224 Wis. 332 | Wis. | 1937
The following opinion was filed February 9, 1937:
The appellant appeals, (1) from the allowance of his claim at less than the amount he claims; (2) from the allowance of items of the final account of the executrix to which he filed objections; and (3) from the denial of a motion for an order of the court directing the executrix to pay his claim. The three branches of the case will be treated separately.
(1) The appellant filed a claim against the estate o f P. C. Onstad for the amount of a promissory note with interest and attorney fees for collection according to its terms. The note was for $800. The payee was the Bank of Wisconsin. Appellant was an accommodation maker of the note for On-stad. The note was dated July 30, 1929, was due in ninety days, bore interest at seven per cent until maturity, and after maturity until paid at the highest rate permissible by law, and obligated the maker to pay an attorney fee of ten per cent incurred in collection.
Onstad died August 24, 1929. The bank demanded payment from appellant. The appellant paid to the bank $814. There was no indorsement or written assignment of the note by the bank to the appellant, and the county court found that the appellant did not purchase the note, but merely paid it. The appellant claims to be the owner of the note by reason of his payment and to be entitled by subrogation, under the law of suretyship, to all the rights of the bank, and therefore to be entitled to recover the full amount of the note according
The appellant, though a maker of the note, was an accommodation maker and was a surety for Onstad. As surety he is entitled by subrogation-to whatever security the bank had for the enforcement of its claim against Onstad. Arrant, Suretyship, p. 364; Stearns, Suretyship, p. 449; Clifford v. West Hartford Creamery Co. 103 Vt. 229, 153 Atl. 205; 79 University of Pennsylvania Law Review, 976; Fox v. Kroeger, 119 Tex. 511, 35 S. W. (2d) 679. The Negotiable Instruments Law, sec. 116.01, Stats., which declares a person absolutely liable to pay the instrument “primarily” liable, does not change the law of suretyship. 10 Texas Law Review, 519; Windhorst v. Bergendahl, 21 S. D. 218, 111 N. W. 544; O’Neal v. Stuart (C. C. A.), 281 Fed. 715; Wakonda State Bank v. Fairfield, 53 S. D. 268, 220 N. W. 515; Clifford v. West Hartford Creamery Co., supra; State Bank of La Crosse v. Michel, 152 Wis. 88, 139 N. W. 748, 139 N. W. 1131; Mueller v. Jagerson Fuel Co. 203 Wis. 453, 233 N. W. 633.
The above rule as stated does not afford the appellant any rights by subrogation, as the bank had no security to enforce against Onstad. The appellant claims that the rule gives him the right to recover the full amount of the note, because the bank might have so recovered had it filed the note against the estate. The rule does not reach so far. This is made clear by consideration of the decisions of this court relied on by appellant. These cases are German American Savings Bank v. Fritz, 68 Wis. 390, 397, 32 N. W. 123, and Mason v. Pierron, 63 Wis. 239, 23 N. W. 119. In the former, Blank-enburg and Fritz signed a note as surety for Servatius. The payee of the note in a suit upon it recovered judgment against all three. The judgment was a lien on land of Fritz. Servatius was insolvent. Blankenburg was compelled to pay
(2) (a) The final judgment approving the account of the executrix showed a balance on hand for distribution of $434.47. This was only sufficient to pay creditors seven per cent of their claims. The account as approved contained the following items of credit to the allowance of which and others the appellant objected: Loss by depreciation through operation of business of decedent by executrix, $7,953.29; loss by depreciation of fixtures, $811.50; loss on sale of stock of goods below inventory, $2,148.93; loss on accounts, $1,314.86.
The claim of the appellant that the credits objected to should have been disallowed entirely or in great part rests upon the fact that the decedent at his death was operating a general store in the village of Cambridge, and the executrix continued to operate the business from his death in August, 1929, to April, 1932.
The executrix did not obtain any order of court authorizing her as executrix to conduct the business, and did not obtain any order of court extending the time for closing the estate beyond sixty days after the expiration of the time for adjusting claims as required by sec. 313.13, Stats. 1929, as a condition of which extension it must satisfactorily appear to the court that some specified or other “good and sufficient cause for delay” existed. If a cause for delay did exist, the court might extend the time for settlement of an estate one year, but no longer extension might be authorized except upon petition and notice by publication. Sec. 313.14, Stats. 1929. No such petition was filed and no notice published. The trial court found that under these statutes, in absence of
The executrix claims authority for continuation of the business of the decedent under the will of decedent which contained the following clauses : “First: I will and direct that all my just debts and funeral expenses be paid as soon as may be after my decease.” Second: A clause giving his estate to his wife during her life or widowhood and thereafter to the testator’s children. “Third: It is my desire that my wife, Jennie, use her discretion as to continuing to conduct . . . for the benefit of my estate” the general merchandise business conducted by the decedent. Fifth: A clause naming his wife as the executrix of his estate.
The executrix, who was “the wife Jennie” named in the will, also claims authority to continue the business under an order of the county court appointing her as “special adminis-tratrix.” She was appointed special administratrix September 5, 1929. On October 23, 1929, an order was entered authorizing her to continue the business as special adminis-tratrix and to pay as an expense thereof to herself $75 per month, to her son $100 per month, and to a woman clerk $60 per month. The letters as executrix issued provided that the inventory filed as special administratrix be accepted as the inventory as executrix, but directed the filing of an inventory of the stock of goods received by her as executrix from herself as special administratrix. No inventory of the goods so received was ever filed.
(b) No cases involving contests where an executor carries on the business of his testator appear to have been before this
The rule of Willis v. Sharp, supra, that creditors of a testator are not bound by the provisions of his will for continuance of his business, follows from the statutory provisions that a decedent’s estate less exemptions, preferred claims,
Many cases are cited in a note in 40 L. R. A. (N. S.) 212, to the point that an executor who proceeds under the terms of the will, will be protected if he acts prudently. However, if losses are sustained through his fault, negligence, or imprudence, he is liable for the losses. Burgess v. Green, 7 Bush (Ky.), 263; Luers v. Brunjes, 5 Redf. (N. Y.) 32; Re Rumsey’s Will, 63 Hun, 635, 18 N. Y. Supp. 402, 45 N. Y. State Reporter, 458.
(c) The county court found in effect that the executrix acted with ordinary prudence in continuing to conduct the business of the estate. To us it seems that this conclusion of fact is contrary to the admitted facts of the case, notwithstanding that she may be held free from imputation of wilful violation of her duties. She knew that the business was being conducted at a loss and that there was a decided decrease in business after the testator’s death before she was appointed executrix. Prior to the testator’s death, the business was only paying expenses. She failed to inform the court oí these facts. She assumed she had the right to continue the business under the terms of the will, regardless of the rights of creditors. Notwithstanding that the creditors of the testator were entitled to have the assets of the estate devoted to payment of their claims, she kept no account of the proceeds of the goods constituting a part of those assets. She did not know at the time of the trial whether any of the original stock of goods was on hand when she quit conducting the business. Her personal interests manifestly conflicted with her duties as executrix, in that she kept drawing from the business $75 each month until she drew a total of $2,324 as
(d) Even upon the trial court’s written decision it should not have approved the account of the executrix as filed. The court found that the executrix was negligent in failing to settle the estate within a year, in absence of an order of court for extension for cause shown. This alone, in the view of the trial court, subjected her to liability for all losses that occurred as a result of the delay. The trial court cites Shupe v. Jenks, 195 Wis. 334, 218 N. W. 375, Coolidge v. Rueth, 209 Wis. 458, 245 N. W. 186, and Will of Robinson, 218 Wis. 596, 261 N. W. 725, to this point and these decisions support his view. The court then finds that it does not appear that any loss occurred by reason of the delay. With this we cannot agree. A year and four months expired after the time the court found the estate should regularly have been settled before the executrix stopped conducting the business. The business was continually losing. The loss would manifestly have been less had the estate been promptly settled. The loss of $7,953.35 in conducting the business, or the depreciation of $8,927.95 appearing from the two inventories of October 23, 1929, and April 11, 1932, in the two items of merchandise and fixtures, manifestly did not all occur before December, 1930, when the court found the estate should have been settled.
(e) The county court in exonerating the executrix from the results of her delay in settling the estate seems to have relied on an addition by amendment to sec. 317.04, Stats., enacted in June, 1933, by ch. 335, Laws of 1933, relating to waste by an executor through “delay to raise money by collecting the debts or selling the real or personal estate of the deceased . . . and the value of the estate shall thereby be lessened” and charging the executor with resulting damages
(f) It thus appears that the judgment on the accounting must be reversed unless the appellant is estopped from objecting to the conduct of business by the executrix by giving consent thereto. It is doubtless true that, when one interested in an estate, whether as heir, legatee, or creditor, expressly consents to the continuing of business by an executor, he will not be heard to object to the continuance because of losses incurred through prudent management. Note in 40 L. R. A. (N. S.) 234, and cases cited; 2 Woerner, p. 1051. “But the onus lies upon the accountant [executrix] in such case to show such consent upon a full understanding of all the circumstances.” 2 Woerner, p. 1051. The appellant did not expressly consent to the continuance of the business or to the failure of the executrix to close the estate within a year. He did know of these facts, and consent may be implied from conduct. French v. Davis, 38 Miss. 167; Billingslea v. Young, 33 Miss. 95; Levi’s Estate, 224 Pa. 233, 73 Atl. 334; Myrick’s Succession, 38 La. Ann. 611; Garrett v. Noble, 6 Sim. 504, 3 L. J. Ch. N. S. 159; 40 L. R. A. (N. S.) 235. But an executor relying on consent must show that the consent was procured (or given) upon full and fair representation and information communicated by him as to all the facts and circumstances connected with the risk. Ward v. Tinkham, 65 Mich. 695, 32 N. W. 901. It is without dispute that the appellant inquired of the attorney for the executrix many times when his claim would -be paid, and was
It follows that the portion of the judgment approving the final account of the executrix must be reversed, and that, but for (3) and (4) below, a proper accounting would be necessary, if it were possible to procure a proper accounting on retrial.
(3) It appears from the recitals of the judgment appealed from that the appellant moved the court that the “executrix be ordered to pay his said claim in full.” The judgment also recites that this motion was denied. There is an appeal from the portion of the order denying this motion.
We are of opinion that this motion upon the whole record should have been granted. It appears from statements of the executrix and her counsel made upon the trial, that all creditors except the appellant had, prior to the hearing, accepted seven per cent of their claims and released the estate from liability. No creditor but appellant would have any interest in the funds that would be found due the estate on a proper accounting. It appears clear that the loss sustained by reason
(4) For the reasons next above stated, irrespective of the statements of the executrix and her counsel upon the trial and of the appellant’s motion for direction to pay his judgment, the reversal of the judgment as to the accounting requires that the record should be remanded, with directions to pay the judgment on his claim, for no one but appellant, Nelson, has appealed from the approval of the account. A party interested who does not appeal from a judgment is not entitled to any relief. Van Matre v. Swank, 147 Wis. 93, 131 N. W. 982, 132 N. W. 904; Lezala v. Jazek, 170 Wis. 532, 175 N. W. 87, 176 N. W. 238; Wanta v. Perszyk, 207 Wis. 282, 240 N. W. 183, 241 N. W. 377.
By the Court. — The judgment of the county court as to the amount of appellant’s claim is affirmed; the portion of the judgment approving the account of the executrix is reversed, and the record is remanded with directions to enter an order requiring the executrix to pay the judgment upon appellant’s claim.
A motion for a rehearing was denied, with $25 costs, on April 7, 1937.