Court Opinion

ID: 8037130
Source: CourtListenerOpinion
Date Created: 2022-09-09 03:22:11.587014+00
Date Added: 2024-06-11T16:37:10.687070
License: Public Domain

Paine, J.,
dissenting.
I fully concur in the excellent dissent filed in this case by Justice Rose and concurred in by Justice Messmore. This case has been very carefully considered by this court since it was first argued to the court on October 21, 1937. From the first opinion, found in 133 Neb. 563, 276 N. W. 180, two members of the court dissented, and another member, who did not sit, concurred in the propositions of law stated in the dissent. It was reargued to the full court on March 7, 1938, and to the opinion now adopted by four members of the court three are dissenting.
Patrick W. Stanton had loaned money to his son, William P. Stanton, and the notes which represented this loan he had kept alive by requiring such son to make payments thereon. The final decree states the amount due on these notes from his son to the estate is $1,109.11. This son was bankrupt, and owed a judgment to the Kenesaw State Bank of $1,125, with interest. This court is called upon for the first time to determine the question involved, which is, whether the one-eighth interest in the farm left by the father to this son can be taken by the bank in payment of its judgment, or whether in the settlement of this estate the debt due to the estate because of the money loaned by the father to -this son shall be first deducted from this son’s share of the real estate.
In state after state, as set out in the original opinion adopted in this case, courts have held that this was proper, *676but it is argued in the present opinion that many of such cases arose in intestate estates. When the question first arose in Iowa, that state followed some of the older cases, and stated that such a debt could not be deducted from the share of the real estate.
Then, in 1923, the question coming up again in Woods v. Knotts, 194 N. W. 953 (196 Ia. 544) the court, in changing from its former holdings and taking the better view of the question, said: “Where deceased had, as surety, paid certain claims against an heir, and the heir was insolvent, his share of the real property will be offset against the claim of deceased; the personal property being entirely insufficient to offset the indebtedness.”
The question again came up in Iowa in the case of Schultz v. Locke, 204 Ia. 1127, 216 N. W. 617; the earlier Iowa cases were discussed, and it was said that the right of retainer should not be denied because no mention was made of the indebtedness in the will of the testator, and it could not be fairly anticipated by the testator that the debt would not be fully paid without resorting to the share of the devisee in the real estate, and hence the failure to mention the debt in the will under all the facts was not controlling nor vitally significant, and that the insolvency of the devisee, where there is no personal estate for distribution, makes it a recognized exception to the general rule. The decision significantly remarks that, as the case is pending in a court of equity, with all parties in interest before it, and with issues calling for determination of the rights of all parties, the court allows retainer against the share of the devisee in the real estate of the decedent. The Schultz case was decided in 1927, and eight years later the same question came before the Iowa court again in In re Estate of Flannery, 221 Ia. 265, 264 N. W. 68, and while I believe the personnel of the Iowa court had entirely changed, with the exception of one justice, between the dates of the two decisions, yet it again states: “This is the rule definitely settled in this state by the case of Schultz v. Locke, 204 Ia. 1127. 216 N. W. 617, and cases therein cited. The de*677cree of the court, therefore, in subjecting the proceeds of the real estate devised to William Meade, together with the legacies, to the payment of his indebtedness owing to the estate and inheritance taxes due the state and costs of the application must be upheld.”
Then follows Rodgers v. Reinking, 217 N. W. 441 (205 Ia. 1311) in which certain creditors holding liens against a son’s interest are defeated in their contention, and it was held: “Mother’s estate was entitled to retainer or offset of $30,000 which son D. had refused to pay brother in accordance with contract with mother against share going to D. under provision of mother’s will.”
Then in 1930 follows the case of Johnson v. Smith, 210 Ia. 591, 231 N. W. 470. The whole question is discussed at length in a decision reviewing the earlier authorities, and Schultz v. Locke, supra, is again approved.
In the case of Thompson v. McCune, 63 S. W. (2d) 41 (333 Mo. 758) the will of Charles W. Armour gave a legacy of $30,000 to Cora S. Thompson, but provided that her indebtedness should be charged against this legacy. The opinion, discussing at length many questions involved, said: “The right of ‘retainer’ is the right of an executor to retain or hold the legacy which is in his hands by treating the debt due to the estate from the legatee as assets of the estate also in his hands and collected by deducting such debt from the legacy.”
In Hornstra v. Avon State Bank, 55 S. Dak. 513, 226 N. W. 740, we find this statement: “A judgment is a lien only against the property of the judgment debtor, and, while on the death of an ancestor intestate his real estate at once descends to his heirs, it does so under the provisions of our Rev. Code 1919, sec. 700, ‘subject to the control of the county court, and to the possession of any administrator appointed by that court for the purpose of administration.’ In the process of administration it is entirely just and equitable that any indebtedness due from an heir to the estate should first be deducted from any distributive share to which he might otherwise be entitled, and that, in *678reality, he is only entitled on any principle of justice or equity to whatever balance there may be in his distributive share after deducting therefrom whatever he owes to the estate.”
In Smith v. Kearney, 2 Barb. Ch. (N. Y.) 533, in addition to the citation made by Justice Rose, another paragraph is quite in point: “This right of retainer depends upon the principle that the legatee or distributee is not entitled to his legacy, or distributive share, while he retains in his own hands a part of the funds out of which that and other legacies or distributive shares ought to be paid, or which is necessary to extinguish other claims on those funds. And it is against conscience that he should receive any thing out of such funds without deducting therefrom the amount of the funds which is already in his hands, as a debtor to the estate. And the assignee of the legatee, or distributee, in such a case, takes the legacy or distributive share subject to the equity which existed against it in the hands of the assignor.”
The Nebraska legislature, in section 30-406, Comp. St. 1929, clearly intended to make a devisee’s ordinary debt a charge upon such devisee’s interest in the real estate bequeathed him under the will. May we note the simple and precise language used by our legislature in this section: “The executor or administrator shall have a right to the possession of all the real as well as the personal estate of the deceased, and may receive the rents, issues and profits of the real estate, until the estate shall have been settled, or until delivered over, by order of the county court, to the heirs or devisees.”
Under this section 30-406, Comp. .St. 1929, this court held, in Blochowitz v. Blochowitz, 130 Neb. 789, 266 N. W. 644: “We have sustained the right of the executor and administrator, under this statutory provision, as a general rule, to maintain ejectment for real estate, pending payment of debts and settlement of the estate.”
In Tillson v. Holloway, 90 Neb. 481, 134 N. W. 232, this court said: “It is true, as contended by defendant, that the *679legal title belonging to an intestate estate descends to the heir subject to the payment of debts; but, under the statute, it is equally clear that the right of possession is in the administrator until his administration is closed.”
In any event, would not the executor, under this statute, clearly have the right to retain the real estate of this son until the rents therefrom had paid the debt due the estate of his father?
A recent statement of the general rule is found in 2 Pomeroy, Equity Jurisprudence (4th ed.) 1009, sec. 541, as follows: “A legacy from a creditor to his debtor, unaccompanied by language in the will or exterior to it expressly showing the special intent, whether equal to, greater or less than, the debt, raises no presumption whatever, either of law or of fact, that the testator intended thereby to excuse, release, or discharge the debt, so that the legatee would be entitled to claim and receive the whole amount bequeathed, but would be freed from all liability to pay the debt.”
It may be of interest to review the pleadings as shown by the record in this case. Section 27-503, Comp. St. 1929, sets out that the county court shall have exclusive jurisdiction of the probate of wills and the administration of estates, and by proper proceedings a final decree was entered in the county court on April 3, 1930, showing that the last will and testament was duly admitted to probate by that court on September 19, 1929, and that John R. Hoban was appointed executor thereof; that the final account of the executor is approved and allowed, and that the title to the real estate is assigned to each of the heirs (naming them and their shares), and “To William P. Stanton an undivided one-eighth interest subject to his indebtedness to said estate as herein found and the said share of William P. Stanton to the extent of his said indebtedness to the legatees above named in their several respective interests in the residue of said estate as provided by the terms of said will and codicil.” No appeal has ever been taken from this final decree fixing the heirs and *680shares and showing that the. share of William is subject to his indebtedness to the estate. The action appealed, to this court is a partition action, brought in the district court after such final decree was entered to have the property-partitioned between the heirs, and, in case that is impossible, to have the same sold, and the question arises, how is it possible to change the provisions of the final decree when no appeal was taken therefrom?
This opinion now entered, setting aside the decree of the district court in the partition case, is said to. be founded upon common-law. doctrines. Does it not clearly violate the simple terms of our Nebraska statute and hold for naught the wishes of the testator? He had kept these notes of his son alive by requiring the three payments thereon, so he could collect them if possible before his death, and, if not then, he was certain that, being current obligations, they could be collected as part of the residuary estate left to his heirs, thus dealing fairly with the heirs who had not borrowed from him. When the intention of the testator is so clearly ascertained, is not this court bound to give it effect? To the contrary, the opinion now adopted declares that these notes so carefully husbanded by the father are null and void. For, as stated in the syllabus, it is held that the father’s omission to mention them in his will evinces an intent not to charge the devise to his son 'with their payment; and, further, “The debt of a devisee to the testator cannot be retained from or charged on the lands devised to him in the absence of language in the will making such debt a charge.”
The majority opinion thus makes it necessary that the will of this testator refer to and set out these loans or they are extinguished. This has never been the practice, as in this state we have permitted wills to be drawn by the testator himself who desired to dispose of his property in his own way, and by a layman as a friend of the testator, and never required that they be drafted by lawyers. Under the requirement all that has been necessary is that the testator be mentally competent and know the objects of *681his bounty, and if so our courts have uniformly construed wills to be valid. In doing that we have taken from them every technical refinement, and not required the services of an expert in drafting wills, and the facts in this case show that the testator did not seek to forgive the debt of his son, but that he kept the notes alive by requiring interest to be paid upon them so they would not outlaw.
In the unanswerable logic of Justice Rose’s dissent, he calls attention to the fact that the father in the case at bar gave his residuary estate to his heirs in equal shares and that these two notes due him from his son were a part of that residuary estate.
The bank has a judgment against the bankrupt son, and is entitled to collect it from all the property this son receives from his father’s estate. The bank had no claim against the other seven-eighths of the property of the estate, but by the opinion now adopted the heirs of seven-eighths of the estate lose the $1,109.11 due from the eighth heir, and the bank collects its claim in full.
Is it not a most extraordinary situation to have this court hold that, if a deceased happens to make no will, or if by accident no will is found, the debt of an insolvent heir can legally be deducted from his share of the real and personal property left to him thereunder? but if, on the other hand, a will be discovered and probated, injustice will result to all of the heirs who do not owe the estate, by giving to the creditors of that one which owes the estate his share of the estate free and clear of all of his debts to the estate, if perchance such debts have not been specifically set out at length in the will.
As has well been stated, “If this opinion stands we will eventually have to change all of our rules of construction of wills relative to charges and liens against the land.”