Darr v. Thomas

• Decision Date: 02 December 1907
• Parties: DARR v. THOMAS et al.
• Court: Missouri Court of Appeals

106 S.W. 95

127 Mo. A. 1

DARR v. THOMAS et al.

Kansas City Court of Appeals, Missouri.

December 2, 1907.

1. EXECUTORS AND ADMINISTRATORS—ALLOWANCE AND PAYMENT OF CLAIMS—STATUTORY PROVISIONS—SECURED CLAIMS.

Rev. St. 1899, § 191 [Ann. St. 1906, p. 403], providing that claims against an estate which are secured by mortgage, deed of trust, or other lien, shall not be paid until the security held by the claimant has been exhausted, when construed in connection with section 143 [page 383], empowering the probate court, where it is for the best interest of the estate, to order a mortgage debt paid out of the general assets, with sections 146 and 170 [pages 384, 393], declaring that real estate may be sold to pay debts of a decedent only when there is not sufficient personalty to pay them, with section 184, subd. 4 [page 397], providing that judgments against the estate of an intestate shall be classified and paid as provided by sections 152-155 [pages 388-389] except that if the estate be insolvent they shall be paid by the administratrix selling the lands at administration sale under order of the probate court and not by the creditor exhausting the lands by closing the lien, and with section 138 [page 382], providing that the probate court may order a vendor's lien creditor of an estate paid out of the assets, is not to be taken as prohibiting an administratrix to pay secured debts against the estate until the security has been first exhausted by the creditor: and where a husband died intestate, leaving a debt secured by deed of trust on the homestead, executed by himself and wife, and sufficient personal property to satisfy the same, his widow, as administratrix, may pay the secured debt out of the personal estate, the intention of section 191 being to protect unsecured creditors by empowering them to compel the secured creditors, where the estate was insufficient to satisfy all, to first exhaust their security before sharing in the common fund.

2. SAME.

Ordinarily a secured creditor can lay by his security and go upon the general estate of his debtor to satisfy his claim, only resorting to his security when he fails to collect his claim by the ordinary proceeding.

3. SAME—DISTRIBUTION OF ESTATE—PRIORITY OF DEBTS TO LEGACIES OR DISTRIBUTIVE SHARES.

The personalty of an intestate's estate vests in the administratrix for the purpose of paying debts and costs of administration, and the heirs have no title to or interest in it until an order of distribution.

4. SAME.

The primary idea of a security is that it may be used to pay the debt if the debtor fails to pay it from other sources: and a debtor should promptly pay his debt without letting it go to protest or by default, thus putting the creditor to the trouble of a resort to the security, and the same duty rests on the debtor's estate after his death, except that of necessity it must first be allowed and classified.

Appeal from Clinton County Court; A. D. Burnes, Judge.

Final accounting by Fannie Darr, administratrix of the estate of William Z. Darr, deceased. On appeal from the probate court to the circuit court certain items claimed as credits by the administratrix, but objected to by Willie C. Thomas, were disallowed, and she appealed. Reversed and remanded.

W. S. Herndon, for appellant. E. C. Hall, for respondents.

ELLISON, J.

This proceeding arises on objections to the settlement of an administratrix of an estate. On appeal from the probate to the circuit court certain items claimed as credits by the administratrix were disallowed and charged back to her. She then appealed to this court.

It appears that the administratrix is the widow of William Z. Darr, who died intestate, leaving surviving him this administratrix, and two children by a former wife who had become of age and were living to themselves. At his death Darr left a homestead occupied by himself and this administratrix. It did not exceed the statutory value. He also left personal property appraised at $3,366.49. Darr, joined by this administratrix as his wife, gave a deed of trust on the homestead to secure his note of $1,600, payable to Charles E. Jones. He likewise, at same time, gave to Jones two building and loan warrants for $300 each as collateral security. Jones assigned the note to the First National Bank of Plattsburg, and also delivered the collateral warrants to the bank. The bank presented the note to the probate court, and had it allowed against the estate. The collaterals were collected by the bank and credited on the demand. This administratrix thereafter paid the balance, with interest, amounting to $1,181.04, with money arising out of the personal estate, and the deed of trust on the homestead was duly released. As before stated, the circuit court refused to allow the administratrix credit for this payment, and had it charged up to her. The action of the trial court was based on a construction of section 191, Rev. St. 1899 [Ann. St. 1906, p. 403], prohibiting the payment of debts against an estate secured by real property until the security has been first exhausted by the creditor. That section reads as follows: "* * * And when a claim is allowed against an estate which is secured by mortgage, deed of trust or other lien held by the creditor, the same may be allowed as other claims, but shall not be paid until such security held by the claimant has been exhausted; but if such security be not sufficient to pay off and discharge the debt of such creditor, then such creditor for the residue of his debt shall be entitled in common with other creditors to have the same paid out of the estate."

Though not so stated, the effect of the position taken by the objectors to the action of the administratrix in paying the mortgage is that the statute just quoted must be interpreted precisely as it reads, disassociated from other parts of the same statute, and be held to mean that in no case can a mortgage debt due from an estate be paid until after the security has been exhausted when the balance only, if any, may be paid out of the general assets. That is not the announcement, but it is the logic of objector's position. If such is the true construction, the effect upon the general policy of our administration law will be far beyond what the courts and the bar have expected since its enactment in 1889. The direct result of such construction is that there can be no redemption of real property by the estate of a decedent. The creditor must sell the land and pass the title out of the heirs however advantageous it clearly appears it would be for the heirs to retain it. It may be property that cannot, in reason, decrease in value, but will in every probability largely increase, and yet it imperatively must be sold at a forced sale under the mortgage. The statute in question cannot mean that. It must be construed with other parts of the same law in reference to the same subject, for that is a fundamental rule of construction. By the express terms of another part of the same enactment (section 143 [page 383]) the probate court is empowered, if for the best interest of the estate, to order the administrator to pay the mortgage debt out of the general assets. Must this latter statute stand as of no force and to all practical purposes be a dead letter? For if the mortgage creditor can only be paid out of the general assets after he has closed out the security, of course the probate court could not order it redeemed. The whole policy of the law of administration has always been thought to be primarily to preserve the real property holdings of estates instead of disposing of them, except where to retain it would work injury to creditors. Thus, by the terms of sections 146 and 170 [pages 384, 393] real estate may be sold to pay debts only when there is not sufficient personalty to pay them. And this is the rule of procedure in all estates except in instances where, from peculiar conditions, it may be thought best to retain the personalty and sell realty, which may be done under the terms of section 161 [page 390].

But there is yet more of the statute bearing on the question. The section here invoked by the objectors not only requires mortgage liens, but any "other lien held by the...