STATE OF SOUTH DAKOTA
OFFICE OF
THE ATTORNEY GENERAL

May 24, 1968

Robert A. Miller
State’s Attorney, Haakon County
Phillip, South Dakota 57567

OFFICIAL OPINION NO. 67-68 pg. 485

Estates. Method of handling moneys distributed from estate when distributive heir refuses to accept the same.

You have requested an official opinion based upon this factual situation:

"In the late 1930's an estate was probated in Haakon County, and in the Devree of Distribution one X, residing in Haakon County, refused to accept his distributive share of the estate. The money to be so distributed was thereupon placed under the administration of the Circuit Court and a South Dakota bank appointed trustee thereof.

"Annually since then such trustee bank has rendered a report as to such account to the Circuit Court and served notice of such learning on such accounting on X. At the same time the trustee bank has executed a cashier's check made payable to X, representing the annual interest on such trustee account and forwarded the same to the Clerk of Courts of Haakon County. There is no court order requiring this forwarding of such interest payment, but the trustee bank has so acted on its own initiative.

"At this time in pursuance to SDC 1960 Supp. 12.1404-1, the Clerk of Courts has deposited the cashier's checks with the County Treasurer, who at this time, due to X's being named payee, is in possession of twenty-eight cashier's checks (the earliest dater January 22, 1968) in the amount of $1,100.00. You can appreciate that the annual receipt of such check is a nuisance to the Clerk of Courts and Treasurer."

Based upon this factual situation, you have submitted these questions:

"1. Does SDC 1960 Supp. 12.1404-1 apply to the receipt of such cashier's check annually so that such must be deposited by the Clerk with the County Treasurer?

"2. If the answer to question No. 1 is YES is the Clerk authorized to endorse X's name thereto, so that such checks may be reduced to currency and such currency deposited with the  Treasurer?

"3. If the answer to question No. 1 is NO would it be proper for the Clerk and Treasurer, either alone or jointly, to petition the Court supervising such trust to the end that the Court shall

direct the method of handling such annual interest earned on such trust?

This factual situation is unique. While the law books are full of actions to compel a personal representative to make distribution in an estate, I have been unable to find a case where the proper procedure is set forth as to how to proceed when a known resident distributive heir refuses to accept distribution from an estate.

From the standpoint of the executor or administrator, such distributive share, although refused, is not his money. Until distributed it is an asset of the estate. Until properly distributed from the estate, such personal representative can receive no final discharge, which discharges him from his trust and releases the sureties on his bond. It is proper for him to seek some procedure to remove such distributive share from the estate. (See Ben v. Wilson (1910) 159 cal. 57, 112 P 1100 on this proposition.)

In probate, there can be no question that the County Court has certain inherent powers, as such court, as to probate proceedings is a court of general jurisdiction (In Re Paddock's Estate (1941) 68 SD 179, 299 NW 865.) While SDC 35.1722 authorizes the appointment of an agent to take the distributive share of a nonresident heir who has no agent in the state, or in case of money, a deposit of such funds with the Clerk of Courts without the appointment of an agent, is not applicable to the factual situation given, it may very well be that this statute would, under the inherent powers of the court, authorize the appointment of either an agent or deposit with the Clerk of Courts at the direction of the Probate Court. (It is interesting to note that Arizona (14 Sec. 707), Calif. Probate Code Sec. 1060) and Idaho (Sec. 15-1330) have expanded statutes similar to SDC 35.1722 to cover those cases where either a distributee cannot be found, or a distributee refuses to accept the same, which gives statutory support to the theory herein advanced.)

However, as the County Court seemingly did not act, it is mere speculation as to what the County Court may do in this situation. The factual situation reveals that a trust administration in Circuit Court, as provided by SDC 33.26, was pursued.

Tn view of the peculiar factual situation and the fact that the trust is being administered at the direction of a Circuit Court, it is my opinion that If Question 3 is answered in the affirmative, that the Court administering such trust estate can itself give answer to Questions 1 and 2, so that it would be academic for me to answer the same.

Trusts are peculiarly equitable in nature. As our Circuit Courts are courts inherently exercising equitable jurisdiction, such Court may have had jurisdiction in the matter, irrespective of statute. There is no question that such jurisdiction has been invested by statute.

The factual situation presented and the dilemma presented the Clerk of Courts and County Treasurer, who are furnished cashier's checks, made payable to "X", certainly present a question peculiarly adaptable to the Courts of Chancery.

My answer to Question No. 3 is YES. I would recommend that a petition, setting forth the peculiar factual situation be presented to the Circuit Court administering such trust estate, with a petition that the Court direct whether the Clerk of Courts, the County Treasurer, either alone or jointly, should handle such annual interest payments, or whether the trustee bank should keep such along with the principal trust estate, with directions as to the method of handling the past issued cashier's checks, and the future method of handling the trust estate, and increments thereto by way of interest, until the time the trust estate may be distributed to the person entitled thereto.