Atterberry v. McDuffee

• Decision Date: 02 July 1888
• Parties: PHILANDER ATTERBERRY et al., Appellants, v. WILLIAM D. McDUFFEE, Executor, Respondent.
• Court: Kansas Court of Appeals

31 Mo.App. 603

PHILANDER ATTERBERRY et al., Appellants, v. WILLIAM D. McDUFFEE, Executor, Respondent.

Court of Appeals of Missouri, Kansas City.

July 2, 1888

Appeal from Macon Circuit Court, HON. ANDREW ELLISON, Judge.

Affirmed.

Statement of case by the court.

This controversy grows out of objections made by heirs to certain credits asked by an executor in his final settlement. The credits are stated as follows: " This executor claims the following additional credits occasioned by loss of money deposited in Macon Savings Bank in the ordinary course of business, for safe keeping, and convenience in use, said bank at said time being in good repute for solvency, and fully trusted and used by the general community: March, 1881--By amount deposited in said bank, $340.00; Oct. 1--By amount deposited in said bank, $523.00. At the time of the failure of said bank, February 15, 1882, there remained of said sums in said bank, not drawn out and used, the sum of $463.80. Since said failure this executor has received two dividends on said sums amounting to $62.88, leaving a balance in bank of $420.82."

The evidence discloses the following facts, substantially: J. M Farmer died testate in 1880,--appointing Wm. D. McDuffee executor of his will. The executor qualified and took charge of the estate in November, 1880. The executor lived in the country, about fifteen miles from Macon City, which city seems to have been the point at which he transacted his business; and the Macon Savings Bank was regarded as the most trustworthy bank in the community.

In February, 1881, the executor, under a power granted by the will, sold a tract of land to one Nancy J. Farmer for the sum of thirteen hundred dollars. Mrs. Farmer held a certificate of deposit in said bank for a larger sum of money. The parties to said sale went to the bank, and, by agreement, the cashier of the bank debited Mrs. Farmer's certificate with thirteen hundred dollars, and issued a certificate to the executor for that amount due in thirty days. On the next day the executor obtained from the probate court an order of distribution among the legatees of the estate, for the sum of nine hundred and sixty dollars, which he had the bank pay over to the heirs out of the thirteen hundred dollars. Whereupon McDuffee handed his certificate to the bank cashier, and told him to cancel it, and issue him a certificate as executor for the balance, which was three hundred and forty dollars. Melone, the cashier, handed him a certificate therefor, which McDuffee put in his pocket-book without examining, supposing, as he testified, that it was properly drawn to him as executor. The evidence shows that the executor was anxious to distribute the money among the distributees as rapidly as possible, and again, in May, 1881 applied to the probate court for another order of distribution. This the court declined to do, as the first year of administration had not expired, and it could not then be known what debts might be presented for allowance although the estate was deemed entirely solvent. The executor notwithstanding made other payments to the heirs in advance of any orders of the court, as he was satisfied there would be no debts. From time to time he sought additional orders from the court directing him to distribute the remaining funds in his hands; and was all the time expecting such order. So that it was not deemed best to make loans of the money except on very short call. As the certificates of deposit drew some interest for a short period it was thought best to let the three hundred and forty dollars so remain in bank. The executor repeatedly consulted with the probate judge respecting this money, and the disposition made of it and his course in the matter was approved by the judge. In November, 1881, the court made an order directing the executor to pay certain heirs a sum sufficient to make them equal with other heirs who owed the estate. This payment was made. The executor kept the certificate of deposit for the three hundred and forty dollars with the papers belonging to the estate; and when he discovered that it ran in his name he concluded not to change it as the money was liable to be called for at any time for the purpose of distribution.

The executor also testified that living so far in the country, and the presence of tramps rendering it unsafe, in his judgment, to keep money at his home, he regarded this bank as the safest place for it. He had no individual money in said bank, as he had no such money. The bank was universally regarded as perfectly solvent, and its officers had the unbounded confidence of the community.

During the fall of 1881 the guardian of one of the heirs had made arrangements with the probate court to purchase for his ward a tract of land, to be paid for out of his distributive share in the hands of the executor. In October the executor came to town with $523.80 for the purpose of meeting this arrangement. He was delayed by the railroad train, and did not get into Macon City until after the probate court had adjourned, and the parties concerned had gone home. Learning from the probate judge, and others, that the parties would be in next day to consummate the matter, and his family being sick requiring his presence, he left for home leaving this money with Ben. E. Guthrie, an attorney at law to be paid over the next day, on the completion of the proposed sale. Guthrie not liking to keep the money on his person or at his house over night, stepped into the business-house of the Macon Mercantile Company, and handed this money to one Kem, of this house, marked so as to indicate that it belonged to the Farmer estate, and requested him to place the same in his safe until he called for it the next day. This was done. The next morning Guthrie informed the probate judge that he had the money for the purpose aforesaid. It seems that the arrangement for the purchase of the land fell through. The money not being called for that day, Kem, not desiring to keep the same longer in his safe, deposited the same in said bank, and took a certificate therefor in the name of Guthrie.

The executor having an opportunity to loan two hundred dollars of this money to one Dodson for a short time, gave an order on Guthrie therefor, which Guthrie paid by a check on said bank out of the sum so deposited. McDuffee at the same time directed him to place the balance of the money for him in said bank. This was the twenty-sixth day of October, 1881. Accordingly Guthrie drew his check on the bank in favor of McDuffee for the balance, $323,80, and directed the bank officer to pass the same over accordingly. From some unexplained cause the bank did not enter this credit until the fourth day of February, 1882; near the date of the failure of the bank. McDuffee supposed all the time the money was deposited to his credit as executor.

The bank knew that all this money belonged to the Farmer estate. In January, 1882, McDuffee drew on this fund, as he supposed, for two hundred dollars, which he had loaned for a short time to one Brockman. This and the other two hundred dollars loaned to Dodson left $123.80 in bank.

The notes taken by McDuffee for these two loans were to him as executor. When he applied to Melone, the cashier of the bank, for the last-named two hundred dollars, he told him he wanted two hundred dollars of the Farmer money, left by Guthrie, and Melone drew the check, which McDuffee signed. This check was charged against McDuffee individually as an over-drawn check, which fact McDuffee never learned until this trial.

At the date of the failure of the bank the Guthrie check for $323.80 was placed to McDuffee's credit in the bank by Melone, presumably, which paid the so-called draft, leaving the balance of $123.80 in controversy in this litigation. McDuffee had no knowledge of this act of February 4, 1882.

The probate court allowed the credits to the executor, and on appeal to the circuit court the same result was reached; and the heirs prosecute this appeal.

BERRY & THOMPSON, for the appellant.

I. In making a disposition of the surplus money in his hands the executor should have consulted the probate court. He must keep and manage it as a trust, where he can at all times command it, and must not put it in peril. Rev. Stat., sec. 102; Garesché v. Priest, 9 Mo.App. 270; S. C., affirmed, 78 Mo. 126.

II. As to defendant's duty and the degree of diligence required of him as trustee, see 2 Pomeroy's Eq. Jur., secs. 1066, 1070; Schouler's Executors and Administrators, secs. 314, 315. He must enter into no relation which would be inconsistent with his trust. 2 Pom eroy's Eq. Jur., sec. 1077. At the time of the bank failure, the bank owed McDuffee, as executor, nothing. It did owe him, individually, the three hundred and forty-dollar note and the balance of his deposit account, to-wit, $123.80, and his relation to the bank was that of an individual creditor, and as such these items were allowed to him by the assignee.

III. The taking of the three hundred and forty-dollar note payable in sixty days to himself individually and not as executor, and allowing the balance of $123.80 to remain on deposit in bank in his name and to his individual credit, was a conversion of the funds of the estate by the executor, and it being lost by the failure of the bank, he must make it good to the estate. By such disposition of the trust fund, he committed a breach of faith in the eyes of the law, and there can be no question of good faith in the case. Ackerman v. Ermott, 4 Barb. 626; Commonwealth v. McAlister, 28 Pa.St. 480; Morris v. Wallace, 3 Pa.St. 319; Knowlton v. Bradley, 17 N.H. 458; Evans v. Halleck, 83 Mo. 376; Nattnor v. Dolan, 8 N.E. 289, and authorities cited; Coleman v. Lipscomb, 18 Mo.App. 443;...