Appeal from the Circuit Court of Cook County, Probate
Division; the Hon. ANTHONY J. KOGUT, Magistrate, presiding.
MR. JUSTICE MURPHY DELIVERED THE OPINION OF THE COURT.
This appeal presents the single question of whether cooperative apartment assessments, which accrued subsequent to the death of a proprietary leaseholder, constitute a claim for "expenses of administration" against the estate of the decedent.
Claimant, 4950 Powhatan Building Corporation, is the owner of an apartment building, operated under what is commonly called a "co-operative" arrangement. Prior to her decease, Carrie L. Desisles had purchased shares of stock in the claimant corporation and had entered into a proprietary lease with claimant. Under the terms of the lease, decedent, as "lessee," agreed to pay to claimant, "lessor," "One Dollar ($1.00)" and "an amount to cover the Lessee's proportionate share of the entire cash requirements (as hereinafter defined) of the Lessor during each and every year of the demised term . . .," to be determined by the Board of Directors from time to time.
Decedent died on September 22, 1961; letters testamentary were granted on November 30, 1961; and the inventory was filed on January 19, 1962. On June 4, 1963, claimant filed its claim for $4,374 for "assessments owed on said lease as of March 31, 1963." The executrix answered that claimant, "for valuable consideration, agreed to extend the due date of said payments until said apartment was sold. Said apartment has not been sold . . . and that therefore, said assessments are not due at this time." On March 30, 1964, claimant increased the amount of its claim, and it was allowed for $8,208.87.
On April 17, 1964, the executrix presented a motion to vacate the allowance order because of claimant's failure to file its claim within the nine-month statutory period. On May 1, 1964, claimant moved to reclassify its claim from the seventh class to the first class. A supporting affidavit stated that the claim "prosecuted herein accrued subsequent to the death of the decedent . . . and represents assessments, levied pursuant to . . . the proprietory lease . . . [and] constituted an expense necessary to preserve, protect and maintain an asset of the above captioned estate, to-wit: The apartment leased by decedent under said Proprietory Lease."
Subsequently, the court vacated its order allowing the claim and entered a further order which denied claimant's motion to reclassify its claim and dismissed the claim with prejudice. Claimant appeals, seeking the reinstatement of its claim and reclassification "from the seventh class to the first class."
Claimant contends "that the post-death accruals of assessments under the proprietary lease signed by decedent constitute `expenses of administration' as a cost of preserving and maintaining an asset of the estate, i.e., the leasehold under the proprietary lease and the stock in Claimant owned by the estate. This claim would thus not be subject to the nine-month statutory bar," and "that `expenses of administration' include much more than merely the costs of the legal proceedings in the Probate Court known as `administration.'"
To show that "expenses of administration" include those needed to preserve and protect the property of the decedent pending administration, claimant cites 2 Woerner, The American Law of Administration, § 362, pp 1197, 1198 (3rd Ed 1923); 1A Horner, Probate Practice and Estates, § 401, p 65 (1961 Rev Vol); In re Watson, 148 NYS 902, 911 (Surr Ct 1914); In re Hincheon's Estate, 159 Cal. 755, 116 P. 47, 49 (1911), including 33 CJS, Executors and Administrators, § 235, p 1237. From these authorities, claimant argues that since the assessments were to be utilized to pay for taxes, interest, insurance, repairs, maintenance and other expenses of operation and upkeep, they were made "to preserve and protect the apartment building owned by the claimant corporation in which decedent owned . . . shares and in which building she held a leasehold," and if the expenditures were made directly by decedent's representative, "they would properly be `expenses of administration' for which the representative would receive credit in his accounts, and which would not be subject to the statutory nine-month bar." Claimant further argues, "regardless of the uses of the funds, assessments under a proprietary lease constitute expenses of administration."
The executrix contends that the assessments, "neither contracted for nor acquiesced in by the personal representative of the estate, do not come within the purview of the statute providing for a preference for `expenses of administration' or of the statute excepting such expenses from the requirement of being presented within nine months," and "could in no event be classified as expenses of administration absent a showing that these assessments were reasonably necessary for the benefit and preservation of the estate." Authorities cited include Chicago Title & Trust Co. v. Fine Arts Bldg., Corporation of, 288 Ill. 142, 123 N.E. 300 (1919); Edwards v. Lane, 331 Ill. 442, 163 N.E. 460 (1928), and others.
The procedure to be followed in asserting claims against estates of decedents, from filing to payment, is set forth in the various sections of article XVII of the Probate Act approved in 1939 (Ill. Rev Stats 1963, c 3). Section 202, entitled "Classification of Claims against Decedent's Estate," provides:
"All claims against the estate of a decedent shall be divided into classes in the manner following and shall be so classified by the court at the time of their allowance: . . . ."
Seven classes are designated in numerical order. Of these classes, the first is "funeral expenses and expenses of administration; . . . ." The seventh class is "All other claims."
Section 204, entitled "Limitations on Payment of Claims," provides:
"All claims against the estate of a decedent, except expenses of administration and surviving spouse's or child's award, not filed within 9 months from the issuance of letters testamentary or of administration, are barred as to the estate which has been inventoried ...