Ellis v. Polhemus

27 Cal. 350 | Cal. | 1865

Lead Opinion

By the Court, Sakdersos, C. J.

On the first day of April, 1862, Horace P. Janes gave to Moses Ellis his promissory note for twenty-five thousand dollars, payable one year from date, with interest at the rate of one and one quarter per cent per month, payable monthly; and to secure its payment gave a mortgage on certain real estate in the City of San Francisco. Janes died before the note matured. It was duly presented to the administrator of the estate of Janes, was allowed by him, and approved by the Probate Judge, and thereupon filed in the Probate Court, on the 12th. of August, 1863, as a valid claim against the estate.

The administrator paid the interest on the claim, at the rate of one and one quarter per cent per month, to December 28,

1863. Subsequent to the last payment of interest, the administrator sold the mortgaged premises, and the proceeds of the sale were more than sufficient to pay the debt and interest at the rate specified in the note. Whereupon Moses Ellis filed his petition in the Probate Court, and sought to compel the administrator to account for his proceedings in the matter of the sale, and to pay to the, petitioner twenty-five thousand dollars, with interest at the rate of one and one quarter per cent per month from the 28th day of December, 1863.

The foregoing facts were admitted by the administrator; but it further appeared that the estate of the deceased was insolvent; and that the fact of such insolvency was not discovered by the administrator until the 6th day of January, 1864. The Court ordered the administrator to pay the peti*354tioner twenty-five thousand dollars, with interest at the rate of ten per cent per annum only, from the date of the letters of administration, to wit: November 9, 1862, less all sums of money which had been paid as interest since that day. The petitioner appealed, and now claims that the Court below erred in holding that he was entitled to ten per cent per annum only instead of one and one quarter per cent per month according to the terms of the note.

The one hundred and thirty-first section of the Probate Act provides, among other things, that “In case the estate is insolvent, no claim contracted after the passage of this Act shall bear greater interest than ten per cent per annum from and after the time of issuing letters.” The foregoing became a part of the law of the land on the 20th of May, 1861—nearly a year before the note and mortgage in question were made.

But it is insisted that this note is not a claim within the meaning of the foregoing provision, and is not subject to it, because it is secured by mortgage, and therefore does not run against the body of the estate in the first instance; and in support of this view the case of Fallon v. Butler, 21 Cal. 24, is cited. Whether that case states the law as correctly as Ellissen v. Halleck, and Faulkner v. Folsom's Executors, 6 Cal. 386 and 412, which it overrules, admits of serious doubt. The meaning of the word “claim” is broad enough to embrace a mortgage or any other lien, and in the one hundred and eighty-sixth section of the Act, mortgages and other liens are expressly mentioned as valid claims against the estate. This section received no special notice, though it was cited in the brief of counsel, at the hands of the Court in Fallon v. Butler, yet it seems to have a very significant bearing upon the question there discussed and determined. But be that as it may, it is clear that Fallon v. Butler does not decide that a note when secured by a mortgage is not a claim against the estate. On the contrary, it goes no further than the naked lien of the mortgage, which, for the purposes of the question then before the Court, was regarded as something “distinct” from the note,- and I am not disposed to extend the doctrine of that case *355beyond its exact limits. The word “ claim” is not only broad enough to include a mortgage, but if there was any doubt upon that point it would seem to be removed by the language of the one hundred and thirty-third section, which provides that “ if the claim be founded on a bond, bill, note or other instrument, the original shall be presented,” etc. This language was added to the section in 1861. When the case of Fallon v. Fatter was tried in the Court below does not appear from the report, and it is possible that it was tried before section one hundred and thirty-three was so amended.

The note in question was presented for allowance to the administrator and the Probate Judge, and thereupon filed in the Probate Court. It was a valid claim against the estate, and having been allowed and filed, took rank, in the language of section one hundred and thirty-three, “ among the acknowledged debts of the estate, to be paid in due course of administration,” under the direction of the Probate Court. The estate being insolvent, this claim, as well as all others, became subject to the provisions of section one hundred and thirty-one, and the petitioner only enlitled to interest at the rate of ten per cent per annum, from and after the date of the letters of administration, and there was no error on the part of the Court in so holding.






Concurrence Opinion

Per Rhodes, J., concurring specially.

I concur in the judgment affirming the order of the Probate Court; and I agree with the Chief Justice in the opinion that a promissory note, executed by the deceased in his lifetime, whether it is secured by a mortgage or not, is a claim against the estate; but, in my opinion, the mortgage, which is but a security for the payment of the note—a mere incident to the debt—is not, in any just sense, a claim against the estate to be presented for payment.

The mortgage debt is required to be presented for payment, and when paid either by the administrator or on proceedings to foreclose the mortgage, it operates as a satisfaction—not *356payment—of the mortgage. The mortgage or an abstract thereof may be required to be filed in the Probate Court with the debt, for the purpose of enabling the Court to make the proper order for the payment of the claims, and give the requisite preference to liens upon any of the assets of the estate. The statute as amended in 1861 (Probate Act, Sec. 133) seems to recognize the distinction between a claim and its security, for it says: “ If the claim or any part thereof be secured by a mortgage or other lien, such mortgage or other evidence of lien shall be attached to the claim and filed therewith, unless the same be recorded,” etc.

The provisions of this section may at first view seem to conflict with section one hundred and eighty-six, where provision is made for the appropriation of the proceeds of the sale of “ land subject to any mortgage or other lien, which is a valid - claim against the estate of the deceased,” but the apparent conflict vanishes when it is remembered that a mortgage is not, in fact, a debt against the estate. The meaning and evident intent of the Legislature was to provide for the appropriation of the purchase money arising from the sale of “lands subject to any mortgage or other lien [given to secure the payment of a debt] which is a valid claim against the estate of the deceased,” etc. It is further provided in the section that the money arising from the sale of the land, after the payment of the expenses, shall be first applied to the payment of the mortgage or lien, meaning, of course, the debt, the claim secured by the mortgage or other lien.

The judgment affirming the order of the Probate Court, directing that the note should bear interest at the rate of ten per cent per annum from the date of the letters of administration, does not conflict with the opinion of the Court in Fallon v. Butler, 21 Cal. 24, which holds that a mortgage is not a claim in the sense in which that term is employed in the Probate Act. The note was filed as a claim against the estate, and payment was sought from the administrator out of the general assets of the estate, and as the note was made after the passage of the amendments of 1861, and the estate was *357insolvent, the note must be subject to the same rule, in respect to the interest to be paid, as other notes filed as claims, which are to be paid by the administrator in due course of administration. Although such is the law in respect to the note and the interest to be paid, in case the estate is insolvent, I see no inconsistency in holding at the same time that the mortgage is not a claim against the estate, and that an action may be brought in the District Court for the enforcement of the mortgage lien by a foreclosure and a sale of the premises for the payment of the debt and interest, but what rate of interest, I do not undertake to determine.






Concurrence Opinion

Per Shafter J., Sawyer J., concurring.

There is, in my judgment, no ambiguity affecting the word “ claim” as used in the one hundred and thirty-first section of the Probate Act. However it may be in other sections, still in that section it is not limited to claims against the estate at large, as distinguished from claims secured by mortgage upon a part or upon the whole of it. The substance of the provision is that all claims having their origin in contract shall draw only ten per cent per annum, after letters of administration have been issued, if the estate of the decedent shall have been insolvent. The appellant in this case had two distinct claims—the note and the mortgage—and as each of them had its origin in contract, both of them are within the scope of the word “ claim” as limited in the section; and whether considered severally, or in their relations to each other, they are directly within the ten per cent provision of the section; and as no other question than that has been raised by counsel for our consideration I concur in the aErmance of the order, on the ground stated in this opinion.