Powell v. Hurt

• Decision Date: 21 December 1891
• Citation: 108 Mo. 507,17 S.W. 985
• Court: Missouri Supreme Court
• Parties: POWELL et al. v. HURT et al.<SMALL><SUP>1</SUP></SMALL>

17 S.W. 985

108 Mo. 507

POWELL et al. v. HURT et al.¹

Supreme Court of Missouri.

December 21, 1891.

EXECUTORS AND ADMINISTRATORS — LIABILITIES AND MISCONDUCT.

Executors allowed a note given to their testator to run for 11 months after its maturity, during which time the makers failed. They had been insolvent ever since the note was given, but were believed to be solvent, and had high credit, up to the time of their failure. The note bore a high rate of interest, and the money was not needed for distribution. In the opinion of two witnesses, the makers, if pressed for payment when the note fell due, would have paid it out of trust funds in their possession. Held, that the executors should not be charged with said note, since their delay in collecting it was not negligence. BARCLAY, BLACK, and BRACE, JJ., dissenting.

In banc. Appeal from circuit court, Macon county; ANDREW ELLISON, Judge.

This action was instituted in the probate court of Macon county, Mo., by J. M. S. Powell, Henry M. Powell, Basil G. Powell, R. F. Love, and William Love, her husband, Nancy Turk, and D. K. Turk, her husband, and the heirs of Mary Lander, deceased, the children, heirs, and legatees of Henry A. Powell, deceased, by objections to the final settlement of Peyton Y. Hurt and William R. Powell, executors of the last will of said Henry A. Powell, deceased, to prevent said executors from receiving a credit for certain notes belonging to said estate, claimed to be worthless on account of the insolvency of the makers thereof, which was appealed from said probate court to the circuit court of Macon county. The decision of the probate court was in favor of the defendants. This decision was reversed by the circuit court, and the Kansas City court of appeals affirmed the decision of the circuit court. Defendants appeal. Reversed.

Peake, Yeager & Ball and B. R. Dysart, for appellants. John F. Williams and John T. Jones, for respondents.

GANTT, P. J.

1. This is an appeal from the final judgment in favor of the defendants, Peyton Y. Hurt and William R. Powell, as executors of the last will and testament of Henry A. Powell, deceased. Henry A. Powell resided in Macon county, Mo. By his will, duly probated in said county, he appointed his son William R. Powell and Peyton Y. Hurt his executors. The estate was large, amounting to something like $40,000. On the final settlement in the probate court the executors asked credit for a note of $1,000, given by C. H. Benedict, J. B. Malone, and R. A. Malone, on the ground that the makers were insolvent at the time of its execution, ever since had been, and were then. The probate court allowed the credit, on the ground that this note could not be collected. From this judgment some of the heirs appealed. Three of the children declined and refused to disturb the finding of the probate court. In the circuit court the credit was disallowed, and from that judgment the executors appealed to the Kansas City court of appeals. That court, by a majority opinion, affirmed the judgment of the circuit court, (31 Mo. App. 648,) but PHILIPS, J., dissented, and, deeming the majority opinion in conflict with the line of decisions of this court, asked that it be certified to this court, which was done.

The facts are few and simple. On the 12th of March, 1880, in his life-time, Henry A. Powell loaned C. H. Benedict, J. B. Malone, and R. A. Malone $1,000, and took their note of that date, payable one year after date, bearing interest at the rate of 10 per cent. per annum compounded. Henry A. Powell died in September, 1880. The executors qualified September 24, 1880. The fourth item in the will was as follows: "(4) I direct my executors to collect all my notes and accounts due me as soon as the same can be done, and also convert all other personal property to cash within the first year of the administration, or as soon thereafter as may be." The makers of this note did not pay it at its maturity in March, 1881. The evidence shows that, a short time after it became due, Hurt, one of the executors, presented the note to J. B. Malone, one of the makers, at the Macon Savings Bank, at Macon, Mo. J. B. Malone was then, and for some time had been, president of that bank, and its general manager. The other makers of the note, C. H. Benedict and R. A. Malone, were in business in Kansas City, doing business as a firm, of which J. B. Malone also was a member, under the style of Benedict, Malone & Co. When Hurt presented the note to J. B. Malone at Macon he said that, in consequence of floods and high waters out west, collections were slow and times were close at Kansas City, and requested him to wait a while. William R. Powell, the other executor, and son of the testator, testified that "he happened to be in the Macon Savings Bank when Hurt presented the note for payment. Hurt said to him, `What about time? They want further time on this note.' I said, `May be they want to get away with it.' When I said that, I did not know that J. B. Malone was on it. Then J. B. Malone spoke up, and said, `No, I am on that note.' And then I considered it good. `Hurt said it is good, and I'll risk it.' I had no suspicion of J. B. Malone's insolvency. I thought the note good when I found that J. B. Malone was on it." On the 15th of February, 1882, the Macon Savings Bank made an assignment for the benefit of creditors, and on the next day Benedict, Malone & Co. were placed in the hands of a receiver. After the failure of the bank the fact was revealed that J. B. Malone, the savings bank, and Benedict, Malone & Co. were all insolvent, and had been for four or five years. The executors at once put the note in judgment at Kansas City, but the note, not being a partnership obligation, was excluded from the dividends arising from the sale of the partnership effects. Of course, not being an obligation of the bank, nothing could be obtained from its assignee. There were some few small tracts of land in J. B. Malone's name, but the evidence is uncontradicted that he held these in trust for the bank, having taken them in payment of debts due the bank. In a word, J. B. Malone was utterly and hopelessly insolvent. Up to the time of the assignment, J. B. Malone was considered a rich man. The bank was considered sound and safe. Nobody in that locality seems to have had the slightest question of its integrity. Hurt, one of the executors, had $3,000 on deposit when the crash came. The deceased himself seems to have had unlimited confidence in the bank and Malone. In addition to the note in question here, he held a past-due note of $3,000 on J. B. and R. A. Malone and C. G. Epperson. He also held certificates of deposit of the bank. After his death, all these obligations except this one were collected, and distributed among the heirs. They redeposited a portion of this same money in the bank, and it remained there until the failure, and was lost. Hurt, the executor, says in his evidence: "I made no agreement or promise with Malone to extend the time. I simply concluded in my own mind to forbear suit and wait on him. The note was bearing 10 per cent. compound interest, and I believed I could collect it one time as well as another. I would have taken the same course had the note been my own. I considered it unnecessary to sue." Soon after the executors qualified, they called a meeting of the heirs to get an expression from them whether they desired the estate settled the first year. The heirs were all of age, and they decided they would wait, and not sell the land till prices were better. The partnership creditors of Benedict, Malone & Co. only received some 40 per cent. on their claims, and there was no surplus for any individual creditor of either of the members of the firm. The bank paid about 30 per cent. to depositors. Under these circumstances, ought the executors be charged with this note and interest?

The liability of executors and administrators has been so often discussed in this court, and so firmly settled, there is little or no ground for difference of opinion as to the measure of their responsibility. They occupy the position of trustees to those who are interested in the estate which they undertake to administer, and are liable only for the want of due care and skill, and the measure of care and skill required by them is that which prudent men exercise in the direction and management of their own affairs. Merritt v. Merritt, 62 Mo. 157; State v. Meagher, 44 Mo. 356; Clyce v. Anderson, 49 Mo. 37. In Fudge v. Durn, 51 Mo. 264, this court said, speaking of an administrator: "He is not an insurer in any sense of the word. He was a trustee acting for the benefit of others." Chancellor KENT, in Thompson v. Brown, 4 Johns. Ch. 619, says: "This court has always treated trustees acting in good faith with great tenderness." Lord HARDWICKE, in Knight v. Lord Plimouth, 3 Atk. 480, Dick. 120, said: "If there be no male fides, nothing willful in the conduct of the trustee, the court will always favor him; for, as a trust is an office necessary in the concerns between man and man, and which, if faithfully discharged, is attended with no small degree of anxiety and trouble, it is an act of kindness in any one to accept it. To add hazard or risk to that trouble, and subject a trustee to losses which he could not foresee, would be a manifest hardship, and would deter every one from accepting so necessary an office." And again, in the same case, it was said: "It is sufficient to say that we regard this as a private trust; that we look upon the administrator as the representative of the deceased; and if the deceased, if alive, and acting as a prudent man, could not have prevented the loss, his representative ought to be exonerated under the like circumstances." In Gamble v. Gibson, 59 Mo. 585, the executor had money in his hands belonging to the estate, which consisted of the national currency of the government. This money, in 1864, was greatly depreciated as...