Ellis v. Polhemus

By the Court, Sakdersos, C. J. On the first day of April, 1862, Horace P. Janes gave to Moses Ellis his promissory note for twenty-five thousand dollars, payable one year from date, with interest at the rate of one and one quarter per cent per month, payable monthly; and to secure its payment gave a mortgage on certain real estate in the City of San Francisco. Janes died before the note matured. It was duly presented to the administrator of the estate of Janes, was allowed by him, and approved by the Probate Judge, and thereupon filed in the Probate Court, on the 12th. of August, 1863, as a valid claim against the estate. The administrator paid the interest on the claim, at the rate of one and one quarter per cent per month, to December 28, 1863. Subsequent to the last payment of interest, the administrator sold the mortgaged premises, and the proceeds of the sale were more than sufficient to pay the debt and interest at the rate specified in the note. Whereupon Moses Ellis filed his petition in the Probate Court, and sought to compel the administrator to account for his proceedings in the matter of the sale, and to pay to the, petitioner twenty-five thousand dollars, with interest at the rate of one and one quarter per cent per month from the 28th day of December, 1863. The foregoing facts were admitted by the administrator; but it further appeared that the estate of the deceased was insolvent; and that the fact of such insolvency was not discovered by the administrator until the 6th day of January, 1864. The Court ordered the administrator to pay the peti [354] tioner twenty-five thousand dollars, with interest at the rate of ten per cent per annum only, from the date of the letters of administration, to wit: November 9, 1862, less all sums of money which had been paid as interest since that day. The petitioner appealed, and now claims that the Court below erred in holding that he was entitled to ten per cent per annum only instead of one and one quarter per cent per month according to the terms of the note. The one hundred and thirty-first section of the Probate Act provides, among other things, that “In case the estate is insolvent, no claim contracted after the passage of this Act shall bear greater interest than ten per cent per annum from and after the time of issuing letters.” The foregoing became a part of the law of the land on the 20th of May, 1861—nearly a year before the note and mortgage in question were made. But it is insisted that this note is not a claim within the meaning of the foregoing provision, and is not subject to it, because it is secured by mortgage, and therefore does not run against the body of the estate in the first instance; and in support of this view the case of Fallon v. Butler, 21 Cal. 24, is cited. Whether that case states the law as correctly as Ellissen v. Halleck, and Faulkner v. Folsom's Executors, 6 Cal. 386 and 412, which it overrules, admits of serious doubt. The meaning of the word “claim” is broad enough to embrace a mortgage or any other lien, and in the one hundred and eighty-sixth section of the Act, mortgages and other liens are expressly mentioned as valid claims against the estate. This section received no special notice, though it was cited in the brief of counsel, at the hands of the Court in Fallon v. Butler, yet it seems to have a very significant bearing upon the question there discussed and determined. But be that as it may, it is clear that Fallon v. Butler does not decide that a note when secured by a mortgage is not a claim against the estate. On the contrary, it goes no further than the naked lien of the mortgage, which, for the purposes of the question then before the Court, was regarded as something “distinct” from the note,- and I am not disposed to extend the doctrine of that case [355] beyond its exact limits. The word “ claim” is not only broad enough to include a mortgage, but if there was any doubt upon that point it would seem to be removed by the language of the one hundred and thirty-third section, which provides that “ if the claim be founded on a bond, bill, note or other instrument, the original shall be presented,” etc. This language was added to the section in 1861. When the case of Fallon v. Fatter was tried in the Court below does not appear from the report, and it is possible that it was tried before section one hundred and thirty-three was so amended. The note in question was presented for allowance to the administrator and the Probate Judge, and thereupon filed in the Probate Court. It was a valid claim against the estate, and having been allowed and filed, took rank, in the language of section one hundred and thirty-three, “ among the acknowledged debts of the estate, to be paid in due course of administration,” under the direction of the Probate Court. The estate being insolvent, this claim, as well as all others, became subject to the provisions of section one hundred and thirty-one, and the petitioner only enlitled to interest at the rate of ten per cent per annum, from and after the date of the letters of administration, and there was no error on the part of the Court in so holding.