Lead Opinion
In 1915, when the appellant was about fourteen years of age, he became entitled to a sum of money which was paid over to his father as his guardian. In March, 1920, the father died and the *Page 125 respondent was appointed administrator of his estate, and on March 31, 1920, published notice to creditors. The time for filing claims would thus expire on September 30, 1920. In March, 1923, the respondent filed his final account, which contained no mention of the guardianship. The appellant then being a few days over twenty-one years of age, filed a petition for an accounting in the guardianship, which being had, showed that the sum of $2,000 was due the appellant from his guardian. On the hearing on the accounting it was discovered for the first time by the appellant that his guardian had misappropriated the fund. On October 6, 1923, he filed a claim in the probate estate for the amount found due him on the accounting. This claim being refused, the present suit was brought, to which a demurrer was interposed and sustained on the ground that the action had not been commenced within the time limited by law.
Laws of 1917, ch. 156, p. 672, § 107 (§ 1477, Rem. Comp. Stat.) [P.C. § 9828], provides that "If a claim be not filed within the time aforesaid [six months after the date of the first publication of notice to creditors] it shall be barred." This statute has been strictly construed and held that it applies to claims of every kind and nature, both those established and those contingent, and under both intervention and non-intervention wills, and that a compliance with the statute is necessary in order for there to be a recovery, and that such compliance cannot be waived by an administrator or executor. Barto v. Stewart,
In First Security Loan Co. v. Englehart, supra, the court laid down the rule firmly that the failure of creditors to file their claims within the statutory time barred the claims, and distinguished the earlier cases from this court and those from other jurisdictions on the ground that there was a difference in the statutes covering the decisions. Sections 1548 and 1549, Rem. Comp. Stat. [P.C. §§ 9810, 9811], refer to unmatured, contingent and disputed claims, which in Barto v. Stewart, supra, and again in Andrews v. Kelleher, supra, were held to be subject to the operation of § 1477, supra. It is to be noted that the appellant here is not seeking to recover property in specie nor to trace the misappropriated funds into specific property. In other words, he is not following a trust fund, but is seeking to recover a claim which he has against his guardian by reason of the fact that the fund has been mingled with the guardian's own property, which places him in the position of a general creditor, and, under such circumstances, the general rule is stated in Ross on Probate Law and Procedure, Vol. 1, page 532, to be that, where one seeks to recover from an executor or administrator property held in trust by a decedent at the time of his death, he is not required to present his claim as a creditor, for the reason that he is not seeking payment of his demand from the assets of the estate, but if the trust property or fund has been mingled by the trustee with his own property so that it can no longer be identified, the beneficiary must present his claim against the estate as other claims. In Woerner's American Law of Administration, Vol. 2, § 402, it is said: *Page 127
"As between a cestui que trust and his trustee the Statute of Limitations does not usually apply; and where a trustee dies, the trust fund if traceable in specie, constitutes no part of his estate, and is recoverable from the administrator by the successor in the trust, or person entitled to the fund, without any of the formalities prescribed for the establishment of a claim against the deceased, and hence the statute of non-claim does not apply to such an action, . . . But when such trust fund is confused with the trustee's own property, so that its identity is lost, the cestui que trust, or new trustee, as the case may be, stands in the position of a general creditor, to whom the statute of non-claim applies with equal rigor as against other creditors."
In 24 C.J. 291, we find the following:
"Upon a trustee's death his indebtedness to the trust becomes a demand against his estate to be authenticated, allowed, classed, and paid out of the assets as other demands, and where decedent made improper investments, commingled trust funds with his own so that they cannot be identified, or wasted or embezzled the trust funds in his hands, the claims of the beneficiaries, whether for a partial or total satisfaction become those of ordinary creditors against decedent's estate."
In 18 Cyc. 467, the rule is stated as follows:
"The statutory requirement of presentation does not apply to the claims of a cestui que trust for whom the decedent was trustee so long as the trust fund or property can be traced and the trust enforced by suitable proceedings; but where the fund or property cannot be traced and the cestui que trust seeks redress as a general creditor of the estate of the deceased fiduciary he must present his claim. . . . The limitation of time within which claims must be presented for allowance in the probate court is inseparable from the peculiar procedure prescribed in each jurisdiction; it is a part of that procedure and so not like a general statute of limitations, . . . But where the statute *Page 128 of non-claim makes no exception as to any person or claims of persons, the courts can make none; and hence in the absence of some provision to the contrary, the statutes of non-claim run against non-resident as well as resident, and infant as well as adult claimants, and also against insane persons, and the estate of a deceased creditor."
Our statute of non-claim seems to be in all essentials the same as those existing in Arkansas and California. We find the supreme court of the United States, in Morgan v. Hamlet,
"But we are unable to appreciate the force of this supposed distinction. The statute in question contains no exception in favor of claimants under disability, of nonage or otherwise; the claim of the complainants against John G. Morgan was adverse to his administrator, although it may have been originated in consequence of a relation of trust and there is no ground, that we are able to understand on which it can be excepted out of the operation of the statute in question. . . . the statute is a bar to every such claim, unless presented within the time prescribed."
The supreme court of California, in Lathrop v. Bampton,
"Before a cestui que trust can claim specific real or personal property he must show that it is identical *Page 129 property originally covered by the trust or that it is the fruit or product thereof in a new form. . . . So long as it can be identified, either as the original property of the cestui quetrust, or as the product of it, equity will follow it; . . . But the right of pursuing it fails when the means of ascertainment fail. This is always the case when the subject-matter is turned into money, and mixed and confounded in a general mass of property of the same description. . . . When thus forced to rely upon the personal liability of the trustee, a cestui que trust occupies a position towards the estate of the trustee which is no better, but is identical with that of a simple contract creditor.. . . Our conclusion is that the plaintiffs, upon the facts as disclosed by the record, had only a claim against the estate of Griffith, upon which they could have recovered had the same been presented to the defendant as required by the act concerning the settlement of the estate of deceased persons, but that they are not entitled to the relief which they obtained in the court below."
This was followed by similar decisions in California: McGrathv. Carroll,
"The beneficiaries who cannot trace their property are relegated to the position of general creditors of the estate. They must present their claims as such, showing a personal liability, and unless they do this, cannot maintain an action based upon personal liability."
See, also, Title Insurance Trust Co. v. Ingersoll,
The appellant contends, however, that this is an action purely in fraud and that subd. 4, § 159, Rem. Comp. Stat. [P.C. § 8166], entirely covers the situation. The cases of Wickham v. Sprague,
Many courts have said that the non-claim statute is one to be more strictly enforced than general statutes of limitation, its object being to obtain early and final settlement of estates so that those entitled may receive the property free from incumbrances and charges which might lead to long litigation. That this was the purpose of the legislature of this state in passing the statute is especially apparent. An examination of the provision discloses that each step taken has been in the direction of making the compliance with the statute more and more mandatory, and the foreclosing of the assertion of claims after the statutory period more and *Page 132 more absolute. In keeping with the legislative spirit, this court has made no exceptions to the statute, and to now do so on the theory of equitable estoppel would be to drive an entering wedge which will tend to confusion and delay. If fraud will prevent the bar of the statute being raised, there is no reason why infancy, non-residence, insanity and other disabilities may not have the same effect, and estates can never be closed and definitely distributed, for, years after the distribution, one who has been guilty of no laches may appear with a claim based on fraud, etc., and establish his rights. Hardship is bound to result in some instances whichever rule is followed, but in the long run it would seem that a strict compliance with the statute with no estoppel against its use as a bar is the more safe and sensible rule. It is the rule which this court has applied to somewhat analogous provisions relating to the filing of claims against municipalities.
In the final analysis, we must hold that § 1477 is a statute applying to the settlement of estates and supersedes all other statutes of limitation, and applies to every kind and character of claim against an executor and administrator, and the trial court was therefore correct in sustaining the demurrer.
The judgment is affirmed.
TOLMAN, C.J., BRIDGES, FULLERTON, PARKER, MAIN, MITCHELL, and ASKREN, JJ., concur.
Dissenting Opinion
While there are strong reasons, as expressed in the majority opinion, for holding that the statute of non-claim sets up an absolute bar to the interposition of any claim after the expiration of the six-months' period prescribed therein, nevertheless equity has always assumed jurisdiction to relieve from the baneful effects of positive statutes in cases of undoubted fraud whereby such a statute is *Page 133 used as a shield for fraud. It is always understood that equity relieves from the consequences of "that wherein the law by reason of its universality is deficient," and also relieves from that harshness produced by any condition whereby one is undoubtedly guilty of fraudulent conduct and another is undoubtedly innocent and under some disability. To my mind there could be no stronger case produced than that shown by the record in this case. When appellant's guardian died, appellant was not only ignorant of the fraud of his guardian — who was also his father — but was a minor. His minority lasted long after the expiration of the period of six months prescribed by the statute of non-claim. As soon as he was twenty-one years of age he moved with great promptness for an accounting from the estate of his deceased guardian, which was about three years after the death of his guardian, and it was only then that it was discovered that his guardian had been unfaithful to his trust and had defrauded appellant of his property. Surely such a state of affairs is ground for the interposition of equity even as against so positive and absolute a statute as our statute of non-claim.
I like the reasoning of the supreme court of New Hampshire inSugar River Bank v. Fairbank,
"To permit a debtor thus to take advantage of his own wrong, would be so repugnant to every principle of natural justice, that it may well be presumed that *Page 134 it was not contemplated by the law-makers in framing this statute. To allow it would be converting the statute into an instrument of fraud and injustice, and it would require strong language to justify such a construction. The terms of the statute, limiting suits against executors and administrators, are no more explicit or absolute than those of the general statutes of limitations; . . . Nor do we perceive any such difference, in the character of the two subjects, as to afford reason to regard the limitation of suits against executors and administrators to be absolute, and not subject to the established principles of equity, which precludes a party from taking advantage of his own wrong. Both are statutes of repose; and if the purpose had been to make the prohibition of suits against executors and administrators absolute, even in cases of fraud, it would be natural to expect a distinct expression of that purpose, . . ."
See, also, Newberry v. Wilkinson, 199 Fed. 673 (C.C.A., 9th Circuit); Baart v. Martin,
If the courts are powerless to enforce the ordinary principles of equity in a case of the most egregious concealed fraud, it is high time that the legislature act to provide a way whereby such fraud may not be perpetuated.
I therefore dissent. *Page 135