King v. Porter

• Decision Date: 28 February 1935
• Docket Number: 7 Div. 275
• Citation: 160 So. 101,230 Ala. 112
• Parties: KING v. PORTER.
• Court: Alabama Supreme Court

160 So. 101

230 Ala. 112

KING v. PORTER.

7 Div. 275

Supreme Court of Alabama

February 28, 1935

Appeal from Probate Court, De Kalb County; G.L. Malone, Judge.

Proceeding on final settlement by C.D. King, as administrator of the estate of S.P. Smith, deceased, contested by C.V. Porter, as administrator de bonis non of the estate of S.P. Smith deceased. From the decree, Olive W. King, as administratrix of the estate of C.D. King, deceased, appeals.

Affirmed in part, and in part reversed and remanded.

Haralson & Son, of Fort Payne, and Ball & Ball, of Montgomery, for appellant.

Wm. B McCollough, of Birmingham, and C.A. Wolfes, of Fort Payne for appellee.

THOMAS Justice.

An appeal from a decree of the probate court against an administrator on final settlement.

The administrator, C.D. King, had filed his accounts for annual settlement; the surety on his bond had failed; there was due insistence for a new bond; the administrator resigned, and his accounts so filed were restated, presented, and passed upon as his final settlement with C.V. Porter as administrator de bonis non of the Smith estate; and there was a decree for succeeding administrator.

These accounts and the decree rendered in favor of the succeeding administrator were held to show an excess of receipts over disbursements against King as administrator of $15,861.63, as the "balance on hand." These funds are shown to have been duly deposited in the First National Bank of Crossville to the credit of "C.D. King as administrator of the estate of S.P. Smith, deceased." Dr. Smith, the decedent, was president of the First National Bank of Crossville to the time of his death; owned 80 of the 200 shares of its capital stock; had theretofore deposited on interest and checking accounts sums larger than that dealt with in several respects by the final decree from which the appeal is prosecuted; and maintained that relation at the time of his death.

From March, 1933, and at the time of King's resignation and the final settlement in question, these trust funds, in general checking account and on time interest-bearing certificates on deposit with the First National Bank of Crossville in the name of King as administrator of the Smith estate, were affected by, or subject to, the bank moratorium announced by the superintendent of banks, to whose authority that bank was subject under the law, and by which this and other state banks were prevented from making payments on deposits, except in the limited amounts thereafter permitted in payment on such claims.

Such sums not being subject to withdrawal or disbursement to distributees or heirs at law, the question is: Was that administrator properly required by the final decree to pay moneys not available in the Crossville Bank when the moratorium was declared, and to account therefor to Porter, the succeeding administrator de bonis non of the Smith estate? Such was the effect of the decree of the probate court in favor of Porter, the administrator de bonis non, and against King, resigning as administrator and settling his trust accounts.

After the decree was rendered, King died, and this appeal is duly prosecuted here by his administratrix and wife, Mrs. Olive W. King.

It is established in this jurisdiction that a personal representative of a decedent's estate may, under recognized conditions, make a general deposit of the funds of that estate, as such trust funds, to his account in a representative capacity, if such deposit be made in a reputable bank for safe-keeping, payment of debts, and distribution in the due administration of the estate according to law.

In Chancellor v. Chancellor, 177 Ala. 44, 58 So. 423, 45 L.R.A. (N.S.) 1, Ann.Cas.1915C, 47, the rule is thus stated, that a personal representative may deposit moneys temporarily in some responsible bank or banking house, and, if he acts in good faith and with discretion in depositing and keeping the trust fund in his trust account, and such funds are lost by failure of that bank, such personal representative is not liable for such a loss.

What constitutes a reasonable temporary deposit of such funds for safe-keeping in the due administration of an estate depends upon the particular facts and reasonable necessities of each fund and its due administration. First Nat. Bank of Opp v. Weaver, 225 Ala. 160, 163, 142 So. 420, 88 A.L.R. 201.

The rule of the Chancellor decision was approved in the Weaver Case, supra, where the executor sought to be charged for the deposit and trust fund was the bank of deposit. The observation made there was:

"*** We are of the opinion that under the facts here disclosed there appears no self-dealing or advantage or profit within the condemnation of the rule of the decisions. Any benefit derived was wholly indirect and incidental, and it would seem that the case differs from that of Elmore v. Cunninghame, supra [[208 Ala. 15, 93 So. 814], only in degree, and not in kind.

"We conclude, therefore, that the mere routine general deposit in good faith of the funds of the estate by an executor in its solvent bank does not, without more, constitute any such use thereof by the executor as to subject it to a liability for interest, and that the nomination of the bank as executor in the will indicates implied authority on the part of the testator that the funds may be so deposited without penalty." First Nat. Bank of Opp v. Weaver, 225 Ala. 160, 163, 142 So. 420, 422, 88 A.L.R. 201.

There is analogy in cases of guardianship, though the rule as to the general right of investment of trust funds is not the same. Bates v. Jones, 224 Ala. 82, 139 So. 242; Barnes et al. v. Clark et al., 227 Ala. 651, 151 So. 586, 90 A.L.R. 637.

We are not persuaded that the decision in the Weaver Case, supra, bears analogy as to the deposits made by Smith of his respective funds in like large sums. It is not a question of implied authority from the decedent that his moneys may remain or be on deposit for a reasonable time and under like circumstances; it is that of whether the continued deposit may be permitted to exist in the same bank by his administrator without penalty, and whether the same question is presented or applies to both trust funds in checking and interest-bearing accounts. When the record is considered, it is apparent that the deposits to King's account in a representative capacity were "temporary deposits," within the meaning of the decisions requiring trust funds and moneys of an estate to be collected and kept, for the protection of legal obligations of the estate, and for the due distribution thereof according to law and the orders of the court. That is to say, that decedent was not only a large holder of the bank's stock, but was the superior or chief executive officer of that institution, and deposited his moneys in like large amounts on interest and checking accounts; that his personal representative was permitted, under continued like general conditions of the bank, to allow these funds to remain there, as and where decedent placed them, within the rule of the Chancellor and Weaver Cases, supra. That is to say further that the evidence shows without dispute that the bank was a good and going institution until its business functions as to distributions were interrupted or suspended by the course of events--the necessity of the estate to protect against superior liens or foreclosures, the eventuation of which would extinguish the large equities in real properties that the bank held--and by the moratorium, of which all courts take judicial notice. Hodge et al. v. Joy et al., 207 Ala. 198, 92 So. 171.

We may here observe that the personal representative testified with a directness that impresses us with its truth. Among other things, he said that after Smith's death he transferred from the Albertville National Bank $10,200 on April 6, 1929, and put it on deposit; that like deposit was made in July from the First National Bank of Fort Payne; that he thereafter made distribution of sums aggregating $45,500; that the condition of the Crossville Bank when he made these deposits was good, solvent, and able to pay all of its liabilities as they became due.

Like tendency of evidence is to be found in the report of the chief examiner of State banks.

It is further shown, that before and until the moratorium was declared the Crossville Bank had not failed to pay at maturity its obligations and had total bank assets of $82,000.00, consisting of stocks and real estate mortgages; that the bank owed only $28,000 or $29,000 to the R.F.C., and had deposits of $35,000, including the Smith deposits; and that in witness' best judgment the bank would probably be able to pay in full "about November."

The evidence, considered as a whole, impresses us that at the time of these large deposits, with which the administrator is charged, there were direct loans or deposits by Smith with his bank--the interest account maturing January 16, 1934. His administrator was not liable therefor in principal or interest, but was erroneously held liable for the deposits subject to check and set-off of sums due by Smith to the bank under the rule as to the Lindsey guaranty, which will be hereafter considered. The claim by reason of the transfer of the Lindsey note should have been declared on final settlement as being held subject to Porter's claim against the bank as administrator de bonis non of the Smith estate. King, as outgoing administrator, is absolved from liability for the two funds or deposits, and the administrator de bonis non of the Smith estate is invested with authority therein and thereover to the end of their collection or due settlement under the law with that bank or its legal representative.

The Lindsey credit claimed by extinguishment...