Walsh v. Walsh

• Decision Date: 19 December 1935
• Docket Number: 2 Div. 65
• Citation: 231 Ala. 305,164 So. 822
• Parties: WALSH v. WALSH et al.
• Court: Alabama Supreme Court

164 So. 822

231 Ala. 305

WALSH v. WALSH et al.

2 Div. 65

Supreme Court of Alabama

December 19, 1935

Appeal from Circuit Court, Hale County; John Miller, Judge.

In the matter of the administration of the estate of Pat Kelly deceased, removed from the probate court to the circuit court in equity. From a decree on final settlement, E.P. Walsh, as administrator, appeals, and Mary Walsh and others, as heirs cross-assign errors.

Reversed and remanded.

E.F Hildreth, of Eutaw, for appellant.

Mallory & Mallory and Craig & Brown, all of Selma, and Joseph H. James and S.W.H. Williams, both of Greensboro, for appellees.

FOSTER Justice.

This is an appeal, with cross-assignments of error, from a decree of the circuit court in equity on the final settlement of appellant as administrator. On March 27, 1923, letters were issued. On January 10, 1928, a partial settlement was made in the probate court having jurisdiction. It was then found and decreed that he had received in cash $276,629.30 for said estate, and that he had paid costs and expenses and debts, and made distribution to the heirs in various amounts, leaving in his hands $6,832.80. His account shows that he deducted commission of 5 per cent., $13,831.46, and was allowed said amount on that settlement.

On the final settlement the court charged the administrator with interest on the amount of the commission from the day the administrator actually paid himself in anticipation of settlement to the date of such settlement, in the amount of $4,090.44. No complaint is made of this by either party. But the court also charged the administrator with interest on that sum ($4,090.44) from the date of the partial settlement to the final settlement, $1,942.30. Both parties complain of this.

Appellant contends that no interest is chargeable after the date of the annual settlement, and appellees contend that, instead of doing as the court decreed, the interest should have been calculated from the date when the administrator improperly paid himself to the date of the final settlement, disregarding the annual settlement as a factor in that calculation.

There are not many cases in Alabama material to that question. In the case of Kenan v. Graham, 135 Ala. 585, 33 So. 699, the court held that an executor is not entitled to anticipate his fees and use the money. If he does so, he is chargeable with interest from the time the money was thus appropriated to the date of settlement. The court was dealing with a final settlement when there had been no annual settlement as required by section 5899, Code, and cited the case of Noble v. Jackson, 124 Ala. 311, 312, 320, 26 So. 955, 958. Referring to that authority, we find a case where the heirs and executors agreed for the payment to be anticipated. The court held that no interest was chargeable under such an agreement, but observed that it was doubtless true that, in the absence of such an agreement, "the commissions were not payable until ascertained by the court." It is not suggested whether such ascertainment must be had at the time of the final settlement.

Section 5923, Code, allows the probate court to fix the commissions not exceeding 2 1/2 per centum on receipts, and a like sum on disbursements. It is not stipulated that such allowance shall be made only on final settlement, nor when it may be done. It is not payable until it is allowed. But why is it not payable when it is allowed by authority of law? Under section 5899, Code, the duty to make annual settlements is required. True, the items on the account and the allowances so approved are not made conclusive by such settlement, but they are prima facie so, and the burden is on one who objects to an item so allowed of showing that it is an improper item either as a fact or in law when it is considered on final settlement. Dickie v. Dickie, 80 Ala. 57; Tayloe v. Bush, 75 Ala. 432; Holman v. Sims, 39 Ala. 709; Jones' Heirs v. Jones' Adm'r, 42 Ala. 218; section 5918, Code; Black v. Morgan, 227 Ala. 327, 149 So. 845.

Such rulings on partial settlement are subject to review on appeal from final settlement, though they will not support review in any other manner. Section 6115, subd. 5; Black v. Morgan, supra; Cunningham v. Cunningham, 215 Ala. 484, 111 So. 208.

Although the theory on which an administrator is chargeable with interest on commissions which he pays to himself is that it is not so payable until it is allowed, such allowance which has the prima facie effect of correctness is an allowance to the extent that the administrator does not commit a devastavit by acting on it unless it is set aside on final settlement or on appeal from final settlement. But if its allowance is not set aside, its effect as such is effective from the date of the decree of the court on annual settlement to that effect. If it is set aside, it is not a justification for the payment. It was not contended on final settlement nor on this appeal that a charge of interest to the date of the annual settlement was not proper.

The theory of the trial court was that on the annual settlement the administrator should have been charged with interest, which was calculated to be $4,090.44, but was not so charged, and therefore he was due that amount at that time. There was no personal judgment for it which bore interest as provided in section 8564, Code.

But it is now held that he personally owed the estate of which he was administrator, and therefore to himself as administrator, a certain amount. That amount must therefore be treated as paid on the date of the annual settlement (Lindsey v. Lindsey, 229 Ala. 578, 158 So. 522; Miller v. Irby's Adm'r, 63 Ala. 477; Cook v. Cook, 69 Ala. 294); so that it then became a fund of the estate which he was personally using, since he did not pay it in fact into the trust fund. He was therefore accountable for interest on it (section 5908, Code), but he was not liable for interest on commissions paid him after the date of their allowance.

Direct assignments 4 and 5. The account of the administrator passed and allowed on annual settlement January 10, 1928, shows that Evins and Jack, attorneys, had a claim of $3,600 for services rendered decedent before he died, and that Judge Edward deGraffenried had a similar account. On final settlement it appears that R.B. Evins, a member of that firm, was indebted to the estate in the sum of $3,195, and that Judge deGraffenried's estate (he having died before appellant's intestate) owed said intestate $2,232, and his claim was agreed to be for a like amount. By agreement of all parties, respectively, the accounts were set off, so far as available. Thereby the administrator charged himself with the collection of said amounts and was credited with them as disbursements. But the court held that the commission provided by section 5923, Code, did not apply, since the administrator did not in fact handle the money.

That section has been held to refer to cash transactions only. Wright's Adm'rs v. Wilkerson, 41 Ala. 267. That does not mean that cash money must be handled; but the transaction must be one which is so regarded and properly so interpreted.

The subject has been treated in various aspects by law-writers. The opinion seems to prevail under somewhat analogous circumstances, that if decedent's property is subject to a lien, and the lienor enforces his right by a sale and satisfies his debt, it is not a receipt and disbursement by the administrator, but that it is so, if the administrator sells the property and pays the debt, even though a creditor buys and thereby discharges his debt without paying out any money. Note 46 A.L.R. 239; Baucus v. Stover, 24 Hun (N.Y.) 109; Wolf's Estate v. Wolf, 36 Tex.Civ.App. 168, 81 S.W. 90; Huddleston v. Kempner, 87 Tex. 372, 28 S.W. 936.

To compute the commission on mere bookkeeping entries of sums that had been only theoretically handled was held to be an improper allowance. Hitchcock v. Mosher, 106 Mo. 578, 17 S.W. 638; Farmers' L. & T. Co. v. Turner, 242 N.Y. 240, 151 N.E. 439. But while "a mere bookkeeping charge could not create an actual receipt where there never had been one in fact, so an actual receipt, or one that was actual 'in contemplation of law,' was none the less actual because the executor in disposing of it adopted some short cut in exchange or in bookkeeping." Oberg's Estate, 148 Misc. 400, 266 N.Y.S. 641, 647; Wolf's Estate v. Wolf, 36 Tex.Civ.App. 168, 81 S.W. 90; Huddleston v. Kempner, 87 Tex. 372, 28 S.W. 936.

Whether the transaction should be treated as cash ought not to depend wholly upon whether cash is in fact passed into and out of the hands of the administrator. If so, the parties could easily let it assume that course when it would be unnecessary, and nothing more than a subterfuge. Its qualities depend upon the substantive nature of the transaction, and not its form. If, when so considered, a claim was collected and a debt paid, rather than a mere application of payments, it would be a cash transaction. Not so if there was a mere adjustment of payments thereby ascertaining the amount of an account with no mutuality of claims. When there is a demand against an estate, it is not in the nature of a payment. The administrator has no legal authority to allow it as such and pay it, or consent to a credit unless it can be collected out of the estate. If it is barred by nonclaim, it cannot be set off even with the consent of the administrator. Patrick v. Petty, 83 Ala. 420, 3 So. 779; Bell's Adm'r v. Andrews, 34 Ala. 538; Walker v. Tyson, 52 Ala. 593, 596.

Each cause of action exists as though the other did not, subject to section 10177, Code. The administrator is prohibited from paying a claim barred under either sections 5815 or 5824.

In no sense, therefore, can it...