178 Ga. 68 | Ga. | 1933
It is insisted that since the children of Mrs. Hinton (defendants in error), under the terms of the will of Mrs. Sanders, were made legatees, in two separate items, of separate legacies, one being real estate and the other bank stock, they are obliged to accept the legacies under both items, or forfeit the legacies under both. Under one item they are devised one half remainder interest in realty. Under the other item they are bequeathed remainder interests in 184 shares of stock in a bank. The bank stock carries the liability to assessment on insolvency of the bank. The bank has become insolvent. The superintendent of banks has issued an execution for the assessment of 100 per cent., as detailed in the statement preceding. Thus it appears that under one of the items of the will the legacy is beneficial; and under the other it is now quite the contrary, because of the burden placed upon it by the law, that is, liability for assessment. The insistence is based upon the provisions of the Civil Code which require, in certain instances, an election, as follows: “A legatee taking under a will must allow, as far as he can, all the provisions of the will to be executed. Hence, if he has an adverse claim to the will, he will be required to elect whether he will claim under the will, or against it. The mere fact of being a creditor does not constitute a case of election.” § 3910. “A case of election arises whenever a person
It is of course well established that, by reason of the adoption of the Code of 1910 as a whole by the General Assembly, every section now has the force and effect of a statute. These sections were not originally founded upon statutory authority in this State. In McGinnis v. McGinnis, 1 Ga. 496, 503, this court discussed the doctrine of election, as follows: “To put the legatee to his election, it is only necessary that the instrument should clearly ascertain the property given; that it was manifestly the intention of the testator to dispose of the property which is not his own; and that the gifts are in such terms as are inconsistent with the notion that the donee can keep his own estate, and also take under the will, without defeating the intention of the testator. It is, in other words, in the nature of a condition, and that condition is implied from the nature of the several dispositions. Chief Justice Ruffin, in Wilson v. Arny, 1 Dev. and Bat. 378.” See the full discussion in that case. Lamar v. McLaren, 107 Ga. 591, 602 (34 S. E. 116), follows the McGinnis case, and contains the following: “It was recognized in this State prior to the Code, as we have seen, in McGinnis v. McGinnis, supra, and is entirely consistent with the declaration of the Code upon this subject.” “The rule is, that, unless the contrary
We look, then, to the earliest authorities accessible, to see how and under what circumstances the doctrine of election was applied: “The earliest eases in which the doctrine of election was applied in English jurisprudence seem to have been those arising out of wills; although it has since been extended to cases arising under other instruments.” 3 Story’s Eq. Jur. (14th ed.) 116, § 1456. Mr. Story, in the same work, describes the doctrine of election as follows: ’“Election in the sense here used is the obligation imposed upon a party to choose between two inconsistent or alternative rights or claims in cases where there is clear intention of the person from whom he derives one that he should not enjoy both. Every case of election therefore presupposes a plurality of gifts or rights with an intention, express or implied, of the party who has a right to control one or both, that one should be a substitute for the other. The party who is to take has a choice; but he can not enjoy the benefits of both.” The same doctrine of election is stated in 1 Pom. Eq. Jur. (4th ed.) § 461; Bispham’s Eq. (9th ed.) § 295; Beach on Wills, § 154; Redfearn on Wills & Administration, 288, § 148. For an elaborately annotated case reference is made to McDermid v. Bourhill, 101 Oregon, 305 (199 Pac. 610, 22 A. L. R. 428). Reference is especially made to “A Treatise on Wills” by Jarman, an English work first published more than one hundred years ago, which has gone through a number of editions. The sixth edition of the work of Mr. Jarman, by Charles Sweet of Lincoln’s Inn, devotes some 27 pages, including elaborate annotations of English cases, to the subject of election. This edition states that the general doctrine as applied by Mr. Jarman is where a testator disposes of his own property, and also professes to dispose of prop
Mr. Jarman sums up (vol. 1, p. 532) : “The doctrine of election . . may be thus stated,” that “he who accepts a benefit under a deed or will must adopt the whole contents of the instrument, conforming to all its provisions, and renouncing every right inconsistent with it. If, therefore, a testator has affected to dispose of property which is not his own, and has given a benefit to the person to whom that property belongs, the devisee or legatee accepting the benefit so given to him must make good the testator’s attempted disposition; but if, on the contrary, he choose to enforce his proprietary rights against the testator’s disposition, equity will sequester the property given to him, for the purpose of making satisfaction out of it to the person whom he has disappointed by the assertion of those rights. . . If the property which the testator affects to dispose of belongs to several, as tenant for life and remainderman, each has a separate right of election.” The decisions of this court have been in harmony with the general rule stated in “Jarman on Wills.” Miller v. Cotten, 5 Ga. 341 (5), McFadden v. Dale, 155 Ga. 256 (116 S. E. 596); Harber v. Harber, 158 Ga. 274, 276 (123 S. E. 114). It is impracticable to quote here all that is said in that splendid work. Sufficient has been quoted to show how the doctrine was applied in the early English decisions. From a careful consideration of the entire subject it is obvious that the sections of the Georgia Code quoted above originated in the
Mr. Jarman, near the close of the discussion of the doctrine (vol. 1, p. 556), states: “Where by the same will two properties are given to the same person, one beneficial and the other burdensome, he is generally at liberty to accept the former and reject the latter, although by so doing he throws a burden on the testator’s general estate, which, if he accepted both, must be borne by himself; as where the repudiated gift comprises shares in a company which, after the testator’s death, fails and is wound up, the shareholders being called on to contribute, or where the subject is leasehold property, in respect of which the testator was liable at his death under his covenant to repair. So where a testator devised a house, which was mortgaged beyond its value, upon trust to permit his two sisters to have the use and occupation of it and the furniture in it; the fhrniture was sold and the proceeds invested; and it was held that the sisters were entitled to receive the income of the investments without keeping down the interest on the mortgage debt. . . The cases are not easy to reconcile, but the test seems to be whether or not the_gifts are separate and distinct. If onerous'property and beneficial property are included in the same gift, as an aggregate, then, unless a contrary intention appears by the will, the donee can not disclaim the onerous property and accept that which is beneficial; he must take the whole gift or nothing. But if two distinct gifts are made by the same will, one of them being onerous
It is argued that the previous decision rendered by this court (174 Ga. 824, supra) requires a different ruling. The following is quoted from the opinion in that case: ’“When Mrs. Hinton died that trust became executed and the stock automatically became the property of the children of Mrs. Hinton. This is true, notwithstanding the fact that no transfer of the shares to them on the books of the bank had ever been made.” Under the record as it then stood, that statement was correct. The writer of this opinion was also the writer of the opinion in the case at that time, and readily admits that the sentence is subject to criticism. It would have been more accurate to have stated that “the stock automatically became the property of the children of Mrs. Hinton, subject to their acceptance or rejection.” However, it was stated elsewhere in the opinion: “We find nothing in'the record to show either acceptance or refusal to accept the bank stock by the children of Mrs. Hinton. Hence we omit any observations on that question.” The two extracts, construed together, are sufficient to warrant the same construction as if they had been stated in immediate connection. It is also true that where land is devised to one for life, with remainder over to another, the executor’s assent to the devise for life inures to the benefit of the remainderman, and at the termination of the life-estate the remainderman may take possession of the property, unless the will shows a different intention. Watkins v. Gilmore, 121 Ga. 488 (2) (49 S. E. 598); Citizens Bank v. Citizens & Southern Bank, 160 Ga. 109, 116 (127 S. E. 219). Until the remaindermen accepted, their title was inchoate.- The remainder-men, however, have the legal right to reject the devise. When the ease was here before, the Hinton children were not parties. Carter,
The superintendent of banks does not seek to recover any funds now in the hands of the administrator of the Sanders estate. He does seek to subject the half interest in the real estate belonging to the children of Mrs. Hinton. The administrator seeks to subject that real estate if he is held liable for the assessment. When the case was previously before this court it was decided that the assessment on the bank stock could not be recovered from the administrator as a debt of the estate of Mrs. Sanders, as the case was then made. It would be useless to repeat here what was there said. The superintendent of banks is not a creditor. The estate of Mrs. Sanders does not owe any “debt” to the superintendent of banks. The demand sought to be enforced is not a “debt” in the sense in which it is used in the Civil Code, § 3997, et seq. It is accepted by courts generally that there is a distinction between a “ claim” or a “demand” and a “debt.” Not all valid “claims” are “debts,” nor are all valid “demands” debts. “The assets of such estate” of a deceased person '“are only bound for the debts contracted bjr the testator during life. McFarlin v. Stinson, 56 Ga. 396; Lynch v. Kirby, 65 Ga. 279.” Carter v. Davis, 174 Ga. 824, 835; Old Colony &c. Co. v. Parker-Sampson-Adams Co., 183 Mass. 557 (67 N. E. 870, 871) ; Bailies v. DeMoines, 127 Iowa, 124 (102 N. W. 813). It was held by the Supreme Court of New Jersey that the words '•“debt” or “debts” of an estate, used in a refunding bond given to an executor “are obviously the debts of the decedent, due "by him in his lifetime, and not the claims of the executor for remuneration and expenses . . of the estate.” Lloyd v. Rowe, 20 N. J. L. 680. That principle is applicable here. Section 3912 of the Code refers to “debts” owing by the deceased in his or her lifetime. It does not apply to such a demand as is made in this case, where, long after the death of the testatrix, a bank fails and by operation of law there is a liability against the stock formerly owned by such, testatrix. Except as provided by law, there is no person authorized to contract a debt against an estate of a deceased person. We held, in 174 Ga. 824, supra, that the executor could not create a binding debt against the estate even to be used for the benefit of the estate, not even when the money was for the payment of taxes due on property held by him as executor of the estate. The
At common law the debts of a corporation died with its dissolution. Hightower v. Thornton, 8 Ga. 486 (52 Am. D. 412); Lane v. Morris, supra; Thornton v. Lane, supra; Robison v. Beall, 26 Ga. 1, 33, 73; Georgia, Masonic Insurance Co. v. Davis, 63 Ga. 471. “At common law the stockholders in a corporation are not liable individually for the corporate débts.” Tichenor v. Williams Pavement Co., 116 Ga. 303, 306 (42 S. E. 505). “The legislature, in enacting this law, in which an ultimate liability is imposed, upon the exhaustion of a prior liability, are to be understood as meaning legal liability.” Thornton v. Lane, supra. It is a fundamental proposition that stockholders of a corporation are not legally liable for its debts, unless expressly made so by law. That fact is one of the chief reasons why numbers of people combine their assets into a corporation in order to capitalize a business larger than the individual is ordinarily able to do. It therefore required statutory enactment to change the common law. A statute of that kind, being contrary to the common law, must be construed strictly. Liability of the shareholder is contingent on the insolvency of the bank, and does not attach until the primary liability is insufficient; that is, that the bank is insolvent. Tichenor v. Williams Co., supra. Such secondary liability does not accrue until the execution has been issued. Since the demand of the superintendent of banks for the payment of the assessments made on the stock held by the testator in his lifetime was not a debt created by the testator, and
The provisions of the banking act quoted above could not and did not have the effect of nullifying the assent of the executor to the devise of the real estate which had already passed into the remaindermen because of the assent of the executor and the acceptance by the legatees. The Civil Code (1910), § 3912, provides: “If the executor has assented to the legacies, and the legatees are in possession, after exhausting the assets in the hands of the executor the creditor may proceed against each legatee for his pro rata share.” But, in order to make that section applicable, there must be “debts” of the estate, and there must be a “creditor.” The banking act can not be construed as authority for the superintendent to collect his assessments against the estate under § 3912, because it is not a debt, nor is the banking superintendent acting for the creditors of the bank a creditor of the estate, and the banking act affords no statutory authority for such a proceeding. If any funds of the estate could be subjected to the payment of the stock assessment under the express terms of the statute last quoted, they would be only that part of the estate and funds which were in the hands of the executor, administrator, etc., at the time the assessment was made. In the present case the real estate which the su
Atkins, the trustee named in the will, died on May 1, 1930, and the bank was closed on May 5, 1930. There was no successor appointed for Atkins (who was originally named) as “trustee” for the stock. The remaindermen, now defendants in error, on the death of Atkins, applied to the superior court and caused a successor to be appointed to Atkins, who was trustee, to hold the real estate. It is significant that they did not apply for the appointment of a new trustee of the bank stock. The reason is obvious. The bank had already failed. They knew that it was insolvent, and avoided any action which might result in liability on their part for the assessment on the stock. Atkins held the bank stock as “trustee” for more than five years, had it transferred to him on the books of the bank as such holder, and it so stood until his death four days before the bank failed. He was also executor and had assented to the bequest. He was never trustee of the children of Mrs. Hinton as to the bank stock. His only duty under the will, at the death of Mrs. Hinton, was to divide the stock among her children. Five years after the assent and acceptance by the life-tenant, the estate can not be held to be the owner of the stock. Whether, in such circumstances, there is any provision in the will under which any other person would take the stock is not for decision. When the executor died and the bank closed, the stock was worthless and no one could be compelled to accept it as a gift. A liability can not be placed upon the estate or upon the legatees because of the inaction or improper action of the executor. , The present adminis
The lawmakers very wisely have not seen fit to declare a liability against any one except the owner, or where the assessment is made and execution issued while the stock is held by an executor, administrator, guardian, or trustee, and then only as against property in the hands of such representative. There are other sound reasons why the legislature went no further. Suppose an estate was not fully administered for thirty or forty years. Such was the ease in Cozart v. Mobley, 43 Ga., App. 630 (159 S. E. 749). In such circumstances, suppose parts of the estate have been assented to for approximately that length of time and there was Georgia bank stock held by the executor or administrator, and before full administration of the estate the bank becomes insolvent. If against property of the estate, after bequests have been assented to and accepted, a recovery could be had on a bank assessment, this
It is argued that if it is decided that the assessment can not be collected from the children of Mrs. Hinton, or from the estate of Mrs. Sanders, then there is no person or persons from whom the assessment can be collected. That difficulty can not affect the issues as to the liability of the parties to this suit. It may and doubtless does happen in numerous instances, that, for one reason or another, the superintendent of banks is unable to collect assessments made against shareholders in insolvent banks.
The judgment of which complaint is made is
Affirmed.