New York Life Ins. Co. v. Brown

• Decision Date: 01 February 1904
• Citation: 76 P. 799,32 Colo. 365
• Parties: NEW YORK LIFE INS. CO. et al. v. BROWN et al.
• Court: Colorado Supreme Court

76 P. 799

32 Colo. 365

NEW YORK LIFE INS. CO. et al. v. BROWN et al.

Supreme Court of Colorado

February 1, 1904

Error to Arapahoe County Court; Ben B. Lindsey, Judge.

Proceeding by Henry C. Brown, executor of the estate of Jane C. Brown deceased, and others, to sell real estate of testatrix for the payment of debts of her estate, in which the New York Life Insurance Company and others were made defendants. From a decree for plaintiffs, defendants appeal. Appeal dismissed and case redocketed on error. Reversed.

The questions presented for review grow out of a proceeding instituted by the executor to sell real estate to pay debts against the estate of a testatrix. The decree of the county court was adverse to the contention of parties made defendants who were neither heirs, devisees, nor creditors of the estate, but claimed to be interested in the real estate described in the petition of the executor, and they brought the case here on appeal. The executor and heirs and devisees of the testatrix move to dismiss the appeal, and also claim that the cause cannot be considered on error for want of jurisdiction. The appeal was dismissed, and the cause redocketed on error. For the purpose of avoiding repetition and because determining the question of jurisdiction raised in a measure determines the cause upon its merits, all questions are disposed of in one opinion. The record is voluminous, but for the purpose of presenting the propositions considered the following summary is sufficient.

By will duly admitted to probate, Mrs. Jane C. Brown made the following disposition of the real estate of which she died seised, which, for convenience, is divided into two classes (1) To her husband, Henry C. Brown, the Brown Palace Hotel for and during his natural life, with full power to incumber the fee in such manner and for such purposes as he might see fit, with authority to appoint who should take the remainder. The will provided that whoever took this property after the termination of the estate devised should take it subject to all incumbrances placed thereon by the devisee. In case of the death of the devisee without directing who should take the remainder, the title to such property was to vest in the children of the testatrix and devisee, and upon their death in their children. (2) The remainder of her realty was bequeathed to Henry C. Brown, his heirs and assigns, in fee. No property was set apart for the payment of debts. By the will Henry C. Brown was named executor, and upon the admission of the will to probate qualified, and entered upon the discharge of his duties. At this time the hotel was incumbered by mortgages or deeds of trust to the Northwestern Mutual Life Insurance Company, which had been placed thereon by the testatrix to secure her indebtedness to that company. These incumbrances also included certain tracts embraced in class 2. There was also other estate indebtedness, part of which was unsecured and part secured on tracts of class 2. Shortly after the probate of the will, Henry C. Brown increased the loan from the insurance company, which he secured on the property already incumbered to that company and thereafter negotiated a loan from the United States Mortgage & Trust Company, which he secured by deed of trust on the hotel and tracts of class 2. The money thus borrowed was applied to the discharge of the indebtedness to the insurance company, and part of the remainder on other indebtedness of the estate. Shortly thereafter the other estate creditors were given and accepted a deed of trust to secure their indebtedness on the same property incumbered to the trust company, and also a parcel of class 2. These creditors were also secured by deed to a tract of class 2 executed before the death of Mrs. Brown. Mr. Brown also obtained a loan from persons named in the record as the 'Clark heirs,' which he secured on parcels of class 2. This money, it is claimed, was used for the benefit of the estate. The transactions with the trust company and Clark heirs were subsequently approved by the heirs and devisee of the testatrix. Subsequent to the date when the deeds of trust above mentioned had been executed and placed of record, Mr. Brown entered into an agreement with his children named in the will, whereby he relinquished to them his right to designate who should take the remainder in the hotel property after his death, or to incumber except for its protection. Thereafter the executor filed his petition for leave to sell real property to pay debts of the estate. This petition contains the statements required by section 4751, 2 Mills, Ann. St. The indebtedness to the trust company secured on the hotel and other property, as well as the indebtedness to the Clark heirs, was scheduled as liabilities against the estate. The petition alleged that certain persons and corporations, who are the plaintiffs in error, claimed an interest in specific realty of the estate on account of dealings had with Henry C. Brown in his individual capacity subsequent to the probate of the will, or were judgment creditors of Mr. Brown, whose judgments are based upon personal transactions with him during the same period; that these parties were made defendants not because petitioner recognized they had any rights which entitled them to be heard, but nevertheless asked that they be summoned to answer. To this petition the heirs of deceased were also made parties defendant. The plaintiffs in error answered, denying certain allegations of the petition; denied that the indebtedness to the trust company and Clark heirs was estate indebtedness; and by way of further defense severally pleaded laches, estoppel by conduct, and waiver on the part of the executor and creditors to maintain the proceeding. In addition, they severally pleaded that they were owners of specific parcels of the real estate embraced in class 2 through transactions with Henry C. Brown in his individual capacity, after the probate of the will, which were not included in either of the mortgages or deeds of trust above mentioned, or had obtained judgments against him based upon personal transactions with him, which were liens upon his interest in the property covered by such mortgages or deeds of trust; and by other averments made it appear that the source of their rights to the realty which they claimed to own or upon which they claimed liens was the will, and that the value of the property specifically pledged was sufficient to discharge all indebtedness thereby secured, as well as satisfy the liens of those who were the judgment creditors of Henry C. Brown. To the several defenses interposed by plaintiffs in error exceptions were filed by petitioner, the purpose of which was to raise the question of their sufficiency. In support of such exceptions the reasons assigned were, substantially, (1) that such defenses did not present issues within the frame of the petition, or within the requirements of the statutes under which the proceeding was instituted, and were not within the jurisdiction of the court to determine in that proceeding; (2) that the right to object to the sale and disposition of the real estate of decedent could not be exercised by those who were neither heirs, devisees, nor creditors of the estate. These exceptions' were sustained except as to certain denials of the averments of the petition. Upon the trial the court concluded that all indebtedness scheduled constituted liabilities against the estate, including that of the trust company and Clark heirs; that the property devised by the will embraced in class 2 should first be resorted to for the payment of the estate indebtedness before resort could be had to the hotel; that whatever interest plaintiffs in error had in the property described in the petition was subject to the payment of estate indebtedness, and was inferior to the rights of the creditors, heirs and devisees, and directed that the petitioner, in his capacity as executor, sell so much of the property of class 2 as might be necessary to pay the estate indebtedness as found and fixed by the court. The question of the disposition of the hotel property after exhausting the property included in class 2, in order to raise funds to pay estate indebtedness then remaining unpaid, was reserved for future consideration. The enforcement of the decree will absorb all the property of class 2.

On Rehearing.

M. J. Galligan, Wolcott, Vaile & Waterman, H. H. Dunham, T. J. O'Donnell, O'Bryan & O'Bryan, Benedict & Phelps, Chas. J. Hughes, Jr., Bicksler, McLean & Bennett, Ralph Stevens, Thos. H. Hardcastle, Rogers, Cuthbert & Ellis, Pierpont Fuller, and Wm. B. Harrison, for plaintiffs in error.

James H. Brown, A. W. Gillette, Bartels & Blood, and I. N. Stevens, for defendants in error.

GABBERT, C.J. (after stating the facts).

The executor, heirs, and devisees of the testatrix move to dismiss the appeal, and also contend that the case cannot be considered on error for reasons based substantially upon the following grounds: (1) That the plaintiffs in error are not aggrieved by the decree from which they appeal; (2) that no question is involved, nor is the subject-matter of controversy or the judgment rendered such as to give this court jurisdiction on appeal; (3) that the questions which the plaintiffs in error sought to have adjudicated by their several answers and defenses were not within the jurisdiction of the county court to determine in a proceeding by the executor for leave to sell real estate to pay debts, and that the value of their several alleged property rights severally exceeded the constitutional limit of the court to adjudicate.

The first proposition is clearly untenable. Plaintiffs in error were made parties to the proceeding because, it was alleged they...