Anspacher v. Utterback's Adm'r

• Decision Date: 06 February 1934
• Citation: 68 S.W.2d 15,252 Ky. 666
• Parties: ANSPACHER v. UTTERBACK'S ADM'R et al.
• Court: Kentucky Court of Appeals

68 S.W.2d 15

252 Ky. 666

ANSPACHER v. UTTERBACK'S ADM'R et al.

Court of Appeals of Kentucky

February 6, 1934

Appeal from Circuit Court, McCracken County.

Action between Marie H. Anspacher and J. C. Utterback's administrator and others to settle the estate of J. C Utterback, deceased. From the judgment, Marie H. Anspacher appeals.

Reversed.

Nunn &amp Waller, of Paducah, for appellant.

Chas C. Grassham, L. B. Alexander, A. E. Boyd, and W. F. McMurry, Jr., all of Paducah, for appellees.

RICHARDSON Justice.

The decisive question in this case is the right of devisees, one of whom is also an executrix of a will, to a preference as to the other creditors of a deceased coexecutor, under section 3868, Kentucky Statutes. J. C. Utterback, a resident of McCracken county, Ky. died intestate, owing debts aggregating $500,000, with an estate of the value from $25,000 to $30,000 available for the payment of his debts. Only the claim of Anspacher's estate grows out of a fiduciary relation. The widow of A. E. Anspacher, for his estate, asserts the right of the devisees under the will of her husband, to a preference under section 3868. He devised all of his property, real, personal, and mixed, of which he died possessed, to her for life, "with power to sell, convey, deed or conduct business with the estate, the same as her husband could do while he was living." And "at the death of my wife, what may be remaining in her hands be equally divided among my brothers and sisters; at their death their portion to go to their children." The effect of this language is to give a life estate to his wife and a gift over of the remainder to the testator's brothers and sisters and their children. Therefore we shall consider this case, not regarding the widow as the only devisee under the will. Wintuska v. Peart, 237 Ky. 666, 36 S.W.2d 50; Banzhoff v. Smith, 233 Ky. 737, 26 S.W.2d 1034; Blessing v. Johnston, 249 Ky. 777, 61 S.W.2d 635. Mrs. Anspacher and J. C. Utterback were nominated in the will as executors without bond, with direction that no appraisement or inventory be made of the estate. Utterback took possession of the entire estate and managed it as sole executor. He made no settlement with her or the county court. She was 65 years of age at the death of her husband; at this time she is 81. From time to time Utterback made payments to her, sufficient only to satisfy her frugal, simple needs. From March 11, 1916, to October 30, 1930, he prepared and signed reports showing his receipts and disbursements. He charged himself in no one of them with the corpus of the estate. At his death some of them were on file in the county clerk's office; others lodged in a remote section of the bank of which he was an officer; still others were found among the papers of Mrs. Anspacher. The estate in his hands was in a confused and uncertain condition. In an action to settle the estate of Utterback, the cause was referred to the master commissioner to audit the estate of Anspacher in the hands of Utterback as executor. The trial court, on fiscal hearing, fixed the value of the estate in his hands, as executor, at $33,314.08, the balance due on October 15, 1932. From this aggregate he deducted $5,600, the inventory value of 18 shares of City National Bank stock and 10 shares of City Savings Bank stock, leaving the balance due Anspacher's estate $27,714.08. In their briefs, Anspacher's estate and the administrator of the estate of Utterback agree that the finding of the trial court fixing the balance of Anspacher's estate at $27,714.08 is the correct balance in Utterback's hands at the time of the latter's death. In the brief of the administrator of Utterback it is written: "The only error in my opinion made by the trial court in this judgment was the refusal of the court to allow any commission to J. C. Utterback on the amounts that had passed through his hands as executor. This question of commission is not of such importance as to warrant a reversal of the judgment, in my opinion." Certain of the creditors of Utterback dispute the correctness of the finding of the chancellor. Among other items, these creditors argue "there were three thousand dollars ($3,000.00) in the savings account in the Citizens' National Bank, which had been placed there by Utterback at the time the Citizens' National Bank closed, for which Utterback was given no credit." It is our view the finding of the chancellor is supported by the facts. We shall dispose of the questions presented, considering the total amount of the estate in the hands of Utterback at the time of his death, as follows:

Receipts: Personal Property Inventory ...................... $21,514.24 Personal Property Income .......................... 17,897.87 ---------- $39,412.11 Real Estate Sales ................................. 15,312.50 Real Estate Rents .................................. 5,342.48 ---------- 20,654.98 ---------- Total Receipts $60,067.09 Disbursements: Taxes, Repairs & Insurance ........................ $4,732.68 Direct to Mrs. Anspacher .......................... 18,386.03 To Miss Tillie, Temple Israel, debts, & funeral .... 5,728.16 Error ................................................... .50 ---------- Total Disbursements $28,847.37 Balance in hand 10/15/30 31,219.72 Add interest to 10/15/32 3,746.36 ---------- $34,966.08 Deduct admitted payments made after 10/15/30 1,652.00 Court deducted inventory value of Bank Stocks 5,600.00 ---------- Amount adjudged without preference $27,714.08

The right of the estate of Anspacher to preference under section 3868, Kentucky Statutes, is the decisive question to be determined. Incidentally the law of application of payments is involved, together with the doctrine of estoppel and laches and the liability of coexecutors.

It is not denied that Utterback as executor assumed and exercised complete and exclusive authority over the entire estate of the testator from the time of his qualification until his death. It is neither denied nor disputed that he filed no appraisement or inventory of the estate with the county court and made no report of the corpus of the estate in any statement to, or settlement with, the county court or Mrs. Anspacher. It is not claimed Mrs. Anspacher, although she jointly qualified as executrix of the will of her husband, ever assumed or exercised any authority over, or control of, or right to, the estate of the testator, either as executrix or as an individual, except she received the several payments as they were made to her by Utterback. She trusted implicitly and relied exclusively upon Utterback in the control and management of the estate. His reports of the receipts and disbursements filed in the county court, copies of some of which were delivered to Mrs. Anspacher, are correct as far as they go. As executrix she asserts the right of Anspacher's estate under section 3868, Kentucky Statutes. It expressly provides: "If the personal estate of a decedent be not sufficient to pay his liabilities, *** the amount of the estate of a dead person *** committed by a court of record to, and remaining in the hands of, a decedent, shall be paid in full before any pro rata distribution shall be made. *** All other debts and liabilities shall be of equal dignity, and paid ratable in the administration of his estate." Unquestionably this section accords to Anspacher's estate a preference as to the personal estate of the testator "committed by the court" to, and remaining in, the hands of Utterback at the time of his death, unless there exists a statute to the contrary or a preference is forbidden by the established principles of equity. No provision is contained in any other section of the statute concerning the right of preference. It is, however, most earnestly and vigorously urged that the principles of equity preclude the estate's right of preference; also the fact she was coexecutor precludes the estate's right to the statutory preference. It is conceded Mrs. Anspacher placed in Utterback's hands the proceeds of certain real estate and that she is not entitled to preference as to same.

It is strenuously argued that Mrs. Anspacher "as co-executor suffered and allowed her co-executor to receive these assets (the personal estate) and exercised no care or caution to prevent any waste. ***" She allowed Utterback to retain this money in his own hands, and his statements lodged with the county clerk's office "show he had the money and had executed notes to her for a part of the money, accounted to her for the interest on the money, which he had loaned himself." The situation presented by the record "was brought about by reason of her acts and confidence which she had in her co-executor"; therefore "she is not allowed a preference against his estate." To support this argument, sections 1180, 1278, and 1284 Story's Equity Jurisprudence, are cited, which read: Section 1180. "If one executor knows that the assets received by the other executor are not applied according to the direction of the will, or in due course of administration, and he stands by and acquiesces in or suffers the assets to be wasted by such executor, without any effort to require or compel the execution of the trust, or the application of the assets in the course of administration thereof, he will be held liable for the waste or misapplication of said assets." Section 1278. "Whenever a trustee or executor, by his own negligence or laches, suffers his coexecutor or co-trustee to receive and waste the trust funds or assets of the testator, when he has the means to prevent such waste by the exercise of reasonable care and diligence, then in such case such trustee or executor will be held personally responsible for the loss occasioned by such receipt and waste by his co-trustee or co-execu...