Schlickman, &C. v. Citizens' Nat. Bank, Covington

• Court: Kentucky Court of Appeals
• Writing for the Court: Lassing
• Citation: Schlickman, &C. v. Citizens' Nat. Bank, Covington, 139 Ky. 268, 129 S.W. 823 (Ky. Ct. App. 1910)
• Decision Date: 17 June 1910
• Parties: Schlickman, &c. v. Citizens' Nat. Bank, Covington.

Page 268

139 Ky. 268

Schlickman, &c. v. Citizens' Nat. Bank, Covington.

Court of Appeals of Kentucky.

June 17, 1910.

Appeal from Kenton Circuit Court (Common Law and Equity Division).

M. L. HARBESON, Judge.

From the judgment the administrators of William Schlickman appeal. — Reversed.

ROBERT C. SIMMONS for appellants.

SCHMIDT & HOLMES for appellee.

OPINION OF THE COURT BY JUDGE LASSING — Reversing.

William Schlickman, a resident of Covington, Ky., died in March, 1894. For many years prior to his death he had been engaged in the pork-packing business, first in partnership with one Daniel Ruttle and later as a member of the Ruttle, Schlickman Packing Company, a corporation, which was organized about 1890. He and Ruttle, his former partner, owned practically all of the stock, and, in 1892, he bought the interest of Ruttle in the business, so that, at the time of his death, he owned practically all of the stock of the packing company. A few shares which were not owned by him were held by employes merely for the purpose of organization. He left a will giving all of his property to his children, some of whom were, at the date of his death, quite young. He also provided in his will that his executor, Fred Pieper, should take charge of his estate and manage his business; and he gave to said executor power to sell and convey his real estate. He also designated him as guardian of his minor children. Shortly after his death his will was admitted to probate, and Fred Pieper, his friend named therein as executor, qualified as such, took charge of the estate, and managed it and operated the pork-packing business until in April, 1899, at which time he resigned and was succeeded by H. W. Schlickman and J. H. Dorsel, son and son-in-law of the decedent, as administrators de bonis non with the will of William Schlickman, deceased, annexed. Thereafter the administrators conducted the business of the Ruttle, Schlickman Packing Company, and, as administrators, became the indorsers for said company, on several notes to the Citizens' National Bank of Covington. The aggregate amount of these notes in 1904, when suit was brought to settle the estate of William Schlickman, amounted to more than $10,000. Upon the institution of the suit to settle, the case was referred to the master commissioner to hear proof of claims. The bank presented its claim before the master, proved as the law directs, but the master was of opinion that the administrators were without power or authority to bind the estate of their decedent, and he rejected said claim. On exceptions filed to this report, the case was submitted to Hon. E. L. Worthington, sitting as special judge, and, upon full consideration, he held that, under the will of William Schlickman, his administrators with the will annexed had the power and authority to bind his estate in the way and manner in which they did, and that the claims presented by the Citizens' National Bank were good and valid claims against said estate, and he directed and ordered them to be paid. From this finding and judgment this appeal is prosecuted.

Two propositions are raised for our consideration: First, did the will of William Schlickman authorize his executor to contract debts and bind his estate for the purpose of carrying on the pork-packing business of the Ruttle, Schlickman Packing Company? And, second, if such power is conferred upon the named executor as would authorize the creation of these debts by him so as to bind the estate therefor, did such authority pass to the administrators de bonis non with the will annexed; or was it personal to Pieper, the named executor? Said will which we are called upon to construe is as follows:

"I, William Schlickman, of Covington, Kenton county, Kentucky, being of sound and disposing mind and memory, and recognizing the uncertainty of life, do hereby make this my last will and testament, to-wit:

"First. I direct my executor hereinafter named out of my estate to pay all my just debts.

"Second. I hereby bequeath and devise unto my children all of my estate of whatsoever kind and wherever situated to have and to hold share and share alike, the said children being named, to-wit: Emma, wife of John Dorsel, Henry Schlickman, Leo Schlickman, Clara Schlickman, William Schlickman, Mary Schlickman, Frederick Schlickman, Margaret Schlickman and Norbert Schlickman.

"Third. I hold the title to a house and lot on the west side of Holman street between Fifteenth and Sixteenth streets, in Covington, Kentucky, the lot being conveyed to me by Crockett, which property has been mortgaged by me to the Kentucky Perpetual Building and Loan Association for $1,500.

"This property belongs to Mrs. Mary Frecking and the title is held by me in order to borrow said sum from said Building Association, and I am also the surety on a note for $400 to Lambert Determan and the title to this property is held by me to secure the payment of said note and whenever said building Association debt is satisfied and said note paid so that my estate is relieved from all liability on account of either of said debts then my executor will by a proper deed convey the said property to said Mary Frecking giving her free and unincumbered title thereto.

"Fourth. I appoint Fred Pieper guardian of my infant and unmarried children being all of my children hereinbefore named except Emma Dorsel.

"Fifth. I hereby nominate as executor of this my will the said Fred Pieper and ask that he be allowed to qualify and act as such without giving bond and I hereby fully authorize and empower him as my executor to do any and all things concerning my estate that I could do if living, leaving it to his judgment and discretion as to how he shall manage the same or carry on my business and giving to him full power and authority to sell and convey any or all of my real estate when in his judgment it may be desirable to do so, and the devise to my children herein is especially subject to the power thus vested in my said executor that is the devise to them is in no way to be construed as a limitation on the power of said executor to sell and convey by deed said real estate as to carry on said business.

"In witness whereof I, the said Henry Schlickman, do hereby this 26th day of February, 1894, set my hand in the presence of Henry Linneman and J. W. Bryan whom I have requested to attest this will. Wm. Schlickman."

The record discloses that, at the date of the death of William Schlickman, the pork-packing business owed approximately $22,500. It was the custom of this company to borrow money with which to purchase the hogs which were slaughtered and packed during the fall and winter season, and, when the cured meats, etc., were sold in the following spring and summer, these obligations would be discharged. After the death of William Schlickman, the packing company did not make money, and this is particularly true after the business passed into the hands of the administrators de bonis non with the will annexed. It cannot be said that this failure of the business to make money was due to any mismanagement on the part of the administrators; but it may more properly be chargeable to the fact that the company, with its limited capital, was unable to compete with the large packing establishments which, by reason of their improved business facilities, were enabled to buy upon more favorable terms and sell to better advantage than their less fortunate rivals. The business steadily lost money, and when all of its assets had been exhausted the company was still largely indebted. Of this indebtedness, $10,080 was due to the Citizens' National Bank, and, upon the notes evidencing same, the administrators of the estate of William Schlickman with the will annexed had sought to bind his estate as surety.

At the date of the death of decedent, the packing company had assets worth approximately $40,000, and it was indebted to the First National Bank in the sum of $22,500, and the estate of decedent was bound therefor. By the fifth clause of his will he authorized and directed his executor, Pieper, to do any and all things concerning his estate which he, if living, could have done. It is conceded that decedent was not engaged in any other business than that of pork packing, and when he referred in his will to "my business," and authorized his executor to "carry on my business," he evidently referred to the pork-packing business, although the business, in fact, was not owned by him in its entirety. He was making provision in his will to enable his executor to manage his estate, and particularly to manage the packing business in such a way as he believed would make it profitable to his estate. He evidently did not desire that it should be precipitately wound up, and for this reason he authorized his executor to carry on his business just as he would himself, if living, have managed and carried it on. Clearly, it was the intention of the testator that his executor should have power and authority to borrow money, if need be, for the conduct of this business, and he understood that, if the executor did so, his estate would be bound therefor. To hold otherwise would be to defeat the clearly expressed intention and desire of the testator.

The entire estate of the decedent was, of course, bound for the payment of notes amounting to $22,500 which the Packing Company owed at the date of his death and upon which he was security. These claims were held by the First National Bank. As they matured they were taken up and either paid off by money realized out of the business of the packing company, or furnished by the executor, or else from money borrowed by the packing company, upon its notes, from the Citizens' National Bank, with the executor as surety. So that, in a reasonably short time after the executor took charge of the business of the packing company, all of its indebtedness to the First National Bank was paid off and fully satisfied, and from that...