State ex rel. and to Use of Gnekow v. U.S. Fidelity & Guar. Co.

• Decision Date: 16 April 1942
• Docket Number: 37744
• Citation: 163 S.W.2d 86,349 Mo. 528
• Parties: State of Missouri at the relation and to the use of Cora M. Gnekow, Relator Appellant-Relator Respondent, v. United States Fidelity & Guaranty Company, a Corporation, Defendant Respondent-Defendant Appellant
• Court: Missouri Supreme Court

163 S.W.2d 86

349 Mo. 528

State of Missouri at the relation and to the use of Cora M. Gnekow, Relator Appellant-Relator Respondent, v. United States Fidelity & Guaranty Company, a Corporation, Defendant Respondent-Defendant Appellant

No. 37744

Supreme Court of Missouri

April 16, 1942

Rehearing Denied June 3, 1942.

Appeal from Circuit Court of City of St. Louis; Hon. William K Koerner, Judge.

Affirmed in part, and reversed in part.

J M. Massengill and John P. Griffin for relator.

(1) The court found that the defendant was not justified in refusing to pay the claim, and, therefore, was guilty of vexatious refusal to pay same, and, therefore, should have assessed damages and a reasonable attorney's fee, and the court erred in failing to assess damages and fixing an adequate attorney's fee. State ex rel. for the Use of the City of Maplewood v. Southern Surety Co., 323 Mo. 150, 19 S.W.2d 691; Block v. U. S. F. & G. Co., 290 S.W. 440; Exchange Bank of Novinger v. Turner, 14 S.W.2d 425; State ex rel. Continental Life Ins. Co. v. Allen, 303 Mo. 608, 262 S.W. 43; Weston v. American Ins. Co., 119 Mo.App. 282, 177 S.W. 792; Streeter v. Washington Fidelity Ins. Co., 229 Mo.App. 33, 68 S.W.2d 889; National Battery Co. v. Standard Accident Ins. Co., 226 Mo.App. 351, 41 S.W.2d 599. (2) This court has the power to consider the reasonableness of the attorney's fee and, if it finds that the fee is inadequate, it will fix a reasonable fee. Robertson, Supt. of Insurance, etc., v. Mutual Life Underwriters, 145 S.W.2d 134. (3) The defendant's principal, George W. Kirk, by virtue of his office as administrator of the estate of E. L. Griffin, collected the money in controversy under a judgment which was not final, and therefore upon reversal he was obligated to pay back this money, and upon refusal the defendant, as surety, was liable therefor. Nye v. U.S. Fidelity & Guaranty Co., 225 Mo.App. 593, 37 S.W.2d 988; State ex rel. Whitlow v. American Surety Co., 191 Mo.App. 191, 177 S.W. 1074; Manley v. Ryan, 126 S.W.2d 909. (4) The defendant's principal, Kirk, collected the money in controversy from the clerk of the circuit court before he had a final judgment in his favor, and upon reversal of that judgment and entry of judgment in favor of the relator, Kirk should have paid back the money. Lanyon v. Chesney, 209 Mo. 1, 106 S.W. 522, 524; Colbern v. Yantis, 176 Mo. 670, 75 S.W. 653, 656; Arkansas Valley Trust Co. v. Corbin, 192 Mo.App. 156, 179 S.W. 484, 485; Warren v. Order of Ry. Conductors, 199 Mo.App. 200, 201 S.W. 368.

Carter & Small, James E. Garstang, Blanton & Montgomery and Harry C. Blanton for United States Fidelity & Guaranty Company.

(1) An administrator is liable on his bond for failure to sue and recover assets of an estate. Sec. 94, R. S. 1929; Toler v. Judd, 262 Mo. 344, 171 S.W. 339; In re Carlin's Estate, 47 S.W.2d 213, 226 Mo.App. 622; Hellmann v. Wellenkamp, 71 Mo. 407. (2) Kirk, as administrator, was entitled to receive the proceeds of the insurance policy and to treat the same as assets of the estate where the losing party, relator Gnekow, failed to file a supersedeas bond on appeal. Sec. 1022, R. S. 1929; U.S. Bank v. Bank of Washington, 31 U.S. 8; State ex rel. v. Goldstein, 209 Mo.App. 102, 237 S.W. 814; Frasier's Executor v. Page, 82 Ky. 73; Lowenstein v. Reikes, 258 N.Y. 444, 180 N.E. 113; Marlee v. Bittar, 257 N.Y. 240, 177 N.E. 434; Nye v. U. S. F. & G. Co., 37 S.W.2d 988; Lanyon v. Chesney, 106 S.W. 522, 209 Mo. 1; State ex rel. v. American Surety Co., 191 Mo.App. 191, 177 S.W. 1074; Gott v. Powell, 41 Mo. 416; Colbern v. Yantis, 176 Mo. 670, 75 S.W. 653. (3) A surety on an administrator's bond is not liable where funds are paid out under proper order of probate court in payment of administrative expenses and need not be presented, etc., as regular demands. In re Carlin's Estate, 47 S.W.2d 213, 226 Mo.App. 622; Austin v. Ennis, 187 S.W. 599; Colbern v. Yantis, 176 Mo. 670, 75 S.W. 653. (4) Order allowing attorneys' fees, including expenses of litigation to protect estate, or other expense of administration may be entered without notice to creditors or claimants and becomes final if unappealed from within ten days after term of the court. Secs. 221, 284, subsec. 10, R. S. 1929; In re Carlin's Estate, 47 S.W.2d 213; State ex rel. Zeppenfeld v. Calhoun, 279 S.W. 188, 219 Mo.App. 482; State ex rel. O'Brien v. Walsh, 67 Mo.App. 348. (5) Where trust funds are handled by administrator under order of the probate court, order of circuit court directing trustee to take over such funds is ineffective until the pobate court handling the estate makes such order, and, in absence of such order, the surety on the bond of the administrator is not liable for failure to turn over such assets. Sec. 189, R. S. 1929; State ex rel. v. Schulte, 90 S.W.2d 1078; Wahl v. Murphy, 99 S.W.2d 32; 24 C. J., p. 332, sec. 954, note 59 f. (6) Even though judgment of trial court was later reversed, such action alone would not render surety on the administrator's bond liable until there had been a judgment of restitution or an order of the probate court or other court directing the payment, and a failure or refusal to make such restitution or obey such order, as a judgment without supersedeas was final until set aside, which reversal might or might not give rise to a new cause of action, to be enforced either by summary motion or plenary suit. U.S. Bank v. Bank of Washington, 31 U.S. 8; State ex rel. v. Modrell, 15 Mo. 421; State ex rel. v. Stafford, 73 Mo. 658; Wolff v. Schaeffer, 4 Mo.App. 367; U.S. v. Giger, 26 F.Supp. 624; Colbern v. Yantis, 176 Mo. 670, 75 S.W. 653, 657; Warren v. Order of Ry. Conductors, 201 S.W. 368, 199 Mo.App. 200; State ex rel. v. Bruce, 70 S.W.2d 854; Sec. 189, R. S. 1929. (7) As there is no order of restitution or judgment of court which the administrator has disobeyed, there is no breach of the bond. Perhaps there would have been no order of restitution, where funds received by Kirk under unsuperseded judgment were expended in discharging his duty as administrator of protecting the estate (he would have been liable under his bond had he not done so), as such an order is of an equitable nature, and within the discretion of the court. Greenwood County v. Duke Power Co., 107 F.2d 484, 488; Atlantic Coast Line Co. v. State of Florida, 295 U.S. 301; Hellmann v. Wellenkamp, 71 Mo. 407, 409. (8) The liability of a surety is not greater than that of the principal. State v. Coste, 36 Mo. 437; Stix Co. v. Ottawa Co., 273 Mo. 376, 202 S.W. 577. (9) Where property was adjudged not to be an asset of the estate, the surety is not liable for failure of the administrator to account therefor. Manley v. Ryan, 126 S.W.2d 909; Emmons v. Gordon, 41 S.W. 998, 140 Mo. 490; Orrick v. Vahey, 49 Mo. 428; 24 C. J., p. 1063, par. 2547. (10) There is no basis in this record for an assessment of penalty for vexatious refusal to pay. (a) Such issue should not be submitted in the absence of evidence showing lack of good faith or that proof against the company was so strong it could not reasonably expect a finding in its favor. Sec. 5929, R. S. 1929; State ex rel. v. Allen, 262 S.W. 43, 303 Mo. 608; Kusnetzky v. Insurance Co., 281 S.W. 47, 313 Mo. 143. (b) Vexatious obstruction must occur or begin before the filing of the suit and facts developed at the trial or adverse outcome of the trial are immaterial in determining liability for penalty. Delametter v. Home Insurance Co., 233 Mo.App. 645, 126 S.W.2d 262; Butler v. Assur. Soc., 93 S.W.2d 1019, 233 Mo.App. 94; State ex rel. Gott v. Fidelity & Deposit Co., 298 S.W. 83, 91, 317 Mo. 1078; Trantham v. Home Ins. Co., 137 S.W.2d 690; Patterson v. Ins. Co., 174 Mo.App. 37, 44, 160 S.W. 59, 62. (c) A surety may contest undecided questions of law without being penalized. Sec. 5929, R. S. 1929; Kusnetzky v. Sec. Ins. Co., 313 Mo. 143, 281 S.W. 47, 52; State ex rel. v. Allen, 295 Mo. 307, 243 S.W. 839, 843; State ex rel. Gott v. Fidelity & Deposit Co., 298 S.W. 83, 91, 317 Mo. 1078; Rieger v. Mutual Life Ins. Co., 110 S.W.2d 878; St. Clair v. Wash. Fid. Natl. Ins. Co., 89 S.W.2d 85; White v. Mo. Ins. Co., 103 S.W.2d 514; Butler v. Equitable Assur. Soc., 93 S.W.2d 1019, 233 Mo.App. 94; Consolidated School Dist. v. N. Y. Cas. Co., 104 S.W.2d 319, 340 Mo. 1070. (d) The surety company is not vexatious where it admits owing some of claim, but contests portion of the demand. Glover v. Insurance Company, 186 S.W. 583, 193 Mo.App. 489. (e) The statute does not require the assessment of both attorneys' fees and penalty even though there be a finding of vexatious refusal. Harmon v. Insurance Company, 170 Mo.App. 309, 156 S.W. 87; Lilly v. Wash. Ins. Co., 44 S.W.2d 656; Terry v. Natl. Insurance Co., 215 Mo.App. 350, 353, 253 S.W. 16. (f) If any penalty be fixed by the trial court or jury, the amount so fixed, like any other jury matter, is binding upon the appellate court, and not subject to an increase by that court. (11) This court is authorized to modify the judgment of the circuit court and order entered the correct judgment. Sec. 1063, R. S. 1929.

Hyde, C. Bradley and Dalton, CC., concur.

OPINION

HYDE

This action is on the administrator's bond of George W. Kirk, as administrator of the estate of E. L. Griffin, deceased, against defendant surety only. Judgment was rendered for the full penalty of the bond ($ 6000.00) to be satisfied upon payment of $ 1213.45 and costs, consisting of items, as follows: Principal, $ 935.96; interest, $ 127.49; attorneys' fees, $ 150.00. Both parties appealed; relator on inadequacy of attorneys' fees and failure to allow additional damages for vexatious refusal to pay; and defendant upon any judgment in excess of $ 697.08, which was tendered.

The appeals went to the St. Louis Court of Appeals,...