Mcmahan & Co. v. Harbert's Adm'rs

• Decision Date: 01 January 1871
• Court: Texas Supreme Court
• Parties: MCMAHAN & CO. v. HARBERT'S ADMINISTRATORS.

35 Tex. 451

MCMAHAN & CO.

v.HARBERT'S ADMINISTRATORS.

Supreme Court of Texas.

1871.

1. An administrator has no power to create a debt which will bind the estate he represents--except in such cases as are expressly provided for by statute.

2. H., a planter, died intestate in 1865, having been in the habit of transacting his business with M. & Co. as his commission merchants. After his death, his administrator conducted the plantation by order of the probate court, and continued its business transactions with M. & Co., and incurred a large indebtedness to them for plantation supplies. The administrator was removed, and administrators de bonis non appointed. M. & Co. sued the administrators de bonis non for the indebtedness, setting forth the above facts, and further alleging that the supplies were furnished for the benefit and on the credit of the estate alone, were required by its necessities, and were used by it; that there were but few debts against the estate, and the administration was carried on in the interest of the heirs, and not of creditors; and that the claim had been presented to the defendants, who admitted its justness and offered to pay it in other claims. Held, that a demurrer to the plaintiff's petition was properly sustained. The indebtedness was one for which the estate could not be made liable by the administrator, even though he acted under the authority of the probate court. But if the suit had been against the heirs, with proof that they approbated the creation of the debt, and profited by it, an equitable liability to pay it might have been established against them, as in the case of Montgomery v. Culton, 18 Tex. 736.

ERROR from Colorado. Tried below before the Hon. L. Lindsay. The material facts are indicated in the opinion of the court, and in the second head-note.

Moore & Shelley, for the plaintiffs in error.

R. V. Cook and R. L. Foard, also for the plaintiffs in error. It may have been the intention of the legislature in passing the laws governing estates of deceased persons to form a complete system, and, doubtless, as between the administrator and the estate, the strict letter of the law applies.

In the case of Price v. McIvor, 25 Tex. 771, the court say. that art. 1340, Pas. Dig., comprises the only debts which the executor or administrator can create against the estate, and it contemplates that he will have incurred the expense by the payment of money, or by becoming personally responsible to third parties. On general principles of equity it has been held that the estate may be held responsible to third parties with whom the administrator has created debts properly chargeable against the estate. In the case of Caldwell v. Morgan, 21 Tex. 802, the court say, neither by the common law nor the statute law has an attorney a direct remedy against the property of the ward; but as the property is equitably bound, there is no inconsistency in our courts having a blended jurisdiction of law and equity in allowing direct recourse on the ward's property. To the same effect see 11 Tex. 157, 359.

In Crayton v. Munger, 9 Tex. 292, the court say, “An administrator, it is true, cannot create a charge upon an estate he represents by his illegal or fraudulent acts, and it is equally true that the estate cannot be benefited or obtain legal advantage as against innocent third parties by means of such acts. The estate can neither be charged, nor can it charge others, by reason of the illegal or fraudulent acts of its legal representatives. It would be a monstrous doctrine to hold that estates may speculate upon the fraudulent acts of their legal representatives.” In the case of Swenson et al. v. Walker's Administrators, 3 Tex. 97, where the administrators had promised to pay a claim against the estate, and a third party, trusting to this promise, bought the claim, and the administrator afterwards refused to pay it, the court said, that being the representative of an estate did not confer upon her any right to commit a fraud upon an innocent person, and then shelter herself under her fiduciary capacity. The court cannot lend its aid to the perpetration of so much injustice, but will leave her to account for her administration as best she may with creditors or distributees. See Dickinson v. MacDermott, 13 Tex. 252; Able v. Chandler, 12 Tex. 92.

In Lee v. Smith, 18 Tex. 146, it was held, that when property is sold for the benefit of the heir, such heir is chargeable with the amount of the proceeds of said sale and interest. In Lockhardt v. White, 18 Tex. 112, it was held, that if the administrator sold property at private sale, she can only be compelled to account for its value. The case of Montgomery v. Nash, 23 Tex. 158, etc., is similar in many respects to the one now before the court; and applying to this cause the law laid down in that, we think it clear that the plaintiff in error can recover.

Now, in the case at bar it is alleged that all the supplies, moneys, drafts paid, etc., set forth in plaintiff's account, were used in the payment of the debts of the estate and for its necessities, and so the plaintiffs in error would have proved. It should not affect the liability of the estate to the plaintiffs in error that the administrators of Harbert mismanaged the estate, or managed it dishonestly, unless the plaintiffs in error knew, or could have known by the use of reasonable diligence, of these illegal acts of the administrator, or participated in some way therein. We contend that McMahan & Co. were not bound to know what was done with the moneys, supplies, etc., after they passed into the hands of the administrators.

The question, we conceive, is whether, at the time they furnished said supplies, moneys, etc., they were furnished under such circumstances as enables them to hold the estate liable. Now, we hold that the very fact that administrators were appointed by the county court on Harbert's estate, invested them, so far as innocent third parties are concerned, with certain powers to bind the estate. Representing the estate, they are bound in their dealings with third parties to act according to the dictates of common honesty and good faith. Crayton v. Munger, 9 Tex. 288;Able v. Chandler, 12 Tex. 92. According to the theory of defendants in error, administrators can bind third parties to the estate, but cannot throw a liability on the estate, unless it be done in strict and literal accordance with the statute.

Though our statutes provide a system of laws for the government of the estates of deceased persons, and it may generally be said that these statutes control in any given case, yet our courts, when it becomes necessary to protect the rights of innocent parties and hinder the commission of frauds, will engraft upon these statutes the general principles of equity. Thus, according to the cases heretofore cited above, though an attorney or other party cannot, by the common law or the statutes, render the estate personally liable to him, yet, under the general principles of equity, he is enabled to do so.

If the money obtained from McMahan & Co. went into the body of the estate and was used by the estate, it matters not in what shape that money was furnished, whether in cash actually paid to the administrators, the drafts of the administrators on the plaintiffs in error, or the drafts of the latter in favor of third parties.

Suppose there were no orders of court allowing the administrators to sell the crops grown on the plantation; yet crops were grown and sent to McMahan & Co. by the legal representatives of the estate, sold, and the proceeds paid to the administrators; now, would it not shock the conscience, and, in the language of Judge Wheeler, be monstrous, to hold that these acts of the administrators were illegal to such an extent that the cotton still belonged to the estate, and that the estate, or some new representative thereof, could force McMahan & Co. to pay again the value of the cotton? Yet such must have been the opinion of Judge Lindsay, and certainly was the theory of the defense, as is demonstrated by their pleas in reconvention.

Admit that there was no order of court to carry on the plantation in 1867, yet it was carried on; crops were raised, sent to McMahan & Co. to be sold, and accounted for. If the plaintiffs in error in good faith furnished supplies and moneys to raise the crops for said year, without any knowledge that the administrators were acting without an order of court, should this, either in law or equity, prevent their recovery

It is alleged in the pleadings, that the plantation was...