Eubank v. Clark

78 Ala. 73

Opinion

CLOPTON, J.

1. Special statutory provisions for the declaration and settlement of insolvent estates, constituting an entire and complete system, have been enacted, which seem to indicate that the administrator and creditors are the only necessary parties to such declaration and subsequent settlements, on the presumption that the heirs and distributees have no further interest. If, however, the estate proves solvent, because of the rejection of claims filed, or of the failure of creditors to file their claims, and a surplus remains, after satisfying the claims filed and allowed, it can not be applied in payment of debts not filed in proper time, but passes to the distributees. In order to show that a surplus remains for distribution, the. distributees have the right to appear on the settlement of the administrator and make objection to his account, by surcharging it, or on account of unauthorized expenditures, which they are not precluded from making, by any antecedent pro' ceedings and decrees of the court.

2. At common law, the authority of an administrator da bonis non extends only to such property as remains in vpeoie, or unadministered.1 He is not authorized to have an account for assets converted, wasted or misapplied by the administrator in chief. Only creditors or distributees can maintain a suit against a former representative, for an account and settlement of assets wasted or misapplied. The rule of the common law was abrogated by the act of 1846, and by the act of February, 1S58, the provisions of which arc embodied in sections 2537 to 2540, inclusive, of the Code of 1876. It is provided, that upon the death of an administrator, without having made final settlement, his personal representative must file the account and vouchers, and make final settlement of his administration; to which settlement' the administrator de bonis non must be made a party, and a decree must be rendered in his favor, for the amount found due by the deceased administrator, or for the delivery of any personal property in his hands. On such settlement, the administrator de bonis non represents the estate, and the creditors and distributees, who can claim nothing, as to the personal property, except through him, when the estate requires further administration.

It will not be controverted, that, by the common law, it is the duty of the administrator de bonis non to obtain possession of all the assets of the estate that remained in specie, and, for this purpose, to exercise due diligence, and, if necessary, resort to appropriate legal proceedings. If he failed to reduce them to possession, and the estate sustained loss by reason of his negligence, he is liable therefor.— Wilkinson v. Hunter, 31 Ala. 268. The statutes do not change or modify the duties and obligations of an administrator de bonis non, but enlarge the kinds and character of the assets which he is entitled to receive and recover.

The statutory grant of authority to recover against the former administrator, for assets converted, wasted, or misapplied, carries with it the correlative duty to use proper diligence to recover, and to protect the estate against loss. Armed by law with the authority to obtain a decree for the amount due by his predecessor, and being the only person in whose favor a decree can be rendered, he is charged with the primary duty of its recovery. In Glenn v. Billingslea, 64 Ala. 345, it was held: “ The administrator de bonis non has the right, and it is his duty, to reduce to his possession all the assets of the estate, whether changed in form or not, which the former administrator has not disbursed in due course of administration ; with the exception, that the outgone administrator may retain assets in his hands, to repay himself for any excess of disbursements he may have rightfully made.” — Waring v. Lewis, 53 Ala. 615.

3. The distributees moved to charge the administrator de bonis non with the amount of an alleged devastavit of the administratrix in chief. It seems that no effort was made to have a settlement, or to recover the amount, if any, due by her for assets not properly and legally disbursed. If there was an amount due, which was lost by his negligence, he is liable therefor. It is the right of the distributees to have an investigation and adjudication, whether she was guilty of a devastavit; and, if so, to what amount, and whether it could have been recovered by the administrator de bonis non, by the use of reasonable diligence. The burden of showing both the amount due, and that it could have been recovered, is on the distributees. The ascertainment of the amount involves, practically, a settlement of the administration of Mrs. Eubank, which should be made on the same principles, as if her personal representative had made a regular settlement.

The peculiar state and condition of the country, and the depreciated currency in circulation, during the greater part of her administration, should have due consideration ; being authorized to complete and gather the crops commenced by the decedent, if any, she will not be charged with the hire of the. slaves for the year of his death, but with the proceeds of the crops, after deducting the expenses of the plantation; and allowances should be made for necessary and proper expenditures in boarding, clothing and educating the distributees, not to exceed the assets in her hands, and to be charged against their respective distributive shares.

4. When a claim is properly filed against an insolvent estate, and no objections are filed within twelve months after the declaration of insolvency, the allowance of the claim is a matter of right secured to the creditor by statute.-*— Clark v. Know, 70 Ala. 607. The act of December 4th, 1878, amendatory of section 2575 of the Code of 1876, extended the right to file objections to claims to heirs at law, legatees, devisees, and distributees, which was previously conferred on the administrator and creditors only. — Acts 1878-9, p. 69. The operation of the act is not retro-active. When an estate had been declared insolvent more than twelve months before the passage of the act, the right to file objections is not secured to a distributee. The court did not err in allowing the claims which had been properly verified and filed, and to which no objections had been filed within twelve months after the declaration of insolvency.

5. The statute authorizes administrators to rent the lands of the deceased, at public auction or privately, securing the payment of the rent by bonds or notes, with two good and sufficient sureties. — Code, § 2446. Without the statute, the administrator had no authority to rent the lands. By the statute it is made his duty, whenever resort thereto is necessary to pay the debts. One good and sufficient surety does not comply with -the statutory requirement. If an administrator takes two sureties for the payment of the rent, one good and sufficient, and the other not, his insufficiency being known to him, or he not having good reason to believe him sufficient, and loss is sustained by reason of the insufficiency of the one, the administrator is responsible therefor. The sufficiency meant by the statute does not repose on good character, or reputation for honesty, but on the feasibility of a compulsory collection of the amount. When an administrator takes two sureties, and has good reason to believe they are both good and sufficient— generally reputed to be good — he is not responsible, though a loss may occur. While an administrator will not be held to infallibility, the law exacts the care and diligence which a pru dent man would exercise in liis own business of a similar character.— Walls v. Grigsby, 42 Ala. 473 ; Lee v. Lee, 61 Ala. 590 ; Moore v. Randolph, 71 Ala. 575 ; Munden v. Bailey, 71 Ala. 63.

6. The principles on which, and the circumstances under which an administrator is chargeable with interest, have been frequently and well settled. Prima faeie he is chargeable, but may relieve himself from the charge by making the statutory affidavit. But the exculpatory oath will not relieve the administrator in every case, although it may not be successfully controverted. If there is unnecessary and unreasonable delay in making settlement and distribution of the money on hand, interest will be charged ; not on the ground that he has used the money, but as compensation to those entitled to it for the damage occasioned by the delay. _ What time is an unreasonable delay, depends on the circumstances of each case — on the situation and condition of the estate, the complication of its affair’s, and the obstacles to an earlier settlement and distribution. — Clark v. Knox, 70 Ala. 607 ; Clark v. Hughes, 71 Ala. 163.

7. The statute requires the administrator of an insolvent estate to make a settlement of his accounts, at such time as the court may appoint, not less than nine, nor more than fifteen months, from the time the estate is declared insolvent. At such settlement, the court must decree to each creditor, whose claim has been allowed, his proportion of the moneys found due from the administrator, reserving a ratable proportion for such claims as may be contested and undecided; and a similar settlement and distribution must be made at least every six months thereafter, at such times as the court may appoint, until the estate is finally settled and distributed.' — Code, §§ 2577, 2578. These statutory provisions show, that the policy of the law is the speedy distribution of the moneys collected by the administrator ; not to suffer them to be unemployed, while interest is running on the claims against the estate. It does not appear from the record, that any times were appointed by the court for settlements by the administrator of the insolvent estate, except the second Monday in August, 1868, as the time for making the settlement required by section 2559. The estate was declared insolvent, July 13,1868, and the personal property was sold in August, 1867, on a credit of twelve months. Twelve months are allowed for filing objections to claims, and a partial settlement and distribution could have been made within a short time thereafter. On January 1, 1870, the administrator had in hand over fourteen hundred dollars in money, and no reasons are shown why its distribution should have been longer delayed. January 1,1870, is, under the circumstances of this case, a reasonable time, from which to charge interest on this amount, and the rent of the land for 1867, and on any devastavit of the administratrix in chief, if the administrator de bonis non shall be held liable for either or both, on the principles above stated.

8. Interest, however, should not have been charged on the rents from the first day of January succeeding the year during which they accrued. If they were punctually paid, the administrator could not have distributed them on the same day. A settlement must be made, and distribution decreed by the court. No time was appointed by the court for a settlement ; and when the amounts collected are so small, the costs and expense of a settlement may have occasioned more damage to the estate, than the loss of the interest. These considerations may have moved the administrator in delaying distribution, and as no bad faith is charged, and the exculpatory affidavit was made, January 1, 1876, appears to us to be an equitable date, from which to charge interest on the aggregate amount of the rents received after 1869. .Generally, interest is calculated on the receipts and disbursements; but as the administrator distributed, January 1, 1877, among the creditors, the amount of assets admitted to be in his hands, which, though irregular, appeal’s to have been in good faith, interest, in this case, should be charged to that date; and from the aggregate of principal and interest, the amount distributed and the proper commissions of the administrator deducted, and interest charged on the balance from that time.

The following authorities will furnish a sufficient guide for the allowance of counsel fees and commissions : Moore v. Randolph, 70 Ala. 575 ; Munden v. Bailey, 70 Ala. 63 ; Moody v. Hemphill, 71 Ala. 169 ; Teague v. Corbitt, 57 Ala. 529. As there will be another trial, and futher litigation, it is unnecessary for us to pass on the present allowances.

9. It is the duty of the administrator of a solvent estate, to defend claims preferred against it, which he knows, or has good reason to believe, are unjust and unfounded ; and the appropriation of the assets of the estate to the payment of such claims, if in fact unfounded and illegal, is a devastavit. — Teague v. Corbitt, supra. The question is, whether the declaration of insolvency, and the administration of the estate as an insolvent estate, relieve the administrator from liability to the distributees, for failing to file objections to claims, which he knows, or has good reason to believe, or the means by proper diligence of ascertaining, to be unfounded, or which show, prima facie, their invalidity as claims. In Thornton v. Moore, 61 Ala. 347, it is said : “ It is the duty of the personal representative, and the right of each creditor, to contest the allowance of any and every claim which shall be preferred, if believed invalid; and a full and fair opportunity for an examination and contest of the claims, the statute intends to afford.” To whom does the personal representative owe this duty ? Certainly, and primarily, to the creditors. When a claim is filed against the estate, which he knows, or has good reason to believe, is unjust, and he informs the other creditors of its invalidity, who, upon being informed, decline to exercise their right to contest, it seems that he has performed his duty to them. Notwithstanding the declaration of insolvency, it is one and the same estate, represented by the administrator as an entirety. The creditors represent their several and distinct interests. The administrator alone represents the estate, and is the representative, not only of the creditors, but of all persons who have contingent interests. We have previously said, that any surplus which may remain, after satisfying all allowed claims, passes to the distributees, and for this reason they are proper parties to the final settlement of the administrator. They have an interest in the estate — -in the rejection of all unfounded claims — to the end that a surplus may remain for distribution. If their interests are not guarded and protected by the personal representative, they are without protection. The administrator owes to the distributees a duty to contest an unjust or illegal claim filed against an insolvent estate, the same as to defend a similar claim when preferred against a solvent estate, the measure of his liability being the loss sustained by them as distributees. If no surplus for distribution would remain, were the invalid claim disallowed, no damage has accrued to them, as distributees, by its allowance.

10. The intestate died during the year 1861; and from the nature and kinds of his property, it is reasonable to infer that he was engaged in planting. The administratrix was authorized to keep the estate together during that year, and to complete and gather the crops commenced by the decedent. The proceeds of the crops, the expenses of the plantation being deducted therefrom, were assets in her hands. The claim for medical services and medicines during 1861 shows, prima facie, a valid claim against the estate ; and the administrator should not have been charged with its proportion of the money distributed by him. The account for services of Dr. Bobinson, during 1862, shows they were rendered after the expiration of the year of the death of the intestate; and the claim is not, prima facie, a charge against the estate.- — Pearson v. Darrington, 82 Ala. 227. There may have been circumstances, under which it became a necessity, and was the duty of the administratrix, to furnish medical attention to the slaves ; but, if such circumstances existed, they are not shown by the record. The remaining account, which is for salt, not only shows it is not a charge against the estate, but the salt is estimated at Confederate prices. In the absence of proof, other than shown by the record, we are constrained to hold, that the administrator is chargeable with the proportion of the money distributed by him to the claims for 1862, 1863, and 1864; although, as to such parts of the claims as are for medical services and medicines furnished the family of the deceased, including the distributees, or some of them, aud in consideration of the peculiar and troublous condition of the country, the motion of the distributees does not commend itself to the favorable consideration of the court.

We observe for the guidance of the court on another trial, that if the assets of the estate are insufficient to satisfy in full the claims allowed, exclusive of the claims of Dr. Robinson for the three years last mentioned, the amounts of the other claims being ascertained as we shall hereafter direct, the above charge ought not to be made. The validity of the claims was open to the creditors, they had an equal right to contest, and have no cause to complain.

11. The record contains a statement of the amounts of the allowed claims, including interest to the day of settlement. In distributing the assets, the court decreed to each creditor, for the use of the administrator, the sum paid by him to such creditor on January 1, 1877, on the ground that such sum was paid in full satisfaction of the claim; and distributed the surplus among the distributees. The form of the decrees is irregular ; but, whether the irregularity is error without injury, we are unable to determine from the record. The difficulty arises, in part, from the fact, that the administrator also represents the creditors, as their attorney. The receipt of one of the creditors — the others being of the same tenor, names and amounts only varying — does not show a satisfaction of the claim, or an acquittance of the estate. On the face of the receipt, it purports to be in full of the personal «.assets, reported by the administrator to be in his hands for distribution, and which were represented as all of the estate, except the lands. If there be other assets, not then reported or known to the creditors, they are not debarred from claiming their application to the payment of their debts. If these claims still belong to the creditors, and further payments enure to their benefit, the distributees are not entitled to receive any thing, until the claims — that is, their total amounts — are satisfied in full.

12. But a trustee will not be permitted to make a profit out of the estate which he represents ; and if he purchases a claim against the trust estate, or satisfies it, at less than its face value, he is entitled to be reimbursed only the amount paid by him, with interest. If it shall be made to appear that the creditors assert no further claim against the estate — that the claims really belong to the administrator, and further payments thereon will enure to his benefit, without liability to account to the creditors — the amounts to be allowed on the claims are the sums paid by the administrator thereon. The question to be determined by the court is, Who is the beneficial owner of the claim, the administrator or the creditor ? And accordingly as this question is decided, the amounts of the claims must be determined.

13. The act of April 23, 1873 (Acts 1872-3, 123), which is embodied in section 2362 of the Code, provides, that the office of general administrator shall expire with the expiration of the term of the judge by whom he is appointed, unless the succeeding judge shall continue him in office. Clark, to whom, as general administrator, the estate of Knott, who was a creditor of the estate of Eubank, was committed, never resigned as general administrator, and hence can not claim the .benefit of the provisions of section 2410. His term of office of general administrator expired with the expiration of the term of office of the judge who appointed him, the succeeding judge not having continued him in office. He was, thereafter, without capacity to fulfill the office of administrator, other than to make settlements of the estates committed to his charge as general administrator. This was done when he made a final settlement. An administrator cle bonis non, who would have been authorized to receive the money, should have been appointed. — Landford v. Dunklin, 71 Ala. 594. It may be, that should a liability be fixed on the administrator de bonis non, on account of a devastavit committed by the administratrix in chief, the amount of such liability, Knott being a surety on her bond, may be set off, pro tanto, against the sum decreed to his estate; but this we do not decide, as the question does not arise, and sufficient facts are not afforded by the record.

We find no error in the rulings of the court not specially considered, and deem it unnecessary to notice them in detail. An application of the principles settled will probably be a sufficient guide on another trial.

If a surplus of personal assets should remain for distribution, the widow is entitled to a distributive share thereof, and her estate should be represented by a personal representative, or an administrator ad litem.

Reversed and remanded. The appellees in each appeal will pay the costs of appeal in this court, and in the Probate Court, except of the transcript, which will be divided between them,