In re The Estate of J. B. Betts v. The Estate of J. B. Betts

• Citation: 176 P. 660,103 Kan. 807
• Decision Date: 07 December 1918
• Docket Number: 21,673
• Parties: In re THE ESTATE OF J. B. BETTS, deceased (THE EXCHANGE NATIONAL BANK, Appellant, v. THE ESTATE OF J. B. BETTS, deceased, LULU M. BETTS, as Executrix, etc., Appellee.)
• Court: United States State Supreme Court of Kansas

176 P. 660

103 Kan. 807

In re THE ESTATE OF J. B. BETTS, deceased (THE EXCHANGE NATIONAL BANK, Appellant, v. THE ESTATE OF J. B. BETTS, deceased, LULU M. BETTS, as Executrix, etc., Appellee.)

No. 21,673

Supreme Court of Kansas

December 7, 1918

Decided July, 1918.

Appeal from Shawnee district court, division No. 1; ALSTON W. DANA judge.

Judgment affirmed.

SYLLABUS

SYLLABUS BY THE COURT.

1. BUILDING CONTRACT--Made by Decedent--Authority of Executrix to Complete Contract. The doctrine that the only effect of contracts made by an executor or administrator is to bind himself individually applies to a contract made by the personal representative in attempting to carry on and complete a building contract entered into by the decedent in his lifetime.

2. SAME--Estate Interested in Profits of Contract Only. Notwithstanding the contract survives, the personal representative is not obliged to complete it; in case he does elect to carry on, he and those who deal with him are charged with knowledge of the law which declares that the estate is interested in the business only to the extent of the profits.

3. SAME--Notes of Executrix Not a Valid Claim against Estate of Decedent. A decedent in his lifetime held a contract for the erection of a building, actual construction of which had been in progress about a month when he died. The widow, who was the executrix of the estate, executed notes to a bank signed by her as executrix, and applied the proceeds toward payment for labor and material which had been used in the construction of the building. She afterwards abandoned the enterprise, and the building was completed by the surety of the decedent. Held, that the notes were not a valid claim against the estate.

W. P. Waggener, J. M. Challis, G. L. De Lacy, Walter E. Brown, all of Atchison, and W. A. S. Bird, of Topeka, for the appellant; J. D. M. Hamilton, of Topeka, of counsel.

John L. Hunt, of Topeka, for the appellee.

Porter J. Marshall, J., not sitting.

OPINION

PORTER, J.:

The sole question for determination is whether, under the particular facts in this case, the estate of the decedent is liable upon a contract made by his executrix.

J. B. Betts in his lifetime held a contract for the erection of a building for the Y. M. C. A. at Atchison; actual construction of the building had been in progress about a month at the time of his death. His widow was made executrix by his will, and some time after letters of administration issued from the probate court of Shawnee county she went to Atchison and arranged with the owner of the building to allow an estimate of the work already done; the estimate to be sent to the surety company (which had guaranteed the faithful performance of the contract), presumably, in order to obtain its approval of the payment of the amount allowed. Without waiting to hear from the surety company, the executrix arranged with the Exchange National Bank of Atchison to make her a loan of $ 980 on two promissory notes which she executed to the bank and signed "Lulu M. Betts Ex." The proceeds of these notes went in partial payment for labor and material used in the construction of the building. The surety company never approved the allowance of the estimate, and a week or ten days after the money was obtained from the bank, Mrs. Betts turned over the contract to the surety company, which completed the building with a loss under the original contract. The estate is insolvent; it is said the general creditors will receive from ten to fifteen cents on the dollar of their claims. The bank's claim for the amount due on the promissory notes was presented and filed against the estate. The probate court disallowed the claim. The district court held that the notes were not a valid claim against the estate, and rendered judgment against the bank, and from the judgment the bank appeals.

The plaintiff concedes the force of the general rule that the executor or administrator cannot bind the estate by a new contract, and that the only effect of contracts made by him is to bind himself individually. (Shrigley v. Black, 59 Kan. 487, 53 P. 477; Campbell v. Faxon, 73 Kan. 675, 85 P. 760; Brown v. Quinton, 80 Kan. 44, 102 P. 242; Milbourne v. Kelley, 93 Kan. 753, 759, 145 P. 816.)

The contention is, that an exception arises in cases of building contracts entered into by the decedent during his lifetime which remain uncompleted at the time of his death, and which the executor or administrator elects to complete.

The plaintiff contends that the rule upon which it relies has been the law since Chief Justice Coke, as early as 1685, in the case of Quick v. Ludborrow, 3 Bulst. 29, used this language--

"If a man be bound to build a house for another before such a time, and he which is bound dies before the time, his executors are bound to perform this." (p. 30.)

Plaintiff also quotes from 2 Woerner on the American Law of Administration (2d. ed.), as follows:

"Thus, if one agrees to build a house before a given time, and dies before that time, his executors are bound to perform the contract; and the completion by an administrator of a decedent's contract to build a house attaches to his work all the liabilities of the original contract, so that a sub-contractor is entitled to his lien for materials furnished the intestate." (§ 328.)

From 3 Williams on Executors (7th Am. ed. [1895]), the plaintiff quotes:

"It must be observed, that when the law speaks of executors not carrying on the business of their testator, it means that they are not to buy and sell. There are many cases when executors not only may, but are bound to continue the business to a certain extent. Thus, if a party contracts for himself and his executors to build a house, and dies, the executors must go on, or they will be liable in damages for not completing the work. So, if a party engages to build a house, and dies, after having procured all the necessary materials, it should seem that his executors ought to complete the work; . . . for otherwise those parts which he has purchased, upon the faith of the work being completed, are useless." (Italics ours.) (p. 311 .)

These authorities do not go to the extent claimed by the plaintiff. All they decide is that building contracts are binding upon the heirs and executors of a decedent, and must be performed, or the estate "will be liable in damages for not completing the work." We fail to find any modern authority which upholds the contention that building contracts are in a class by themselves and bind the executor or administrator to carry them out regardless of consequences.

In Lumber Co. v. Tomlinson, 54 Kan. 770, 39 P. 694, an action was brought against the executor and heirs to foreclose a mechanic's lien for material and labor used in erecting a building. In that case two parties made a contract for the erection of a building; one of them died and the...