Schott v. Schott's ex'R.
| Decision Date | 16 May 1944 |
| Citation | 298 Ky. 55 |
| Parties | Schott et al. v. Schott's Ex'r. |
| Court | United States State Supreme Court — District of Kentucky |
2. Appeal and Error. — Decision on former appeal that certain parties could raise issue of executor's negligence in failing to sell realty within two years of testator's death was the law of the case.
3. Executors and Administrators. — Creditors who failed to file timely exceptions to items embraced in settlement of executor's account are barred from thereafter objecting to such items.
4. Executors and Administrators. — An executor has all of two years to sell real estate and during such period he is liable only for a gross abuse of judgment in respect of such matter.
5. Executors and Administrators. — Where property could not have been sold for as much as mortgage debts, executor was not liable for not selling, even though he had not been as diligent as he might have been.
6. Executors and Administrators. — Evidence showed that executor failed to exercise reasonable discretion in delaying sale of realty, to damage of estate in sum of $2,249.
7. Executors and Administrators. — Evidence showed that executor negligently handled sale of rings to damage of estate in sum of $280.
8. Executors and Administrators. — Where income tax would not have been payable if settlement had been made within two-year period, exception to allowance of such item in executor's report was properly sustained.
9. Executors and Administrators. — Executor was entitled to commissions for sales and distribution of proceeds of all property sold during two-year period and attorneys' fees incident to bringing suit seeking advice after expiration of such period up to time creditors and heirs pleaded, but from such pleading executor could not claim counsel fees, costs of administration or costs of litigation.
10. Conversion. — Where there is direction by testator to sell real estate and divide proceeds, the realty is converted into personalty at the time of death or at the time when the sale should have been made.
11. Executors and Administrators. — Where sale of real estate is directed by testator, the right to collect rents, care for the property and make necessary disbursements is incident to power to sell.
Appeal from Jefferson Circuit Court.
Chas. E. Keller, J.C. Cloyd, and W.G. Dearing for appellants.
A.M. Marret for appellee.
Before Churchill Humphrey, Judge.
Affirming in part and reversing in part.
Reference to 286 Ky. 208, 149 S.W. 2d 782, will furnish a history of the litigation and the court's conclusions on issues presented on appeal from orders dismissing appellants' answers and cross-petition. Appellants then were, as on this appeal, the residuary legatees under Dr. Schott's will, and creditors whose claims had been allowed in former partial settlement.
At the outset we are met with appellee's motion, passed to the merits, to dimiss the appeal as to the four heirs on the ground that they are residents of Germany, and not entitled to maintain an action undertaking to protect their property rights so long as the enemy status exists. The litigation was begun by appellee in 1931 in an action for settlement and advice, and the four were made defendants. We had the same sort of motion before us in Rau v. Rowe, 184 Ky. 841, 213 S.W. 226. Reference to that opinion will demonstrate that the motion is without merit. See also The Pietro Campanella, D.C., 47 F. Supp. 374; Ullmann v. Mayer, 180 Misc. 600, 41 N.Y.S. 2d 505; Verano v. De Angelis Coal Co., D.C., 44 F. Supp. 726. Fear that any proceeds which may be subject to distribution among the alien non-residents might become enemy funds may be dissipated by a compliance on the part of officers of the court, or the executor with General Orders, 5, 6 and 20 "Office of Alien Property Custodian," of February 9, 1943. The motion is denied.
When the case went back to the trial court, pleadings were filed and amended in such a way as to bring before the court, under our first opinion, the issue as to liability of the executor for damages occasioned by alleged negligence in failing to sell the real estate within two years after the death of Dr. Schott, and distribute any residue among the brothers and sisters. Their right, as the right of the creditors to raise this question, was determined in the former opinion, and is the law of the case. Appellants undertook to raise questions as to the legality of matters embraced in the first settlement. They also filed exceptions to certain items embraced in a settlement which appellee filed August 12, 1941. The commissioner in dealing with the exceptions later filed to the 1931 settlement, insofar as the legatees were concerned, concluded that there was no serious contention that they were not barred from reopening the case on this point, except as to some items in the settlement allowed, but not disbursed at the time. The creditors contend that by reason of certain expressions used in the first opinion they are not estopped from challenging numerous items embraced. We agree with the commissioner's conclusion that there is no distinction between creditors and heirs as to the effect of failure to file exceptions at the proper time.
The executor brought its accounts down to August of 1941. Appellants filed exceptions to disbursements in payment of certain taxes, to attorneys' and former commissioner's fees and court costs, and commissions paid to the representatives. The basis of the exceptions to these items was that they were unnecessarily paid; that the charges would not have arisen if settlement had been made within the two-year period, and if necessary were excessive. There were exceptions to an item of $185 representing the sale price of certain jewelry sold by the representative at that price, on the ground that it should have brought $781 had it been sold within the two-year period. Also exceptions based on a failure to account for automobiles and other personal property owned by decedent at the time of his death.
The most serious contention arises on exceptions to the report of sale of three pieces of real estate not sold within the two years as directed; these were houses on Barrett Avenue, St. Catherine Street and West Walnut Street. The charge as noted in our former opinion was that the representative by negligent failure to sell within the period became liable in damages to the extent of the difference in claimed values during the period and the sales prices at later date.
A great deal of proof was taken, chiefly upon the values of the unsold properties during the two-year period and the prices for which they were finally sold, and bearing upon the question of negligence. Little proof was taken in respect of other items embraced in the 1941 report, fees, commissions, payment of taxes, etc., on the point of excessiveness. The matter was again referred to the commissioner who apparently expended considerable time and labor in the hearings and in filing a comprehensive report, and to which we will resort in stating his facts and conclusions, particularly in regard to the sale of the three pieces of real estate. We may remark here, as bearing on the controversial question, that upon his death Dr. Schott owned nineteen parcels of real estate; nine in Louisville, the others in the State of Texas. Between the date of his death and the expiration of the two-year period executors sold the Texas property, with the exception of one lot and about which there is no complaint, most personal belongings were sold in 1928; some jewelry in 1930; the remainder including a diamond ring was sold in November 1931. All of the Louisville real estate was sold by the executor (at apparently fair prices) within the two-year period, except the three above-named lots, twelve days after the expiration of the two-year period.
The Barrett Avenue property was, at the time of Dr. Schott's death, used by him as a "sort of sanitarium," containing seventeen rooms. Describing its location and its condition and use, the commissioner found it to be a specialized piece of property, restricted to institutional purposes, not desirable as a dwelling. The property was under mortgage. It was valued by numerous real estate men testifying for contending parties, those for appellants fixing the value as of the two-year period at a mean average of $12,500; those for appellant about the same amount in 1928, but at much less, or about $6,500 in 1930, before the two-year period had expired. The property was listed in the real estate department of appellee and with the Louisville Real Estate Board at a higher figure. The commissioner called attention to the sharp conflict as to values, as between the two classes of expert witnesses. The contention of appellee is that being a specialized property the market was limited, and that due to inactivity in the real estate market its efforts to sell were fruitless. The commissioner found that the real estate market was at its peak in 1928, with a gradual recession of activities until 1929; that later from 1929 to the fall of 1930, the closing of local banks had a decidedly depressing effect until the early part of 1933, since when there had been gradual improvement. He went into detail as to the activities and non-activities of the executor in the handling of the property, and concluded that there was a lack of showing of aggressive efforts to sell on the part of the representative during the two-year period. He concluded that the property was, during the period, of the value of $10,000, and with extra effort might have brought this sum. The property sold at auction after advertisement, the sale being fairly well attended, at $5,300; the commissioner recommended that the...
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