E.H. Shelman & Co., Inc., v. Livers' Extrx.

• Decision Date: 23 April 1929
• Court: United States State Supreme Court — District of Kentucky
• Parties: E.H. Shelman & Company, Incorporated, Bankers v. Livers' Executrix et al.

229 Ky. 90

E.H. Shelman & Company, Incorporated, Bankers v. Livers' Executrix et al.

Court of Appeals of Kentucky.

Decided April 23, 1929.

1. Wills. — Widow has right to incumber her individual interest in estate by virtue of deceased husband's will, in accordance with provisions of Ky. Stats., sec. 2355, making interest of widow subject

to her debts, though she was without right to pledge or otherwise dispose of any estate other than that vested in her by will.

2. Wills. — Where there is nothing in will to show a contrary purpose, a devise to a person and his children vests a life estate in such person, with remainder to his children.

3. Wills. — Under will devising estate to widow and children jointly until the youngest child reached his majority the widow received a life estate subject to rights of children, who had a remainder plus the use and benefit of property as stated.

4. Executors and Administrators. — Where executrix used money borrowed from bank partially for payment of deceased husband's debt and the balance to purchase share of tenant in crops in the nature of a business venture, without being necessary to maintain or educate children in accordance with provisions of will, the bank was not entitled to have a subrogated lien to secure it for money advanced for purposes of trust.

5. Novation. — Where bank accepted note and mortgage of executrix in payment of debt of deceased husband and cancelled the latter obligation, there was a complete novation of original obligation of testator.

6. Novation. — Acceptance by creditor of one or more debtors in satisfaction of a pre-existing note operates as a novation of the original obligation

Appeal from Meade Circuit Court.

MOORMAN, WALLS, BEARD & HARDIN for appellant.

W.D. ASHCRAFT for appellees.

OPINION OF THE COURT BY COMMISSIONER STANLEY.

Affirming.

On October 26, 1923, the appellee Mrs. Richard E. Livers, who is the widow of H.B. Livers, executed and delivered a note to the appellant, E.H. Shelman & Co., bankers, for $852.53, due four months thereafter. To secure its payment, she mortgaged a certain farm containing 123 acres and about 3,500 pounds of tobacco. The note not having been paid in full at maturity, the appellant instituted this suit against Mrs. Livers, individually, Thomas Hardesty and Mrs. Livers, as executor and executrix of the will of H.B. Livers, deceased, and his children and devisees to recover a judgment against Mrs. Livers for the debt and to enforce its mortgage. It was alleged that the deceased was indebted to plaintiff and others, and that he left but little personal estate; that the money was borrowed by Mrs. Livers to pay the debts of her husband, and for the care and maintenance of his children, as provided in the will, which was made a part of the petition.

The answer traversed the allegations respecting the use of the proceeds of the note sued on and the validity of the lien. It was affirmatively pleaded that the mortgage was void because Mrs. Livers was without power to execute it; that the note was her personal obligation; and that the personal representatives, acting jointly, could sell the land only for the necessary care and education of the children or for reinvestment. It was further set up in the answer that at the time of his death H.B. Livers owed the bank a note for an unnamed sum, on which John M. Livers was surety; that Mrs. Livers had made several payments on the note reducing the amount due on October 26, 1923, to $252.38; that she desired to borrow $600, and the plaintiff proposed to her if she would pay the balance of her husband's note, join the Burley Tobacco Association, and mortgage her crop of tobacco, it would let her have the money desired; that she accepted the proposition, and, in accordance with the agreement, executed the note sued on, which included $252.38, the balance due on the note of her husband; that in the preparation of the mortgage plaintiff's officer suggested that the land be included, and she advised him that she could not execute a good mortgage on the land. The answer further pleaded "that said contract, agreement and understanding and the consideration of the execution of said note for $852.38, secured by said mortgage on said crop of tobacco, was and is a complete novation of the H.B. Livers note for the sum of $252.38." It was further pleaded that Mrs. Livers was entitled to a credit of $100 as of February 2, 1924, instead of $52.38, as was indorsed on the note.

No reply or other responsive pleading was filed to the answer. The evidence of Mrs. Livers as to the execution of the note and the credit claimed was in accord with the allegations of the answer. She testified that she used $500 of the money to buy her tenant's interest in the crops and $100 for work done about the place. She did not obtain possession of her husband's note and did not know what became of it. The president of the bank testified to nothing about the circumstances surrounding the execution of the note and mortgage or matters related by Mrs. Livers, but only that it took the amount of the new note to cover testator's indebtedness and to buy the tenant's tobacco. As to the disposition of the old note, he said: "I suppose Mrs. Livers ought to have it; if not, it is canceled and in the bank."

Judgment was awarded for the debt, as claimed, and it was further adjudged that the bank had a lien on the interest of Mrs. Livers in her husband's land, which the court construed to be a life estate, with remainder to the children, but that the life estate was burdened with a trust for the use and benefit of the widow and children until the youngest child shall become 21 years of age. It was further adjudged that the life estate, subject to the trust (or so much as might be necessary), should be sold to satisfy the judgment, the purchaser to obtain possession upon the termination of the trust. The court was also of the opinion that there was a novation of the original obligation of H.B. Livers. This appeal is prosecuted from that judgment.

The first clause of the will involved directed the payment of testator's debts and funeral expenses. The second paragraph devised all of his property to his wife "for her and her children (by me) use and benefit." The third one gave his wife "the right to use any of the principal of my estate that may be necessary in the care and education of our children." By the fourth clause testator appointed his wife and her brother as executrix and executor, giving them the right to sell the real estate devised for reinvestment; and further provided: "Said property or the residue after the maintenance of said children until the youngest becomes of age, then they may do as they desire with the property." The fifth clause declared that the executor and executrix shall have the right to sell and convey the real estate "to pay debts or to carry out the provisions" of the will. The sixth clause names testator's children. The seventh expressed a desire that no inventory be required. The eighth provided that any sales made by the executor and executrix should be "jointly and with their joint approval." The ninth clause provided that his wife be not required to give bond as executrix.

Appellant contends that the mortgage pledges the entire property to secure the payment of Mrs. Livers' debt: First, because she was vested with discretionary powers as to the use of the estate in caring for herself and children, and it was executed in the exercise of that...