Haley v. Austin

• Decision Date: 04 February 1924
• Docket Number: 10854.
• Citation: Haley v. Austin, 74 Colo. 571, 223 P. 43 (Colo. 1924)
• Parties: HALEY et al. v. AUSTIN.
• Court: Colorado Supreme Court

223 P. 43

74 Colo. 571

HALEY et al. v. AUSTIN.

No. 10854.

Supreme Court of Colorado

February 4, 1924

Department 3.

Error to Garfield County Court; J. W. Bell, Judge.

Proceeding by B. F. Haley and another, copartners doing business as Haley & Hollis, for the allowance of claims against the estate of Josiah C. Austin, deceased. From a judgment in favor of Fannie Austin, administratrix of the estate disallowing the claims, claimants bring error.

Affirmed.

C. W. Darrow, of Glenwood Springs, for plaintiffs in error.

J. W Dollison and C. W. Fulghum, both of Glenwood Springs, for defendant in error.

CAMPBELL J.

November 12, 1923, plaintiffs in error, a copartnership, as claimants, filed in the county court of Garfield county their claim against the estate of Josiah C Austin, deceased, aggregating about $16,500, represented by three promissory notes executed by the administratrix and bearing date May 19, 1923, payable to claimants 180 days after date, which notes were secured by chattel mortgage given by the administratrix under authority of the court upon certain live stock, and the hay crop of 1923 growing on 120 acres of land. In the instrument filed, verified by one of the partners, is a statement that on the day of the filing, and before the claim was tendered, the administratrix served a written notice upon claimants that she thereby surrendered possession to, and the same was received by, them of the live stock and hay crop included in the mortgage, for application on the indebtedness represented by the notes, which action on the part of the administratrix the claimants say made the notes due and payable at once and was, in effect, an agreement by which foreclosure forthwith could be made. The claimants asked an allowance of the alleged indebtedness represented by the notes, as a claim against the estate, and for an order of court permitting a foreclosure of the chattel mortgage. Upon final hearing, in which the claimants and the administratrix were represented by counsel, the court, on November 16th, disallowed the claim and refused its permission for the foreclosure. The court made a finding that the administratrix, without securing authority therefor, executed a mortgage including the 1923 hay crop. A few days thereafter she formally applied, in writing, for authority to execute such a mortgage, for authority to stock and the hay crop. Authority was thereupon given to mortgage the live stock but not the hay crop. The court held the mortgage void as to the hay, and as the evidence disclosed that claimants had taken possession under their chattel mortgage upon voluntary surrender thereof by the administratrix, no order would be, or was, made concerning the mortgage so far as it related to the live stock. We are now asked to set aside the judgment.

The record shows an unusual and an anomalous procedure, which may be due, in part, to the fact that the administratrix and the claimants seem to have conducted proceedings themselves and without aid of legal counsel, until after the administratrix had dispaired of paying debts of the estate and after the claimants had made their own case in their own way. It sufficiently appears from the record, however, that the debt represented by these notes signed by the administratrix, was contracted by the intestate during his lifetime, and that it was secured by a chattel mortgage upon his live stock and the crop of hay then growing upon his lands. The date of the intestate's note or notes and chattel mortgage is not shown. Letters of administration were granted to Fannie Austin as administratrix of the estate November 18, 1919, her husband having died on November 10th. She qualified on the same day. The adjustment day for filing of claims was fixed for January 28, 1919, and the proper statutory notice was published. The claimants, who were the payees in these notes given by Mr. Austin, did not appear on the adjustment day and have never appeared in the county court, or filed for allowance a claim represented by, or based upon, these original notes. Why they did not is not specifically disclosed by the evidence, but probably they had no intention of filing their claim under the fifth subdivision of section 5331, C. L. 1921 (which provides that, to be payable out of general assets, all debts and demands of whatever quality shall be filed in the county court within one year from the granting letters of administration and, if allowed, shall compose the fifth class), but, in lieu thereof, having a mortgage which they deemed equivalent to the value of the amount of the notes, they were relying entirely upon that security and did not intend to have their claim established as a debt against the estate, to be paid in whole or in part out of its unincumbered assets. This purpose is indicated by further and later proceedings by them which we proceed to recount. First it should be said that the payees of the original notes given by Austin named Haley Bros. as the payees, who then constituted then firm which afterwards was dissolved or succeeded by the firm of Haley & Hollis, claimants here.

On June 10, 1920, more than one year after adjustment day, the administratrix addressed a letter to the judge of the county court, stating that it was necessary for the interests of the Austin estate that the intestate's note of $19,000 to Haley Bros., maturing June 19, 1920, be renewed in that sum, together with interest, and that the renewal papers should be drawn in favor of Haley & Hollis, their successors, and requested, in the letter, that the judge grant her authority to make and sign as administratrix renewal thereof. On June 19, 1920, the court, finding that it was for the best interest of the estate that the renewal of such date should be made, ordered the administratrix to renew the same, and apparently the intention, which was carried out, was to effect renewals by giving new notes signed by the administratrix. Authority was also given the renew the renewal note, from time to time, if it became necessary for the best interest of the estate. The administratrix thereafter and upon order of the court, in responses to her applications, on June 14, 1921, made a second renewal note for the same reason, and on December 1, 1922, a third renewal, and on May 21, 1923, a fourth renewal. These three renewal notes of the fourth series were secured by a chattel mortgage and they constitute the claim presented to and disallowed by, the order and judgment of the court, which we are now reviewing.

The claimants contend that the presented claim or debt was not contracted by the intestate in his lifetime, but that it is an original debt, created as the result of the acts of the administratrix in asking for, and obtaining authority of the court to make, and making, the renewals. They insist it is the same as a loan directly to the administratrix, a debt at that time contracted by her under authority of the court. Hence ...