McDivitt v. Mapes, 78.
| Citation | 299 Mich. 329,300 N.W. 107 |
| Decision Date | 06 October 1941 |
| Docket Number | No. 78.,78. |
| Parties | McDIVITT v. MAPES. |
| Court | Supreme Court of Michigan |
OPINION TEXT STARTS HERE
Suit in equity by C. F. McDivitt, administrator of the estate of Clarence Edward Mapes, deceased, against Catherine I. Mapes, to recover estate assets claimed to have come into defendant's hands while deceased was insolvent. Decree for plaintiff, and defendant appeals.
Reversed, and decree dismissing the bill entered.
Appeal from Circuit Court, Shiawassee County, in Chancery; Joseph H. Collins, Judge.
Argued before the Entire Bench.
George H. Wyatt, of Durand, for appellant.
Seth Q. Pulver, of Owosso (Milton G. Schancupp, of Owosso, and Ellis J. Bowler, of Durand, of counsel), for appellee.
This is a bill in equity by the administrator de bonis non of the estate of Clarence E. Mapes, deceased, under the provisions of § 14, chap. 7, of Act No. 288, Pub.Acts 1939, known as the probate code, which superseded § 15668, Comp.Laws 1929, Stat.Ann. § 27.2815, to recover, in behalf of creditors, assets of the estate claimed to have come into the hands of defendant while the deceased was insolvent. By stipulation the issue of insolvency was determined as of the time of Mr. Mapes' death in December, 1937. In May, 1934, when Mr. Mapes owed debts, now allowed against his estate, he purchased, under land contract, in the manes of himself and wife, jointly, a house and lot in the city of Durand for a funeral home. The contract price was $2,000, of which $500 was paid down, and $30 to be paid monthly thereafter. Up to June, 1937, when Mr. Mapes was taken sick, he made the monthly payments and thereafter payments were made by defendant and, in September, 1939, the contract price being paid, defendant received a deed from the vendor. It is conceded defendant paid $840 on the land contract. Mr. Mapes was an undertaker and, to remodel and equip the premises as a funeral home, he spent considerable sums of money. No homestead right is involved.
The court found Mr. Mapes insolvent at the time of his death in December, 1937, by reason of insufficient assets in his estate, upon sale thereof, to pay debts contracted prior to the purchase of the Durand property and, in behalf of such creditors, decreed a lien upon the premises for $2,000 under a finding that such amount was expended by Mr. Mapes in the purchase and improvement of the property.
Defendant reviews by appeal and claims that, inasmuch as the inventory and appraisal of the estate showed solvency, it was not permissible to plant insolvency at the time of Mr. Mapes' death upon subsequent deficit by reason of inability to dispose of the assets at the appraised value.
The inventory and appraisal showed an estate sufficient to pay the alleged claims, but sums realized on sales of the assets, expenses of administration, and loss in carrying on the undertaking business in the course of administration, showed insufficient funds to pay the creditors in full.
Except for the stipulation mentioned, the burden would have been upon plaintiff to show that the deceased was insolvent at the time of the purchase of the Durand property in 1934. Under the stipulation the burden was on plaintiff to show that the deceased was insolvent at the time of his death in December, 1937, and the creditors, in whose behalf suit was brought, were such creditors at the time the Durand property was purchased in May, 1934.
The true value of the assets at the time of death governs upon the question of solvency or insolvency and any lessened value thereof, occasioned by delay in the course of the administration, for obsolescence or deterioriation as well as expenses or loss in the course of the administration, cannot be considered upon the subject. Loss to the estate in carrying on the undertaking business may not be considered in reduction of assets, if sufficient at the time of Mr. Mapes' death to meet his obligations to creditors existing in May, 1934. The solvency of the deceased, as at the time of his death, is not to be made dependent upon costs of the administration of his estate or subsequent failure to realize the appraised amount, or loss occasioned by endeavors to carry on the former business of decedent. No fraudulent intent on the part of the deceased in purchasing the Durand property was charged or proven.
Mr. Mapes left a will and defendant herein was appointed executrix of the estate and served for a time; then plaintiff herein was appointed administrator.
Under the record plaintiff failed to establish the charge that the result of taking the 1934 land contract in the names of Mr. Mapes and his wife was, by reason of insolvency of Mr. Mapes at the time of his death, in fraud of his creditors.
The decree in the circuit court is reversed and decree will be entered in this court dismissing the bill, with costs to defendant.
I am for affirmance. The only question in this case is whether Clarence E. Mapes, deceased, was insolvent at the time of his death in December, 1937. In determining this, we are limited to his financial condition at the date of death instead of the date when the contract was entered into (1934), by the stipulation of counsel. The issue is purely a question of fact.
The guide for determining insolvency within the meaning of the fraudulent conveyance act has been established by statute, 3 Comp.Laws 1929, § 13393 (Stat.Ann. § 26.882): ‘A person is insolvent when the present fair salable value of his assets is less than the amount that will be required to pay his probable liability on his existing debts as they become absolute and matured.’
The issue thus narrows down to two questions: (1) What was the fair salable value of Mapes' assets at the time of his death; (2) What was the amount required to pay his probable liability on his existing debts at the time of his death.
1. Much testimony was taken as to the value of his assets. They were inventoried and appraised in his estate at $6,982.52. Subsequently some further assets were discovered and added. Also, there were some losses and deductions from the inventory and appraisal value. Subsequently discovered assets must be added, inventoried assets subsequently found to belong to someone else must be deducted. Evidence of gain or loss on sale of inventoried assets, and of appreciation or depreciation, has some probative value. Obligations of the estate subsequent to the date of death, such as expenses of administration, widow's selections and allowances, expenses of burial, monument or marker, are not debts of deceased at the date of death. From a full consideration of all the testimony adduced, after making proper allowance for these matters, I am convinced that the original inventory and appraisal fairly represents the salable value of Mapes' assets at his death, $6.982.52. This is about $800 more than was actually realized, due to depreciation, delay, and many other causes.
2. The second question is, what were his debts at the date of death? The guide for determining the debts within the meaning of the fraudulent conveyance act is likewise established by statute, 3 Comp.Laws 1929, § 13392 (Stat.Ann. § 26.881): “Debt' includes any legal liability, whether matured or unmatured, liquidated or unliquidated, absolute, fixed or contingent.'
Plaintiff claims that when Mapes died, he owed $9,441.60. Defendant claims the amount owed by Mapes at that time is represented by the claims allowed in probate court, $6,976.70. The difference is $2,464.90. If any substantial portion of this difference is resolved in plaintiff's favor, Mapes was clearly insolvent; because the inventory and appraisal of his assets exceeds the amount of claims allowed against his estate by only $5.82.
Plaintiff claims that when Mapes died, he owed the following obligations:
+----------------------------------------+
¦Shiawassee County Bank-note ¦ ¦
+------------------------------+---------¦
¦jointly and severally with Mr.¦ ¦
+------------------------------+---------¦
¦Godfrey ¦$4,668.35¦
+------------------------------+---------¦
¦Shiawassee County Bank-note ¦1,855.70 ¦
+------------------------------+---------¦
¦Doctor Bills ¦519.25 ¦
+------------------------------+---------¦
¦Hospital Bill ¦31.70 ¦
+------------------------------+---------¦
¦Martha Pierce Estate ¦152.25 ¦
+------------------------------+---------¦
¦R. A. Cummins-note ¦2,000.00 ¦
+------------------------------+---------¦
¦Interest on above note ¦214.35 ¦
+------------------------------+---------¦
¦Total ¦$9,441.60¦
+----------------------------------------+
The claims allowed in probate court were as follows:
+------------------------------------------+
¦Dr. Bates and Linden ¦$ 419.25 ¦
+--------------------------------+---------¦
¦University Hospital ¦31.70 ¦
+--------------------------------+---------¦
¦Dr. Nesbitt ¦100.00 ¦...To continue reading
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In re Otis & Edwards, PC
...the debtor must have been unable to make ultimate payment of then-existing obligations from then-existing assets. McDivitt v. Mapes, 299 Mich. 329, 333-334, 300 N.W. 107 (1941); Watzel v. Beardslee, 289 Mich. 522, 286 N.W. 813 (dissenting opinion) (1939); Mossler Acceptance Co. v. Martin, 3......
- People v. Ept, 59.