Hartford Acc. & Indem. Co. v. White
| Decision Date | 15 June 1937 |
| Citation | 115 S.W.2d 249,22 Tenn.App. 1 |
| Parties | HARTFORD ACCIDENT & INDEMNITY CO. v. WHITE. |
| Court | Tennessee Court of Appeals |
Certiorari Denied by Supreme Court March 5, 1938.
Appeal from Probate Court, Shelby County; Samuel O. Bates, Judge.
Proceeding by the Hartford Accident & Indemnity Company against William White, executor of the estate of Elizabeth Hein, deceased, in which plaintiff sought to be relieved from further liability as surety on a bond furnished by defendant as executor and as trustee under the will of the deceased. Certain residuary legatees filed an intervening petition. Decree dismissing the petition, and petitioner appeals.
Affirmed.
Winchester & Bearman, of Memphis, for appellant.
Evans Evans & Creson, of Memphis, for appellee.
By a petition filed in the probate court of Shelby county under Code § 9604 et seq., the appellant, Hartford Accident & Indemnity Company, sought to be relieved from further liability as surety on a $100,000 statutory bond furnished by William White as executor of the estate of Miss Elizabeth Hein, deceased, and as trustee under her will. This action was taken pursuant to the provisions of Code, § 9604 et seq. The prayer of the petition was that the said William White be required to give other security or to deliver up the estate to the petitioner or such other person as the court might direct, and that the petitioner be discharged as surety and relieved of all liability subsequently accruing. The relief sought was resisted by the executor and trustee in an answer filed by him. Upon the hearing had upon oral evidence, the court denied the relief and dismissed the petition. From this action the surety prosecuted an appeal.
Miss Elizabeth Hein, an elderly lady, died testate, leaving a large estate. By her will, William White was appointed executor and also trustee of the residuary estate of the testatrix. It was provided that a bond of $100,000 be required of him to cover his duties both as executor and trustee. The will was admitted to probate by an order entered on May 4, 1936. The required bond was given, with the appellant, Hartford Accident & Indemnity Company, as surety thereon, and letters testamentary were accordingly issued to Mr. White, and he entered upon the discharge of his duties.
The petition in the present proceeding was filed on October 31 1936. The petitioner averred therein that said William White was personally indebted to the estate of the testatrix in the sum of approximately $40,000. There was attached as an exhibit to the petition a written agreement entered into between the said William White and the testatrix on June 15 1931, respecting the security for, and the payment of part of, the indebtedness.
The petitioner further averred that the security pledged by White with the testatrix under the terms of this agreement was of doubtful value, and that the only other assets securing the indebtedness consisted of unvalued river land north of Memphis, which was likewise of doubtful value. It was averred that in addition to the indebtedness to the estate the said executor and trustee owed substantial sums of money to others, and that he had admitted to the petitioner, prior to the filing of the petition, that he was unable to pay all or any part of the amount due the estate.
It was further averred that the written application for the bond made by the said White to the petitioner contained an agreement, under the terms of which the said White agreed that upon request he would procure the petitioner's release from liability under the bond, and that the surety should have a right at any time to be discharged from liability for the further default of the said White, and to require him to account and give a new surety.
The will provided that the said William White should receive for his services as trustee $5,000 annually. On June 3, 1936, an order was entered in the probate court providing that the trustee should be paid this annual compensation in monthly installments commencing with the date of the death of the testatrix. After the petition was filed by the surety, three of the residuary legatees who represented the three-fifths interest in the residuary estate filed an intervening petition seeking to revoke and set aside the order entered on June 3, 1936, allowing the trustee to draw the compensation as aforesaid, and averring that the petitioners would not oppose the application of the surety to be released, provided all accrued rights be preserved and protected.
This petition averred, among other things, that in addition to the indebtedness to the estate White was "indebted to other creditors in amounts exceeding in the aggregate several hundred thousand dollars, and that he is utterly unable, financially, to pay various obligations that he owes."
An answer was filed by the appellant to this petition, in which it was averred that: "The very charge which these petitioners are thus making in the intervening petition forms one of the basic reasons motivating the Hartford Accident & Indemnity Company in filing its petition to be relieved of further liability as surety on this bond, etc." This answer was by permission of the court incorporated in, and as a part of, the original petition of the surety in the nature of an amendment thereto.
An order was entered on the petition of the residuary legatees revoking the decree entered on June 3, 1936, and terminating the authority on the part of the trustee to collect any further or additional compensation by virtue of said order.
When the matter was called for hearing, the appellant insisted that it was entitled to the relief prayed for upon the averments and admissions in the pleadings; that no proof was necessary, and it moved for a judgment accordingly.
Error is assigned upon the denial of this motion.
It is first to be noted that, apart from the statute, we think the appellant had no inherent, absolute right to be released, upon notice, from further liability upon this particular bond. It was not a continuing bond. It covered the liability of the principal both as trustee and as executor. The will fixed the term of the trusteeship at ten years. The period of liability as surety of the executor is fixed by law at the duration of the administration of the estate and until it has been closed in the manner directed by law. 11 R.C.L. 305, § 352. That no such inherent, absolute right to be released exists necessarily follows from the decisions holding that the release of a surety on bonds like that before us can only be effected by a strict compliance with the statute. Johnson v. Johnson, 6 Heisk. 240; Gower v. Shelton, 16 Lea 652; 24 C.J. 1073.
The contention of appellant proceeds upon the theory that the statute under which the proceeding was instituted makes it mandatory upon the court to grant the relief upon the sworn petition of the surety to the effect that it conceived itself to be in danger of suffering by virtue of its suretyship.
The statute, carried into the Code at section 9604 provides as follows: "The surety of any guardian, executor, or administrator, trustee or assignee for creditors, who conceives himself in danger of suffering by his suretyship, and desires to be relieved therefrom, may file his petition, in writing, in the county court, or the court having cognizance of the estate or fund."
Section 9605 provides: "Proceedings.--Upon such petition and notice, the court may compel the principal to give other sufficient security, or counter security, to be approved by the court, or to deliver up the estate to the petitioner, or such other person as may be directed, and may make such other orders and decrees for the relief of the petitioner and better security of the estate as may be just and equitable." (Italics ours)
It is the appellant's view that the word "may," in the last-mentioned section, gives the court the right either to compel the principal to give other sufficient security or to compel him to deliver up the estate to whomsoever the court should direct, but that the court "must" do one or the other upon the filing of a proper petition and notice, and that it has no discretion to decline to do either, whatever the facts may be.
Counsel for the respective parties cite cases from other jurisdictions pro and con upon the proposition that statutes in the respective states granting a surety the right to be relieved of further liability are mandatory.
We have not had access to the various statutes, nor to all of the cases cited as construing them. Whatever may be the view adopted in these cases, a disposition of the question is to be controlled by the legislative intent as disclosed by the language of our own statutes. With respect to the meaning to be given the word "may" as used in Code, § 9605, it is to be presumed that the Legislature employed the word in ordinary signification, which is "to have permission; to be allowed." It is not to be construed to mean "shall," unless it is necessary so to do in order to carry out the manifest intention of the Legislature disclosed by the language of the statute, considered as a whole. Black v. State, 154 Tenn. 88, 290 S.W. 20. We find no such necessity in the present instance. Upon the other hand, the provisions of the other Code sections dealing with the procedure by which the surety may be relieved negative the idea that the word "may" was inadvisedly used.
Code, § 9611, referring to the application for relief under sections 9604 and 9605, provides that the officer authorized to hear and dispose of the application may administer oaths and summon witnesses.
By the next section it is provided that the costs of the application, if unsuccessful, shall be paid by the applicant if...
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