Turner v. Alton Banking & Trust Co.

• Decision Date: 30 March 1948
• Docket Number: No. 13560.,13560.
• Citation: Turner v. Alton Banking & Trust Co., 166 F.2d 305 (8th Cir. 1948)
• Parties: TURNER v. ALTON BANKING & TRUST CO.
• Court: U.S. Court of Appeals — Eighth Circuit

166 F.2d 305 (1948)

TURNER v. ALTON BANKING & TRUST CO.

No. 13560.

Circuit Court of Appeals, Eighth Circuit.

February 27, 1948.

Rehearing Denied March 30, 1948.

Chase Morsey, of St. Louis, Mo. (Orville Richardson and Jones, Hocker, Gladney & Grand, all of St. Louis, Mo., on the brief), for appellant.

B. Sherman Landau, of St. Louis, Mo. (Louis E. Miller, of St. Louis, Mo., Cross, Streuber, Gibbons & Gwillim, of Alton, Ill., and Miller & Landau, of St. Louis, Mo., on the brief), for appellee.

Before GARDNER, THOMAS, and JOHNSEN, Circuit Judges.

JOHNSEN, Circuit Judge.

The appeal is from an order striking a counterclaim in a diversity of citizenship case. The controlling questions are (1) whether under Missouri law a defendant may assert a counterclaim against a foreign executor as an individual, where the executor sues in that State on a judgment recovered by him in his representative capacity in the State of his appointment and (2), if so, whether the alleged wrong, which was the basis of the counterclaim here and which had occurred in Illinois, gave rise to a general cause of action in appellant's favor under Illinois law. The record does not indicate the basis of the trial court's action in striking the counterclaim.

The situation can be briefly stated. Appellee, as executor of the will of appellant's father, probated in Illinois, had sued appellant in the courts of Illinois and taken judgment against her on a cognovit note¹ executed by her in favor of her father during his lifetime. Thereafter, appellee brought suit on the Illinois judgment in the federal court in Missouri, where appellant resided. Appellant filed a counterclaim² seeking damages against appellee individually for alleged maladministration in the father's estate in Illinois, affecting appellant's rights as beneficiary under the will.

The counterclaim alleged that appellee had colluded with appellant's three brothers (who were the controlling stockholders in appellee-corporation) to deprive appellant of the one-fifth interest in her father's estate given her by the will; that to accomplish this object appellee agreed to assist the brothers to obtain out of the estate 550 shares of stock (some of which was stock in appellee-corporation and the balance of which was stock in other corporations in which also the brothers were controlling stockholders) at a grossly inadequate and unfair price and without the necessity of any outlay of money by them; that, as part of the scheme agreed upon, the brothers brought suits against appellee as executor and took judgments for more than $100,000 and appellee allowed the judgments to be filed as claims against the estate; that appellee then made application to the probate court for leave to sell the stocks referred to, at public sale, without having them appraised and without advising the court of their market value; that further than this a question had at that time been raised as to the executor's title to the stock, and appellee knew that a sale held under these conditions would not bring the full value of the stocks and that appellant's brothers would likely be the only bidders; that, as a result of this situation and as anticipated by appellee and appellant's brothers, the brothers were in fact the only bidders appearing at the sale and one of them purported to buy all the stocks for $70,100; that the stocks had an actual and readily realizable value at the time of over $500,000, which fact appellee knew; that, notwithstanding this fact, appellee recommended to the probate court that the sale be confirmed; and that by reason of all of the foregoing appellee had caused appellant to be deprived of $100,000 out of the estate, which would have been the value of her one-fifth share of the proceeds of the stock, if a proper sale had been made.

On the initial question, whether under Missouri law a defendant may assert a counterclaim against a foreign executor or administrator as an individual, where the latter sues in that State on a judgment recovered by him in his representative capacity in the State of his appointment, we think the answer must be in the affirmative.

Missouri follows the general rule that a foreign executor or administrator many not sue in its courts in his representative capacity for the benefit of the estate.³ Naylor's Adm'r v. Moffatt, 29 Mo. 126; May v. Burk, 80 Mo. 675; Gregory v. McCormick, 120 Mo. 657, 25 S.W. 565, 566; Wells v. Davis, 303 Mo. 388, 261 S.W. 58; In re Thompson's Estate, 339 Mo. 410, 97 S.W.2d 93. And this disqualification, of course, is applicable also in a suit brought in the federal court in that State based on diversity of citizenship. Moore v. Mitchell, 281 U.S. 18, 24, 50 S.Ct. 175, 176, 74 L.Ed. 673, and cases there cited. But while Missouri does not recognize any right in a foreign representative to sue in that capacity in its courts for the benefit of a decedent's estate, it allows him, where he has reduced a claim of the estate to judgment in the state of his appointment, to treat the judgment, in view of the merger of the original cause of action,⁴ as his own personal effect and to sue on it in the courts of Missouri in his individual capacity. Hall v. Harrison, 21 Mo. 227, 64 Am.Dec. 225; Tittman v. Thornton, 107 Mo. 500, 17 S.W. 979, 980, 16 L.R.A. 410; Miller v. Hoover, 121 Mo.App. 568, 97 S.W. 210, 211. This legal transvestitism which is recognized in suits based on judgments is a heritage of the common law. Restatement, Conf. of Laws, § 505, Comment a, § 508, Comment b; 21 Am.Jur., Executors and Administrators, § 982, p. 927. And the court has the right in such cases to treat a styling of the plaintiff as executor or administrator as mere descriptive surplusage. Moore v. Petty, 8 Cir., 135 F. 668, 673.

Since, however, a foreign representative, in suing in another state on a judgment, has an individual status only and is simply a personal suitor,⁵ he necessarily comes into court on the same basis and conditions as any other individual suitor. This would logically mean, among other things, that he exposes himself to any counterclaim which may exist against him personally and which is capable of being asserted as such under the practice of the forum. Under Missouri law, there may be asserted as a permissive counterclaim "any matured claim against an adverse party, not arising out of the transaction or occurrence that is the subject matter of the adverse party's claim, which the party had at the time of filing his first required pleading." Mo.Sup.Ct. Rule 3.16; Mo.R.S.A. § 847.37; Carr, Missouri Civil Procedure, §§ 166, 205, 206, 207. The same right obtains in federal practice under Federal Rules of Civil Procedure, rule 13(b), 28 U.S.C.A. following section 723c. And even though in the present case the court, while treating appellee's status as that of a personal suitor, would doubtless so far respect the trust nature of appellee's obligation in relation to the judgment as to refuse to allow any recovery by appellant on her counterclaim to be directly offset against it, this would not create any problem, for the court would have the right to simply enter separate judgments on the respective claims.

On the foregoing considerations, it must be held that appellant was entitled to maintain the counterclaim which she asserted against appellee, if the wrong which was its basis gave rise to a general cause of action in her favor under Illinois law.⁶ The latter question, however, which is the second one presented by the appeal, must, we think, be answered in the negative.

Ill.Rev.St.1947, ch. 3, § 459, makes provision for a right of action against an executor or administrator for failure to pay money or deliver property after an order by the probate court therefor and a demand by the person entitled thereto. Appellant's cause of action is clearly not within this section, for it is not claimed that there has been any order by the probate court for any payment by the executor to appellant. The next section of the statute, § 460, provides: "An executor, administrator, or administrator to collect and the surety on his bond are liable to a successor executor, administrator, or administrator to collect, to a co-executor or co-administrator, or to any person aggrieved thereby for any mismanagement of the estate committed to his care and the successor executor, administrator, or administrator to collect or the co-executor or co-administrator, or the person so aggrieved, may institute and maintain an action against the executor, administrator, or administrator to collect and the surety on his bond for all money and property which have come into his possession and are withheld or may have been wasted, embezzled or misapplied and no satisfaction made therefor."

This section, however, is not intended to allow matters which have been the subject of valid orders or decrees by the probate court in the estate proceedings to be collaterally attacked in a general action outside that court against the executor or administrator personally. None of the Illinois cases to which we have been cited and none which we have found would warrant such an interpretation. On the contrary, the Supreme Court of Illinois has held that "an order and decree made by a probate court is entitled to the same protection against collateral attack as the judgments of other courts of general jurisdiction." Commissioners of Lincoln Park v. Schmidt, 395 Ill. 316, 69 N.E.2d 869, 872; Healea v. Verne, 343 Ill. 325, 175 N.E. 562, 565. This protection against collateral attack (which is necessary to enable any judicial system to succeed in its function of terminating disputes) extends under Illinois law to "each and every step taken or order made in the proceeding", where the court has proper jurisdiction of subject matter and person. Lewis v. Blumenthal, 395 Ill. 588, 71 N.E.2d 36, 39. If the court does not have proper jurisdiction in entering the order, decree or judgment, it of course is void...