Lafferty v. People's Savings Bank

• Decision Date: 11 July 1889
• Parties: LAFFERTY v. PEOPLE'S SAV. BANK.
• Court: Michigan Supreme Court

43 N.W. 34

76 Mich. 35

LAFFERTY v. PEOPLE'S SAV. BANK.

Supreme Court of Michigan

July 11, 1889

Appeal from circuit court, Wayne county.

For a former report of this case, see 38 N.W. 221.

SHERWOOD C.J., and CAMPBELL, J., dissenting.

CHAMPLIN J.

The bill of complaint was filed April 27, 1887, to quiet title to real estate situated in the city of Detroit. The case was heard upon pleadings and proofs, and a decree rendered in favor of complainant, from which defendant appeals. The bill alleges and the answer admits that one Olney Cook, in his life-time, and at the time of his death, was the owner in fee of the land; that Cook died August 13, 1876, leaving a last will, by which he disposed of his property in the following language: "After all of my lawful debts are paid and discharged, the residue of all my estate, both real and personal, I give, devise, and bequeath to my beloved wife, Asenath Cook, and her heirs forever." He appointed his wife executrix. This was in 1864. In 1875 he added a codicil, the sole purpose of which was to appoint Royal C. Remick executor of his will jointly with his wife. This will was admitted to probate on September 4, 1876, and administration was granted to Asenath Cook and Royal C. Remick, executors, and it was ordered "that upon their giving a bond in the penal sum of ten thousand dollars, with sufficient sureties, and the same being approved, letters testamentary do issue to them." Royal C. Remick declined in writing to act as executor, and thereupon, on the 2d day of October, 1876, Asenath Cook filed in the probate court a bond, with Royal C. Remick as surety in the penal sum of $1,000, reciting that she had been appointed sole executrix of the will, and conditioned that she would pay all the debts and legacies of the testator, and perform all orders and decrees of the probate court by her to be performed in the premises. This bond was approved by ALBERT H. WILKINSON, judge of probate, on the 2d day of October, 1876, and ordered filed, and thereupon letters of administration with the will annexed were issued to Asenath Cook. The approval of the bond was entirely ex parte, and without notice of any kind to defendant as a creditor of Olney Cook, and was not based upon any preliminary order other than that of September 4, 1876, requiring a bond in the penal sum of $10,000 with sufficient sureties. On June 12, 1877, defendant filed a petition in the probate court, setting forth that it was a creditor of Olney Cook to the amount of nearly $15,000; that the bond of Asenath Cook was insufficient; and praying that she be required to file a new bond. On the 9th day of July, 1877, the petition was granted, and she was required by the probate court to file a new bond in the penal sum of $20,000, within 10 days thereafter, which she did not do, and was removed from the office of executrix on July 21, 1877. The time for the executrix to comply with the order of the court by filing a new bond expired on the 19th of July, 1877; and on the 18th day of July, 1877, she gave a warranty deed of the land described in the bill of complaint to S. Titus Parsons, reciting a consideration of $4,000. This deed was recorded on the 25th day of October, 1877. On November 15, 1877, S. Titus Parsons and wife executed and delivered a deed of the land to Martha Lafferty, reciting a consideration of $6,000. This deed was recorded on the 17th day of November, 1877. Complainant took possession of the real estate covered by her deed about January 1, 1878, and has ever since had sole possession of the same. On the removal of Asenath Cook as executrix, Henry D. Barnard was appointed administrator de bonis non, and on the 3d of September, 1877, qualified as such, and letters of administration with the will annexed were issued to him. Commissioners on claims were appointed by the probate court on September 10, 1877, who allowed a claim in favor of the defendant for $13,931. Their report was filed on the 21st of March, 1878, and affirmed. July 2, 1879, the administrator petitioned for license to sell said real estate and other lands, which was granted on September 30, 1878. Such proceedings were had under said license that on the 5th day of March, 1880, the land in question was sold at administrator's sale, and bid off by Francis Palms, and the land conveyed to him. The report of sale was made to the probate court, April 5, 1880, and confirmed by the court on April 21, 1880.

The defendant is a corporation duly organized under the laws of Michigan, and on December 10, 1880, Francis Palms conveyed said land to it, and it now claims title through him. No steps have ever been taken by defendant to test the validity of its title, either at law or in equity. The oral testimony introduced upon the trial proved that the sale by Asenath Cook to S. Titus Parsons pending the requirement to file a new bond was for the purpose of preventing any of the property in suit from being applied in payment of the debt of the testator to defendant, and as to defendant was fraudulent and void. The complainant exchanged property she owned in Malden, Ontario, for this property. Her husband acted as her agent in the transaction, and dealt with S. Titus Parsons, who was a lawyer and the adviser of Mrs. Cook in the scheme to defraud the creditors of Olney Cook. Complainant claims that personally she had nothing whatever to do with the trade. Neither she nor her husband has ever lived upon the property, but they have rented it to other parties. She claims to be a bona fide purchaser from Parsons. The complainant claims that Mrs. Cook, being the residuary legatee named in the will of Olney Cook, and having filed a residuary legatee's bond, which was approved by the judge of probate, became, by reason thereof, the absolute owner of all the real and personal estate of Olney Cook, with the right to deal with it and dispose of it in the same manner as any other property of which she was owner; that such property is not in any way under the supervision, dictation, or management of the probate court, or any other court, as a trust fund, and that she cannot be called upon to account for it, either in the probate court or in chancery; that the only protection the creditors have is in the bond filed by her as residuary legatee. Several decisions of this court are cited in support of these propositions: Hatheway v. Weeks, 34 Mich. 240; McElroy v. Hatheway, 44 Mich. 399, 6 N.W. 867; Durfee v. Abbott, 50 Mich. 278, 479, 15 N.W. 454, 559.

In Hatheway v. Weeks the residuary legatee filed a bill in chancery to be relieved from liability on his residuary legatee's bond, on the ground of mistake in supposing that the assets were far greater than they proved to be, and prayed that the estate might be remitted to the ordinary course of administration. This court held that it would open the door to grave abuses to grant the relief prayed; that the residuary legatee was not obliged to give this bond; and by giving it he obtained very decided advantages, which he could have acquired in no other way. He had ample time to investigate and determine whether he would give this bond or not. Until it was approved and accepted by the probate court, it was subject to his control. Having given it, he is bound by the condition "to pay all the debts and legacies of the testator." In the opinion in this case the distinction between the two courses of administration is pointed out. The whole is summed up as follows: "The executor or administrator is a mere officer of the law. He has no personal interest in the property. His powers are all given him by law, and he is accountable for the due and proper execution of those powers; while the residuary legatee, upon giving the bond, becomes sole and absolute owner of the estate of the testator, both real, personal, and mixed, with all the rights and remedies of an absolute owner, and subject to none of the conditions, restrictions, or accountabilities of an executor."

In McElroy v. Hatheway, 44 Mich. 399, 6 N.W. 867, two opinions were written. The bill was filed by one of the sureties upon the residuary legatee's bond, and its purpose was to transfer the whole remedial jurisdiction over the settlement of the estate from the court of probate to the court of chancery, and to compel, by the authority of the latter court, the executor and residuary legatee and the co-sureties to discover and trace from the death of the testator until the present time all parts of the estate, and through a receiver to enforce an absolute surrender by the executor and legatee of the whole assets to the court, in order that it may assume to conduct the administration to final settlement. Mr. Justice GRAVES, after stating the purpose of the bill as above, said: "No such bill can be maintained. The court has no jurisdiction to override the title of a residuary legatee in the way and on the grounds set forth, and the complainant has mistaken his remedy, if he has any. There may be cases, no doubt, when the court, proceeding in accordance with its own maxims, and keeping within the limits given to it in this state, would find some way for relieving the surety by hastening the principal, and preventing him from using his opportunity to oppress and defraud his surety." Mr. Justice COOLEY, in concurring in dismissing the bill, said that "it was decided in Hatheway v. Weeks, 34 Mich. 237, that when a residuary legatee had given bond to pay the debts and legacies of the testator, the property of the estate became his, and he was at liberty to deal with it as he might with any other property of which he was owner. The protection of creditors and legatees was in the bond, and their remedy to sue upon it with permission of the probate court, if payment was not made with...