United States Fidelity & Guaranty Co. v. Greer

• Decision Date: 06 November 1925
• Docket Number: Civil 2342
• Citation: 29 Ariz. 203,240 P. 343
• Court: Arizona Supreme Court
• Parties: UNITED STATES FIDELITY & GUARANTY COMPANY, a Corporation, Appellant, v. DODD L. GREER, as Administrator of the Estate of STANSELL GREER, Deceased, Appellee

240 P. 343

29 Ariz. 203

UNITED STATES FIDELITY & GUARANTY COMPANY, a Corporation, Appellant, v. DODD L. GREER, as Administrator of the Estate of STANSELL GREER, Deceased, Appellee

Civil No. 2342

Supreme Court of Arizona

November 6, 1925

APPEAL from a judgment of the Superior Court of the County of Apache. Andrew S. Gibbons, Judge. Judgment and order modified and as modified affirmed.

Messrs Armstrong, Lewis & Kramer, for Appellant.

Mr Dodd L. Greer, for Appellee.

OPINION

ROSS, J.

The appellant, United States Fidelity & Guaranty Company, on May 7, 1920, signed as surety Stansell H. Greer's bond as administrator of the estate of Stansell Greer, deceased. Greer acted as such administrator until August 10, 1923, when he was removed by the court. Thereafter the appellee, Dodd L Greer, was appointed administrator of said estate.

On February 21, 1924, Stansell H. Greer, describing himself as "outgoing administrator," filed his amended final account. Appellee filed exceptions thereto. A hearing was had on the said account and exceptions thereto on March 7th and 8th, 1924, and on April 2, 1924, the court made an order disallowing certain enumerated items which in the aggregate amounted to $5,933.55,and approved the account in other respects. At the same time judgment was ordered in favor of the estate against Stansell H. Greer in the sum of $5,933.55.

On May 17, 1924, after his attorneys had perfected an appeal from the order and judgment of April 2d, Stansell H. Greer, repudiating the right and authority of his said attorneys to appeal, filed his motion dismissing same, which motion was granted.

Thereafter, on May 23d, the appellant filed its petition in said cause setting forth, among other things, that it was surety on Stansell H. Greer's bond as administrator; that it had not been a party to any of the proceedings affecting the Greer estate; that certain portions of the judgment and order of April 2d injuriously affected its rights and interests; and moved that such portions be modified or set aside. On June 23, 1924, the court sustained a demurrer to petition and motion to modify the order and judgment of April 2d, and denied appellant's right to appear in the manner attempted or to question the judgment and order against Stansell H. Greer. From this last order this appeal is prosecuted..

We are satisfied error was committed in denying the appellant the right to question by motion the correctness of the judgment and order against the outgoing administrator. The appellant was not a party to the proceedings concerning the allowance or disallowance of the administrator's account, yet it had a vital interest in the result thereof because under the general rule any adjudication in such a proceeding, even though the surety be not a party of record, is as binding upon the surety as upon the principal. Doubtless the appellant could have intervened in such proceeding and appealed from any judgment injuriously affecting its rights, but there would be no reason for its taking such a precautionary step as long as the principal on bond diligently and in good faith did what he could to prevent an unjust judgment from being entered against him and in favor of the estate.

In this case the administrator, in apparent good faith, insisted that his final account should be allowed as presented, but, when it was not allowed and on the contary judgment was given in favor of the estate against him, he refused to prosecute it further, and dismissed the appeal started by his attorneys. If, in such exigency, the surety cannot, by motion, make itself a party of record in the case and thereby secure a footing to demand protection, it is practically without remedy, and could be greatly harmed by the collusive or fraudulent co-operation of an administrator and those representing the estate. We do not mean to intimate that there is anything in this record tending to show collusion or fraud, but to set out what might occur if the law should be declared to be against allowing a surety, after judgment from ever, for any reason, questioning it by motion filed in the case.

The course pursued by appellant is not without precedent in other jurisdictions, and, as we look at it, is founded upon reason and justice. In California it has long been the practice to allow one whose rights and interests have been injuriously affected by a judgment or an appealable order, given or made in an action or proceeding in which he is not a party, to make himself a party by moving to set aside such judgment or order. In re McDermott's Estate, 127 Cal. 450, 59 P. 783; In re Elliott et al., 144 Cal. 50l, 103 A. St. Rep. 102, 77 P. 1109; Luckenbach v. Laer, 190 Cal. 395, 212 P. 918. And if such motion be denied, he may on appeal therefrom have the proceeding of which he complains reviewed for error. Id.

The disallowance of certain credits claimed by the administrator in his final account is assigned as error. We do not think, from the presentation of its case here, that the appellant contends the administrator's administration of the affairs of the estate was in all respects regular, legal or in accordance with his trust; but it advances, by way of excuse for the manner in which he conducted the affairs of the estate, a set of facts which claims ought to estop the estate, or principal beneficiary thereof, from requiring the administrator to make good any losses suffered by reason of his administration. It is necessary for us to state the facts so claimed by appellant.

Stansel H. Greer was the eldest of seven childred of the deceased, and had just attained majority when appointed administrator. He was without business experience. His attorney was also the attorney for his mother, Ella Greer, wife of the deceased, and the attorney and local agent of the appellant. The estate was made up of community property. The appraisers in December, 1920, appraised the estate at $32,061. The approved claims against the estate came to $28,819. It was realized that the assets, owning to the hard times that had come upon the people, would not be sufficient to take care of all the creditors if the estate were put through liquidation at once. Ella Greer, as the beneficiary in life insurance policies of her husband had received from insurance companies the sum of $12,000 or $13,000. Following her attorney's advice, she took assignments of claims against the estate to the amount of $10,000, paying face value therefor out of her insurance money. There were also assigned to her as trustee three other claims amounting to approximately $17,580, so that Ella Greer's claim against the estate in her own right and as trustee, amounted to $27,580. The attorney for the trustee accounts was also attorney for Ella Greer and the administrator. He drew up a written agreement by and between the administrator and Ella Greer, under which it was agreed that, upon the allowance by the court of her account and the three thrust accounts the administrator should apply for an order of sale of the property of the estate and that at the sale she would bid in said property for the total amount of claims; that she would immediately, by a deed of conveyance, transfer all said property, including the homestead, to a turstee to secure the payment of the trust accounts, with eight per cent interest. The trust accounts, which the agreement undertook to prefer over Ella Greer's cash investment of $10,000 and the homestead, belonged $12,120.50 to Stockmen's State Bank, of which the attorney for Ella Greer and the administrator was cashier and manager, $3,172.33 to First National Bank, of Belen, New Mexico, and $2,770.17 to M. Dannebaum, represented by the same attorney.

Of course this agreement was a mere nudum pactum, unenforceable, not only because of lack of consideration, but because of its palpable unfairness to Ella Greer; and we believe it was so treated by the lower court.

It is this arrangement--all admittedly the work of the attorney for the administrator, Ella Greer, the owners of trust accounts, and the local agent and attorney for appellant--that is now urged as a reason why the administrator should not be held to account to the estate in the respects hereinafter stated. This should be so, the appellant asserts, because Ella Greer, being the only creditor and having knowledge of what the administrator was doing, and consenting thereto, had waived any irregularity, misconduct, or neglect of such administrator, and any loss suffered by the estate by reason thereof.

It may be that the sole creditor of an insolvent estate, with no homestead or family exemptions, could so act and behave towards its management and disposition by the administrator as to be regarded a party thereto and bound thereby, but such is not this case. There were three other creditors besides Ella Greer, and their claims represented nearly two-thirds of the debts owed by the estate. She acted only as trustee for such creditors in the presentation of their claims to the administrator and the court for allowance.

The agreement is also referred to by appellant as the family arrangement for a settlement of the estate, and appellant reminds us that this court, in Faulkner v. Faulkner, 23 Ariz. 313, 203 P. 560, spoke of such arrangements as "favorites of the law." It was no family arrangement. There was no controversy among the members of the family to be settled. It was apparent that the agreement was a mere cloak to prefer other creditors over the widow and the minor children of the deceased. We cannot therefore see how the agreement gave the widow a status that could be made the basis of a claim of waiver or estoppel, or that it could in any manner relieve the administrator from the faithful performance of the obligations of his trust.

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