Binder v. Fruth

In Binder v. Fruth, 150 Ariz. 21, 721 P.2d 679 (App. 1986), secured creditors submitted to the personal representative an unsecured claim for the amount due on a note; the note represented a loan to the decedent and had been secured by a deed of trust on a time share condominium. Id. at 22, 721 P.2d at 680. The personal representative conveyed the property securing the note and disallowed the claim. Id. The creditors returned the deed to the property and went forward with their claim against the estate. Id. The court found that the secured creditors had the right to choose their remedy. Id. at 24, 721 P.2d at 682. The Court noted that under the common law rule, secured creditors have the power to choose a remedy after a debtor dies, unless limited by statute. Id. The Court found that A.R.S. 14-3809 and 14-3814 did not limit that rule. Id. The Court also found that, although 14-3814 gives the personal representative discretion to deal with secured assets, that power "cannot . . . be in derogation of the secured creditor's right to either surrender the security and submit a claim for the indebtedness or exhaust the security and submit a claim for the deficiency." Id.