National Surety Corporation v. Laughlin, 32180

• Court: United States State Supreme Court of Mississippi
• Citation: 178 Miss. 499,172 So. 490
• Decision Date: 22 February 1937
• Docket Number: 32180
• Parties: NATIONAL SURETY CORPORATION v. LAUGHLIN

172 So. 490

178 Miss. 499

NATIONAL SURETY CORPORATION
v.
LAUGHLIN

No. 32180

Supreme Court of Mississippi

February 22, 1937

Division A

Suggestion Of Error Overruled May 22, 1937.

APPEAL from chancery court of Washington county HON. J. L. WILLIAMS, Chancellor.

Bill by Bessie C. Hillery, administratrix de bonis non of the estate of Wesley Cooper, deceased, against the National Surety Corporation, D. B. Cooper, and others. Bessie C. Hillery was removed as administratrix de bonis non and William F. Laughlin was appointed in her stead, and was substituted as complainant. Bessie C. Hillery and the United States Fidelity & Guaranty Company, surety on her bond as administratrix de bonis non, were made defendants. D. B. Cooper filed a cross-bill. From the decree, the National Surety Company appeals. Affirmed in part, reversed in part, and modified decree entered.

Affirmed in part and reversed in part.

[178 Miss. 500] Butler & Snow, of Jackson, M. N. Thayer and Roy H. Callahan, both of New York City, for appellant, National Surety Corporation.

Appellant is not liable for alleged devastavits of R. L. Jayne, as administrator, which were committed prior to May 1, 1933.

The certificate of assumption of liability does not constitute a new bond and was not intended for a new bond. [178 Miss. 501]

It merely certifies that an extraneous assumption has been made relating to certain losses.

People ex rel. Smith v. Foster, 27 Misc. (N. Y.) 576; Dolan v. U.S. 133 F. 440; 9 C. J. 7; New York Insurance Law, art. 11; People v. Title & Mtg. Guar. Co., 264 N.Y. 69; Matter of Lustig, 240 A. D. 405, 265 N.Y. 517; Matter of Estate of Harry Block, N. Y. L. J., June 14, 1933; Matter of Propp, N. Y. L. J., Nov. 23, 1933, 241 A. D. 863; Matter of Sacks, 153 Misc. (N. Y.) 262; Matter of Patrone, N. Y. L. J., Dec. 28, 1934; Matter of Copstein, 155 Misc. (N. Y.) 424; Coleman v. National Surety Corp., 244 A. D. 244; Moffatt v. Loughridge, 51 Miss. 211; Aetna Indemnity Co. v. State, 101 Miss. 703; Randle v. Birmingham Ry. Light & Power Co., 190 Ala. 314; Duncan v. Landis, 106 F. 839; Green v. State, 109 Ga. 536; Bradbury v. Furlong, 13 R. I. 15.

The liability of appellant, if any, does not arise from the assumption of liability certificate but does arise from the underlying fact or facts to which it certifies.

Templeton v. Butler, 94 N.W. 306; Austin v. Metropolitan Life Ins. Co., 142 So. 337; Wann v. Metropolitan Life Ins. Co., 41 S.W.2d 50; Steffen v. Equitable Life Assur. Society, 64 S.W.2d 302; Seavers v. Metropolitan Life Ins. Co., 230 N.Y.S. 367, 132 Misc. (N. Y.) 719; Provident Life & Acc. Ins. Co. v. Nicholson, 157 Va. 345, 160 S.E. 5; Metropolitan Life Ins. Co. v. Harrod, 166 S.E. 870; Metropolitan Ins. Co. v. Lewis, 142 So. 721; 85 A. L. R. 1464.

Statutory liability can only be read into or imported into a bond where there is at least something which purports to be a bond.

Appellant is not liable for the embezzlement or misappropriation of assets which took place before May 1, 1933.

Royal Indemnity Co. v. American Vitrified Products Co., 117 Ohio St. 278; Fitchburg Savings Bank v. Mass. Bonding & Ins. Co., 274 Mass. 135; [178 Miss. 502] First National Bank v. National Surety Co., 130 F. 401; Smith v. Federal Surety Co., 60 S.D. 100, 243 N.W. 664; Queenan v. Palmer, 117 Ill. 619, 7 N.E. 613; Newcomb v. Ingrain, 211 Wis. 88, 243 N.W. 209.

The Washington county court's decree deprives appellant of its property without "due process of law."

People v. Title & Mortgage Guaranty Co., 264 N.Y. 69; Re Casualty Company of America, 244 N.Y. 443; Tolfree v. N. Y. Title & Mtg. Co., 72 F.2d 702, 46 S.Ct. 216; Kerrison v. Stewart, 93 U.S. 155; Beals v. I. M. & T. R. Co., 133 U.S. 290; Relfe v. Rundle, 103 U.S. 222; Central Penn. Natl. Bank v. N. J. Fidelity & Plate Glass Ins. Co., 182 A. 262; National Surety Corp. v. Nantz, 90 S.W.2d 385; Scudder v. Union National Bank, 91 U.S. 406; Application of People, by Van Schaick, Superintendent, 239 A.D. 490, 268 N.Y.S. 88, 264 N.Y. 473; In re Lustig's Estate, 240 A. D. 405, 265 N.Y. 517; Coleman v. National Surety Corp., 244 A. D. 244; Matter of Sacks, 153 Misc. 262; Matter of Copstein, 155 Misc. 424; Matter of Estate of Harry Block, N. Y. L. J., June 14, 1933; Hartford Acc. & Ind. Co. v. Delta & Pine Land Co., 292 U.S. 143; Home Ins. Co. v. Dick, 281 U.S. 397; Stamps v. Frost, 164 So. 584.

The administrator, de bonis non, has no right to sue for devastavits committed by the former administrator.

Rives v. Patty, 43 Miss. 338; Gray v. Harris, 43 Miss. 421; Dement v. Heth, 45 Miss. 388; Weir v. Monahan, 67 Miss. 430, 7 So. 291; Miss. Codes of 1875, 1880, 1892, 1906 and 1930; Act of 1873 (Miss.); Duffy v. Kilroe, 116 Miss. 7, 76 So. 681; Klaus v. Moore, 77 Miss. 701, 27 So. 612; Cook v. Reynolds, 58 Miss. 243; Clayton v. Merrett, 52 Miss. 353.

The chancery court committed reversible error in sustaining appellees' objections to introduction of material evidence offered on behalf of appellant.

Ham v. Cerniglia, 18 So. 577; North American Transportation & Trading Co. v. Samuels, 146 F. 48.; McConnell v. Camors-McConnell Co., 152 F. 321; Haas [178 Miss. 503] Bros. v. Hamburg-Bremen Fire Ins. Co., 181 F. 916; National Wire Bound Box Co. v. Healty, 189 F. 49.

Wm. I. McKay, of Vicksburg, for Administrator de bonis non.

An administrator who is indebted to his intestate must account for the debt, and even at common law his appointment, not being through the act and favor of his creditor, does not appear to have extinguished his debt.

23 C. J. 1132-3; Section 1648, Code of 1930.

When Bessie C. Hillery became administratrix de bonis non of the estate it became her duty as such to collect this asset, the claim against herself.

It is a primary duty of the executor or administrator, to the performance of which his authority of course extends, to collect the assets of the estate for the benefit both of the creditors and the next of kin or legatees.

23 C. J., pages 1189, 1202.

When Bessie C. Hillery became administrator de bonis non of the estate and the United States Fidelity & Guaranty Company became surety on her bond as such, both the principal and surety became jointly and severally obligated to restore to the estate the $ 1,000 in its original or converted form.

24 C. J. 1062-3.

Where an administrator who has resigned or been removed fails to pay over to his successor the funds of the estate in his hands, his bond is liable at the suit of the successor.

24 C. J. 1070.

The failure to collect assets, so far as possible by the exercise of good faith and due prudence and diligence on the part of the representative, is a breach of the bond.

24 C. J. 1075, 1078.

Failure of an executor or administrator to turn over assets of the estate to his successor in office on a revocation [178 Miss. 504] of his letters or his resignation or removal is a breach of the bond. His successor alone is competent to receive the estate.

24 C. J. 1079.

The cause of action against Bessie C. Hillery for having unlawfully obtained and retained and appropriated the $ 1,000 of the insurance funds of said estate arose and accrued after decedent's death, and the present representative of the estate has the legal capacity to sue therefor.

24 C. J. 732-3, 1075; Klein v. French, 57 Miss. 662; Grinstead v. Fonte, 32 Miss. 120; Falls v. Wilson, 24 Miss. 168; 23 C. J. 1189.

An executor or administrator has, of course, the right to sue on debts due to or claims of his decedent or the estate.

23 C. J. 1191, 1192; Section 1632, Code of 1930; Kelsey v. Smith, 1 How. 68; Forniquet v. Forstall, 34 Miss. 87; 24 C. J. 1083.

It is the duty of the administrator de bonis non to take possession of unadministered effects of decedent, within a reasonable time, and to this end he may maintain any action necessary or proper for the recovery of such assets.

24 C. J. 1156.

The capacity of appellant to sue cannot be raised by the general demurrer.

Griffith's Chancery Practice, pars. 147-9; Wherry. v. Latimer, 103 Miss. 529; Hamilton v. Miss. College, 52 Miss. 70; Sections 514 and 515, Code of 1930; Campbell v. Farmers Bank, 127 Miss. 668; Williams v. Home Ins. Co., 151 So. 729; Mclnnis Lbr. Co. v. Rather, 111 Miss. 55, 71 So. 264; Afro-Am. Sons & Ds. v. Webster, 161 So. 318; Hudson v. Poindexter, 42 Miss. 304.

The appellee's general demurrer did not raise the question of appellant's capacity to sue, and the judgment of the lower court should be reversed. [178 Miss. 505]

Mack v. U.S. 28 F.2d 602; Robinson v. U.S. 33 F.2d 545; Robinson v. U.S. 40 F.2d 14.

Leonard E. Nelson, of Vicksburg, for Mimic Cooper.

The theory upon which the lower court predicated its action in sustaining the demurrer of the surety is unknown to the appellant, Mimic Cooper, who finds neither reason nor law to sustain such action. It is submitted that the demurrer should have been overruled for the following reasons.

Mimic Cooper was entitled to enforce liability upon the bond of Bessie C. Hillery, Administratrix de bouts non.

Rives v. Patty, 43 Miss. 338; Prosser v. Yerby, 2 Miss. 87.

When Bessie C. Hillery became administratrix de bouts non she became entitled to all choses in action taken or held by R, L. Jayne and not administered by him. The debts and trust fund owing to the estate by the unlawful recipients of the payment aforesaid, to-wit: Margaret C. Wilson, Dora C. Spates, Bessie C. Hillery and Dollie Bessie Cooper, were unadministered assets of the estate. The law on this point is well settled.

A sale, transfer or payment without authority passes no title and does not constitute an administration, therefore, an administrator de bonis non may pursue assets so disposed of. Not only may this be done where the sale or transfer is contrary to law, but also where it is fraudulent, in which case the administrator de bonis non may avoid it unless...