United States v. Printy

Docket No. 100232.

IN THE

SUPREME COURT

OF

THE STATE OF ILLINOIS

In re ESTATE OF FLOYD W. FUNK (United States of America,

Appellant, v. Patsy Printy, Ex=r, et al., Appellees).

Opinion filed April 20, 2006.

JUSTICE KARMEIER delivered the judgment of the court, with

opinion.

Chief Justice Thomas and Justices McMorrow, Fitzgerald, and

Kilbride concurred in the judgment and opinion.

Justice Freeman concurred in part and dissented in part, with

opinion.

Justice Garman took no part in the decision.

OPINION

Floyd W. Funk was a truck driver. He died January 7, 1983,

leaving a will; a widow; four children, including a minor son; a

modest life insurance policy, and interests in farmland, crops and

equipment heavily encumbered by loans from the Farmers Home

Administration (FmHA), an agency of the United States government.

Funk=s will named his widow, Patsy Printy, as executor. Shortly after

Funk=s death, Printy filed a petition in the circuit court of Scott

County for admission of the will to probate and issuance of letters

testamentary. See 755 ILCS 5/6B2 (West 2004). The petition was

granted, Printy=s oath and bond were approved, and letters of office

were issued to her on February 14, 1983.

With the assistance of David R. Cherry, an attorney she retained

to assist her, Printy commenced the work of disposing of her

husband=s estate. That work lasted more than two decades. It did not

end until December 2, 2003, when the circuit court entered its final

order in the case. That order, which was not entered until after

Cherry=s election as State=s Attorney required him to withdraw from

the case, was one that Printy could not have foreseen when she

agreed to assume her responsibilities on behalf of the estate. It held

her personally liable to the United States government for $90,092.66

in payments she had authorized as executor, plus interest. Included in

that sum was $38,830.73 which Printy had paid to Cherry for the

legal work he performed on the estate=s behalf.

The United States appealed, contending that the circuit court=s

judgment was inadequate because it did not also include a provision

requiring Cherry himself to personally surrender to the government

the $38,830.73 in disputed attorney fees. The government conceded

that Cherry had earned the fees and that they were reasonable. Its

contention was simply that it had a superior claim to the money used

to pay the fees and that the money should have gone to it rather than

Cherry.

The government=s claim was rejected by the appellate court,

which affirmed the circuit court=s judgment over the dissent of one

justice. The appellate court subsequently modified its opinion on

denial of rehearing, but continued to affirm. 355 Ill. App. 3d 466. The

United States then petitioned our court for leave to appeal. 177 Ill. 2d

R. 315. We granted the government=s petition, and the matter is now

before us for review. For the reasons that follow, we affirm in part

and reverse in part.

In order to properly evaluate the government=s arguments,

careful review of the facts is necessary. The pages which follow will

therefore relate in considerable detail the specifics of what led to the

present appeal. As our discussion will reflect, the executor and her

attorney were extremely thorough in undertaking their

responsibilities. They withheld nothing from the court. They

misrepresented nothing to anyone with an interest in the estate.

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The exhaustive records maintained by the executor and her

attorney have been critical in guiding our understanding of this case.

Those records show precisely what monies flowed in and out of the

estate, when financial transactions occurred, the identity of the parties

involved, and the purposes for which funds were received or

expended. Neither the authenticity nor the accuracy of the

documentary record is in question.

The issues presented by this appeal turn on the documentary

evidence and on questions of law. With respect to such matters, we

are not bound by the views or conclusions of either the circuit or

appellate court. Our review is de novo. See Eden Retirement Center,

Inc. v. Department of Revenue, 213 Ill. 2d 273, 284 (2004);

Rosenthal-Collins Group, L.P. v. Reiff, 321 Ill. App. 3d 683, 687

(2001).

Floyd Funk came from a farming background but became a truck

driver to earn a living. He died suddenly of an apparent heart failure

while traveling through Wisconsin in 1983. He had just turned 61

years old. Surviving him were Patsy Printy, who was his second wife,

and four children. Three of the children, Erle, Joyce and Jana, were

issue of Funk=s first marriage and had attained their majority. The

fourth, Michael, was the issue of Funk=s marriage to Printy. He was

only 12 and still resided with Printy in the family home.

Funk and Printy were married in 1968. After their marriage,

Funk executed a will naming Printy executor of his estate. When

Funk died, Printy, acting in her capacity as executor, retained

attorney David Cherry to assist her in performing the responsibilities

imposed on her by the Probate Act of 1975 (755 ILCS 5/1B1 et seq.

(West 2004)). One of those responsibilities was to prepare and

present to the circuit court verified accounts of her administration of

the estate. 755 ILCS 5/24B1 (West 2004). Printy filed the first such

account on October 11, 1983. That report, which covered the period

from February 15, 1983, to October 7, 1983, disclosed that as of the

date of Funk=s death, the estate=s assets consisted of real estate

located in Scott County, 250 bales of straw, 150 bales of hay, and

various pieces of equipment associated with the operation of a farm,

including tractors, plows, augers, wagons, a combine, and a

cultivator. Printy subsequently discovered and reported to the circuit

court that at the time of his death, Funk was also entitled to a tenant=s

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share of certain harvested grain and a landlord=s share of other

harvested grain. In addition, Funk held a life insurance policy from

Country Life Insurance Company which paid a benefit to his estate of

$28,879.46.

The real estate owned by Funk when he died was the family

farm. It consisted of three parcels. The first, referred to as Tract I,

consisted of approximately 62 acres and was owned by Funk in fee

simple. No other party, including Printy, held an interest in it. The

second, designated as Tract II, contained 37.5 acres, while the third,

known as Tract III, covered 56 acres. Funk owned an undivided

three-fourths interest in Tracts II and III. 1 With respect to the

remaining one-fourth interest, he held only a life estate with the

remainder in fee simple to his minor son, Michael.

In May of 1980, less than three years before his death, Funk

borrowed $205,000 from the FmHA pursuant to the Emergency

Agricultural Credit Act of 1978 (7 U.S.C. '1961 et seq.) That loan,

issued under the government=s Economic Emergency loan program,

was secured by a 40-year mortgage on all three tracts of his farm,

excluding Michael=s interest. The mortgage bore only his signature as

did the corresponding promissory note.

Pursuant to the terms of the promissory note, Funk was to make

41 annual payments to the FmHA. The first, for $10,000, was due

January 1, 1981. The second, for $15,000, was due January 1, 1982.

Beginning January 1, 1983, annual installments were to increase to

$19,507.

1

Tracts II and III came to be known as such when they were sold at

auction. Prior to that time, they were treated as a single parcel known

collectively as Tract II. We shall refer to them by their latter designation for

purposes of clarity and consistency.

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According to the documentary evidence filed with the circuit

court, Funk made payments on the promissory note which reduced

the principal balance due at the time of his death to $185,000. An

additional $23,252.06 in accrued and unpaid interest was also due. 2

Following Funk=s death, interest continued to accrue on the loan at

the rate of approximately $50.68 per day.

A month after taking out the $205,000 loan secured by the

mortgage on his farm, Funk obtained an additional loan from the

FmHA pursuant to the Emergency Agricultural Credit Act of 1978 (7

U.S.C. '1961 et seq.). The amount of the second loan was $31,000. It

was subject to an interest rate of 14% and was to be paid in annual

installments over a three-year period. To secure payment of the loan,

Funk executed a security agreement and financing statement. The

security agreement granted the government, acting through the

FmHA, a security interest in crops grown on Funk=s farm, in crops

grown by Funk on land owned by two other individuals, and in

tractors and other farm equipment owned by Funk, subject to

purchase money interests held by others on some items of that

equipment. At the time of Funk=s death, he owed the FmHA

$3,322.52 in principal and $495.74 in interest on this loan.

In February of 1981, Funk obtained a third loan from the FmHA

pursuant to the Emergency Agricultural Credit Act of 1978 (7 U.S.C.

'1961 et seq.). The amount of the new loan was $39,290. It had a

lower interest rate than the second loan, 13%, and a longer term. It

was to be paid in annual installments over a five-year period, with the

final payment due on the fifth anniversary of the loan. As with the

second loan, Funk executed a security agreement and financing

statement. Similar to the previous agreement, the new security

agreement granted the government, acting through the FmHA, a

2

Given the interest rate on the note (10%) and the timing of Funk=s death,

which took place the same week he was to have made his first $19,507

payment, we assume that the bulk of this interest was associated with his

failure to make that payment.

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security interest in crops grown on Funk=s farm, in crops grown by

Funk on land owned by other individuals, and in tractors and other

farm equipment owned by Funk, subject to purchase money interests

held by others on some items of that equipment. Funk made payments

on this loan, but still owed $1,782.34 in principal and $262.81 in

interest when he passed away.

Funk applied for and obtained a fourth and final loan from the

FmHA on April 1, 1982, approximately nine months prior to his

death. It was an operating loan issued pursuant to the Consolidated

Farm and Rural Development Act (7 U.S.C. '1921 et seq.). The loan

amount, $44,000, was larger than the second and third loans. It

carried a higher interest rate, 143%, and a shorter term, just one

year.

Unlike the earlier loans, the papers for this transaction were

signed by Printy as well as by Funk. As with the previous two loans,

a security agreement was executed granting the government, acting

through the FmHA, a security interest in crops grown on Funk=s farm,

in crops grown by Funk on land owned by other individuals, and in

tractors and other farm equipment owned by Funk, subject to

purchase money interests held by others on some items of that

equipment.

The first payment on the fourth and final loan was due the week

Funk died and was never made. Funk and Printy therefore still owed

the full $44,000 principal amount of the loan plus accrued and unpaid

interest of $4,067.65 when he died. Accordingly, of the $114,290 in

total loan proceeds Funk received from the second, third and fourth

loans between 1980 and 1982, $49,104.86 in principal and $4,826.20

in interest remained unpaid. Under the terms of the respective

promissory notes, interest continued to accrue on the unpaid amounts

at a combined rate of approximately $19.09 per day.

Pursuant to section 18B1 of the Probate Act (755 ILCS 5/18B1

(West 2004)), the state director of the FmHA filed a claim with

Funk=s estate for the $185,000 in principal owed under the first loan,

the $49,104.86 in principal owed on loans two through four, and the

unpaid interest that had accrued and was continuing to accrue under

all of the loans. Numerous additional claims were filed by Funk=s

other creditors. These included unpaid bills for insurance premiums,

electricity, equipment and parts, plumbing repairs, oil products, feed,

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fertilizer and other items; unpaid loans of more than $80,000 owed to

a local bank; money owed the United States for two farm storage

facility loans; the balance due on purchase agreements for farm

machinery; and outstanding labor charges owed to individuals who

helped harvest crops on Funk=s land. A report filed with the court on

October 22, 1984, calculated the foregoing claims against the estate

to be $463,472.76. That sum did not include court costs, taxes,

attorney fees or other costs of administration.

Early in the administration of Funk=s estate, it became apparent

to the executor and the FmHA that at the time of his death, Funk did

not have sufficient assets to pay his debts. He had become insolvent,

and now his estate was insolvent. One major reason for that was that

Funk=s farmland was worth significantly less than the debt

encumbering it. At the time of Funk=s death, the land in Tract I was

estimated to be worth only $500 per acre, while Tracts II and III were

thought to be worth $1,750 per acre. Using those estimates, the value

of Tract I was only $31,000, while the value of Funk=s three-fourths

interest in Tracts II and III amounted to $122,718.75, for a total value

of $153,718.75. An immediate sale of the land would therefore not

have yielded sufficient proceeds to cover even the principal balance

still due on the mortgage, much less the accrued but unpaid interest.

To help guard against just such a situation, the FmHA had

required Funk to assign to Athe United States of America, acting

through the Farmers Home Administration, United States Department

of Agriculture, all of his right, title and interest in and to@ certain

specified life insurance policies. Unfortunately for the estate and the

government, Funk failed to maintain the requisite policies. As a

result, no proceeds from the policies were available to help pay off

the mortgage when he died.

Given the dire condition in which Funk had left his finances, the

FmHA invoked the Federal Insolvency Statute when it submitted its

claims against Funk=s estate. Cited by the FmHA as A31 U.S.C. 191,@

the statute was actually amended in 1982, prior to Funk=s death, to

update its language. Now codified as 31 U.S.C. '3713, the statute has

been in force since 1797 without significant modifications. United

States v. Emory, 314 U.S. 423, 428, 86 L. Ed. 315, 322, 62 S. Ct. 317,

320 (1941). It provides, in pertinent part, that A[a] claim of the United

States Government shall be paid first when *** the estate of a

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deceased debtor, in the custody of the executor or administrator, is

not enough to pay all debts of the debtor.@ 31 U.S.C. '3713(a) (2000).

Under '3713(a), the United States is entitled to priority with

respect to the payment of Adebts of the debtor,@ not debts incurred by

the estate. The priority of the federal government is limited to the net

proceeds from the property of the deceased after the debts of the

estate are paid. Statutory amounts due a widow and a decedent=s

minor child, funeral and burial expenses, and expenses of

administration of the estate are debts of the estate, not debts of the

deceased. As a result, the claims of the United States do not take

priority over payment for those items. See In re Estate of Igoe, 717

S.W.2d 524, 527 (Mo. 1986); Martin v. Dennett, 626 P.2d 473, 475

(Utah 1981); In re Estate of Gleason, 68B1 U.S. Tax Cas. (CCH)

P9416; 21 A.F.T.R.2d (RIA) 1364 (D. Ks. 1968); United States v.

Weisburn, 48 F. Supp. 393, 397 (E.D. Pa. 1943); United States v.

Hunter, 5 Mason 229, 26 F. Cas. 439 (Cir. Ct. D. R.I. 1828); 31 Am.

Jur. 2d Executors & Administrators ' 663 (2002). 3

Priority for payment of claims against the estate is determined by

the classification scheme set forth in section 18B10 of the Probate Act

of 1975 (755 ILCS 5/18B10 (West 2004)). Under that system, funeral

and burial expenses and expenses of administration are included in

the first class of claims against the estate. The surviving spouse=s or

child=s award is ranked second. Debts due the United States come

third. Four additional categories of claims follow those. Section

3

The reason costs of administration come before claims of the United

States and other creditors is a pragmatic one. Administration of the estate is

essential for ensuring that all available assets and liabilities are accounted

for and that the proper parties receive what they are due. Unless costs of

administration are provided for, there can be no assurance that the estate can

be administered at all. See In re Estate of Henke, 39 Misc. 2d 705, 708, 241

N.Y.S.2d 788, 792 (N.Y. Sur. Ct. 1963).

-8-

18B13 of the Probate Act (755 ILCS 5/18B13 (West 2004)) provides

that with one exception not relevant here, the representative of the

estate is required to pay claims against the estate in order of their

classification under this system. See In re Estate of Brooks, 134 Ill.

App. 3d 993, 994-95 (1985).

The primacy of funeral expenses, expenses of administration,

and what the government referred to as the Awidow=s dower or

allowance@ was acknowledged by the FmHA at the outset of these

proceedings, when it submitted its claim for payment of the balance

due on the four loans it had made to Funk before he died. In a letter

signed by the FmHA=s county supervisor explaining the government=s

intention to invoke its statutory priority under what is now 31 U.S.C.

'3713(a), the government specifically advised Printy that

A[i]t has been held that debts due the United States and

entitled to priority under [the statute] are not payable until

after payment of the costs of administration of the estate,

widow=s dower or allowance, funeral expenses, and state

taxes levied on the estate as such ***.@

It was against this background that Printy, in her capacity as

executor, and Cherry, acting as her attorney, proceeded with the

management and disposition of the estate=s assets. Because Funk had

fallen behind in his mortgage payments for the farm, the government

could have initiated foreclosure proceedings. It elected not to do so.

Instead, the FmHA considered it more prudent to have the estate

continue to operate the farm until Michael, the minor child, attained

his majority. Two reasons were given for this decision: (1) the

government had instituted a temporary national moratorium against

farm foreclosures, and (2) once Michael attained his majority, he

could convey his one-fourth interest in Tracts II and III, allowing the

property to be sold unencumbered, thereby enhancing its

marketability.

With the government=s approval, Printy, as executor, assumed

control of the farm=s operations. Lacking access to cash or loans to

finance cultivation and harvesting and not wishing to expose the

estate to the risks associated with growing crops, Printy rented the

farm to a tenant on a net one-third basis. Under this arrangement, the

tenant was to pay all crop expenses and receive two-thirds of the

crop. The remaining one-third would be paid to the estate.

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At this time, crops harvested from the farm prior to Funk=s death

remained in storage. Printy arranged for the stored crops to be sold.

The sale, which was completed in July of 1983, yielded $64,441.51 in

net proceeds for the estate. An additional $35.70 was added to that

sum later for additional interest that had accrued before the sale

proceeds were distributed. In addition, Printy identified and

liquidated two smaller amounts of grain for $1,238.78 and $1,392.83.

These sums totaled $67,108.82 and were deposited into the estate=s

checking account.

With respect to the vehicles and various pieces of farm

equipment and machinery owned by Funk at the time of his death,

Printy retained Leroy Moss Auction Company to sell them at auction.

The auction netted $54,756.25 for the estate, after sales commissions,

advertising and labor costs incurred by the auctioneer. That sum was

also deposited in the estate=s checking account.

The sale of the stored grain was completed in July of 1983. The

proceeds from the auction were received in June of 1983. Proceeds

from Funk=s remaining life insurance policy, noted earlier in this

opinion, were deposited in the estate=s checking account in March of

1983. Additional moneys were received and deposited at various

other times during the year. These included a small refund from FS

Credit Corporation on March 5, 2003; an additional payment of

$62.79 from the life insurance company on June 8, 1983; $1700.53

from GLH Grain Company on July 22, 1983, for the estate=s share of

grain harvested on the Funk Farm following Funk=s death; and a

refund of $87.85 deposited on July 29, 1983, relating to overpayment

of advertising charges for the auction.

In addition to receiving and depositing the foregoing sums,

Printy made various cash disbursements during the first 10 months

the estate was open. Among these were a $10,000 payment to her as a

surviving spouse=s award and a $2,000 payment to Michael as his

surviving child=s award pursuant to section 15B1 of the Probate Act

(755 ILCS 5/15B1 (West 2004)) on March 9, 1983; payments totaling

$108.30 to the Scott County Farm Bureau on May 19, 1983, for

membership fees and other charges; $940.49 on June 8, 1983, for real

estate taxes; and periodic disbursements to David Cherry for the legal

services he performed on behalf of the estate. Cherry=s attorney fees

totaled $4,239 and were paid as follows: $1,047.50 on March 9,

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1983; $1,551 on May 5, 1983; $1,285.50 on July 1, 1983; $169.50 on

August 3, 1983; and $186 on September 8, 1983.

The receipts and disbursements just described were detailed in

the first report and account filed by Printy, in her capacity as

executor, on October 11, 1983. The circuit court approved that

account, without objection, in an order filed October 31, 1983.

In the months that followed, discussions took place between

Cherry and an assistant United States Attorney assigned to the case to

explore the possibility of disposing of the farm before Michael

attained his majority. Among the proposals considered by the parties

was for the FmHA to foreclose on Funk=s interests in the property; to

allow the FmHA to take possession of the farm and operate it until

Michael turned 18, then sell it; to continue having the executor

operate the farm in the context of the probate proceedings and then

sell it following Michael=s eighteenth birthday; or to bring an action

to partition the 93 acres in which Funk had held a three-fourths

interest and sell that.

A hearing on various outstanding claims against the estate,

including those asserted by the FmHA, was set for late fall of 1984.

That hearing was conducted on October 22, 1984, after the requisite

notice was given. To assist the court in resolving the outstanding

claims, Printy, through Cherry, filed a report on October 22, 1984,

detailing the estate=s assets and liabilities and listing the outstanding

claims against the estate according to their priority under section

18B10 of the Probate Act of 1975 (755 ILCS 5/18B10 (West 2004)).

Based on the materials presented at the hearing, the court entered an

order denying one claim outright, continuing until another time the

hearing on a $6,488.20 claim related to some litigation in which Funk

had been involved, and delaying the hearing on the FmHA=s claims

for repayment of its four loans until a time set by agreement of the

parties. Finally, the court considered and allowed a total of

$102,857.59 in seventh class claims. Included among these claims

was the $80,000 bank loan and the unpaid bills for insurance,

electricity, oil products, plumbing repairs and various other items

noted earlier in this opinion.

Although the court allowed the seventh class claims, it did not

order them to be paid and Printy did not pay them. Because those

claims were of a lower priority than other claims which had not yet

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been paid, most notably the claims for the expense of administering

the estate and those asserted by the United States government, they

could not be paid by the executor unless and until there were

sufficient funds to first pay off the higher priority claims. See 755

ILCS 5/18B13 (West 2004). That condition was not met at the time

Printy filed her report with the court prior to the October hearing.

According to that report, the amount of outstanding claims exceeded

the value of the estate=s assets by an estimated $174,368.84, not

including costs of administration, court costs and state and federal tax

obligations. As interest on outstanding loans continued to accrue and

administration expenses mounted, so too did this deficit.

In November of 1984, Printy filed her second verified report and

account under section 24B1 of the Probate Act of 1975 (755 ILCS

5/24B1 (West 2004)) covering the period from the end of the first

report until October 25, 1984. That account disclosed that the estate

had received $828.76 on July 24, 1984, and $5,435.38 on October 20,

1983, as its share of the proceeds from the sale of new crops grown

on Funk=s farm, plus an additional $35.70 on February 27, 1984,

representing additional interest that had accrued in connection with

prior grain sales. The account also reported the following

disbursements: $3,055.21 to Carlinville Ford to pay off its secured

claim on one of the items that had been sold at the auction in 1983;

$324 for crop insurance premiums; $2,415.06 in real estate taxes;

$808.67 in federal taxes; $126 for tax preparation; $1,566.03 to

Michael Funk for his share of the proceeds from the sale of the new

crops grown on the farm; a small check charge to the bank; and a

total of $2,269.75 in attorney fees to Cherry, paid in 11 increments

between November 7, 1983, and October 5, 1984. In addition, the

report and account showed that in June of 1984, Printy, as executor,

had placed $130,000 of the cash held by the estate in an interest-

bearing certificate of deposit (CD) and that the CD had generated

$3,208.68 in interest during that reporting period.

The cash used to purchase the certificate of deposit was derived

from the sale of grain following Funk=s death and the auction of the

farm equipment and machinery the previous year. The decision to

place the money in a CD followed numerous letters, calls and

meetings in which Cherry, the FmHA, and counsel for the United

States Justice Department, representing the FmHA, attempted to

work out how the government=s claims against the estate could best

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be resolved. At each step of the process, the estate kept the court and

the government fully advised as to how it was proceeding. The

government acknowledged the difficulty posed by the administration

of Funk=s estate and made no objection to the manner in which

matters were being handled by Printy. Indeed, by letter dated April

25, 1984, the government expressly authorized the estate to place the

$130,000 in sale and auction proceeds into an interest-bearing

account.

A hearing on Printy=s second verified report and account was

held on November 16, 1984, after requisite notice was given to all

claimants, including the FmHA. No objection to that report and

account was made, and it was approved by the court. The court also

considered a request by the estate to authorize an additional $20,000

payment to Printy for her surviving spouse award and an additional

$4,000 payment to Michael for his surviving child award. Finding

that proper notice of that request had been given and that no objection

had been made, the court approved those amounts.

In accordance with the court=s order approving the surviving

spouse and child awards, Printy transferred $24,000 from the account

in which the sale and auction proceeds had been deposited and made

the specified payments. That transfer, which occurred on December

28, 1984, reduced the balance of the CD to $106,000. When the CD

subsequently matured on June 28, 1985, the government requested

that the proceeds be remitted to the FmHA, through its county

supervisor. Printy complied, issuing a check to the FmHA for the full

amount of the remaining principal, $106,000, plus an additional

$4,000 in accrued interest, for a total of $110,000. The check was

transmitted to the FmHA with a cover letter from Cherry dated July

17, 1985.

Upon receipt of the $110,000 payment, the government applied

$68,789.48 to pay off the three FmHA loans secured by crops and

farm machinery and equipment which Funk had taken out in 1980

(for $31,000), in 1981 (for $39,290) and in 1982 (for $44,000). The

FmHA returned the corresponding promissory notes to Printy, as

executor, on September 13, 1985. Each note was marked Apaid in

full.@

After the three loans were paid off, the FmHA took the

$41,210.52 remaining balance from the estate=s $110,000 payment

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and applied it to the fourth and final loan, which was secured by the

mortgage on Funk=s farm. With the additional interest that had

accrued on that loan in the years following Funk=s death, the balance

still due was calculated to be $205,000, exactly the same as the

original loan amount.

The $110,000 payment to the FmHA left only a small amount in

the estate=s checking account. At the time, Cherry estimated the

remaining amount to be approximately $9,000, and so advised the

FmHA. 4 The government did not object to the estate=s retention of

that sum. It advised Cherry, however, that it expected the estate to

either turn the money over to the FmHA Aat some point in time@ or

else provide the government with an accounting of how the funds

were spent.

At the same time the three smaller FmHA loans were paid off,

further attention was given by the estate and the government to

repayment of the loan secured by the mortgage on the farm. The

FmHA ultimately rejected the idea of exercising its right under the

mortgage to foreclose and decided against taking over operation of

the farm until Michael turned 18. Rather, it chose to maintain the

status quo. By agreement with the executor, the estate was to remain

open and the executor was to continue operation of the farm until

Michael attained his majority, at which time the parties would decide

whether the entire farm should be sold or whether the real estate

should be partitioned and only the estate=s share sold. The agreement

further provided that, during the interim, the FmHA was to receive a

4

When the executor received the bank statement for the account, it

showed a remaining balance closer to $10,000. There is nothing in the

record to suggest that the discrepancy was anything other than inadvertent,

and the government does not claim otherwise.

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share of the proceeds from the sale of any grain grown on the

property. 5

Following these developments, the estate went on with the

business of operating the farm. Printy filed her third verified report

and account with the circuit court on March 20, 1986. That document

covered the period between October 25, 1984, and the date on which

the document was filed. It listed all of the financial transactions that

had taken place since the previous report, including the transfer of

funds to pay the surviving spouse=s and child=s awards and the

$110,000 payment to the FmHA. The report itemized receipts from

the sale of crops, two modest dividends, and interest paid on the

certificate of deposit before it matured. It also listed all cash

disbursements, including payment to Michael for his share of the crop

proceeds and payments to Cherry for the legal services he performed

on behalf of the estate. As with past attorney fees, these were

disbursed every month or so during the reporting period. Over the

course of this reporting period, which was slightly longer than

previous ones, 14 attorney fee payments were made ranging in size

from $7.50 to $1,220. The total amount of fees was $3,915. The total

amount left in the estate=s checking account, following all the receipts

and disbursements, was $14,406.57. Aside from that checking

account, the estate held no other assets except for Funk=s farm.

Neither the government nor any other creditor objected to the

March 20, 1986, report and account. The FmHA merely sent a letter

to Cherry, in his capacity as Printy=s attorney, acknowledging the

amount of cash on hand listed in the report and requesting that the

estate remit to it some of the proceeds from crop sales to be applied

to the remaining loan on the farm. Based on the reports and accounts

filed by Printy, the FmHA correctly computed that the estate had

5

A proposal to rent the farm to a tenant for cash rather than a share of the

harvest was also considered. It offered the prospect of reduced

administrative expense and simplified accounting. For reasons not apparent

in the record, it was never implemented.

-15-

received a total of $7,941.02 from the sale of crops during 1985. The

FmHA regarded that as an appropriate minimum payment. The

government indicated a desire to receive more than that, but

acknowledged that the estate needed to retain Asome reserve for

payment of taxes, etc.@ Printy signed a check for $7,941.02 payable to

the FmHA, on October 8, 1986, and it was forwarded to the agency

by Cherry that same day.

With that payment and the $41,210.52 applied to the farm loan

the year before, the estate had paid a total of $49,151.54 toward the

mortgage since Funk=s death. As indicated earlier in this opinion,

Funk was $23,252.06 in arrears when he died. Under the terms of the

promissory note secured by the mortgage, three additional payments

of $19,507 each should have been made between 1984 and 1986. The

arrearage plus the three additional installments due totaled

$81,773.06. Even with the payments tendered by the estate, a

deficiency of $32,621.52 therefore remained under the loan. It

continued to grow each day as additional interest accrued.

Where a loan issued by the Department of Agriculture and

administered by the FmHA falls into arrears, Congress has given the

Secretary of Agriculture authority to permit the deferral of principal

and interest payments upon a showing by the borrower that due to

circumstances beyond the borrower=s control, the borrower is

temporarily unable to continue making payments when due without

unduly impairing the borrower=s standard of living. 7 U.S.C. '1981a

(2000). The government is required to give notice to borrowers that

such deferral opportunities are available (Curry v. Block, 738 F.2d

1556, 1560-61 (11th Cir. 1984)), and such notice was given in this

case by letter dated February 18, 1986. By the time that letter was

received, the estate was operating under what amounted to a deferral

from the FmHA already. As a result, no further action was taken by

the estate in response to the notice, and none was required by the

FmHA or the Department of Agriculture. The FmHA continued to

forebear from foreclosure, and the estate was left with responsibility

for operating the farm until Michael turned 18.

During the remainder of 1986 and throughout 1987, little of

consequence occurred. Printy=s administration of the estate and the

estate=s operation of the farm were routine. The estate received

$6,001.40 in payment for its share of crops harvested from the farm

-16-

in 1986 and gave Michael his one-fourth share of that, $1,500.35.

With the knowledge and prior approval of the FmHA, it used $700 to

pay part of the expense of repairing a division fence, transferred

$2,700 to the FmHA to be applied toward the mortgage, and retained

the remainder, $1,101.05, for expenses in administration of the estate.

In November of 1986, the FmHA noticed that the real estate

taxes on the property had not been paid and asked Printy to take care

of it. Records show that the estate made two payments of $748.64 to

the county treasurer. The estate also paid a crop insurance premium

and continued making periodic payments to Cherry for the estate

work he was doing on Printy=s behalf. The total amount of the fees

for this period was $3,616.23.

Printy=s fourth verified report and account, filed with the court

on November 12, 1987, covered the period from the end of the

previous report through October 26, 1987, and detailed each of the

foregoing transactions. To the $14,406.57 in cash on hand at the

conclusion of the previous reporting period, the estate added a total of

$9,451.41 in additional cash receipts and made $19,827.25 in

disbursements, leaving a cash balance of $4,030.73. According to the

report and account, that sum, and the estate=s interest in the farmland,

remained the estate=s sole assets.

As with the three prior verified reports and accounts filed by

Printy, no objection was filed by the government or any other

creditor. Administration of the estate continued without controversy.

When 1988 arrived and Michael turned 18, Printy filed a verified

petition for leave to sell the farm as previously agreed with the

FmHA. A hearing on that petition was held September 19, 1988.

There being no objection, the petition was approved by the court in a

written order filed October 7, 1988. In accordance with the order,

notices were published and a public auction was conducted the

following month.

The estate retained Moss Real Estate & Auction Company to

handle the auction. As indicated earlier in this opinion, the farm

consisted of three tracts. The FmHA submitted the highest and best

bid, for $31,000, for Tract I. The highest and best bid for the 37.5

acres in Tract II was the $54,375 offered by Frank and Sandra Grubb.

-17-

Clarence and Ruth Baird were the highest and best bidders, at

$91,000, for the 56 acres comprising Tract III. 6

Printy promptly filed reports with the court asking that each of

the three sales be approved. She also petitioned the court to award her

the sum of $25,000 for her fees as executor of the estate. A hearing

on those matters was conducted on January 20, 1989. All required

notices having been given and no objections having been made, the

court approved each of the sales, authorized Printy to close the sales,

and granted her request for an award of $25,000 in executor fees.

At Cherry=s request, the FmHA agreed to release its mortgage

with respect to Tracts II and III in order to permit the sales to be

closed and the property to be conveyed to the new owners. When he

submitted the mortgage release to the FmHA, Cherry advised the

agency in writing that the proceeds of the sale would be placed in an

account for the purpose of paying expenses and making a distribution

of the proceeds. Cherry confirmed that, consistent with the provisions

of 31 U.S.C. '3713, invoked by the FmHA when it filed its claim

against the estate, the government=s claim would have priority over

all other outstanding claims with the exception of those for expenses

of administration. In response, the FmHA executed documents

releasing the property from the liens held by the government. The

release specified that it did not affect or modify the loan obligation

which the mortgage had secured, a point on which the parties were in

agreement. There was no dispute that release of the liens did not

excuse the estate from its responsibilities to repay the promissory

note.

There was no need for the estate to seek release of the mortgage

as to Tract I because, as we have just indicated, that parcel was

purchased by the FmHA itself. Subsequent to that purchase, and its

approval by the court, the FmHA asked the estate to put Tract I up for

auction again. The estate agreed to do so provided that the sale

6

We have used the numerical designations assigned to the parcels by the

estate in the probate proceeding. Different numerical designations were

used by the auction company in advertising the sale.

-18-

expenses would be deducted from the proceeds. The FmHA gave

written assent to that arrangement. A new sale was conducted, and

Tract I was sold to Thelma Keehner for $24,000.

By the time the farmland was sold in 1989, the estate had been

open for more than six years. As our discussion has suggested, the

relationship between Printy and the FmHA throughout this period

was marked by cooperation. Both sides recognized the challenges

posed by the insolvency of the estate, and both sides strove to ensure

that the estate=s financial problems were handled in a rational and

appropriate manner.

Although Printy was eventually able to recover a fee for her

work as executor and although her son Michael received a share of

the proceeds from crop sales over the course of the years, the

arrangement enured principally to the benefit of the United States. As

a result of Printy=s efforts and the substantial assistance she received

from Cherry, the estate was able to pay in full three of the four

government loans still outstanding at the time of Funk=s death and

make substantial payments toward the fourth. The government was

spared the expense of foreclosure, did not have to seek partition of

the property, and was able to share in the revenue produced by the

farm without assuming any risk or responsibility for the farm=s

operations. The land was kept productive and its value was preserved,

if not increased, until Michael turned 18 and the property could be

sold. In addition, when the property was sold, the government was

freed from having to make any of the arrangements. The sales were

organized by Printy and the closings were handled by Printy.

Printy drafted a proposed final report and account in the spring

of 1989 and submitted a copy of it to the government. Despite the

extent of the work Printy had done and the advantages the

government received as a result of her labors, the FmHA and the

assistant United States Attorney with whom it was then consulting

about the case were displeased by the final attorney fees which the

proposed final account and report showed that Printy had paid

Cherry. Although the government did not object to them at the time

they were approved by the court, the FmHA and the assistant United

States Attorney also had concerns over the executor fees Printy was

paid. In September of 1989, the government therefore requested Aa

breakdown of the hours and expenses for the administrative and

-19-

attorney costs in handling [the] estate.@ It also asked for information

regarding how the surviving spouse award had been determined even

though, as with the executor fee, it had not objected to either

installment of that award at the time the installments were approved

by the court and paid.

Cherry discovered problems with the proposed final report

unrelated to the foregoing issues and refrained from filing it with the

court. Although that draft was never filed, the government

nevertheless filed an objection to it. That objection was limited to the

amount of executor fees Printy had received and the size of the

payments she had made to Cherry for attorney fees after October 26,

1987. The government did not challenge the estate=s authority to

make the payments. Its contention was simply that the payments were

excessive given the size of the estate.

The government=s objection lay dormant in the court file.

Hearings were scheduled at various times and rescheduled, without

objection. On October 20, 1989, the cause was Acontinued generally

to be reset at request of parties.@ The reason given for this

continuance was that the final tax returns, necessary to determine the

amount available for distribution, had not been completed.

Although nothing further was filed with the court during the

ensuing months, the United States Attorney=s office sent Cherry a

letter in late June of 1990 claiming that the balance due on the

mortgage as of June 25, 1990, had risen to $294,485.17.7 The letter

7

The reason this sum was so much higher than the original amount

claimed by the FmHA was that the United States Attorney=s office believed

that interest should continue to accrue on the mortgage until it was paid in

full. We note, however, that the status of the estate=s obligation to pay such

interest was unclear once it acceded to the FmHA=s request for it to continue

operation of the farm until Michael turned 18. Interest was not addressed in

the relevant correspondence. Instead, as we have described elsewhere in this

opinion, the arrangement simply called for the estate to pay the FmHA its

share of the crop proceeds until Michael attained his majority, then apply

net proceeds from the sale of the property to satisfy the mortgage. Given the

size of the balance due on the mortgage at the time of Funk=s death, the

estimated value of the property, and the land=s productivity, there was no

possibility that the estate would ever be able to cover additional interest,

which accrued at the rate of $50.68 per day, for the period the estate was

asked to operate the farm prior to its sale. Had Printy realized that the

-20-

stated that Alegitimate itemized expenses relating to the sale of the

property can be deducted from the sale proceeds,@ but demanded full

payment within 30 days.

Cherry filed a prompt response to that letter which provided

documentation about the sales and advising that a current report

would be forthcoming. Cherry=s response elicited another letter from

the United States Attorney=s office, dated August 17, 1990, advising

that based on the information Cherry had provided, the estate should

distribute $126,161.57 of the sale proceeds to the FmHA, consisting

of $131,477.90 in proceeds less $5,316.33 in sale expenses.

Inexplicably, the letter then concluded by stating that the United

States Attorney=s office would be Amaking formal demand for full

payment of $131,477.90 to FMHA within 30 days.@

One week later, on August 24, 1990, the estate filed its fifth

report and account with the court. This report covered the period

between October 26, 1987, when the fourth report ended, and August

10, 1990. That report showed that the estate began with a cash

balance of $4,030.73 at the start of the period and collected an

additional $189,431.24, consisting of $14,415.40 in proceeds from

the sale of crops harvested from the farm prior to its sale,

$167,235.96 from sale of the farm itself, monthly interest on the

estate=s bank account, and a few minor items, including refund of an

overpayment from the Internal Revenue Service. Offsetting the

receipts were $108,946.45 in disbursements, including $39,361.88 to

Michael for his share of the crop sales and his interest in the real

estate, $4,023.50 to the company which conducted the real estate

auction, charges for advertising the auction, real estate taxes, federal

taxes, tax preparation fees, expenses for fence repair, the $25,000

executor fee approved by the court and paid to Printy, and Cherry=s

government might eventually seek to collect all that additional interest, she

would have had no reason to agree to assist the FmHA. The best interests of

the estate would have dictated that the agency be left to seek foreclosure

and whatever other legal remedies it might have.

-21-

attorney fees. According to the report, the attorney fees consisted of

$7,994.50 paid to Cherry as they were incurred in installments

ranging from $37.50 to $1,830.00 plus a final lump-sum payment of

$25,000 in April of 1989.

Following these disbursements, the cash balance left in the estate

to pay creditors was $84,515.52. All but $141.38 of this amount was

transferred to an interest-bearing trust account to protect Printy from

any temptation she might have to use the funds for nonestate

purposes and to ensure that they remained available to meet the

estate=s obligations. The existence, size and purpose of the trust

account were known to the court and documented in the record.

Shortly after the fifth report and account was filed, the

government filed a new objection. As with the government=s 1989

objection, this version claimed that the executor fees and attorney

fees were excessive. In addition, it complained that although the

FmHA had agreed to release its liens on the farmland to facilitate the

property=s sale and the sale had gone forward, it had not yet received

any of the proceeds. No other aspect of the report or the

administration of the estate was questioned. The objection simply

asked for an order (1) requiring Printy and Cherry to document the

basis for the $25,000 payments each of them had received in the

latest reporting period and (2) directing the estate to immediately

disburse the amounts still owed to the FmHA.

In demanding payment of the amounts still owed to the FmHA,

the government=s objection asserted that the estate had made no

payments Ato FmHA on the farming property.@ This claim was false.

As we have noted, Printy made several payments to the FmHA which

were credited against the balance due on the mortgage. In July of

1985, Printy had issued a check to the FmHA for $110,000, of which

$41,210.52 was applied to the mortgage and the balance was used to

pay off the other three loans in full. In addition, Printy paid $7,941.02

to the FmHA in 1985 and $2,700 to the FmHA in 1986 as its share of

the proceeds from the sale of crops. Both sums were applied to the

mortgage, the only debt the estate still owed to the FmHA after the

other three loans were paid off. 8

8

The government=s objection, which failed to acknowledge the estate=s

payments, claimed that the total amount due under the mortgage had risen

-22-

Following submission of the government=s objection, the cause

went dormant again. The next filing occurred on February 10, 1992,

when Printy filed her sixth verified report and account. This account

covered the period between her previous report and account and

January 7, 1992. According to this report, the estate=s sole income

consisted of $6,991.63 in interest earned on the account in which the

proceeds of the land sale were being held. Disbursements, totalling

$2,699.56, consisted of bank service charges, state and federal taxes

and $200 paid to a tax preparer. Although Cherry continued to

perform significant services on behalf of the estate, he received no

fees from the estate for those services and submitted no claim to the

court for compensation. At the end of the reporting period, the estate

reported having a total of $88,807.59 in the bank. All other assets had

been distributed. It owned nothing else.

Printy=s sixth report and account triggered a brief objection from

the government. The objection did not dispute the veracity of Printy=s

report or the accuracy of her accounts. It merely renewed the

government=s complaint that it had not yet Abeen paid the amounts

that are owed to it from the sale of the decedent=s property.@ In

addition, it asserted, as it had in its initial objection, that the $25,000

to $298,228.59 as of September 7, 1990. As it happened, the FmHA

generated a letter to the estate just 12 days later indicating that the amount

actually delinquent on the promissory note secured by the mortgage was

only $104,216.09. In raising only the delinquency, the FmHA assumed the

terms of the promissory note and mortgage continued to apply normally

notwithstanding Funk=s death. In claiming the full amount due, including all

accrued interest, the United States Attorney was following the view implicit

in the original claim submitted to the probate court by the FmHA that the

loan accelerated and became due and payable in full on Funk=s death.

-23-

paid to Printy and approved by the court for her executor fee and the

final $25,000 in attorney fees paid to Cherry for his work on behalf of

the estate were Aexcessive and unreasonable.@

Nothing further took place until the following year. In April of

1993, Printy filed her seventh verified report and account. Once

again, the sole income received by the estate was interest from the

bank account containing the proceeds from the sale of the farm. This

time, the interest totaled $4,094.89. Disbursements, amounting to

$886.77, were made for bank service charges, a tax preparation fee

and state and federal taxes. The result was a net increase in the

estate=s accounts to $92,015.71. No other assets remained and none

were reported. As with the previous report, no additional attorney

fees were paid or requested even though Cherry continued to perform

work on the estate=s behalf.

Following submission of the seventh report, the government

elected not to file any new objections. Another year passed. Although

nothing further was filed with the court during the interim, the record

shows that Cherry was in ongoing communication with the FmHA

and the United States Attorney=s office in an effort to resolve any

remaining issues, settle the FmHA=s claims, and finally close the

estate. The sticking point had nothing to do with the FmHA=s priority

over the other creditors whose claims had been allowed but remained

unpaid. It was assumed that whatever money remained in the estate=s

accounts would be paid to the FmHA in satisfaction of the

promissory note secured by the mortgage. The difficulty was with

Printy=s $25,000 executor=s fee and the final $25,000.00 in attorney

fees paid to Cherry in April of 1989, four years earlier. The FmHA

did not question that Printy was entitled to an executor=s fee or that

Cherry should be paid for the legal work he performed on behalf of

the estate. As we have already noted, giving priority to such expenses

of administration was permitted by the Federal Insolvency Statute (31

U.S.C. '3713) and specifically acknowledged by the FmHA when it

asserted its original claim in the probate action. The only problem the

FmHA had with the fees, so far as we can tell, was the one it asserted

in the objections it filed to Printy=s fifth and sixth verified reports and

accounts and to the proposed final account circulated but never filed

in 1989: it believed that the disputed $50,000 in fees were simply

excessive and unreasonable.

-24-

The government=s view was that if the executor and attorney fees

were scaled back, the money could be added to the funds obtained

from the sale of the farm, thereby increasing the amount the

government would receive in satisfaction of the promissory note

secured by the mortgage. Without that adjustment, the amount the

government stood to recover from the estate was the $92,015.71

identified in Printy=s seventh report and account, plus any interest

accruing since the report was filed. In a letter transmitted to Cherry in

August of 1993, the government advised that it believed $124,500 to

be a fair settlement amount, taking into account the costs of the sale,

including publication costs and Cherry=s attorney fees.

The government=s settlement offer exceeded the funds left in the

estate by $32,484.29. It would therefore have necessitated return by

Printy of some, if not all, of the executor=s fees approved by the court,

leaving her with no compensation for a decade=s worth of work on

behalf of the estate and for the benefit of the government. It would

also have required Cherry to further discount his fee, notwithstanding

that he been paid nothing for his work since 1989, and made no

provision for further payment, despite the fact that the estate could

still not be closed and significant work for the estate still lay ahead.

Although records filed with the circuit court showed that Cherry

prepared a proposed stipulation and judgment in April of 1994, the

terms of that stipulation have not been disclosed. All we know is that

no settlement was reached. Failing settlement, Cherry returned to

court to obtain a hearing on the government=s objections to Printy=s

$25,000 executor=s fee and the $25,000 final payment he received for

his attorney fees and for resolution of the government=s claim for

repayment of the promissory note secured by the mortgage on Funk=s

farm. The circuit court granted Cherry=s request and set the matter for

hearing on June 17, 1994.

Cherry=s efforts to enlist the aid of the court had an unexpected

effect. Rather than hasten the long overdue termination of Funk=s

estate, it triggered a succession of legal maneuvers by the United

States Attorney=s office that would ultimately keep the estate open for

another full decade and more. The government=s immediate response

was to file an objection to the estate=s Acurrent report and account.@

That objection, filed less than a week before the scheduled June 17

hearing, was not addressed to the seventh and most recent current

-25-

report and account filed in April of 1993. It was not even addressed

to report and account filed before that, in February of 1992. Instead,

it reached back to the fifth account and report filed nearly four years

earlier on August 24, 1990.

As we have detailed, the government already had an objection to

that report and account on file. Submitted on September 10, 1990,

that objection claimed simply that the $25,000 executor fee received

by Printy and the $25,000 final attorney fee payment made to Cherry

were excessive and unreasonable. As relief, the objection requested

an order requiring Printy and Cherry to document the basis for the

foregoing payments and directing the estate to immediately disburse

the amounts still owed to the FmHA.

The new objection submitted by the government purported to be

a memorandum in support of the September 10, 1990, objection. In

one limited respect it was. It did address the assertion made in the

September 10, 1990, objection that the $25,000 payments to Printy

and Cherry reported in the August 24, 1990, report and account could

not be justified absent additional documentation. Aside from that,

however, the 1994 memorandum represented a quantum shift in the

government=s position. In direct contrast to the position it had taken

since the inception of these proceedings, the government asserted that

none of the expenses of administration, including attorney fees, could

be paid out of the proceeds of the sale of the farmland secured by the

FmHA mortgage. It further asserted, for the first time, that the estate

had failed to properly distribute to the government the estate=s share

of the proceeds from the sale of crops for the years 1987 and 1988,

and suggested that the conduct of Printy and Cherry in handling the

estate=s affairs in the years that followed had been wrongful.

With respect to its claim that Printy and Cherry had acted

improperly in administering the estate, the government anticipated,

quite rightly, that Printy and Cherry would adduce evidence that their

actions were sanctioned by the FmHA officials with whom they had

dealt regarding the government=s claims. To forestall this defense, the

United States Attorney=s office filed a motion in limine prior to the

scheduled hearing to bar the introduction into evidence of any

representations by the FmHA officials Aconcerning use of proceeds of

sale of real estate mortgaged to [FmHA] for payment of any costs of

administration, attorney=s fees incurred in probating this estate,

-26-

executor=s fees or any other fees or expenses except for costs of sale

of the mortgaged real estate.@

The June 17 hearing was postponed to provide Cherry time to

file a response to the government=s latest objection. On July 15, the

hearing was continued again at the request of the United States

Attorney=s office. Ironically, the reason given by the government for

seeking the request was that one of the principle FmHA officials with

whom Printy and Cherry had dealt was unavailable to testify at that

time.

In due course, Cherry, on behalf of the estate, filed an objection

to the government=s motion in limine and a response to the new

objection to the August 24, 1990, report and account. Following

various developments, including a decision by the government in

September of 1994 to submit a belated objection to Printy=s fourth

verified report and account dated November 12, 1987, the court

conducted a hearing on the motion in limine in December of 1994.

The motion was denied. The court then continued the hearing on the

government=s objections and set a discovery schedule.

With the failure of its motion in limine and the circuit court=s

decision to permit additional discovery before reaching the merits of

the government=s latest objections, the United States Attorney=s office

decided to seek relief in a different forum under another new theory.

It brought a civil action against Cherry and Printy in the United States

District Court for the Central District of Illinois alleging that the two

of them had converted the proceeds from the sale of the mortgaged

farmland. The federal court, however, refused to allow the United

States to use that forum to supplant the ongoing state court

proceedings. It abstained from hearing the government=s claim under

the authority of Colorado River Water Conservation District v.

United States, 424 U.S. 800, 817-18, 47 L. Ed. 2d 483, 498, 96 S. Ct.

1236, 1246 (1976), which permits a federal court to stay or dismiss a

suit, in exceptional circumstances, when a concurrent state

proceeding is pending and the stay or dismissal of the federal action

would promote wise judicial administration.

Colorado River abstention is discretionary. In determining

whether the doctrine should be invoked, a court must consider a

number of factors. One of those factors is the vexatious or contrived

nature of the federal claim. See Clark v. Lacey, 376 F.3d 682, 685

-27-

(7th Cir. 2004). In applying that factor to the government=s federal

action here, the federal district judge cited contentions raised by

Printy and Cherry that the United States had looked to the federal

forum because of the failure of its motion in limine in the state court

action and that it had joined Cherry as a party only because it

believed Printy to be indigent and unlikely to have the resources to

satisfy a judgment, while Cherry was perceived to be wealthy.

The federal judge specifically stated that he agreed with this

characterization of what had taken place. He wrote that the United

States had litigated the same issue asserted in the federal action

Ain the probate proceeding beginning in 1989 when it first

[Printy and Cherry]. After such time, it allowed [Printy and

Cherry] to continue the sale of the last piece of property. In

1994, as the issue regarding the use of the proceeds of the

mortgage to pay the attorney and executor fees came close to

the hearing, [the United States] filed a motion in limine to

prevent FmHA agent Jeffrey Koch from testifying. On

March 31, 1995, [the United States] filed the action in

federal court. The Court has no doubt that such action was in

response to the adverse ruling from the state court regarding

its motion in limine. It appears that [the United States]

thought it would lose its claim and sought another forum.@

United States of America v. Cherry, No. 95B3101, slip op. at

14 (C.D. Ill. October 28, 1996).

Based on this and other factors, the court stayed the federal action

pending termination of the probate proceeding in state court and

denied a pending motion for summary judgment filed by the United

States. United States of America v. Cherry, slip op. at 14-15.

While the federal action was pending, Printy filed exhaustive

documentation with the circuit court in response to interrogatories

previously propounded by the government. The probate action was

subsequently stayed pending the federal court=s determination as to

whether it would proceed with the government=s federal claim. The

decision by the federal court to abstain from hearing the

government=s federal claim was filed at the end of October 1996.

Following that ruling, the probate proceedings went forward again.

In June of 1997, a hearing was held in the circuit court at which

the parties agreed to complete discovery by September 9, 1997, a

-28-

pretrial hearing was scheduled for October 16, 1997, and a hearing on

the government=s objections to Printy=s fifth verified report and

account was set for November 1997. Immediately after the June 1997

hearing, the government served Printy with a voluminous request for

admission of facts. When Printy balked at responding to the request

to admit, the government moved for an order deeming the facts set

forth in the request to have been admitted unless Printy could show

cause why those facts Ashould not be confessed against her.@

Following a written objection by the estate and a hearing on October

16, 1997, at which both parties were represented, the government=s

motion was denied.

Approximately two weeks later, on October 29, 1997, the

government filed an objection to the estate=s seventh report and

account, which had been filed by Printy in April of 1993. That

objection took issue with $844.95 in disbursements made by Printy

on the estate=s behalf to pay federal and state taxes and to cover the

fee charged by the tax preparer. The basis for the objection was that

the payments had been made from Acollateral pledged to the United

States@ and were unauthorized. The government asserted this claim

notwithstanding the fact that the estate no longer held any collateral

pledged to the United States in 1993. The last collateral held by the

estate was the farm, which had been auctioned off in the late 1980=s

with the agreement of the government and the approval of the court.

The government had released its security interest in the farmland so

that the sales could close, and the net proceeds were deposited in the

estate=s account.

Language at the conclusion of the objection indicates that what

the government actually meant to say was that disbursement of the

proceeds from the sale to pay the challenged expenses should not

have been made by the estate without the government=s permission,

notwithstanding the fact that the government had voluntarily released

its liens on the land prior to the completion of the sale and receipt of

the purchase price from the buyers. The government did not

elaborate, however, and offered no legal authority for such a view. In

addition, it proffered no explanation for why it was raising its

objection for the first time approximately 42 after the expenses were

paid and the report and account detailing their payment was filed

with the court.

-29-

No action was taken on the foregoing objections. The sole matter

before the court was the government=s objections to the fifth verified

report and account filed by the executor on August 24, 1990. The

specific date set for that hearing was November 18, 1997. Less than a

week before that hearing, the government filed approximately 60

pages of notices, motions and memoranda. Included were a notice

that it intended to call Cherry, attorney for the estate, as an adverse

witness for the government; a renewed motion in limine with

supporting memorandum to bar FmHA officials from testifying

regarding approval they had given the estate to pay various expenses;

a petition to order Printy to pay the government $102,875.02 in

interest based on the fact that she had still not disbursed to the United

States its share of the proceeds from the sale of the farm; and a

memorandum asking the court to consider all of the objections it had

-30-

ever filed in the case, not just the objections to the August 24, 1990,

report that were presently set for a hearing. 9

9

The government=s pleadings also suggested that Cherry=s dealings with

FmHA officials violated his ethical responsibilities. The ethics charge is

premised on the government=s belief that beginning in 1984, Cherry should

not have had any direct contact with the FmHA in representing the estate. In

its view, he was obligated to deal solely with representatives of the United

States Attorney=s office. The record before us, however, contains nothing to

suggest that Cherry=s communications with the government were improper

or were thought to be improper by the United States Attorney=s office

during the 14 years leading to the November 1997 hearing. Cherry was

meticulous in providing the United States Attorney=s office with notice of

everything he did in the case and attempted to maintain ongoing and open

communication with that office. To the extent he communicated with the

FmHA rather than someone from the United States Attorney=s office, such

communication occurred with either express or implicit prior authorization

of the government=s lawyers. At all times, he dealt with the representatives

-31-

he believed the government wished him to deal with. Sometimes that was a

deputy United States Attorney. Sometimes it was an official from the

FmHA. On at least one occasion, a deputy United States Attorney actually

expressed confusion as to why Cherry had contacted his office about

something rather than simply going to the FmHA. Given the history of the

case and the relationship between the various parties and entities, no

legitimate claim can be made that Cherry ever attempted to circumvent the

United States Attorney=s office or engage in communications which the

United States Attorney=s office opposed.

-32-

When the government filed the foregoing motions, interest

earned on the estate=s trust account over the years had increased the

account=s balance to $104,382.20. That sum represented all that was

left in the estate, and there was no disputeBthere had never been any

disputeBthat the FmHA had priority over all other creditors whose

claims for repayment of debts of the decedent which remained

unsatisfied. Accordingly, Cherry sought and obtained an order

authorizing him to release the funds to Printy, as executor of the

estate, for payment to the FmHA. The circuit court granted that order.

Neither Printy nor Cherry sought any further payment for their work

on the estate=s behalf, and no deductions were made for costs of

administration. The entire sum was paid to the FmHA. Accordingly,

as of November 1997, the estate was exhausted.

Once the FmHA received from the estate all it had left to give,

one might have anticipated that the estate could, at last, have been

closed. That was not to be. Although 14 years had passed since the

estate was first opened, it would be another six years before the

circuit court was able to enter its final order in the case.

On November 18, 1997, the court proceeded with its hearing on

the August 24, 1990, report and account and the government=s

objections to that report. The deputy United States Attorney=s motion

in limine was denied. In response to the government=s notice that

Cherry would be called as an adverse witness, he moved to withdraw

as Printy=s attorney. After discussion between counsel and the court,

consideration of the position Printy would be left in if she were left

without counsel, and the receipt of testimony from Printy that she

understood the conflict and still wanted Cherry to serve as her

lawyer, the motion to withdraw was itself withdrawn, and the hearing

went forward.

Printy was the only witness called to testify. Despite the breadth

of the issues raised in the prehearing motions and memoranda filed

by the government, the focus of the hearing was limited. It centered

on the specifics of how the proceeds of the farmland sales were

handled. At the conclusion of the hearing, the court indicated that it

would not revisit reports and accounts that had previously been

approved, but that it would not approve the August 24, 1990, report

and account because of uncertainties it had regarding how and when

proceeds from the sale of the farm were distributed, and why the

-33-

FmHA had not received its share earlier. The estate was given until

March 2, 1998, to file a new report Ashowing the receipt of funds

from the sale of all property secured by [FmHA] and the

disbursement of all those funds or their present location,@ and the

government was given six days beyond that to file any objection.

Cherry, still acting on behalf of the estate, promptly complied

with the court=s order. On March 2, 1998, he filed a new report

itemizing and describing everything that had been done in the

administration of the estate from the date of Funk=s death in 1983 to

the date on which the new report was filed. The report was supported

by extensive documentation, including copies of every notice, claim,

bill, and cancelled check generated during the course of the estate=s

administration; copies of all correspondence from and to the FmHA

and the United States Attorney=s office; contemporaneous notes kept

by Cherry of his discussions with Printy and the government

representatives regarding estate matters; and Cherry=s itemized billing

records showing what work he did, when he did it, how long it took,

and how much he charged.

The United States Attorney=s office responded to this new report

by moving to strike it, to obtain an expedited hearing on its motion to

strike and an extension of the deadline to file an objection to the new

report and to reopen discovery. The motion to strike was denied by

order entered April 20, 1998. At the same time, the court gave the

government additional time, to June 12, 1998, to file its objection and

reserved the issue of whether discovery should be reopened.

Immediately before the scheduled hearing, the United States

filed an objection to the amended report and to the documentation

submitted by the estate in support of that report. Once again it filed a

motion in limine to bar FmHA officials from testifying about

authorizations they had given to the estate with respect to the use of

proceeds from the sale of property in which the FmHA held a

security interest or interest accrued on those proceeds. In addition, it

filed an updated version of its prior petition asking that Printy be

ordered to pay the government $102,875.02 in interest based on her

allegedly Awrongful@ failure to timely disburse to the United States its

share of the proceeds from the sale of the farm. Unlike the prior

petition, the updated version was not limited to interest attributable to

delay in transmitting the proceeds from the farm auction. It also

-34-

asked for interest based on alleged delays in paying the FmHA its

share of proceeds from the sale of machinery and grain in which the

government had held security interests. The government made this

claim notwithstanding the fact, noted earlier, that the loans for which

the grain and machinery were pledged as collateral had been repaid

and the corresponding promissory notes returned marked Apaid in

full@ 13 years earlier in 1985.

On June 18, 1998, the impending hearing was rescheduled for

July 20, 1998. Prior to the new hearing date, the government filed yet

another motion in limine to bar testimony from the FmHA officials

with whom Printy and Cherry had dealt. It also submitted a 47-page

supplemental response to Printy=s amended report. At the hearing, the

court questioned counsel for the United States regarding the truth and

accuracy of the records submitted by the estate in support of its

amended report. Counsel conceded that the government had no

reason to believe that any of the financial records were incorrect.

There was no dispute that the court had before it every pertinent

document Cherry and the estate possessed. The question which had

motivated the government=s initial concern in the case, namely,

whether the basis for $25,000 executor fee and the final $25,000

attorney fee payment could be substantiated, dissolved. The

government no longer contended that Cherry=s fees were

unreasonable and excessive. The detailed records he provided

foreclosed any such claim. So too fell the argument raised by the

government in its objection to the August 24, 1990, report that the

estate had failed to pay the FmHA any of the proceeds from the sale

of the farm. As we have noted, the estate paid the FmHA all of the

net proceeds from the farm sale, plus accrued interest, a year earlier.

Ultimately, the matter left for the court to resolve was whether, under

the law, the estate was administered properly and the government had

been paid everything it was due. Finding that it had sufficient

evidence to make that determination, the court denied the

government=s motion in limine, rejected a challenge by the

government to the admissibility of the estate=s report and objections,

and took the case under advisement without hearing additional

testimony.

Believing that it should have been given a more complete

opportunity to present its case, the government filed what it

denominated as a Amotion to reconsider denial of evidentiary hearing

-35-

and offer of proof on executor=s amended current report, objection

and response to same and motions in limine.@ No response was filed

on behalf of the estate. Shortly thereafter, the court entered a detailed

order regarding the administration of the estate and the validity of the

government=s objections. That order, dated July 23, 1998, found: (1)

that the government had agreed with the estate to delay the sale of the

farm until Michael reached his majority, (2) that the government=s

sole objection following the sale was to the amount of the fees paid to

the executor and attorney, (3) that the government had withdrawn its

objection to the amount of the fees and now objected to the executor=s

report on the grounds that under controlling law, the executor should

have paid the United States a greater share of the proceeds of the sale,

(4) that no objection was made to the truth or accuracy of the content

of the current report, (5) that the current report contained a full and

accurate accounting of the receipts and disbursements of estate

property, (6) that at the outset of these proceedings, the FmHA

claimed that a total of $234,106.86 plus interest remained due on the

four loans it had issued to Funk prior to his death, (7) that the FmHA

eventually received a total of $225,023.33 from the estate, (8) that the

executor and her attorney Aexperienced considerable risk and

responsibility in handling an insolvent estate which contained

farmland owned in part by a minor and secured by a federal agency,@

and (9) that the court=s examination of the evidence revealed no

expenditures that were not reasonable and necessary for the

preservation of the estate property Awhich was the real estate upon

which the U.S. had a security interest.@ Based upon the foregoing, the

court concluded that the actions of Printy and Cherry were

Areasonable and necessary under the circumstances of a complex and

insolvent estate.@ Accordingly, it approved the amended report

submitted by Printy on March 2, 1998.

The government appealed. The appellate court reversed and

remanded, holding that the circuit court=s ruling was tantamount to

entry of judgment on the pleadings and that genuine issues of

material fact remained which should have precluded such a

disposition. In the appellate court=s view, an evidentiary hearing

should have been conducted. In re Estate of Funk, No. 4B98B0640

(1999) (unpublished order under Supreme Court Rule 23).

Following remand, the circuit judge who had presided over the

case recused himself. The case was reassigned. The United States

-36-

then submitted a lengthy bench memo summarizing its view of the

case and restating its arguments as to why the amended report

submitted by Printy on March 2, 1998, should not be approved. In

addition, and for the first time, the government asked the circuit court

to enter a Asurcharge monetary judgement against [Printy]

individually and in her capacity as executor in the amount of

$90,092.66 plus interest@ to recoup the additional sums it believed the

estate should have paid to the FmHA over the years. Although no

hearing was then scheduled, the government also filed a renewed

motion in limine to bar testimony from the FmHA officials with

whom Printy and Cherry had dealt in handling the estate.

The judge to whom the case had been reassigned also recused

himself. The case was then assigned to a new judge who conducted a

thorough evidentiary hearing. At that hearing, conducted November

2, 1999, testimony was received from Printy, officials of the FmHA,

and two deputy United States Attorneys who had been involved with

the case earlier in its history. Numerous documents were admitted

into evidence. Argument was heard, counsel were given the

opportunity to file posttrial memoranda, and the case was taken under

advisement.

On February 10, 2000, the court issued a lengthy written order

setting forth the history of the case and the arguments of the parties.

Following its detailed review, the court concluded:

AHaving considered the evidence presented at [the

hearing], the Court record, the voluminous material

submitted by the United States and the arguments of the

parties, the Court is of the opinion and finds that the position

of the executor is the more reasonable and legally

supportable position. From the beginning of the

administration of this estate it was clear to all parties that the

estate was insolvent. As early as October of 1984, all parties

recognized that upon his death in January of 1983, Floyd

Funk owed more than he owned in property. Knowing this

information, the United States, through its agent the Farmers

Home Administration allowed the executor and her attorney

to operate the estate. While this was not a settlement of the

claim, it was acquiescence in a course of action that has

certain consequences. The executor and the attorney who

-37-

operated the farm and administered the estate during this

time period are entitled to compensation for their activities.

The wisdom of this decision [to have the estate continued to

operate the farm] is not at issue. In point of fact by this

decision by the FmHA mitigated [its] damages in this case.

[It has] received substantial sums of money that [it] might

not have otherwise received had [it] commenced legal action

earlier in this proceeding.

The United States by their various agents in this

protracted litigation established a procedure for the land in

question to continue to operate as a viable farm and income

producing property. Having allowed the operation to

continue, the government now says all of its secured claims

should take first priority. Under the Probate Act, reasonable

expenses of the executor and attorneys fees take priority

over the claims of the United States government. Those are

the only fees being paid in the present case. They are

reasonable and appropriate under the circumstances.

The executor and her attorney acted reasonably under the

particular facts of this case. Their expenses were reasonable

and there is no evidence to suggest that those expenses were

the result of mismanagement, fraud or other misconduct. The

amended current report is approved by the Court. The estate

shall be closed and the executor discharged.@

The government appealed again. This time it argued that the

circuit court=s opinion was erroneous as a matter of law. The basis for

that argument was that the security interests it held in Funk=s property

trumped any entitlement the executor and her attorney may otherwise

have had under the Probate Act to recovery of the expenses of

administration. A divided appellate court agreed. It therefore reversed

and remanded for yet more proceedings. In re Estate of Funk, No.

4B00B0178 (2000) (unpublished order under Supreme Court Rule

23). In so doing, the appellate court made no mention of the Federal

Insolvency Statute (31 U.S.C. '3713) invoked by the government at

the outset of these proceedings as the basis for the priority it claimed.

Shortly before the appellate court rendered the foregoing

decision, Cherry was elected State=s Attorney of Scott County. That

position precluded him from continuing to engage in the private

-38-

practice of law. 55 ILCS 5/4B2001(b) (West 2004). He was therefore

compelled to seek leave of court to withdraw as Printy=s attorney. In

response, the United States stated that while it had no objection to

Cherry=s withdrawal, it believed that the circuit court should order

Cherry to Areturn to the United States its secured moneys paid to him

without prior court approval.@

A hearing on Cherry=s motion to withdraw was conducted in

March of 2001. At the conclusion of the hearing, the circuit court

allowed Cherry to withdraw but ordered that he remain in the case as

an interested party; continued the case for 21 days to allow Printy an

opportunity to obtain new counsel; and ordered the United States to

file, within 30 days following the above-mentioned 21-day period, a

final account of Printy=s actions as executor.

We do not know why the circuit court authorized the

government to file a final account. Pragmatic considerations are one

possibility. Printy testified at the hearing that she had no money to

retain replacement counsel, and the court may have believed that

unless the government was given responsibility for preparing a final

accounting, no accounting would be filed. We note, however, that the

Probate Act of 1975 does not authorize this procedure. Under the Act,

responsibility for submitting accounts of the administration of the

estate rests with the representative of the estate authorized by the

court to carry out that administration. 755 ILCS 5/24B1 (West 2004).

The United States was not the estate=s representative. Printy was.

The Probate Act does contain procedures for ensuring that

required accounts are prepared and submitted if the duly authorized

representative dies or falls under a legal disability (755 ILCS 5/24B13

(West 2004)) or the letters issued to a representative are revoked and

the representative fails or refuses to file an account within the time

fixed by the court (755 ILCS 5/24B14 (West 2004)). None of those

circumstances were present here. Printy was not dead or disabled, the

letters issued to her were not revoked and she had not failed or

refused to file accounts within the time set by the court.

We note, moreover, that even if Printy had died, resigned or had

her letters of administration revoked, it is by no means clear that the

United States would have been an appropriate successor. The Probate

Act sets forth a preference list from which successor representatives

may be selected. See 755 ILCS 5/9B2, 9B3 (West 2004). Creditors of

-39-

the estate, which is all the United States is here, are at the very

bottom of the list. 755 ILCS 5/9B3(b), (j) (West 2004). Funk had

numerous surviving relatives who would have been eligible for

consideration first. 10

No longer represented by counsel, Printy filed no objection to

the circuit court=s decision to transfer responsibility for the

accounting to the government. In accordance with the judge=s order,

the United States prepared its proposed final account and filed it on

April 11, 2001. Although the probate act requires accounts to be

verified (755 ILCS 5/24B1 (West 2004)), this one was not. It was not

even signed by someone with direct knowledge of how the estate=s

assets had been managed. The signatory was an assistant United

States Attorney who had not entered the case until after the estate had

been open for more than a decade and all the real and personal

property had long-since been sold.

Although the record shows that a copy of the account was mailed

to Printy, she still lacked counsel, as she would throughout the

remainder of these proceedings, and did not take issue with either the

10

There is also the question of whether the United States would be

legally eligible to serve as a representative of the estate. The Probate Act

requires that the administrator be a Aperson.@ 755 ILCS 5/9B1 (West 2004).

It is true that under Illinois law, a body politic may sometimes qualify as a

person. See 5 ILCS 70/1.05 (West 2004). With respect to who may serve as

an administrator, however, the Probate Act appears to contemplate that he

or she must be a natural person. See 755 ILCS 5/9B3 (West 2004). An

exception exists for corporations qualified to accept and execute trusts in

our state (755 ILCS 5/1B3 (West 2004)), but the law confers no similar

authorization on the United States.

-40-

technical sufficiency or the substance of the document. Thus freed

from meaningful adversarial challenge, the government=s account

implemented its view that the court should undertake a

comprehensive reexamination of the receipts and expenditures

handled by the estate since its inception two decades earlier, even

those that had previously been approved by the court without

objection by the United States, and that it should do so without any

reference to the estate=s lengthy cooperation with the FmHA. In the

account, the estate=s dealings with the FmHA are ignored.

When the cause was before the circuit court in 1999, the

government had argued that the amended report submitted by Printy

on March 2, 1998, should not be approved and a money judgment

should be entered against Printy individually because the government

failed to receive $90,092.66 in proceeds and accrued interest to which

it was entitled from the sale of the farm, crops, and machinery. In the

final account it prepared, the government argued that during the

course of administering the estate, Printy had wrongfully distributed

to third parties the sum of $89,666.49.

The largest single component of this sum was attorney fees paid

to Cherry. Cherry was paid a total of $45,814.48 for his work on the

estate=s behalf. Those payments were fully documented, and we have

mentioned them all in this opinion. They were paid as follows:

$4,239 in 1983, $2,269.75 in 1984, $2,695 in 1985-86, $3,616.23 in

1986-87, and $32,994.50 in 1987-89. The last amount included the

$25,000 lump sum payment Cherry received after the government

released its security interest in the farmland, the farm sales were

closed, and the proceeds were paid to the estate. The government

received notice of all these payments. The payments for 1983 and

1984, totaling $6,508.75, were specifically approved by the circuit

court. With the exception of the final $25,000 for which it sought

supporting documentation, the government filed no objection to the

accounts in which the fees were reported until many years later.

In its proposed final report, the government stated that

$38,830.73 of Cherry=s fees should not have been paid. It does not

explain how it arrived at this particular amount. That Cherry did the

work and that the fees were reasonable is not disputed. As it had

begun doing in 1994, five years after the last of the fees had been

-41-

paid, the government contended simply that the money used to pay

the fees should have gone to it and not Cherry.

After the $38,830.73 in attorney fees, the next largest sum

challenged in the government=s report is the $25,000 executor=s fee

approved by the court and paid to Printy in 1989. Inexplicably, the

government next took issue with $11,111.25 of the $30,000 surviving

spouse award which had been approved by the court and paid to

Printy in two installments, the first in 1983 and the second in 1984,

both prior to the sale of the farm. The government also challenged

$4,000 of the $6,000 surviving child award, which, like the surviving

spouse award, had been approved by the court and paid in two

installments in 1983 and 1984. Although the government once

inquired as to the basis for the surviving spouse award, this document

marked the first time the surviving child award had been directly

contested.

The remaining sums challenged in the government=s account

consisted of state and federal income tax paid by the estate on money

earned from the sale of property in which the government held

security interests, tax preparation fees, miscellaneous bank fees

pertaining to the account in which the estate held its funds, final court

costs incurred in connection with the real estate sale, and $920.16

which the government contends should have been deducted from

Michael=s share of the proceeds from the sale of the farm to cover his

share of the sale expenses.

With respect to all of the foregoing payments, the government=s

position was not that they were unreasonable or excessive. As in the

case of the attorney fees, its argument was that it had a superior claim

to the money used to pay them. Although it filed no contemporaneous

objections to any of the payments, it believed that the executor=s

decision to pay the expenses rather than apply the funds to the loan

balance due the United States was wrongful.

Printy filed no objection to the final account proposed by the

government. After hearing nothing from her, the court, sua sponte,

issued a rule to show cause why she should not be removed as

representative of the estate. The court was reluctant to act on the

government=s proposed final account without insuring that the parties=

various interest were properly represented and believed that given the

conflict of interest that existed between Printy, Cherry and the

-42-

government, a different executor was needed, someone who could, at

last, wind the matter down.

The court convened a hearing on the matter in August of 2001.

Printy appeared and made her position clear. She testified:

AThis has gone on 19 years this February. And I have got

to a point with the diabetes that I can=t remember. I am

having seizures now and it=s just gotten so bad that I don=t

want to be executor because I asked 3 or 4 times before why

can=t I withdraw from this? Because Mr. Cherry has done all

the work. I haven=t done anything except go back and forth

to court and ask the same questions over and over. And I

don=t want no more of it. I can=t handle it.@

Following discussion on the record with counsel, and the realization

that it would be difficult to get anyone to replace Printy, particularly

since there was no money left in the estate, the court elected to

maintain the status quo and refrained from removing Printy as

executor. The court further indicated that it would adopt the final

account submitted by the United States. When the government

submitted the appropriate order to the court, the court signed it

without any further evidentiary hearing.

The order which the government prepared and the trial court

signed found that Printy had wrongfully distributed A$89,666.49 of

the United States= secured collateral and accrued interest thereon@ as

set forth in the government=s final account. Because of the source of

the funds used to make the challenged payments, the trial court

disallowed them. The court=s order further provided that Printy was

not yet discharged as executor and that further hearings would be

scheduled on the following pending matters: (a) the government=s

petition for entry of a monetary judgment against Printy, (b) its

request for relief requiring Aattorney Cherry to return to the United

States $38,830.73 of its secured collateral,@ and (c) the petitions it

had previously filed seeking the assessment of penalty interest

against Printy.

Notwithstanding the language in the order regarding Printy=s

continued status as executor and the court=s intention to schedule

additional hearings, the court directed the circuit clerk to enter the

following order: AFinal [r]eport of the Executor entered this date.

Estate closed. Cause stricken.@ In accordance with the judge=s

-43-

command, the clerk made a docket entry showing that order. When

the government complained that the order conflicted with the order it

had prepared for the judge=s signature, the trial court advised that the

government was free to take an appeal, which it did. On that appeal,

the government argued that the docket entry closing the estate and

striking the cause should be vacated because it was Afatally

inconsistent@ with the trial court=s September 2001 written order

approving the final account. The United States further argued that

instead of remanding the cause for further proceedings, the appellate

court should order Cherry to return to the United States $38,830.73 in

disallowed attorney fees, and enter judgment against Printy for

$89,666.49, to be offset by a credit totaling whatever amount Cherry

might actually repay the government.

Cherry conceded that the docket entry should be vacated. The

appellate court accepted Cherry=s concession and vacated the docket

entry. It declined the government=s request for entry of judgment

against Printy and Cherry, holding that the trial court had not ruled

upon the issues and the parties had not had an opportunity to present

all of their evidence on those issues. In accordance with that view, it

remanded for further proceedings. In re Estate of Funk, No.

4B01B0902 (2002) (unpublished order under Supreme Court Rule

23).

Following remand, the government filed a motion for summary

judgment requesting that the circuit court order Cherry to pay to the

government the $38,830.73 in attorney fees the court had previously

disallowed. Simultaneously, the government requested entry of

summary judgment in its favor and against Printy in the amount of

$89,666.49, a sum which included the same $38,830.73 sought from

Cherry. Both Cherry and Printy responded. Cherry argued, inter alia,

that the government=s motion was premature because a genuine issue

of material fact existed as to whether the attorney fees were

Aunreasonable, excessive[,] or unearned.@ What Printy had to say was

this:

AI have no idea what all of this is about. I=ve been

tormented and harassed and pushed aside since 1983. You

people have taken 20 years of my life and throwed [sic] it

out the window. Because I sit here in fear wondering what=s

coming up next. *** I have nothing left. I have to borrow

-44-

money to the end of the month sometimes to get by. I think

you should go after the right people. I=m just an inocent [sic]

bystander.@

Printy=s note was one page long. The government responded with a

four-page reply reasserting its entitlement to summary judgment. It

also filed a reply to Cherry=s response.

A hearing on the government=s motions for summary judgment

was held February 21, 2003. Following argument by counsel, the

court entered judgment in favor of the government and against Printy

in the amount of $90,092.66, a sum actually higher than the amount

requested by the government in its motion. At the same time, it

denied the government=s request for summary judgment against

Cherry. Noting again that the government no longer challenged the

reasonableness of the fees, the court held that the appropriate course

was for the government to seek recovery from Printy and for Printy to

then seek recovery of the fees from Cherry. In the court=s view,

allowing the government to proceed directly against Cherry would be

inappropriate under the law.

The government filed yet a fourth appeal. Because the estate was

still open and issues remained pending, e.g., the government=s claim

for penalty interest, the appellate court, on its own motion, dismissed

the appeal for lack of a final appealable order. The government

subsequently moved for dismissal of its request for penalty interest

and entry of final judgment. Following one final hearing, that motion

was granted. On December 5, 2003, the court entered an order

finding Printy liable individually and in her capacity as executor for

$90,092.66, plus postjudgment interest, reaffirming its denial of the

government=s request for an order requiring Cherry to surrender

$38,830.73 of the attorney fees he had been paid for his work on the

estate, dismissing the government=s claims for penalty interest with

prejudice, and discharging Printy as executor of the estate.

Once final judgment was entered, the government promptly

appealed again. The sole basis for its appeal was that the circuit court

erred in refusing to order Cherry to return to the government the

$38,830.73 in fees. The appellate court rejected that contention in a

published opinion. 355 Ill. App. 3d 466. The appellate court=s

opinion, as modified on denial of rehearing, held that Cherry=s failure

to object to the government=s accounting precluded him from

-45-

challenging the determination that the fees should not have been

allowed. In its view, however, the disallowance of the fees did not

mean that Cherry was not entitled to be paid for his work. It meant

simply that Printy should not have paid the fees using funds which, in

the appellate court=s view, should have gone to the United States. The

appellate court further concluded that Cherry=s status in the case was

that of a creditor, not a party. In its view, the courts never acquired

personal jurisdiction over him and therefore lacked the authority to

compel him to pay the money to the government. One member of the

appellate court dissented, asserting that the trial court Aerred by

denying the United States= request that the court order Cherry to

return the disallowed attorney fees to [Printy] as executrix.@ 11

Shortly after the appellate court filed its opinion, as modified on

denial of rehearing, Printy filed a petition for relief under the United

States Bankruptcy Code. Pursuant to the Code, the petition

automatically stayed continuation of the proceedings against Printy in

this case. 11 U.S.C. '362 (2000). On the government=s motion, the

stay was subsequently lifted, and the appellate court=s mandate

issued. The United States then petitioned our court for leave to

appeal. 177 Ill. 2d R. 315. We granted that petition, and the matter is

now before us for a decision. Printy is unrepresented in these

proceedings, as she was in the appellate court, and has filed no brief.

Cherry appears pro se.

As grounds for its appeal, the United States contends that its

motion for summary judgment against Cherry was improperly denied.

In its view, Cherry should have been required, as matter of law, to

11

In reaching this conclusion, the dissenting judge apparently failed to

realize that the government had made no such request. Its motion for

summary judgment did not ask that the money be returned to Printy. What

the government sought was an order compelling Cherry to Arepay to the

United States its secured moneys totalling $38,830.73 wrongfully received

by him in disallowed attorney=s fees.@

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surrender to the United States $38,830.73 of the attorney fees he had

been paid for his work on behalf of the estate, and the appellate court

erred in concluding that the court lacked authority to order him to do

so.

Ordinarily, the denial of summary judgment is not appealable.

That is because orders denying summary judgment are interlocutory

in nature. An exception to this rule has been recognized where cross-

motions for summary judgment have been filed on the same claim

and one party=s motion is granted while the opposing motion is

denied, thereby disposing of all issues in the case. Arangold Corp. v.

Zehnder, 187 Ill. 2d 341, 357 (1999). That situation is not present

here. In the matter before us, there were no cross-motions for

summary judgment. When it denied the government=s motion for

summary judgment against Cherry, the circuit court proceeded to

finally resolve the case based on all the evidence which had been

presented. Any error thereupon merged into the final judgment

rendered by the court. Belleville Toyota, Inc. v. Toyota Motor Sales,

U.S.A., Inc., 199 Ill. 2d 325, 355 (2002). It is that judgment, not the

denial of the government=s summary judgment motion, that we must

consider.

As we have just discussed, the government=s challenge to the

appellate court=s judgment centers on that court=s conclusion that the

circuit court never acquired personal jurisdiction over Cherry and

therefore lacked authority to order him to surrender the disputed

portion of his attorney fees to the United States. The question of the

circuit court=s jurisdiction was not asserted by Cherry himself and he

does not dispute that the circuit court could have exercised

jurisdiction over him. His position is that notwithstanding the

existence of jurisdiction, the lower courts acted properly in rejecting

the government=s claim that it was entitled to judgment against him.

We agree.

Whether the appellate court misapplied principles of personal

jurisdiction is not dispositive of this appeal. The reasons given for a

judgment or order are not material if the judgment or order itself is

correct, for it is the judgment and not what else may have been said

by the lower court that is on appeal to a court of review. A reviewing

court may sustain the decision of a lower court on any grounds which

are called for by the record regardless of whether the lower court

-47-

relied on the grounds and regardless of whether that court=s reasoning

was correct. See Rodriguez v. Sheriff=s Merit Comm=n, No. 100165,

slip op. at 11 (January 20, 2006); Material Service Corp. v.

Department of Revenue, 98 Ill. 2d 382, 387 (1983).

In this case, there are numerous reasons, wholly unrelated to the

question of jurisdiction, supporting the appellate court=s rejection of

the government=s claim that the circuit court erred in refusing to order

Cherry to surrender a portion of his attorney fees. The first is federal

law. The Federal Insolvency Statute (31 U.S.C. '3713), on which the

government=s claim to priority is based, specifically identifies the

party who will be held accountable if a debt is paid before a claim of

the United States in violation of the statute. It is the representative of

the person or estate who paid the money, not the person who received

payment. If the representative Apays any part of a debt of the person

or estate before paying a claim of the Government@ in violation of the

law, as the government contends Printy did here, the representative is

liable for the government=s unpaid claims to the extent of the

improper payment. 31 U.S.C. '3713(b) (2000). In accordance with

this statute, the circuit court entered judgment against Printy for the

sums the government contends were paid out in violation of its

statutory priority. Under the circuit court=s judgment, and consistent

with the federal statute, Printy was held personally liable. The

government thus received precisely the remedy to which it was

entitled under federal law.

Under a previous version of the Federal Insolvency Statute,

personal liability extended beyond representatives of the person or

estate indebted to the government. It included executors,

administrators, assignees or Aany other person[s]@ who paid a debt

owed by the person or estate before paying debts due the United

States. See King v. United States, 379 U.S. 329, 333, 13 L. Ed. 2d

315, 318, 85 S. Ct. 427, 429-30 (1964). The statute, as presently

enacted, is limited by its terms to the representative of the estate or

person, a status that Cherry did not possess. Cherry is merely the

representative=s attorney. Moreover, even under the prior version of

the law, the imposition of personal liability required that the person

involved have control and possession of the debtor=s assets. King v.

United States, 379 U.S. at 337-38, 13 L. Ed. 2d at 320-21, 85 S. Ct. at

431-32 . Cherry occupied no such position. While assets of the estate

were held in his client trust account for a time, with the approval of

-48-

the court, to insure that Printy was not tempted to dispose of them

improperly, Cherry was never given and never attempted to exercise

independent authority with regard to disposition of any of the assets

of Funk=s estate. That authority was vested exclusively in Printy.

In addition, the federal courts have long held that a person can be

held personally liable under the statute only if he or she has notice of

the government=s claim and, despite such notice, makes a distribution

of the estate without making provision for that claim. See Want v.

Commissioner of Internal Revenue, 280 F.2d 777, 783 (2d Cir. 1960).

That situation was not present here. Cherry did not disregard or

ignore a debt of the United States. Assuming, arguendo, that his

acceptance of payment from Printy for his attorney fees could

somehow be deemed to constitute a distribution by him of the estate=s

assets, it is clear that he had no knowledge, actual or constructive,

that the distribution might conflict with any claims asserted by the

government. To the contrary, the record plainly shows that when the

government asserted its claim under the Federal Insolvency Statute, it

expected the costs of administration, including attorney fees, to be

paid first. The government so indicated in writing at the outset of the

probate proceedings in 1983. Cherry=s conduct was fully consistent

with the government=s notice, and the government=s subsequent

actions gave no hint that his understanding of its claim was

erroneous. Attorney fees and other administration expenses were

incurred and paid at regular intervals in the years that followed with

no objection by the government. Cherry received his last attorney fee

from Printy in 1989. It was not until 1994, five years later, that the

government first asserted that costs of administration, including

attorney fees, were subordinate to its claims. Under these

circumstances, Cherry could not be charged with acting in derogation

of the government=s position unless he possessed the ability to foretell

the future. The Federal Insolvency Statute may require many things,

but it does not demand that debtors or their representatives be

clairvoyant.

The government=s claim against Cherry is also incompatible with

fundamental substantive principles governing the Federal Insolvency

Statute. Consistent with the statute=s broad purpose of securing

adequate revenue for the United States Treasury, courts have

interpreted it liberally. United States v. Coppola, 85 F.3d 1015, 1020

(2d Cir. 1996). The law is clear, however, that the Federal Insolvency

-49-

Statute does not create a lien in the government. It merely entitles the

government to priority in the payment of its claim when the

conditions of the statute have been brought about. United States v.

Gotwals, 156 F.2d 692, 694 (10th Cir. 1946).

As discussed earlier in this disposition, the statutory priority of

the United States extends only to the net proceeds of the estate after

the expenses of administration have been paid. Under the statute as it

has been consistently interpreted and applied for more than 200

years, expenses of administration take precedence over claims by the

federal government. In other words, such expenses are paramount and

prior to any claim which the United States may have against the

proceeds of the estate as creditor of the deceased. They must

therefore be deducted from the funds under the control of the

representative of the estate before the claims of the United States are

paid. See, e.g., United States v. Eggleston, 25 F. Cas. 979, 981 (Cir.

Ct. D. Or. 1877).

That does not mean the expenses of administration are beyond

challenge. As in every case, such expenses must reasonable and

appropriate. In this case, however, there is no dispute that the

attorney fees paid to Cherry for his work on behalf of the estate were

earned and reasonable in amount. In the face of the documentation

adduced in the circuit court by Cherry, the government has long since

abandoned any argument to the contrary. Under the Federal

Insolvency Statute, Cherry was therefore entitled to all of the attorney

fees he was paid for his work on behalf of the estate, including the

$38,830.73 challenged by the government in this appeal.

In addition to the general principle that expenses of

administration take precedence over the claims of the federal

government, the Federal Insolvency Statute is also subject to the

equitable principle A >that he who shares in a benefit should contribute

a like share to the expenses incurred in realizing the benefit.= @

Abrams v. United States, 274 F.2d 8, 13 (8th Cir. 1960), quoting In re

Kennedy, 14 Fed. Cas. 309, 309 (W.D. Pa. 1873). In accordance with

this equitable principle, creditors, including the United States

government, must bear the expenses of proceedings taken in their

favor, including payment of an attorney retained by the debtor for

services performed in furtherance of the insolvency remedy. The test

is not by whom the attorney has been employed but for whose benefit

-50-

he has acted. It has therefore been held that where an the attorney=s

work in connection with the proceedings inures to the benefit of the

United States, no construction of the Federal Insolvency Statute is

tenable which would allow the government=s claim to take

precedence over the amounts due the attorney. Abrams v. United

States, 274 F.2d at 13.

The matter before us falls squarely within this rule. After Cherry

completed the preliminary work on behalf of the estate, work for

which his payment is not challenged, his efforts centered on assisting

Printy in keeping the estate open and the farm operating until

Michael attained his majority and the land could be sold. Although it

was Printy who retained Cherry, the arrangement was patently not for

Printy=s benefit. She clearly had no interest in undertaking, much less

extending, her responsibilities as executor and would unquestionably

have been better off had the government simply foreclosed. As

discussed earlier in this opinion, the work was done as an

accommodation to the United States, it significantly enhanced the

ability of the government to recoup monies it was owed, and it freed

the government from any risk or responsibility in maintaining and

ultimately disposing of the farmland. It was Cherry who made this

possible. Having thus reaped the fruits of Cherry=s labors, the United

States cannot fairly argue that its claims take precedence over his

right to be paid for his services.

The refusal of the circuit and appellate courts to order Cherry to

surrender a portion of his fees to the federal government was not only

correct under federal law, it was also correct under the law of the

State of Illinois. Under Illinois law, priority for payment of claims

against a decedent=s estate is determined by the classification scheme

set forth in section 18B10 of the Probate Act of 1975 (755 ILCS

5/18B10 (West 2004)). As discussed earlier in this opinion, funeral

and burial expenses and expenses of administration, including

attorney fees, are included in the first class of claims against the

estate. The surviving spouse=s or child=s award is ranked second.

Debts due the United States come third. With one exception not

relevant here, the representative of the estate is required to pay claims

against the estate in order of their classification under this system.

755 ILCS 5/18B13 (West 2004).

-51-

In accordance with the foregoing provisions, Printy had no

choice but to pay the costs of administration, including Cherry=s

attorney fees, before the debts due the United States under the four

promissory notes executed by her husband prior to his death. That is

precisely what she did. Because her actions conformed to the statute,

the government cannot contend that the attorney fees Printy paid to

Cherry, which it now admits were earned and reasonable, should

have been subordinated to the sums it claims it was still owed. It held

only a third-class claim. Cherry=s attorney fees were a first-class

claim. For the government=s claim to take precedence over Cherry=s

would therefore have required that the hierarchy established by the

Probate Act be reversed. That is a result the courts cannot sanction.

Where a statute is clear and unambiguous, as the relevant provisions

of the Probate Act are, a court must give it effect as written without

reading into it exceptions, limitations, or conditions that the

legislature did not express. Land v. Board of Education of the City of

Chicago, 202 Ill. 2d 414, 426 (2002).

The government sought to avoid its subordinate position under

the Probate Act by arguing that the security interests it obtained when

it issued the loans to Funk barred Printy from using the proceeds

from the sale of the collateral for any purpose other than repayment

of the debt due the United States. Although the appellate court found

the government=s argument persuasive when, in a divided decision, it

reversed the circuit court=s order of February 10, 2000, and remanded

for another round of proceedings (see In re Estate of Funk, No.

4B00B0178 (2000) (unpublished order under Supreme Court Rule

23)), its analysis is untenable given the facts of this case.

The government=s argument is premised on a number of Illinois

cases which have held that where property left by a decedent is

subject to a lien, the property does not become an asset of the estate

until the creditor=s lien is discharged. See Furness v. Union National

Bank of Chicago, 147 Ill. 570, 573-74 (1893); King v. Goodwin, 130

Ill. 102, 109-10 (1889); In re Estate of Philp, 114 Ill. App. 3d 107,

111 (1983); In re Estate of Yealick, 69 Ill. App. 3d 353, 355 (1979).

Wholly aside from the fact that none of those decisions involved a

situation subject to the Federal Insolvency Statute, we note that none

directly addressed the situation presented by this case, namely,

whether a creditor=s security interest in property entitles it to jump

ahead of claims for expenses of administration that would otherwise

-52-

fall within a higher classification under the Probate Act. The

distinction is critical. A valid security interest unquestionably gives a

creditor preference over unsecured creditors within the same or lower

statutory class under the Probate Act. That does not necessarily mean,

however, that the secured creditor is entitled to trump those whose

claims fall within a higher class. To the contrary, it has been held that

the fact that a claim is secured by a lien upon real or personal

property gives the claimant no superior rights in the matter of

classifying claims. 6 Ill. Jur., Probate, Estates & Trusts '29:20

(2001), citing Lillard v. Noble, 159 Ill. 311, 320 (1896).

Such a rule works no genuine hardship on secured creditors in

cases such as this, where the competing superior claims consist of the

expenses of administration. Although expenditures for the expenses

of administration mean that secured creditors stand to receive less

than they might otherwise, the administration of the estate benefits

them by preserving the property until it can be disposed of,

facilitating the property=s sale and ensuring that the proceeds are

properly collected and disbursed. Without proper administration of

the estate, creditors= ability to satisfy their claims would, in fact, be

seriously compromised. If a secured creditor does not wish to avail

itself of those benefits, it retains the option of undertaking foreclosure

proceedings on its own. Nothing in the Probate Act forecloses that

remedy. It was available to the United States in this case. Having

elected to forgo that remedy and permit the estate to manage and

dispose of the subject property, the government cannot now contend

that its third-class claim should have eclipsed the first-class claim for

administration expenses of which Cherry=s attorney fees were an

integral part.

The government=s reliance on cases such as Furness v. Union

National Bank of Chicago, 147 Ill. 570, 573-74 (1893), is misplaced

for another reason as well. As we have just suggested, the

government cites those decisions for the proposition that where

property left by a decedent is subject to a creditor=s lien, the property

does not become an asset of the estate and should therefore not be

used to pay claims against the estate until the lien is discharged.

Assuming the validity of that proposition, it does not aid the

government=s position in this case. The government=s security

interests pertained to four loans. Through Printy=s efforts as executor

of the estate, loans two through four were completely paid off. The

-53-

promissory notes were returned by the government in 1985 marked

Apaid in full.@ The government=s security interest in the subject

collateral was extinguished and its liens were discharged. As a result,

any claim the government might have pertaining to loans two through

four ended. The government therefore has no basis for asserting that

monies paid to Cherry for attorney fees should have been applied to

those loans instead.

To be sure, the remaining loan, which involved the mortgage on

the farm, was not paid in full. Nevertheless, the record clearly shows

that before proceeds from the sale were paid over to Printy, as

executor, and used to pay expenses of administration, including

Cherry=s final charge for attorney fees, the government expressly

released its security interest in the subject property. The release did

not extinguish any part of the debt. The government retained its right

to claim proceeds from the sale and demand payment in full when the

proceeds proved inadequate to satisfy the balance due on the

promissory note. Without the lien, however, the predicate for treating

the proceeds as anything other than assets of the estate was gone.

Accordingly, while the government=s claim remained superior to

claims of all other creditors, it was subordinate to the expenses of

administration, including attorney fees. The government=s contention

that $38,830.73 of the fees paid to Cherry constituted an improper

application of secured proceeds must therefore fail.

In its order of July 23, 1998, and its subsequent order of

February 10, 2000, following remand from the appellate court, the

circuit court carefully considered the record and applied the

applicable law to conclude, correctly, that the costs of administration

claimed by Printy, including the attorney fees paid to Cherry, were

proper and should be approved. Although the court subsequently

changed its position and deemed the fees to be disallowed, that

characterization was wholly unrelated to the validity of the fees

themselves. As we have noted at various points in this opinion, the

government concedes that the fees were earned and were reasonable.

The sole basis for the circuit court=s decision to disallow the fees

was the belief that the government had first claim to the funds used to

pay the fees and that without those funds, the estate lacked sufficient

resources to pay the fees. For the reasons just discussed, that belief

-54-

was erroneous. The claims of the United States did not take priority

over Cherry=s rights to be paid for his services on behalf of the estate.

We feel constrained to point out, moreover, that the circuit

court=s decision presupposes that a claim against the estate cannot be

allowed unless a showing is first made that the estate has the

resources to pay it. The government has not cited and we have not

found any provision of the Probate Act or any case law to support

that view. Whether a claim should be allowed turns on its validity,

not on whether there is money to satisfy it. Whether resources exist to

pay the claim is a separate inquiry to be made by the executor, in the

first instance, subject to challenge by interested persons, based on the

priorities established under the Probate Act. See 755 ILCS 5/18B11,

18B13 (West 2004).

These principles were recognized by the executor and by the

circuit judge who presided over this case in its early stages. That is

why, in the fall of 1984, the court considered and allowed a total of

$102,857.59 in seventh-class claims notwithstanding the fact that the

insolvency of the estate was already apparent and it was why Printy

did not pay those claims even though they had been allowed. That

Printy and the circuit court acted properly with respect to those

claims has never been questioned. Why the circuit court took a

different view with respect to Cherry=s attorney fees is unknown. In

any case, those fees were properly allowed by the circuit court in the

first instance and should not have been subsequently disallowed.

By the time the circuit court changed its position and declared

Cherry=s fees to be disallowed, Cherry had withdrawn from the case

based on his election as State=s Attorney of Scott County and Printy

was left without legal representation or the resources to retain any. As

a result, no objection to the court=s determination was filed. Based on

the absence of a timely objection, the government asserts that the

circuit court=s determination that fees were disallowed is no longer

subject to challenge. We note, however, that what is before us on

review is the appellate court=s judgment affirming that aspect of the

circuit court=s judgment which refused to order Cherry to surrender

any of his attorney fees. As set forth at the outset of our analysis in

this case, we are not bound the reasons given by the lower courts for

their judgments and may affirm on any grounds which are called for

by the record. See Rodriguez v. Sheriff=s Merit Comm=n, slip op. at

-55-

11; Material Service Corp. v. Department of Revenue, 98 Ill. 2d 382,

387 (1983).

The same $38,830.73 in attorney fees which the government

sought to recover from Cherry is a component of the $90,092.66

judgment the government ultimately succeeded in obtaining against

Printy based on expenditures she made in her capacity as executor of

Funk=s estate. In view of our conclusion that the expenses of

administration were properly given priority over the debts of the

United States under the facts of this case, allowing the judgment

against Printy to stand would therefore place that judgment in an

irreconcilable conflict with the judgment in favor of Cherry. If Printy

acted properly in paying the fees to Cherry, as we have held she did,

she cannot be held personally liable to the United States for making

that payment.

Because Printy did not challenge the portion of the judgment

imposing liability on her, we would normally deem her rights on

appeal to be waived. The rule of waiver, however, is an admonition to

the parties, not a limitation on the jurisdiction of this court. See

People v. Normand, 215 Ill. 2d 539, 544 (2005). We may look

beyond considerations of waiver in order to maintain a sound and

uniform body of precedent or where the interests of justice so require.

Carpetland U.S.A., Inc. v. Illinois Department of Employment

Security, 201 Ill. 2d 351, 397 (2002). This is such a case.

In addition to the need to avoid an inconsistent and legally infirm

result, other factors militate in favor of scrutinizing that aspect of the

judgment involving Printy. The earlier rulings of the circuit court

approving her accounting, closing the estate and discharging her as

executor were entered following evidentiary hearings based on

pleadings submitted in accordance with the Probate Act, and tested

by the adversarial process. By contrast, the judgment ultimately

levied against her was premised on an accounting that was submitted

by an entity not authorized by the Probate Act to act for the estate,

not verified as the Probate Act requires, and prepared by an attorney

who had no personal knowledge of any of the salient events and who

had not entered the case until years after the estate=s assets were

finally disposed and the disputed claims had been paid. Moreover, by

the time the new accounting was presented, Printy had lost her legal

representation and lacked the means for securing replacement

-56-

counsel, leaving the account to be considered free of meaningful

challenge. In proceeding to consider the judgment against Printy, we

are also mindful of the power conferred on this court by article VI,

section 16 of the Illinois Consitution of 1970 (Ill. Const. 1970, art.

VI, '16). Article VI, section 16, invests our court with general

administrative and supervisory authority over Illinois= judicial

system. Our court=s supervisory authority is unlimited in extent and

hampered by no specific rules or means for its exercise. It is bounded

only by the exigencies which call for its exercise. Pursuant to our

supervisory authority, we have jurisdiction to evaluate judgments of

the lower courts even where the litigants themselves may have raised

no challenge. McDunn v. Williams, 156 Ill. 2d 288, 301-04 (1993).

When one views the judgment against Printy on the merits, it is

clear that it must be rejected in its entirety. As we have indicated, the

judgment, which amounted to $90.092.66, is based on various

payments made by Printy in her capacity as executor and opposed by

the government, including payments to Cherry for legal services he

performed on behalf of the estate. As with Cherry=s attorney fees, the

government does not dispute the reasonableness of those payments.

Its contention is simply that it had a superior claim to the money used

to make the payments and that Printy should have paid it first.

The particular sums at issue are detailed earlier in this opinion.

The majority consist of expenses attendant to administering the

estate, including the challenged attorney fees paid to Cherry, the fees

Printy received for her services as executor, taxes, bank fees, and

costs pertaining to sale of the real estate. As with Cherry=s attorney

fees, all of these expenses were a necessary and unavoidable

consequence of keeping the estate open and continuing operation of

the farm, an arrangement which benefitted only the government, not

Printy. Had the government wished to avoid such expenses, it could

have foreclosed on the property and taken over the farm operations

itself. It was unwilling to do so. For the same reasons set forth in

connection with Cherry=s attorney fees, these expenses of

administration had priority over the government=s claims under both

federal and state law.

The remaining sums consisted of a portion of Printy=s surviving

spouse award and a portion of the surviving child=s award made to

Michael, Printy and Funk=s then minor child. No legitimate claim can

-57-

be made that those payments, which were made in 1983 and 1984,

were in derogation any of the federal governments security interests.

As previously discussed, loans two through four were paid off in full,

and the security interests attendant to those loans were extinguished

and released. Moreover, Printy could not be accused of using

Asecured proceeds@ from the farm to pay those amounts because the

farm had not yet been sold, and when it was sold, the government

released its liens before any proceeds reached Printy.

Awards to surviving spouses and minor children take priority

over debts of the United States under the Federal Insolvency Statute.

Where, as here, no security interests are involved, there can be no

question that they are also entitled to a higher classification than

debts due the United States under section 18B10 of the Probate Act of

1975 (755 ILCS 5/18B10 (West 2004)). In addition, the particular

awards at issue here were reported by Printy in prior accounts which

were presented to the court, with notice to the United States, and

approved without objection following a hearing. Absent fraud,

accident or mistake the approval of an account makes it binding on

all persons who had notice. See In re Estate of Winston, 99 Ill. App.

3d 278, 286 (1981). No fraud, accident or mistake was claimed in this

case. The approval of those sums was therefore binding on the

government, which should not have been permitted to challenge the

approval for the first time more than a decade after the fact. See 755

ILCS 5/24B2 (West 2004); In re Estate of Aschauer, 188 Ill. App. 3d

63, 68 (1989).

For the foregoing reasons, the circuit court=s judgment against

Printy and in favor of the United States for $90,092.66 is reversed.

That portion of the appellate court=s judgment which affirmed the

judgment against Printy is likewise reversed. The judgments of the

circuit and appellate courts are affirmed to the extent that they

rejected the claim of the United States that Cherry should be

compelled to surrender $38,830.73 of the attorney fees he was paid

for his legal services in assisting Printy to administer the estate. The

estate is hereby closed. Printy is discharged as executor.

Appellate court affirmed in part

and reversed in part;

circuit court affirmed in part

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and reversed in part.

JUSTICE GARMAN took no part in the consideration or

decision of this case.

JUSTICE FREEMAN, concurring in part and dissenting in part:

I agree with my colleagues in the majority that the circuit court

did not err in denying the United State=s request to hold the attorney

personally liable for the $38,830.73. The court today holds that such

a ruling was correct because the United States did not have first claim

to the funds used to pay the fees. Slip op. at 51. I concur in that

holding.

In my view, the holding I describe above is the only one that can

be made in this case because the sole issue before this court is limited

to whether it was error to deny the United States= request to hold the

attorney personally liable. Since the entry of the judgment in the

circuit court, no party but the United States has questioned the

propriety of the circuit court=s final order. 12 Thus, while I agree with

my colleagues that today=s rationale is in Airreconcilable conflict@

with the remainder of the circuit court=s order as it pertains to other

aspects of this estate (slip op. at 52), I believe that they act well

beyond the scope of this appeal when they insist upon reaching

portions of the judgment which are not before us, in particular the

judgment entered against the executrix. As the court acknowledges,

the executrix did not appear in the proceedings leading up to the entry

of the judgment or challenge the judgment on appeal. The court

justifies its actions by pointing out that it can look beyond

considerations of waiver in order to maintain a sound and uniform

body of precedent or whether the interests of justice so desire. Slip

op. at 53. The court also says that it must act in this manner because

of several improprieties that occurred during the probate proceedings

below, as if to suggest that such irregularities render the heretofore

unchallenged aspects of the circuit court=s judgment subject to

plenary review in this court. Slip op. at 53. Finally, the court invokes

its supervisory authority, a power described as being Abounded only

1

It is unclear from the court=s opinion under which supreme court rule

this appeal was taken.

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by the exigencies which call for its exercise@ (slip op. at 53) as further

justification for its action. The court therefore appears to employ

three different rationales as support for its decision to address the

unchallenged aspects of the circuit court=s order, none of which I find

particularly persuasive after carefully considering the record in this

case.

I believe a remand would better solve the problem caused by the

Airreconcilable conflict@ between our holding and the circuit court=s

final order. Today=s opinion would serve to provide the circuit court

and the parties with the correct legal analysis that is to be used when

considering the final account of this estate. Moreover, the procedural

irregularities evinced by the record and pointed out by the court sua

sponte in its opinion lead me to believe that it is unwise for this court

to attempt to take matters into its own hands, however laudable its

intentions are for a final resolution of this lengthy and protracted

litigation. While the situation in this case is highly unusual, I do not

believe it warrants the extraordinary use of our supervisory authority

to reach those aspects of the court=s order which deal with the

executrix. Slip op. at 53. The more prudent and judicious course of

action is to remand the matter to the circuit court with specific

instructions to reconsider its entire final account of the estate and

judgment in light of this opinion, particularly in light of the conflicts

between accounts. I therefore would order the circuit court to (i)

reopen the estate, (ii) appoint the public administrator to protect the

interests of the estate and the widow/executrix, (iii) order the public

administrator to review the final account prepared in this case in light

of today=s opinion, and (iv) enter a final order, consistent with today=s

opinion and closing the estate, upon receipt of the public

administrator=s review within 90 days of the issuance of this court=s

mandate.

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