Davis v. Harbaugh

• Citation: 230 P. 103,76 Colo. 73
• Decision Date: 23 July 1924
• Docket Number: 11044.
• Parties: DAVIS v. HARBAUGH et al.
• Court: Supreme Court of Colorado

230 P. 103

76 Colo. 73

DAVIS v. HARBAUGH et al.

No. 11044.

Supreme Court of Colorado

July 23, 1924

Department 1.

Error to District Court, Weld County; George H. Bradfield, Judge.

Action by Grace Davis against H. H. Harbaugh, as executor of the last will and testament of Marcy S. Thompson, deceased, and others. From decree for defendants, plaintiff brings error.

Reversed in part, and cause remanded.

Joseph C. Ewing and Worth Allen, both of Greeley for plaintiff in error.

E. H Houtchens, of Greeley, for defendants in error.

CAMPBELL J.

This is an action in equity by Grace Davis, a legatee, to obtain a construction of the will of Mercy S. Thompson, deceased particularly of the third clause thereof, on which items, 1, 2, 4, and 7 are supposed to throw light. These clauses are:

'First. I direct that all of my just debts and funeral expenses be paid as soon after my decease as conveniently may be.

'Second. I hereby give, devise and bequeath to the First Baptist Church of Greeley, in Weld county, Colorado, the sum of two thousand ($2,000.00) dollars, said sum to be used for the benefit of said church as the board of trustees thereof shall deem wise.

'Third. I hereby give, devise and bequeath to Grace Davis, the daughter of Ella Davis, the rents, issues and profits arising from my property, both real and personal, of which I may die seized and possessed for and during her life if she shall survive me; provided, however, my said debts and funeral expenses and the legacy provided for in paragraph second shall first be paid.

'Fourth. I hereby give, bequeath and devise the rest, residue and remainder of my estate wheresoever, situate, whereof I may die seized or possessed or to which I may in any manner be entitled or in which I may be interested at the time of my death to (here follow the names).

'Seventh. Power is hereby given to my executor hereinafter, named to sell and convey by good and sufficient deed or deeds of conveyance any and all of my real estate for the purpose of paying my just debts, funeral expenses, cost of administration and said legacy if it shall be found necessary.'

The district court construed clause 3 to mean, as contended by the executor and remaindermen, that the plaintiff, Grace Davis, was and is entitled to the rents, issues, and profits arising from the estate, 'contingent and conditioned' that the debts, funeral expenses, and the legacy of $2,000 to the First Baptist Church of Greeley, Colo., provided for in clauses 1 and 2, first be paid from the rents, issues, and profits arising from the estate during the period of the first year of administration thereof so far as sufficient, any remaining unpaid balance to be then paid from the corpus of the estate, and that plaintiff is entitled to receive the rents, issues, and profits arising from the estate only from and after the expiration of the first year of the administration thereof, to wit, February 24, 1924, less a deduction for payment made by the executor of an inheritance tax in behalf of this plaintiff. The plaintiff has brought the case here for a review of this judgment.

It is conceded by the plaintiff that her rights are subject to the inheritance tax advanced for her by the executor. Her contention is here, as it was below, that the rents, issues, and profits of the entire estate belong to her, commencing at the death of testatrix, subject only to the proper deduction therefrom for enough to pay repairs, insurance, etc., if the corpus of the estate is sufficient to pay the debts, funeral expenses, costs of administration, and the legacy of $2,000. She insists that the creditors and the other legatee are not concerned, because all debts that are established against the estate and the legacy must first be paid, even though she receives nothing; but, as there is enough to pay all claims, the debts, legacy, etc., should be paid out of the corpus of the estate. The question for consideration, as both parties agree, is one between plaintiff, the life tenant, and the remaindermen.

The admitted facts are that personal assets of the testatrix at her death are not sufficient to pay the debts, costs of administration, funeral expenses, and the legacy of $2,000. The gross income from the improved property of the estate is about $225 per month. The estate is solvent, the real estate being of the value of $25,000 or $30,000. The executor and the only one of the remaindermen who appeared contend that the will requires that the debts, costs of administration, and the legacy be paid out of the rents and profits, and not of the corpus of the estate, so that the corpus or principal of the estate at the death of the life tenant may pass intact and unimpaired to the remaindermen. While some reference or suggestion has been made in the briefs of counsel as to whether the will created or intended to create a trust to be carried out by the executor, it is doubtful if such an issue is tendered in the pleadings, and it certainly was not determined by the district court, and we therefore express no opinion concerning it.

In a leading case, Bartlett v. Slater, 53 Conn. 102, 22 A. 678, 55 Am.Rep. 73, it is stated to be the general rule that, where no time of payment of a legacy is fixed by the will, the executor is allowed one year from the testator's death to ascertain and settle his affairs, and meanwhile a legacy is not payable. Upon that ground, interest or income is payable on the legacy only from that time. To this general rule are recognized exceptions, of which two are relied upon by the plaintiff: One, where the legacy is given to the testator's minor child, or to one to whom the testator is in loco parentis, and there is no other provision for its maintenance. The other exception is where the legacy is of the residue of the testator's estate, or of some aliquot part thereof, in trust to pay the interest or turn over the income to the life tenant, remainder over at this death. Other cases of the same import are Cook v. Lanning, 40 N.J.Eq. 369, 372, 3 A. 132; Simonsen v. Hutchinson, 231 Ill. 508, 83 N.E. 183; Lacey v. Collins, 134 Iowa 583, 112 N.W. 101; Greene v. Rathbun, 32 R.I. 145, 78 A. 528; Lewis v. Darling, 16 How. (U. S.) 1, 14 L.Ed. 819; Lamb v. Lamb, 11 Pick. (Mass.) 371; Lawrence v. Security Co., 56 Conn. 423, 15 A. 406, 1 L.R.A. 342; Bancroft v. Security Co., 74 Conn. 218, 50 A. 735; Sargent v. Sargent, 103 Mass. 297, 299; Lovering v. Minot, 9 Cush. (Mass.) 151; Van Blarcom v. Dager, 31 N.J.Eq. 783; Metcalfe v. Hutchinson, L. R. 1 Ch. Div. 591; Schouler on Wills (5th Ed.) p. 758, par. 579.

We do not think any of the authorities relied upon and cited by the executor are in point. Indeed, the opinions in some of these cases recognize as exceptions to the general rule the two which the plaintiff here invokes as sustaining her contention.

To avoid misapprehension, not because the instant case comes within it, it is appropriate to refer to Cobb v. Stratton's Estate, 56 Colo. 278, 138 P. 35, Ann.Cas. 1915C, 1166. which decides that, where a legacy is a designated sum of money, the will not specifying the time of its payment, the common-law rule as to the time of payment and the commencement of the enjoyment of the interest or income therefrom is not applicable. We said there that under our statute (sections 5358, 5361, C. L. 1921), such a legacy is not payable, in any event, until after the court in charge of the estate makes an order directing payment; and, as the legacy itself cannot be paid until after entry of the order, interest on the legacy, if payable at all, begins to run only from the date of the order. The court went further in that case, and held that under our statute no provision is made for interest on a money legacy in an amount certain. We do not think the Cobb decision governs the case now before us. In one sense, interest on a legacy in a sum certain corresponds, if it is not equivalent, to rents and profits on the residue of the estate, real and personal.

It should be borne in mind that the question for our determination is not when the rents and profits are due and payable, but when do they begin to run, or from what time are they to be computed? The rents and the profits are what the property itself yields. They are the very substance of the gift. They represent the usufruct of the estate, and therefore the Cobb rule, that interest on a legacy is not allowed, does not apply here. There the point first determined was that a pecuniary legacy in a fixed sum does not draw interest; and, secondly, if it did, the interest would not begin to run until after the county court in charge entered an order directing payment of the legacy. The question here involved was not an issue there; it is, not whether interest is provided for rents and profits of a residuary estate, but when do the rents and profits themselves begin? The parties here are agreed that the plaintiff is entitled to rents and profits. The Cobb Case throws no light upon the time when they accrue. With that question prior claimants are not concerned, for as to them plaintiff gets nothing until after they are satisfied; so that they get their money, they do not care from what source it comes, but as between the life tenant and the remaindermen it is an important question.

The testatrix is presumed to know the value and extent of her property; how much was real estate, how much was personal. She also knew approximately the amount of rents and profits that it would yield. If it was her desire to devote rents and profits to the payment of debts and a prior legacy, etc., and not immediately to the maintenance...