Hartford Accident & Indemnity Co. v. Stout

2 N.W.2d 315, 140 Neb. 859, 1942 Neb. LEXIS 218
CourtNebraska Supreme Court
DecidedFebruary 6, 1942
DocketNo. 31281
StatusPublished

This text of 2 N.W.2d 315 (Hartford Accident & Indemnity Co. v. Stout) is published on Counsel Stack Legal Research, covering Nebraska Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Hartford Accident & Indemnity Co. v. Stout, 2 N.W.2d 315, 140 Neb. 859, 1942 Neb. LEXIS 218 (Neb. 1942).

Opinion

Simmons, C. J.

Plaintiff filed its petition in the district court seeking to have a lien declared upon certain real property. Defendants demurred separately. The trial court sustained the demurrers. Plaintiff elected to stand on its petition. Its action was dismissed. Plaintiff appeals.

For the purpose of this decision, the following facts, alleged in the petition, are taken to be true.

Nellie K. Rector, by will admitted to probate June 13, 1935, made nine specific cash bequests totaling $9,400; five specific bequests of personal property; and devised certain real estate in Lancaster county to Richard F. Stout; devised the remainder of her estate, real, personal, and mixed, to a residuary devisee; nominated Stout as executor of her will “and empower him to sell any real property of which [860]*860I may die seised without obtaining the license of any court for such sale.”

June 13, 1935, Stout qualified as executor by filing his oath, together with his bond in the sum of $5,000 upon which the plaintiff was surety.

April 17, 1937, the First Trust Company of Lincoln obtained a judgment against Stout for $360.92 which became a lien against the property devised to Stout by Mrs. Rector.

Under the authority in the Rector will, Stout sold the real estate for more than $2,000.

Stout died October 15, 1939, having been the executor of said estate from his appointment until his death. Under Stout’s will, admitted to probate, Ethel Stout is the sole devisee and also the administratrix with’ the will annexed of the Stout estate.

After Stout’s death, Ethel Stout filed a report for him as executor of the Rector estate, to which objections were filed by the residuary devisee and legatee. Upon hearing, the county court on July 3, 1940, entered an order surcharging the account of Stout as executor in the sum of $1,349.21 for moneys received and not accounted for. This sum was paid by the plaintiff to the administrator de bonis non of the Rector estate, and it thereby became subrogated to all rights of such administrator against the Stout estate.

The only asset in the Stout estate is the real estate devised to him by Mrs. Rector, which has a value of less than $2,000 after deducting unpaid taxes. Claims allowed against Stout’s estate, exclusive of this claim, are in excess of $5,000. The Stout estate is insolvent.

On April 30, 1940, and within time, plaintiff filed a contingent claim against the Stout estate and on July 5, 1940, filed its “absolute claim or set-off” against the devise to Stout under the Rector will.

Plaintiff alleges that, by reason of the fact that Stout, as executor, applied to his own use funds belonging to the Rector estate, he thereby elected to receive to that extent payment óf his devise in moneys instead of property, and [861]*861that said sum of $1,349.21 is a first lien or claim upon the real estate superior to the claim of Ethel Stout as devisee and as administratrix with the will annexed, and to the judgment of the First Trust Company. Plaintiff prayed for a decree that the sum of $1,349.21 is a first lien upon the real estate and for equitable' relief.

Ethel Stout personally and as .administratrix demurred for the reasons that the petition does not state facts sufficient to constitute a cause of action and that the court has no jurisdiction of the subject-matter. Defendant First Trust Company demurred on the grounds that the petition did not state a cause of action and that plaintiff had an adequate remedy at law.

The petition recognizes that title to the real estate passed to Stout under the Rector will and to Ethel Stout under the Stout will. Plaintiff alleges that Stout, by applying to his own use funds belonging to the Rector estate, “elected to receive to that extent payment of his devise in moneys instead of property,” and by reason thereof the sum so used becomes a lien superior to the claim of Ethel Stout as devisee and as administratrix. It necessarily follows that plaintiff claims that the election to take money and not property and the creation of the lien by the taking occurred during Stout’s lifetime. It further follows that Stout’s death did not change this situation, for had Stout lived, had he reported his doings as, executor and had his account been surcharged for the amount here involved and had his surety paid the amount, the problem would have been the same.

It may be pointed out here that the petition is silent on three matters of fact: First, when did Stout sell the Rector real estate? second, when did he apply estate funds to his own use? and, third, when did he become insolvent?

We have then this situation as presented by the plaintiff. Title to this real estate vested in Stout personally at the date of Mrs. Rector’s death, a date not disclosed by this record, but obviously prior to the probate of her will on June 13, 1935. He held that title, free from any lien or [862]*862claim until April 17, 1937, when the lien of the First Trust Company judgment attached. No lien or claim thereafter attached to that title during his lifetime, unless it is determined that a lien attached thereto when he applied estate funds to his own use. This date is not set out in the petition. We cannot determine when that application of funds occurred prior to the date of his death October 15, 1939. Neither can we say that the misuse of estate funds in 1939 establishes as a fact that he then elected to take money instead of the real estate, title to which vested in him in 1935.

The plaintiff stands in the position of a creditor of the Stout estate. As such it has filed a claim against the Stout estate. As such a creditor, should it be given a preferred status, due to the source of Stout’s title to the real estate ?

We have not been cited to a statute that makes a specific devise to an executor subject to a lien in favor of the estate for the improper administration of estate funds. The will of Mrs. Rector places no such charge upon the devise. The necessary conclusion is that Stout held title to the property subject only to such claims as are established by the ordinary legal remedies to enforce payment, unless it should be determined that an equity court should intercept the devise and attach a lien thereto because of the facts here recited.

Plaintiff’s contention is that Stout was empowered to sell the real estate, that he sold other real estate, that this power extended to his specific devise, and that, because of the power to sell, the real estate here involved passed under his dominion as executor and not to him as an individual.

We do not so construe the power of sale. The power was obviously given for the purpose of avoiding the requirement of “obtaining the license of any court” should it become necessary to sell property. This is a power which Stout could exercise consistent with his duties as executor for the purposes for which a court license could be obtained, to wit, to pay debts of the estate and costs of administration. The will did not direct Stout to sell real estate. He [863]*863did exercise that power in the sale of real estate, obviously from the residuary estate, and thereby converted real property into personal property. Why he sold real estate is not disclosed. No question is presented as to the legality of the exercise of that power. There is no showing that the money used by Stout, involved in this proceeding, came from the sale of the real estate.

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Bluebook (online)
2 N.W.2d 315, 140 Neb. 859, 1942 Neb. LEXIS 218, Counsel Stack Legal Research, https://law.counselstack.com/opinion/hartford-accident-indemnity-co-v-stout-neb-1942.