In re Sheeler's Estate
| Decision Date | 14 March 1939 |
| Docket Number | 44451. |
| Citation | 284 N.W. 799,226 Iowa 650 |
| Parties | In re SHEELER'S ESTATE. |
| Court | Iowa Supreme Court |
Appeal from District Court, Plymouth County; O. S. Thomas, Judge.
The administrator with the will annexed appealed from a judgment and decree in probate qualifiedly approving the final report and supplement thereto, of the preceding executor, and determining the amount of his shortage. Walter Champeny appealed from the decree in so far as it denied his claim. Modified and affirmed on the appeal of the administrator, and reversed on the appeal of Champeny.
E. P Murray, of Le Mars, for appellant Murray, adm'r.
Wormley & Wormley, of Kingsley, for claimant, appellant Walter Champeny.
Ray Rieke and Shull & Stilwill, all of Sioux City, for appellee Mason J. Foft.
Shull & Stilwill, of Sioux City, for appellee Fidelity & Deposit Co. of Baltimore, Md.
Bedell & Bedell, of Le Mars, for appellee Floyd Sheeler.
Henry Sheeler died testate on November 27, 1929, survived by his wife, nine children and the children of a deceased child. Less than two years before his death he married the wife who survived him. Prior to their marriage, and on April 23, 1928 they had executed a written prenuptial contract, by the terms of which she waived dower and homestead rights, and accepted the agreement of Sheeler to establish a trust fund of $10,000, from which, if she survived him, she was to receive only the income, as long as she lived. Sheeler failed to establish the trust fund and failed to provide for her in his will.
On April 4, 1928, he executed his will, in which he stated " I direct that my executor shall sell all my property, both real and personal, at public and private sale, as soon as convenient after my death, in such manner and at such time as may seem to him to be for the best interest of my estate." He further provided therein that after the payment of his debts, funeral expenses, and administration costs, his executor should divide the remaining proceeds from the sale of all of his property into ten equal shares, one of which he bequeathed and devised to each of his nine living children, and one share to the children of a deceased son. Mason J. Foft. who was named as executor in the will, qualified on January 7, 1930. On January 27, 1930, he filed an inventory listing cash and bank deposits, without accrued interest, in the aggregate amount of $14,548.32, liberty bonds, $150, stocks, $25, promissory notes, aggregating $19,187, without accrued interest. He estimated the total face value of this property at $33,910.32. Among the notes he had listed his own note of $3,000, given to Sheeler on March 1, 1929 and due in a year. He estimated it as worth its full face value. The testator owned 671 acres of farm land at his death, which the executor, in the inventory, estimated to be worth $65,000. The liabilities of the deceased, at the time of his death, as found by the court, were $27,282, including the prenuptial obligation. The widow accepted the provisions of this agreement, and made no further claim upon the estate. The bond of the executor in the penal sum of $40,000 was signed by the Fidelity & Deposit Company of Baltimore, Md., as surety.
The executor having made no report, three of the daughters of the testator, on April 5, 1932, filed an application, for an order requiring the executor to show cause why reports should not be filed, and that he be removed, and a successor appointed. On April 22, 1932, he filed a report up to April 13, 1932, showing cash receipts of $27,114.62, of which over $15,300 was from cashing certificates of deposit, which he began collecting on May 4, 1930 and continued collecting until September 29, 1930. In this statement of receipts he listed the collection of $3,180 on May 1, 1930 in payment of his own note. His disbursements, according to the report, totalled $18,298.38, of which $10,000 was stated as being set aside for the use of the widow.
In September 1932, he filed a supplemental report, stating that he was mistaken in setting out in his previous report that he had paid his $3,000 note to the estate. He listed additional collections totalling $1,400, and additional disbursements, including fees to his attorney of $526.69, executor's fees to himself of $626.29, and executor's fees for extraordinary services, in the sum of $750. He also listed payments to the widow of $1,000. Hearings were had on these reports on April 22, 1932, and on October 5, 1932. It is unnecessary to refer to the testimony at these hearings, save on a few matters. Speaking generally of it, it will suffice to say that the testimony of the executor was evasive, equivocating, contradictory, self-neutralizing, and a reading of it gives little information as to what he did with much of the money which came into his possession. After he collected the various deposits of the deceased in the banks of Kingsley and Pierson, Iowa, he deposited it to his individual credit in a bank at Sioux City, and mingled it with his own funds, and with the funds of other estates. He claimed that a little later he withdrew in excess of $10,000 of it and kept it in currency in different places. Much of it was withdrawn on checks to his son-in-law. Although requested to, he produced no bank books, books of account, or cancelled checks, respecting these funds. He failed to account for interest on these moneys after collecting them. He asked for no orders from the court. He was negligent in collecting rentals. He was discharged as executor, on order of the Court, on October 5, 1932, and directed to make a final accounting within twenty days. He never made any further accounting to the court. He never sold any of the land. E. P. Murray was appointed administrator with the will annexed.
The following matters, ascertained at the various hearings, are involved in the controversy. Anna Rice, a daughter of the decedent, purchased of Foft land in South Dakota, which he personally owned. As part of the purchase price, she executed to Foft her note for $9,000 dated February 24, 1930, due March 1, 1931, and to secure its payment, she, at the same time, executed a written assignment of her one tenth interest in her father's estate to the executor. This assignment provided that any part of the property assigned which was not necessary for the payment of the note was to be paid to her. It was also verbally agreed that if the assigned property was insufficient to pay the note, the deficiency on the note was to be cancelled.
At his death the testator held two notes of Mrs. Rice for $3,450 which she did not pay to the executor. About April 1, 1930, the executor sold the Rice note of $9,000 to the claimant, Walter Champeny, for $9,000, which the purchaser then paid by check. Champeny was well acquainted with Foft, and knew he was executor of the Sheeler estate, and knew, in a general way, of the value of the estate. He solicited the purchase. He thought the note was good. He thought Foft was good, also. He did not ask Foft for the assignment when he bought the note though he knew he held it. After the note had run for two years, he wrote to Mrs. Rice for the interest, and she replied that Foft was to pay the note and interest out of the estate. Some time in the fall of 1931, he asked Foft for the assignment, which was refused, but Foft wrote and signed the following endorsement on the back of the note: " This note is secured by assignment of interest in Henry Sheeler Estate." Champeny made no claim against the Sheeler estate until February 21, 1933, when he filed an application therein, alleging the sale of the $9,000 note and the assignment of the interest of Mrs. Rice in the estate as security. He asked that the distributive share of Mrs. Rice be paid to him.
On March 9, 1932, the executor personally purchased the one tenth interest of Floyd Sheeler in his father's estate, for a consideration of $6,500 or $7,500. The record is not clear as to the amount. It is conceded that it was all paid except a note for $2,500, which Foft gave Floyd Sheeler. Foft took a written assignment of Floyd's interest. On December 30, 1932, Foft transferred and assigned this assignment to the Fidelity & Deposit Co. of Baltimore, Md., to secure it against any loss as surety on his bond as executor. Foft never paid the $2,500 to Floyd Sheeler, and the latter filed a claim in the estate asking for the establishment of a vendor's lien on his interest.
On July 10, 1933, the administrator filed objections to the above mentioned final and supplemental reports of the executor, and asked for a determination of the executor's shortage. Hearing was had in November, 1933, and some subsequent hearings in 1934.
On August 17, 1937, the trial court rendered decree approving the final report of the executor except as to the item of $10,000 claimed to have been set aside for the widow, and except as to the item of $3,180 claimed to have been received in payment of his note, and except as to the item for the executor's attorney's fees, which were reduced from $626.29 to $500, and except as to the fee of the executor, which was reduced from $1,376.69 to $750. The court further found and decreed that:
The executor had collected and was chargeable with the sum of $25,334.32, and was entitled to credits thereon of $10,834.01, leaving the sum of $14,500.61 unaccounted for on October 5, 1932; that under the testator's will an equitable conversion was had of all of the real estate at the time of his death, and that the value of the real estate at that time was $125 an acre, making the total value of the real estate $83,875; that the total value of all of the assets of the estate at the time of his death, including the converted real estate, was $125,122.62, and the total liabilities as of...
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