Court Opinion

ID: 3544843
Source: CourtListenerOpinion
Date Created: 2016-07-05 22:56:15.185426+00
Date Added: 2024-06-11T13:55:53.516487
License: Public Domain

ON MOTION FOR REHEARING.                        (Filed December 3, 1940.)
Respondents in their petition for rehearing of the modified portion of the above opinion point out that the court directed the execution of a mortgage securing the claims of the creditor banks and object to such proceeding. We suggested this method, not as an exclusive procedure for getting the estate in shape for closing, but as being a method compatible with the terms of the will. It is true that the trustee or creditors have their remedy in applying to the probate court under the statute for sale of property to satisfy the debts, but that proceeding must be taken in the district court and not here.
Respondents also contend that we were in error in stating in our opinion that at the settlement of the final account there was due the two banks the sum of $53,411.64. We based this statement upon the following paragraph in the decree of the probate court settling the account: "* * * and that there is on hand at this time the sum of $130,700.36 in cash from which there is to be deducted the sum of $4,000 attorney's fees, *Page 277 
leaving a balance in cash in the hands of the said executor of $126,700.36 to apply on the claims of the First National Bank of Dillon and Daly Bank and Trust Company of Anaconda, leaving a balance of $53,411.64, together with interest due upon said claims."
Respondents point out that the final account of the executor filed on February 9, 1926, and settled, allowed, approved on February 23, 1926, shows an indebtedness to the two above named creditors of $180,112. There can be no dispute as to this. The confusion arises on account of the fact that in reporting assets on hand available for the payment of these claims, the executor treated as cash the property of the estate set out in his accounting. This appears in Finding No. 27 of the trial court, fully set out in the original opinion. It appears that after the settlement of the final account the executor applied $33,000 to the claim of the First National Bank of Dillon, and $15,000 on the claim of the Daly Bank and Trust Company, and otherwise the direction of the court in the final decree as to the payment of the bank claims was not carried out. These sums, aggregating $48,000, were obtained from the Federal Land Bank of Spokane on mortgages covering the land "sold" by the executor to Peterson and Clemow, which sales we have declared invalid.
The trial court's findings that the trustee was holding this[10]  property as security for the payment of the claims against the estate is fully supported by the evidence. This doubtless was his reason for reporting the property in his final account as cash on hand. However, since we have held, as did the trial court, that the sales were invalid we must and do likewise hold that the property cannot be applied to the payment of claims except by the procedure outlined in the statutes. Both creditors and heirs have the right to insist that legal procedure in this regard be followed and that the property be converted to cash by probate sales.
The creditors, of course, cannot be prejudiced by the failure or inability of the executor to carry out the direction in the final decree as to payment of their claims. These claims can *Page 278 
only be discharged by payment. Upon the accounting of the trustee, as ordered in the foregoing opinion of this court, he may show what amounts he has paid upon the bank claims after settlement of the final account.
As modified by this addendum, the original opinion will stand.
MR. JUSTICE MORRIS and HONORABLE H.H. EWING, District Judge, concur.