Court Opinion

ID: 6615822
Source: CourtListenerOpinion
Date Created: 2022-07-20 20:22:25.581078+00
Date Added: 2024-06-11T15:58:31.548839
License: Public Domain

Philips, P. J.,
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 *649business, under the firm name of “Benedict, Malone & Company,” a firm composed of three makers of said note.
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 *650February, 1882, lie was universally regarded in the community as perfectly solvent. Hurt himself kept his money in this bank and lost by its failure about three thousand dollars. And the evidence shows that a part of the monies paid over to these contesting heirs by the executors at the end of the first year of their administration, was lent by them to this bank, át seven per cent, interest, and was lost by the failure. The evidence also showed that at the time of Powell’s death he held other notes on Malone then past due, which Malone voluntarily paid before the maturity of the note in question.
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 *651and against the executor, the court exercises an especial function, of equity. As said by Coulteb, J., in Kellar’s appeal, 8 Barr, 288: “It is peculiarly a branch of equity jurisprudence, where the conscience of the chancellor, enlightened and controlled by adjudicated precedents, is the umpire. * * * A court of chancery always deals with great tenderness towards a trustee) acting in good faith. * * * A slumbering credulity, or careless indifference, on the part of . the trustee the law will not tolerate. He must do as a prudent man) under like circumstances, might do in his own case. It must be borne in mind that the office of administrator, executor and guardian, is one of the highest and most absolute necessity in society; and in the great majority of cases is undertaken more out of kindness and duty, than with any hope or expectation of emolument, and is attended in its faithful discharge' with trouble, anxiety and hazard.” So it is, in effect, said ih Neff’s appeal, 57 Pa. St. 96: All that justice, in the reasonable conservation of estates under administration, ought to exact of the administrator is common skill, prudence and caution, which an ordinarily prudent man exercises in the management of his own like affairs. This is approved by our Supreme Court in the Pudge case: “We look upon the administrator as the representative of the deceased, and if the deceased if alive, and acting as a prudent man, could not have prevented the loss, his representative ought to be exonerated under the like circumstances.” If these rules are to be recognized in the consideration of this case I do not perceive how the executor is to be made liable for the loss of the money on the note in question. That he acted just as the intestate himself would have acted, if living, in respect of this debt, is manifest. At the very time of Mr. Powell’s death he had money loaned to Malone then past due, showing his confidence in Malone’s solvency. That Hurt in indulging Malone as he did acted just as an ordinarily prudent man would have acted in his own affairs is beyond debate. And this is the rale laid down *652by our Supreme Court, for the determination of this case. No other standard of diligence can be erected by this court.
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 *653into money dioses in action. But we wholly deny that it is a fixed rule that, under any and all circumstances, this should be done, and if not so done the administrator acts at his own peril. No court has ever laid down such a rule. The very authority relied upon by respondents (Charlton's appeal, 34 Pa. St. [10 Casey] 475) says: “We do not desire to be understood as holding, that an administrator is bound to sue immediately a debt due his intestate, or encounter the hazard of personal liability for it; such is not the rule, but he is responsible for the want of ordinary diligence. When he-has suffered years to pass by without any effort to collect such debt, dr offering any excuse for his failure to proceed * * * we will not reverse the judgment.” The facts of the case at bar bring it within the very terms which .the opinion says wall excuse it. If the rule were otherwise, it would run counter to the rule established by our Supreme Court, of establishing the administrator’s liability by the test of what an ordinarily prudent man would do under like circumstances. It recognizes the right of exercising a discretion in every case, subject to the limitation as to its reasonableness, to be ascertained by the standard which governs the action of men, of common prudence, similarly situated.
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 *654absolutely mandatory on the executors to collect all the notes of the estate within the first year of administration. This was not tenable, for the obvious reason, that the direction as to the collection of notes and accounts was to do so “ as soon as the same can be done.” The direction as to the first year of the administration was as to the conversion into cash of “all other personal property; ” and even as to that there was the qualification, “ or as soon as may be done.”
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 *655acts at his own peril, if the change or adventure prove disastrous.
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 *656had met the conjecture of the witness—a bare supposition—it would have been done by wrongfully taking the funds of other people entrusted to the bank, and misapplying them to the payment of an individual debt. What right had the witness to presume that Malone would have thus committed a flagrant breach of trust ? And upon what ethics, recognized by a court of chancery, should we feel constrained to adopt the mere opinion of the witness and predicate a decree upon such mala jidea of this bank officer ?
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 *657the maturity of this note by any such threat. There is no evidence in this record that he had made any payment on any of his vast indebtedness maturing after this debt. The expressed opinion of the witnesses as to what might have happened, was not based upon, nor accompanied with, the presentation of any reliable fact to warrant any court in founding judgment thereon.
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 *658debts which have been charged in the inventory as due to the estate, if the court be satisfied that such debt was not really due to the estate, or that it had been balanced or reduced by offsets in any court of competent jurisdiction, or 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.” This statute in unmistakable terms declares that, if the ‘ ‘ debtor was insolvent, ’ ’ the “ court shall give credit to the executor or administrator.” The court has no discretion in such case, for thus saith the law-making power of the state. The fact of insolvency of the debtor as much entitles the executor to the credit as if it appeared the debt was not really owing to the estate, as if it had been balanced or reduced by offset in a court of competent jurisdiction. These excuses for not collecting lie alongside of each other in the section of the statute, and the one is just as obligatory as the other on the probate court. To these unqualified grounds of excuse, entitling the executor to the credit, is added “any other cause,” rendering it “impossible for the executor, etc., to have collected such claim by the exercise of due diligence.”
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 *659is more doubt, because the evidence did not show that during the whole time the administrator held it Gilliam was insolvent. When the administrator first had this note the debtor was not shown to be insolvent, and even after it came again into the hands of the administrator, the evidence shows, the administrator had secured^ through a land trade, a debt due to the estate and a debt to himself. The evidence tended to show that there was a time during the administrator’s possession of the note that he might have secured a part of it at least, as he secured part of an individual debt, out of the property of the debtor. It was in respect of this state of facts that the court said: “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.” As to the Gilliam note, it is manifest it came under the last clause of said section of the statute, “any other cause.” But as to the Clark note, the testimony showing Clark’s insolvency from the time the note came into the possession of the administrator, he was entitled to the credit as a matter of course.
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 *660the executor held the note and mortgage for a number of years, without any effort to foreclose the mortgage, and negligently permitted the security to depreciate in value, he was held accountable to the extent of such depreciation.
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 *661this case, to demand that Hurt shall make good the one thousand-dollar note, with its accumulated interest, compounded, more than doubling the principal, is contrary to common right, and the dictates of an enlightened conscience. I cannot consent to the wrong and injustice.
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.