32 F. 130 | U.S. Cir. Ct. | 1887
Lead Opinion
This bill is brought to charge the assets of the estate of Hiram Bellows, in the hands of the defendant Sowles, as executor, and of the other defendants, as devisees and legatees, with an assessment on 430 aliares of the capital stock of the First National Bank of St. Albans, of the par value of §100 each, made by tlie comptroller of the currency equal to that amount. At the time of the organization of the bank, in 1804, the testator took 450 of its 1,000 shares, and they were placed to bis name on the books of the bank. In 1865 he refused to pay bis taxes, and the collector advertised and assumed to sell 50 shares of this stock, which were bid off by the defendant Sowles and paid for by money of the bank, for which he gave his note. The collector made no transfer of the stock on the books of tlie bank, and it stood there the same afterwards as before. The validity of the tax was in suit between tlie testator and collector, and was finally decided against the testator in 1860. Bellows v. Weeks, 41 Vt. 590. To about that time Sowles received the dividends; afterwards the testator did. After the death of the testator, Sowles paid his note given for the stock to the hank. It is claimed now that Sowles became the real owner of these 50 shares, and that tlie estate of the testator is not liable for tlie assessment upon them. The laws of the state for the distraint, keeping, and sale of property for taxes did not, at that time, apply to property of this nature, and the attempted sale by the collector had no effect whatever upon the title. Barnes v. Hall, 55 Vt. 420. It is urged, however, that the acquiescence of the testator, shown by permitting Sowles to receive the dividends,
In 1880, Susan B. Bellows died, leaving a will making, so far as is material, the same devises and bequests as were made by the will of Hiram Bellows, except that their adopted daughter, Margaret B. Sowles, wife of Edward A. Sowles, executor of his will, was made residuaiy legatee in her will; and Edward A. Sowles was appointed executor of her will, with' the same provision that additional surety should not be required on his bond, and that he should not be required to file any inventory of her estate. Letters testamentary were granted to him upon her estate accordingly, with additional surety upon his bond for the payment of debts, of which, however, there appears to have been none.
Prior to or on March 11, 1881, Sowles, as executor of each of the wills, appears to have applied to the probate court having jurisdiction for an order for the settlement of his accounts, and for decrees of distribution under each wall, whereupon notice was ordered to be given for that purpose, as required by law for such settlement and decrees, on the twenty-sixth of the same month, and notice having been given the hearing was continued to the thirtieth. On that day Margaret B. Sowdes made an application in writing to that court, signed by her as residuary legatee, wherein she requested the court to “decree the amount of real and personal estate named in Pliram Bellow's’ will to E. A. SoavIcs, executor therein named, according to the terms of said will, Avithout finding any definite amount in said executor’s hands,” and “to decree to the undersigned all the residuary portion of real and personal property named in Susan B. Bellows’ will, or ow'ned by her, without finding any definite amount in E. A. Sowdes’, executor’s, hands, wdthout any inven-
The bill alleges, as to those 400 shares, referring to this transfer previously therein set out, that such pretended transfer was made before the conditions of the decree had been complied with, by paying the legatees the several sums bequeathed to them, of which sums the amount of about §4.0,000 remained unpaid, with less than §30,000 of property in the hands of the executor, aside from this bank stock, from which to pay this balance; that she bad no knowledge of the transfer until a long time after it was attempted to be made, and after the bank became insolvent; that she never accepted or assented to the transfer, nor received any-certificate of the slock, or dividends thereon.
The answers of the executor, and of Margaret B. Sowles, who is made a defendant on account of the receipt of assets, admit these allegations', and she affirms their truth. The answers of the other defendants deny them. That the executor bad not assets in bis hands, aside from this bank stock, sufficient to pay the balance of the legacies, at the time of
By section 858, Rev. St. U. S., the laws of the state are made the rules of decision in the courts of the United States as to the competency of witnesses, except in some respects not material. This provision requires this court to enforce that part of the statute of the state prohibiting disclosure. Insurance Co. v. Trust Co., 112 U. S. 250, 5 Sup. Ct. Rep. 119. The provision of that statute, as to production of the inventories in court on subpoena, applies to production on prosecutions under that act, as all other disclosure is prohibited. The listers should not be required or allowed to testify to their contents, nor the town clerk be required to produce them, except in such prosecutions. The motion to suppress is therefore granted, and that testimony not read, and the offer of production excluded.
The testimony of a witness who assisted her in making one of the inventories, and saw its contents by her permission before it was taken up by the listers, was examined as to what they were. Motion was made to suppress this. The state law imposes the obligation of secrecy only after the inventories are taken up by the listers, and has no application to exhibitions of them by the tax-payers before. This testimony is in the nature of proof of declarations and written statements by her, bearing upon her testimony when she testifies that she did not know that the stock was transferred to her. The motion to suppress is denied as to this, and the testimony read and considered. It shows that this stock was put into her inventory as made by her. The grand lists, on which taxes are made out, are open and public, and are in evidence. They show that this stock ceased to be set to the executor at the time of the transfer, and was set to her afterwards, and taxes assessed upon it were paid by or for her. Hiram Bellows was president of the,bank, while he lived, after it was organized; she was the only child and resided in the same village. She must have known of the stock, and have known that
The orator insists, however, that the decrees were so unlawful and irregular as to furnish no foundation for the transfer; and that the transfer, without them, and without consideration, was inoperative to divest the executor of the stock. There is no question here between legatees and devisees about this stock, nor between any such and the creditors of the estate. Hiram Bellows had been dead several years, about seven, before the debts of the bank, for the payment of which this assessment is wanted, were contracted. These assets are therefore only liable for this assessment by virtue of section 5152, which provides that executors shall not be personally holden, but the estates and funds in their hands shall be liable in like manner as the testator would be if living. The question is whether this stock was in the hands of the executor, within the meaning of this statute, at the time of the failure. The legatees had no title or right to the property, except under the will. By the terms of the will, and the law of the state, they had only the responsibility of the executor for security. The creditors could not be defeated in their rights, but they were provided for, as the laws of the state required, by a bond with such sureties, and to such an amount, as the probate court should require. Rev. Laws, § 2067. The highest court of the state, whose construction of these proceedings is binding, has held in respect to this very decree that, in an action by one of the unpaid legatees for the legacy, the question whether debts and expenses had been paid was not a proper subject of inquiry, but was res adjudícala, and that the decree laid a foundation for the recovery of the legacy. Weeks v. Sowles, 58 Vt. 696, 6 Atl. Rep. 603. The executor took the risk of having assets sufficient for all when he represented and showed to the court that he had them. This showing gave the court jurisdiction to decide that he had them. He elected to treat this stock as a part of the residuum; whether it was or not, is not now open. It is suggested that no inventory had been filed, as directed by the statute, and that there was no property before the court for the decree to operate upon. An inventory does not appear to be necessary to bring the assets of a deceased person within the jurisdiction of the probate court for administration. If none is filed, the court may proceed to ascertain and decree the assets on proof, as ivas done, on notice to all, and proof to the satisfaction of the court furnished by the executor.
The relation of husband and wife between the executor and residuary legatee is put forward as preventing the validity of the transfer, to change this stock from his hands to hers. They are one person in law, as by the. common law, in this state, for most purposes, and a sale by him to her of his-own property would be of no validity, both on that account and by reason of her disability to make contracts. But this was not a sale of the stock to her, and involved the making of no contract. He did not own the stock, and did not transfer it as his own, but as of the testator, by virtue of the authority given by the will to him as executor. As early as A. D. 1495, it was adjudged that a feme covert executrix could make sale of lands to her husband, and it was a good bargain. Year Book 10 Hen. VII. 20; Brooke, Abr. “Executors,” 175. And in Coke upon Littleton it is laid down that, if a cestui que use had devised that his wife should sell his land, and made her executrix, and died, and she took another husband, she might sell the land to her husband, for she did it enautre droit, and her husband should be in by the devisor. 112a, Hargrove’s Notes, 143; Newis v. Lark, 2 Plow. 414. This appears to be good law now. Gridley v. Wynant, 23 How. 500; Gridley v. Westbrook, Id. 503. The reasons are equally strong why a conveyance by a husband executor to his wife should be good. The executor separated this.stock from the rest of the estate in his hands, and made it a part of the residue by the transfer, which was a mere delivery, and it became hers by title from the testator. Prom that time it appears to have ceased to be in his hands as executor, and was in hers as legatee.
On the fifth day of September, 1882, the executor transferred 10 shares of the stock to Behnett C. Hall. The bill alleges that this transfer was without consideration, and in mere trust for the benefit of the executor, and for the purpose of enabling Hall to become a director. The answer of the executor, in substance, admits this, and there is in reality no question made but that the allegations are true. These 10 shares, upon these facts, remained in the hands of the executor, for the purposes of this assessment. Bank v. Case, 99 U. S. 628; Witters v. Sowles, 25 Fed. Rep. 168. These considerations leave 30 shares in the hands of the executor subject to the assessment, and for which the “estates and funds,” in his hands are liable. Rev. St. § 5152. The assessment amounts to $3,000, with interest from September 10, 1884, the time at which it became due.
The receiver claims that the assets of the estate which have been paid, delivered, or otherwise have gone to the devisees or legatees, in satisfaction of their legacies and devises, are still liable for this assessment, and that they are chargeable for the amount received up to the amount of
The executor appears to have delivered to the bank, while its failure was impending, stocks and securities belonging to the estate, to an amount much larger than the amount of these shares, which were disposed of by the bank in payment and security of claims against it. He sets up in his answer that this was done upon an understanding that the property should be restored by the bank, if it survived, and applied on an assessment, if it failed, and one should be made. And he now claims that so much of this property or its proceeds as is necessary should be applied upon this assessment, and bar further recovery. He claims, upon the evidence, that this understanding was had, with the bank examiner as well as with the officers of the bank. This assessment is for the purpose of paying those who were creditors of the bank at the time of its failure. That property went to pay others not creditors at the time of the failure, so far as it did pay them. The delivery of the property may have created a liability of the bank; if so, the assessment upon this and the rest of the stock would go ratably upon that and the other liabilities if proved and established. A set-off cannot be made without depriving others of their ratable proportion. Besides this, the claims are not in any sense mutual. The claim of the executor, if he has any, is against the bank. The assessment never was due to the bank, and does not belong to it. The assessment belongs to the creditors of the bank, and is recoverable by the receiver, only for the purpose of ratable distribution among them. Delano v. Butler, 118 U. S. 634, 7 Sup. Ct. Rep. 39. This claim is therefore no answer to the claim for the assessment, whether this understanding was had or not, or with the bank examiner or only with others. There was no receiver, and the examiner did not, and probably did not assume to, represent the creditors.
The bill is not framed to charge Margaret B. Sowles with the assessment as owner of the stock, but only to charge the assets in her hands as legatee; and it is said by Mr. Justice Swayne, in Kennedy v. Gibson,
Lot there be a decree for the orator against the defendant Edward A. Sowles, that he pay to the orator, out of the assets of the estate of Hiram Bellows in his hands, the sum of $3,000, with interest from September 10, 1884, to the time of entering the decree, together with the costs of this suit, within 10 days from the entry of the decree; and that in default of such payment execution against such assets issue; and dismissing the bill as to Margaret B. Sowles, without costs and without prejudice, and as to the other defendants, with costs.
Rehearing
(August 24, 1887.)
On rehearing the following opinion was delivered:
Since the filing of the decision and decretal order in this cause, and before entry or signature of any decree pursuant thereto, on motion of the orator, further hearing has been had as to charging the assets of the estate of Hiram Bellows, which have passed to Margaret B. Sowles, trustee of Susan B. Sowles, with the assessment upon 30 shares of stock of the national bank, of which the orator is receiver, still held by the executor. At this stage of the case correction of any oversight or error can be made on suggestion of any party, or by the court of its own motion. Such correction is not the alteration of a decree, for as yet there is no decree; hut is a mere change of the directions for a decree, if necessary, which may always be done until the directions, as finally settled, are carried into the decree itself and the decree is entered.
On re-examination of the case on this point, which was not made on the argument in chief, it fully appears that, at the time of the creation of the debts of the hank, on account of which this assessment is made necessary, there were estates 'and funds in the hands of the executor, which were of the testator, to an amount several times greater than this assessment upon this stock. It is said in argument that the title to these assets had before that time vested in (he legatees under the decrees of distribution. None of these assets were specifically bequeathed or distributed to the legatee. A legacy of $25,000 was bequeathed to her by the testator. The decrees were made on representations by the executor that he had more than sufficient assets in his hands to satisfy all debts, legacies, and charges. Thereupon he was decreed to pay this legacy. He had not done so at the time of the failure of the bank, which, of course, was after the accruing of these liabilities of the bank. He has since assumed to pay it out of these assets by delivering them to the trustee at agreed prices, in satisfaction of the legacy. The statutes of
So much of the decretal order heretofore entered herein as directs that the bill be dismissed as to Susan B. Sowles, and Margaret B. Sowles, trustee for her, is hereby vacated. And there is added thereto that the decree provide that in default of payment by the defendant Edward A. Sowles, executor, payment be made by the defendant, Susan B. Sowles, or Margaret B. Sowles, her trustee, within 10 days thereafter; and, in default of such payment, that execution issue against the assets of the estate of Hiram Bellows, in the hands of Edward A. Sowles, executor; and for want thereof against such assets in the hands of Margaret B. Sowles, trustee of Susan B. Sowles; and for want thereof against the goods, chattels, and estate of Susan B. Sowles, in her own hands, or in the hands of Margaret B. Sowles, trustee.