Hoffman v. Ness
| Decision Date | 18 October 1941 |
| Docket Number | 6768 |
| Citation | 300 N.W. 428,71 N.D. 283 |
| Court | North Dakota Supreme Court |
Syllabus by the Court.
1. Where promissory notes are executed and delivered, and money borrowed thereon, and thereafter are renewed by the giving of other promissory notes, the defense of the statute of limitations is of no avail when the action is brought upon the renewed note within six years from the time the renewal note was due, even though the original notes were given many years before.
2. Where an administrator borrows money for the purpose of preserving and caring for the estate, suit may be brought against him in the district court.
3. Where an administrator has borrowed money for the use and benefit of the estate, he has the right to present this to the county court for allowance as part of his expenses as administrator, even though he may not have been authorized by the county court to borrow the money.
4. Where the administrator borrows money for the use and benefit of the estate, and presents the same to the county court for allowance as part of his expenses, it is the duty of the county court to examine the transaction and to allow the same, if it be shown that such action on his part was necessary to preserve the estate, and the money borrowed was used for the benefit of the estate. If so found, the county court will allow this item as one of the expenses of administration to be paid out of the assets of the estate.
5. Under the record in this case, it was error on the part of the trial court to dismiss this action at the close of the plaintiff's case.
6. On the retrial, if it be shown that the administrator borrowed the money for the use and benefit of the estate, and the money was furnished for that purpose, the trial court should ascertain the amount, and order the administrator to present the account to the county court as part of his expenses in the administration of the estate, in order to determine what portion thereof, if any, the county court will allow to the administrator as part of his expenses in the administration.
Appeal from District Court, Richland County; W. H. Hutchinson Judge.
Action on a note by Ruth J. Hoffman against John M. Ness administrator of the estate of Christian Ness, also known as Christ Ness, deceased, and others. From a judgment dismissing the action, the plaintiff appeals.
Judgment reversed, and case remanded for further proceedings.
J E. Hendrickson and Forbes & Forbes, for appellant.
The powers and duties of executors and administrators are prescribed by statute. Blakemore v. Roberts, 12 ND 394, 96 NW 1029.
If an administrator or executor, without being authorized to do so, elects or undertakes to carry on the business in which the deceased was engaged, he does so at his peril. Re Knight, 12 Cal 200, 73 Am Dec 531; Re Moore, 72 Cal 335, 13 P 880; Re Dome, 175 Cal 399, 165 P 919.
Where a mortgage was unauthorized, the fact that the money lent thereon was used to pay debts of the estate, gives the lender no equitable lien on the mortgaged property or other assets. 24 CJ 196, § 702; Smith v. Wagner, 174 NYS 205; Thomas v. Provident Life & T. Co. 138 F 348; 21 Am Jur 508; Evans v. Tucker, 101 Fla 688, 135 So 305, 55 ALR 170.
Where money has been borrowed by an executor without authority and the estate has received the benefit thereof, the creditor may recover the amount loaned from the estate. Deery v. Hamilton, 41 Iowa 16; Dunne v. Deery, 40 Iowa 251.
An administrator who uses his own funds in payment of debts and pecuniary legacies is entitled to be subrogated to the rights of the creditors and legatees. 11 RCL 221; Earl v. Coberly, 65 W Va 163, 64 SE 628; Moulton v. Smith, 16 RI 126, 12 A 891, 27 Am St Rep 728.
Equity looks to the substance of the thing rather than the form, and will endeavor to carry out the real intent and purpose of the parties to a contract. Weckerly v. Taylor, 77 Neb 886, 110 NW 738.
Where the original declaration states a cause of action, but does it imperfectly, and afterwards an amended declaration is filed, correcting the defect, the plea of the statute of limitations will relate to the time of filing the original declaration. 37 CJ 1068 et seq.; North Chicago Street R. Co. v. Aufman, 77 NE 1120; Pettijohn v. Weede, 219 Iowa 465, 258 NW 72; Curtice v. Chicago & N.W.R. Co. 162 Wis 421, 156 NW 484; Westover v. Hoover, 94 Neb 596, 143 NW 946.
Clifford Schneller, for respondents.
An administrator has no authority as such to create any debts against the estate. He cannot incur a debt in the administration of the estate and bind the estate for the payment. 11 RCL § 142; 15 LRA 850; 44 ALR 1348; Martin Bros. Co. v. Peterson, 38 SD 494, 162 NW 154; May v. May, 68 Am Dec 43; Evans v. Tucker, 101 Fla 688, 85 ALR 170.
Where the administrator or executor in discharging the functions of his office does acts and enters into contracts for which the estate is ultimately liable, the liability must be proven in the probate court. Schlicker v. Hemenway, 52 Am St Rep 116; 11 RCL § 177.
Plaintiff alleges that about May 1, 1928, John Ness, as the administrator of the estate of Christian Ness, "found himself unable to pay the legal charges then due and payable from him as such Administrator or to carry on the farming operations on the real estate belonging to said estate and that the assets then in his hands were insufficient to cover the demands then necessary, and that on said May 1, 1928, for value received, he made, executed and delivered to the said Farmers & Merchants State Bank of Wahpeton, North Dakota, his promissory note in writing, dated on said day, wherein and whereby he promised to pay to the order of said Farmers & Merchants State Bank, the sum of eight hundred dollars ($ 800.00) on demand with interest at the rate of nine (9) per cent per annum until paid. That thereupon the said John M. Ness as Administrator aforesaid, received from the Farmers & Merchants State Bank, the sum of eight hundred dollars ($ 800.00) in cash which the said administrator used and expended for the advantage, benefit and preservation of said estate in the payment of claims against said estate, expenses of administration and taxes against said real estate belonging to said estate.
"That said estate and the other defendants and heirs at law were mutually benefited thereby and that the assets of said estate were thereby conserved and increased, all of which was done for the preservation of said estate and the interests of each of the defendants herein."
The plaintiff further alleges that this note was sold, indorsed, and delivered to her, without notice, before maturity, and for valuable consideration; that no part thereof has been paid; that the money represented by the note was used by John M. Ness for the preservation of the estate, of which he is the administrator; and she prays for judgment, finding the amount due on the note "is a legal and valid claim upon and against the property and assets of the estate of Christian Ness, deceased, for the benefit and preservation thereof, and that the same be ordered paid by the administrator of said estate out of the property and assets of said estate."
The summons and the complaint were served upon the administrator on April 25, 1934. The defendant administrators answer jointly, denying the allegations of the complaint; and alleging that if John Ness ever gave this promissory note, then said note "was given as a renewal of other notes previously given, and that for said note given on the 1st day of May, 1928, no cash money was ever received, and not receiving any money therefor, no money was spent at said time for the use and benefit of said estate and for the heirs thereof, but that said note if ever given was given as a renewal note of other notes previously given for debts incurred in the operation of the farm lands by said John M. Ness, individually, and that neither on the 1st day of May, 1928, nor at any time thereafter was any money expended from the proceeds of any loan for the use and benefit of the Christian Ness estate.
"That since the 17th day of April, 1921, John M. Ness has been the duly appointed, qualified and acting administrator of the estate of Christian Ness, deceased, and that he has personally operated the farm property of said estate and has supervised the farm management thereof, and that because of financial and crop conditions prevailing throughout the territory in which said real estate is situated, such farming operations were not profitable, and that in the running and operation of said farm lands, both personally and in active supervision thereof, the said John M. Ness incurred indebtednesses in the purchase of grain and the payment of operating expenses of such farm, and that the income therefrom was not sufficient to pay such operating expenses and that he borrowed money to meet such expenses and gave several and divers notes for the losses incurred in such operations, and that these notes were given to pay overdrafts at the bank upon checks drawn upon his account and to make up deficiencies in the operation of the farm, and if he ever gave a note on the 1st day of May, 1928, as alleged in Paragraph 6 of plaintiff's complaint the same was given as a renewal note for other...
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