Estate of Merritt v. Merritt
| Citation | 62 Mo. 150 |
| Parties | IN THE MATTER OF THE ESTATE OF ABEL K. MERRITT, Respondent, v. GEORGE MERRITT, Appellant. |
| Decision Date | 31 January 1876 |
| Court | United States State Supreme Court of Missouri |
Appeal from St. Louis Circuit Court.
T. E. Ralston for Stewart & Ralston, for Appellant.
I. The heirs and devisees had a right to appear, and by showing a waste or misapplication, or improper and illegal charges and credits on the part of the administratrix in amount equal to the claims proven up, prevent a sale of the real estate until the creditors had exhausted all legal remedies against the executor or administrator and his bondsmen.
II. The administratrix having carried on the hotel and bar room for over a year in her own name, and for her own purposes, without any order of court, or authority given by the will, was guilty of waste and mismanagement of the funds and property of the estate and is responsible personally and on her bond, for all losses sustained and expenses incurred.
Geo. P. Strong, for Appellant.
I. If there has been a waste, or impropor use of the funds or personal property by the administrator, the creditors are not therefore to have an order of sale of the real estate; they must proceed against the administrator and his securities.
Where an executor, or administrator, or trustee uses the trust funds or property in business of his own, on his own responsibility, he must bear all losses and account for all profits.
If he uses the trust property by order of the probate court, he must account for all profits, but is not charged with losses, if he acts in good faith. Good faith will shield from losses if he acts under lawful authority, but not when he acts without authority. (3 Redf. Wills, 402, par. 10, § 48; Piety vs. Stace, 4 Ves. Jr., 620; Barney vs. Saunders, 16 How. [S. C.], 535, 543; 2 Will., Ex'rs, 1566, 1567, and cas. cit.; Glenn vs. Glenn, 41 Ala., 589; De Jarnette vs. De Jarnette, 41 Ala., 710; Palmer et als., Appeals, 1 Doug. [[[[[Mich.], 428; Commonwealth vs. McAllister, 28 Penn. St., 484-5; Id., 30 Penn. St., 536; In the matter of Stafford, 11 Barb., 354-5; Conger vs. Ring, 11 Barb., 361-2; Utica Ins. Co. vs. Lynch, 11 Paige, 520; Robinson vs. Robinson, 11 Beav., 371, 380; Urtes vs. Graham, 2 Drew, 271; 3 Lead. Cas. Eq., 452; Wagn. Stat., 1872, p. 88, §§ 38, 39, 41, 44; Id., p. 90, § 52.)
A. M. Gardner & Polk, with Causey, for Respondents.
Although the action of the administratrix may not have been strictly and technically legal, yet she acted in perfect good faith, and for the best interest of the estate.
She was governed by the measure of responsibility affecting trustees. She certainly exercised the same care as persons of ordinary prudence and diligence would bestow on their own affairs, and therefore not liable as charged. (Fudge vs. Dunn, 51 Mo., 264; Clyce vs. Anderson, 49 Mo., 37; Foster vs. Davis, 46 Mo., 248; Byrd vs. Governor, 2 Mo., 102; State ex rel. vs. Meagher, 44 Mo., 356; Smith vs. Paris, 53 Mo., 274.)
The creditors of the estate of A. S. Merritt, deceased, presented their petition to the probate court, praying for the sale of real estate sufficient to satisfy their claims. An order was granted in accordance with their request, and the defendant, who had an interest in the estate as a devisee, under the will of the decedent, appealed. In the circuit court the case was heard anew, and the judgment of the probate court was affirmed, and the defendant has prosecuted his appeal to this court.
The ground of resistance to the order of sale is, that the administratrix having the estate in charge, was guilty of malversation, and misappropriation of the assets, and that if she was compelled to properly account, there would be sufficient personal assets to pay the debts without resorting to a sale of the realty. It is insisted here that the creditors have no concern in regard to the improper conduct or acts of the administratrix, and that they have a right to have the real estate sold in satisfaction of their demands, and that the recourse of those who are interested in the realty, would be exclusively over against the administratrix, and the sureties on her bond. But this ground is not tenable. The statute provides, that, upon proof of publication, the court shall hear the testimony, and may, if necessary, examine all parties on oath, touching the application, and make an order for the sale of such real estate or any part thereof. (Wagn. Stat., 97, § 26.) By our law, the personalty is primarily the property out of which to pay the debts owing by the estate. When that proves insufficient, then, upon proper application, the real estate may be resorted to.
The issue is, whether it is necessary to apply the real estate; and, to determine that question, the court is required to hear testimony and form its judgment upon all the facts in evidence. The only object or purpose in hearing testimony on the subject, is to ascertain whether the personal estate is sufficient to pay the debts of the estate, and if sufficient, then no sale of the land is ordered; but if not sufficient, then the court orders a sale. If the personal estate becomes insufficient to pay the debts in consequence of the devastavit or neglect of duty of the administratrix, the law furnishes a speedy and efficient remedy on the administration bond, which should in the first instance be pursued.
The controversy between the parties grows out of the administratrix continuing to keep the St. James Hotel after the death of her husband, without any order from the court, and which course, it is alleged, proved disastrous to the interests of the estate. It appears from the record that Merritt in his lifetime leased the St. James Hotel for seven years, at an annual rental of $12,000, to be paid in instalments of $1000 per month.
Previous to his death, he had been carrying on the business for about nine months, and in that time he had lost $8000. At his death Mrs. Merritt took out letters of administration with the will annexed, and continued the business for a little over one year, when she sold it out. This she did without any authority or order of the court. She paid the rent, for which the estate was liable, and charged it in her settlement against the estate. She lost about $7000, which she did not charge, but submitted to the loss personally. There was a balance of $2000 dollars on the sale of furniture, which she failed to collect, and for which she obtained credit, and there were certain store rooms and a bar connected with the house which would have produced an annual rent, but with which she did not charge herself. It is now insisted that because she voluntarily assumed this business, and had no direct legal sanction for the course she pursued, she is accountable to the estate for whatever profits she made, and that, whatever loss occurred, she must submit to. The statute declares that, “if any person die, leaving horses, or other stock that require attention; crops ungathered, property so exposed as to be in danger of loss in value, or work in an unfinished state, so that the estate would suffer material loss, from the want of care and additional labor, the executor or administrator may, until the meeting of the court, procure such indispensable labor to be performed on the most reasonable terms that he can.” (Wagn. Stat., 90, § 52.)
In all the instances enumerated in this section of the statute, the executor or administrator has full authority to act, and whatever he does is legalized. In other cases, if he proceeds without the direction or sanction of the court, he does so at his peril, and he will be held to a strict accountability. Where the executor carries on the trade of the testator, by provisions contained in the articles of co-partnership, or by the directions of the will, or in pursuance of the decree of a court of chancery, he is accountable for any profits realized, but not for any loss, in such cases, since he is acting according to his duty as trustee.
But it has been held, that, where the trustee adventures the trust fund in business of his own, or others, from which he expects to derive a benefit beyond the legal rates of interest; if he fails to receive any return, or even where the principal itself is lost, wholly or in part, he must make the fund good, with lawful interest at the least, although if more than legal interest had been received, he must also have accounted for all that was...
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