Jones v. Patty

• Decision Date: 06 January 1896
• Citation: 18 So. 794,73 Miss. 179
• Court: Mississippi Supreme Court
• Parties: W. M. JONES ET AL. v. ELLA H. PATTY, ADMR., ET AL

18 So. 794

73 Miss. 179

W. M. JONES ET AL. v. ELLA H. PATTY, ADMR., ET AL

Supreme Court of Mississippi

January 6, 1896

FROM the chancery court of Noxubee county, HON. T. B. GRAHAM Chancellor.

The opinion states the case.

Decree affirmed. Suggestion of error overruled.

J. E Rives, for the appellant.

1. The $ 2,000 of insurance money in excess of the $ 10,000 exempted by the statute were assets of R. C. Patty's estate, and the complainants were entitled to a decree in respect thereto. The statute, § 1964, code 1892, which is a reenactment of § 1261, code 1880, imparts to a debtor the right to devote his means to the payment of premiums to procure insurance to the extent of $ 10,000, but no more; and as Patty paid all the premiums on the $ 12,000 of insurance the excess of $ 2,000 was subject to the demands of creditors.

The suggestion that $ 5,000 of the $ 12,000 of insurance money was realized on benefit certificates in the Knights of Honor and Knights of Pythias, which are benevolent orders and not insurance companies, cannot avail the appellees, as it is against the fact, both of those organizations, so far as this controversy is concerned, being essentially insurance companies. The case of Bishop v. Curphey, 60 Miss 22, relied on by appellees, involved a different question from that here presented. In that case the total insurance was less than $ 10,000. The court, moreover, declined, in that case, to adopt the view that a benevolent order could by its laws and contracts with insolvent debtors among its membership, enable them to invest their means in the procurement of benefits to others, to be held beyond the reach of creditors contrary to the laws of this state. See Miner v. Mead, 3 Conn. 289, referred to in 1 Williams on Exrs. (5th Am. ed.), p. 474, and Chilton's Probate Court Law & Pr., p. 348.

2. The chancellor also erred in ordering the funds to be paid over to the clerk, to be pro rated among all the creditors of the estate. Had these funds been accounted for by the administratrix in her accounts, and had she reported them to the court as so much assets in her hands, but had failed to pay them over, then the complainants could only have asked for a pro rata distribution among all the creditors. But this is not the case here. The bill was filed to establish a devastavit as to the insurance money in excess of $ 10,000, and other funds mentioned therein. That the rule is different in such case, and recognizes the right of the successful complainant to priority seems to be settled by authority. Burruss v. Fisher, 23 Miss. 229; State, use, etc., v. Bowen, 45 Miss. 351.

Ames & Drake, as amici curioe,

Filed an elaborate brief, contending that the complainants were not entitled to priority of payment out of the proceeds realized by the suit, and attacking the decision in Burruss v. Fisher, 23 Miss. 228, which the court was asked to overrule. They also made the following points:

The case at bar is quite different from that of a bill filed to set aside a fraudulent conveyance. An administrator cannot attack a fraudulent conveyance made by his intestate, because he stands in the place of the intestate, who cannot take advantage of his own fraud. Hence, property so conveyed is not assets of the estate, and cannot be made assets, because the administrator cannot reduce such property to possession. Armstrong v. Stovall, 26 Miss. 275; Ellis v. McBride, 27 Miss. 155; Snodgrass v. Andrews, 30 Miss. 472; Winn v. Barnett, 31 Miss. 653; Hamilton v. Miss. College, 52 Miss. 65.

It does not follow that because a conveyance is fraudulent that it is fraudulent as to all creditors. It is only fraudulent as to those injured by it, and, consequently, only those can attack who are injured. As to others, it is not fraudulent. Hence, it very clearly follows that the proceeds of property fraudulently conveyed by the intestate should not be distributed to all the creditors. Winn v. Barnett, supra. Section 503, code 1892, covers the case of a fraudulent conveyance, and gives the creditor who first attacks a lien on the property described in the bill from the date of its being filed. This is an entirely different case.

OPINION

COOPER, C. J.

The appellants, creditors of R. C. Patty, deceased, exhibited this bill in the chancery court of Noxubee county in which administration of said estate was pending, against Ella H. Patty, administratrix, and the sureties on her official bond, seeking to recover for a devastavit of said estate committed by the administratrix. The demands of some of the appellants have been reduced to judgments at law in suits against the administratrix, and those of the other complainants are evidenced by promissory notes of the intestate or open accounts against him. The bill avers that there does not remain in the hands of the administratrix property of the estate upon which executions may be levied.

The breaches of the bond alleged are:

1. That the administratrix failed to return, within the time required by law, a true inventory of the property, money and rights in action of the intestate.

2. That when the inventories were made the administratrix failed and refused to return or account for certain personal property of said estate of the value of $ 700.

3. That the administratrix failed and refused to put upon her inventory certain specified sums of money collected by her after the death of her intestate on choses in action which belonged to him.

4. That at the time of his death the life of the intestate was insured by policies aggregating $ 12,000, the premiums on all of which the intestate had paid, all of which policies were payable to the said Ella H. Patty as beneficiary thereof, and that on said policies there had been paid to her the sum of $ 11,999, of which sum $ 10,000, and no more, was exempt by law from the claims of creditors of said intestate. But said Ella H. Patty, claiming the whole sum realized from said policies as her individual money, had failed and refused to account for any part thereof as administratrix of said estate.

This bill was filed in October, 1893. In September, 1893, the administratrix had reported the estate as insolvent, and at the October term of the court it was declared insolvent. The answers of the defendants were filed in May, 1894, and the final decree in the cause was made in March, 1895.

By the decree it is found that the administratrix had, before the institution of this suit, and in the course of administration, been directed and required to account for the property and money named in the second and third assigned breaches of her bond in this cause, and had failed and refused so to do, but had wasted and misappropriated said property and money, by reason of which her bond had become forfeited; that the insurance money referred to in the bill was not assets of the estate, and therefore the complainants were not entitled to any relief touching that fund. The court further decreed that the recovery decreed against the administratrix and the sureties on her bond, should inure to the benefit of all creditors of the estate equally, and denied to complainants the right to priority of satisfaction of their demands.

The defendants do not appeal or assign error, nor do the complainants assign for error any other action of the court below than, first, in ruling that the proceeds of the insurance policies were not assets of the estate; second, in denying to complainants priority of satisfaction out of the recovery on the bond.

Of the policies of insurance upon the life of the intestate, two were in benevolent secret societies, one in the Knights of Pythias for $ 3,000, and one in the Knights of Honor for $ 2,000. Under the charters and by-laws of these societies it is provided that the proceeds of policies issued by them shall not be subject to the claims of the creditors of the assured. The chancellor was of opinion that this limitation was effectual to exclude the creditors from resorting to the proceeds of the policies, and since excluding the sum of these policies--$ 5,000--there remained only $ 7,000 of...