In re Rodgers' Estate, No. 5,234

No. 5,234 | Mont. | Jun 25, 1923

MR. JUSTICE STARK

delivered the opinion of the court.

For a number of years prior to September 18, 1917, Patrick Rodgers was a resident of Prairie county, and at least a portion of the time was employed by one E'. W. Thomas, who was extensively engaged in the cattle 'business in Eastern Montana. Rodgers appears to have been thrifty, for he had accumulated some sixty head of cattle, which were run with the 'Thomas herds.

On the date above mentioned, Rodgers entered the military service of the United States by voluntary enlistment, and on the same day made a will in which he left all of his property to his aged father and mother, who lived in Ireland, and named Thomas as his executor. Thereafter he went overseas with the American Expeditionary Forces, and on June 22, 1918, died in France as the result of wounds received in action. Upon his enlistment he left his cattle in the keeping of Thomas, who agreed to look after them. Thomas ran the cattle with his own during the winter of 1917-18, and in the early summer of the latter year, pursuant to a letter which he received from Rodgers, purchased them and allowed the sum of $65 per head therefor.

It is fairly inferable from the record that Rodgers had directed Thomas to place the selling price of the cattle on deposit to his credit in the Miles City National Bank of Miles City. However, Thomas did not do this, but kept the cattle as his own, and retained the selling price without segregating it from his own funds, and used it in connection with bis business.

On December 4, 1918, Thomas filed a petition for the probate of the Rodgers will, and such proceedings were had thereunder that on July 17, 1919, the will was admitted to probate and Thomas appointed the executor thereof. Thomas immediately qualified by taking the necessary oath and filing a bond as required by the order of the court, and on or about July 17, 1919, paid all the debts of the deceased, together with the expenses of administration. Shortly thereafter, by autiiority of the court, he sent to the legatees named in the will the sum of $190; the total expenditures thus-,made amounting to $1,138.20. On July 25, 1919, notice to creditors was duly published to present their claims to the executor within four months from that date.

In the petition for probate of the will the property of the estate is described and valued as follows: “Sale price of about 60 head of cattle sold to E. W. Thomas at $65 per head, $3,900; one saddle-horse, $50; one sheep wagon, $50; total, $1,000.” On July 17, 1919, appraisers of the estate were appointed, but- they did not act, and no inventory and appraisement of the estate were made until new appraisers were appointed by the court on October 8, 1921. These appraisers made their report on the same day of their appointment, showing the property of the estate to consist of “moneys belonging to said deceased which have come into the hands of the executor, $1,138.20; money due the estate from E. W. Thomas, $1,911.80,” and containing the further recital that the last-mentioned sum “has never been paid into the funds of the said estate and is a balance due on the purchase price of certain cattle owned by the said deceased which were purchased by the said E. W. Thomas from deceased during his lifetime.” On the same day that the inventory and appraisement were returned into court, Thomas rendered and filed his first account, reciting, among other things, that he had received the sum of $1,138.20, all of which had been paid out; also “that at the time of the death of the said deceased, E. W. Thomas was indebted to him in the sum of $3,380, and that there now remains due and owing a balance of $1,911.80, which the said E. W. Thomas has not paid to the said estate.”

On November 1, 1921, an order was made allowing and settling the above account, but subsequently, in February, 1922, on the petition of William and Bridget Rodgers, father and mother of the deceased and the legatees named in the will, the account was reopened and the executor ordered to “file a new, full, complete and final accounting of the said estate from the time of his appointment as executor and of the condition thereof and of all his actions and doings as such executor.” Pursuant to this order, on May 1, 1922, Thomas filed a supplemental account showing that the estate was ready to be closed and that the property belonging to the same consisted of the balance of the account which he owed, and also the saddle-horse and sheep wagon above mentioned. In this account he also set up a claim of $364 alleged to be due him from the deceased for running the cattle of the deceased during the winter of 1917-18, and $20.44 for taxes paid on the cattle of deceased in November, 1917, and filed therewith a creditor’s claim for that amount. This creditor’s claim was not acted upon by the judge, but the amount thereof was subsequently allowed to Thomas, as hereinafter shown. To the allowance of this account the legatees William and Bridget Rodgers filed certain objections by which they sought to have the executor Thomas charged with interest on the purchase price of the cattle from the time he took them over in June, 1918, until the time of his appointment as executor on July 17, 1919, and from the latter date down to the time of distribution, and also to have the court disallow Thomas’ claim for running the cattle for the winter of 1917-18, and the amount alleged to have been paid for taxes on the cattle in November, 1917. After a hearing, the court held that Thomas was not liable to the estate for any amount of interest, and allowed the claim for running the cattle and for taxes paid, amounting to $384.44, as an offset against the amount due from him to the estate, thereby reducing the same to $1,557.-36. From the decree settling this account the objectors have appealed to this court, and specify as errors the refusal of the court to require the payment of interest by Thomas and the allowance of his claim of $384.44 as above set out.

The only material facts developed at the hearing, in addition to those above recited, were that at the time of Thomas’ appointment as executor in 1918, and for some time subsequent thereto, he was reasonably worth a sum in excess of $150,000, and during that time carried a substantial checking account of $1,000 or $2,000 and was able to borrow from the ■bank up to $25,000, but that, by reason of meeting financial reverses during the winter of 1919-20, he had been reduced to practical insolvency; and that the reason why Thomas had not mentioned his claim for taxes and wintering the 'cattle, and claimed the same as an offset against the price of the cattle when he filed the petition for probate of the will and the other proceedings prior to the final account filed on May 1, 1922, or about three and one-half years after the institution of the probate proceedings, was that he “supposed when the estate was settled up his claim would be allowed, and didn’t suppose it was necessary to mention it when he.filed the petition for letters, and he didn’t know why it had not been mentioned in his first report.”

1. The court made a finding to the effect that the number of the Rodgers cattle purchased by Thomas was fifty-two; that [1] the purchase price was $65 per head, making a total of $3,380; and that this amount was due at the time of Rodgers’ death, on June 22, 1918. Thomas admitted at the hearing that he never segregated this amount from his own funds, and it was established that he continued to use it in his own business down to the date of his appointment as executor, although he was amply able to have made payment at the time. Under these circumstances we think that on June 22, 1918, Thomas became liable as for money received for the benefit of Rodgers, or his representatives, for the sale price of the cattle, and under the provisions of section 7725, Revised Codes of 1921, was liable for interest thereon at the legal rate of eight per cent per annum from that date until the time of his qualification as executor on July 17, 1919.

"When Thomas qualified as executor the sale price of the cattle, with the interest due thereon, as indicated in the foregoing paragraph, was due from him, and he immediately became liable therefor as for money in his hands by section 10133, Revised Codes of 1921.

In paragraph 9 of the objections filed to the final account it is recited that on or about July 17, 1919, Thomas paid all debts of deceased and sent the legatees $490, the total of such expenditures being $1,438, and those recitals are admitted in the executor’s reply thereto, so that this sum should be deducted from the amount of Thomas’ liability as executor on July 17, 1919, to determine the exact amount for which he was accountable after that date.

After his appointment as executor Thomas made no change in the method of handling the funds representing the selling price of the cattle. The testimony at the hearing showed that it was never segregated or set apart in a separate fund, but that Thomas continued to use it in connection with his own resources until it was finally lost in his financial reverses. His only explanation for not paying the money into the estate was that he did not think it was necessary for him to do so.

Section 7889, Revised Codes of 1921, declares that “A trustee may not use or deal with the trust property for his own benefit, or for any other purpose unconnected with the trust, in any manner. ’ ’ And by section 7897, if he does use property ‘ ‘ contrary to section 7889 may, at the option of the beneficiary, be required to account for all profits so made, or to pay the value of its use, and, if he has disposed thereof, to replace it, with its fruits, or to account for its proceeds, with interest.” These sections of the Code are applicable to this case. Thomas, as executor, was liable for the amount which he owedHhe estate as for money in his hands. It was a trust fund. He did not pay it into the estate, but instead of doing so used it for his own benefit, and is therefore bound to account for it with interest. (In re Eakins’ Estate, 64 Mont. 84" court="Mont." date_filed="1922-07-03" href="https://app.midpage.ai/document/in-re-eakins-estate-v-eakins-8023521?utm_source=webapp" opinion_id="8023521">64 Mont. 84, 208 Pac. 956.)

2. With reference to the claim of Thomas for taxes paid in [2, 3] 1917 and for running the cattle for the winter of 1917-18, the learned judge of the trial court made a finding to the effect that it was within the agreement between Rodgers and Thomas that the latter should charge for his services in caring for the cattle and that it had always been his intention so to do; that it was merely an oversight on his part that the charge had not been made prior to the filing of his final account on May 1, 1922; that he was not making a claim against •the estate in the ordinary sense, but was merely showing that he owed the estate less than the first figure he gave upon the subject. For these reasons the amount of the claim was allowed as an offset against the sum for which Thomas was accountable to the estate at the time of his appointment as executor. In this, we think, the court erred. It seems to us that the finding is contrary to the facts appearing in the record. At the time he filed the petition for probating the will he made no mention of this account. When he was appointed executor on July 17, 1919, he paid off all claims against Rodgers and no mention was made of his own claim. In the inventory and appraisement which was made and filed on October 8, 1921, and to which Thomas made affidavit, he was particular to emphasize the fact that he owed the estate $1,-941.80, and that it was a debt incurred during the lifetime of Rodgers and had never been paid into the estate. In his first accoupt, which was filed on the same day with the report of the appraisers, he states that at the time of the death of Rodgers he was indebted to him in the sum of $3,380, and “there now remains due and owing a balance of $1,941.80.” It was not until after he had been required by the court to render a new, full, and complete account of all his transactions as executor that any mention is made of a pretended claim which he had against the estate on account of taxes and earing for the cattle during the winter of 1917 and 1918.

Conceding, however, that the executor’s claim against the Rodgers estate was a just one, still it could not properly be allowed by the court at the time it was made, in May, 1922. This claim arose out of the agreement made with Rodgers that Thomas should be entitled to charge for his services in caring for the cattle, i. e., it was a claim arising upon contract. The time for the presentation of claims against the estate had long since expired when this claim was made. Section 10173, Revised Codes of 1921, provides: “All claims arising upon contracts, whether the same be due, not due, or contingent, must be presented within the time limited in the notice [to creditors], and any claim not so presented is barred forever.” And under the provisions of section 10191: “If the executor * * * is a creditor of the decedent, his claim, duly authenticated by affidavit, must be presented for allowance or rejection to the judge, and its allowance by the judge is sufficient evidence of its correctness, and must be paid as other claims in due course of administration.”

Rehearing denied July 11, 1923.

The claim of an executor against an estate must be presented within the same time as the claim of any other creditor, and if not so presented it is barred under the provisions of section 10173. (In re Hildebrant’s Estate, 92 Cal. 433" court="Cal." date_filed="1891-12-22" href="https://app.midpage.ai/document/in-re-the-estate-of-hildebrandt-5445684?utm_source=webapp" opinion_id="5445684">92 Cal. 433, 28 P. 489" court="Cal." date_filed="1891-12-28" href="https://app.midpage.ai/document/ex-parte-gordan-5445689?utm_source=webapp" opinion_id="5445689">28 Pac. 489; Morrow V. Barker, 119 Cal. 65" court="Cal." date_filed="1897-11-12" href="https://app.midpage.ai/document/morrow-v-barker-5448887?utm_source=webapp" opinion_id="5448887">119 Cal. 65, 51 Pac. 12; In re Long’s Estate, 9 Cal. App. 754" court="Cal. Ct. App." date_filed="1909-01-30" href="https://app.midpage.ai/document/in-re-estate-long-3287344?utm_source=webapp" opinion_id="3287344">9 Cal. App. 754, 100 P. 892" court="Cal. Ct. App." date_filed="1909-01-28" href="https://app.midpage.ai/document/baker-v-baker-3294610?utm_source=webapp" opinion_id="3294610">100 Pac. 892.)

In our opinion the court erred in allowing the amount of this claim to be offset against the sum for which Thomas was accountable to the estate, as well as in failing to hold him liable for interest upon the selling price of the cattle from the time he purchased them until his appointment and qualification as executor, and on the balance remaining in his hands as executor after payment of the sum of $1,438.20 on or about the seventeenth day of July, 1919.

The cause is remanded to the district court of Prairie County, with directions to modify the decree settling the final account in accordance with the views above indicated, and when so modified the decree will stand affirmed.

Modified amd affirmed.

Mr. Chiee Justice Callaway and Associate Justices Cooper, Holloway and Galen concur.