Fidelity Union Ins. Co. v. Hutchins

• Decision Date: 24 September 1937
• Docket Number: No. 1686.,1686.
• Citation: 111 S.W.2d 292
• Parties: FIDELITY UNION INS. CO. et al. v. HUTCHINS et al.
• Court: Texas Court of Appeals

111 S.W.2d 292

FIDELITY UNION INS. CO. et al. v. HUTCHINS et al.

No. 1686.

Court of Civil Appeals of Texas. Eastland.

September 24, 1937.

Rehearing Denied December 17, 1937.

Appeal from District Court, Taylor County; M. S. Long, Judge.

Suit by Tate Hutchins and another, by their next friend, A. A. Tate, against the Fidelity Union Insurance Company and others. From a judgment for plaintiffs, defendants appeal.

Modified and, as modified, affirmed.

Curtis White, of Dallas, Wagstaff, Harwell, Wagstaff & Douthit, and Cox &amp Hayden, all of Abilene, and Seay, Malone & Lipscomb, of Dallas, for appellants.

Kirby, King & Overshiner, of Abilene, for appellees.

GRISSOM, Justice.

Plaintiffs, Tate and G. B. Hutchins, minors, and the only children of G. B. Hutchins, Sr., and Eula Hutchins, by their next friend, A. A. Tate, sued defendants, G. B. Hutchins, Sr., Fidelity Union Insurance Company, and Commercial Casualty Insurance Company, on Hutchins' bond as community survivor or administrator. Plaintiffs alleged in substance: That their mother, Eula E. Hutchins, died in 1926, intestate; that the community estate of their father and mother was of the value of $32,000; that on August 6, 1928, G. B. Hutchins, Sr., qualified as community survivor and executed a bond as such for $23,000 with Fidelity Union Casualty Company as surety, which was duly approved; that said community administrator breached the conditions of said bond and did not faithfully administer the community estate as required by law; that he did not keep the account required by article 3670; that he mixed and mingled community funds and property with his separate property by depositing moneys received from the sale of community property with separate property in banks to his individual account and paid out said funds by checks drawn indiscriminately thereon for both individual and community expenses, keeping no account as to which were individual and which community, and mixed and mingled community property with his separate property so that same became indistinguishable; that he mortgaged and exchanged community property for other property, not to pay community debts, but for his own use and benefit; and for the benefit of the second community; that he collected rents and revenues from the community property without keeping account thereof and used the same for his own personal benefit and converted all the community property to his own use; that he failed and refused to pay over to the plaintiffs one-half the surplus of said community property after the payment of community debts; that he sold, mortgaged, exchanged, and converted to his own use and lost all the community estate and failed to deliver any part of the community estate, or proceeds thereof, to plaintiffs; that he mismanaged, wasted, destroyed, and converted to his own use all the community property and thereby committed a devastavit; that plaintiffs were entitled to recover one-half of the value of the community estate, after deducting the community debts, at the time Hutchins, Sr., qualified as community administrator.

Plaintiffs alleged in detail the property that came into the hands of the community administrator, its value and the way and manner in which he disposed of same; they charged the administrator did not exercise reasonable diligence and ordinary care in attempting to collect certain notes of the estate (which he failed to collect) and in his management generally of the estate.

Plaintiffs alleged that from August, 1928, to January, 1931, the administrator collected rents and revenue from the community estate amounting to $11,944, and from January 1, 1931, to October 21, 1933, $2,082.71, or a total of $14,076.61, which he converted to his own use.

The court found the following property constituted the assets of the community estate at the time of the qualification of the community administrator; that its value was as hereinafter shown; and that the debts of the community estate were as hereinafter shown:

                320 acres, value ............................. $ 8,000
                3 lots .......................................   3,000
                2 Herring V. L. notes ........................   1,200
                5 Standefer V. L. notes ......................   1,000
                Merrick notes aggregating $8700
                  (amt. collected) ...........................     125
                Hamilton note, $250 (amt. collected) .........   1,056
                Cash in bank .................................     833
                (The last two items were not listed
                 in the inventory)
                                                               _______
                     Total ................................... $15,214
                Community debts
                Lien on 320 acres to secure debt to
                  State of Texas ............................. $   468
                Lien on 3 lots ...............................   1,000
                                                               _______
                    Total .................................... $ 1,468
                           Net value $13,746
                

The court deducted the community debts, $1,468, from the community assets of $15,214, leaving the net sum of $13,746, and rendered judgment for plaintiffs for one-half thereof, to wit, $6,873, against Hutchins, Sr., and the defendant insurance companies, with judgment for the insurance companies over against Hutchins, Sr Hutchins, Sr., in October, 1927, married his second wife, Lou Conklin. In 1930 she obtained a divorce from him and he paid her $1,000 in settlement of her property rights, and paid $109 as attorneys' fees and court costs out of the estate of the first community, in consideration of which she executed to G. B. Hutchins, Sr., a quitclaim deed to the 320 and 158-acre tracts. After the divorce was granted his second wife, Hutchins, Sr., married a widow with six children, and as a result of said marriage four children were born.

On August 14, 1928, eight days after his qualification as community survivor, Hutchins, Sr., borrowed $5,500, giving as security therefor the 320 acres of land; he borrowed $3,000, giving as security therefor community notes. He acquired 158 acres of land near Lamesa at the price of $15,800. The money acquired by the loan on the half section of land and the money borrowed from the bank, or most of it, was paid to Hubbard, the owner of the 158-acre tract, as part of the purchase price therefor. The three lots in Lamesa, property of the first community were taken in exchange by Hubbard on the 158 acres. Hubbard assumed the payment of the $1,000 debt against said lots and Hutchins assumed payments of a debt of $4,000 against the 158-acre tract. Hutchins paid the debt of $468 to the state.

In June, 1933, the holder of the debt and lien against the 158-acre tract, having obtained judgment, foreclosed the judgment lien and same was sold under execution for the debt assumed by Hutchins.

In May, 1934, the lien securing the $5,500 loan on the 320 acres was foreclosed and the land sold for the principal debt and interest. Hutchins testified that he made no "effort to get an extension of time on this debt (either) before or after suit was filed." Thus it is seen that the administrator, when he qualified, took charge of community property in August, 1928, of the value of, at least, $15,214, against which were debts aggregating $1,468. That the entire estate is gone. That the heirs have received nothing for their one-half interest in said community estate.

At the time the trade for the 158-acre tract was made, the court found there was then no necessity for the payment of the community debts; the deed to the 158-acre tract was made to G. B. Hutchins, Sr., individually, as grantee. He was then married to Lou Conklin Hutchins. The tract was occupied by them as their homestead. Improvements were made thereon and paid for with revenue evidently derived chiefly from the two farms. There was evidence to the effect that the controlling reason for making this trade, whereby the lots were exchanged and the community 320 acres mortgaged and eventually lost, the community vendor's lien notes pledged and the community lots exchanged, was to satisfy the demands of the second wife.

The court found that the foreclosure of the lien on the 320-acre tract was caused by his failure to pay an interest installment amounting to $412.50, due January 1, 1934, and that the loss was not unavoidable. With reference to the loss of the 158-acre tract, the court found the administrator defaulted in one annual payment of interest amounting to $320 due January 1, 1933, which caused it to be foreclosed and sold in September, 1933; that this loss was not unavoidable. The court further found, and the evidence, we think, supports the court's findings, that by the exercise of ordinary care and reasonable diligence Hutchins, Sr., could have secured an extension of time on said interest payments and could have saved both said tracts of land from foreclosure.

The court found that the administrator collected and converted the Standefer and Herring notes; that he collected and converted the Hamilton note prior to January 1, 1931; that he collected $1,530 interest on the Merrick notes and in 1933 traded said notes for cows of the value of $125, all of which was converted to his own use.

The court found that the administrator "sold, mortgaged and wasted the entire community estate so that nothing remained on hand at the time of filing this suit; that by mortgaging the 320 acres and using the proceeds for his own benefit in the purchase of the 158 acres and exchanging the Lamesa lots the same were thereby converted by the administrator." The court further found the allegations of the plaintiffs' amended petition with reference to keeping account as required by article 3670 to be true; that Hutchins "sold, mortgaged, and exchanged said community property for other property, not for the purpose of paying community debts, but for his own use and benefit and that he collected rents and revenues of said community property without keeping an account therefor and used the same for his own personal use. That G. B....