State ex rel. Shields v. Second Judicial District Court

MR. CHIEF JUSTICE BRANTLY, after stating the case, delivered the opinion of the Court. — 7 — The contentions made by counsel require an answer to two questions: (1) Was the order of April 19th in excess of the jurisdiction of the district court for the reason that it named a fixed rental to be paid by Britt, McSherry and Ryan? (2) Was the order of June 10th void by reason of the stipulation filed in the proceeding on May 16th, and the order made in pursuance thereof on May 20th, authorizing Britt to withdraw the acceptance of the lease by him for himself and associates with all proposals for a lease? 1. The power of the district court to authorize an administrator or executor to lease the real estate, or any part of it, in his hands for the purpose of administration, is derived from the Code of Civil Procedure, Secs. 2720, 2722. Section 2720 provides: “Whenever it appears to the court or judge, to be for the advantage of the estate to raise money by mortgage of the real property of the decedent, or any part thereof, or to make a lease of said realty, or any part thereof, the court or judge, as often as occasion therefor shall arise in the administration of any estate, may, on a petition, notice and hearing as provided for in this article, authorize, empower and direct the executor or administrator to mortgage or lease such real estate or any part thereof. ’ ’ The mode of procedure is provided in section 2722. The portions of it requiring notice here are the following: “To obtain an order to lease the realty, the proceedings to be taken and the effect thereof shall be as follows: “(1) The executor, administrator, or any person interested in the estate, may file a verified petition showing: the advantage or advantages that may accrue to the estate from giving a lease; a general description of the property proposed to be leased; the term, rental and general conditions of the proposed lease; and the names of the legatees and devisees, if any, and of the heirs of the deceased, so far as known to the petitioner. * * * ‘ ‘(4) At the time and place appointed in the order to show — 8 — cause, or at such other time and place to which the hearing may be postponed, the court or judge having first received satisfactory proof of personal service or publication of the order to show cause, must proceed to hear the petition and any objections that may be filed or presented thereto. Upon such hearing witnesses may be compelled to attend and testify in the same manner and with like effect as in other cases, and the court or judge may, in its or his discretion, appoint one or more, not exceeding three, disinterested persons to appraise the rental value of the premises, and direct that a reasonable compensation for their services, not to e'xceed five dollars per day, to be paid by the estate. If, after a full hearing, the court or judge is satisfied that it will be for the advantage of the estate to lease the whole or any portion of the real estate, an order must be made authorizing, empowering and directing the executor or administrator to make such lease. The order may prescribe the minimum rental to be received for the premises, and the period of the lease, which must in no case be longer than tor five years, and may prescribe the other terms and conditions of such lease. “(5) After the making of the order to lease, the executor or administrator must execute, acknowledge and deliver a lease of the premises, for the rent, and period, and with the conditions specified in the order, setting forth in the lease that it is made by authority of the order, and giving the date of such order. A certified copy of the order shall be recorded in the office of the county clerk of every county m which the leased land or any portion thereof lies. “(6) Every lease so made shall be effectual to demise and let, at the rent, for the term, and upon the conditions prescribed therein, the premises described therein. Jurisdiction of the court to administer the decedent’s estate shall be effectual to vest such court and judge with jurisdiction to make the order for the lease, and such jurisdiction shall conclusively inure to the benefit of the lessee, his heirs and assigns. No omission, error or irregularity in the proceedings impairs or invalidates the same, or the lease made in pursuance thereof. ’ ’ — 9 — Subdivisions 2 and 3 contain provisions touching the form and contents of the notice to be given, and the time and mode of service. It is not necessary to examine these matters further than to note the requirement that the notice must contain mention of the term and rental contemplated by the proposed lease. There is no question here but that there was proper notice of the original application. The contention is made by counsel for the relators that the order of April 19th was in excess of jurisdiction, for the reason that the court or judge could not, under the foregoing provisions of the statute, fix at a specific sum or rate the rental to be paid by the lessees. The provision contained in the last sentence of subdivision 1, they say, requires a minimum to be fixed, so that it may be left to the discretion of the executor or administrator to secure a greater sum or rate, if he can. It therefore follows, also, they insist, that the court or judge should not, in the order, name the lessee or lessees, but the iepresentative of the estate should be left unrestricted in the exercise of his discretion, except as to the length of the term, the minimum rental, and the other terms and conditions of the lease; so that he may be free to accept or reject offers from persons who may not be known as desiring a lease at the time the order is made. In short, their contention is that the power of the court or judge is exhausted when the order is made permitting a lease at a minimum rental upon suitable conditions. The executor or administrator will then be free to carry out the order when, -in his discretion, a suitable offer has been made. If this oi\der was without jurisdiction,- the conclusion must be that the order of June 10th was void, since it was founded upon the former order, without reference to the conditions existing on June 10th. It is clear that this contention cannot be sustained. The provisions of subdivision 1, supra, clearly contemplate a case where the executor or administrator has already exercised his discretion, and made all the arrangements and agreements with some particular person or persons for a lease, subject to the order of the court or judge, and presents his petition asking for authority to carry out the — 10 — arrangement. For if, after a hearing upon proper notice, as provided in subdivision 4, this officer’s acts are approved, and it is found to the advantage of the estate to make the lease, ‘ ‘an order must be made authorizing and directing the executor or administrator to make such lease;” that is, the lease asked for in the petition, and mentioned in the notice as containing a fixed rental, a specified term, and certain conditions. After the order is made, ‘ ‘the executor or administrator must execute, acknowledge and deliver a lease, of the premises for the rent and period and with the conditions specified in the order. ’ ’ The lease shall also give the date of the order, and state that it is made under the authority thereof. (Subdivision 5.) Furthermore, “every lease so made shall be effectual to demise and let,” etc., and the jurisdiction of the court or judge to make the order “shall conclusively inure to the benefit of the lessee, his heirs and assigns. ’ ’ (Subdivision 6.) All these provisions taken together seem clearly to have in view the idea that at the end of the proceedings, and after the order is made, there is nothing left for the representative of the estate to do but carry out the order according to its terms. This duty is obligatory upon him. No discretion is left. To all intents and purposes the lease is the act of the court or its judge, and the executor or administrator becomes but the agent, without discretion, to execute it. For it cannot be admitted that it is not the duty of the court or judge to inquire into the responsibility, both moral and financial, of the lessee, and the prospect that the promised rent will be paid, and the other conditions of the lease carried out.« Contrary to the contention of counsel, the provision contained in the last sentence of subdivision 4 is in full accord with these ideas. Clearly, this has reference to a case where the court or judge disapproves, or does not entirely approve, of what the representative has proposed, or where it is deemed advisable to insert other conditions and agreements in the contract, the better to guard the interests of the estate and to meet contingencies likely to arise during the term. It may be advisable to require security for the faithful performance of the conditions — 11 — of the lease, and the lease may be conditioned upon the furnishing of this. There may be circumstances indicating that rents will fluctuate during the term. It might be desirable to direct the lease to be conditioned to meet this contingency. In the exercise of a sound discretion this could be done. By fixing a rental for the time being with provisions for the payment of a greater or less amount upon the happening of certain contingencies, but never a less amount than a specified minimum, the estate would be assured a revenue at no time less than that produced by the minimum rate, and would profit by an increase in values. This provision seems peculiarly applicable to the conditions arising in a state like ours, in which property interests often depend upon mining enterprises, and rents and values are subject to frequent and violent fluctuations. Especially applicable is it to a case like the present, where the only property belonging to the estate consists of mines, which, from their situation and surroundings, are probably of great value, and it is desirable to save them to the estate, and at the same time meet the demand of its creditors. All the provisions of subdivision 4, supra, clearly have to do with the powers and duties of the court or judge, and have no reference to those appertaining to the executor or administrator. The addition of the last provision to this subdivision can only be regarded as a more specific definition of the discretionary powers vested in the court or judge. We do not think the statute as a whole contemplates leaving any of the substantial conditions or agreements in the lease to the final discretion of the representative. Certainly, the provisions of subdivision 4 do not. The minimum rental which a court might fix in a particular case would depend upon conditions enumerated in the lease, and the determination of them would be entirely without the discretion of the representative. In making the order of March 25th the district court was clearly within its lawful powers. So it was within its discretion to make the order of April 19th, modifying its former order, the lessees and executor having agreed to the modification. It was also its duty to refuse to revoke this order with — 12 — out the consent of the lessees after they had accepted its terms and complied with them on their part. After this had been ■done, the court had no authority to revoke it upon the facts disclosed in the record upon the filing of the petition of April 24 th. 2. The order made on June 10th directing the executor to execute the lease to McSherry and Ryan was without jurisdiction and void. Throughout the .proceedings looking to the making of the lease Britt was the representative of himself and his associates. . He accepted the terms of the original order, and also of the order of April 19th, and complied with the terms of the latter by paying down the $500. bonus, and furnishing the required bond. Thereupon, and before the' order had been carried out, moved by considerations not disclosed by the record, he stipulated with the executor for a release from the agreement, and the court confirmed that stipulation. He then withdrew the money and bond from the hands of the clerk, and also all proposals theretofore made to the executor for a lease. This left the matter in the same position as it was before the original application was made by the executor. If the release was proper, there was at the date of the order nothing before the court but the application for permission to lease to Silas F. King. If the release was not proper, still the executor was not in a position to carry out the order of April 19th as long as the order of May 20th remained unchanged. As the latter stood, it virtually revoked the former order, and the court, in making the order of June 10th under this condition of the record, did so in the absence of any application before it upon which this latter order was based. For it cannot be claimed that upon an application for leave to execute a lease to Silas F. King the court would grant a lease to other parties who were not before it. McSherry and Ryan were not there asking for a lease, but were objecting to the application on behalf of King. They had no one petitioning for them. They were not interested in the estate, and could not make any application on its behalf. If they had been defrauded of their rights by their associate, they should — 13 — have applied to the court to have the order of May 20th set aside. In this way only could they be heard, if they could be heard at all. If the court could grant them a lease under these circumstances, then it could, of its own motion, without any application or notice, or hearing, grant a lease to any person making it known that a lease was desired. This the court could not do. Its power when sitting in probate matters is derived from the statute, and it cannot go beyond the provisions of the statute. (State ex rel. Bartlett v. Second Judicial District Court, 18 Mont. 481, 46 Pac. 259; In re Higgins’ Estate, 15 Mont. 474, 39 Pac. 506, 28 L. R. A. 116.) Jurisdiction over the estate, and the power arising therefrom to make the order for a lease, inure to the benefit of the lessee only when they have been invoked by proper application. The error, omission or irregularity referred to in the latter part of subdivision 6 of the statute, upon which counsel relies for a justification of the order of June 10th, certainly does not warrant dispensing with a verified petition by some authorized person, and notice to all parties interested. The order of the district court made and entered on June 10th must be annulled. It is so ordered.