Gupton v. Carr

REYNOLDS, P. J. (after stating the facts).— In the brief and argument of the learned counsel for the respondent, submitted to us when this case was heard at bar, those counsel have said that it is conceded “that the sole and only question for this court to determine is whether under the facts stated, the appellant is entitled to a commission of five per cent on the sum of $37,687.55 which he paid unto the two hundred and thirteen depositors of the Exchange Bank of Jonesburg. Respondent however denies that the executor is entitled to any such commission on said sum, and her objections thereto may be summarized as follows: “First. That the probate court had no jurisdiction to wind up the affairs of the Exchange Bank of Jones-burg; and, second, That if it did have jurisdiction, before the executor is entitled to a commission on demands paid, the creditor of the estate must have his demand duly allowed, adjudicated and classified by the probate court.” Counsel then argues, first, that on sections 1298 to 1303, Revised Statutes 1899 (the Banking Law), the probate court had no jurisdiction over the funds in the bank. As their second proposition, they argued that the executor is not entitled to any commissions on the bank hinds paid out, because the demands against the bank, evidenced by the checks, were not presented to — 116 — and allowed by tbe probate court. These practically follow tbe exceptions lodged in tbe probate court.. Referring to tbe paper read in evidence and wbicb we bave copied in our statement, that is tbe agreement between Mrs. Carr and tbe executor, counsel, in this first brief and argument, say that it should not bave been admitted because “foreign to the question of tbe right of tbe executor to retain a commission. Had respondent excepted to the credits claimed by tbe executor by reason of bis having paid tbe depositors, the paper then would become relevant. But in this proceeding tbe paper throws no light upon tbe issues. At most it merely- protected tbe executor by reason of paying tbe depositors; but it could convey no jurisdiction upon tbe probate court, if tbe court bad none.” We call attention to these arguments and solemn admissions of counsel for tbe respondent, lawyers learned in tbe law, in order to emphasize exactly what issues were before tbe probate court and tbe circuit court and brought to us, as those issues were defined by counsel themselves in their printed brief as well as by oral argument. For, having obtained leave to file a supplemental brief, with that before us, we are obliged to say that they now attempt a departure from tbe issues wbicb they bave so distinctly avowed were tbe issues in both of tbe courts of first instance. In this supplemental argument and brief, filed with us after submission of tbe case, counsel for respondent for tbe first time advance this position: That “where an executor voluntarily, before final settlement, pays a legatee or creditor more money than would be due such legatee or creditor on final settlement, tbe loss must fall on tbe executor,” and in support of this position it is said that in reviewing this settlement, this court will determine tbe issue as though it was sitting as a probate court, and that tbe record shows that tbe executor voluntarily paid this legatee five thousand dollars; that when be made bis annual settlement there was a balance in his bands amounting — 117 — to $1946.61;. that be made no claims for commissions on amounts paid depositors in Ms annual settlement, but in Ms final settlement be claims a balance due bim from Mrs. Carr to complete bis settlement, of $1000.40, and it is submitted that the probate court has no jurisdiction to render any judgment against the exceptor, Mrs. Carr, compelling her to pay back this $1000.40, or any other sum to the executor. In effect, that it was a voluntary payment by the executor, which counsel assert the court has no power to compel the legatee to refund. Before entering upon a discussion of the case arising upon the exceptions, we will dispose of all the above by remarking that it is not within the exceptions, which, in a case of this character and class, may be called the petition which states the cause of action. No such issue was before either of the courts of first instance, and this court is not one of original jurisdiction, in cases of this class, and can and will determine only such issues as were before the trial courts. We have no power, even if we had the disposition, which we have not, to go outside of those issues and give any consideration whatever to this so manifest afterthought. Returning now to the case as presented by the exceptions and taking up the first objection, which rests on the proposition that the probate court had no jurisdiction to administer on $37,657.55, the amount of the assets in the bank, which were due to the depositors or creditors of the bank, but could only administer on whát remained of the bank assets after payment of these claims, we hold that the objection is not tenable. The death of Mr. Purl occurring in 1905, and the administration of his estate falling in between then and December 28, 1906, the banking law as in force prior to January 15, 1909, when the new law of March 18, 1907, took effect (Laws 1907, pp. 124,150), is to be applied. Our statute, chapter 12, of article 8, Revised Statutes 1899, referring to it as in force before the adoption of the new chapter in 1907, — 118 — provides for the regulation of banks, section 1299 being amended by Act of March 24, 1903. Section 1301 applied all the provisions of the article to private bankers, the latter section distinctly providing that the provisions of the article shall apply to the private banker, “so far as the same are applicable.” Section 1304, before the law of 1907, gave the Secretary of State visitorial right of examination, and section 1305 provided for the winding up of the affairs of a bank when the conditions set out in that section occur. In Clifford Banking Co. v. Donovan Com. Co., 195 Mo. 262, 94 S. W. 527, our Supreme Court held that this section 1305 had no application whatever to the settlement of the affairs of a banking corporation which is solvent at the time its existence terminates by the limitation of its charter. In this Clifford Banking Company case, the charter had expired and the affairs of the hank were taken in charge by the members of the last board of directors of the concern as trustees, they being such under the general statute relating to the winding up of corporations whose charters have expired by the last board of directors, they acting in liquidation as trustees. . In the later case of State ex rel. Hadley, Attorney-General, v. People’s United States Bank, 197 Mo. 574, 94 S. W. 953, it is reiterated that the Secretary of State has no power to take upon himself the administration of the affairs of a bank, organized under the laws of the state, save in case of insolvency, as insolvency is defined by statute. True, both of these cases were incorporated banks, but this section here construed is the only law giving any authority to the Secretary of State to proceed against any hank. The. evidence in this case shows, beyond room for cavil, that the private bank, known as the Exchange Bank, owned by Mr. Purl, was at the date of his death and taking over of the assets thereof by the executor of his will, entirely solvent. — 119 — The limitation of the law as construed in the two cases above cited disposes of the claim of any right in the Secretary of State to have gone into the circuit court, as it is argued he should have done, and applied for the appointment of a receiver, even if this Exchange Bank had been a corporation. Much less is there any Such right when the institution, instead of being a corporation, is a private bank, owned by one individual, .a banker sole. We cannot assent to the proposition advanced by counsel that a private bank, carried on by an individual, is quasi a corporation. The law, in subjecting the business of banking, when carried on by an individual, to state supervision, merely recognizes it as impressed with a public character, recognizes it as a business in which the public has an interest. In like manner and by like reasoning and for like cause, an individual engaged in operating a grain elevator for hire is recognized as engaged in a public employment, devoting his property to a public use and thereby subjecting himself to the control of the state. Munn v. Illinois, 94 U. S. 113, and kindred cases, inter alia, Merchants’ Exchange of St. Louis v. Knott, 212 Mo. 616, 1. c. 648, 111 S. W. 565, affords illustration of the application of this rule and uphold the application of the former. It might be sufficient to dispose of this proposition by saying that the case of a private banker —sole—dying, is not a case within the letter of the law, but we go further and hold that the individual banker solvent at the date of his death, sole owner of all the assets of the bank, is not within the spirit of the provisions of our state banking law, so as to warrant the Secretary of State to step in, and by the hands of a receiver, appointed by the circuit court, take upon himself the administration of the affairs of the individual banker. That is practically what, respondent contends should have been done in this case. Moreover, if this is the effect of the banking law it has engrafted a marked exception upon our probate laws. By the lat — 120 — ter, when tbe individual dies bis whole personal estate certainly, often bis real estate, passes so completely witbin tbe jurisdiction and exclusive power of tbe probate court of bis county for tbe purpose of settlement and distribution, that tbe beir can take over tbe personalty only through tbe administrator or executor. But if counsel are right in their contention, if tbe estate of tbe decedent happens to be entirely in bis bank, tbe probate court has no jurisdiction over it; tbe decedent could not even direct its disposition by will. If tbe legislators of tbe state bad intended to make such a radical departure from our probate laws as would be involved by any such rule, they certainly would have said so in plain and unmistakable language. They have not done it even by indirection. We bold that under tbe law as then in force, tbe jurisdiction of all matters pertaining to the winding up of tbe estate of Taylor Purl, tbe taking over of all tbe assets thereof, was exclusively and entirely in tbe probate court of Montgomery county.. Learned counsel for tbe exceptbr argue against this with great force, however, going even further and earnestly contending that it was tbe duty, no less than within tbe power of tbe Secretary of State, on tbe death of Mr. Purl to have stepped in and taken over tbe affairs of tbe bank; that section 1305, in terms, provides that “whenever it shall appear to the Secretary of State that it is unsafe or inexpedient (italics those of counsel) for any such corporation to continue to transact business, . . . or that its continuance in business will seriously jeopardize the safety of its depositors,” that it is bis duty to do so. Without resting on tbe proposition that in tbe cases above referred to, our Supreme Court has held that this power rests in tbe Secretary of State only in cases of insolvency, it is a sufficient answer to tbe contention to say that as this section rests action so entirely witbin tbe discretion of tbe Secretary, it is certain that in tbe case of this banker’s decease, the Secretary has not seen fit to — 121 — step in and. take possession. It is fair to presume that he knew of the death of Mr. Purl, for it is in the case that he issued a certificate to the corporation organized for the very purpose of taking oyer the business of this bank. The result in this case is a complete justification for the non-action of the Secretary, for every depositor and creditor of the bank was paid off in full, at a minimum of cost, delay and trouble. It is argued that the depositors had some special lien on these funds; that more than the relation of debtor and creditor existed between them and the bank. This is a mistake. These depositors were general creditors of the bank, even regarding the bank as something outside the estate of its sole owner; were not preferred or special creditors. [Kenneth Investment Co. v. Nat’l Bk. of the Republic, 96 Mo. App. 125, 1. c. 144, 70 S. W. 173; Arnold v. Sedalia Nat’l Bank, 100 Mo. App. 474, 1. c. 478, 74 S. W. 1038; O’Grady v. Stotts City Bank, 106 Mo. App. 366, 1. c. 369, 80 S. W. 696; State v. Reid, 125 Mo. 43, 1. c. 51, 28 S. W. 172.] It is further argued that this money in the bank did not belong to the bank but to the depositors. This is more specious than sound. It was money held and of the estate of the decedent, and the fact that he owed it to some one else in no manner whatever took it out of his estate. His executor and no one else was the only person who was entitled to take possession of it and distribute it to the claimants, creditors of the bank, and when he took it into his hands as he did, it was just as much of the personal property and money of the estate as any of the so-called individual assets of the decedent. The case of Hitchcock v. Mosher, 106 Mo. 578, 17 S. W. 638, is cited and relied upon by counsel for each side. In that case the deceased had bought bonds through a broker, paying 10 per cent on their value, and after he died the broker, buying in the bonds, turned back to the administrator the 10 per cent the deceased had in them, the other 90 per cent belonging — 122 — to the broker and in no sense whatever were of the assets of the estate of the decedent. All the right or interest of decedent in the bonds was in ten per cent of their value. That case has no parallel whatever in its facts to the case at bar. Counsel urge as a final argument against throwing the bank assets into the probate court, that the winding up of an estate in that court involves a delay of two years in the payment of depositors. It did not in this case, but even if it had, the delay of two years is one imposed by the law, and the argument of delay is not one that appeals to us; it is for the Legislature. The second proposition as to right to the commission claimed, is somewhat more difficult of solution. That the assets of Taylor Purl in the bank were just as much of the assets of his estate as any other personal property he possessed, admits of no question. It might as well be claimed that there were two- estates and that there should be two administrations or settlements of the estate of a merchant engaged in carrying on the business of a grocer, if at the same time he happens to be running a farm or doing any outside business in which his capital or labor is employed. The law commands that the executor taken into his hands all the personal estate of the testator, so that it is not alone his right but his duty so to do. There is provision in the law for but one administration of an estate, whether by the original executor or administrator or by one des boms non. The separation of accounts which seems to have been carried on here, while possibly not improper,, did not have the effect of dividing the estate of the decedent or its administration into two parts; making an inventory of one branch and a separate inventory of another, could not have the effect, in law, of dividing the decedent’s estate into two parts or branches. It was as much the duty of this executor to collect and preserve the estate of the decedent invested in the banking business, as it was to collect that outside of the — 123 — bank. The executor here did this, and the total personalty collected — allowing for unavailable assets, was $49,426.42; of this amount all but about $4000 came to him of the assets of the bank; he paid out to the creditors of the bank the $37,681.55, turning over to the exceptor all the balance, less allowed costs, credits and commissions; in fact he seems to have distributed to the exceptor, sole heir and legatee, about $1000 more than, on this showing, and if he is allowed commissions claimed thereon, she was entitled to receive. That he has made the disbursements claimed is not disputed. That he was authorized by the exceptor and her husband, sole distributees, to pay out the $37,687.55, to the bank creditors, is not disputed. That the probate court did not allow the demands of those bank creditors is not disputed, although it is admitted that the executor reported this disbursement of $37,687.50 in his first annual settlement and exhibited vouchers for it and that the probate court passed and approved that settlement. What then is the law as applies to these facts, as to allowance of commission to the executor for this $37,657.55 disbursement? The statute, section 223, Revised Statutes of 1899, provides: “In all settlements of executors or administrators the court shall settle the same according to law, allow all disbursements and appropriations made by order of the court (as also for), legal advice and services, and collecting and preserving the estate, and as full compensation for their services and trouble a commission of five per cent on personal property and on money arising from the sale of real estate.” Then follows section 224: “Upon every settlement, the executor or administrator shall show that every claim for which disbursements have been made has been allowed by the court according to law.” It is over these two sections that this branch of the controversy turns. Prior to 1889, this section 224 read: “Upon every settlement the executor or administrator shall show that every claim for which disbursements — 124 — have been made has been allowed by the court according to law, or shall produce such proof of the demand as would enable the claimant to recover in a suit at law.” [E. S. 1879, sec. 230.] Many cases, of which Jacobs v. Jacobs, 99 Mo. 427, 12 S. W. 457, and McPike v. McPike, 111 Mo. 216, 20 S. W. 12, are types, which arose nnder this section as it stood in the statutes of 1879, have held that independent of the allowance by the probate court of the demand, it was open to the executor or administrator to produce proof on final settlement that the demand paid by him, although not formally allowed by the probate court, was of such a nature that it could be proved ánd established by the claimant if he instituted an action at law against the estate, and it was held that when the executor or administrator showed that disbursements made by him but not previously allowed as claims by the probate court were of such a character that they could be established at law, he was entitled to credit for them and to his commission on them. But in the revision of the statutes of 1889, the words which we have italicized were eliminated and ever since the revision of 1889, the section has stood as it now appears and as we have before quoted it, as section 224, Revised Statutes 1899. It was at one time contended that the omission of these italicized words from the revision of 1889 was not justified by law; that no act of the Legislature had amended section 230 of the revision of 1879. This question, however, was put at rest by the Supreme Court in a decision by Judge Y allí ant in Langston v. Canterbury, 173 Mo. 122 (73 S. W. 151) where at page 130, he says that without questioning the authenticity of the revisions of 1889 and 1899, an examination of the files in the office of the Secretary of State shows the passage and approval of an act revising the chapter on administration as found in the revision of 1879, and which act shows that section 230 of the revision of 1879 was amended in the particular above indicated and as ap — 125 — pears in tbe revisions of 1889 as section 223, and as section 224 in tbe revision of 1899. In this same case of Langston v. Canterbury, supra, it is beld that under the law as it now exists, claims must be exhibited to the administrator, presented to the probate court for allowance and established by proof, and that until a claim has been so allowed by the probate court or established by judgment of the circuit or other court of competent jurisdiction and classified by the probate court, the administrator has no right to appropriate any of the assets of the estate in its payment, and inferentially, that he could not claim commissions on that much of the estate so not properly administered. In Springfield Grocer Co. v. Walton, 95 Mo. App. 526, 69 S. W. 477, Judge Barclay, speaking for this court and after having with his usual care and particularity pointed out the change affected in section 230, Revised Statutes 1879, by the revision of 1899, holds (page 536) that so far as concerns the commissions due to the administrator, the trial court had limited them to his percentage upon disbursements which the court finally approved. Those which were not approved were held not entitled to be estimated in arriving at the administrator’s charges, and Judge Barclay says that the trial court was correct in so holding. On the authority of these decisions it is claimed that the appellant here is not entitled to any commissions on these disbursements which he made on checks drawn against, him, although the checks were presented by him in the probate court as vouchers to his first settlement, and show the expenditure of the $37,687.55. This first settlement was approved with this disbursement shown in it and with the vouchers showing its expenditure before the court, and under the law as it stood prior to the revision of 1889, upon the executor showing that these vouchers were correct and lawful charges against the estate which could have been established in an ac — 126 — tion at law, lie would have been allowed credit for the disbursement and of course bis commissions thereon. We have no statute limiting the commission of the executor or administrator to his disbursements on allowed claims, or measuring his allowances by his approved disbursements. Section 223, Revised Statutes 1899, is the only section covering commissions, and section 224, is the only section ever construed in connection with it when the matter of commissions is under consideration. Recurring to the case of Springfield Grocer Co. v. Walton, supra, it is to be observed that there is no discussion by Judge Barclay of the proposition which he there announces, that the trial court properly limited the allowance of commissions to the administrator to a percentage upon his disbursements which the court had finally approved. Obviously what was in the mind of the court was the general doctrine that an administrator or executor, like any trustee, is only entitled to commissions or reward when he has faithfully and according to his trust or the law administered the estate. It is true there are dicta in one or two cases to the effect that the administrator shall receive his commission on the assets belonging to the decedent which came into his hands and were properly paid away or disbursed by him in the course of his administration, as see Hitchcock v. Mosher, 106 Mo. 578, 1. c. 582, 17 S. W. 638. In Ladd v. Stephens, 147 Mo. 319, 1. c. 335, 48 S. W. 915, it is said that “administrators are entitled to commissions on the actual value of the assets distributed by them,” citing Glover v. Holliday, 109 Mo. 108, 18 S. W. 1133, and Hitchcock v. Mosher, supra. But there is no statutory provision which confines the commissions to the amount of the estate disbursed on allowed accounts. To hold that such was the law would entirely defeat an administrator or executor from any commission, if it so happened that there were no claims whatever against an estate and that the personal prop — 127 — erty was distributed among tbe beirs without a' sale. When we search for the underlying reason for refusing allowances of commissions on unallowed disbursements, it is not difficult to find. It rests on the broad rule that an unfaithful trustee shall not reap any reward springing out of his breach of trust, more particularly on the common sense proposition that an administrator shall not be allowed his commission on that part of the assets of the estate which he has paid out without authority of law or for which he has failed to account. He has committed a breach of trust and therefore is not entitled to commissions. In brief, the executor or administrator is entitled to his commissions on all the personal property of the estate which came into his hands and for which, without default and in accordance with the law, he has accounted. This is so, not that the law itself makes any such provision, but because the courts, looking to the spirit of the law and having the estates of the dead under their care, will not allow him who has been guilty of maladministration to reap any reward therefrom. Applying this rule to the facts in the case at bar, there is no suggestion whatever of any breach of trust or malversation on the part of this executor. On the contrary, it is admitted that his disbursements are all correct. It is admitted that he paid out the money to those creditors of the bank who were entitled to it. It is in the record that he made these payments under and in accordance with the agreement between him and Mrs. Carr, and her husband, the sole legatees and dis-tributees of the estate, who moreover agreed to hold him harmless by reason of making the disbursement. It is also admitted that he paid out this amount to these creditors without requiring the creditors, depositors in the bank, to present their claims in the probate court for allowance. The exceptor does not seek to charge him with this disbursement. What she does do is to chaih;nge his right to a commission on this dis128 bnrsement. Admitting that it was unlawful on the part of the executor, as such to have made these disbursements without the previous authorization of the probate court, does it lie in the mouth of Mrs. Carr, this exceptor, who is the sole party in interest and the only one complaining of the act of this executor, to do this; to challenge the right of the executor to lawful commissions on these disbursements? We think not. While the disbursement was not authorized by any order of the court, it involved neither a breach of trust or of duty upon the part of the executor, nor did it involve a misappropriation of the funds or any loss to the estate. The executor has faithfully accounted for every dollar of the assets of the estate that came into his hands. This exceptor is estopped by her own agreement from asserting the contrary. This court, in Newton v. Rebenack, 90 Mo. App. 650, held that where a cestui que trust, who is sui juris, has authorized her trustee to pursue a certain line of conduct, she will be precluded from maintaining an action against the trustee for breaches which he had committed and which breaches were induced by her direction and assent. It is true that this rule is one usually applied between a trustee and his cestui que trust, but we know of no reason why under the facts in this case, it does not apply as between this exceptor and the executor. Without invoking the rule existing between trustee and cestui que trust as entirely applicable to the relation of executor and distributee, there is sufficient analogy to those relations to make that rule apply here. It is true that the agreement between Mrs. Carr and the executor makes no provision as to commissions, nor does it in terms say that the claims of depositors are not to be presented to the court for allowance. But who can doubt that but for the agreement this executor would have compelled all the depositors in the bank to have presented their claims to the probate court for — 129 — allowance. If that had been done, it is tacitly admitted that the claims would have been allowed and the executor, beyond all question, would have been entitled to his commission on them. It may he said that a persuasive inducement for this agreement may be found to rest in the item of cost saved the estate by avoiding the cost of having the claims allowed by the court to each individual claimant. Be that as it may, this executor, having at the instance and with the assent of the exceptor made these payments, this exceptor is es-topped from now claiming that he is not entitled to the commission allowed by law on all the money and personal assets of the estate which came into his hands as executor, for it is clear that he has faithfully administered upon all of them. We do not put our conclusion on tbe ground that because these claims of the bank creditors were claims which could or might be established by an action at law, the executor is protected in payment thereof and entitled to commission thereon. The ground for any such conclusion fell, when section 224 was amended as in its present form by the revision of 1889. We place our conclusion on the distinct ground that the executor has faithfully administered all of the estate, and having made the disbursement here under consideration without previous allowance of the demands by the probate court, but in consequence of and in execution of the agreement between him and the ex-ceptor, there has not only been no maladministration, but the exceptor is estopped from claiming it as an unlawful disbursement; and being a lawful disbursement as against this exceptor, she is estopped from denying to the executor the commission the law allows on the assets of the estate which passed through his hands and were in his charge, and all of which he has faithfully administered. The judgment of the circuit court of Montgomery county is reversed and the cause remanded with diree130 tions to that court to overrule tbe exceptions to tbe final report of tbe executor, and further proceed according to law and as here pointed out. All concur.