31 Mo. App. 632 | Mo. Ct. App. | 1888
Lead Opinion
The defendants are the executors of the will of Henry A. Powell. The plaintiffs are a majority of his heirs. The executors on final settlement before the probate court asked credit for a note of one thousand dollars, given by C. IT. Benedict, J. B. Malone, and R. A. Malone, on the ground that it could not be collected. The probate court allowed the' credit and plaintiffs appealed to the circuit court where the credit was disallowed, and the executors appealed to this court.
The facts of the case are, that deceased died in September, 1880, leaving as a part of his property, the note in question. This note is dated March 12, 1880, due one year after date, with ten per cent, interest. The executors qualified September 24, 1880. Among other provisions of the will was the following: “4. I direct my executors to collect all my notes and accounts due me as soon as the same can be done, and also convert all other personal property to cash within the first year of the administration, or as soon thereafter as may be.” i
It appears that the makers of this note were the
The question presented under these facts is, are the defendants entitled to a credit for this note on the ground that it was impossible to collect it by the exercise of due diligence ? Rev. Stat., sec. 240. It is perhaps well in this case to consider the duty of an executor when acting in relation to matters about which he has been specifically directed by the testator, as well as when acting without such direction. In my opinion, it is the duty of the executor, without being directed by will, to diligently and speedily collect in the debts due the estate, especially such as are out on personal security only. The duty of an executor is to pay the debts of the deceased and distribute the residue to the heirs or legatees. To do this, he must collect in the debts due the estate. It is. therefore, said that the collection
The foregoing authorities are only a few among many others, in both England and the United States, which hold that debts without something more than personal security must be diligently collected as soon as may be; and this without reference to a direction in the will. But when there is direction in the will as to what shall be done with the testator’s effects, all question or debate is closed. The will of the testator is law for the executor. It is a fundamental principle that a trustee accepting the trust, must comply with its provisions. “When the will contains express directions what the executors are to do, an executor, who proves the will, must do all which he is directed to do as executor, and he cannot say, that though an executor he is not clothed with any of these trusts.” Williams Ex’rs, bottom page 1796; Schouler Ex’rs & Admr’s, sec. 382.
In Booth v. Booth, 1 Beav. 125, the Master of the Polls said : ££ This is a very unfortunate case. It is to be lamented that Batekin, by inadvertence and over good-nature, should have placed himself in such a situation of responsibility as he has done. Here is a will the terms of which are perfectly distinct; on the twenty-sixth of October, 1830, the two executors proved the will; they took on themselves the trust and the duty of performing it. Prom that moment it was their duty to do all that was necessary for the conversion of the estate into money, and to see the dividends duly applied.” In Prior v. Talbott, 10 Cush., it was said of the executor that it was “his duty to administer.the estate according to the will, and such is the condition of his bond.” These authorities are by no means all that may be found. Prom my examination of the subject I feel safe in saying that all, both text-books and reports, bear the imprint of the rule that an executor must strictly obey the direction of the testator.
I am not unmindful of the rule of law established in this state and elsewhere, that executors and administrators are only responsible for want of due care and
Suppose a testator should direct that upon his death one thousand dollars should be paid to his nephew and two thousand dollars to his niece, and yet it could be shown that prudence would suggest that the larger sum should have been given to the nephew and the lesser to the niece, would that excuse him for such application of the money % Suppose the testator should direct the executor to 1 oan certain of his moneys on real estate security or to invest in government bonds, will he be excused for loss consequent on loaning to individuals without security, although they appeared to be on solid financial basis and prudent businessmen were making loans to them ? These questions answer themselves, and they serve as an apt illustration that the rule of prudence and skill only applies where there is room for prudence and skill under the will.
If the executors had demanded the note and been refused, and if in the bona-fide exercise of their judgment they had concluded the note could not be collected, and such conclusion was such as a prudent man would have arrived at in managing his own affairs, then, even though it turned out they were mistaken, they would not be liable. If the testator had directed that the executors collect all his questionable debts but not his good ones, in such event, under the evidence in this case, the executors would not have been responsible for not collecting this note, as they would have been justified in considering it good. I believe it to be beyond
But it is said, notwithstanding the evidence shows the makers of the note were considered by everybody to be solvent, yet in point of fact they were really insolvent. Insolvency is a very broad and general term as it relates to the different conditions of debtor and creditor. One’sliabilities may be greater than his assets, in which case, he would be said to be insolvent, though he may have been in that condition for years, and yet paying all claims demanded of him. So a man may be said to be insolvent when he has nothing above exemptions which is subject to execution, and yet there are persons without number, in such condition, who are free from debt, who promptly meet every obligation and whose credit and standing is untarnished. There is, perhaps, no businessman but that in a moment can call to mind men who havé no property above the exemptions, yet whose note for any reasonable sum is worth dollar for dollar. But according to the argument here, an executor would be excused from even demanding a debt from such person, notwithstanding the demand would have been complied with.
Therefore, before entering upon this question it may be well to look at the provision of the statute in this respect. It is provided (sec. 240) that an executor shall receive credit for all debts charged in the inventory where “the debtor was insolvent, or that, from any other cause, it was impossible for the executor or administrator to have collected such claim by the exercise of due diligence.” There is no possible doubt but that the statute uses the word “insolvent,” as meaning impossibility to collect. The insolvency must be such as that it is impossible to collect. The reading-shows such to be the case. It says the executor shall have credit if “ the debtor was insolvent, or that from any other cause it was impossible” to have collected the
Such is the view of the Supreme Court of this state. In Williams v. Petticrew, 62 Mo. 470, Hough, J., says: “The question, therefore, is one of fact, as to whether it was impossible for the administrator by the exercise of due diligence to have collected these notes at any time after he entered upon the administration.” Again in same case he says : “But as the burden of proof was on the administrator to establish his right to credit for this note, he should have at least made.it appear, that even by the exercise of a proper degree of diligence it would have been impossible to collect it.” The same rule is also announced by the approval of an instruction in Julian v. Abbott, 73 Mo. 580, 582. What possible excuse to a trustee can insolvency be, if he can nevertheless collect the debt by demanding it % Is it possible that an executor may know that he can get money from the debtor on demand, and yet, because of the fact that he could not force it out of him by suit, he need not make the demand % Legal proceedings are a resort when other means will not avail. Insolvency must be the cause of not collecting. But aside from the' statute, why should insolvency excuse a. demand in this case ? Even though the executors had known the true condition of the payors of the note, yet they were in high credit and standing, and how could the executors know but that they would not, by some means, pay the claim on demand. Insolvency of the debtor does not excuse demand in other cases. It is no excuse for want of demand of a promissory note in order to hold the endorser. 2 Daniels Neg. Inst., sec. 1171; Parsons N. & B. 446. All the books say that the holder of the note cannot know by what means he may be paid if he will make demand. A man may borrow the money, his friends may pay it, he may have made special provision for the specific debt, or it might otherwise be paid. Fugitt v. Nixon, 44 Mo. 295.
The slightest • heed to the desire of the testator
N ow if we have in mind the provision of the will that the debts should be collected as soon as it could be done, it is apparent that due diligence required some effort to be made, by demand or otherwise, after the note became due, to collect; or if no such effort was made to, at least, show that effort would have been fruitless. The case concedes that'there was no effort to collect; nearly the whole of the defendants’ evidence is to show that the reason they did not endeavor to collect was that the payors were so thoroughly solvent and
It is well to keep in mind that the executors were in charge of the estate on March, 1881, when the note fell due; that though living in the same community with J. B. Malone, who was in daily business as a banker, whose credit and standing was unbounded, they never asked him about the note till some four months after it became due and then never demanded payment, but acquiesced in his request to wait; that they did let it run without even so much as mentioning it to him for some eight months afterwards, when' the bank, of which he was president, made an assignment. Thus the loan was allowed to remain, in the face of the will directing its collection, for a year after it became due. The evidence shows beyond all cavil or doubt, that Malone would have paid the note if it had been demanded or insisted upon. That he was a man who paid all claims against him on demand, is shown by the fact that his financial standing and credit was unbounded. The evidence shows that no man ever possessed the confidence of the business community up to the moment of his bankruptcy to a higher degree. He was considered “better than the bank.” His financial standing was the power which run the wholesale establishment in Kansas City with a stock of from sixty thousand to one hundred thousand dollars. Could he have had such standing, and begot such confidence, without being a debt-paying man? The direct testimony of defendants’ own witnesses is that the money would have been paid if payment had been insisted upon. But besides all this, the
This, then, is the case: The will directs the note to be collected as soon as it can be done; the executors accept the trust; the note is owing by a debt-paying man of the highest standing and credit; it becomes due and is allowed to run without any effort of any sort for a year, when it is lost by the total wreck of the payors.
It should be remarked that the evidence establishing the extraordinary character, and commercial standing of J. B. Malone, and that the note would have been paid if demanded, comes from defendants. They have shown this on the theory that it was not negligence or imprudence in them to let the note run; but in this case it only fixes their liability the more certainly, for it demonstrates that if they had obeyed the will, the estate would have had the money. There is another theory upon which defendants should not be allowed this credit. It is shown by the testimony, expressed in the language of one of their witnesses, that “if payment had at any time been demanded prior to the failure of the bank the money would have been paid.” It is further shown by undisputed testimony that when one of the executors was asking Malone about the note and Malone requested him to wait, “Hurt said it is good and I will risk it.” In that remark, he sounded the keynote to the situation, and in the language of the books, if he concluded to interpose his own discretion for that of the testator, he must accept the consequences, however unexpected they may turn out to be.
I think the judgment ought to be affirmed, and
it is so ordered.
Dissenting Opinion
Dissenting.—It is altogether important to a correct result in the investigation of this case that the facts should be fully stated and kept in mind.
This controversy arose on the application of the executors of the estate of Henry A. Powell to make final settlement. Said Powell died in September, 1880, possessed of a large estate of real and personal property. On his deathbed he made his last will and testament. He sent for the defendant, Payton Y. Hurt, who was his neighbor and close friend, and requested him to act, in connection with the testator’s son, as executor of this will. Hurt was reluctant to accept this burden. The testator wished him to accept it without taking the commission allowed to such executor by the statute; but to receive only one and three-quarters per cent, in lieu thereof. On the instance of the testator, who had great confidence in the integrity and business judgment of Mr. Hurt, he finally consented to accept.
Among the assets coming to the hands of the executors was a note executed to the testator in his lifetime by C. H. Benedict, J. B. Malone, and R. A. Malone, dated March 12, 1880, due one year after date, for the sum of one thousand dollars, with interest from date at the rate of ten per cent, to be compounded annually, if not paid. In the final settlement offered by the executors they returned- said note as insolvent, and asked credit therefor. Some of the heirs appeared and objected to this credit. Others of the heirs were willing that the executors should receive the credit. On the trial of this issue in the circuit court, whither the cause was taken on appeal from the probate court, this credit was disallowed, and the executors have appealed.
The evidence tended to show that shortly after the maturity of this note Hurt demanded payment thereof of J. B. Malone, at the Macon Savings Bank, of which bank J. B. Malone was president. The other makers of the note resided at Kansas City, engaged in mercantile
When the note was so presented to J. B. Malone he said, that owing to floods and high waters out west his concern at Kansas City had been unable to make collections, and as times were a little close in Kansas City, he requested the executor to wait on him a little while.
At the instance of this conversation, Wm.. R. Powell—the co-executor—appeared, when Hurt advised him of the situation, and asked him : “ What about time on the note?” or something to .that effect. Powell at first expressed the thought that “perhaps they wanted time to get away with it.” But on being advised that J. B. Malone was on the note, he seemed satisfied, as J. B. Malone was regarded by everybody in the community as perfectly solvent.
In the following February the Macon Savings Bank, to the great surprise of the business community, failed; and on the next day the mercantile house of Benedict, Malone & Company, at Kansas City, made an assignment for the benefit of creditors. The note in question was sent at once to Kansas City for suit against the makers ; but nothing wras realized on it out of the partnership assets, as the court held this note not to be a partnership obligation, and there were no partnership assets sufficient to pay the joint creditors. It was not a note of the bank, and consequently it was not provable against the receiver appointed for that concern.
The evidence showed that, as a matter of fact, the makers of this note had been insolvent for three or four years prior to its execution. The concern in Kansas City had in fact been doing business on the money of the Macon Savings Bank, which they used most freely for supporting the losing concern at Kansas City.
J. B. Malone was the active manager of the bank, and seems to have run its ■ affairs as if individually controlled by him. Up to the time of the collapse in
I. The duties of an executor are so well defined by the courts as to leave no room for controversy in this case as to the equitable rule in this jurisdiction. An executor is not an insurer of the claims coming into his hands. Fudge v. Dunn, 51 Mo. 264; Foster v. Davis, 46 Mo. 268. “The prevailing rule now established in this court is, that executors stand in the position of trustees to those interested in the estates upon which they administer, and are liable only for the want of due care and skill; and that the measure of care and skill required by them is that which prudent men exercise in the direction and management of their own affairs.” Merritt v. Merritt, 62 Mo. 157. In the Fudge case, supra, the court quote approvingly the. following language from highest judicial authority: “ This court has always treated trustees acting in good faith with great tenderness. * * * If there was no mala jides, nothing wilful in the conduct of the trustee, the court will always favor him. For as a trust is an office necessary in the concerns between man and man, and which, if faithfully discharged, is attended with no small degree of anxiety and trouble, it is an act of kindness in any one to accept it. To add hazard or risk to that trouble, and to subject a trustee to losses which he could not foresee, would be a manifest hardship ; and would deter every one from accepting so necessary an office.’’
In these final settlements, in determining what credits shall be given and what charges made, in favor of
II. The evidence shows that no man in that community enjoyed its entire confidence more than Malone. His credit seemed unlimited up to the hour of the final collapse of the 'bank. No one was pressing or suing him, to excite any apprehension on the part of Hurt, or to stimulate him .to any special effort. He left his own money with this bank, just as these complaining heirs did their private money. The executor manifested proper diligence, for he did on the maturity of the note present it for payment. The excuse given by the debtor for not paying it then was a most reasonable one, and there was nothing in it whatever to excite any suspicion. The co-executor Powell, while apparently willing in this controversy that his share in the fund when distributed should be increased by mulcting Hurt (as he thinks Hurt would bear the loss, as he took the note for collection), yet, when he knew that Hurt was about to grant further time, or not to sue, he indicated his acquiescence when informed that J. B. Malone was on the note, thereby emphasizing the popular confidence in Malone’s solvency, and approving the course taken by Hurt. That ninety-nine men out of a hundred, of prudence and care, would have acted in this matter just as Hurt did is too palpable for argument. The note was bearing ten per cent, interest compounded. There was no exigency of the estate demanding the collection of the money. A distribution was made among the heirs during the first year, and these very contestants loaned the money, or a part of it, to Malone’s bank at seven per cent, interest, so that the probabilities are that if Hurt had collected this note the money would have gone back into the same place whence it came, and been there lost.
III. It is contended that it was the imperative duty of the executors to sue on this note immediately on its maturity. We need not controvert the general proposition that it is the duty of an administrator to convert
Much has been said, both in the brief and oral argument of respondents’ counsel, about the following clause in the testator’s will: “Fourth. I direct my executors to collect all my notes and accounts due me as soon as the same can be done, and also convert all other personal property to cash within the first year of the administration or as soon thereafter as may be. I also direct my executors to sell my real estate just as soon as it can be done, and when the money is received, likewise' distribute it among my children ; and I leave the time, terms and manner of sale to the sound discretion of my executors, and give them express authority to execute, acknowledge, and deliver the necessary deeds of conveyance for said real estate.”
It was at first contended that this provision made it
The first direction as to collecting notes and accounts was nothing more than what the law itself,imposed, which is, that executors should proceed to collect debts due the estate promptly. And this remits us back in the discussion to the rule of reasonable discretion, and whether or not the executors in not bringing suit acted with that degree of diligence and prudence which a reasonably prudent man exercises under like circumstances. The evidence shows that within the first year of the administration a conference was held between the executors and heirs as to whether the land should be sold, and the estate wound up within that year. It was determined that it would not be for the best interest of the estate to do so. As there was no need of money to carry on the administration, and no money demanded by the heirs, and they were loaning the money distributed to them under the will to this very bank at a lower rate of interest than this note was bearing, and there was not even a suspicion of Malone’s insolvency, the discretion exercised by the executors in not pressing the collection of this note was most reasonable, and was such as any prudent man would have shown under like circumstances.
IV. The authorities cited on behalf of respondents respecting the liability of trustees where they depart from the provisions of the trust instrument as to the manner of managing and investing the trust fund, or in changing the trust property from one character to another, have no application whatever to the facts and law of this case. In the case of such departures the trustee
Y. The foregoing discussion has proceeded upon the hypothesis that this note could or might have been collected had the executors pressed its collection within the year. But the executors’ claim to this credit rests upon a yet firmer ground, upon which there can be no possible legal or equitable assault. The uncontradicted evidence shows that during the whole time of this administration Malone was hopelessly insolvent. No witness pretended otherwise. The only witnesses who spoke to this matter were Rubey and Dysart. .Rubey testified as follows: * ‘ All the makers of the note in controversy were insolvent prior to the death of Powell, and have continued to be so. As a matter of fact I do not believe the note in question could have been made by law out of the property of the makers at any time since the death of Powell; but if payment had been demanded prior to failure of the bank the money would have been paid, but it might have been with some other person’s money. They might not have stood a suit for one thousand dollars. They might have paid it rather than been sued, but if so, it would have been paid out of the Macon Savings Bank with the bank’s money.”
Dysart testified : “ Benedict and Malone were both insolvent during this administration. Prom my personal knowledge I am satisfied this could not have been made out of the makers thereof, or either of them, by law. If paid at all it would have been paid by the Macon Savings -Bank. * * * There was nothing else to pay it with.”
This is the whole of the evidence on which it is sought to hold these executors to account for a debt now of over two thousand dollars, on the ground of official neglect of duty. And what is this evidence, but the mere conjecture'that Malone might have paid, in the opinion of the witness, if pressed, but the money would have been taken by him from the bank. He had no property, no money of his own; and if perchance he
I submit that a court of equity, administering justice ex aequo et bono, ought not to adopt such a rule This evidence is not the proof of any substantial, reliable fact. No man’s property, which it is the design of the law and the office of the courts to protect, should be swept away from him on mere conjecture—the mere speculation of a witness, when there is no possible means of ascertaining its truth. The supposition of the witness may or may not be well founded. How is a court to determine in advance whether it is or not? We might render judgment on such conjecture when the fact was, the debtor might not be thus scared into payment, or when he may have been unable or unwilling thus to wrong the bank ? The property of the executor would under such a ruling be at the mere caprice—the opinion—-of an irresponsible witness.
It is a fundamental rule of evidence that a witness must speak to actual facts, or not at all. Except in the instance of expert testimony, where the fact sought to be established is out of the range of tangible proofs, depending on some matter of science, or special experience, the mere opinion of a witness is incompetent; because it is an assumption of the province of the triers of fact, and because of the danger of basing a judgment on naked conjecture and surmises, instead of on existing facts. The witnesses who volunteered this speculative opinion gave no data, no tangible fact, for such surmise. There was not one word of proof that Malone had been coerced to make a single payment after
YI. I have always understood the law to be in the matter of such final settlements that, where the executor or administrator showed that the debtor was insolvent during all the time of his administration, he was entitled to the credit as a matter of course. And no case has been cited, after two arguments at this bar, where an administrator or executor has been denied the credit in such- case. To hold him to an accountability for a failure to collect “as soon as can be done,” when it appears that a resort to a suit, judgment, and execution, would be unavailing, would be to hold him to' the letter of the law when the law itself afforded him no means of protection. If A should place claims in the hands of B to collect immediately, the implication of law would be, that he should have recourse to legal process as the effectual means to the end. And when he should show, when called upon by A for an account of his stewardship, that the debtor at the time he received the claim for collection was, and yet is, insolvent, his defence at law would be complete.
In Potter v. McDowell, 31 Mo. 73, it is declared: “That if all a man’s debts cannot be collected by legal process out of his own means he is insolvent. * * * Whenever it is shown that a suit against an individual for a demand would be unavailing he is insolvent.” In such case no return of nulla bona is required.
Our own statute recognizes the insolvency of the debtor as an unqualified excuse for failure on the part of the administrator or executor to collect. Section 240 provides, that: “At his final settlement, the court shall give credit to the executor or administrator for all the
The case of Williams Adm’r v. Heirs of Petticrew, 62 Mo. 460, is cited in support of the proposition, that, it devolves upon the executor to show affirmatively that, notwithstanding the insolvency of the debtor, he could not have collected the debt by the exercise of proper diligence. ’ This is an entire misconception of the opinion. There were two debts for which the administrator asked credit. One was against a man named Clark, the other was against one Gilliam. Of the Clark debt the court say : “In regard to the Clark note, the testimony is conclusive, that from the time this note came to the hands of Williams as .administrator, in 1861, Clark was and continued to be insolvent. We have no doubt about the propriety of allowing the administrator credit for this note.” The court then proceeded to show that in respect of the Gilliam note there
The principles of law upon which I base my conclusions in this case have been recognized by the Supreme Court recently, in Booker v. Armstrong, 93 Mo. 49. The court again affirm the rule, that the measure of diligence required of an administrator is that which “a prudent man exercises in the direction of his own affairs.” In that case the note which came into the hands of the administrator was secured by a deed of mortgage on real estate. The debtor was otherwise insolvent; and the court say: “But the Grove estate could not have suffered any loss by reason of the failure of the executor to prosecute a personal action against Pogue [the debtor], for he was and still is insolvent.” Thus again recognizing the principle that insolvency is a complete answer for the executor to make to a demand that he should account for such debt. But inasmuch as
VII. Against all this, the only argument interposed is, that the executor might possibly have induced the insolvent debtor to pay this note, not out of the property he owned, but by taking the money out of the vaults of the bank, held as a trust fund, and misapplying it to his individual debts. This he could only do in .violation of a high trust, and in effect robbing his depositors to pay another man’s debt. It occurs to me that a decision of a court bottomed upon such questionable morality would not be creditable.
VIII. On the other hand it seems to me that if ever there was a case where the salutary and reasonable rule of equity laid down by Lord Hardwicke should be applied this preeminently is one : !t If there is nothing wilful in the conduct of the trustee, no mala fides, the court will always favor him. To subject him to losses which he could not foresee would be manifest hardship, and would be deterring every one from accepting such office.” Not only that, but the respondents seek to make this executor answerable when it is in proof that he could not have made this debt by legal process. Every consideration of equity is in favor of Mr. Hurt in this ■ controversy. Mr. . Powell was his neighbor and friend, and pressed upon Mr. Hurt the acceptance of the burden of this administration against his wishes. He yielded only to oblige the dying request of his íriénd; and accepted the labor and responsibility for the meager pittance of one and three-fourths per cent, commission, when the statute would have allowed five per cent. Hurt was faithful to his dead friend and his heirs. He administered the estate with marked success and promptness ; and turned it over to the distributees in good time, and with unusual small loss. For the heirs, under all the facts and circumstances surrounding
The majority opinion being in conflict, in my opinion, with the line of decisions of the Supreme Court cited in this opinion, I ask that the cause be certified to the Supreme Court; which is accordingly done.