172 Ky. 519 | Ky. Ct. App. | 1916
Opinion op the Court by
Affirming in part and reversing in part.
The testator, at his death, was the owner of lots Nos. 142,143 and 144, which fronted on Eastern Avenue, in Covington, and in the Wallace subdivision, and upon the first named lot, his residence was situated, and the three lots mentioned were used with it for the purposes of the residence. He was, also, the owner of lots, which are Nos. 156, 157, 159, 160, 161, 162 and 163 respectively, and which are lots between Eastern Avenue and Oakland Avenue, in Wallace’s subdivision, and front on the last named street. He, also, • owned the south twenty feet of lot No. 17 and lots Nos. 18, 19, 20, 21, 22, 23, 24 and 25, which lie on the east side of Oakland Avenue, and front on the east side of that street, and are in Craig & Fisher’s subdivision. He owed a debt amounting to three thousand dollars, with interest thereon at six per centum per annum from May 1st, 1911, to George England and the German National Bank, and which was secured by a mortgage upon lots Nos. 156 and 157. He owed to the Central Savings & Trust Company the sum of four thousand five hundred dollars, with interest at six per centum per annum, from the 1st day of July, 1906, and which was secured by a mortgage upon lots Nos. 142, 143, 144, 159, 160, 161, 162, 163, 18, 19, 20, 21, 22, 23, 24, 25, and the portion of lot No. 17, which was owned by him. He was indebted to various creditors, whose debts were unsecured, about eight thousand dollars, and was the owner of five hundred dollars in money and household property of the value of two hundred dollars. He was a florist and was engaged in the business of growing, culture and sale of flowers, bulbs, plants and shrubs, and in connection with that business owned a considerable stock of flowers and plants, and this business as conducted by him, was regarded as the most valuable asset of his estate. For the purpose of carrying on the business of a florist and!
The last will and testament of the testator is as follows:
“I, W. R. Miller, being of sound mind and disposing memory, declare this to be my last will and testament. First: I give to my wife all my household and kitchen furniture. I, also, give to her my residence on Eastern avenue, in the City of Covington, for and during her natural life, and one-third of the income of the rest of my estate for her life. Second: I direct that the floral business I now conduct and own be carried on by my executors in the name of W. R. Miller until my son, Walter, is twenty-five years of age, and there shall be no division of my estate until said time; and out of the proceeds of said business my executors will pay for the education, clothing and maintaining my son, Walter, not to exceed six hundred dollars a year, until he is twenty-two years old, but none of said sum shall be used, except for the time he is attending some educational institution. If the money spent for his education after June, 1913, does not amount to two thousand dollars, then there shall be paid to him in money when he arrives at twenty-five years of age the difference between the sum so spent for him for said purpose after June, 1913, and the sum of two thousand dollars. I give to my son, Charles, all my interest in the money due C. C. Miller & Company, at Lexington, Kentucky. I give to my three sons, C. C. Miller, A. R. Miller, and Walter Miller, equally, all my «estate, subject to the provisions named in the foregoing clauses. Fourth: I appoint my sons, C. C. Miller and A. R. Miller executors of this will and request that they be permitted to qualify as such without bond.
“'Witness my.............................. this 25th day of October,' 1911.
“W. R. MlLLEB.”
The executors undertook to carry on the floral business as directed in the second clause of the will with the result of the receipts of the business amounting to about seven thousand dollars per year and the expenditures in its conduct to about six thousand dollars per year, leaving an excess of receipts over expenditures of over one thousand dollars, which’ was entirely taken up in the payment of the taxes and interest on debts,. repairs and other necessary expenses in the preservation of the estate, so there was no net income from the estate, and the widow could not be paid anything, as directed in the first clause of the will. There was expended for Walter R. Miller the sums directed in the second clause of the will, but he became twenty-one years of age on the 19th day of November, 1915, and did not attend school after June, 1913, only to the extent that three hundred dollars was spent for him, after that time, leaving a balance of seventeen hundred dollars to be paid to him under the terms of the will. No compensation has been received by the executors for their services, and to protect the estate against creditors and for necessary expenditures in carrying out the trust imposed upon them in the second clause of the will, in addition to the receipts of the business, they have been compelled to advance of their own funds a sum in excess of six thousand dollars. Creditors became importunate in their demands for the payment of the debts, which the estate owed them. The personalty of the estate was largely insufficient to pay the original debts, without considering the expenses of administration or the necessary expenses of'carrying, on the trust.
On June 30th, 1915, the executors, making the heirs of testator and the creditors holding debts against the Estate, which were secured by mortgage liens, defend-, ants to the action, presented their petition to the circuit court, in which they asked the court to appoint a receiver for the floral business, and for a construction of the will, and for a judgment defining the rights of the parties under the will; that the real estate be sold and the creditors of the estate be required to assert their claims in •the action. Upon the same day, by the request of the
The court adjudged, (1) that the executors could not carry on the floral business as directed in the will without such a substantial loss as to materially impair the estate and that it must be sold for the payment of its debts; (2) that it was impossible for the executors to so manage the trust estate as to perform the directions of the testator with reference to the estate with the charges imposed upon it hy the will and by the testator previous to his death; (3) that the real estate mortgaged by testator in his lifetime could not be sold in satisfaction of the mortgage debts, without destroying the floral business and thus necessarily terminating the trust.
Basing its judgment upon the above findings of fact, the court then adjudged, that the lots Nos. 156 and 157, of Wallace’s subdivision, and 17, .18, 19, 20, 21, 22, 23, 24 and 25, of Craig & Fisher subdivision, should be first sold and out of the proceeds the mortgage indebtedness upon the lots must be paid and the balance applied to the payment of the unsecured indebtedness, including- the advances made by the executors, and if any portion of the proceeds of the sale of the lots mentioned remained unexpended, out of it to pay the mortgage indebtedness upon lots Nos. 142, 143, 144, 159, 160, 161, 162 and 163, of Wallace’s Subdivision; and if only a portion of the last mentioned lots had to be sold to satisfy the indebtedness of the decedent, then lots Nos. 163, 162, 161, 160 and 159 should be sold in the order mentioned, and if the indebtedness should be satisfied without a sale of lots Nos. 142, 143 and 144, upon which the residence of
The first question presented is: Did the court have power to terminate the trust provided for in the second clause of the will'? It will be observed that the testator did not mention his debts in the will, and did not make any provision for their payment. Neither did he fix any time when his executors should make a settlement of the indebtedness of his estate. While, it has been held, that where a testator fixes the time, by his will, when his personal representative should make a settlement and distribution of his estate among his heirs and devisees, the heirs and devisees are bound by such a provision and cannot maintain a suit to settle the'estate prior to the time fixed by the will for the settlement and distribution, but such a provision in a will cannot restrain the creditors from coercing the payment of their demands before such time, and they may proceed without regard to the provisions of the will. Linthecum, etc. v. Vowels, 26 R. 221. The will, in the instant case, provides, that a division of the estate shall not be made until Walter R. Miller shall arrive at the age of twenty-five years, but the division referred to and intended by the testator was a division among his devisees, for as before said, he undertook to make no provision with reference to his creditors or the payment of the obligations of his estate. The executors, as his personal representatives, can maintain an action for a construction of the will and a settlement of the estate against his devisees, creditors and others interested in the estate, as provided by section 428, subsections 1 and 2, of the Civil Code, and this action may be treated as such if the creditors are made and become parties to the action, as prayed for in the petition. In such an action a judgment may be rendered for the sale of the real estate of the decedent, if it appears that the personalty is insufficient to satisfy the debts of the estate. All of the heirs and devisees, at the time of the judgment, were above the age of twenty-one years, and parties to the action. The allegations in the pleadings, as well as the evidence heard, proved without doubt, that it was necessary to sell the real estate, or at least a large part of it, and probably all of it, to satisfy the indebted
The trust property is, however, covered by mortgage ■ liens, and in addition to the mortgage liens, there are outstanding against the property several thousand dollars of unsecured debts of the testator. In the will, which created the trust, the testator made no provision for the payment of the debts or the discharge of the liens. The trustees cannot pledge the property for money to discharge the liens or to pay the other debts, because of their amount compared with the value of the property, .and the refusal of others to extend the necessary credit, with the property as the security. The rights of the creditors to subject the property to the satisfaction of the debts is superior to the rights of the devisees under the will. They do not have to wait on the expiration of
(b) The court adjudged that the lots Nos. 156 and 157 and 17, 18, 19, 20, 21, 22, '23, 24 and 25 being the lots upon which the floral business was conducted, should be sold and the proceeds be applied to the payment of the mortgage indebtedness upon these lots, and the sum remaining, if any, should be applied to paying the unsecured indebtedness against the estate. This seems to be in violation of the rights of the mortgage creditors. The party holding the mortgage upon lots Nos. 156 and T57 is a different party from the one holding the mortgage lien upon the other real estate of the testator. The overplus of the proceeds of the sale of the lots embraced in one of the mortgages, over and above what is necessary to pay off the lien, cannot be appropriated to the payment of the other mortgage indebtedness, to the exclusion of the unsecured creditors. Neither can the proceeds of the sale of the lots covered by one of the mortgage liens be appropriated to the debts of the unsecured creditors until the mortgagee’s debt is extinguished. Lots Nos. 156 and 157 should be sold in satisfaction of the mortgage upon them, and the holder of the lien isi entitled to ..have his entire debt extinguished from the
(c) The court was in error in adjudging that all advancements made by the executors out of their own means should be upon an equality with the other unsecured indebtedness of the estate. If the executors, in carrying on the floral business as directed by the will, were compelled to expend their own means, and such expenditures were necessary to execute the trust, and such as were dictated by prudence, such debts, like the costs of administration, are preferred, and should be paid before any of the unsecured indebtedness is paid. If funds of their, own were used by the executors in satisfying indebtedness against the estate, which was created by the testator — as to such indebtedness the executors should be treated as assignees of the creditors, whose debts they have discharged, and are, as to them, upon an equality with the holders of other similar debts.
(d) It was manifestly the intention of the testator that his widow should have a life estate in his residence and one-third of the income of the rest of his estate for her life, and the next consideration was the education-of and a provision for his infant son.. The rights of his creditors to have his property subjected to the payment of his indebtedness are, however, superior to the rights of these intended objects of his bounty under the will, and if it takes the entire property to satisfy the cred
It is, therefore, ordered that the judgment, so far as it adjudges that the trust property, as well as a sufficiency of the other real estate to satisfy the indebtedness be sold in satisfaction of the indebtedness, and the trust secured in the second clause of the will be termi