Campbell v. Faxon, No. 14,606

No. 14,606 | Kan. | May 12, 1906

The opinion of the court was delivered by

Johnston, C. J.:

The material facts in the case are not in dispute, but there is a contention as to the relation of J. A. Campbell to the drug business and his liability for the contracts made while he was conducting it. These depend mainly upon the interpretation and obligation of the McCormick-Ela contract, under which Campbell continued the business. At an early stage of. the litigation there appears to have been some claim that the contract created a partnership relation, but all parties now agree that McCormick and Ela were not partners, and Campbell therefore does not stand in such relation and cannot be held liable as a partner. He does contend that he was warranted in continuing the business, and that he did so without personal liability because Ela’s contract did not terminate with McCormick’s death.

It will be observed that it was a personal contract, which ended with the life of McCormick. It was expressly stipulated that McCormick should be the sole owner of both goods and fixtures, and, while Ela was given the management of the store, he was not to have any ownership or interest in it. Instead of receiving a fixed salary his compensation was to be regulated by the extent of the business done; that is, he was to receive as compensation all above a fixed amount of the earnings which was to be paid monthly to McCormick. Aside from this there was the specific provision that the contract could be terminated at any time by McCormick, and if McCormick was not bound to continue the relation with Ela it is certain that no obligation rested upon Campbell to do so. It is clear, therefore, that the contract was dissolved by the death of McCormick, and that it had no binding effect on Campbell. (Marvel v. Phillips, 162 Mass. 399, 38 N.E. 1117" court="Mass." date_filed="1894-11-28" href="https://app.midpage.ai/document/marvel-v-phillips-6425076?utm_source=webapp" opinion_id="6425076">38 N. E. 1117, 26 L. R. A. 416, 44 Am. St. Rep. 370; Smith v. Preston, 170 Ill. 179" court="Ill." date_filed="1897-11-08" href="https://app.midpage.ai/document/smith-v-estate-of-preston-6967656?utm_source=webapp" opinion_id="6967656">170 Ill. 179, 48 N. E. 688; Schultz & Co. v. Johnson’s Ad’r, 5 B. Mon. [Ky.] 497; Dickinson v. Calahan’s Administrators, 19 Pa. St. 227; Bland’s Administrator v. Umstead, 23 Pa. St. 316; 2 Woerner, Am. Law of Adm., 2d ed., § 328.)

When Campbell renewed the contract with Ela for a continuance of the business he made himself individually liable for such obligations as his agent should contract. Upon his appointment as administrator the legal title of the stock of goods vested in him, and it became his duty to sell it and administer the proceeds as the statute provides. He had no authority to continue and carry on the drug business for the estate, and contracts made by him in the conduct of the business bind him personally, and not the estate. A representative expressly authorized by a will to carry on the business of the testator for a time may do so under the direction of the probate court. One so authorized is not bound to incur the hazard, but if he does the contracts made will be his own, and he will be individually bound by them. In volume 2 of the second edition of Woerner on the American Law of Administration, section 328, it is said:

“The executor carrying on the business under the will is personally liable to the persons with whom he deals as such, but they have a fight to indemnify themselves for the payment of debts thereby incurred, and an equitable right arises to the trade creditors to resort to the estate, if their remedy against the executor is unavailable.”

Here there was no will, and the administrator’s only duty with respect to the business was to wind it up. In volume 18 of the Cyclopedia of Law and Procedure, at page 241, it is said:

“The general rule is that neither an executor nor an administrator is justified in placing or leaving assets in trade, for this is a hazardous use to permit of trust moneys; and trading lies outside the scope of administrative functions. So great a breach of trust is it for the representative to engage in business with the funds of the estate that the law charges him with all the losses thereby incurred without on the other hand allowing him to receive the benefit of any profits that he may make, the rule being that the persons beneficially interested in the estate may either hold the representative liable for the amount so used, with interest, or at their election take all the profits which the representative has made by such unauthorized use of the funds of the estate.”

(See, also, Willis et al. v. Sharp, 113 N. Y. 586, 21 N. E. 705, 4 L. R. A. 493; Lucht, Adm’r, v. Behrens, 28 Ohio St. 231, 22 Am. Rep. 378; 1 Williams, Executors, 7th Am. ed., 791; Schouler’s Ex. & Adm., 2d ed., § 325; 11 A. & E. Encycl. of L. 974.)

Ela was not employed by Campbell to wind up the business of the estate, but to carry it on in the same manner and upon the same plan in which it had been conducted during McCormick’s lifetime. It was not carried on in pursuance of an order of the court or cither authority, and hence Campbell took the risk of any loss that might occur, and made himself individually liable for the purchases of goods and other contracts made by his agent.

We find no error in the record, and therefore the. judgment is affirmed.

All the Justices concurring.