Knobeloch v. Germania &c. Bank

The opinion of the court was delivered by Me. Justice Pope. This action was commenced on che 31st January, 1894, and came on for trial, under a written stipulation between the parties, at chambers, before his honor, Judge Witherspoon, on the 14th June, 1894, in the city of Charleston, in this State. The first question submitted to the Circuit Judge for decision was: Is the action one in chancery, and if so, should it be placed on Calendar 1 for trial? The Circuit Judge held that it was an action in chancery, and, therefore, that it should be placed on calendar 2, and not on Calendar 1, for trial. The next, question submitted to the Circuit Judge was: Does the complaint state facts sufficient to constitute a cause of action? The Circuit Judge held that.it did not, and dismissed the complaint. From the two orders in writing made by Judge Witherspoon on these two questions, the plaintiff has appealed on these seven grounds: 1. Because his honor erred in holding that the pleadings show a case in chancery. 2. Because his honor erred in ordering this action stricken from Calendar 1 and placed on Calendar 2. 3. Because his honor erred in holding that the plaintiff, in his complaint, does not state facts sufficient to constitute a cause of action against the defendant. 4. Because his honor should have held that the plaintiff could maintain this action as administrator de bonis non eum testamento annexo. 5. Because his honor erred in sustaining defendant’s oral demurrer and dismissing the complaint. 6. Because his honor erred in not holding that the defendant had waived the right to question plaintiff’s legal capacity to sue, having failed to do so by written demurrer or to make it in his answer. 7. Because his honor erred in not holding that defendant’s demurrer, on the — 241 — ground that the complaint does not state facts sufficient to constitute a cause of action, was defective, because it failed to state wherein the pleading objected to is insufficient. In order that our decision of the matter involved in this appeal may be understood, it will be necessary in the report of this case that the complaint and answer shall be reported in full. This being done, it will be readily seen that, stripped of the verbiage necessary to the pleadings whereby the issues are carefully presented on both sides, the plaintiff in his representative character of administrator de bonis non cum testamento annexo of William Knobeloch, sr., deceased, seeks to recover from the defendant the sum of $2,000 paid to one Jacob Small, as surviving executor of the last will and testament of the said William Knobelock, sr., deceased, on his check therefor, from funds then on deposit to his credit as said executor in the defendant bank, on the 7th February, 1891, and, also, the further sum of $5,728.48 paid to said Jacob Small' as surviving executor of said last will and testament of William Knobeloch, sr., deceased, on his check therefor, from funds then on deposit to his credit as said executor in the defendant bank, on the 28th day of February, 1891, upon the ground that both of said payments, made as aforesaid, were while the said Jacob Small was the president and a director of said defendant bank, and that the defendant knew at the time such two payments were made that the said Jacob Small intended to and did misappropriate and convert the said funds deposited by him in his name as executor as aforesaid, to his own use and not to the use of the estate of his said testator; and with the further knowledge on the part of said defendant bank that said funds so deposited by the said Jacob Small as executor as aforesaid were the property of certain cestuis que trust under the said will of William Knobeloch, sr., deceased, and of which said cestuis que trust the said Jacob Small was not one. That knowledge of these checks and the misapplication of the proceeds thereof only came to such cestuis que trust about on 19th January, 1894; that Jacob Small departed this life on or about the 5th day of December, 1893; that the plaintiff was appointed administrator de bonis non cum testamento — 242 — annexo of the said William Knobeloch, sr., deceased, on or about the 19th day of January, 1894, by the Probate Court for Charleston County, in this State. The defendant, by its answer, denies its liability to pay said two sums of money or any part thereof. Amongst other things, it alleges who are the eesiuis que trust under the will of the said William Knobeloch, sr., deceased, and states who is the executor of the will of Jacob Small, who died.testate. 1 The plaintiff, conceiving that his action was one which, under the law, was triable before a j ury, placed the same on Calendar 1, which is the appropriate calendar for such causes. The defendant objected to the action being placed on Calendar 1 for trial by jury, alleging that it was alone cognizable by a Court of Chancery. The judge below concurred in the latter view. Was this error? We think not, and will briefly indicate the grounds of our conclusion. When the' executors of the last will and testament of Wm. Knobeloch, sr. (of whom Jacob Small was one), placed on deposit, as such executors, in the defendant bank the sum of $7,728.48, under the decisions of the court of last resort in this State (Fogarties & Stillman v. State Bank, 12 Each., 518, Simmons &c. Co. v. Bank of Greenwood, 41 S. C., 177), there arose an implied contract between the defendant bank and said executors, or the survivor of them, that such defendant bank would pay all checks drawn by such executors in such amounts and to such persons as may be mentioned in such checks, as long as there remained to the credit of such executors on such account an amount sufficient to pay such checks. This statement as to this implied contract of the defendant bank is made substantially as a quotation from the latter ease at pages 188 and 189. If this proposition of law is sound, and under the authority of the two cases just cited we hold it to be sound law in this State, there could be no liability in law, as distinguished from equity, upon the defendant bank for paying the checks of the depositing executor. If the payment of such check by the defendant bank could create any liability, it must be for a breach of some trust owed by the bank to the eestuis que trust under — 243 — William Knobeloch’s last will. It is this liability, arising from some breach of some such duty or trust alone, which the plaintiff here seeks to enforce. This can alone be done in a Court of Chancery. The action, therefore, was not triable of right by the plaintiff before a jury. It should not have been placed on Calendar 1, but on Calendar 2. If we had reached a contrary conclusion, we would have been obliged to hold, of necessity, that che order or judgment sustaining the demurrer must be reversed, whether we agreed with the Circuit Judge or not; but having held that the Circuit Judge was right in ordering the action from Calendar 1 to Calendar 2, we will now inquire into the second proposition of error — namely, that the Circuit Judge erred in sustaining the demurrer. 2 Is the plaintiff the successor in office of Jacob Small? What office does the plaintiff hold? Clearly he has been appointed to execute the will of William Knobeloch, sr., deceased. His very appointment, and his character before the court, is administrator with the will annexed of William Knobeloch, deceased. That will is as much the chart for his guidance and control as it would have been had he been named as executor by the testator. When it is remembered that in this case it is by the death of Jacob Small, who was the surviving executor nominated by the testator in and by his will, and who by his death before he fully executed that trust, the plaintiff has become associated with the estate of William Knobeloch, sr., deceased, there can be no other conclusion than that the plaintiff is the successor in office of Jacob Small, now deceased. Jacob Small must have been of necessity his predecessor. Such being our conclusion, the next inquiry is, can the plaintiff as such successor in office of Jacob Small maintain in his representative capacity this action to invalidate a complete transaction between his predecessor in office, Jacob Small, and the defendant bank? We hold that he cannot. The two cases in our State (Johnston v. Lewis, Rice Ch., 40; Steele v. Atkinson, 14 S. C., 154,) are conclusive of this contention. In the former ease, it was announced on circuit and affirmed on appeal, that the complainants, Johnston and Wall, who had succeeded Mrs. Martha G. Pickett as the administratrix of the — 244 — estate of James R. Pickett, deceased, could not invalidate a transaction of the first administratrix, Mrs. Pickett, with the defendant, Lewis, in that case, because of a fraudulent collusion between them; that Mrs. Pickett herself as such administratrix could not have doneso; and that all “acts binding upon a predecessor are equally binding upon a successor.” And the court, in that case, pointedly held that if the first administratrix, Mrs. Pickett, had, in collusion with the defendant, Lewis, committed a fraud upon the rights of the creditors or distributees of the estate of James R. Pickett, deceased, a right of action existed in the creditors or distributees to assail it, but that on so doing the administrators must be made parties; also, in the second case (Steele v. Atkinson), when the decision of the Supreme Conrt was announced by the present chief justice, he said: “It appears to us that the plaintiff in the outset encounters an insurmountable obstacle which effectually prevents him from maintaining this action. He, as administrator de bonis non, is seeking to set aside a transaction between his predecessor and a debtor of the estate upon the ground of a fraudulent collusion between them. He is not asking that the estate be protected from a fraud practiced upon his predecessor, the former administrator, but the ground of his complaint is that such preceding administrator himself fraudulently colluded with the debtor to the prejudice of the estate. The case of Johnston v. Lewis, Rice Ch., 40, conclusively shows that the plaintiff cannot maintain the action.” In the case at bar, the complaint is exhibited by the administrator de bonis non cum testamento annexo, and not by any one of the cestuisque trust under the will of William Knobelooh, sr., deceased, nor by any creditor of said testator. The demurrer should have been sustained, unless we can discover merit in the somewhat technical grounds to be now noticed. 3 In the sixth ground of appeal it is suggested that his honor, the Circuit Judge, ought to have held that the defendant had waived the right to question plaintiff’s legal capacity to sue, having failed to do so by written demurrer, or to make it in its answer. We think that the stipulation in writing entered into before any hearing before Judge With — 245 — erspoon took place, plays an important part just here. This is its language: “The above entitled action having been placed upon Calendar No. 1 of the Court of Common Pleas for Charleston County. * * * 2. The defendant has given notice to the plaintiff of its intention to demur orally to the complaint in this action, on the ground that it does not state facts sufficient to constitute a cause of action. It has, therefore, been agreed and is hereby agreed by the attorneys for plaintiff and the attorneys for defendant herein, that the several matters hereinbefore mentioned and enumerated, be heard at chambers by his honor, Judge I. D. Witherspoon, now in the 1st Circuit, and the said plaintiff and defendant by their respective attorneys, by this stipulation consent to such hearing at chambers, with the same rights of appeal to the said parties, plaintiff and defendant, respectively, as if the said hearing was had in open court.” Signed by Messrs. Buist & Buist for plaintiff, and Messrs, Simons, Seigling, and Cappelmann, defendant’s attorneys. It seems to us if notice in writing had been required, this would be sufficient. It does not appear that this question was raised before the Circuit Judge. It is too late now. 4 The seventh exception imputes error to the Circuit Judge in not overruling the demurrer because the grounds thereof were not distinctly specified. It does not appear that this question was raised before the Circuit Judge. He certainly did not pass on it, and hence we are not required to do so. But we might say in passing that we seriously question the validity of any rule of court that seems to contravene the rights of suitors secured by statutes, and should such a question occur, we prefer to leave ourselves free to consider and decide it after a full argument. Having thus passed upon the different grounds of appeal, we might dismiss the subject at this point. The court feels its obligation to respond with a careful attention to the arguments and authorities cited in support of the same, and we do not know where an abler exposition of the views of both sides of a cause has been made than has appeared in the hearing of this appeal. But when we are satisfied that our own decisions furnish an answer to questions presented, we prefer to adhere to — 246 — them, and this statement must serve as an explanation of our failure to comment on very many of the cases cited in the arguments on both sides of the case at bar. It is the judgment of this court, that the judgment of the Circuit Court be affirmed.