Fisher v. . Trust Co.

Connor, J. After stating the facts: The proceedings *98 had in this action have been somewhat eccentric and irregular. It was originally brought by the administratrix and mortgage creditors against the children of the deceased, who had under his will only a remainder after the life estate of their mother, who appears only in her representative capacity. The creditors, refusing to proceed with the cause, are made parties defendant and summons issued returnable to the September term of court. The plaintiff as adminis-tratrix proceeds to file her complaint against the children who by their guardian ad litem at the-same term file an answer admitting every allegation of the complaint. A receiver is at the same term, and without notice to the creditors or the trustee, appointed with very extensive and unusual powers. The jurisdiction of courts of equity to entertain administration suits, at the instance of creditors, de-visees or legatees has been uniformly recognized and frequently exercised. Such suits are less frequent since the distinction between legal and equitable assets has been abolished and full powers in the settlement of estates conferred upon courts of probate. Whatever doubt may have existed in respect to the jurisdiction after the establishment of our present judicial system, was removed by the act of 1876 chapter 241, Code, Sec. 1511; Haywood v. Haywood, 79 N. C., 42; Pegram v. Armstrong, 82 N. C., 327. It is true that the language of the statute would seem to contemplate actions by creditors, but we think the purpose was to give to the court, if it did not have it, jurisdiction to entertain suits brought by any party interested in the proper administration of an estate. When the infant defendants by their answer admitted the facts upon which the jurisdiction attached, and joined in asking the same relief, we can see no reason why the court should not retain the cause bringing the creditors in as defendants and proceed to protect the rights of the parties by appropriate orders etc. The facts set out, in our opinion, entitle the parties to have the aid of *99 the court in protecting the property by the appointment of a receiver, and the adjustment of conflicting claims to the end that it might be brought to sale, with an unincumbered title to purchasers under such circumstances and conditions as would pay the debts and leave the largest possible surplus for. the devisees. When the plaintiff filed her complaint against the defendant Loan & Trust Company, it developed the fact that prior to his death Eisher had entered into a contract with the company in regard to a portion of his real estate by which the said company was empowered to make sale thereof in the manner and upon the terms set out. It is manifest that until the rights and powers of the defendant company in respect to this property are adjudged and settled, it will be impossible to make sale or deal with it. The court therefore upon the admissions in the pleadings and inspection of the contract, properly proceeded to dispose of this very important question. We concur with his honor in respect to the effect which the death of Eisher had upon this contract. There was no question or issue of fact in this regard for the jury. It has been universally recognized as sound law in this country since the decision of Hunt v. Rousmainer, 21 U. S., 174, that a power of attorney is revoked by the death of the person giving it. To this rule there is one exception: that if a power be coupled with an interest, it survives the person giving it and may be executed after his death. That the interest which can protect a power after the death of a person who creates it must be an interest in the thing itself — the power must be grafted on the estate. The doctrine, with the reason therefore, is thus stated by Marshall, C. J. “The interest or title in the thing being vested in the person who gives the power, remains in him, unless it be conveyed with the power and can pass out of him only by a regular act in his own name. The act of the substitute therefore, which in such a case is the act of the principal, to be legally effectual, must be in his name, must *100 be such an. act as the principal himself would be capable of performing and which would be .valid if performed by him. Such a power necessarily ceases with the life of the person making it. But if the interest or estate passes with the power and vests in the person by whom the power is to be executed, such person acts in his own name. The estate being in him passes from him by a conveyance in his own name. lie is no longer a substitute, acting in the place and name of another, but is a principal acting in his own name, in pursuance of powers which limit his estate. The legal reason which limits a power to the life of the person giving it exists no longer and the rule ceases with the reason on which it is founded.” Carter v. Slocumb, 122 N. C., 475; 22 Am. & Eng. Enc. (2nd Ed.) 1132. The fact that the power may' have been irrevocable during the life of the person giving it does not affect the principle. It is equally well -settled that an interest in the proceeds of the property does not constitute an interest in the thing — the subject matter of the power. F. L. & T. Co. v. Wilson, 138 N. Y., 287. The defendant company conceding the law to be as stated says that the contract under which it claims thg_ right to proceed with the sale of this, property is distinguished from the cases cited for that performance is made binding on Eisher’s heirs,, executors, administrators, assigns and upon the company’s successors; that thereby the parties contracted that the rights and. duties should continue _ and be operative after the death or dissolution of either contracting party. It must be conceded that parties may enter into contracts, the performance of which may be enforced by or against their representatives after the death of the contracting party. We do not think this contract falls within that class. An in-’ surmountable difficulty confronting the defendant company in making sales under it, is that the wife of Eisher, although named a party, did not execute the contract — it would be ruinous to all parties interested in the estate to permit sales *101 of tbe property subject to the dower rights of the widow. Again, the right and power to make sales is dependent upon EisheFs agreeing to’ the price. It requires no argument to show that this power cannot be exercised by his personal representative; his heirs at law and devisees, except his widow, are infants and therefore incapable of acting. Again, there is no power conferred on the defendant company to execute deeds for the property when sold. Eisher agrees that he will execute deeds to purchasers for land whenever the company makes a sale. This certainly is nothing more than a contract of his part to convey when sales are made at prices agreed upon by him. The only possible right accruing to the company would be to compel specific performance by the heirs or devisees of Eisher. This they could not do, because the condition upon which the right accrues can never exist, nor could the purchaser be required to accept title subject to the dower right of the widow. While we, for the reasons given, concur with His Honor, are of the opinion that he should not have directed-the concellation of the contract. The defendant company avers that it had prior to Eisher’s death, pursuant to the terms and provisions of the contract, expended large sums of money in opening up and improving the real estate, preparing it for sale etc. It also alleges that it had a vested interest in the contract. In so far as the right conferred is a power to the defendant company to sell, it is avoided and annulled by way of revocation by Eisher’s death, but for expenditures made and it may be for services rendered, it is entitled to be repaid and compensated from the proceeds of the property when sold. .The plaintiff and defendant devisees show no equity for cancellation, but for a décree removing any cloud from the title to the property and declaring the effect of Eisher’s death upon the right to make sales. In all other respects the rights of the parties are unaffected by Eisher’s death. The judgment in this respect, thus modified, is affirmed. *102 Tbe defendants insist that Mr. Brooks should not have been appointed receiver and commissioner because of his relation to the parties. It is undoubtedly true and abundantly sustained by authority that the court will not usually appoint as receiver, persons interested in the property, of the parties to the controversy as attorney or otherwise. The selection of the person to be appointed necessarily rests in the sound judicial discretion of the court. The chancellor, under the equity practice, usually referred the question of selection to the master and unless good cause was shown appointed the person nominated by him. While objection to the person appointed on the ground of relationship to the parties or interest in the property, is proper to be considered upon appeal, the appellate court will not, save for Strong reasons, interfere with the appointment made by the court. No suggestion is made affecting the personal fitness of the receiver, or that he will not discharge the duties of the position properly. Mr. High says, “It is not regarded as an abuse of judicial discretion to appoint as receiver the attorneys of the respective parties to the cause and the court, in making such appointment, will not be. interfered with upon appeal.” High on Receivers, 69. If in the progress of the cause any conditions arise which will render it embarrassing either to the receiver or the parties for him to continue, we are quite sure that the court will either associate some one with him or appoint another in his stead. So far as we can see at this time there is no conflict of interest in regard to management or.sale of the property. The welfare of all is promoted by procuring the best possible results. We note the fact that very extensive and, we think unusual powers, are conferred upon the receiver by the order made at February term, 1904. We do not commend the practice of appointing a receiver upon the unverified complaint and without notice to creditors and other persons interested. We note also that at the same.term an order was made authoriz *103 ing tbe receiver to issue a certificate to the plaintiff admin-istratrix for a large account. We very much doubt whether it is within the power of the court in a proceeding like this to authorize the issuance of receiver’s certificates. This practice which has grown up of late years is very largely confined to the Federal Courts in suits for the foreclosure of mortgages and trust deeds executed by railway companies and other corporations, whose property is affected by a public duty. We are not prepared to say .that these certificates may not be authorized in similar suits dealing with other corporations such as cotton or other mills, machine shops etc, in all of which it is of vital interest to creditors and owners that their operations be continued until they can be brought to sale. If such power exists it should not be exercised until notice has been given to creditors. High on Receivers, 312. However this may be we are clearly of the opinion that the reasons upon which the power is claimed and exercised do not apply to a case like this or to claims like those for which the certificate for $8,250 was issued. Judge Gresham, in Loan and Trust Co. v. Grape Creek Coal Co., 55 Fed. Eep. 481, discusses the subject and clearly limits the power to issue such certificates to suits for the foreclosure of railway mortgages and to operating expenses. Kneeland v. Trust Co., 136 U. S. 89. The liens, encumbrances and order of payment of the indebtedness of a deceased person are fixed either by contract or by statute and we can find no power in the court to change or disturb such order. In saying this we do not question the power of the court to make necessary orders for the protection of the property, payment of taxes, insurance, surveying and such like expenses. These are essential to the purpose and end for which the court lends its aid. The order of February term, so far as it confers upon the receiver the power to issue such certificates or otherwise incumber the property, should be modified. ' Having been made prior to the time the creditors were brought in *104 they are not bound by it. They are bound by the orders made at the December term, 1904., It is evident that the condition of the family of Mr. Fisher demands a prompt settlement of all controverted matters and sale of the property so that they may have an income for their necessary support. A decree will be drawn declaring that by the death of B. J. Fisher the power to make sale or otherwise interfere with the property described in the contract of October 11, 1900, is revoked. That defendant, Southern Loan & Trust Co., file with the receiver an itemized statement of-all amounts expended by it under and pursuant to the provisions of said contract. . The defendant company or any other creditor may upon notice move the court to modify the order of February term, 1904, by striking from it all provisions conferring upon the reveiver the power to issue certificates or otherwise incumber the property. Mrs. Fisher, in her individual right, should be made a party plaintiff so that her interest may pass under a sale of the property. ' In all other respects the judgment appealed from is affirmed. Neither party will recover costs in this court. Modifie'd and Affirmed.