104 F.2d 567 | 7th Cir. | 1939
This is an appeal from an order entered by the District Cqurt in an interpleader suit brought by the plaintiff insurance company to determine the ownership of four policies of insurance, only two of which are involved in this appeal.
The plaintiff insurance company had issued the four policies on the life of John B. Mailers, Jr., payable to his wife, Jennie-Eaton Mailers. The policies were of the-ordinary life plan, with a special absolute-ownership right in the beneficiary. Jennie-Eaton Mailers predeceased her husband and. her estate succeeded to her interest under the policies. Mollie Eaton duly qualified as-executrix under the will of Jennie Eaton. Mailers.
The inventory of the estate showed assets of $1,900.95 in cash, other personal property of the value of $2,018.50, and other assets of questionable value. The estate included four policies of insurance in addition to the four above referred to. The annual premiums payable for each policy amounted, to $1,250, less dividends per policy. Because of the small amount of assets and lack of current estate income the executrix, Mollie-Eaton, found it impossible to pay the premiums as they became due. She was forced to cancel four policies not involved in this suit, and take their cash surrender value.
On September 21, 1933, premiums became due on two policies and the insurer applied accrued dividends in the amount of $481.50 to payment of the premiums, thus-keeping the policies in force until January 10, 1934. On January 8, 1934, Mollie Eaton, executrix, assigned the two policies to John B. Mailers, Jr. The cash surrender value-of the policies as of that date was less than ten ($10) dollars and they would have expired within two days. The assignments-were made in writing which recited as consideration thereof $1 paid and other good and sufficient consideration. Mailers promised to pay to the estate the amount of the dividends ($481.50) which had been applied to the payment of premiums to keep the-policies in force until January 10, 1934.
The assignee, John B. Mailers, Jr., continued to keep the policies in force by payment of premiums and the policies were in-force on the day of his death on July 10, 1934. Charles E. Mailers qualified as executor under the will of John B. Mailers, Jr.,, and he has continued to act as executor from that time. Mollie Eaton, as executrix of the estate of Jennie Eaton Mailers, and Charles E. Mailers, as executor of the estate of John B. Mailers, Jr., filed claims-for the proceeds due under the four pol-
The contention of defendants-appellants may be summed up as follows:
1. The assignments of the policies to John B. Mailers, Jr., are void because (a) they were made without prior authorization or subsequent confirmation by an order of the probate court, and (b) because they were made without consideration.
2. The assignments are voidable for the following reasons:
(a) A personal representative cannot sell personal property belonging to an estate on credit;
(b) It is beyond the power of a personal representative to bind the estate by contract, and
(c) A personal representative cannot give away property belonging to an estate.
The first proposition involves provisions of the Illinois statutes regulating the sale of personal property in course of administration of estates.
It is the contention of defendants that the foregoing requires an order of court as a condition precedent to the sale of personal property by private sale. This precise question has. not been decided by the Supreme or Appellate courts of Illinois, but it is unquestioned that under the common law of Illinois a sale without approval of the court “to a bona fide purchaser for a valuable consideration” is valid. The sale can be avoided, if the purchaser knew, or “had good reason to suspect that the sale is made with a design to misapply the funds to the prejudice of those interested in the estate.”
In the case of Christy v. Christy,
In Zimmerman v. Dawson
In view of the facts the decision cannot be said to constitute a holding that an executed sale is void where there is no order of the court forbidding it.
Statutes providing for court supervision of sales of personal property in the course of administration of estates have been construed by courts of some states to require approval as a condition precedent to sales, and in other states to be merely directory and for the protection of the administrator and not to affect his power to pass good title. The latter effect has been attributed to such statutes in Iowa, Massachusetts, Nebraska, New York, North Carolina, South Carolina, Vermont and Wisconsin.
The language of the Illinois statute is of the more general type which has been held to be directory. And although the Supreme Court of Illinois has not construed the language in question, the Appellate Court of Illinois in its opinion in Christy v. Christy, supra, stated that it saw no reason “why he [administrator] had not the power to pass such title at private sale, if made in good faith, although without an order of court.” That the foregoing statement embodies the rule in Illinois under the statute is strongly indicated by the declarations and holdings of the Supreme Court of Illinois on the question of statutory repeal of common law rules by implication.
By legislative enactment the common law of England “shall be considered as of full force until repealed by legislative authority.”
Applying the foregoing severe test to the statutory language in question we conclude that the language does not repeal the Illinois common law rule. Our conclusion is reinforced by the statement of the Appellate Court of Illinois in the Christy case.
The trial court found that the assignments were free from fraud and the facts clearly support such finding. At that time the two policies were imposing a premium burden of $2,500 a year on the estate, the total assets of which were valued at less than $4,000. Also the estate was attempting to carry eight policies requiring approximately $10,000 a year in premiums. The two policies in question would have lapsed within 48 hours, and had a cash value of something less than $10. From the standpoint of the executor it was evident that it would be necessary to allow some or all of the policies to lapse, and four of the eight policies were cancelled at a later date. It had been necessary in the preceding September to apply available dividends to keep the two policies in force until January 10, 1934. In addition to her own judgment the executrix had the benefit of legal counsel, and the terms of the transfer to John B. Mailers, Jr., were in accordance with the views of her legal adviser. No question is raised respecting the finding of facts and the facts as found disclose no basis for a conclusion that any other course was available to the executrix to salvage anything from the two policies.
It is also urged that no consideration was given for the assignments and that the assignments were in effect a giving away of assets of the estate. The no-consideration contention rests ultimately upon the assumption that John B. Mailers, Jr., assumed no obligation whatever for the reason that his promise was illusory. It is urged that his promise reduces itself finally to a promise to pay $481.50 if he chooses to keep the policy in force for one year from date of September 21, 1933. The finding of the court respecting consideration is not susceptible of such a loose interpretation. The full finding is as follows: “10. That the consideration for the assignment. of said policies Nos. 3905106 and 3907784 by Mollie Eaton as Executrix aforesaid to John B. Mailers, Jr. was a promise by the assured to pay to Mollie Eaton, as said Executrix, the amount of the dividends which had been applied on said policies to extend as far as possible the life of the said policies from September 21, 1933, to January 10, 1934, said dividends amounting to Two Plundred P'orty and 75/100 Dollars ($240.-75) on each of said assigned policies, or a total of Four Hundred Eighty-one and 50/100 ($481.50), provided that said John B. Mailers, Jr. should keep said assigned policies in force for a period of one year from date of September 21, 1933.”
The finding is more readily understood to be that the assignment is conditioned upon the assignee’s keeping the policy in force for a period of one year. But if it be interpreted to mean that John B. Mailers, Jr., will not be required to pay the $481.50 unless he keeps the assigned policies in force for a period of one year, it is a .condition subsequent and the fact is that he did keep the assigned policies in force for the required period and his promise became absolute and binding upon his estate. It cannot be contended that keeping the assigned policies in force for a period of one year was a condition precedent to Mailers’ giving his promise to pay the $481.50. At most it was a condition precedent to the performance of his promise by actual payment of the amount promised.
The remaining question is whether a sale to a co-beneficiary is valid. In this connection it should be noted that under the will of Jennie Eaton Mailers the deceased left all of her property except certain articles here not material, to her three sisters, Mollie Eaton, the executrix, Sadie D. Eaton, and Eva E. Coombs. John B. Mailers, Jr., the deceased’s husband, received nothing by the terms of the will, but under the law of Illinois was entitled, and did elect, to take his dower interest in the estate, which amounted to one-third of the personalty. As respects some aspects of the situation John B. Mailers, Jr., and the executrix clearly were dealing at arms length. But for purposes of our discussion we shall assume that the sale in the instant case was one by a trustee to a beneficiary. It is the general rule that anyone, including a co-beneficiary, may buy.
In the case of Fredrick v. Fredrick,
The utmost of good faith must be shown throughout all transactions in which the trustee is dealing with a cestui.
It is contrary to the facts to say that any loss was sustained by the beneficiaries of the trust as a result of the assignments.
The judgment of the District Court is affirmed.
An appeal was taken to this Court from the interlocutory decree and the decree was affirmed. Mailers v. Equitable Life Assurance Society of the United States, 7 Cir., 87 F.2d 233, certiorari denied 301 U.S. 685, 57 S.Ct. 786, 81 L.Ed. 1343.
Illinois Revised Statutes, 1937 Ed. Ch. 3, §§ 92, 93, 94.
McConnell v. Hodson et al., 2 Gilman 640; Dwight v. Newell, 15 Ill. 333; Makepeace v. Moore, 10 Ill. 474, 5 Gil-man 474; Walker v. Craig, 18 Ill. 116.
225 Ill. 547, 80 N.E. 242, 243.
24 C.J. 209.
208 Ind. 122, 193 N.E. 226.
Illinois Revised Statutes Ch. 28, Sec. 1 (1937).
Smith v. Laatsch, 114 Ill. 271, 279, 2 N.E. 59, 63.
353 Ill. 451, 460, 187 N.E. 525, 529.
24 C.J. 217.
Restatement of Trusts, Sec. 190 (1).
219 Ill. 568, 76 N.E. 856.
Palliser v. Mills, 339 Ill. 568, 171 N.E. 618.
3 Bogert, Trusts and Trustees, § 493.