Pulliam v. Pulliam

• Decision Date: 12 February 1881
• Court: U.S. District Court — Western District of Tennessee
• Parties: PULLIAM v. PULLIAM, EX'R, and others.

10 F. 53

PULLIAM v. PULLIAM, EX'R, and others.

United States Circuit Court, W.D. Tennessee.

February 12, 1881

[Copyrighted Material Omitted]

Wright Folkes & Wright, for complainant.

Calvin F. Vance, H. C. Moorman, Harris & Turley, and C. C. Harris for defendants.

HAMMOND D.J.

This cause comes again before me on exceptions to the report of the special master, John B. Clough, Esq., and on a petition for rehearing as to the question of the money paid to Joel L. Pulliam after the bar of the statute in favor of dead men's estates.

I find it unnecessary to determine whether a petition for rehearing can be heard at this stage of the cause. The former decree was only interlocutory, for an account, and on final hearing all questions are open. Fourniquet v. Perkins, 16 How. 82.

LOSSES ON COTTON.

The executor excepts to the master's charge of $6,730.35, losses on cotton belonging to the estate. I cannot do better than to appropriate, as the opinion of the court, the report of the master on this subject, it is so thorough and to my mind so conclusive an exposition of the facts as shown by the proof and the law as I find it after a careful examination of the authorities.

Nor do I think the fact that there are no specified allegations in the bill in regard to this cotton alters the case. It is not like a bill to surcharge and falsify a stated account, or to reopen a settlement. It is for an account of this administration de novo, and the plaintiff is in no sense bound by the settlement in the county court of which she had no notice, either actual or constructive. As a mere question of evidence, the settlement in the county court is prima facie taken in favor of the executor, but it is not binding on the plaintiff, as it might have been, perhaps, if she had been present or notified. Besides, the proof shows that this executor himself did not know the facts about this cotton, and how could the plaintiff? They were disclosed only by the searching investigation necessary in taking this account before the master. I am satisfied this is not a case for the application of the rule so much relied on, that we must be confined to the bill and issues made by it in taking the accounts. In Badger v. Badger, 2 Cliff. 137, it is distinctly stated that 'he had given public notice to all persons interested,' and Lupton v. Janney, 13 Pet. 381, was placed by the court 'wholly upon the ground of lapse of time,' and the meaning of this is apparent when compared with the report in 5 Cranch, 474. The supreme court says, in Perkins v. Hart, 11 Wheat. 237, that, even at law, a settled account is only prima facie evidence of its correctness, and concludes nothing as to items not stated in it. Hager v. Thompson, 1 Black, 80-93; Piatt v. Vattier, 9 Pet. 405; Stevens v. Page, 7 How. 819; Chappedelaine v. Dechenaux, 4 Cranch, 306; Lidderdale v. Robinson, 2 Brock. 159; Pratt v. Northam, 5 Mason, 95.

These cases show that when acquiescence, lapse of time, and the statute of limitations are relied on, and it is shown that a settlement has been made of which the parties had notice, and it is sought to be reopened by bill charging fraud, mistake, or the like, the court requires strict pleading, alleging the fraud and omissions, and explaining why they were not set up at the time of the hearing. But these rules cannot apply to a case like this, where no final settlement has been had, except one that is ex parte, the effect of which is prescribed by statute and well understood not to preclude an accounting de novo in a court of equity, if any errors have been shown, even in the state courts. It is said that the rule which binds a party to an account to which he does not except, presupposes proper notice. Carr v. Lowe, 7 Heisk. 84; Jameson v. Shelby, 2 Humph. 198, 200, which was not a bill for a general account, but only to correct one item; State v. Hyde, 4 Bax. 464.

The master says, in reference to this cotton:

'After a very careful examination of all the proof, I find and report that John N. Pulliam, in the year 1864, raised a crop of cotton on his home place, in Fayette county, and in the year 1865 he raised a crop of cotton on the Isbell place, in said county. Of this 1864 crop a portion had been hauled to Memphis and disposed of before the death of John N. Pulliam, and the balance was stored in two cabins on the Isbell place. On November 16, 1865, this cotton, amounting to 22 bales, was shipped by the executor at LaGrange, Tennessee, by rail to George W. Trotter, a merchant at Memphis, Tennessee, and was received by him on the eighteenth day of the same month, and stored in the cotton-shed of Rambaut & Lamb, where it remained until Trotter's failure, when the executor took charge of it and placed it in the hands of Owen McNutt & Co., on May 7, 1867. Said firm, on June 24, 1867, sold nine bales of this cotton at 24 cents a pound, netting $906.83; on June 28th following they sold 12 bales at 21 cents a pound, netting $992.98; and on July 17th following the remaining bale at 17 cents a pound, netting $67.97-- making in all the sum of $1,967.78, the amount with which the executor charges himself.

'I also find and report that the amount of cotton raised on the Isbell place in 1865, and belonging to the estate, was 38 bales. None of this cotton was ginned or sold at the time of John N. Pulliam's death; but it was all picked, taken to the home place, some one and three-fourths miles distant, ginned, and hauled back to the Isbell place, and stored before the executor's sale, January 19, 1866, there being no gin on the Isbell place. On March 9, 1867, this cotton was sold by Trotter at 20 cents a pound, netting $2,573.56, the return of sale being dated May 1, 1867. Said George W. Trotter failed about this time, and these 38 bales of cotton became a total loss to the estate, as reported by the executor, except the first dividend of $86.04.

'It is claimed by the complainant that the executor should have sold this cotton promptly; that he had no right to hold any of it for a period of from 15 to 18 months on a falling market; and that he is, therefore, answerable for the entire loss. The executor, on the other hand, claims that he acted in good faith, and that, therefore, he is not to be made answerable for these losses.

'I find and report that from the qualification of the executor, December 6, 1865, there was an almost constant decrease in the price of cotton down to the time when this cotton was actually sold. If further find that the executor and his attorney, Joel L. Pulliam, treated their own cotton, some 80 to 90 bales, in the same manner as the executor treated the cotton of the estate, recovering from Trotter their own at the same time that the said 22 bales belonging to the estate were recovered from him. The executor, in his settlement with the county court, claims that the 38 bales of cotton, so sold as above stated by Trotter, were shipped and appropriated by him without instructions, and no proof has been adduced to contradict this.

'The Code of Tennessee, Sec. 2243, provides that the executor shall sell the personalty at public sale, pointing out the mode. But in Johnson v. Kay, 8 Humph. 142, it was held that he might sell 'at private sale or otherwise, and in doing so, generally speaking, he will incur no liability beyond accounting for their value;' and in Hunter v. Bryant, 12 Wheat. 32, the supreme court of the United States decided that an 'executor, who takes charge of the affairs of a man in trade, must necessarily, in the winding up of his affairs, be allowed a reasonable discretion.' Smith v. Smith, 4 Johns.Ch. 282; Bradshaw v. Cruise, 4 Heisk. 260; Thompson v. Brown, 4 Johns.Ch. 619. In his life-time John N. Pulliam sold his cotton through said Trotter, as his cotton merchant, and Memphis was then a market for Fayette county cotton.

'Assuming there was no mala fides in the executor holding this cotton, and that it was held in the best of faith for an anticipated rise, just as he held his own, still I do not think he had a right, as executor, to hold it for such a purpose, though the anticipated advance would have been solely for the benefit of the estate. In King v. Talbot, 40 N.Y. (Hand,) 76, it is said by the supreme court of New York 'that the just and true rule is that the trustee is bound to employ such diligence and prudence in the care and management as, in general, prudent men of discretion and intelligence in such matters employ in their own like affairs.' This necessarily excludes all speculation, all investments for an uncertain and doubtful rise in the market, and, of course, everything that does not take into view the nature and object of the trust. Hemphill v. Lewis, 7 Bush, 214; Phillips v. Phillips, 2 Freem. 12; Taylor v. Tabrum, 7 Sim. 12; Braser v. Clark, 5 Pick. 96; 6 Mod. 181; 1 Bouv.Dict.' Devastavit,' 4, 5; Thompson v. Brown, 4 Johns.Ch. 629-630; 4 Kent, Com. 551, and note b, et seq.

'The 22 bales of the 1864 crop of cotton were shipped to Memphis November 16, 1865, and the crop of 1865, being 38 bales, was ginned and baled ready for market before the sale of the personal property, January 19, 1866, and I think, and so report, that all this cotton should have been sold promptly, at or about that time, under all the circumstances surrounding this case, and that the conduct of the executor in holding it as he did, for so long a time and on a declining market, and with so large an indebtedness against the estate drawing interest, was not such an exercise of diligence and prudence, in trust matters, as would excuse him from the loss thereby resulting. From the deposition of Thomas H. Allen I find that the price of such cotton as this, during the months of January and February, 1866, was 38...