Costigan v. Kraus

• Decision Date: 13 May 1914
• Citation: 158 Ky. 818,166 S.W. 755
• Parties: COSTIGAN v. KRAUS ET AL.
• Court: Kentucky Court of Appeals

166 S.W. 755

158 Ky. 818

COSTIGAN v. KRAUS ET AL.

Court of Appeals of Kentucky.

May 13, 1914

Appeal from Circuit Court, Campbell County.

Action by Maggie Kraus and others against M. J. Costigan. From the judgment, defendant appeals, and plaintiffs prosecute a cross-appeal. Affirmed on the cross-appeal, and reversed with instructions on the appeal.

Brent Spence, of Newport, for appellant.

Kelly &amp Regenstein, of Newport, Healy, Ferris & McAvoy and John H Marckworth, all of Cincinnati, Ohio, and J. Arthur Shackelford, of Newport, for appellees.

MILLER J.

Joseph J. Humbrecht qualified as the executor of the will of his father, Joseph N. Humbrecht, in October, 1906, with the appellant Costigan as surety upon his bond. The testator bequeathed legacies to 20 persons, aggregating $3,650. The residue of the estate was given to Joseph J. Humbrecht, the son. The executor having failed to pay the legacies, the legatees brought this action on February 12, 1912, against the executor and his surety, to collect them.

The appraisers appointed by the county court valued the personal estate at $5,029.50. The executor, acting under section 3850 of the Kentucky Statutes, accepted the appraisement as his inventory, by making thereon the following indorsement "I hereby accept the foregoing as my inventory of the estate of Joseph N. Humbrecht, deceased. Joseph J. Humbrecht Executor." The inventory included a joint note of Joseph J. Humbrecht and Fred J. Bley for $1,700; another note of Joseph J. Humbrecht for $700; a third of Joseph J. Humbrecht for $500; the note of Mrs. George Hagen for $988; and the note of Mrs. M. Kramer for $141.50. These items aggregated $4,029.50, and nothing was realized from them by the executor. According to the executor's statement, his receipts were as follows: Two bonds for $500 each, $1,000; interest and premium on same, $70; proceeds of sale of Oklahoma land, $1,192.06--total receipts, $2,262.06. The chancellor being of opinion that the proof showed the presumption of solvency on the part of the executor had been rebutted, and that he and the other obligors in the notes that were not collected were insolvent, and that said notes were uncollectible, did not charge either of said notes against the executor. The judgment charged the executor with $2,262.06, as above stated; he was credited with $642.05; leaving a balance of $1,620.01 in his hands for distribution. The bequests, excluding the one to the executor, aggregated $3,650, thus showing that the legatees were entitled to receive 44.38 per cent. of their respective legacies, aggregating $1,420.24. The chancellor having rendered a judgment against the surety on behalf of the several legatees for their respective bequests, aggregating $1,420.24, as above stated, Costigan prosecutes this appeal. The legatees prosecute a cross-appeal from so much of the judgment as failed to hold the surety liable for the amount of the notes the executor owed the estate of Joseph N. Humbrecht, deceased. No complaint is made to that part of the judgment which failed to charge the executor with the uncollected Hagen and Kramer notes.

1. The chancellor properly refused to charge Costigan, the surety, with the indebtedness of the executor. In Kirby v. Moore, 99 S.W. 1157, 30 Ky. Law Rep. 1022, the court said: "The rule is well settled that, where a debtor qualifies as the personal representative of his creditor, the debt is considered as assets of the estate in the hands of the trustee, for which he is liable on his bond. Swart v. Reveal , 16 Ky. Law Rep. 503; Webster v. Webster, 7 Ky. Law Rep. 302; Howell v. Anderson, 61 L. R. A. 313, and the cases there cited." See, also, Hickman v. Kamp's Adm'r, 3 Bush, 206; Johnson v. Hicks, 97 Ky. 118, 30 S.W. 3, 16 Ky. Law Rep. 827; and Wachsmuth v. Penn Mut. L. I. Co., 241 Ill. 409, 89 N.E. 787, 26 L. R. A. (N. S.) 411, with note, 132 Am. St. Rep. 226. But if the executor be insolvent throughout the term of his trust, the surety will not be charged with his principal's indebtedness. Buckel v. Smith's Adm'r, 82 S.W. 1001, 26 Ky. Law Rep. 991. Since the evidence in this case fully sustains the finding of the chancellor that the two notes of the executor, and the joint note of the executor and Bley, were worthless and uncollectible throughout the period covered by the executorship, the judgment properly relieved Costigan from liability therefor. Howell v. Anderson, 66 Neb. 575, 92 N.W. 760, 61 L. R. A. 318; Walker v. Walker, 125 Cal. 242, 57 P. 991; Baucus v. Barr, 107 N.Y. 624, 13 N.E. 939; McCarty v. Frazer, 62 Mo. 263; Harker v. Irick, 10 N. J. Eq. 269; Rader v. Yeargin, 85 Tenn. 486, 3 S.W. 178; State ex rel., etc., v. Gregory, 119 Ind. 503, 22 N.E. 1.

2. Appellant insists it appears from the testimony of the executor that in the discharge of his duties he paid certain claims against the estate of the decedent, and that the burden is upon the appellees to show the claims were not just and should not have been paid. The statement is too general to attract the attention of the court. If appellant desired to have this court review the ruling of the trial court in passing upon any one of the many specific items adjudged in making the settlement, he should specify the items and direct the court's attention to the evidence which he claims sustains his view. This court cannot undertake to examine each item with the view of ascertaining whether it was properly or improperly allowed or rejected. The objection should be specific in order that the court may pass upon only those claims which are in dispute; otherwise, the court would be called upon to do the work of a commissioner, and practically make up the account from the beginning. Where no errors are pointed out, they will be treated as waived, and the judgment affirmed. Brown v. Daniels, 154 Ky. 268, 157 S.W. 3; Garvey v. Garvey, 156 Ky. 664, 161 S.W. 526.

3. The testator owned certain lands in Oklahoma county, Okl.; and, it becoming necessary to sell those lands for the payment of the debts and legacies, supplementary proceedings were had in Oklahoma in the name of Humbrecht as executor, who joined with him the administrator with the will annexed appointed by the Oklahoma court, by which the land was sold and the net proceeds, amounting to $1,192.06 came into the hands of Humbrecht. The surety denies that this money was received by Humbrecht as executor, his reason for this position being a technical one, that there could be no liability against the surety on the bond of Humbrecht, executor, for the proper administration of the proceeds of real estate sold under the judgment of the Oklahoma court. There is no provision in the will directing or authorizing the executor to sell the real estate; the will does not mention real estate.

The general rule as to what property constitutes assets of an estate is stated in 18 Cyc. 1254, as follows: "According to the weight of authority, where an executor or administrator receives property to which he is not legally entitled in the discharge of his duty as personal representative, his administration bond does not cover such property, and his sureties are not liable in respect to it. The liability of the sureties on an executor's or administrator's bond is limited to such assets as rightfully come or ought to have come into his hands in the state of his appointment. Therefore, while as to all the assets which he has a right to receive and does receive, although coming from a foreign jurisdiction, the sureties on the bond will be liable, they will not be liable for such assets which he receives without lawful authority. * * * The liability of sureties on the general bond of an executor or administrator for the proceeds of the sale of real estate that have come into his hands is governed by the conditions of the bond. In some jurisdictions it is held that the ordinary conditions cover the proper administration of such proceeds, and that if a special bond be required it is to be regarded merely as additional security. In others, the sureties on the general bond are not liable, and a special bond must be given to cover such proceeds as a distinct liability." The author places Kentucky in the second or last class above enumerated, and as authority therefor cites Speed's Ex'r v. Nelson's Ex'r, 8 B. Mon. 499, and Stuart, Receiver, v. Hathaway, 4 Ky. Law Rep. 438.

In Speed's Ex'r v. Nelson's Ex'r, supra, Brooks devised the residuum of his lands to Neil, his executor, for the payment of his debts, and Neil, as executor, having sold the land to Beckwith and others, the question was whether Neil's sureties were liable for the proceeds of the sale of the land. In holding they were not liable, the court said "The executor's sureties, however, contend they are not liable for the money arising from the sale of the real estate; it constituting equitable and not real assets. It was decided by this court in the case of Loftus v. Locker, 1 J. J. Marsh. 298, that the money arising from the sale of real estate, devised to be sold by the executor for the payment of the debts of the testator, was legal assets in the executor's hands; although the land itself, before the sale, was only equitable assets. But in the subsequent cases of Helm, etc., v. Darby's Adm'r, 3 Dana, 186, Cloudas' Ex'x v. Adams, 4 Dana, 603, and Clay & Craig v. Hart, 7 Dana, 1, a different view of the law was taken; and it may now be regarded as the settled doctrine that money arising from the sale of real estate by an executor, in pursuance of a devise or power conferred on him for that purpose, is equitable assets, constituting a trust fund, and subject to the equitable control of the chancellor. Are the sureties of the executor responsible for equitable assets in his hands? This depends upon the...