May 11, 2015 – In the Matter of the Estate of Edward K. McElveny, Deceased, Michael Phillips, as Personal Representative of the Estate of Edward K. McElveny v. State of New Mexico, ex rel. Department of Taxation & Revenue, No. 33,568

IN THE COURT OF APPEALS OF THE STATE OF NEW MEXICO
Opinion Number: _______________
Filing Date: May 11, 2015
NO. 33,568
IN THE MATTER OF THE
ESTATE OF EDWARD K.
McELVENY, Deceased,
MICHAEL PHILLIPS, as
Personal Representative of the
Estate of Edward K. McElveny,
Petitioner-Appellee,
v.
STATE OF NEW MEXICO, ex rel.
DEPARTMENT OF TAXATION
AND REVENUE,
Respondent-Appellant.
APPEAL FROM THE DISTRICT COURT OF SANTA FE COUNTY
Raymond Z. Ortiz, District Judge
Law Office of Cristy J. Carbón-Gaul
Cristy J. Carbón-Gaul
Albuquerque, NM

Starace Law
Carmela D. Starace
Albuquerque, NM
for Appellee
Hector H. Balderas, Attorney General
Peter A. Breen, Special Assistant Attorney General
Santa Fe, NM
for Appellant

OPINION
VIGIL, Chief Judge.
{1} 	This case presents a question of first impression: whether the district court in
a formal proceeding under the Uniform Probate Code (UPC), NMSA 1978, §§ 45-1-
101 to -404 (1975, as amended through 2011) has jurisdiction to order the Department
of Taxation and Revenue (Department) to deliver estate assets to a personal
representative when the assets are in the Department’s custody pursuant to the
Uniform Unclaimed Property Act (UPA), NMSA 1978, §§ 7-8A-1 to -31 (1975, as
amended through 2006). We conclude that the district court has jurisdiction to do so,
and affirm the order of the district court.
BACKGROUND
{2} 	Edward McElveny (Decedent) died intestate in 1991, and his heirs consist of
seven adult grandchildren and one adult great-grandchild. In 2013, Michael Phillips,
one of the adult grandsons, filed an application in the Santa Fe probate court to open
an informal probate for his grandfather and to be appointed personal representative of
Decedent’s estate (Estate). The remaining heirs renounced their right to be appointed
personal representative and nominated Michael Phillips to be appointed personal
representative of the Estate. The application states that Decedent “has property which
was transferred to the . . . Department as unclaimed property” and that “[a]s part of the

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probate administration, Applicant will claim the unclaimed property for Decedent’s
Estate.” It is undisputed that the Department is holding property in the name of
Decedent valued at “a little less than $70,000” pursuant to the UPA. The probate court
issued an order appointing Mr. Phillips personal representative (PR) of the Estate and
ordered the Department to “release the unclaimed property of the Decedent to
Applicant as [PR] of the Estate of Decedent.”
{3} 	The PR attached a copy of the probate court order to a blank claim form used
by the Department under the UPA and submitted it to the unclaimed property office
of the Department, demanding that the money be released to the PR to be administered
under the UPC and distributed to the heirs. The Department rejected the claim as
“incomplete” on the grounds that “[w]e do not have appropriate documentation
showing that the property in question would devolve to Mr. Phillips alone under the
applicable law of heirship” and that “the application should be made directly to [the]
Department as unclaimed property custodian rather than probate.” 	The Estate
responded by pointing out that the demand was not made on behalf of Mr. Phillips
personally, but in his capacity as PR of the Estate so the money could be distributed
to the heirs. In addition, the Estate disputed that the exclusive method for acquiring
estate assets in the custody of the Department under the UPA is through the
Department’s own administrative process rather than the UPC. The Estate therefore

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contended that the application was “complete” and demanded that the funds be
delivered to the PR no later than ninety days after the claim was initially submitted to
the Department, or the Estate would return to court and seek enforcement of the
probate court order in addition to sanctions.
{4} 	The Department failed to respond to the Estate’s demand, and the probate court
thereupon transferred the probate case to the district court “for determination of all
disputed issues” subject to being remanded back to the probate court for completion
after resolution of the disputed issues. See N.M. Const. art. VI, § 23 (stating that the
probate court “shall not have jurisdiction in civil causes in which the matter in
controversy shall exceed in value three thousand dollars ($3,000.00) exclusive of
interest and cost[.]”). The Estate then filed a motion in the district court to enforce the
probate court order and for sanctions, with notice to the Department. The Department
responded by moving to dismiss on the ground that the district court had no
jurisdiction to grant the relief requested. First, the Department asserted that the UPA
is the “exclusive mode” for disbursing unclaimed property and that a court order
issued under the UPC is ineffective. Second, the Department asserted the district court
lacked jurisdiction because the Estate failed to exhaust its administrative remedies
under the UPA before it obtained the order from the probate court. Finally, the

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Department asserted that because it was not served with process, the probate court
failed to obtain jurisdiction over the Department.
{5} 	Following a hearing at which the Department appeared, the district court denied
the Department’s motion to dismiss, enforced the order of the probate court, and
ordered the Department to deliver the personal property of Decedent to the PR of the
Estate. The Department appeals.
DISCUSSION
{6} 	As a prelude to our analysis, we provide a brief overview of the UPA and how
it generally operates. Property is “presumed abandoned” if it is “unclaimed” by its
apparent owner for a specified period of time. Section 7-8A-2. A “holder” of property
that is “presumed abandoned” is required to send written notice to the apparent owner
stating that the holder is in possession of property that is subject to the UPA, make a
report to the Department that it is in possession of such property and, ultimately,
deliver custody of the property to the Department. Sections 7-8A-4; 7-8A-7; 7-8A-8.
Upon payment or delivery of property to the Department, “the state assumes custody
and responsibility for the safekeeping of the property.” Section 7-8A-10(b). The
Department is then required to publish a notice stating in part that “property of the
owner is presumed to be abandoned and has been taken into the protective custody of
the [Department.]” Section 7-8A-9(a)(3). The notice must also state that “information

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about the property and its return to the owner is available to a person having a legal
or beneficial interest in the property, upon request to the [Department].” Section 7-8A-
9(a)(4). The property does not escheat to the State. The Department is required to
deposit all money and proceeds from the sale of abandoned property, minus expenses,
into the tax administration suspense fund and retain it in an unclaimed property fund
containing at least one hundred thousand dollars ($100,000) from which the
Department “shall pay claims duly allowed.” Section 7-8A-13.
{7} 	Against this general background, the Department contends that the order of the
district court must be reversed, arguing: (1) the district court had no jurisdiction, apart
from the UPA, to order the Department to release the unclaimed property to the
Estate; (2) the district court order is void because the Department was not served with
process; and (3) for additional reasons, which we address summarily.
Standard of Review
{8} 	Arguments made by the Department require us to engage in statutory
interpretation, which requires de novo review. Oldham v. Oldham, 2011-NMSC-007,
¶ 10, 149 N.M. 215, 247 P.3d 736. In addition, whether a district court has subject
matter jurisdiction likewise presents a question of law, with de novo review. State v.
Chavarria, 2009-NMSC-020, ¶ 11, 146 N.M. 251, 208 P.3d 896. Finally, questions
relating to sufficiency of service of process are also reviewed de novo. See Edmonds

6
v. Martinez, 2009-NMCA-072, ¶ 8, 146 N.M. 753, 215 P.3d 62. We now turn to the
arguments made by the Department.
Subject Matter Jurisdiction
{9} 	We first address whether the district court had jurisdiction, independent of the
UPA, to order the Department to deliver the property of Decedent to the PR of the
Estate. When the probate case was opened and the PR was appointed for the Estate,
the PR was automatically granted certain powers and obligations. The PR acquired
“the same power over the title to property of the estate that an absolute owner would
have” which could be exercised “without notice, hearing or order of the court.”
NMSA 1978, Section 45-3-711 (1975). In addition, the UPC directs that “every
personal representative has a right to, and shall take possession or control of, the
decedent’s property” and the PR “may maintain an action to recover possession of
property[.]” NMSA 1978, Section 45-3-709 (1975). Thus, the PR acted in accordance
with his statutory obligation in seeking an order from the probate court directing the
Department to deliver Decedent’s property to the Estate. After the Department refused
to honor the order, the case was transferred to the district court for enforcement of the
probate court order. When the hearing was held in the district court with notice to the
Department, it was a “formal proceeding” under the UPC. Section 45-1-201(A)(19)
(defining “formal proceedings” under the UPC as “proceedings conducted before a

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district judge with notice to interested persons”). Section 45-1-302(B) then expressly
provides:
The district court in formal proceedings shall have jurisdiction to
determine title to and value of real or personal property as between the
estate and any interested person, including strangers to the estate
claiming adversely thereto. The district court has full power to make
orders, judgments and decrees and to take all other action necessary and
proper to administer justice in matters that come before it.
On its face, Section 45-1-302(B) expressly and unambiguously grants jurisdiction to
the district court to do exactly what it did here.
{10} 	The UPC notwithstanding, the Department asserts that the district court lacked
subject matter jurisdiction because the UPA contains an express declaration that the
Estate must utilize its procedure to acquire Decedent’s property. The sole authority
cited to us is Subsection (a) of Section 7-8A-15. This statute provides:
A person, excluding another state, claiming property paid or delivered
to the [Department] may file a claim on a form prescribed by the
[Department] and verified by the claimant.
The Department argues that because an estate is included in the definition of a
“person” in the UPA under Section 7-8A-1(12), the Legislature expressed its intent
that an estate must follow the Department’s procedures to the exclusion of the UPC
in collecting estate assets in its custody under the UPA. At oral argument the

1 The Department also repeatedly asserted at oral argument that its procedures
for determining whether a person is entitled to property in its custody under the UPA
are superior to a district court’s. We do not comment further on this assertion, as it is
not supported by reference to any facts or legal authorities.
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Department added that it contends the word “may” in the statute really means “shall.”1
We are not persuaded.
{11} 	Our task in construing a statute is to give effect to the intent of the Legislature.
Oldham, 2011-NMSC- 007, ¶ 10. To ascertain the Legislature’s intent, we look first
to the plain language of the statute, unless the Legislature indicates that a contrary
meaning was intended. Id. “[W]hen a statute contains language which is clear and
unambiguous, we must give effect to that language and refrain from further statutory
interpretation.” Bank of N.Y. v. Romero, 2014-NMSC-007, ¶ 40, 320 P.3d 1 (internal
quotation marks and citation omitted). Here, there is nothing to indicate that the
Legislature intended the word “may” to mean anything other than what it plainly
means. Plainly, the word “may” is permissive and not mandatory. See Webster’s Third
New Int’l Dictionary 1396 (unabridged ed. 2002). Moreover, the Legislature has
specifically stated in the Uniform Statute and Rule Construction Act, NMSA 1978,
§§ 12-2A-1 to - 20 (1997), that when “may” is used in a statute, it “confers a power,
authority, privilege or right” but when “shall” or “must” are used in a statute, they

2 Section 7-8A-15(b) states: “Within ninety days after a claim is filed, the
[Department] shall allow or deny the claim and give written notice of the decision to
the claimant. If the claim is denied, the [Department] shall inform the claimant of the
reasons for the denial and specify what additional evidence is required before the
claim will be allowed. The claimant may then file a new claim with the [Department]
or maintain an action under Section [7-8A-16].” (Emphasis added.)
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“express a duty, obligation, requirement or condition precedent.” Sections 12-2A-
4(A) and (B).
{12} 	Because the words “may” and “shall” have such different meanings, “a
fundamental rule of statutory construction states that in interpreting statutes, the words
‘shall’ and ‘may’ should not be used interchangeably but should be given their
ordinary meaning.” Thriftway Mktg. Corp. v. State, 1992-NMCA-092, ¶ 9, 114 N.M.
578, 844 P.2d 828. Thus, “[w]here the terms ‘shall’ and ‘may’ have been juxtaposed
in the same statute, ordinarily it must be concluded that the [L]egislature was aware
of and intended different meanings.” Id. In this regard, we note that in Section 7-8A-
15(b), which immediately follows Subsection (a) on which the Department relies, the
Legislature used these words in just this fashion. 2 We therefore conclude that the
Legislature intentionally used “may” and “shall” in Sections 7-8A-15(a) and (b) to
respectively convey permissive and mandatory meanings. See Vaughn v. United
Nuclear Corp., 1982-NMCA-088, ¶ 23, 98 N.M. 481, 650 P.3d (stating that a

10
statutory amendment “substituting ‘may’ for ‘shall’ manifests a clear intent to make
the act referred to permissive instead of mandatory”).
{13} 	Here, Section 7-8A-15(a) unambiguously states that a claim “may” be filed with
the Department; it does not state that a claim “must” be filed with the Department.
Moreover, we conclude that the UPA and the UPC can operate together and that no
intent was expressed by the Legislature that the UPA supersede the UPC in the
circumstances of this case. Thus, in the exercise of its duty to act “for the best interests
of [the] successors to the estate” under Section 45-3-703(A), the PR had discretion to
either file a claim with the Department under Section 7-8A-15(a) or invoke the
jurisdiction of the district court under Section 45-1-302(B). We therefore reject the
Department’s argument and hold that the district court had jurisdiction to act as it did.
See In re Estate of Harrington, 2000-NMCA-058, ¶ 17, 129 N.M. 266, 5 P.3d 1070
(concluding, on the basis of the language in Section 45-1-302, that “the Legislature
intended to confer upon district courts general civil jurisdiction in formal probate
proceedings”).
Service of Process
{14} 	The Department contends that the order of the probate court directing it to
deliver Decedent’s property to the Estate and the order of the district court enforcing

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the order was ineffectual and void because the Department was never served with
process as required by Rule 1-004 NMRA. For the following reasons, we disagree.
{15} 	Probate proceedings are in rem special statutory proeedings. See In re Estate
of Harrington, 2000-NMCA-058, ¶ 14 (stating that probate proceedings are special
statutory proceedings); In re Estates of Salas, 1987-NMCA-018, ¶ 11, 105 N.M. 472,
734 P.2d 250 (“The procedure for probating wills and testaments in New Mexico is
strictly statutory and is an action in rem.”), abrogated on other grounds by In re
Estate of Harrington, 2000-NMCA-058; In re Hickok’s Will, 1956-NMSC-035, ¶ 30,
61 N.M. 204, 297 P.2d 866 (“A probate proceeding is a special, statutory
proceeding.”). Here, the PR opened an informal probate for his deceased grandfather
pursuant to the UPC, and the probate court properly issued an order directing the PR
to collect the Estate’s assets so they could be administered through probate. Property
of Decedent was in the custody of the Department and, in keeping with the UPC, the
Department was properly ordered to deliver the property to the PR. In this respect, the
Department stands in the same shoes as any other custodian of property belonging to
an estate, such as a bank. The Estate did not sue the Department, nor did it attempt to
obtain personal jurisdiction over the Department for the purpose of stating a claim
against the Department. Thus, the district court was not required to obtain personal
jurisdiction over the Department by service of process. All that was required was that

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it have in rem jurisdiction over Decedent’s estate property—and there is no argument
that it did not. Nowhere does the UPC require service of process upon a custodian of
a decedent’s property in such circumstances.
{16} 	Under the UPC, “each proceeding before the district court or probate court is
independent of any other proceeding involving the same estate” unless it is a
supervised administration. Section 45-3-107. When a hearing is held, “the petitioner
shall cause notice of the time and place of hearing of any petition to be given to any
person having an interest in the subject of the hearing.” Section 45-1-401(A). As
custodian of Decedent’s property, the Department had an interest in the subject of the
hearing, and it was entitled to notice of the hearing and an opportunity to be heard.
That is precisely what was done here. At oral argument, the Department conceded it
had notice of the proceedings and that it had a full and fair opportunity to be heard in
the district court. If the Department had any concerns about whether the Estate was
the rightful owner of the property, it had a full and fair opportunity to present those
concerns to the court. The public policy of New Mexico, as expressed in the UPA, is
to locate and restore property to its owner rather than to claim it by escheat. See In re
Estate of Tischler, 97 Cal. Rptr. 510, 516 (Ct. App. 1971) (stating that by adopting the
UPA, California’s public policy is to restore property to the owner rather than claim
it by escheat). By ordering the property to be delivered to the Estate, the district court

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acted in conformance with our public policy. And the district court properly ordered
the property to be delivered to the Estate to be administered in accordance with the
UPC so title could pass to Decedent’s heirs. See Clovis Nat’l Bank v. Callaway, 1961-
NMSC-129, ¶ 17, 69 N.M. 119, 364 P.2d 748 (stating that before title to personal
property of a decedent passes, there must be a determination of heirship and an order
of distribution in a probate case).
Remaining Arguments
{17} 	The Department asserts that the district court had no jurisdiction because the
Estate did not exhaust its administrative remedies. The short answer to this argument
is that the Estate was not required to proceed under the UPA, and exhaustion of
administrative remedies is not a prerequisite for enforcing a probate court order in the
district court.
{18} 	Finally, the Department argues that the Estate’s claim to the property is
insufficient to overcome the statutory presumption that the property is abandoned. We
disagree. The Estate made a claim to the property pursuant to the UPC, and despite
having been given the opportunity to contest the Estate’s ownership of the property,
the Department chose not to. Moreover, in its brief, the Department concedes that it
“has roughly $70,000 of unclaimed property in its custody . . . which colorably

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belonged to [Decedent].” There is no factual dispute that the property belongs to the
Estate, and we therefore reject the Department’s argument.
CONCLUSION
{19} 	The order of the district court is affirmed.
{20} 	IT IS SO ORDERED.
_______________________________
MICHAEL E. VIGIL, Chief Judge
WE CONCUR:
_________________________________
CYNTHIA A. FRY, Judge
_________________________________
RODERICK T. KENNEDY, Judge