Hirning v. Webb

• Decision Date: 01 November 1966
• Docket Number: No. 9826,9826
• Citation: 419 P.2d 671,91 Idaho 229
• Parties: Maurine W. HIRNING, an heir to May D. Webb, deceased, Appellant-Appellant, v. Edward M. WEBB, Jr., Administrator Estate of Mary D. Webb, Jonathan Webb, Francis Webb, LeRie Underwood, Robert G. Webb, Dorothy L. Webb, Administrix Estate of Van R. Webb, deceased, Prespondents-Respondents.
• Court: Idaho Supreme Court

Page 671

419 P.2d 671

91 Idaho 229

Maurine W. HIRNING, an heir to May D. Webb, deceased, Appellant-Appellant, v. Edward M. WEBB, Jr., Administrator Estate of Mary D. Webb, Jonathan Webb, Francis Webb, LeRie Underwood, Robert G. Webb, Dorothy L. Webb, Administrix Estate of Van R. Webb, deceased, Prespondents-Respondents.

No. 9826.

Supreme Court of Idaho.

Nov. 1, 1966.

Kerr & Williams, Blackfoot, for appellant.

Furchner, Anderson & Beebe, Blackfoot, for respondents.

McFADDEN, Chief Justice.

An order in the estate of Mary D. Webb, deceased, who died intestate June 2, 1962, is the subject of this appeal. During her lifetime she was married to Edward M. Webb, Sr., who died intestate January 22, 1961. Born issue of their marriage were eight children, seven of whom lived to maturity, i. e., Maurine W. Hirning, appellant, and respondents Edward M. Webb, Jr., who is the administrator of Mrs. Webb's estate, Janathan Webb, Francis Webb, LaRie Underwood, Robert G. Webb and Van R. Webb, deceased, whose administratrix is also a respondent.

Mrs. Webb succeeded to her deceased husband's interest in their community property, which property is involved in these proceedings.

Edward M. Webb, Jr., the administrator, filed his first account and petition for partial distribution of the estate. Following the hearing for settlement of the first account and the petition for partial distribution, the probate court entered its order approving the first account and its order and decree authorizing partial distribution of the estate in accord with the administrator's petition. Mrs. Hirning appealed to the district court from this order and decree. The district court heard the cause anew and entered its order affirming the probate court's order and decree, from which this appeal has been taken.

The principal issues presented involve whether the transfer of 160 acres of land to Mrs. Hirning by her parents on August 26, 1955, was a gift or an advancement against her distributive share of the estate, and also whether the sum of $7,000.00 paid in March 1944 by her father to a third party was in the nature of a loan, a gift, or an advancement and whether it too should be charged against her distributive share.

The facts presented by the record are without dispute. In March 1944 appellant's father wrote a check to a third party for $7,000.00 as payment on land appellant and her husband were them purchasing. For a number of years thereafter and up until about 1951 she and her husband annually paid to her parents 5% interest on this sum. No interest payments were made after 1951.

In 1955 Mr. and Mrs. Webb executed and delivered four separate gift deeds, each conveying 160 acres of 'desert ground.' Three of these deeds were executed August 26, 1955, and was delivered to LaRie Underwood, Van R. Webb, and Maurine Hirning. The other deed was executed on December 16, 1955, and delivered to Robert G. Webb.

There were several other transactions whereby the parents transferred both real and personal property to some of their children.

Sometime after their mother's death, appellant and the respondents met in an attorney's office. A discussion was had as to the valuation to be placed on the various lands conveyed to the children; it was agreed by the respondents that the various transfers by their parents to the heirs should be treated as advancements against their respective interests in their mother's estate. This agreement, however, was apparently conditioned upon the probate court's entering its decree treating all of the transactions as advancements, including the loan of $7,000.00 to appellant and the deed of the 160-acre tract to her. No written evidence of such agreement was submitted. Appellant denied she ever acknowledged in writing that either the $7,000.00 or the gift deed to the tract was an advancement or that she concurred in such an agreement. She stated that at that meeting, 'Well, I had to agree, I was out-voted.' She stated further, 'Well, they were all telling me what I had coming and what I had already got, and I was just one among six, so that could I do.' She later denied that she concurred in such agreement.

The trial court in its order affirming the probate court's order found as a fact that appellant had acknowledged the loan of $7,000.00 and such sum had not been repaid. This finding is fully sustained by the record. While appellant contends that this payment of $7,000.00 was a voluntary payment by her father to her creditors as a gift and should not be treated as an advancement or as a setoff against her inheritance, yet in her testimony she admitted it was a loan. She also contends that if this was in fact a loan, the statute of limitations (I.C. § 5-201) should be applied as a bar against the contention of the administrator that this should be treated as a setoff.

Respondents contend that I.C. § 5-201 is a statute of repose and does not extinguish the debt but only bars the remedy, and thus does not bar a defense or counterclaim based on such debt. It is recognized that there is a decided division of opinion in the decisions from our sister states on this issue. See: Annotations: 1 A.L.R. 1007; 30 A.L.R. 778; 75 A.L.R. 880; 110 A.L.R. 1385; 174 A.L.R. 726; 39 A.L.R.2d 676.

'Generally proceeding, at least in part, on the theory that the local statute of limitations bars only the right of action and does not extinguish the debt itself, and that it therefore does not preclude the creditor from appropriating to the payment of the debt such property of the debtor as comes into his hands, the following cases support the proposition that the personal representative has the right to apply the statute-barred indebtedness to the debtor's legacy or distributive share: (citiations from 19 states and England).' 39 A.L.R.2d 677.

'A large proportion of these decisions have been based, at least in part, on the reasoning that since the statute-barred debt could not have been collected by direct action, the personal representative would not be permitted to achieve the same result by retaining the amount of the debt from the debtor's legacy or distributive share. (referring to decisions from 14 other jurisdictions)' 39 A.L.R.2d 682.

Under the law in Idaho, the respondents' contention is the more logical. Idaho has aligned itself with other jurisdictions which consider that a statute of limitations is one of repose, i. e., that the lapse of the statutory period bars the remedy to enforce the debt but does not extinguish the debt. Billings v. Sisters of Mercy of Idaho, 86 Idaho 485, 389 P.2d 224; Despain v. Despain, 78 Idaho 185, 300 P.2d 500; Trusty v. Ray, 73 Idaho 232, 249 P.2d 814; Miller v. Monroe, 50 Idaho 726, 300 P. 362.

In Kelson v. Ahlborn, 87 Idaho 519, 393 P.2d 578, this court was presented with the issue of whether a defendant's cross-demand, arising from the same transaction as the plaintiff's original claim, could be set off against the plaintiff's claim even though affirmative relief on the cross-claims was barred by the statute of limitations. This court held that such cross-demands, although barred as the basis for affirmative relief, could be set off against the plaintiff's claim.

At 34 C.J.S. Executors and Administrators § 494, p. 390, it is stated:

'As a general rule, and executor or administrator has the right to and should retain from a legacy or distributive share the amount of any indebtedness which may be due to the estate by the legatee or distributee, * * *.'

'The right of retainer of the amount of an indebtedness from a legacy or distributive share is not a set-off, although it is sometimes termed such, but is an exercise of the right of the representative to apply the funds in his hand to the payment of a debt due from the legatee or distributee to the estate. It is a right of an equitable nature, and not dependent on any statute, constitutes an equitable lien, and is based on the equitable principle that the indebtedness of the legatee or distributee constitutes a part of the assets out of which his and other legacies or distributive shares are to be paid, and that therefore it would be inequitable for him to receive his legacy or distributive share while her retains such part of the assets.' 34 C.J.S., p. 393.

'In some states, the application of the doctrine of retainer is not affected by the fact that the estate's claim against the legatee or distributee is barred by the statute of limitations, unless there is a contrary testamentary expression of intention; and this rule has been held to apply where the legatee or distributee is executor or administrator.' 34 C.J.S., p. 394 21 Am.Jur. Executors and Administrators § 457, p. 637, states:

'The cases are in conflict upon the question whether there is a right of retainer in respect of debts which have become barred by the statute of limitations. Although there is some authority to the contrary, the weight of authority is to the effect that the amount of the statutebarred debt may be applied by the executor, or administrator, in satisfaction of the debtor's legacy, or distributive share. This is upon the theory that the statute of limitations bars only the right of action, and not the debt itself, and therefore that where property of the debtor comes into the hands of the creditor, the statute does not preclude his appropriating such property of the payment of the debt.'

While recognizing this division of authority, is is our conclusion, based on previous rulings of this court, that the trial court correctly determined that the $7,000.00, admitted by appellant to have been a loan, was properly charged against her distributive share of the estate.

The next contention is that the trial court was in error in determining that the deed of the 160 acres to appellant in 1955 was an 'advancement' and is to be charged against any distributive share to which she might be entitled.

There was admitted into evidence a copy of the deed conveying this...