Cummings v. Langroise

• Decision Date: 12 December 1940
• Docket Number: No. 2075.,2075.
• Parties: CUMMINGS v. LANGROISE.
• Court: U.S. District Court — District of Idaho

36 F. Supp. 174

CUMMINGS v. LANGROISE.

No. 2075.

District Court, D. Idaho, S. D.

December 12, 1940.

COPYRIGHT MATERIAL OMITTED

Richards & Haga, Boise, Idaho, and T. Pope Shepherd, of Chattanooga, Tenn., for plaintiff.

Sam S. Griffin and W. E. Sullivan, both of Boise, Idaho, for defendant.

CAVANAH, District Judge.

The nature of the case, as disclosed by the record, was given in the opinion of the court on the motions, and it is not again necessary to repeat it, for it appears that the plaintiff, individually and as trustee, seeks to recover from the defendant as executor, and from the estate of James McDonald, Jr., the principal sum of $79,631.14, interest and attorneys' fees, and a decree that the plaintiff has a lien upon the stocks, bonds, securities and assets of the estate of James McDonald, Jr., now in the possession and under the control of the defendant as executor, arising out of the estate of McDonald, Jr.

The evidence discloses in substance that James McDonald, Jr., died on the 2d day of July 1936, and his will was admitted to probate in the Probate Court of Ada County, Idaho, and the defendant qualified as the executor of his estate.

McDonald, Jr., during his lifetime incurred numerous large obligations and many orders in writing were executed by him, by the terms of which he assigned an annuity and certain portions of the net income derived from his father's estate, and which the testamentary trustees made payment.

Judgments were obtained by some of his creditors and others threatened to sue and levy upon and attach his share of his father's estate, and if that had been done it would have left him without income and means for the maintenance of himself and family.

In December 1931 he was unable to secure loans to pay his indebtedness, and he appealed to the plaintiff, a friend of many years, for financial aid in order to provide for the preservation of his estate and living expenses for himself and family, and for such purposes the plaintiff then loaned him $50,000 evidenced by three promissory notes, one for $15,000; one for $15,000; and one for $20,000, all of date December 17, 1931, and at the time three agreements in writing were accordingly entered into providing that the loan made by plaintiff and evidenced by the three notes, and as security for the payment of the same, he transferred and assigned to the plaintiff, all sums due and to become due from his share of the trust estate held and administered by the trustee for the plaintiff's benefit, and his interest in the testamentary trust and trust estate.

The plaintiff under the agreements made an advance to McDonald, Jr., of $50,000 and borrowed on the account of McDonald, Jr., in the taking care of the numerous obligations and financing his living expenses and the protection of his estate. Later, in November 1935, the plaintiff and McDonald, Jr., entered into another written agreement securing all advances made after the testamentary trustees had stopped paying the income and annuity and by the terms thereof promised and agreed that the plaintiff should have a lien, and as security for all advances so made and to be made, on the share and interest of his estate. When the four agreements are read together it appears clear that it was the intention of McDonald, Jr., and the plaintiff, and those acting thereunder, that the three promissory notes, aggregating $50,000, and other advances made since the testamentary trustees stopped paying the annuities and income, were to be protected by the transfer and assignment of, not only the annuities and income of McDonald, Jr., but of the testamentary interest.

At the time of the execution of the agreements on December 17, 1931, McDonald, Jr., had a large number of creditors who were pressing him for payment and proceeding to attach and levy upon his interest in the testamentary estate. He needed immediate assistance as he had no other income, so he appealed to the plaintiff, who not only loaned him the $50,000 but made advances thereafter.

It seems to have been the intention of the parties and those acting thereunder that the assignments were for the purpose of securing the plaintiff for the loans he made, and to be made as here stated, to insure that no creditor could attach and levy upon McDonald Jr.'s interest in the testamentary estate, to insure sufficient income for his living expenses and to appease creditors by giving some cash out of plaintiff's loan and pro-rate a share of the moneys that would be received by plaintiff under the assignments.

The agreement was made in Tennessee and its highest court has said that the principle governing the construction of a contract is the intention of and the interpretation placed thereon by the parties, by their acts and declarations. Board of Education v. Board, 160 Tenn. 351, 24 S. W.2d 889; Canton Cotton Mills v. Bowman Overall Co., 149 Tenn. 18, 257 S.W. 398; State ex rel. v. Board of Trust, 129 Tenn. 279, 164 S.W. 1151.

The fact that the plaintiff paid first, the claims of other creditors to obtain settlement through which he obtained reduction of claims and not paying himself all of the income until his notes and advances had been paid in full and not have protected McDonald, Jr., and his estate, should not now deprive the plaintiff of his lien and security under the contract, as there is no priority of agreement provided, and because he graciously deferred payment of his claims, and continued advancing money and took his chances, when there was no provision in the agreements requiring them to be paid first, should not in justice militate against him and defeat him of his rights under the agreements.

Within the time required by notice given by defendant as executor of the McDonald, Jr., estate, to the creditors to file claims, plaintiff filed his claim in which he reserved and claimed all rights and benefits to which he might be entitled to resort to under the security assigned to him, and this suit, therefore, was brought within three months after it was rejected. Section 15-609, I.C.A.

The statute of the state provides that after claims are filed with the executor he must endorse thereon, within sixty days, his disallowance or rejection. Section 15-607, I.C.A.

None of the items of the plaintiff's claim were barred by any limitation statute of the state when McDonald, Jr., died on July 2, 1936. But the defendant urges that the five-year general statute of limitation, § 5-216, I.C.A., applies from the date of maturity of the debt and insists that it supersedes the probate statute in the administration of estates, and if so, plaintiff's claim was barred at the time of filing his suit on February 6, 1940. While the plaintiff asserts that the general statute of limitations was superseded during the time of probate proceedings until the claim had been filed and disallowed by the executor. In determining what was the five-year period of the general limitation statute, and if it had expired, it would be necessary to include in it the time intervening in the probate proceedings from the date of the death of McDonald, Jr., on July 2, 1936 until suit was brought. The defendant, executor, was appointed August 20, 1936, and the plaintiff's claim was presented to him within the six-month period required by the statute and rejected by the executor on November 11, 1939, some two years and eight months after presentation. The present suit was instituted February 6, 1940, within three months after the claim was rejected, as required by statute. The steps required to be taken by a creditor of an estate as provided by the laws of Idaho are that after notice to file claims has been given by the executor, he must present it to the executor within the time prescribed by the notice, and the executor must, within sixty days after its receipt, endorse thereon his allowance or rejection, and if rejected, he must within ten days thereafter notify the claimant of such rejection. If rejected, the holder of the claim must bring suit in the proper court against the executor within three months after notice of its rejection, if the claim is then due. No claim must be allowed by the executor which was barred by the statute of limitation at the time of the death of the decedent. An action on any claim against an estate shall not be maintained thereon unless the claim is first presented to the executor. Sections 15-604, 15-607, 15-609, 15-610, 15-611, I.C.A.

The Supreme Court of Idaho has interpreted section 15-611, I.C.A., in the cases of Flynn v. Driscoll, 38 Idaho 545, 223 P. 524, 34 A.L.R. 352, and Wormward v. Brown, 50 Idaho 125, 294 P. 331; and held that the failure of the executor to allow or reject a claim does not amount to a rejection and that before action can be maintained thereon against an estate the claim must first be presented to the executor and rejected.

The Supreme Court of California in the cases of Smith v. Hall, 19 Cal. 85, and Quivey v. Hall, 19 Cal. 97, when in considering whether the general statute of limitation supersedes the probate statute, reached the conclusion that the right to sue comes from the refusal of the executor to acknowledge the claim against the estate and does not accrue until the presentation of the claim and that it would be unjust to hold that the claim was barred by the statute when the claimant was in no legal default, so it will be observed that the Supreme Courts of Idaho and California have held that the general statute of limitation was superseded by the provisions of the probate statute relating to the filing of claims and the bringing of suit upon rejected claims after they are first presented to the executor, and during the time the executor is considering it a creditor is prohibited from instituting suit thereon, and the time intervening between the death of the decedent and when the claim is rejected by the executor is not to be computed as any part of the time within which action must be brought.

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