Sutton's Estate

Opinion by William W. Porter, J., The decedent sold a farm on November 23, 1872, to his son, Peter Sutton. The contract was a sealed writing. The terms — 495 — of the payment were “one half payable one'year after the decease of said Silas Sutton, and the balance two years thereafter, with interest payable annually if called for, otherwise no interest to be paid during the natural life of the said Silas Sutton.” The contract further provided, “that if at any time and as often as any instalments of principal and interest, under this contract, shall become.due and remain unpaid for the space of thirty days, the whole amount of purchase money, above named, -shall, therefore, become due and payable, and the said party of the first part and his legal representatives shall be thereupon entitled to re-enter and take possession of said land and premises, after paying the said Peter Sutton for all the improvements he has or may make thereon.” Silas Sutton died December 21, 1874, leaving a will dated August 16, 1878, appointing his son, Peter Sutton, and his daughter, Annie Gr. Shelley, executors. The will directed the executors to apply the income of the estate, and as much of the principal as necessary, to the support •of the decedent’s wife, and directed that no division of the estate should be made until her death. She died October 14, 1896. The residue of the estate was given and devised, one fifth to each of three children; one fifth to the wife and chil-dren of the decedent’s son, Ira Gr. Sutton; one fifth to the decedent’s grandchildren, Ira T. Beisecker and Anna E. Beiseeker, children of Lydia, deceased daughter of the decedent. No part of the purchase money for the farm was paid by Peter Sutton. On October 9, 1878, all of the owners of the . residuary estate of Silas Sutton (except the children of Ira G. .•Sutton, who were then minors or unborn), executed an agree.ment with Peter Sutton, allowing him to surrender the farm Tinder the terms of the first agreement, by which the contract ■was. made forfeitable for nonpayment. Thereafter, the farm was treated as part of the estate of Silas Sutton, and Peter -Sutton, as executor, as found by the court below, has accounted for its proceeds. In the rescission of the first contract, Peter Sutton agreed to -pay legal interest on the purchase money of the farm from the death of his father to October 9, 1878, the date of the contract of rescission. In the original contract of sale there was, as we 'have seen, a stipulation that on a forfeiture Peter Sutton should be paid for any improvements he might have put upon — 496 — the property. When the purchase was rescinded by the contract of October 9, 1878, the amount of the improvements was ascertained by three agreed, disinterested appraisers, who fixed the amount at -13,168.75. This amount was not paid by Peter Sutton or his coexecutor. Within a few months after the death of the widow of the decedent, the executors of the decedent’s will filed an account, and upon the audit of it the questions here to be determined were raised. The appellants stand, in respect to the controversy, in somewhat different positions. Almira Sutton, one of the appellants, was a party to the contract of October 9, 1878. Her rights must be considered separately from the rights of the other appellants. By an agreement filed of record in this court, it has been stipulated by all of the parties that the appeal of Almira Sutton may be separately determined, and that the appeal of Victor B. Sutton shall determine the rights of the remaining appellants. THE APPEAL OF ALMIRA SUTTON. The appellant is the wife of Ira G. Sutton. She and her children take a one fifth interest in the residue of the decedent’s estate. Ira G. Sutton is the son of the decedent and is still living. He joined with Almira, his wife, in signing the agreement of October 9, 1878. She seems to be the only party to that agreement who now objects to the construction put upon it by the court below, save Annie E. Beisecker, who was not of age when she signed the agreement. It is urged in Almira Sutton’s behalf that the court erred in allowing the accountant the value of the improvements put upon the farm by him and appraised under the provisions of the agreement of October 9, 1878. The objection is that by the terms of the agreement the value of the improvements was only to be collected from the premises upon which the improvements were put, and that the allowance was to be payable only when the premises, or the proceeds of their sale, were divided. The premises have not been sold or divided. They are still an asset of the estate of Silas Sutton. The present account does not, therefore, bring in the proceeds of the sale of the premises, but does include some of the rentals. It is an account of the administration of the estate of Silas Sutton upon which a distri — 497 — bution can and, under tbe order of tbe court, will be made. The claim of the accountant is based on the terms of the agreement of October 9, 1878. We are of opinion that payment of the allowance for the improvements ivas not limited to the premises upon which the improvements had been placed, nor to the proceeds of the premises, if sold, but is a debt due by the estate and payable put of the fund for distribution. The language of the contract is that the aggregate amount of the value of the improvements “ shall first be allowed and paid to Peter Sutton before distributing the estate of Silas Sutton or the proceeds arising from said lands among parties hereto under the will of said Silas Sutton.” To say that the payment shall be made before distributing the estate is equivalent to saying that the estate is a fund out of which it may be made. It is true that the contract contains some phraseology upon which has been builded, by the ability of the counsel, an argument of some strength for a different interpretation. We have given the argument due consideration and are convinced that the conclusion reached by the court below and by us does not succumb to the assault. The learned court below was right in allowing the claim of Peter Sutton for the appraised value of the improvements. The next question is whether under the contract the allowance for improvements should bear interest. Under the view we have taken of this contract, the appraised value of the improvements became a debt due by the estate of Silas Sutton from the date of the contract, October 9, 1878. The amount was ascertained. Peter Sutton was authorized to withhold the amount on any division of the premises or of the money arising from a sale of the same. He was authorized to deduct the amount from the general estate of the decedent before distribution. There seems to be no reason why he could not immediately have appropriated as executor the funds of the estate to the payment of this indebtedness. If this be so, why should he not receive interest? To this, it is answered, he should have paid the debt and thus tolled the running of the interest. The rejoinder is that under the terms of the will the whole estate was pledged for the support of the decedent’s wife, the mother of the accountant. The filial relation may have been the motive for postponing the payment of the debt out of the — 498 — principal of the estate. There is no unbending rule which requires a trustee to pay off a debt where the creditor is not pressing. It may be, in some cases, for the manifest benefit of an estate that the debt should be carried for a time. There is, however, the obligation to pay current interest, since by its accumulation the whole corpus may be swept from the remainder-men. It cannot be inferred that the payment of the principal and the accumulating interest was postponed because of the needs of the beneficiary for life, who had both income and principal as her security. Such a state of facts must be proved and with great clearness, to justify such a course as that taken by the accountant here. While our eyes are not closed to the fact that the appellant alone of all the signers of the agreement of 1878 now complains, yet are we of opinion that error was committed in allowing interest on the claim in the absence of positive proof showing the necessity for deferring the payment of the principal and interest. APPEAL OF VICTOR B. SUTTON. In this appeal the agreement of October 9, 1878, is to be disregarded. It is claimed that Peter Sutton, as executor, is not entitled to the allowance for the improvements put upon the farm, which he, as an individual, was under contract with his father to buy, because of a certain unexplained interlineation in the writing, which is of paramount importance. The contract was executed on November 23, 1872. The consideration was, as we have seen, payable one half one year after the decease of Silas Sutton, and the balance two years thereafter. It was provided that on the failure to pay any instalment of the principal or interest, the whole amount of the purchase money should become due, and the vendor have the right of re-entry by summary proceedings of ejectment, or otherwise. In this clause of the contract was inserted by interlineation these words : “ After paying the said Peter Sutton for all the improvements he has or may make thereon.” The claim for allowance for the improvements is based on this injected clause. It is true that the party offering an interlined document in evidence and seeking advantage from the writing is bound to explain the alteration to the satisfaction of the jury: Jordan v. Stewart, 23 Pa. 249. The record of this case, however, shows that the — 499 — document was offered in evidence by the claimant without objection. It does not appear that proof of the execution of the contract was even required. We are warranted in assuming that the appellants had opportunity for examination of the document or that they were willing to admit it in evidence without such examination. It may even be, as alleged by the appellee, that the document itself had precedently been offered in evidence by the appellants themselves. This would seem to be the case from the portions of the record printed in the appellee’s paper-book. At all events, the court below was sitting to determine facts as well as law. The record discloses no challenge when the contract was offered. We will assume that the court was satisfied of the bona tides of the contract as interlined. The act of Peter Sutton in dealing with himself as vendee of the farm is attacked. He, by virtue of the provisions of the contract of November 23, 1872, agreed with himself that as vendee of the land he would relinquish his rights, pay $1,200 as interest on the unpaid purchase money up to the time of surrender; that as executor and trustee, he would make an allowance to himself, as vendee, of the appraised value of the improvements upon the property. All of the heirs sui juris seem to have been cognizant of his acts and to have joined in the agreement approving of them. There is nothing which stamps the transaction with bad faith. The method of appraising is objected to, but not its bona fides. The sale of the land was made by the decedent in Ids lifetime for a fixed price. Peter Sutton, as executor of the decedent’s will, succeeded to the decedent’s rights, inasmuch as the farm was no longer land, but personalty in respect to the decedent’s estate. The land, on the breach of the contract to purchase, became a part of the decedent’s estate and, under the terms of the will, chargeable with the trusts in favor of the widow. Peter Sutton, as executor and trustee, therefore, dealt with the land as personalty. He accepted a surrender from himself as vendee, and this he was with authority to do, being bound only to the exercise of good faith in the transaction. While not alleging bad faith, the appellants assert that an erroneous valuation was permitted by the court to be made of the improvements upon the farm. It is claimed that the value — 500 — of the improvements should be measured by the enhanced value of the land. This is the measure applied in actions for mesneprofits: Noble v. Biddle, 81* Pa. 430. But the language of the contract here warrants the measure of value adopted. Peter Sutton was, on re-entry being made upon the farm by the-vendor or his legal representatives, to be paid “ for all the improvements he has or may make thereon.” It is not the value of the improvements. It is not the enhanced value of the farm. It is for all the improvements, which means the cost of the improvements. This is the method of valuation adopted by the appraisers and it is the measure approved by the court, below. In this appeal the right of the accountant to interest on his allowance for improvements is attacked. Holding, as "we do, that the transaction of 1878 was in good faith an adjustment of rights after the breach of the contract of 1872, the allowance became a debt of the estate, independent of the written contract of 1878. What has been said in Almira Sutton’s appeal,, supra, applies to the matter of interest in this appeal. The accountant not having shown affirmatively the necessity for postponing payment of the principal and current interest on his claim, has, as against the remainder interests, estopped himself from collecting the accumulation of interest. The decree of the court below is reversed, and the record is. remitted with direction that distribution be made in accordance-with the views herein expressed.