Shelby v. White

• Decision Date: 01 December 1930
• Docket Number: 28931
• Citation: 158 Miss. 880,131 So. 343
• Court: Mississippi Supreme Court
• Parties: SHELBY et al. v. WHITE

131 So. 343

158 Miss. 880

SHELBY et al. v. WHITE

No. 28931

Supreme Court of Mississippi

December 1, 1930

Division B

1 TRUSTS. Nonresident testamentary trustee held necessary party in suit by trustee's creditor to establish claim against trust property.

A testamentary trustee in a will under the provisions of which he is undertaking to operate a plantation is a necessary party to a suit to establish liability in favor of a creditor of such trustee against the trust property, although such trustee is a nonresident; and such trustee must be brought into court, unless he voluntarily appears, by publication or other process, before final judgment can be established.

2 TRUSTS. Debt incurred by trustee under authority of trust instrument is primary liability of trustee with right of reimbursement against trust estate; trustee's creditor seeking to subject trust property to payment of debts must establish liability of trustee and right to subrogation.

In such case the primary debt or liability is that of the trustee with the right of reimbursement where the trustee is authorized by the trust instrument to make the debt. The creditor undertaking to subject the trust property to debt must establish liability against the trustee and also establish his right to subrogation.

3. TRIAL. Agreed statement of facts not signed by trustee, though signed by beneficiary, will not warrant recovery against trust estate by trustee's creditor, where trustee is not made party.

An agreed statement of facts without being signed by the trustee cannot be considered in the absence of the trustee, or process to bring him into court, and no judgment upon such agreed statement of facts not so signed can be upheld.

4. PROCESS. Statutory method resorted to in lieu of personal summons, to bring nonresident before court, must be strictly complied with (Hemingway's Code 1927, section 3130).

Where a person is a nonresident of the state, and the statutory method of bringing such person into court in lieu of personal summons is resorted to, it must be strictly complied with.

5. EQUITY.

Bill and affidavits merely stating testamentary trustee's business office and residence held insufficient to authorize publication of summons under statute requiring designation of post office address (Hemingway's Code 1927, section 3130).

HON. R. E. JACKSON, Chancellor.

APPEAL from chancery court of Bolivar county, Second district, HON. R. E. JACKSON, Chancellor.

Action by D. D. White against Mrs. Anna L. Shelby and others. Decree for plaintiff, and defendants appeal. Reversed and remanded.

Judgment reversed, and cause remanded.

Sillers & Sillers, of Rosedale, for appellants.

Debts incurred by an administrator in cultivating crops are privileged claims therein, and limited thereon to the crops.

Emanuel v. Norcum, 7 Howard 150; Byrd v. Wells, 40 Miss. 711; Hogan v. Barksdale, 44 Miss. 186; Farley v. Howe, 45 Miss. 96; Hardie v. Cheatem, 52 Miss. 41; Ward v. Harrington, 29 Miss. 238.

While trustees have a lien on the trust fund for all costs and expenses legitimately incurred by them in its ministration, this privilege does not extend to agents employed by them, but such agents must look alone to the trustees for reimbursement.

Clopton v. Gholson, 53 Miss. 466; Fearn v. Mayers, 53 Miss. 458.

Generally the trustee must be looked to. He stands between the creditor and the estate. He represents the estate and deals for it. He is entitled to be reimbursed out of the trust estate for all disbursements rightly made by him on account of it, and creditors must get payment from him; but when they cannot do that, and it is right for the trusts estate to pay the demand, and it owes the trustee, or would owe him if he paid or should pay the demand, the rule founded in policy which denies the creditor access to the trust estate, yields to the higher consideration of justice and equity.

Norton v. Phelps, 54 Miss. 467.

Smith & Millsaps, of Cleveland, for appellee.

A testator may authorize or direct his executor to continue a trade, or to employ his assets in trade or business; and such authority or direction, if strictly pursued, will protect the executor from responsibility to those claiming under the will, in case of loss happening without his fault or negligence, and also entitle him to indemnity out of the estate for any liability lawfully incurred within the scope of the power.

Burwell v. Cawood, 43 U.S. (2 How.) 560, 11 L.Ed. 378; Laible v. Ferry, 32 N.J.Eq. 791; Scott v. Izon, 34 Beav. 434; Lucas v. Williams, 3 Giff. 150.

Where a testator by his will directs that his business may be carried on, and that his personal estate shall be used as capital with which to do so, the persons who after his death become creditors of the business, in addition to the personal responsibility of the individuals who gave the order for the goods, or otherwise contracted the debt, are entitled in equity to claim against the estate of the testator to the extent that he authorized it to be used in the business.

Owen v. Delamere, L. R. 15, Eq. 134; Jones v. Bates, 4 L. R. A. 493; Frost v. Armstrong, 202 Pa. St. 348, 90 A. S. R. 653.

Persons dealing with a trustee must look to him for payment of their demands, and ordinarily, the creditor has no right to resort to the trust estate to enforce his demand for advances made or services rendered for the benefit of the trust estate. But while this is the rule, there are exceptions to it, and where expenditures have been made for the benefit of the trust estate, and it has not paid for them directly, or indirectly, and the estate is either indebted to the trustee, or would have been if the trustee had paid or would be if he should pay the demand, and the trustee is insolvent or non-resident, so that the creditor cannot recover his demand from him or will be compelled to follow him to a foreign jurisdiction, the trust estate may be reached directly by a proceeding in chancery.

Norton v. Phelps, 54 Miss. 467.

Where the trustees have no interest to be affected by the litigation and no relief is sought or could be granted against them, they are not necessary parties.

39 Cyc. page 453; Norton v. Phelps, 54 Miss. 467.

The trustee was not a necessary party to this action and it is therefore, immaterial whether or not the agreed statement of facts was signed by the said trustee.

OPINION

Ethridge, P. J.

D. D. White, a physician, filed petition in chancery court to impress upon the estate of D. P. Shelby, deceased, a claim for medical services rendered to tenants upon the plantation owned by D. P. Shelby in his lifetime, under the theory that the testamentary trustee and executor of the estate had contracted for his services as physician for the use of said plantation, and that the trustee in the said will of the said Shelby was a nonresident of the state. It was alleged in the bill that Shelby appointed the Bank of Commerce & Trust Company, Memphis, Tennessee, testamentary trustee, with directions to operate the farming interests of the said decedent and to turn over the profits of the said operation to the appellees, Mrs. Anna L. Shelby and the children of Anna L. and D. P. Shelby; that the testamentary trustee, through a manager employed by it to superintend the plantation involved and embraced in the will, had contracted the obligation; that the trustee had refused to pay it; and that the petitioner was entitled to impress his claim upon the assets and property of the estate because of the nonresidence of the testamentary trustee. It was further alleged that the excuse given by the testamentary trustee for the nonpayment of the claim is that it did not have sufficient money on hand belonging to the said estate with which to pay the said account. It was further alleged that the testamentary trustee now has in its hands certain bonds and other personal property belonging to the estate. It was then charged: "Petitioner further charges that the said personal property in the hands of the said testamentary trustee is liable for the debts contracted by the said trustee in the operation of the farming interests as aforesaid of the estate of D. P. Shelby, deceased. Petitioner would further show unto the court that there is at present belonging to the said estate of D. P. Shelby, deceased, large tracts of land in Bolivar county, Second Judicial district of said Bolivar county, Mississippi, and that the said property is of great value and that the said estate is amply able to pay its debts." The petition then prayed that the Bank of Commerce & Trust Company, testamentary trustee, and executor of the will of D. P. Shelby, deceased, Mrs. Anna L. Shelby, May Shelby, Elenor Shelby, and Zula Shelby Brown, be made parties defendants to this petition, that proper process of this court issue to them commanding them to appear and plead, answer or demur to this petition, at the March rules, 1930, answer under oath being hereby specially waived, and that the court will enter an order directing and commanding the said testamentary trustee, Bank of Commerce & Trust Company, to sell a sufficient number of the bonds or other personal property belonging to the said estate of D. P. Shelby, deceased, to pay the account of petitioner, and that the account be declared a lien on the property of the said estate until paid, and prays for other relief general and special.

Attached to the petition was an itemized account showing visits to and prescriptions for various tenants upon the plantation, with an affidavit that the account is correctly stated, and it is not usurious, and has not been paid. The affidavit attached to the bill also set forth that the Bank of Commerce & Trust Company and Zula Shelby Brown, two of the defendants in the...