Latham v. McClenny

• Decision Date: 03 March 1930
• Docket Number: Civil 2870
• Citation: 36 Ariz. 337,285 P. 684
• Parties: A. DAVID LATHAM, as Administrator De Bonis Non of the Estate of HERMAN SCHOENEWALD, Deceased, Appellant, v. CHARLES McCLENNY, as Executor of the Last Will and Testament of KARL HOERATH, Deceased, and HARTFORD ACCIDENT AND INDEMNITY COMPANY, a Corporation, Appellees
• Court: Arizona Supreme Court

285 P. 684

36 Ariz. 337

A. DAVID LATHAM, as Administrator De Bonis Non of the Estate of HERMAN SCHOENEWALD, Deceased, Appellant, v. CHARLES McCLENNY, as Executor of the Last Will and Testament of KARL HOERATH, Deceased, and HARTFORD ACCIDENT AND INDEMNITY COMPANY, a Corporation, Appellees

Civil No. 2870

Supreme Court of Arizona

March 3, 1930

APPEAL from a judgment of the Superior Court of the County of Maricopa. Dudley W. Windes, Judge. Reversed and remanded with instructions.

Mr Earl F. Drake and Mr. A. David Latham, for Appellant.

Mr Charles McClenny and Mr. Samuel White, for Appellees.

OPINION

LOCKWOOD, C. J.

May 26th, 1926, Herman Schoenewald died in Maricopa county, Arizona, and thereafter Karl Hoerath filed his application to be appointed as the administrator of the estate of Schoenewald, which petition on June 14th, 1926, was duly granted, and he qualified, Harrford Accident & Indemnity Company, a corporation, hereinafter called the company, being the surety on his administrator's bond. An order for publication of notice to creditors was duly made, and notice was published in accordance therewith. The notice called for the presentation of claims within four months after the first publication, the estate being of a value requiring such a period. This four months expired on November 3d, 1926. On the fifteenth day of January, 1927, Hoerath presented to the judge of the superior court a duly verified claim in his own favor for $3,333.97 -- being the entire balance remaining in the estate after the payment of expenses of administration and all claims filed within the statutory time -- which claim was on the same day approved by the court. Thereafter, and on the twenty-fifth day of January, Hoerath filed his final account and report, listing all claims purported to have been allowed and for the payment of which he then sought credit, among them being the one last mentioned; and on February 21st, 1927, the court entered an order approving said account and discharging the administrator.

Schoenewald's heirs were two brothers, two sisters and the heirs of a deceased sister, all of whom resided outside of the state of Arizona, and had no knowledge of the death of Schoenewald or of the aforesaid proceedings until April, 1928. In the meantime, Hoerath died and Charles McClenny was appointed and qualified as executor of his will. A. David David Latham, hereinafter called plaintiff, was later appointed administrator de bonis non of the Schoenewald estate, and brought this action in equity against the executor and the company, seeking to vacate and set aside the order of the probate court allowing the claim of Hoerath, described above, and the one settling his final account as administrator of the Schoenewald estate, and to recover the amount of the aforesaid claim, on the ground of fraud in procuring said orders, and also on the ground of the want of jurisdiction of the court to consider or allow the claim after the expiration of the time for the presentation of creditors' claims in the state. The defendants demurred separately to the second amended complaint, on the ground that it did not state a cause of action, and, plaintiff electing to stand upon his complaint, judgment was rendered dismissing the action, from which judgment this appeal was taken.

The sole error assigned is that the court erred in sustaining the demurrer and rendering judgment dismissing the complaint, but under this assignment several interesting legal propositions are raised which we will discuss as seems advisable. On such an assignment, of course, all the matters properly pleaded must be assumed as true. It is first claimed by defendants that it was necessary for plaintiff to file a claim in the Hoerath estate as a condition precedent to bringing this action. So far as McClenny, as executor, is concerned, we think the contention well founded. The gist of the action is that Hoerath, as administrator, converted the trust funds of the Schoenewald estate in his hands to his own use, without authority of law. If it had been possible to follow the converted property so that the identical trust fund or its product in new form could be traced into the possession of the personal representatives of the deceased trustee, it was not necessary to present a claim against the estate of the latter, but a beneficiary of the trust who is unable to do this must present his claim against the estate for allowance. McGrath v. Carroll, 110 Cal. 79, 42 P. 466; Title Ins. & Trust co. v. Ingrosoll, 158 Cal. 474, 111 P. 360; 24 C.J. 894.

The company, however, the surety on Hoerath's bond, is not entitled to raise tis objection, as the mere failure to present a claim against the estate of the principal on a bond does not release the surety. Los Angeles County v. Lankershim, 100 Cal. 525, 35 P. 153, 556; Yerxa v. Ruthruff, 19 N.D. 13, Ann. Cas. 1912D 809, 25 L.R.A. (N.S.) 139 and note, 120 N.W. 758.

The demurrer was correctly sustained therefore, so far as McClenny was concerned, on the ground that no claim having been presented, no cause of action existed as against him. The question as to the sufficiency of the complaint against the surety, however, must be determined on other grounds.

That the claim should have been disallowed by the probate court when presented is too plain to require discussion. The authorities are unanimous to the effect that under statutes such as ours, if a claim is not presented in the time and manner prescribed by statute, it is barred; and not only is the remedy on the claim destroyed, as with the ordinary statute of limitations, but the right itself is wiped out, and the claim ceases to exist, as though it had been paid. Rev. Stats. of Ariz. (Civ. Code) 1913, pars. 882 and 888; In re Rodgers' Estate, 68 Mont. 46, 17 P. 678; In re Hildebrant's Estate, 92 Cal. 433, 28 P. 486; In re Cates' Estate, 195 Cal. 319, 232

Pac. 972; Rhodes v. Cannon, 112 Ark. 6, 164 S.W. 752.

It is contended, however, that notwithstanding the item under such circumstances may not be allowed as a claim, nevertheless if it is paid by the administrator, the court has the power to credit him with such payment in his account under the last sentence of paragraph 883, Revised Statutes of Arizona (Civil Code) 1913, which reads as follows:

"When it shall appear, upon the settlement of the accounts of any executor or administrator, that debts against the deceased have been paid without the affidavit and allowance prescribed in this section, and it shall be proven by competent evidence to the satisfaction of the court that such debts were justly due, were paid in good faith, that the amount paid was the true amount of such indebtedness over and above all payments or set-offs, and that the estate is solvent, it shall be the duty of said court to allow the said sums so paid in the settlement of said accounts." (Italics ours.)

And we are cited to the cases of Stapley v. Stapley, 29 Ariz. 487, 242 P. 1005, and in In re Tamer's Estate, 20 Ariz. 228 179 P. 643, as sustaining this construction. We are of the opinion that the cases cited do not go to this extent, but that the proper construction of the law is that if the claim is paid by the administrator while it is still enforceable against the estate, and the court is of the opinion it was one which would have been approved if properly presented, the mere fact that the formalities of the law have not been complied with before its payment, will not prevent an administrator, who has in good faith paid the claim during such period, from receiving credit therefor in his accounts. when, however, the period fixed by statute within which claims may be presented has elapsed, not only without the presentation of the claim but without its payment, the administrator may not thereafter pay the claim and receive credit therefor. It is generally held, under provisions similar to paragraph 883, supra, that since the nonclaim statutes not only deny a remedy but wipe out the debt itself, the administrator may not waive them, and it is his duty to refuse to pay any claim thus barred. In re Cate's Estate, supra; In re Rodger's Estate, supra; Fullerton v. Bailey, 17 Utah 85, 53 P. 1020; Dakota Nat. Bank v. Kleinschmidt, 33 S.D. 132, 144 N.W. 934; F.A. Patrick & Co., v. Austin, 20 N.D. 261, 127 N.W. 109; Vanderpool v. Vanderpool, 138 P. 772; 24 C.J. 973.

The claim was,...