Court Opinion

ID: 3399488
Source: CourtListenerOpinion
Date Created: 2016-07-05 19:10:36.286803+00
Date Added: 2024-06-11T14:03:01.671938
License: Public Domain

The present case was properly dismissed on general demurrer.
(a) Unless an executor is authorized to do so by the will, he has no authority to borrow money for any purpose and bind the estate he represents to repay it. Concerning creditors, this rule is not different where the executor borrows money for the benefit of the estate by and with the consent of the legatees, since the former, as well as the latter, have a right to have the estate legally administered.
(b) A subrogee takes the place of the original creditor to whose rights he stands subrogated subject also to the same limitations. And where the original creditor's right to bring an action to enforce his claim would have been barred by limitations had there been no subrogation, the subrogee's right to do so is likewise barred.
                      No. 16490. FEBRUARY 15, 1949.
On May 27, 1948, Mrs. Mabel Hurt Bickerstaff brought a suit in equity against Frampton E. Ellis as administrator cum testamento annexo of the estate of Joel Hurt, deceased. Her petition, after being amended, alleges that Mr. Hurt died January 9, 1926. His estate was liable for Federal estate taxes. The assets of his estate consisted almost entirely of stock in various corporations, the value of which at that time was virtually nothing. To obviate the necessity for an immediate sale of the assets of the estate under then existing unfavorable market conditions and to thus protect her interest in the estate as one of the legatees thereof, she loaned the executor Joel Hurt Jr., on March 1, 1927, $2000 with which to pay the Federal estate taxes. At the time of making the loan, the plaintiff agreed with the executor and with all of the other legatees that no demand would be made for the repayment of her loan until there were sufficient cash assets in the estate for that purpose. On December 18, 1943, the plaintiff sought to ascertain if there were sufficient available assets in the estate to pay her loan, and found that there was not an amount sufficient to pay it in full, but $1932.82 was paid to her and credited against interest due thereon. On May 29, 1947, a demand made by the plaintiff for full payment of the balance due on her loan was refused by the defendant. The assets of the estate are now sufficient to pay the balance presently due the plaintiff. It was further alleged that the plaintiff stands subrogated to the claim of the United States for estate *Page 735 
taxes, and for that reason she has a claim prior to all other claims against the assets of the estate. It was further alleged that the defendant, as the present representative of the estate, is threatening to use the assets of the estate for the purpose of paying other claims against the estate; that, if permitted to do so, the plaintiff will not be able to realize anything on her claim; and that for this reason she has no adequate remedy at law.
The prayers were: for process; that all other persons having claims against the estate be required to intervene in this suit so as to prevent a multiplicity of suits; that the defendant be enjoined from disbursing the assets of the estate until the plaintiff's claim can be adjudicated; that the plaintiff have judgment for the balance due on her loan; and for general relief.
To the petition both general and special demurrers were interposed. The grounds of general demurrer were: (1) no cause of action is stated; (2) the allegations of the petition do not authorize the granting of any of the relief prayed; (3) the allegations of the petition show that the plaintiff has an adequate and complete remedy at law; and (4) it appears from the petition that, if the plaintiff ever had a cause of action for the relief sought, it is now barred by laches by Code § 3-706, which provides that all actions upon open account, or for the breach of any contract not under the hand of the party sought to be charged, or upon any implied assumpsit or undertaking, shall be brought within four years after the right of action shall have accrued; by Code § 3-709, which provides that all actions against executors, administrators, guardians, or trustees, except on their official bonds, shall be brought within 10 years after the right of action shall have accrued; by Code § 3-711, which provides that all other actions upon contracts, not expressly provided for as to time, shall be brought within four years from the accrual of the right of action; and by section 310, and particularly section 310 (a), of the Federal Revenue Act of 1924, which bars a right of action for the collection of an estate tax after the expiration of five years from the filing of an estate-tax return as required by the act.
Without passing on any of the special demurrers, the court sustained the general demurrer upon each and every ground, and dismissed the suit. The exception is to that judgment. *Page 736 
The controlling question in this case is whether or not the plaintiff's petition shows a right in her to have a judgment against the defendant for the balance due on a loan claimed to have been made by her to a former representative of the estate. Unless it does, it will be unnecessary to decide any other question raised by the demurrers. It has long since become a well-established rule in this State that an executor can not borrow money for any purpose and bind the estate he represents to repay it unless there is authority in the will for him to do so.O'Kelly v. McGinnis, 141 Ga. 379 (1) (81 S.E. 197);Putney v. Bryan, 142 Ga. 118 (82 S.E. 519); 8 Cyc. 251, 252. In the present case the plaintiff contends that the above rule is not applicable for two reasons, namely: (1) because the executor by consent of all the legatees, one of whom is the plaintiff, was authorized to borrow a necessary amount for the purpose of discharging a tax claim in favor of the United States against the decedent's estate; and (2) because the amount sued for represents a balance due the plaintiff on an advancement made by her to a prior legal representative of the estate to be used for the purpose of paying a tax due the United States, and since it was necessary for the plaintiff to make the advancement to protect her interest as a legatee she is subrogated to the rights of the United States as a creditor, and therefore has a claim upon the assets of the estate prior to that of any other creditor. We will dispose of these two contentions in the order of their statement.
(a) There is no merit in the first contention. The lender, as one of the legatees, and the present representative of the estate are the only parties to the cause. The petition affirmatively shows that there are other creditors of the estate, and it does not appear how any consent given by the legatees for a former representative to borrow money, though it might be binding or work an estoppel as against them if set up with proper pleadings and parties, could bind creditors of the estate or authorize a recovery against the present representative in a suit having the character of the present one. O'Kelly v. McGinnis, supra. The creditors, *Page 737 
as well as legatees, have a right to have the estate legally administered by the executor. Upon this theory of the plaintiff's case, the petition fails to state a cause of action.
(b) Assuming that the allegations of the petition are sufficient to show that the plaintiff became subrogated to the rights of the United States respecting its claim for estate taxes, it will be conceded that the subrogee, because of such, acquired no greater rights than the United States originally had, and that she was subject to the same limitations concerning the enforcement of those rights. Harrison v. Citizens  SouthernNational Bank, 185 Ga. 556 (195 S.E. 750). And, as here, where the rights of other creditors are involved, as we have previously pointed out in this opinion, the representative of an estate has no authority to enlarge upon the rights and limitations of the subrogee even by consent of the legatees. That the allegations of the petition affirmatively show that the plaintiff's right to recover the amount advanced by her is barred by Federal limitations, is one attack which the demurrer makes upon it and which was sustained by the trial judge. Since a subrogee takes the place of the creditor to whose rights he stands subrogated, it necessarily follows in the present case that, if the right of the United States to bring proceedings to collect the tax here in question, had it not been paid by the subrogee, was barred when the present suit was filed, then the subrogee's right to sue for the recovery of the amount advanced by her for that purpose is likewise barred. Concerning this the petition shows that Mr. Hurt died January 9, 1926. For the purpose of determining the amount of estate tax due the United States, the executor of his estate was required to file a verified return showing, among other things, the assets of the estate within fifteen months after his death. U.S.C.A., Title 26, § 821-b. Construing the petition most strongly against the pleader, as we must do, it will be presumed in the present case that the executor obeyed this mandate of the law and performed his duty (Clements v. Hollingsworth, 202 Ga. 684,44 S.E.2d 381); and this presumption is strengthened by an allegation in the petition that the $2000 advanced by the plaintiff was the amount of estate tax due the United States by the decedent's estate. With certain exceptions not material here, *Page 738 
the United States had five years from the date the executor's return was filed in which to bring proceedings for the collection of this tax. 43 U.S. Stat. at Large 310, § 310 (a). Unquestionably the allegations of the petition show that the right of the United States to bring proceedings for the collection of the tax in question would have been barred, had it retained its claim for the same until the present suit was brought on May 27, 1948, and the same rule of limitation, being applicable to the plaintiff as a subrogee of the United States, likewise bars her right to maintain the present action.
For the reasons above stated, the plaintiff's right to bring the present suit was barred by limitations, and such being true, the judgment complained of is not erroneous.
Judgment affirmed. All the Justices concur.