McKenzie v. Standard Accident Ins. Co.

• Decision Date: 24 September 1941
• Docket Number: 15311.
• Citation: 16 S.E.2d 529,198 S.C. 109
• Parties: McKENZIE et al. v. STANDARD ACCIDENT INS. CO.
• Court: South Carolina Supreme Court

16 S.E.2d 529

198 S.C. 109

McKENZIE et al. v. STANDARD ACCIDENT INS. CO.

No. 15311.

Supreme Court of South Carolina

September 24, 1941

M L. Meadors, of Florence, for appellants.

Henry E. Davis, of Florence, for respondent.

FISHBURNE Justice.

This was an action in the Court below upon an administrator's bond in the usual form. The case was brought for the purpose of holding Standard Accident Insurance Company liable as surety upon the bond of M. L. McKenzie, as administrator of the estate of Mrs. A. V. Collins, deceased.

Mrs. Collins died intestate on December 28, 1933 and the administrator of her estate was appointed on October 17, 1934. On the same day he qualified and gave bond with the defendant as his surety in the sum of $2,000. In proceedings had on the filing of his final return in 1936, to which the defendant was not a party, McKenzie, as administrator, was charged by the Probate Court of Florence County with the sum of $3,237.03. Judgment for this amount was entered in the Probate Court, and thereafter by transcript in the Court of Common Pleas. Subsequently, as the result of supplementary proceedings, the sum of $916.60 was collected from the administrator and applied on the judgment, leaving an alleged balance due of $2,320.43. The plaintiffs are two of the distributees of the estate, and bring this action for the benefit of themselves and all of the other distributees who may come in and participate in the expense.

The complaint alleges a breach of the bond by reason of the administrator's failure to properly account for and pay over the sum with which he was charged. Judgment against the surety is prayed for the full amount of the bond. The surety company defended upon the ground that all of the funds with which the administrator was charged and for which judgment was entered against him, except the sum of $379.61, were derived from rents and profits of certain real estate of the decedent, subsequent to her death, by M. L. McKenzie, under a written contract with all the other heirs and distributees at law. It is contended that such funds constituted no part of the estate, and were not covered by the obligation of the surety bond.

In the former appeal to this Court (McKenzie et al. v. Standard Accident Insurance Company, 189 S.C. 475, 1 S.E.2d 502 507), it was held: "That the surety on the bond of an administrator is not bound by the judgment of the Probate Court, when he was not a party to the proceeding therein in a case or proceeding where the Probate Court exceeded its jurisdiction, or where the Probate Decree was procured by fraud or collusion, or where the obligation of the bond contract does not cover the alleged liability."

And it was further held that the defendant had the right to raise these issues by its answer, and to set up its affirmative defense in the present suit, and entitled to proceed with its defense in the Court below. The case was remanded, and upon trial resulted in a directed verdict in favor of the defendant. The plaintiffs have appealed, and claim that the Court should either have directed a verdict in favor of the plaintiffs or else have granted their motion for a new trial.

In order to prove the breach of the bond, the plaintiffs offered in evidence the judgment of the Probate Court, and then rested. Testimony introduced by the defendant was directed to the establishment of its position that the obligation of the bond did not cover the alleged liability; that the funds with which the administrator was charged did not constitute assets of the estate, were not owned or possessed by the decedent at the time of her death, and did not come into the hands of the administrator by virtue of his office.

Three days after the death of Mrs. Collins, to wit, on January 1, 1934, all of her heirs-at-law and distributees, including the plaintiffs and M. L. McKenzie, entered into a written agreement in which it was provided that M. L. McKenzie:

"Shall exercise full power and dominion over the entire estate of the deceased Mrs. A. V. Collins, with full power and authority to sell such of the personal property of every kind and nature as he shall deem necessary to settle unsecured obligations contracted by the deceased, except the household and kitchen furniture which shall be divided among these heirs, the proceeds of the sale of which, after paying such obligations, shall be deposited by the said party of the first part in Lake City Depository, Lake City, S. C., to his account as Trustee of such funds, to be held in trust by him for the use and benefit of these heirs or for such division thereof as they shall hereafter deem fair and just. It is further agreed that the party of the first part shall exercise full control and authority over the real property, and shall look after the operation of the farm, the buying of fertilizers, etc., as agent for all these heirs including party of the first part. Party of the first part shall keep a true and accurate account of all his actings and doings under this authority, in writing, and shall render a full and complete report thereof to parties of the second part on November 15th of each year, if so required, during the life of this agreement which shall be for a period of at least one full year, after which time it can be terminated by any of the parties hereto upon notice to each other."

In further support of its defense, the surety offered evidence from witnesses conversant with the assets of the estate including the surviving husband of the deceased, and one or more of her...