Clifford v. McAlester Fuel Company
| Decision Date | 24 April 1922 |
| Docket Number | 322 |
| Citation | 240 S.W. 722,153 Ark. 276 |
| Parties | CLIFFORD v. MCALESTER FUEL COMPANY |
| Court | Arkansas Supreme Court |
Appeal from Pulaski Circuit Court, Third Division; Archie House Judge; reversed.
STATEMENT OF FACTS.
The McAlester Fuel Company sued John F. Clifford to recover $ 3,816.34 alleged to be due it for coal. The defendant denied liability.
The plaintiff is a corporation engaged in the business of buying and selling coal at McAlester, Okla. K. P. Alexander of Little Rock, Ark., was its agent, and as the representative of the plaintiff, had been selling coal for it in large quantities to Edgar J. Hahn for several years prior to his death. Hahn was a contractor and bond broker. In August 1919, Hahn became ill and was carried to the St Vincent's Infirmary in Little Rock, Ark. On the 16th day of August, 1919, he executed his will and died on the 20th day of August, 1919, in the infirmary. Hahn at the time of his death had entered into contracts with improvement district commissioners to construct seven drainage ditches and one road. The drainage contracts were far advanced in the course of construction. At the time of his death Hahn had large crews of men, a large amount of material, and a large amount of machinery which were used in the construction of said drainage projects. These contracts all provided for the completion of the improvement within a certain period of time and provided for damages against the contractor in the event they were not completed on the date designated.
The thirteenth and fifteenth clauses of Hahn's will are as follows:
Walter E. Orthwein was Hahn's partner in the bond brokerage business with headquarters at St. Louis, Mo. He desired to wind up their partnership as surviving partner, and for that reason did not qualify as executor under the will. J. R. Vinson was appointed in his stead, and with John F. Clifford duly qualified as executor under the will of Edgar J. Hahn, deceased, and after consultation it was deemed to the best interest of his estate to carry out the drainage contracts which Hahn had obligated himself to perform.
Orders from the probate court to that effect were obtained, and the orders were couched in language as broad as the clause of the will above quoted. Hahn was a customer of the McAlester Fuel Company and was accustomed to buy large quantities of coal from it to carry out his drainage and road contracts. After his death his executors continued to buy coal from the plaintiff to be used in carrying out these drainage contracts.
The McAlester Fuel Company understood that the coal was purchased for this purpose and charged the same to the estate of Edgar J. Hahn, deceased. This was done after Alexander had investigated the matter and had been assured by the executors that the estate was solvent. The coal was furnished and charged exclusively to the account of Edgar J. Hahn's estate.
Suit was first brought against Hahn's executors with a view to holding his estate liable for the account sued on herein. That suit was dismissed, and subsequently the present suit was instituted for the purpose of holding Clifford individually liable. J. R. Vinson had died before the coal in question had been purchased.
The circuit court rendered judgment in favor of the plaintiff for the amount sued for, and to reverse that judgment, the defendant has duly prosecuted this appeal.
Judgment reversed and cause remanded.
J. H. Carmichael and Cockrill & Armistead, for appellant.
Every man has the right to dispose of his property by will as he pleases, with only such limitations as the statute imposes (87 Ark. 243) and such will becomes the law to the personal representative of the deceased. 32 S.E. 16; 34 Ark. 251. The will in question instructed the executor to proceed with certain contracts if necessary for the preservation of the estate, and such acts on the part of the executor in carrying out the will became a charge against the estate and not against the executor individually. See 159 Cal. 755; 116 P. 47; 129 S.W. 823, 29 L. R. A. (N. S.) 264; 8 S.E. 180; 32 S.E. 16; 82 Ga. 177; 82 N.E. 194; 1 Daly 360; 10 Ala. 608; 51 A. 996.
The executor could at least make such purchases and do such things as were necessary to wind up the estate, or prevent waste. 115 P. 717; 69 P. 272; 46 S.W. 859; 53 Mo.App. 225; 52 N.E. 1067. See also Rainey-Milburn Co. v. Ford, 146 Ark. 563.
Sam T. Poe, Tom Poe, Malcolm W. Gannaway and A. Carlyle Gannaway, for appellee.
An executor is personally liable on a contract made by him, no matter whether the goods be charged to him personally or to the estate. 10 Ves. Jr. 110; 24 C. J. 60; Walker on Executors 228; 3 Williams on Executors 1689; 113 N.Y. 591; 2 How. (U. S.) 560; 32 N.J.Eq. 791; 34 Bea. 434; 12 N.Y.S. 389; 28 N.E. 254; 152 N.Y.S. 173; 135 P. 724; 6 P. 358; 38 Cal. 85; 20 Fla. 359; 7 Conn. 306; 72 Ala. 224; 5 Gray 403; 7 B. & C. 202; 56 Ark. 159; 34 Ark. 211; 61 Ark. 410.
Neither an order of court nor a direction in the will in any manner affects the personal liability of the executor to those with whom he contracts. 41 N.Y. 315; 34 Ark. 206.
OPINIONHART, J. (after stating the facts).
The theory of the court below, and that upon which it is sought to uphold the judgment, is that a debt contracted by an executor after the death of his testator, although contracted by him as executor, binds him individually, and does not bind the estate which he represents, notwithstanding it may have been contracted for the benefit of the estate. The general rule and numerous cases bearing on the question are collected and reviewed in Ann. Cas. 1915-C, at p. 367; 40 L.R.A. (N.S.) 201, and 3 A. L. R. pp. 1604 and 1608.
The general rule is that the claims and liabilities are fixed at the time of the death. With regard to these suits they must be brought by and against the personal representatives in their character as such. With regard to contracts made by the personal representatives themselves, in the course of administration, they are personal, although for the benefit of the estate. The reason is that the executor or administrator has no right to make a contract for a dead man. Hence the representative becomes the contracting party and is individually liable. Bomford v. Grimes, 17 Ark. 567; Yarborough v. Ward, 34 Ark. 204; Tucker v. Grace, 61 Ark. 410, 33 S.W. 530; and Bryan v. Craig, 64 Ark. 438, 44 S.W. 348.
In the application of the general rule in Altheimer v. Hunter, 56 Ark. 159, 19 S.W. 496, it was said that it was not within the ordinary authority of a probate court to empower an administrator to continue the mercantile business of the deceased, and that an administrator is not empowered to bind the estate of a dead man by making a contract for him. The reason is that the death of a trader puts an end to his business and his executor or administrator has no authority to continue the business unless such authority is conferred by statute or by the terms of a will. The assets pass to the executor or administrator to be collected and applied to the payment of debts, and the remainder to be distributed to the heirs or devisees.
Again in Altheimer v. Hunter, supra, the court said that an executor may continue the business of his testator when empowered to do so by will, but that he becomes personally liable for all the debts he contracts in the prosecution of his trust. This language was not necessary for a decision of the issue presented by the appeal in that case, but it is in accord with the general rule on the question as shown by the decisions cited in the case notes above referred to.
A leading case on that phase of the question is Willis v. Sharp, 113 N.Y. 586, 4 L. R. A. 493, 21 N.E. 705. In that case it was recognized that a testator may authorize or direct his executor to continue a trade or to employ his assets in trade or business; and that such authority will protect the executor from responsibility to those claiming under the will in case of loss without his fault or negligence, and also entitle him to indemnity out of the estate for any liability lawfully incurred within the scope of the power.
The court said, however, that it is the settled doctrine of the courts of common law that a debt contracted by an executor after the death of his testator, although contracted by him as executor, binds him individually, and does not bind the estate which he represents, notwithstanding it may have been contracted for the benefit of the estate. The principle upon which the case was decided...
To continue reading
Request your trial