Court Opinion

ID: 9624608
Source: CourtListenerOpinion
Date Created: 2023-08-22 07:11:18.36408+00
Date Added: 2024-06-11T18:05:51.156530
License: Public Domain

Bussey, Justice
(dissenting).
I respectfully dissent. Before proceeding to discuss the reasons why, I wish to call attention to certain factual matters not reflected in the majority opinion. According to the undisputed evidence, Mr. David T. Ouzts, in his capacity as executor, spent a great deal o,f time in the study and the giving of directions to the several brokers for the liquidation of the stock in the several margin accounts, and, in this re*161spect, acted in a most judicious manner to the best interest of the estate. It is further not disputed that the assets of the estate were quite sufficient to have enabled the executo,r to pay off the amounts due the several brokers on the margin accounts and to take actual physical possession of the stocks involved, had he been so minded or deemed it to the best interest of the estate to do so. Had he done so, it is most probable that this controversy would not be before the court.
Admittedly, both the rationale and the results of the majority opinion would have been quite correct prio,r to the act of the General Assembly approved March 12, 1943, 43 Statutes 34, which amended Section 9017 of the 1942 Code relating to the commissions of executors and administrators. The case of Spartanburg County v. Arthur, 180 S. C. 81, 185 S. E. 486, was decided in 1936, and all o,ther decisions of this court relied upon as authority for the result reached in the majority opinion antedate the cited case.
The cases of Hitchcock v. Mosher, 106 Mo. 578, 17 S. W. 638; In re Mercantile Trust Co., 210 N. Y. 83, 103 N. E. 884, and In re Ledbetter, 235 N. C. 642, 70 S. E. (2d) 667, cited and relied upon, are all, in my opinion, distinguishable from the case before us either op the facts or the statutory language involved or both. A leading case from another jurisdiction, which I think much more nearly, though not precisely, in point with the instant case is that of York v. Maryland Trust Co., 150 Md. 354, 133 A. 128, 46 A. L. R. 231, wherein commissions were allowed the execute,r on the full value of the stocks held in margin accounts.
In my view, however, none of the above mentioned cases are at all decisive of the issues and contentions presented on this appeal. These issues and/or contentions arise strictly out of and involve a full consideration and construction of the above mentioned amendatory Act of 1943, the pertinent portion of which is set forth as follows:
“AN ACT to Amend Section 9017, Code of Laws of South Carolina, 1942, Relating to Commission of Executors and Administrators, by Providing for the Calculation of *162Said Commission upon the Appraised Value of the Personal Assets.
“BE IT ENACTED by the General Assembly of the State of South Carolina:
“SECTION I: § 9017, 1942 Code, amended — calculate commissions of executors and administrators on appraised value of personality.- — -That Section 9017 of the Code of Laws of South Carolina, 1942, be, and the same is hereby amended, by inserting on line four of said section after the word ‘dollars’ and on line six of said section after the word ‘dollars’' the word ‘appraised value of all personal assets’; so that said section, when so amended, shall read as follows:
“ ‘Section 9017. Every executor or administrator shall, for his, her or their care, trouble, and attendance, in the execution of their several duties, take, receive, or retain in his, her, or their hands, a sum not exceeding the sum of two dollars and fifty cents for every hundred dollars appraised value of all personal assets which he, she or they shall receive, and the sum of two dollars and fifty cents for every hundred dollars appraised value of all personal assets which he, she or they shall pay away, in credits, debts, legacies, qr otherwise, during the course and continuance of their or either of their managements or administration, * ”
To bring the real contentions of the parties into proper perspective and focus, it is not contended by the respondent that the various stocks held in the several margin accounts were improperly included as assets of the estate in the inventory and appraisal thereof. Moreover, to my mind, the applicable statutory provisions of Title 19, Article 3, of the South Carolina Code, the inventory and appraisal forms prescribed by the South Carolina Tax Commission pursuant to the statutes, and the long established practice in the Probate Courts all indicate clearly that these stocks were properly included as assets of the estate in the inventory and appraisal thereof.
The basic contention of the respondent is simply that since decisions of this court prio.r to the adoption of the *1631943 statute gave a strict construction to the word “receive” and held that money had to be actually received by an executor or administrator to be subject to commissions, and since the legislature presumably was aware of such decisions, it follows that when applied to other personal assets, the word “receive” has to be given the same strict construction, and, hence, since the executor here did not receive actual physical possession of the shares of stock, commissions on the appraised value thereof are not allowable.
On the ojRer hand, the basic contention of the appellants is that when the amendatory act of 1943 is considered in its entirety, in the light of circumstances existing at the time of its passage, the legislature did not intend that the word “receive” should be given such a strict construction with respect to personal assets other than money; and that such personal assets, other than money, are received by an executor o,r administrator, within the legislative intent, when he receives constructive possession and control thereof with the attendant burdens and responsibilities.
I most respectfully submit that the majority opinion does not sufficiently reach or deal with the main thrust of appellants’ argument here and rather summarily disposes thereof without full consideration. The entire argument of the appellants is disposed of by a holding that the only effect of the 1943 amendment was to merely allow an executor or administrator commissions on the appraised value of personal assets actually received and distributed in kind, in addition to commissiqns on money actually received and paid out, which latter commissions were allowed prior to the 1943 enactment.
To begin with a consideration of the act involved, it is elementary that all rules of statutory construction are servient to the one that the legislative intent must prevail if it can be reasonably discovered in the language used, which must be construed in the light of the intended purpose. Greenville Enterprise, Inc. v. Jennings, 210 S. C.163, 41 S. E. (2d) 868. It is further well settled that where there is doubt *164as to the legislative intent, .the title of the act is a proper matter for consideration in determining the legislative intent, and this is particularly so where, as in this jurisdiction, the Constitution provides that every act must relate to one subject which shall be expressed in the title. In this connection see numerous cases in 17 West’s South Carolina Digest, Statutes, Par. 211, p. 241.
The statute must be construed in the light of the evil which it seeks to remedy, and in the light obtaining at the time of its enactment. Judson Mills v. South Carolina Unemployment Compensation Commission, 204 S. C. 37, 28 S. E. (2d) 535; Creech v. South Carolina Public Service Authority, 200 S. C. 127, 20 S. E. (2d) 645.
With these principles in mind, just what was the intention of the legislature? Since the statute providing for executors’ and administrators’ commissions prior to the 1943 amendment referred only to “dollars” received and paid out as a basis fqr the calculation of commissions, this court consistently held, as already pointed out, that no commissions were allowable on assets other than money, and with respect to money, it is understandable that the court gave a very strict construction to the wo,rd “receive” since money usually either is actually received or is not received at all. Due to the ever increasing complexities of business life, and the infinite variety of assets which often comprised the assets of a decedent’s estate, it necessarily followed that in many instances executors and administrators were charged with vast responsibilities even though there was little, if any, cash money coming into their hands, and, consequently, in many instances they could not be adequately compensated in the absence of bringing a suit against the estate in the court of common pleas for extra compensation Added to the foregoing facts, with the advent of World War II federal estate tax rates were greatly increased and exemptions greatly lowered with the result that many estates formerly unaffected by federal tax laws became involved with tax problems, greatly adding to the burden of executors *165and administrators. It was clearly in the light of these conditions that the legislature adopted the 1943 amendment.
The legislature was no doubt aware of the prior decisions of this court, but it was also aware of the fact that money usually is actually received, if it is in any sense received. It, likewise, knew that with respect to personal assets, other than money, an executor or administrator in many instances, most probably more often than no.t, does not receive actual physical possession thereof. To the contrary, he receives constructive possession, the right of control and receives such assets to the extent that he is responsible for the proper handling thereof. To mention only a few simple ilustrations, a furniture or appliance merchant has a stock of goods in the store and not infrequently still many items in warehouses where they may or may not be subject to liens or other indebtedness. A farmer,, for instance, dies leaving virtually no cash, but crops, farm equipment, livestock, etc. Seldom, if ever, does an executor or administrator take actual physical possession of such assets. He does, however, receive such assets to the extent that he has contro,1 thereof and is reponsible for the safekeeping and handling of the same. Even capital stocks, with which we are here concerned, are often times held for a decedent by banks and brokerage houses under various contractual arrangements other than margin accounts, and as often as not the executor who. has the control of and responsibility for such stocks never receives the actual physical possession thereof.
' The title of the act certainly indicates an intention on the part of the legislature that commissiqns should be calculated on the basis of the appraised value of all personal assets, properly included in the inventory and appraisal, if such assets are in any sense received by -the executor or administrator to the extent that he has the control thereof and the responsibility therefor.
When the entire act here involved is considered, including the title and all of the attendant circumstances presumably well known to the legislature, it appears to me that *166the legislature intended that an executor need receive the personal assets of the estate, properly included in the appraisal thereof, only to the extent of being in control thereof and responsible for the proper handling thereof in order to entitle him to commissions thereupon. Certainly, it does not appear likely to me that the legislature would have even bothered to pass the act had it intended to accomplish nothing more than to allow an executor or administrator commissions on personal assets in the relatively few instances where he might receive actual physical possession thereof and thereafter distribute the same in kind.
Here, I think, the executor did exactly what he was required to do by law; he received control of the stock, though not the actual physical possession thereof, and he exercised that control diligently, judiciously and with expenditure of great time and effort to the advantage of the estate. It might not be amiss to point out that for the purpose of federal estate taxes an executor has several optional methods of valuing stock, Title 26, Section 2032, U. S.C. A. Which option the executor avails himself of to the best advantage of the estate is dependent to some extent upon the status of the particular estate and always upon the status of the market, but it is well known, at least in estate circles, that the exercise of the proper option by the executor frequently results in most substantial tax savings to the estate. These options are available whether stock is owned outright or held on margin. In a case such as this, had the executor not fully exercised his control over the stock, and had concerned himself solely with the net amount of money which might be received from the brokers after the liquidation of the accounts solely by the brokers, with primary emphasis upon the protection of their respective interests, at least a serious question could arise as to whether he was liable to the estate for not having diligently exercised his control in the manner most advantageous to the estate.
For all of the reasons herein set forth, I would reverse the judgment of the lower court and allow the executor com*167missions calculated on the basis of the appraised value of the stock. In the instant case the executor’s commissions are substantial regardless of the basis upon which they are calculated, and the result reached by the majority may very well not be unjust to the appellants in regard to adequacy of compensation. We are, however, concerned only with the proper construction of the act and I am greatly concerned as to the effect of the decision upon the handling of other estates.
An additional reason impelling this dissent is the fact that a proposed probate code for the State of South Carolina is currently being prepared under the direction of the Judicial Council and will be shortly submitted to the legislature for its consideration. If this dissent serves no other useful purpose, it may at least serve the purpose of calling to the attention of both the Judicial Council and the Legislature the questions and problems involved in this case, to the end that they may take any action thereabout which may be deemed appropriate.
The foregoing portion of this dissent having been written prior to the preparation of the concurring opinion of Mr. Justice Brailsford, I now wish to point out, at least in part, wherein our views do not coincide. If the agreements referred to were complete contracts, which fixed all the rights, duties and obligations as between the customer and the respective brokers, then I might very well not disagree with his views thereabout.
Each of the agreements, however, is what is known and designated as a “customer’s agreement”; they being identical with each other and apparently customary in connection with margin accounts. It is worthy of note that such agreements were signed only by the customer, William B. Ouzts, and not signed by the respective brokers, and nowhere therein are the duties, obligations or liabilities of the respective brokers set forth. Since the agreements are identical, I will now refer to them singly. The agreement recited that only *168actual purchases or sales for the account of the customer were contemplated, and that all orders and transactions would be subject in all respects to the regulations and usages of the Security Exchange Commission, New York Stock Exchange, or other exchange or market where executed and of the clearing house thereof. The agreement then goes on to set forth authorizations to the broker by the customer to do various specific things, to facilitate the handling of the account of the customer by the broker in connection or conjunction with the accounts of various other customers of the broker. The agreement does give to the broker protection against loss by the broker, in that the broker, among other things, is given the right to liquidate the account upon the occurrence of a number of different eventualities, one of which is the death of the customer.
The basic and fundamental rights and liabilities of both the customer and the broker, however, I think were fixed by applicable regulations, usages and general principles of law governing the nature of the relationship of the parties and the transactions being handled. Of course, the customer could by agreement waive his basic legal rights, but here I do not think that the customer’s agreement, fairly construed, waived any of Ouzts’ fundamental legal or property rights.
As a matter of law, the brokers here occupied the dual role of fiduciaries and pledgees. 12 Am. Jur. (2d), Brokers, Sections 84 and 115. By a pledge contract, the pledgor does not part with his general right of property in the collateral but such remains in him and only a special property right vests in the pledgee, and this is still held to be true even where the legal title to the property, here the stock certificates, is vested in the pledgee. See 41 Am. Jur. 603, Pledge and Collateral Security, Section 27.
Under these applicable rules of law it seems to me clear that the general right of property in the collateral was vested in William Ouzts during his lifetime and not waived by any provision in the customer’s agreement. Upon his death such *169general right of property in the collateral passed to his personal representative, and I think it clearly follows that the executor succeeded to these property rights; had the same control with respect thereto that William Ouzts had, and became responsible therefor. Here the brokers in each instance recognized the lawful property rights of William Ouzts in and to the various shares of stock purchased by them for the account of William Ouzts, which property rights passed to the executor, and dealt with the executor accordingly.