Raney v. Riedy, 8849

• Decision Date: 15 July 1946
• Docket Number: 8849
• Citation: 71 S.D. 280,23 N.W.2d 809
• Parties: R. F. RANEY, Appellant, v. WILLIAM RIEDY, Administrator of the Estate of H. E. Hagen, deceased, Respondent.
• Court: South Dakota Supreme Court

71 SD 280, 23 NW2d 809 (1946)

R. F. RANEY,

Appellant,

v. WILLIAM RIEDY, Administrator of the Estate of H. E. Hagen, deceased,

Respondent.

South Dakota Supreme Court

Appeal from Circuit Court, Perkins County, SD

Hon. Frank Gladstone, Judge

#8849—Affirmed

Frank P. Kinney, Lemmon, SD

Attorney for Appellant.

F. J. Feeder, Lemmon, SD

Attorney for Respondent.

Opinion Filed Jul 15, 1946; Rehearing denied Aug 19, 1946

SMITH, Judge.

This is the second appeal in this action between the holder of a chattel mortgage and the administrator of the estate of the deceased mortgagor. On the first trial the court awarded the proceeds of the sale of the mortgaged property in the amount of $719.25 to the administrator on the theory that the mortgage had ceased to be valid as against creditors of the deceased mortgagor because more than six years had elapsed since the filing thereof. Cf. SDC 39.0411. The insolvency of the estate was neither pleaded nor proved. The judgment was reversed for the reason that in the absence of a showing of insolvency the administrator could not assail the chattel mortgage on the ground that it was void as against creditors. Raney v. Riedy, 70 SD 174, 16 NW2d 194. A retrial was had under an amended answer in which the insolvency of the estate was alleged. The trial court found the estate to be insolvent and again entered judgment for the administrator. The holder of the mortgage has appealed.

The plaintiff, holder of the mortgage, complains because the trial court retried the cause. The judgment of this court reads: “It is considered, ordered and adjudged, that the judgment of the Circuit Court, within and for Perkins County, appealed from herein, be and the same is hereby reversed.” In Schnepper v. Whiting, 18 SD 38, 99 NW 84, it was held that it is the duty of the court to retry an action where the mandate merely orders a reversal of a judgment without any other direction. In Butler Bros. v. Mason et al., 52 SD 349, 217 NW 510, 511, this court said, “... whenever the circumstances are such that the cause should not be retried, this court will clearly indicate its opinion to that effect.” In Janssen v. Tusha, 67 SD 597, 297 NW 119, 120, this court said, “The mandate of this court ordering a reversal of a judgment without other direction nullifies the judgment, findings of fact, and conclusions of law, and leaves the case standing as if no judgment or decree had ever been entered.” The trial court did not err in ordering a retrial.

It is contended that the trial court erred in allowing the administrator to serve an amended answer alleging the insolvency of the estate, because the record discloses that the administrator was fully informed as to the condition of the estate at the time of the first trial. A motion to amend is addressed to the sound discretion of the trial court, and its ruling will not be disturbed on appeal, except in case of a clear abuse of discretion. F. M. Slagle & Co. v. Bushnell, 70 SD 250, 16 NW2d 914, 156 ALR 1070. Such an amendment may be allowed after an action has been reversed on appeal. Janssen v. Tusha, supra; Stoefen v. Brooks, 67 SD 591, 297 NW 116. Under the mandate of this court, the trial court was duty bound to retry the cause. The amendment was sought in the interest of the creditors of the estate. In the circumstances, we think that it was not unreasonable for the trial court to conclude that justice would be served by allowing the amendment.

The record of the county court in the estate of the deceased mortgagor was received in evidence. Among other instruments it included (1) the inventory and appraisement, (2) the claims filed by creditors, (3) a special account by the administrator showing his receipts and expenditures, the names of the creditors and the amount due each creditor, and (4) an ex parte order of the county court reading as follows,

“Ordered and adjudged that the said report of the Administrator Wm. Riedy is approved and allowed; that the creditors as set forth in said report are due and owing the total amount of $3926.36 and there are not sufficient assets ... to pay other than pro rata; ... .”

The finding of insolvency of the estate rests upon the testimony of the administrator and the above described exhibits. The plaintiff offered no testimony on the issue of insolvency. We understand the plaintiff to contend that the record of the probate court is without probative force because the county court failed to adjudicate the insolvency of the estate by entering a decree, after due notice and hearing, under SDC 35.1426 reading in part as follows,

“Upon the settlement of the accounts of the executor or administrator at the end of the year as required in this title, the court must make a decree for the payment of the debts as the circumstances of the estate require. If there be not sufficient funds in the hands of the executor or administrator, the court must specify in the decree the sum to be paid to each creditor. ...”

The testimony of the administrator in connection with his special account evidenced the assets and the expenses of the estate. The special account of the administrator and the quoted ex parte order of the county court, in our opinion, were the equivalent of an approval of the listed claims of creditors by the administrator and the county judge. Such an approval of the claim of a creditor by the administrator and the judge of the county court is not conclusive, but it serves to rank the claim as one of the acknowledged debts of the estate. SDC 35.1410; In re Gooder’s Estate, 68 SD 415, 3 NW2d 478; 3 Bancroft’s Probate Practice § 852. Where the financial condition of the estate is drawn in question, we think it would be illogical and unreasonable not to receive the estate’s record of duly acknowledged claims as prima facie evidence of the estate’s indebtedness. We therefore hold that the administrator made a prima facie showing that the assets of the estate were insufficient to discharge its expenses and the approved claims of creditors.

The remaining question is whether the administrator of an insolvent estate may defend against a chattel mortgage on the ground that it is void as against the creditors of the estate under SDC 39.0411 reading as follows:

“A mortgage of personal ceases to be valid as against creditors of the mortgagor, and subsequent purchasers, or incumbrancers in good faith after the expiration of six years from the filing thereof.”

It is undisputed that more than six years had elapsed since the filing of the mortgage at the time of the death of the mortgagor on December 29, 1942.

The authorities are in conflict. They are collected in an annotation in 91 ALR 299. To the cases there considered, the case of Wasatch Livestock Loan Co. v. Nielson, 90 Utah 307, 56 P2d 613, should be added. That case exemplifies the majority view that an executor or administrator of an insolvent estate may assail, in the right of creditors, a mortgage which is void as againts creditors. The opposing view is presented in Graham v. Perry, 200 Wis. 211, 228 NW 135, 68 ALR 267.

The question will be considered against a background of settled law. Notwithstanding the six-year limitation fixed by the statute has run, the mortgage subsists as a valid lien as against the mortgagor, his heirs and legatees, and it is generally held to be binding upon the executor or administrator of his estate. Raney v. Riedy, supra; and Brown Grain Co. v. Coughlin, 53 SD 66, 220 NW 151. Although the statute declares that the mortgage ceases to be valid as against creditors of the mortgagor after the expiration of six years, and actually renders the mortgage invalid as against all of the creditors of the mortgagor after the limitation has run, cf. First National Bank v....