Case Name: The First & Citizens National Bank of Elizabeth City, N. C., v. Seip et al.
Court: Ohio Court of Appeals
Jurisdiction: Ohio
Decision Date: 1931-07-27
Citations: 43 Ohio App. 440
Docket Number: 
Parties: The First & Citizens National Bank of Elizabeth City, N. C., v. Seip et al.
Judges: Mauck, P. J., concurs.
Reporter: Ohio Appellate Reports
Volume: 43
Pages: 440–449

Head Matter:
The First & Citizens National Bank of Elizabeth City, N. C., v. Seip et al.
(Decided July 27, 1931.)
Mr. John P. Phillips, Mr. John P. Phillips, Jr., and Messrs. Wilson S Morrow, for plaintiff.
Mr. Walter W. Boulger and Mr. Wilby G. Hyde, for defendants.

Opinion:
Middleton, J.
The plaintiff, the First & Citizens National Bank of Elizabeth City, North Carolina, filed this action in the court of common pleas of Ross county under favor of Section 11104, General Code, praying that four deeds dated April 7, 1921, made by the defendant John Seip to the remaining defendants, be set aside. The claim of the plaintiff in brief is that John Seip by such conveyance attempted to prefer the grantees as his creditors, and further that the conveyances were made with intent to hinder, delay, and defraud his remaining creditors. Each of the deeds in question attempted to convey to one of the defendants an undivided one-fifth interest in certain real estate situate in this county and in the city of Chillicothe. The petition further particularly alleges that the plaintiff did not learn of the execution of said deeds until within four years prior to the bringing of the action, which was instituted on July 24, 1926, more than five years after the making and delivery of the deeds in question. In August, 1926, the defendants other than John Seip filed an answer which in effect was, first, a general denial of the material allegations of the petition; secondly, they referred to the statute of limitations by averring that the cause of action did not accrue within four years next preceding the bringing of the suit. In June, 1928, after some delay, they filed an amendment to this answer and alleged that the said John Seip had received an advancement from his father in the sum of $21,000, and that by reason thereof he had no interest in the real estate so conveyed except merely the legal title thereto, and that the deeds were made in settlement of said advancement. The case is in this court on appeal from the court of common pleas, and was submitted on a transcript of the evidence adduced in the hearing in the lower court and some additional evidence.
It would not be possible within any reasonable limits to discuss in detail all of the evidence or the legal claims made thereunder by the parties in the hearing of this action. It will be sufficient to direct attention to only those matters which in our judgment relate to such ultimate facts as are determinative of the rights of the parties herein.
The interest in the real estate which John Seip attempted to convey to his two brothers and two sisters was devised to him by Ms father, one Charles Seip, who died on June 2, 1902, leaving a last will and testament. By the provisions of this will, he gave to each of his six surviving children an undivided one-sixth interest in all of his property both real and personal. The will was probated on August 2, 1902, and the defendant John Seip, one Charles Schlegel, and the defendant Charlotte Seip were thereafter duly appointed as executors of said estate as provided in the will. It appears that no inventory of the personal estate was filed until January 2, 1903. In the meantime, it is apparent from the record there was some dissatisfaction among the heirs, and on November 1, 1902, Charlotte Seip, John Seip, George Seip, David Seip, and Elizabeth Seip filed an action in partition against the remaining daughter, Mary Schlegel, and Charles Schlegel, her husband. In the petition in that action there was a complete description of the real estate of which the testator died seized, and the averment is made that each of the plaintiffs and the defendant Mary Schlegel had a legal right to and was seized in fee simple of an undivided one-sixth part of said real estate therein described, which included the real estate involved in this action. There is no reference in this petition to any existing claims against John Seip, nor is there any claim made in said petition for the adjustment of any advancement or any debt due the estate from the said John Seip. It appears from the record that this action was dismissed and no decree entered by the court. It is shown, however, that there was an agreement among the heirs for the settlement of the interest of said Mary Schlegel in the estate, and that she received as her interest a conveyance for two tracts of real estate of the value approximately of $16,000. It is said in argument that she also received $5,000 in money. We are unable to find that this latter claim is sustained by the evidence, but it does appear that she was charged with an advancement of $2,000 in this settlement, which would make the value of her interest as she received it approximately $18,000.
Now, referring again to the estate of the testator. The evidence shows that on January 2, 1903, an inventory and appraisement of the personal property of said estate was filed by the said John Seip, as one of the executors, and that it was verified by him under oath to the effect that it contained a true and correct statement of all the estate and property of the said testator "which has come to the knowledge of said affiant." This inventory shows an appraisement of something over $14,000 in personal property, which included certain United States bonds of the value of more than half of said appraisement, and did not include in any form any claim against John Seip. On August 24, 1903, the first and final account of the executors in the administration of said estate was filed in the probate court. This account charged the executors with the amount shown by the inventory aforesaid, and credited them with the disposition of that exact amount, and did not contain any further receipts by the estate or show the payment of any amount beyond the amount fixed by the inventory. The account was verified by the defendant John Seip. The probate court, after due notice of the pendency of said account, made the following finding and decree in respect thereto:
"This day came on to be heard the first and final account of John Seip, et al., executors, heretofore filed for settlement and duly published for hearing as of June 30, 1903, and then continued to this day. And no exceptions having been filed to said account and all objections thereto having been withdrawn, the court carefully-examined same and finds that said executors have properly charged themselves in ]said account with assets of the estate of Charles Seip, deceased, in the sum of $14,444.57, and further that they have paid out in the administration and distribution of said estate and entitled to credit in said account for the sum of $14,444.57, no compensation for themselves being included therein. And it appearing to the court that the items of credit therein are correct, it is ordered that same be now approved by the court. The court finds that said account represents the final settlement of said estate and it further appearing that same is in all respects correct and true, it is ordered that said executors be now discharged from said trust and that said account be now allowed, settled, approved, confirmed and made a matter of record. ' '
The evidence in this case does not support the claim of the defendants that John Seip had received an advancement from his father in the sum of $21,000. All of the evidence adduced by them in support of this claim tends to prove, if it establishes anything, that at the death of his father John Seip was indebted to his father in the sum of $21,000 or had received that amount from his father as a gift. There is evidence to the effect that the remaining two sons, David Seip and George Seip, were also indebted to their father in a substantial amount at the time' of the latter's death. Be that as it may, the judgment of the probate court approving the final account of the executors is like the judgment of any other court of competent jurisdiction. It is conclusive against all persons involved who have legal notice, and the judgment approving the account continues as a bar to any claim of the heirs for any money rights growing out of the settlement of the estate until such judgment is reversed or is attacked for fraud or mistake.
"Orders or decrees settling final accounts entered after giving notice in the manner required by statute are conclusive evidence that the amounts found to be due thereby correctly represent the indebtedness of the party whose account is settled to the' estate in his care; and are res judicata as to all matters'directly involved in the accounting and necessarily determined thereby, not only as to the representative himself but as to all parties to the proceedings and persons as to whom jurisdiction has been acquired in the manner prescribed by law, including those interested as legatees, distributees and creditors." 2 Freeman on Judgments (5th Ed.), Section 820.
The general rule in this respect is well stated in 11 Ruling Case Law, 102, Section 104, as follows:
"As a general rule a probate court has no power to reopen an estate which has once been administered and closed. And an executor or administrator is no longer subject to the jurisdiction of the probate court when, in obedience to a valid decree of that court, he has made final distribution and has been discharged." .
It is apparent that the inventory filed in the settle ment of this estate was not a correct inventory if the claims of the defendants are supported by the evidence. But this court has no jurisdiction to interfere with the decree of the probate court, in the settlement of this estate. It is equally apparent that the account filed by the executors, which purports to show that they had received and administered approximately $14,000, is not correct if the defendants' claim is true. Section 30691, General Code, being Section 6069, Revised Statutes, at the time of the settlement of this estate, provides that an administrator or executor who is indebted to the estate must charge himself with that indebtedness in cash. John Seip did not do this, and his brothers and sisters must be held to have known that he did not comply with the law. In the case of Stubblefield v. McRaven, 13 Miss. (5 Smedes & M.), 130, 43 Am. Dec., 502, the application of the doctrine of res judicata to judgments of probate courts making final disposition of estates is approved, and that case is followed by many other cases subsequently recognizing the same principle. The judgment of the probate court in the instant case necessarily included a finding that all of the personal estate of Charles Seip was accounted for and settled. There is nothing in the record to show otherwise, and if this is not true, that fact was known only to the heirs and the executors. The evidence indicates that this settlement was made by John Seip, not only with the full knowledge of the other heirs, but by their consent. When his sister, after the institution of the partition suit, conveyed her undivided one-sixth interest of the remaining estate, after she had received her share, she conveyed to John Seip the undivided one-fifth of her one-sixth interest in such remaining property, and this conveyance was placed on the official records of this county.
It follows from what has been said that the defendants are estopped from pleading any consideration for the transfer of the property by John Seip to the remaining defendants. But, if this were not so, it is beyond question that for more than eighteen years these heirs permitted John Seip to possess this property in his own name, as shown by the records in the probate court and recorder's office of this county. It is in evidence that he represented to the agent of the plaintiff in this case that he was the owner of about $100,000 of real estate in Ohio, and that it was part of an estate worth $300,000 jointly owned by him and his brothers and sisters. Equity will not permit these defendants, after having by their own fault made it possible for John Seip to obtain credit and financial standing to come in at this time and say that, while during all these eighteen years he was the ostensible owner of the property in controversy here, and according to the public records was the actual owner thereof, he was not in fact such owner, and that during all that time he was holding the property in trust for them.
We are persuaded that the defendants have no defense in this case unless it is by way of the statute of limitations. Before, however, referring to that phase of the case it must be observed that we are convinced that, when John Seip made the deeds attacked in this proceeding he was insolvent, and that he knew he was insolvent, and that it was because of this situation that he made the transfers. If it had not been necessary for him to place himself beyond the reach of his creditors at the time he made these conveyances, we are in doubt as to whether such conveyances would ever have been made. His right to this real estate had remained too long unchallenged to impress a court of equity with the belief that any of the remaining defendants ever seriously considered any further adjustment of their father's estate. At any rate, we have no difficulty in concluding that the transfer of this property was without consideration and made for the purpose of preferring the brothers and sisters of John Seip to his other creditors, and for the further purpose of delaying such creditors.
It appears that the claim of the plaintiff in this action grew out of a contract between the defendant John Seip and one E. II. Craig, on the one hand, and W. S. Taylor, on the other. By the terms of this contract, Seip and Craig agreed to pay Taylor $46,500 in installments of $10,000 each, and the performance of said contract was secured by Seip and Craig hypothecating a large number of shares of stock in a real estate project near Elizabeth City, North Carolina. This real estate project was being carried on under the name of the Providence Farms, Inc. It is not necessary to go into further details in respect to this real estate matter except to say that Taylor hypothecated this contract and the stock as collateral security for a debt to the plaintiff. So that the plaintiff is attempting in this action to enforce what was primarily an obligation of Seip to Taylor. This contract with Taylor was signed under date of October 6, 1920. The record discloses that some time in May, 1922, Taylor filed an action against John Seip in the superior court of Elizabeth City, North Carolina. In this action Taylor sought to set aside the transfer of the same property involved in this case upon the same grounds and for the same reasons as are urged by the plaintiff in this action. It seems that for some reason that proceeding was dismissed, but we do not have a full transcript of the record made in that case, nor has this court heard any explanation as to why that action was instituted and for what reason it was dismissed. It seems strange, to say the least, that an action of that kind could be brought in a city of the population of Elizabeth City and the pendency of such action not be known to the plaintiff in this case, considering the intimate business relations between the plaintiff bank and Taylor. At the time that action was brought, if we are to believe the evidence of the plaintiff, the plaintiff was the holder and possessor of the claim against Seip on which Taylor founded his right of action. It seems not only possible, but entirely probable, that Taylor did not bring that action without the knowledge of some agent or representative of the plaintiff bank. Three officers of the bank, however, testified that they had no knowledge of the conveyances in question until some time in 1925 or 1926. It appeared that counsel for the defendants were unaware of the depositions taken, since the case came to this court tending to show this want of knowledge on the part of the plaintiff. These depositions appear to have been taken after due notice, but the witnesses were not cross-examined. There is not a particle of testimony adduced by the defendants upon what we consider to be the only defensive issue in the case. Under these circumstances, we conclude that, if the defendants desire, they may have until the 1st day of September to take depositions bearing upon this defense. If the defendants do not desire to secure further evidence, a decree will be entered for the plaintiff as prayed for in the petition
Decree accordingly.
Mauck, P. J., concurs.
Blosser, J., not participating.