American Surety Company v. Jeffries

28 S.E.2d 355, 70 Ga. App. 408, 1943 Ga. App. LEXIS 322

• Court: Court of Appeals of Georgia
• Decided: November 11, 1943
• Docket: 30034.
• Status: Published

Opinions

The court did not err in overruling the general demurrer.

DECIDED NOVEMBER 11, 1943. ADHERED TO ON REHEARING DECEMBER 20, 1943. The only exception in this case is to the judgment overruling the general demurrer to the petition as amended, the judgment reciting that "the special demurrer is not considered nor passed upon." The petition as amended is as follows: "To the superior court of said [Fulton] County: Thomas S. Jeffries, ordinary, for the use of Mrs. Joyce Mae Scarborough, brings this suit against the American Surety Company of New York, and shows to the court the following facts: 1. That the defendant is a non-resident corporation, doing business and having an office, agent, and place of business in Atlanta, Fulton county, Georgia. 2. That John W. Williams died a resident of Fulton County, Georgia, on the 21st day of August, 1918, leaving a will, a copy of which is hereto attached marked exhibit A., and made a part of this petition, in which he devised his entire estate, share and share alike, among the following legatees, to wit: E. D. Williams, J. T. Williams, Mrs. Exa Edgar, Clara Jane Williams, Mrs. Nannie Nichols and Mrs. Pearl Chambers, naming as executors of said will the said E. D. Williams, J. T. Williams, and Mrs. Exa Edgar. 3. The said E. D. Williams, J. T. Williams, Mrs. Exa Edgar and Clara Jane Williams were heirs of the said testator. 4. The last two named legatees, to wit, Mrs. Nannie Nichols and Mrs. Pearl Chambers, were strangers in blood to the said testator. 5. Mrs. Pearl Chambers died prior to the death of said testator, leaving as her only heir a daughter by the name of Joyce Mae Chambers who is now Joyce Mae Scarborough, plaintiff herein. 6. That on August 31, 1918, the said nominated executors filed in the office of the ordinary of Fulton County, Georgia, an application for probate in solemn form of said will, stating in said application that the paper presented for probate was the true last will and testament of the said John W. Williams, deceased, and was duly executed, copy of said application for probate is hereto attached and made a part of this petition, marked X. 7. That no caveat was filed to said application for probate in solemn form of said will. 8. That when said application for probate came on for hearing at the October term, 1918, in said court of ordinary, the nominated executors stated to the court of ordinary that they were unable to locate the subscribing witnesses to said will and that they were therefore unable to offer sufficient proof to probate said will. 9. That the said court of ordinary thereupon passed the following order: `The petition of E. D. Williams, John T. Williams, and Mrs. Exa Edgar, as propounders of the alleged last will and testament of J. W. Williams, in which said alleged will they, the petitioners, are named as executors, having been duly filed in this court, and it appearing that all of the heirs of the said J. W. Williams, deceased, have been duly notified, and the said matter coming on at this time for a hearing, after hearing the testimony of all of the witnesses produced in court, and the said testimony being insufficient to establish and prove the said alleged will as the last will of the said J. W. Williams, it is therefore ordered and adjudged by the court that said alleged will has not been proved to be the last will and testament of said J. W. Williams, deceased; and it is therefore ordered that same be not admitted to record as such, and the petition is hereby denied, and an intestacy declared in said estate. In open court this October 23, 1918.' 10. That on the same day, to wit, October 23, 1918, the said E. D. Williams and J. T. Williams filed in said court of ordinary an application for letters of permanent administration upon the estate of the said John W. Williams, deceased, alleging in said application that the said John W. Williams died intestate, a copy of said application being hereto attached, marked exhibit B, and made a part hereof. 11. That after citation had been issued and published upon said application for letters of permanent administration, the said court of ordinary issued letters of permanent administration to the said E. D. Williams and J. T. Williams, both of whom qualified and gave an administrator's bond in the sum of $20,000 signed by the said E. D. Williams and J. T. Williams as principal, and by defendant, the American Surety Company of New York, as security, a copy of said bond being hereto attached, marked exhibit C, and made a part hereof. 12. That thereafter the said J. T. Williams died, leaving as sole administrator of said estate E. D. Williams, who continued to act as administrator at all times thereafter referred to in this petition. 13. That the said E. D. Williams proceeded with said administration and acquired and had on hand as assets of said estate and ready for distribution on the 24th day of June, 1922, the sum of $23,662 in cash, as shown by the annual return of the said E. D. Williams filed in said court of ordinary for the year 1922, a copy of which is hereto attached and made a part of this petition and marked exhibit D; and said total sum of $23,662 was distributed in June and July 1922 to others than plaintiff. 14. That theretofore the said E. D. Williams, as said administrator, had distributed funds belonging to said estate as follows: $4350 to Mrs. Exa Edgar; $4350 to E. D. Williams; $4350 to J. T. Williams; and $4350 to Miss Clara Williams; all of which are evidenced by vouchers filed with the returns of the administrator with the ordinary of Fulton County. 15. That thereafter, to wit, in August 1924, the said E. D. Williams as administrator had on hand for distribution, and did actually distribute assets of said estate in the total amount of $1250 to others than plaintiff, and the said E. D. Williams as administrator did have on hand in cash for distribution assets of said estate amounting to $2251.67 on January 1, 1925, which latter sum has never been distributed, nor accounted for to anyone, copy of returns showing this balance is hereto attached, marked exhibit F. 16. That plaintiff under the terms of said will was entitled to one-sixth undivided interest in the said total amount of cash which said E. D. Williams as administrator did have on hand for distribution and did actually distribute to others than plaintiff, the said amount of cash being $42,312; and plaintiff was entitled under the terms of said will to receive one-sixth undivided interest in the additional sum of $2251.67, the amount of cash on hand and unaccounted for by said administrator on January 1, 1925. The one-sixth undivided interest which plaintiff was entitled to in the grand total of said amounts is $7427.27. 17. That plaintiff was entitled to have her share. amounting to $7427.27, paid out of the said funds on hand on the 24th day of June, 1922, and subsequent funds in the hands of said administrator, she not having theretofore received anything. 18. That the said E. D. Williams was guilty of fraud and negligence, and acted in bad faith in the administration of said estate, in that when he was ready to distribute the said assets of said estate afore said, and knowing of the existence of said valid will, he made no bona fide effort to protect the rights of all of the legatees under said will, including plaintiff, by having claims of said legatees passed on and judicially approved, denied, or otherwise foreclosed; and the said E. D. Williams at the time that he distributed said assets of said estate, as aforesaid, to himself and others, excluding plaintiff, knew or by the exercise of ordinary care and diligence in the administration of said estate could and should have known that said will could be probated and that at least one of the witnesses to the same, to wit, W. A. Brown, was available and subject to subpoena, he at that time having an office in the Fourth National Bank of Atlanta building, and being listed in the city directory and having a telephone listing in the Southern Bell telephone directory for the City of Atlanta; and the said E. D. Williams at the time he so wrongfully distributed to others plaintiff's one-sixth interest in said sum of money could have, by the exercise of reasonable care and diligence, contacted or subpoenaed and found out from Walter A. Sims, the attorney who drew said will, such facts as to the genuineness of testator's signature and that of the witnesses to said will, inasmuch as on the back of said will was the name and address of the said Walter A. Sims, disclosing the fact that he was the attorney who drafted the same; that in addition to all other facts herein alleged as constituting negligence and bad faith in failure to produce the necessary evidence to probate said will, the said E. D. Williams himself knew of and could have testified as to the genuineness of the signature of the testator, and could have produced numerous other witnesses, including relatives and business acquaintances of the testator and of the witnesses to said will, to prove the genuineness of their signatures. 19. With knowledge of plaintiff's claim being outstanding and undisposed of, the said E. D. Williams, as said administrator, did negligently, wantonly, wilfully, recklessly, and in bad faith distribute said cash sum belonging to said estate, including plaintiff's share therein, to himself and others, excluding plaintiff, and he did make said distribution with an utter disregard for the consequences of the said act, and in utter disregard of plaintiff's rights when she was at that time a minor about thirteen years of age, and his said act in thus wrongfully distributing plaintiff's part of said estate to himself and others, was done with the deliberate intention on the part of the said E. D. Williams to defraud plaintiff out of her one-sixth interest in said estate, and by his said acts he did thereby so defraud her. 20. That the said E. D. Williams was guilty of fraud and acted in bad faith in the administration of said estate, and particularly in distributing plaintiff's one-sixth interest in the assets of the same, in that, although knowing of the existence of a valid will, under the terms of which plaintiff was entitled to said one-sixth interest, he nevertheless distributed the same to others, including himself, to the total exclusion of the plaintiff, when it was his duty to ascertain and distribute to the rightful beneficiaries, or being in doubt as to whom to distribute, to petition the superior court for direction, and failing to do so, to act at his peril. 21. That the said E. D. Williams, as such administrator, did distribute plaintiff's one-sixth interest in the said assets of said estate as aforesaid negligently, in that he failed to exercise due care and diligence under the circumstances in distributing said estate to the rightful beneficiaries thereof, including plaintiff, and said negligence consisted, among other things, of the following, to wit: (a) Failure to examine the said paper constituting the said will and ascertaining from the back of the same the name of the lawyer whose name appeared thereon as the attorney who prepared said paper, to wit, Walter A. Sims, and to consult or subpoena him and find out the facts concerning the execution of the same, including the whereabouts of the subscribing witnesses and of other witnesses who could testify as to the genuineness of the testator's handwriting, and the handwriting of said subscribing witnesses, which information could and would have been furnished him by the said lawyer. (b) Failure on his part, as said administrator, to search the city directory of the City of Atlanta and the telephone directory for the City of Atlanta for the names of the subscribing witnesses to said will and thereby locate them and make them available by subpoena or otherwise to testify to the genuineness of said will and due execution thereof, when by so doing he could have found listed in said city directory and telephone directory at least one of said subscribing witnesses, to wit, W. A. Brown, whose name appears listed in the city directory of Atlanta for the years 1918 to 1925, both inclusive, and whose name appears in the telephone directory for the City of Atlanta in all issues for the years 1918 to 1925, inclusive. (c) Failure on the part of said E. D. Williams, as administrator, in view of all facts herein alleged, to petition the superior court of Fulton County for direction before distributing the said assets, including plaintiff's share therein. (d) Failure on the part of the said E. D. Williams, as administrator, to appeal from the judgment of the court of ordinary denying probate and declaring an intestacy in the matter of the estate of John W. Williams. And as a result of said fraud, bad faith, and said negligence plaintiff was damaged and suffered loss to the extent of the amount herein sued for, and the same constituted devastavit. 22. That the said E. D. Williams died . . [in] 1932, without having obtained a discharge from his said administration on said estate, and there has been no administration on the estate of the said E. D. Williams. 23. That there is not and has never been any administration de bonis non on said estate of the said John W. Williams, nor has any executor ever been appointed by the court under said will and said estate is now unrepresented. 24. That based upon said original application for probate made August 31, 1918, the said will was duly ordered probated in solemn form by the superior court of Fulton County, Georgia, on June 30, 1933, on appeal from the court of ordinary of Fulton County, and on Oct. 13, 1933, the said judgment of the Fulton superior court ordering said will to be probated was made the judgment of the court of ordinary and the said will therein recorded. A copy of said judgment of probate in solemn form is hereto attached, made a part of this petition, marked exhibit E. 25. That petitioner has never received her one-sixth interest in the assets of said estate, to which she is entitled under said will, nor any part thereof. Wherefore, plaintiff prays that process issue requiring the defendant to be and appear at the next term of this court to answer this complaint, and plaintiff further prays that she be given judgment against the defendant in the sum of $7,427.27, together with interest thereon at the rate of seven per cent. per annum from the date that said sum was due and payable, and for such other and further relief as plaintiff under the facts may be entitled to receive."

The demurrer follows: "1. The petition fails to state a cause of action against this defendant. 2. The facts alleged in the petition do not constitute a breach of the bond sued upon. 3. The facts alleged in the petition do not give rise to a cause of action in favor of the plaintiff. 4. The petition fails to allege or show the right of the plaintiff to sue for the alleged legacy described in the petition. 5. The petition seeks to collaterally attack the judgment of the court of ordinary of Fulton County, granting permanent administration upon the estate of John W. Williams. 6. The right of action of the plaintiff is barred by the judgment of the court of ordinary of Fulton County, granting permanent administration on the estate of John W. Williams set forth by the petition, which is not subject to collateral attack. 7. The cause of action declared upon is barred by the statute of limitations applicable to such causes. 8. It affirmatively appears from the petition that the cause of action of the plaintiff is barred by laches."

The only other exhibit which we deem essential is the bond, which reads in part as follows: "E. D. Williams J. T. Williams, principal[s] and American Surety Company of New York, security, are held and firmly bound unto Hon. Thos. H. Jeffries, ordinary of said county, and his successors in office, in the sum of $20,000 to be paid to the said ordinary and his successors; for which payment well and truly to be made, we bind ourselves, jointly and severally and each of our heirs, executors and administrators, firmly by these presents. Sealed with our seals and dated at Atlanta, Georgia, the 30th day of November, in the year of our Lord One Thousand Nine Hundred Eighteen. The condition of the above obligation is such, that if the above E. D. Williams J. T. Williams, administrators of the lands, tenements, goods, chattels and credits of John W. Williams, deceased, do make a true and perfect inventory of all and singular, the lands, tenements, goods, chattels and credits of the said deceased, which have or shall come to the hands, possession or knowledge of the said E. D. Williams and J. T. Williams or in the hands or possession of any person or persons for them and the same so made to exhibit in the court of ordinary of said county when they shall be thereunto required; and such lands, tenements goods, chattels and credits do well and truly administer, according to law, and make a just and true account of their actings and doings thereon, as required by law; and all the rest of the lands. tenements, goods, chattels and credits which shall be found remaining upon the accounts of the said administration, the same being first allowed by the said court, shall deliver and pay to such persons respectively as are entitled to the same by law. And if it shall hereafter appear that any last will and testament was made by the said deceased, and the same be proved before said court, and the executor or executrix obtain a certificate of the probate thereof, and the said E. D. Williams and J. T. Williams do in such case, fully account for any or all of said estate which may come into their hands, and if required, render and deliver up the said letters of administration then this obligation to be void, else to remain in full force. In case of a breach of this bond, we, and each of us, as against the collection thereof, hereby waive and renounce all benefit of homestead of realty, and exemption of personality, under the laws of force in this State, as fully and completely as we are authorized so to do under said laws." 1. The point is made that the suit is improperly brought in the name of the ordinary for the use of Mrs. Scarborough. Plaintiff in error takes the position that if any right of action exists, it is in the executors named in the will, or in an administrator cum testamento annexo. Webster v.Thompson, 55 Ga. 432, 435, is cited in support of this contention. That case, however, is readily distinguishable from the case at bar. The bond there sued on was that of a temporary administrator, and as pointed out in the opinion, the office of a temporary administrator, is to collect, preserve, and deliver to the permanent administrator. "His bond binds him to this, and perhaps his oath does too." The bond sued on in the case at bar is that of a permanent administrator. Such administrator shall disburse the assets of the estate as the law requires. Code, § 113-1215. And "such bond [as is required] shall be payable to the ordinary for the benefit of all concerned." § 113-1217. Among other cases, Rudolph v. Underwood, 88 Ga. 664 (16 S.E. 55), is a precedent for the bringing of the suit in the manner followed in the instant case. The Code, § 81-1307. is authority for the procedure followed. The bond was given to the ordinary for the benefit of all concerned or "as are entitled to the same by law." Certainly Mrs. Scarborough would fall within that class, under the allegations of the petition. It is well settled that the distributee may bring a suit on the bond of the administrator in the first instance without a suit against the administrator in his representative capacity. Mathis v.Fordham, 114 Ga. 364 (40 S.E. 324); Long v. Gordon,61 Ga. App. 608 (7 S.E.2d 43), and cit. We accordingly hold that the suit, under the allegations of the petition, was properly brought by the ordinary for the use of the distributee.

2. The plaintiff in error urges that the fraud charged in the petition constituted a personal tort by the administrator committed prior to appointment. This, however, is not the gist of the action. The petition alleges that the administrator, with knowledge of the plaintiff's claim, negligently and wantonly, wilfully, recklessly, and in bad faith, distributed the greater part of the estate (including the plaintiff's share therein) to himself and others in disregard of the plaintiff's rights. We construe this to charge devastavit on the part of the administrator while acting as such, and for which his bond would be liable. It is earnestly argued by able and diligent counsel for the plaintiff in error, and with much persuasiveness, that the conditions of the bond required the surety to stand sponsor only for the administration of the estate in accordance with the law of descent and distribution of the estate in accordance with the law of descent and distribution. This argument tends to by-pass the allegations of fraud. The petition alleged that the distributions were made to the administrator and others in bad faith, with knowledge that Mrs. Scarborough was named as a beneficiary under the will. Assuming this to be true, it would seem to be immaterial whether the administrator acquired the knowledge before or after his appointment. The bond required the defendant to "well and truly administer, according to law, and . . deliver and pay to such persons respectively as are entitled to the same by law." The conditions of the bond, as will be observed, are not restricted to an administration in accordance with the rules of inheritance, but according to law. It certainly would seem that for an administrator with full knowledge of a valid will to pay out the assets of an estate to those entitled to it under the rules of inheritance in disregard of the rights of a minor beneficiary under a will of the deceased would not be "according to law," but would be a breach of the administrator's bond. We are not here dealing with the question of payments by an administrator according to the rules of inheritance before he has knowledge of the existence of a will. So far as we have been able to find, that is an open question in Georgia, there being no statute on the question as in many (if not most) other states. In Walden v. Mahnks, 178 Ga. 825 (174 S.E. 538, 95 A.L.R. 1101), the Supreme Court touched on the question, but did not decide it. As was said by that court inAwtrey v. Campbell, 118 Ga. 464, 467 (45 S.E. 301): "He [the administrator] obligates himself to administer the property of the estate according to law; and if he fails in this obligation, he is liable to the ordinary, for the benefit of those interested, for whatever damages they may have sustained by his failure to comply with this obligation. The allegations of the petition are certainly sufficient, as against a general demurrer, to show that the defendant has not administered the estate according to law, and that he is liable in some amount on account of his conduct which is set forth in the petition." The petition was good as against the general demurrer.

Judgment affirmed. Broyles, C. J., and MacIntyre, J.,concur.

ON REHEARING. It is earnestly argued that the effect of the opinion in this case is to sanction a collateral attack on a judgment of the court of ordinary appointing an administrator. As authority for this contention it is claimed that this court overlooked the principle applied under the facts in the cases of Smith v.Scarborough, 182 Ga. 157 (185 S.E. 105); Scarborough v.Smith, 183 Ga. 386 (188 S.E. 526); and Scarborough v.Long, 186 Ga. 412 (197 S.E. 796). We can not follow this reasoning. In those cases the Supreme Court simply held that where the proceedings to appoint an administrator by the court of ordinary showed on their face jurisdictional authority to appoint, and the appointment was made, and thereafter application by such administrator for order to sell real property was granted, and sale was had in compliance with all the statutes relative thereto, such proceedings with reference to such sale could not be collaterally attacked. Such is not the question here. Here, instead of making an attack on the judgment of the court of ordinary appointing the administrator, the action is based on that judgment. The suit here is against the surety on a statutory bond given in pursuance of the judgment appointing the administrator. The proceedings do not in any sense constitute an attack on the judgment of the court of ordinary. The suit is based on the failure of the administrator to comply with the judgment appointing him administrator. It is true that it is not against him individually, but it is against his surety who stood sponsor for him as administrator to perform his duties in good faith and according to law. One of his duties was to account to the distributees under a will, if there were one. There was a will, which was duly probated before this suit was brought. When the will was probated, the judgment of the court of ordinary appointing him as administrator was revoked, and he was then to account to the distributees under the will (Thomas v.Morrisett, 76 Ga. 394), "except as to such portions of the estate as had been fully administered prior to its production and probate." To make distribution as administrator to an heir at law without a judgment of a court of competent jurisdiction is not "to fully administer" the distribution of the estate, under the facts of this case. In fact, no distribution of the assets of an estate without a judgment of a court of competent jurisdiction, is conclusive proof of its legality. At best, it is only prima facie proof of a correct disbursement. McKee v. McKee,48 Ga. 332 (2); Ellis v. McWilliams, 70 Ga. App. 195 (27 S.E.2d 886).

An illegal distribution by an administrator, even on proper annual returns which have been allowed, serves only to shift the burden to the objector of proving that the same was not a legal distribution. Under the allegations of a petition which, as here, alleges that the distributions were made fraudulently, and with the knowledge that there was a will concerning which the administrators concealed evidence to prevent its being probated, and in which they were named executors and distributees, it does not seem that under the law they could escape liability for themselves, or their surety, by distributing the funds to themselves under the rule of descent and distribution in order that they might receive more than they would receive as distributees under the will. If there be no duty on a person named as executor under a will to use diligence in probating the will, as contended, certainly the law would restrain him, and hold his surety liable for distributing the funds of the estate as administrator, with the knowledge of such valid will, otherwise than as the will provides. To give the statute the construction of an honest intent and purpose, we can not conceive of a situation otherwise than that the petition sets out a cause of action as against a general demurrer.

Judgment adhered to. Broyles, C. J., and MacIntyre, J., concur.