Untitled Texas Attorney General Opinion, O-5826

Untitled Texas Attorney General Opinion

O-5826

| Tex. Att'y Gen. | Jul 2, 1944

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Case Information

*1 OFFICE OF THE ATTORNEY GENERAL OF TEXAS AUSTIN

Honorable J. D. Looney County auditor, Bowie County Boston, Texas

Dear Sir: Opinion No 0-8888 Re: Report of sale of suited States Governance Bouds reconnection with tha administration of the artate of W. J. Buchanan, deceased.

Your letter of April 1, 1944, requesting the opinion of this department of the guestions stated therein reads, in part, as follows: "I enclose herewith bertifled copies of application for order of sale report of sale, and second annual report of administrative in connection with the administrative of the Estate of W. J. Buchanan, Receased, Mre. Helen Seeger, Administratrix, all of which have a bedring on an opinion which I am going to request in this letter. "Mrs. Helen Seeger, administrative of the above mentioned estate, filed her second annual report something the month of March, 1944. Attached to this report are Exhibits 'A,' 'A-1' and 'B.' Exhibit 'B' purports to show all cash received and disbursed. "During the period of this report the administrative made application to sell certain U. S. Government bonds of the par value of $$ 1, 376, 000.00$ , as shown in the attached application for order of sale. Order of sale was issued on this application, but up to the time of the filing of the annual report attached hereto, no report of sale had been made on the sale of these bonds. When the County Judge examined the report, he found that the only item of cash shown in connection with this sale was an item under Receipts in Exhibit 'B' of $$ 12, 789.39$ , said item being listed as 'Difference

*2 between value of U. S. Government securitios surrendered and value of U. S. Government securitios received in exchange.' Upon being advised by the County Clerk that no report of sale had over been filed on the sale of the bonds in question, the administrative was ordered to file said report, a oopy of which is attached hereto. Counsel for the administrative contends that these bonds were not :sold as set out in his application for sale, but were merely exchanged for other U. S. Government bonds at a profit of $$ 12, 789.39$ , and administrativa reports as oash received only the profit realized from tia so called exchange. "It is my contention, and that of the County Judge, that the report sale speaks for itself in the fact that these bonds were sold at the request of the administrative by the Chase National Bank to a bond house in New York, and the other securitios mentioned purchased with money realized from said sale, leaving a balance in oash of $$ 12, 789.39$ , profit on the sale and purchase. "We oontend further that although the report of sale states that these bonds were exchanged, they were in reality not exchanged, but sold, and regardless of the manner of sale, this money oame into the hands of the administrative as oash receipts whether the money was actually in a bank in New York or in Bowie County; that the reason the bonds were sent to New York for sale was because there was no market in Bowie County for such a large amount of bonds, and in order to sell said bonds they had to be sent to a proper market. "Neither the report of sale nor the second annual report has been approved by the County Judge. The question is, should the report of sale show a sale of these bonds instead of a transfer of securitios with a oash profit involved, and should the entire amount of the sale, to-wit: $$ 1, 513, 259.64$ be shown on the second annual report under the heading of Receipts, instead of the manner in which it is now reported, to-wit:'Differance between value of U. S. Government securitios surrendered, and value of U. S. Government securitios received in exchange, $12,789.39.?

*3 In the application of the administrative to sell such securities, the administrative prays that she be authorized to sell said bonds and reinvest the proceeds in government tax free bonds with such other orders as may be proper in the premises.

The order of sale issued on the above mentioned application is as follows:

"IN THE COUNTY COURT OF BENIE COUNTY, TEXAS.

"IN RE: ESTATE OF W. J. BUCHNAAN, "DECEASED.

No. 5571

"O R D E R

"On this 20th day of November, 1943, came on for hearing the application of Mrs. Helen Seeger, administrative, for authority to sell on the market United States Government bonds of the par value of $1,376,000.00, fully described in said application, and to reinvest the proceeds thereof in non-taxable United States Government securities, and the Court, after examining said application and hearing the evidence thereon, is of the opinion that said application should be, and it is hereby granted, and said administrative authorized to sell the securities listed in said application at the market price and reinvest the proceeds thereof in non-taxable United States Government bonds.

*4 Honorable in. D. Jooney, inie

The report of the administrativa on the sale of the bonds, based on the foregoing order of sale, is as follows:

"REPORT OF ADVIDIATRITAL ON SALE OF DON'S

"IN THE COUNTY COURT OF BOWIE COUNTY, TEXAS.

"IN AE: ESTATE OF W. J. BUCHANAN DECEASED

"No. 5571

"Comee Mrs. Helen Seeger, Administratriz in the above proceeding, and reports that subsequent to the order of this court dated November 20, 1943, in respect to the disposition of United states Government bonds of the par value of $1, 376, 000.00, s h e s e n t s a i d b o n d s t o T h e C h a s e N a t i o n a l B a n k o f N e w Y o r k w i t h i n s t r u c t i o n s t o s e c u r e t h e r e f o r 24$ 1,500,000.00; that said Bank delivered said bonds to C. J. Devine & Company, New York dealers in government bonds and received credit for the market value thereof; to-wit: $1, 513, 259.64; t h a t s a i d C . J . D e v i n e & a m p; C o m p a n y t h e r e u p o n c h a r g e d s a i d T h e C h a s e N a t i o n a l B a n k o f N e w Y o r k w i t h t h e s u m o f$ 1,500,470.25, representing market value of 24% United states Treasury Bonds 65/69 of par value of $1, 500, 000.00, a n d a l s o g a v e s a i d B a n k c r e d i t i n c a s h i n t h e s u m o f$ 12,789.39.

*5 Honorable J. D. Looney, page 5

"Your Administratrix shows that in lieu of the United States Government bonds of par value of $1, 376, 000.00, r e f e r r e d t o i n t h e o r d e r o f t h i s C o u r t d a t e d N o v e m b e r 20, 1943, s h e h a s r e c e i v e d 24$ 1,500,000.00 and has received in cash the sum of $12,789.39, both of which items are included in her report made as of February 29, 1944.

"MRS. HELEN SKEGER, ADMINISTRATRIX "By: A. L. Burford "Her Attorney."

Article 3553, Vernon's Annotated Civil Statutes, provides:

"No sale of any property of an estate shall be made by an exeeutor or administrator without an order of the court authorizing the same."

Article 3583, Vernon's annotated Civil Statutes, provides:

"All sales of property of an estate shall be reported to the court ordering the same within thirty days after the sales are made. The report of sale shall be in writing and shall be subsoribed and sworn to by the exeeutor or administrator. Said report may be made

*6 in term time or in vacation, and when returned, shall be filed by the clerk and the filing thereof noted upon the judge's docket, and shall show: "l. The time and place of the sale. "2. The property sold, describing the same. "3. The name of the purchaser of such property. "4. The amount for which each article of property sold. "5. The date of the order of the court authorizing the sale. "6. The terms of the sale, and whether at public auotion or made privately."

Article 3430, Vernon's Annotated Civil Statutes, provides: "When an executor or administrator deems if for the interest of the estate to purchase or exchange property, or to take any claims or property for the use and benefit of the estate in payment of any debt due or owing to the estate, or to compound bad or doubtful debts due or owing the estate, or to make compromises or settlements in relation to property or claims in dispute or litigation, or to compromise or pay in full any secured claim which has been allowed and approved as required by law against the estate by conveying the real estate securing the payment of the claim to the holder thereof in full payment, liquidation and satisfaction of such claim and the cancellation of any and all notes, deed of trust, mortgages or other liens evidencing or securing the payment of such claim, he shall present an application in writing to the County Court representing the facts; and if the Court is satisfied that it will be to the interest of the estate to grant the same, an order shall be entered showing the authority granted. The executor or administrator may also release mortgages upon payment of the debt secured thereby."

*7 Honorable J. D. Looney, p.ge 7

Generally speaking, "probate courts generally have power to confirm or to disapprove a sale, and in the absence of a clear showing to the contrary, a court's authority to act in confirming a sale will be presumed. A court may confirm a sale even though it was not in accordance with the order." Corpus Juris Secundum, Vol. 34, Section 607 (a), page 581.

In the case of Bliokensderfer v. Hanna, 132 S. W. 678, at page 682, it is dated:

" Again and again this court has held sales of real estate under orders of the probate courts to be judicial sales and the confirmation of such sales by the probate court is the crowning act and cures all prior irregularities, provided, of course, always, that the court had obtained jurisdiction of the subject-matter and over the parties. *

It is stated in your letter that "neither the report of sale nor the second annual report has been approved by the County Judge." Counsel for the administratrix contends that these bonds were not sold as set out in his application for sale, but were merely exchanged for other United States Government bonds at a profit of $12, 789.39, a n d t h e a d m i n i s t r a t r i x r e p o r t s a s c a s h r e c e i v e d o n l y t h e p r o f i t r e a l i z e d f r o m t h i s t r a n s a c t i o n . W h i l e o n t h e o t h e r h a n d, a m o n g o t h e r t h i n g s, t h e C o u n t y J u d g e c o n t e n d s t h a t a l t h o u g h t h e r e p o r t o f s a l e s t a t e s t h a t t h e s e b o n d s w e r e e x c h a n g e d, t h e y w e r e i n r e a l i t y n o t e x c h a n g e d, b u t s o l d, a n d r e g a r d l e s s o f t h e m a n n e r o f s a l e, t h i s m o n e y c a m e i n t o t h e h a n d s o f t h e a d m i n i s t r a t r i x a s c a s h r e c e i p t s w h e t h e r t h e m o n e y w a s a c t u a l l y i n a b a n k i n N e w Y o r k o r i n B o w i e C o u n t y . I t i s a p p a r e n t t h a t t h e p a r a m o u n t q u e s t i o n i n v o l v e d i s w h e t h e r t h e C o u n t y J u d g e i s e n t i t l e d t o t h e c o m m i s s i o n u n d e r A r t i c l e 3926, V e r n o n^{'} s A n n o t a t e d C i v i l S t a t u t e s, o n t h e e n t i r e p r o c e e d s i n v o l v e d i n t h e a b o v e m e n t i o n e d t r a n s a c t i o n o r w h e t h e r t h e C o u n t y J u d g e i s e n t i t l e d o n l y t o t h e c o m m i s s i o n a l l o w e d b y A r t i c l e 3926 o n t h e$ 12,789.39 cash actually received by the administratrix.

Although not specifically asked in your request, as pretofore stated, it is apparent that the main question involved

*8 conceris the amount of commission due the Judge under Article 3926. It is our opinion that the County Judge would be entitled to the commissions provided by Article 3926 on the $$ 12, 789.39$ and not on the $$ 1, 513, 259.64$ .

Yours very truly

ATTORNEY GENERAL OF TEXAS

By Judith Willam

Ardell Williams Assistant

AW:EP