Bellinger v. Thompson

Opinion by Mr. Chief Justice Bean.

1. The defendants contend that because Mrs. Holladay expressly declared in her will that no bonds or security should be required of Ingalls as the executor thereof, the county court had no authority to require him to give bonds, and, this being so, no liability exists upon the bonds in question. Under the early English law the spiritual courts, which had jurisdiction in the settlement of estates, exerted so little authority over an executor, who was supposed to derive his powers from the testator and not from the grant of the ordinary, that they refused to require bonds of him, even though he should become insolvent, or misappropriate and squander the assets of the estate. But the consequence of this doctrine was such that the courts of chancery were early compelled, in order to protect widows and orphans, to assume a new jurisdiction; and it became a rule of that court that an insolvent and bankrupt executor, or one who was unfaithful to his trust, would be compelled to give security for the faithful performance of the duties of his office: Schouler on Exec *334 utors and Administrators, § 137. In this country the duties of the spiritual court and of the court of chancery in this respect are exercised by courts having probate jurisdiction. The English rule permitting an executor to administer upon the estate of his intestate without giving bonds in the first instance prevails in many states, but in a majority of them, including Oregon, the privilege is given only when the will expressly so directs: Hill’s Code, § 1088; 1 Woerner on Law of Administration, 250. In the latter case the will simply operates to place the executor in the same position in which he is placed in those states which have adopted the English rule. The exemption which the will makes under the sanction of law in the one case is of no more authority than the exemption which the law makes without reference to the will in the other. Upon this question a recent work on the law of administration says: “In those of the states in which an executor is permitted to administer without giving bonds, whether the exemption arise under the statute or by express direction of the testator, his office is one of special trust and confidence, for which reason no bond is required of him. But if a court becomes satisfied that the executor who was solvent when named in the will, is likely to become insolvent, and that there is danger that he may abuse his trust, or has ground to suspect that he will indirectly and fraudulently administer the estate to the prejudice of creditors or legatees, he will be ordered to give bond with sufficient surety to protect the estate ”: 1 Woerner on Law of Administration, 251. This is thought to be but an exercise by the probate court, which is given exclusive jurisdiction in the first instance over the administration of estates, of the powers formerly exercised and enforced in chancery in order to protect estates. In Re Holderbaum’s Estate, 82 Iowa, 69 , 47 N. W. 989 , it is held that, though the law provides that bonds shall not be required of the executor, *335 yet, when the effect of his management of the estate is to destroy the security of a creditor, it is proper for the court to order him to give bonds. The order requiring bonds in this case, it is true, was made on the motion of a creditor, but this is of no consequence in determining the power or authority of the court. The rights of a legatee are certainly as much entitled to protection as those of a creditor, and if the court has authority to require bonds for the protection of the one, it certainly has for the other.

By the statute of Mississippi it is provided that an executor may be exempted from giving bonds by the intestate, and in such case no bonds shall be required, unless the court at any time shall have good reason to suspect the executor of fraud or maladministration. In Clark v. Niles, 42 Miss. 463 , the court, in referring to this statute, says: “This statute only reiterates what has been the action of courts having jurisdiction of the settlement of estates of deceased persons. The nature of the business, as well as the relation between the probate judge and administrators or executors, requires that the judge should have and should more frequently exercise a general supervision over the settlement of estates, and upon his own motion require the representatives of such estate to give new or additional bonds whenever, in his judgment, the interest of the heirs or creditors of such estates might seem to require the same. ” By our statute (Hill’s Code, § 1078,) the mode of proceeding in the county court in the transaction of probate business is in the nature of a suit in equity, as distinguished from an action at law, and such court, under Hill’s Code, § 895, has exclusive jurisdiction “to direct and control the conduct and settle the accounts of executors, administrators, and guardians”; and it is made its duty by section 1100 “to entertain a supervisory control over the executor, to the end *336 that he faithfully and diligently performs the duties of his trust according to law. ” These sections of the statute, it seems to us, plainly confer upon the county court jurisdiction to control and exercise general supervision over executors and administrators, to the extent of requiring of them bonds for the faithful performance of their trusts whenever, in the opinion of the court, the interests of the estate require the same. It is charged by law with the duty of seeing that such officers faithfully perform the duties of their trust, and it is necessary to the ¡safety and interests of the estate that this should be so. The only effect of the statute allowing the testator to exempt his executor from giving bonds is to relieve him therefrom in the first instance, but we think it is plainly not only the right, but in many instances the duty, of the county court, when it has reason to suspect that an estate will be fraudulently administered, or the property thereof lost to those interested in it, on a proper application by a legatee or creditor, to require the executor to give a bond, notwithstanding such exemption in the will.

2. But if, in view of the provisions of the will, the county court had no authority to require Ingalls to give bonds as executor, the bonds upon which this action is brought are nevertheless valid as common-law obligations. They were given voluntarily, contain no conditions unauthorized by law, and are not against public policy. So far as the record discloses, the parties interested in the estate were fully satisfied with the Loewenberg bond, but these defendants seem to have been quite willing to substitute their bond in place of one already satisfactory to the parties, and, having done so, the law will hold them to the obligations they have thus voluntarily assumed. “Because a bond is a voluntary one,” says Sherwood, C. J., “its binding and obligatory force is by no means lessened”: State v. Creusbauer, 68 Mo. 254 . The facts as stated in the *337 opinion from -which the above quotation is made are that prior to the execution of the bond sued on the administrator had given another bond, sufficient in all respects, which had been approved by the probate court, and on which letters were granted, but afterward, on his own motion, without any order of the court or request of the sureties on the original bond, he procured the defendants to sign the bond sued on, signed it himself, and handed it to the clerk of the probate court, who filed it, but never called the attention of the court thereto, and it was held that the bond was good as a voluntary bond, though not approved by the probate court, and that the party injured had his option to sue upon either bond. And in Folkes v. Docminique, 2 Strange, 1137, a voluntary bond given by an administrator in the spiritual court was held to be valid, though the court had no authority to take it. So also in McChord v. Fisher's Heirs, 13 B. Mon. 194 , it was held that although the appointment of an administrator was void for want of jurisdiction in the court, a bond given by him as such administrator was binding, not as a statutory but as as a common-law bond, being upon good consideration, and not against the policy of the law. And, again, under a statute authorizing the judge of probate to order a new bond to be given in place of an old one, on the petition of a surety seeking a discharge, a person who was not, but erroneously supposed himself to be, surety upon an executor’s bond, filed a petition to be relieved from further liability on such bond. Acting upon this petition, and under the same error as the petitioner, the judge of probate ordered a new bond, and entered a decree discharging the petitioner; whereupon the principal on the old bond, acting under the same mistaken idea, filed a new one, which was approved by the judge of probate. In an action against the sureties on the second bond, it was held that, *338 although it may have been given under a mistake of fact, it was nevertheless valid, as having been voluntarily given: Brooks v. Whitmore, 142 Mass. 399 , 8 N. E. 117 . And in United States v. Rogers, 28 Fed. 607 , it was held that it is sufficient to make a bond given by an officer of the government, although not expressly required by law, valid as a common-law obligation, that it is voluntarily given, and that the office and duties assigned to the officer and covered by the bond are duly authorized by law. Now, in this case the bonds on which this action was brought were authorized by law, voluntarily given, and the duties of the executor covered by them provided by law, and they are, therefore, binding obligations, whether the county court had authority to require a bond from Ingalls or not: Schouler on Executors and Administrators, § 143; State v. Creusbauer, 68 Mo. 254 ; State v. Cannon, 34 Iowa, 322 ; Holbrook v. Klenert, 113 Mass. 268 . Nor do the authorities cited by defendants conflict with this principle, but, so far as they are applicable to the case before us, are in harmony with it. They are cases in which the bond either contained conditions variant from those provided by law, and was extorted under color of office, or the bonds were not authorized or required by a valid law, or were against public policy: United States v. Tingey, 5 Pet. 115 ; Benedict v. Bray, 2 Cal. 251 , 56 Am. Dec. 332 ; Hicks v. Mendenhall, 17 Minn. 475 .

3. But it is contended that under the terms of Mrs. Holladay’s will Ingalls was a trustee holding the legal title of the property, and liable to account for the same to the guardian only in a court of equity, and that the county court only had jurisdiction to control his conduct and settle his accounts as executor to the end that all testamentary expenses and debts of the estate should be paid; but that when his account was settled, and the balance in his hands ascertained, he held the same in trust *339 for the minor children, and can be compelled to account therefor only in a proper court of equity. A sufficient answer to this position is that the will by its terms required him as executor to pay all moneys realized from, the property, after paying all testamentary expenses and just indebtedness, to the guardian, to be held, managed, and expended by such guardian for the benefit of her children, and that Ingalls petitioned for and was appointed executor, entered upon and assumed to discharge the duties of such office, and in that capacity gave the bonds in action, which have reference to his duties as executor. It may be that the will gave to him two characters, those of executor and trustee, but the duties of the one are sep. arate and distinct from and independent of the other; and until he was discharged from the former and assumed the duties of the latter his liability as executor still continued: White v. Ditson, 140 Mass. 351 , 54 Am. Rep. 473 , 4 N. E. 606 ; Foster v. Wise, 46 Ohio St. 20 , 15 Am. St. Rep. 542 , 16 N. E. 687 ; Cranson v. Wilsey, 71 Mich. 356 , 39 N. W. 9 . A mere order of final settlement or distribution could not discharge him as executor, or relieve his bondsmen, until the distribution was actually made. This could be done, under the terms of the will, only by paying the balance in his hands to the guardian of the minor children. In Foster v. Wise, 46 Ohio St. 20 , 15 Am. St. Rep. 542 , it was urged, in an action on an executor’s bond, that at the time it was given the executor held the assets as trustee under the will, by which he was authorized to invest them for the benefit of a third person, but in passing upon this view of the case the court said: “It is a sufficient answer to this to say that he never qualified as such trustee, and. no such investments were made. He cannot, therefore,, be regarded as having acted in any other capacity than as; executor: Prior v. Talbot, 10 Cush. 1 . Moreover, the sureties on his bond as executor are estopped from assert *340 ing that he had ceased to be an executor and was only a trustee. In all cases where the condition of the deed has reference to any particular thing, the obligor shall be es-topped to say that there is no such thing.” So, in this case, Ingalls having qualified as executor, and acted as such throughout, his duty to account for and pay over to plaintiff, as guardian, the amount in his hands belonging to the children is purely executorial, for a failure to perform which he is liable on his bond as executor. By the will his appointment as trustee, if at all, was for the purpose of converting the assets into cash, and paying the proceeds over to the guardian. This duty he never assumed to perform, except in the capacity of executor, and, having assumed so to act, the sureties on his bond are estopped from questioning the capacity in which he was acting.

4. It is next contended that because Ingalls had, prior to the order requiring him to give bonds, paid two thousand nine hundred and thirty-seven dollars and eighty cents on claims against the estate in favor of third persons, and applied the sum of five thousand nine hundred and seventy dollars on a claim in his own favor, for which he was not allowed credit on final settlement, the sureties on the bond in action are not liable for the money so applied. In other words, the contention for the defendants is that such application was a conversion of the funds belonging to the estate, and that they are only liable on their bonds for assets converted and misapplied after the execution thereof. It is undoubtedly the general rule that sureties on official bonds are only liable for defaults occurring after the commencement of the term of office for which they become responsible, and such is the purport of the authorities cited by defendants. But this rule has no application to an administrator’s or executor’s bond, because the law under which and the purposes for which they are given *341 are different. There are no terms of office of an executor or administrator. It is a continuous employment from the date of appointment until the close of the administration. If during such time an administrator or executor should for any sufficient reason give a bond, he would not thereby be entitled to a new commitment of the estate to his hands, nor would it result in any settlement or rest in his accounts. And, again, the condition of an official bond is that the principal shall faithfully perform the duties of the office to which he has been elected or appointed, and it would be an unwarranted construction of the terms of such bond to hold the sureties liable for any default occurring prior to the commencement of the term; but an administrator’s or executor’s bond is conditioned ‘ ‘ that he shall faithfully perform the duties of his trust according to law”: Hill’s Code, § 1088. A failure to pay over to the heir or legatee the amount ascertained on final settlement to be due such heir or legatee, and ordered paid to him, is a breach of such bond and condition (Gerould v. Wilson, 81 N. Y. 573 ); and the sureties thereon at the time of such breach are liable for such default, no matter when the bond may have been executed, or when the funds were actually misapplied or lost to the estate. The executor or administrator, from the moment he becomes such, is entitled to the possession and control of all the property of the estate, but he is not required to pay or account for any money or property coming into his possession, until ordered to do so by the county court. In every case, therefore, where a bond is given by an executor during the progress of administration, the sureties assume liability thereunder upon the assumption that he is in possession at the time the bond is given of all the assets of the estate which have been received by him and are unaccounted for, and they in effect agree that he will execute his trust by faithfully administering upon and accounting for such assets. The *342 bond is security against a breach of duty, and there is no such breach until there is a failure to account or pay over the money, as ordered by the county court: Schouler on Executors, § 148; 1 Woerner on Law of Administration, § 255; Schofield v. Churchill, 72 N. Y. 565 ; Lacoste v. Splivalo, 64 Cal. 35 , 30 Pac. 571 ; Pinkstaff v. People, 59 Ill. 148 ; Choate v. Arrington, 116 Mass. 552 ; Foster v. Wise, 46 Ohio St. 20 , 15 Am. St. Rep. 542 , 16 N. E. 687 ; Dugger v. Wright, 51 Ark. 232 , 14 Am. St. Rep. 48 ; Brown v. State, 23 Kan. 235 ; State v. Creusbauer, 68 Mo. 254 ; Beard v. Roth, 35 Fed. 397 .

Pinkstaff v. People, 59 Ill. 148 , was an action on an administrator’s second bond, in the trial of which the sureties sought to defend, as the sureties do here, on the ground that the assets came into the hands of the administrator and were misapplied before the bond was executed; but Chief Justice Lawrence, speaking for the court, said: “Conceding the sureties upon the bond are liable only for breaches occurring after its execution, the breach in the present case is of that character. Even if the money due the heirs had been, as averred in the plea, appropriated by the administrator to his own use before the bond was given, yet, for such misapplication of the funds he would be liable only for nominal damages, if able and willing to pay the heirs whatever might be due them on final settlement. The gravamen of this action is, not that the administrator had confounded the trust funds with his own, and appropriated them to his own use, but that he did not respond to the demands of the guardian. Whether he had, in fact, used the trust funds or not, when this bond ■was given, they were, in the eye of the law, then in his hands to be administered, and the bond was given as security that they should be so administered. But for this new bond he probably would then have been removed, and the heirs and creditors would have had their recourse upon the first bond. By the additional bond he was kept *343 in office, the securities thereon undertaking that he would duly administer all unadministered assets. The bond can have no other rational construction, and such must have been the intention of the parties. He then stood chargeable with certain assets. For the purposes for which this bond was given they were in his hands. The securities undertook that he would pay them over to the persons entitled to receive them, when duly called upon. This he has not done, and hence the liability of these defendants. ” And in Brown v. State, 23 Kan. 235 , it is said that the liability of an administrator to an estate for property he has received and converted to his own use is ‘ ‘ assets in his hands belonging to the estate,” which it is his duty to make available, and to account for on final settlement. In Dugger v. Wright, 51 Ark. 232 , 14 Am. St. Rep. 48 , it was held that although the executor had converted the funds of the estate prior to the execution of the bond, it was still his duty to account to the probate court therefor, and when he failed to comply with the order of the court directing him to pay over the amount with which he had been charged on that account, the sureties on the bond were liable by the terms of the undertaking to make good the default. A surety on an administrator’s or executor’s bond, conditioned as the bonds here in action are, is liable for whatever is properly chargeable to the executor in his official capacity, and it is not necessary to show that the funds or property so chargeable were actually on hand intact or in specie at the time the bond was executed. If they are shown to have come into the hands of the executor in his official capacity, and he has not properly disposed of or accounted for them, he is bound to do so on final settlement, and the sureties upon his bond, whenever given, are held for the faithful performance of that duty.

But it is argued that the intention of the guardian in applying for an order requiring bonds, of the county court *344 in making the order, and of the sureties in giving the bond, was only to secure the money and funds on hand at the time from further loss. This intention is sought to be drawn principally from the prayer of the petition. By his petition the guardian charged Ingalls with an abuse of his trust in misapplying the funds of the estate, and asked that he be required to make final settlement, or give a bond to “account for the money received by him to the use of the petitioner’s wards.” Under this petition the county court had authority to compel Ingalls to make final settlement, if the condition of the estate would admit of it; if not, to remove him, and appoint some one else in his stead; or continue him in office with or without bonds as in its judgment seemed best for the estate. It chose, in the exercise of its judicial judgment, to allow him to continue in office by giving a bond to faithfully discharge the duties of his trust, and it seems to us an unfair inference to assume that in doing so it did not intend to provide for the security of the funds which it was claimed Ingalls had already disapplied. But why speculate on this question, when the intention of the sureties plainly appears from the terms of their undertaking? By their bonds they undertook and agreed that Ingalls should faithfully perform the duties of his trust. This obligation they must be held to have intended to assume, and the law will require its performance by them.

5. It is claimed on behalf of Thompson and Dekum that the order of the county court allowing the Spaulding bond to be substituted for the one formerly given by them, and exonerating them from any further liability as sureties for Ingalls, relieves them of responsibility for any violation by Ingalls of his trust as executor occurring subsequent to the date of such order. By reference to the statement of facts, it will be observed that this order was not made on the application of any heir, legatee, or cred *345 itor, or other person interested in the estate, but solely at the solicitation and upon the request of Ingalls, and even against the protest of the plaintiff in this case. The power of the county court to relieve a surety on an administrator’s or executor’s bond from liability is purely statutory. After a bond has been given, the heir, legatee, or creditor of the estate acquires and has a vested interest in it, and the power of the county court over it ceases, except in a proceeding authorized by law. When, therefore, an executor or administrator has given a bond for the performance of his duties as such, he cannot, after it has been accepted and filed, upon his own motion, to suit his own convenience or his own interest, apply for and obtain an order of the county court setting it aside, and discharging the sureties thereof, and substituting a new one in its stead. If such was the rule there would be no security for the estate, and the authorities abundantly show that no such power is vested in a probate court: Schouler on Executors, § 147; Commonwealth v. Rogers , 53 Pa. St. 470; Wood v. Williams, 61 Mo. 63 ; Burnett v. Vandiver, 56 Ga. 302 ; Brooks v. Whitmore, 142 Mass. 399 , 8 N. E. 117 . In many states the statutes provide that a surety may, on his own petition, and with notice to interested parties, obtain an order, and be discharged from further liability on an executor’s or administrator’s bond, but we have no such statute in this state. The only method provided by which a surety can be discharged or relieved is found in sections 1.096, 1097 of Hill’s Code, and it is not pretended or claimed that the proceedings upon which the order in this case was made were in conformity with the provisions of these sections. The authorities above cited clearly show that it does not follow that because a county court has power to compel an executor or administrator to give a bond it also has power to cancel it and substitute another in its place. *346 After the bond has been given the power of the county court over it ceases, and the heirs, legatees, or creditors for whose security it is given have a vested interest therein of which they can be deprived only by some proceeding known to the law. In this state it is only when the amount of the executor’s or administrator’s undertaking is insufficient, or the sureties therein, or either of them, have become nonresidents of this state, or are likely to or have become insolvent, that the county court may require a new bond which will operate to discharge the sureties on the former undertaking from any liability on account of their principal, arising from his acts or omissions subsequent thereto; and this proceeding is by statute wisely limited to cases where complaint is made by an heir, legatee, devisee, or creditor, or other person interested in the estate, and who, as we have shown, has a vested interest in such undertaking or bond. A rule permitting a county court, on its own motion, and not in the manner provided by statute, to at will relieve a surety on an executor’s bond from liability, would tend greatly to the insecurity of estates, and might in some instances permit the substitution of insolvent sureties for solvent ones. We are clearly of the opinion, therefore, that the order of the county court attempting to relieve Thompson and Dekum from liability on their bond was wholly and entirely void, and the Spaulding bond,, not having been given in conformity with the provisions of any statute, and being simply a voluntary bond, had the effect only of adding new or additional security for the faithful performance of Ingalls’ duties as executor. In this view of the liability of the sureties upon the respective bonds, the plaintiff was at liberty to proceed against any of or all the bonds, as he might elect.

6. And, finally, for defendants, it is claimed that this action should have been brought in the name of Linda and Ben Campbell Holladay, and not in the name of their *347 guardian. This question was not presented in the court below, but is raised here for the first time, and hence comes too late: Hill’s Code, § 97; Seaton v. Davis, 1 Thomp. & C. 91. We are of the opinion, therefore, that the bonds in action are valid, and that plaintiff is entitled to a judgment against the defendants as sureties thereon, and the only remaining question is as to the amount of such judgment-

7. It was ascertained and determined by both the county and circuit courts that there was due from Ingalls to the estate the sum of twelve thousand five hundred and fifty-seven dollars and nine cents, of which sum the county court ordered him to pay the guardian nine thousand nine hundred and ninety-four dollars and eighty-seven cents, and to certain claimants the remainder; but on appeal the circuit court modified this order, and decreed that the entire sum, twelve thousand five hundred and fifty-seven dollars and nine cents, should be paid to the plaintiff as guardian. This decree is, we think, conclusive upon the defendants in this action. It is by no means certain that the decree of the circuit court ordering the executor to pay to the guardian the entire amount found due the estate from the executor was not erroneous, but the question as to whom the money thus found due should be paid was necessarily determined by the circuit court on the accounting, and so long as the decree stands unreversed, it cannot be questioned in a collateral action either by the executor or his sureties. In an action on an executor’s or administrator’s bond, a decree of final settlement is conclusive, not only upon the executor or administrator, but also, in the absence of fraud or collusion, upon the sureties, because by their contract they have made themselves privy to the proceedings against their principal, and when the principal is concluded the surety is concluded also: Casoni v. Jerome, 58 N. Y. 315 ; Housh v. People, 66 Ill. 178 ; Slagle v. Entrekin, 44 Ohio St. 637 , 10 N. E. 675 ; Stovall v. *348 Banks, 10 Wall. 582 . It follows,, therefore, that the plaintiff is entitled to a judgment against the defendant for the amount claimed, less an admitted credit of six hundred and fifty-eight dollars and fifty cents, to wit, for the sum of eleven thousand eight hundred and ninety-eight dollars and fifty-nine cents, with interest thereon from the four' teenth day of December, eighteen hundred and ninety-two, at the rate of eight per cent, per annum, and for his costs and disbursements, and it is so ordered.

Modified.

[Decided December 17, 1894.]

ON MOTION TO RECALL MANDATE.

Opinion by Mr. Chief Justice Bean.

The motion of defendants Dekum and Thompson for an order recalling the mandate in this case with a view to the determination .of the rights of the defendants among themselves, must be denied. This is an action at law against the defendants, as sureties on the official bonds of Ingalls as executor, and the only question made by the pleadings, considered by the court, or properly triable in the action, is the validity of the bonds sued on, and the liability of the defendants to the plaintiff. The rights and duties of the defendants as among themselves, or the amount each should contribute toward the payment of plaintiff’s judgment, depends upon the application of equitable principles to a state of facts not disclosed but only hinted at by the record. In order to prevent further possible litigation, it would be gratifying to the court to be able to enlarge the scope of its decision so as to embrace the respective rights and liabilities of the defendants as between themselves, but it is very doubtful whether this could be done, even if the issues had been framed for that purpose. Such a question is wholly foreign to the *349 object of the action, and entirely unnecessary to its determination, and "within Hovenden v. Knott, 12 Or. 267 , 7 Pac. 30 , it would seem, could not be considered. But however this may be, no such issue was tendered or made, and there are no findings of fact upon which a decision could be based. Nor do we think the judgment as entered in any way determines this question, or will affect the right of contribution between the defendants in a proper proceeding for that purpose. It is a judgment in favor of the plaintiff against the defendants jointly and severally, and fixes their liabilities as to the plaintiff, but not among themselves. Motion overruled.