Sheehy v. O'DONOGHUE

• Decision Date: 06 December 1937
• Docket Number: No. 6925.,6925.
• Citation: 94 F.2d 252,68 App. DC 127
• Parties: SHEEHY v. O'DONOGHUE.
• Court: U.S. Court of Appeals — District of Columbia Circuit

68 App. DC 127, 94 F.2d 252 (1937)

SHEEHY v. O'DONOGHUE.

No. 6925.

United States Court of Appeals for the District of Columbia.

Decided December 6, 1937.

Rehearing Denied January 5, 1938.

Vincent L. Toomey, of Washington, D. C., for appellant.

Leon Tobriner, Selig C. Brez, Frederick G. Umhau, and Walter N. Tobriner, all of Washington, D. C., for appellee.

Before ROBB, GRONER and MILLER, Associate Justices, and WHEAT, District Judge.

MILLER, Associate Justice.

This is an appeal from an order of the District Court, sitting as a probate court, overruling the exceptions of appellant, as administratrix, d. b. n. c. t. a., of the estate of Francis P. Sheehy, deceased, to the final account of appellee as administratrix, d. b. n. c. t. a., of the estate of Catherine T. Sheehy, deceased. The cause was heard on the exceptions to the final account and the answer thereto, and upon the record in the cause; appellant admitted well pleaded allegations of the answer so far as not inconsistent with the record.

Catherine T. Sheehy, a resident of the District and unmarried, died on April 4, 1935, leaving a last will and testament dated October 22, 1930, which was duly admitted to probate. Under item 6 of her will the testatrix devised to her brother, Frank P. Sheehy, realty encumbered by a deed of trust to secure the payment of outstanding promissory notes. The issue here involved is whether the devisee is entitled to have the notes paid and the encumbrance satisfied out of testatrix's estate, or whether, as held by the court below, the devise was subject to the encumbrance; in other words, whether the rule of exoneration applies.

Item 6 of the will reads as follows: "I further give, devise and bequeath unto my said brother, Frank P. Sheehy, in fee simple, the following described land and premises, situate in the District of Columbia, and being lots lettered `U' and `V' in W. B. Todd's subdivision of lots in Square numbered six hundred and thirty-eight (638), in the City of Washington, District of Columbia, as per plat recorded in B page 70 in the office of the Surveyor for said District, the same being improved by premises numbered 453-455 Delaware Avenue, Southwest. If I should during my lifetime sell and convey the real estate in this item devised, I then in lieu of the devise thereof to my said brother, give and bequeath unto him, the said Frank P. Sheehy, absolutely, the sum of Fifteen Hundred Dollars ($1500.00). The record title to said real estate is in my name, but the said Frank P. Sheehy is entitled to an undivided one-half interest therein."

Some years prior to the testatrix's death the property in question was purchased by her and her brother Francis, also known as Frank P. Sheehy, as a joint venture, each being entitled to an undivided half interest therein; each contributed one-half of the purchase-money and of all other expenses incident to the property, and benefited and shared equally in the rents, profits, and other funds derived therefrom. The title to the property was, at the suggestion of the brother, placed in the name of Catherine T. Sheehy. On February 4, 1927, a deed of trust of the property was executed to secure the payment of promissory notes of Catherine T. Sheehy in the sum of $4,250. Two payments were made to curtail these notes, one on July 24, 1930, in the amount of $1,250, and the other on February 5, 1935, in the amount of $250. Thus at the time of the making of the will (October 22, 1930) there was a balance due of $3,000; and at the date of her death (April 4, 1935) a balance of $2,750. The obligation on the notes was at all times that of Catherine T. Sheehy and Frank P. Sheehy in equal proportions, and each contributed equally to the curtailment thereof. At the time of the making of the will, therefore, each owned a one-half interest in the property, and each was liable in the amount of $1,500 on account of the notes and the deed of trust.

On oral argument in this court it was conceded by the appellant that at most the rule of exoneration should apply to one-half, only, of the amount of the encumbrance. The question for us to decide, therefore, is whether the administratrix of the estate of Catherine T. Sheehy should satisfy that half.

It is well settled that the common-law rule of exoneration is in effect in the District of Columbia. O'Meara v. Shreve, 58 App.D.C. 220, 26 F.2d 998; Tracy v. Atwell, 58 App.D.C. 397, 32 F.2d 392, 393; Union Trust Co. v. Brendlinger, 59 App.D. C. 294, 40 F.2d 806. It is also well settled that the intent of the testatrix determines whether the rule applies in the particular case and, thus, whether the devisee takes free and clear of the encumbrance or subject to it. O'Meara v. Shreve, supra; Union Trust Co. v. Brendlinger, supra. See, also, Kellam's Ex'rs v. Jacob, 152 Va. 725, 148 S.E. 835.

The will of the testatrix, here, reveals her intent that the devisee, Frank P. Sheehy, should take only her equity in the property devised. This is shown by the language of Item 6, as follows: "If I should during my lifetime sell and convey the real estate in this item devised, I then in lieu of the devise thereof to my said brother, give and bequeath unto him, the said Frank P. Sheehy, absolutely, the sum of Fifteen Hundred Dollars ($1500.00). The record title to said real estate is in my name, but the said Frank P. Sheehy is entitled to an undivided one-half interest therein."

It is clear that she regarded her interest in the property which was the subject of the devise as having a value of approximately $1,500, and that this is what she intended the devisee to get. It is impossible to reconcile this fact with an intention upon her part that the encumbrance should be removed at the expense of the rest of the estate. A one-half interest in the property clear of the encumbrance would have had a value in her mind of at least $2,125. She had secured a loan of $4,250 on the property, and we may safely assume that her idea of its value was at least that much. If she had intended to give to the devisee an interest clear of the encumbrance, she would have provided for a lieu value of at least $2,125. If we assume, as we may properly do, that the loan of $4,250 represented only part of the value, then the total would be even higher. Indeed, assuming that the property produced a loan of 70 per cent. of its value (which we judicially know to be a high percentage)¹ it would be worth approximately $6,000; if it produced a loan of 50 per cent. of its value it would be worth $8,500. Making those assumptions, her interest in the property, clear of the encumbrance, would have been $3,000 or $4,250, respectively. If the will had contained no provision for a money bequest, in lieu of the devise, or if it had spoken in terms of a bequest amounting to $4,250 or $3,000, or even $2,125, appellant's contention would be more persuasive.

In each of the three cases previously decided by this court, and relied upon by the appellant, the rule of exoneration was so applied as to transfer the property devised, free of encumbrance. In each of them it appeared that the obligation was the personal debt of the testatrix, recognized as such by her and intended to be paid in the same manner as her other debts. Moreover, in O'Meara v. Shreve we pointed out that the disposition of the testatrix toward ...