Pinneo v. Goodspeed

22 Ill. App. 50, 1886 Ill. App. LEXIS 302

• Court: Appellate Court of Illinois
• Decided: December 11, 1886
• Status: Published

Opinion

Lacey, J.

The appellants ask the reversal of the decree for the following reasons: The court below erred in charging against her in the accounts^ of rents and profits coming to her on the 300-acre tract of land, certain payments made by the executor Goodspeed, to her, of sums o f money in the aggregate amounting to §1,125, which had been receipted for by her as payments on her life decree of §500 per annum allowed in the divorce proceedings against her late husband, Orange Fargo; for not allowing the abatement of §144.95 which Elizabeth M. Fargo and Goodspeed got deducted from the amount of accrued interest on the said mortgage against the 300 acres of appellants’ land, at the time they purchased it of Mrs. Haff; and for allowing ten per cent, interest to Mrs. E. M. Fargo on her note secured by the same mortgage, from its purchase to December 10, 1880; and for not allowing her rents to her on the said 300 acres of land while managed by the executors at the same rate allowed by the former master, upon which the decree was based, reversed in part by the Supreme Court, reported in 104 Ill. 184, to wit, at §3 per acre per annum, instead of on the basis of the actual receipts, as was done by the master at this hearing, under the direction of the court; and for not crediting this note with a dividend of forty per cent., the same as had been paid by the executors on other seventh-class claims. Lastly §34 was wrongfully allowed to Goodspeed, executor, for money paid as insurance on the buildings on the 300-acre tract of land while he managed it.

These are the only objections urged against the justness of the decree.

It will be seen that the supplemental cross-bill on which this trial was had was the only one to which Knox was a party, and of which the Supreme Court say, “most of these complications and changes of interest accrued after the filing of the original and cross-bill, and we are of the opinion it was proper to bring all the parties interested in the settlement of the account before the court, and this could only be done by a supplemental billand they say Knox “ was not bound by the statement of the account or any of the proceedings.”

The scope of the supplemental cross-bill was sufficiently broad to require an answer from the executor, Goodspeed, and the executrix, Mrs. Fargo, and Knox, as to the amount of the rents received. In fact the executors were directly questioned as to the amount, which Goodspeed answered in full, specifically showing the exact amount received and the amount paid out for taxes and insurance. It is strenuously insisted by counsel for appellants that the question of the manner of estimating the rent, and in fact the amount of it, was a matter fully settled by the Supreme Court in its decision and remanding order; that the entire question was res adjudioata. If what the Supreme Court says is correct, that Knox was not bound by the statement of account or any of the proceedings, it can not be that the court would undertake to conclude Knox by forever settling the account before he had had an opportunity to be heard. In fact the court did not do so, nor attempt to do so. It says that “the statement of the account by the master is not sufficiently specific or comprehensive, nor does it seem to have been prepared with reference to the legal rights of the parties affected by it.” In the order of the court reversing the case, it is said: “ So much of the decree, therefore, as directs a dismissal of the supplemental cross-bill and approves of the report of the master, and directs the accrued rents and profits of the premises to be paid to Knox, is reversed, but is in all other respects except so far as it may be modified by what we have already said, affirmed, and the canse .remanded with directions to the court below to refer the cause again to the master for the purpose of restating the account, and for other proceedings in conformity with the views here expressed.”

There was no order in the opinion or decree of reversal to state the account on the same evidence. The master’s former report and statement of account was nullified and a new account was ordered, and on this reversed report the decree of the Circuit and the opinion of the Supreme Court was based. There was no order not to offer new evidence before the master, and from the fact that an issue was to be formed on the allegations of the supplemental cross-bill it was more than probable new evidence would be taken, as Knox was not bound by the former proceedings. Nowhere in the opinion is the manner of estimating the rent indicated, whether according to the reasonable value of the actual receipts. This question not having been settled it was open for the court below to adopt any legal method it desired, and where there is proof as to what the actual receipts were, it-is the legal method to fix the rental value on such basis. McConnell v. Holobush, 11 Ill. 61; Mosier v. Norton, 83 Ill. 519. The Supreme Court say, 104 Ill. 195 : “ The mortgage having been assigned to Good-speed for the use of Mrs. Fargo on the 14th April, 1875, she should from thence until the appointment of the receiver be treated as mortgagee in possession, and should account for the rents and profits accordingly, and they should be applied from year to year as they accrue, less the. taxes, necessary repairs, etc., upon the mortgage indebtedness.” So there can be no dispute as to what position Mrs. Fargo and her agent, Goodspeed, occupied in the eyes of the law after the latter purchased the mortgage. In the master’s report the rents were accounted for which accrued on the said land of Mrs. Pinneo from the time of the death of her late husband, Fargo, in 1874, to the time the receiver was appointed, in 1879, on the basis of what was actually received. This was a correct legal basis, and all in equity and good conscience the executor and executrix, or Mrs. Fargo, in possession under the mortgage, ought to he required to pay; and the court helow, not having been concluded by any action of the Supreme Court in the manner of computing the accrued rents, was not in error in ordering the master to compute it on the basis adopted, and as upon the sworn ans wers o.f the executor and executrix the master was justified in doing. There is no evidence appearing in this record, or at least none is shown by the abstract, to show what evidence was before the master on the former hearing, and we therefore can not determine whether there was sufficient basis in that evidence to justify the master in -the present case in fixing the rent on the basis of the actual receipt or not, but certainly the sworn answers were sufficient. We therefore hold that the point made by counsel for appellants under this head is not well taken.

The two following objections, raised by the appellants’ counsel, we will consider together, to wit: The charging against her in her rent account by the executors the sum of §1,125, paid to her at different times between May 31, 1875, and May 21, 1877, as on her alimony accoxmt on the Chicago decree; and the other objection that the executors should have paid forty per cent, dividend on the decree of foreclosxxre in favor of Knox, against the said 300-acre tract of land, so that such deex-ee should be reduced to that extent, the estate of Fargo being bound for it, and the said amount of forty percent. having been paid by the executors on some other seventh-class claims. As the two objections are clearly allied, and the reasons for allowing or rejecting them being nearly identical^ they can more conveniently be considered together. It will appear, upon examination of the foregoing opinions of the Supreme Court in this case and the evidence herein, that at the time of the death of the said Orange T. Fargo, November, 1874, this suit was pending against him in the Supreme Court on the appeal of his former wife, one of the appellants herein, the Circuit Court having rendered a decree in his favor on his original bill. The cause xvas continued in the Supreme Court till after the September term, 1877, when an opinion was filed in the Supreme Court, in the case reversing the decree of the Circuit Court and holding that Mrs. Pinneo was the rightful owner of the 300 acres of land in question. The executrix thereupon filed a petition for a rehearing which was afterward, in Maicli, 1878, denied.

Fargo’s will provided that if the appellant Sarah Fargo lived, the farm in Troy (the 300 acres in question) could not; be sold, and the quarterly installments to her must be paid from the rents of the said farm; but if she should die, then the said farm may be sold at the option of the executors of the will as in their judgment should seem best. The proceeds of the sale of the said farm and all such other property as the testator should die possessed of was to be divided equally among his four children or as many of them as shall be living.

The executor and executrix undertook the work of executing the provisions of the will and during several years pending the first appeal in the Supreme Court proceeded to collect the rents of the land in question and pay the appellant her quarterly installments out of them, and to settle up the affairs of the estate generally under the orders of the County Court. The §1,125 in question was paid out of those rents as the will directed, and a considerable sum of money remained over, arising from the rents. The estate of Fargo aside from this tract of land was hopelessly insolvent — with it there was plenty of assets to pay all the debts. There was a large amount of claims of a class or classes that took precedence of the seventh-class claims and was entitled to be first paid, allowed against the estate, and also a large amount of seventh class was allowed; the mortgage in question, and also the Chicago so-called alimony decree of appellant, Mrs. -Pinneo, as claims against the estate of Orange T. Fargo, were only entitled to be allowed as seventh class.

In March, 1876, the executor, Goodspeed, having collected a large amount of assets and received rents from the rea,ltyi obtained an order from the County Court to pay a dividend of forty per cent, on the seventh-class claims, and made such payments on certain of them to the amount of §1,389.07, which the executors reported to the County Court, which was approved; but no portion was paid on the Chicago decree other than the §1,125, and none on the mortgage debt.

The answers of appellees clearly show that without the rents accruing on the tract of land recovered by appellant from the estate there were not enough assets to pay the proper costs and charges against it, and the first, second, third, fifth and sixth-class claims, and the exiDenses of administration, and that there was no fund to pay any part of the said seventh-class claims. The land in question was recovered by Mrs. Pinneo, together with all the rents and profits arising from it from the date of Orange T. Fargo’s death, and the two executors have been required to account for it to her in the accounting. There is no doubt that in' all these transactions the executors acted in- the utmost good faith, believing that the decree of the Circuit Court confirming the title in the land to the deceased Fargo would be sustained by the Supreme Court; but it turned out that they were mistaken. In case they are net able to recover the amount of money paid out on the seventh-class claims from the creditors to whom it was paid, they will be compelled, personally, to stand the loss. There certainly can be no equity in any other seventh-class creditor who has not .received such dividend, demanding it after the true state of the case has been developed.

It is insisted that because such dividend has been paid to a portion of that class of creditors in order to create equality, others should receive the same. This would be a good rule where there is as much or more equity in establishing an equality than in not doing so. It could not be just that appellees, who paid this money out to a class of creditors not entitled to it through mistake and misconception, should be compelled to still pay to others something which, but for such mistake, no one would contend they ought to be required to do. Mor could any technical rule against going behind the executors’ report to the County Court, which shows that they had this money in their hands belonging to the estate, avail. appellant. That was made under the same mistake and was not in fact true. Any reasoning that would establish a liability in law against appellees in favor of the seventh-class creditors not having received such dividend would establish a rule that would do great injustice, which it is the boast of the law it never does. Brandon v. Brown, 106 Ill. 519, establishes a rule broad enough to cover this case. The administrator’s report in that case was not held so sacred that the administrator was held bound by it when circumstances were such as to make it unjust to bind him by it; this is in a court of equity where the appellant is asking equity, and she ought to be required to do equity. The appellant has taken to herself by force of the law the identical assets out of which appellees expected to pay their seventh-class claims, leaving nothing more in their hands, and ought to be content.

For the same reason the appellant was properly charged with the §1,825. It was received from the rents of this land which she had a right to claim as her own, and has received it; but in paying it to her the appellées were under the same mistaken views as to their rights or their ability to pay as they were in paying 'out the forty per cent, dividend, and took the receipts as though it were paid on the alimony decree.

Admitting that the alimony decree did not cease at the death of Fargo, a point we do not decide, it was only a seventh-class claim, and not entitled to any payment, as we have shown. As appellant Pinneo actually received the money, and equity requires that it should be charged to the rent account, it ought to be so done, and the court below in doing so did pot err.

The only remaining errors assigned are the ones arising out' of the court below allowing to Mrs. E. M. Fargo, or to Knox, the full amount of the note and ten per cent, interest, which she, through Goodspeed, purchased of Mrs. Half, and the §34 item for the insurance of the buildings on the land in question.

That the appellee, Mrs. Fargo, is entitled to be subrogated to all the rights of the original holders of the note and mortgage there can be no question. Not having any funds in her hands belonging to the estate of Orange T. Fargo applicable to the payment of seventh-class claims, such as this was, she furnished her owm money and purchased in the mortgage debt and relieved the estate of the pressure. The estate was notin the least injured by .this, and should be required to pay to appellee the same as it would have been obliged to do in ease she had not purchased it. There was some $944 accrued interest on the note at the time of its purchase and the note of $2,000 and this interest was purchased in for $2,800. The note has run for over ten years since that time and before final adjustment, the $800 drawing no interest whatever, interest being only allowed on the principal. It would not be inequitable, but highly equitable, to take no notice of the small discount, hut to allow the entire interest due just as it was when purchased, and the principal sum and ten per cent, on that sum up to the time of settlement. King v. Cushman, 41 Ill. 31, 38; O’Halloran v. Fitzgerald, 71 Ill. 53, 58; Stinson v. Anderson, 96 Ill. 373; Condict v. Flower, 106 Ill. 105, 117.

Another consideration is that as to Mrs. Pinneo, the appellee, Mrs. Fargo, by. reason of being the executrix of the estate of Orange T. Fargo, deceased, never stood in the relationship of trustee or in any fiduciary relation. And as the executors never had any money, as it appears, to pay any por.tionof said note as a se\ euth-elass claim against the estate, she was under no duty to pay any portion of the note at the time she purchased it, and as the matter was indifferent, so far as the estate was concerned, whether the amount of the note was large or small, Mrs. Pinneo.ought not to claim any discount through any supposed equities of the estate.

We see no error in the computation on said note and interest thereon.

As to the small item of $34 for insurance, we think it was properly allowed. The appellant assumes that the insurance was not taken for the benefit of the inheritance; but for the executors; but we think she is not justified in this, for Good-speed’s answer shows this insurance was paid out of the rent for the benefit of the farm, and under such circumstances the insurance money in case of loss would be in equity payable to the owner of the title, whoever he or she might be. As far as we can determine from the answer, we see no error in that particular. We have noticed all the objections we'regard of any importance, and think the decree is eminently just to all parties and in accordance with the opinion of the Supreme Court and therefore the decree of the court below is in all things affirmed.

Deoree affirmed.