Mayo v. Arkansas Valley Trust Co.

McCULLOCH, C. J. Dave Mayo, a citizen of the State of Arkansas, and a resident of the city of Fort Smith, died in the year 1908, leaving a large estate, consisting of personal property and real estate in Fort Smith. He left a widow, Sallie E. M'ayo, the plaintiff in this case, and certain collateral heirs, hut no children or other descendants. He executed his last will and testament in which the Arkansas Yalley Trust Company, one of the defendants, was named as executor, and after the will was probated said defendant qualified as executor and took charge of all of the property of the estate, both real and personal, in this State, and has managed said property since that date, receiving all the personal property and collecting the rent of the realty without objections from either the heirs or the widow. Within apt time after the will was probated the Avidow renounced any claim thereunder and elected to take her dower, and she instituted the present action in the chancery court of Sebastian County against the executor and heirs to have her dower ascertained and set apart to her. The personal estate' of said decedent, exclusive of the minimum allowance of dower under the statute, was more than sufficient to pay the debts of the estate, and payments on dower were made to the widoAV from time to. time Avithout the ascertainment or adjudication of the extent of her rights. There is a controversy uoav as to the extent of the widow’s rights and this appeal involves the solution of those questions. We find it unnecessary to state all the details of the controversy for the reason that we have reached the conclusion that the chancellor erred in his construction of the statute of this State with reference to the dower rights of the widow, and the decree must be reversed. There is little, if any, controversy concerning the facts, and a statement now of the law applicable to the case will enable the chancellor to readily apply the facts when the case is remanded for further proceedings. The principal controversy turns upon the construction of the folloAving statute, declaring the dower rights of a widow where there are no children or other descendants of the decedent: “If a husband die, leaving a widow and no children, such widow shall be endowed in fee simple of one-half of the real estate of which such husband died seized, where said estate is a new acquisition and not an ancestral estate; and one-half of the personal estate, absolutely and in her own right, as against collateral heirs, but, as against creditors, she shall be endowed with one-third of the real estate in fee simple if a new acquisition and not ancestral, and of one-third of the personal property absolutely. Provided, if the real estate of the husband be an ancestral estate she shall be endowed-in a life estate of one-half of said estate as against collateral heirs, and one-third as against creditors.” Kirby’s Digest, § 2709. (1) The real estate owned by Dave Mayo constituted a new acquisition, and this fact brings the case within the operation of the statute just quoted. One-half of the personal property was insufficient to pay the debts, but it did not require two-thirds of the personalty for that purpose. It is conceded that the widow is entitled to one-third of the estate, both real and personal, regardless of the amount of the debts, but the controversy arises over the proper rule of division where, as in this case, more than one-half, but less than two-thirds, of the personal estate is required for the payment of the debts. The defendants contend and the learned chancellor held that under those circumstances the widow, being entitled to one-third in any event, the balance of the personalty after paying the debts should be equally divided between the widow and the collateral heirs. That is not a correct interpretation of the statute, which means that the widow, where there are no children, takes as her dower one-third of the personalty as against creditors and one-half as against collateral heirs. It means that, though the widow can take only one-third as against creditors, she is entitled to one-half as against collateral heirs, even though it takes all of the remainder to pay the debts, and that if more than one-half of the estate is required to pay the debts, she is, as against collateral heirs, entitled to the remainder. There is, we think, no reason for construing the statute to mean that where more than one-half of the estate is required to pay the debts, the surplus over the one-third which the widow is entitled tc as against creditors should be divided between her and the collateral heirs. The collateral heirs get nothing under the statute unless one-half of the estate is more than sufficient to pay the debts, and then they get what is left out of that one-half after the payment of the debts, but in no event can their rights encroach upon the rights of the widow who is given a preferential right to one-half of the estate as against collateral heirs. The same rule applies as to realty which constituted a new acquisition of the decedent, but we are only discussing the question of the rights in the personalty inasmuch as it is conceded that the real estate is hot needed for the payment of the debts. Counsel for defendants argue the injustice of this interpretation of the statute, but with that we have nothing to do. It may be stated, however, in reply to that suggestion that it has been the plain policy of the laws of this State to favor the widow as against collateral heirs, and that policy is made manifest in the plain letter of the statute now under consideration. It was doubtless thought by the lawmakers that the moral claims of collateral heirs upon the estate of a decedent were so remote that they ought not to participate in the estate unless something is left after the widow is given one-half and the debts of the decedent paid out of the other one-half. It is not within the province of the court to find fault with the policy of the lawmakers, even if different views concerning that policy should be entertained. The conclusion is reached, therefore, by a majority of this court that the chancellor erred in confining the rights of the widow to one-half of the surplus personal estate in excess of one-third after payment of debts. There is a further controversy between the parties concerning the disposition of the rents collected by the executor of the real estate owned by the decedent. It appears from the record that without objections from either the heirs or the widow — in fact it was with the acquiescence of them all — the executor took charge of the real estate, though not needed for payment of the debts, and rented the property and collected the rents from the time of the decedent’s death up to January 1, 1916. The executor received gross rents aggregating $13,775.44, and paid out for taxes, repairs, insurance, etc., $3,364.15, leaving a'net sum of $10,411.29. The property consisted of a lot referred to as the “beer depot” and two storehouses on Garrison avenue. The amount of the rents of the beer depot was $2,830 gross. There was a mortgage on the beer depot executed by the decedent to the Pabst Brewing Company to secure a debt which, with accumulated interest, amounted to $4,936.90, and the executor paid the mortgage out of the rents collected. (2-4) The question is earnestly debated whether the rents from the realty should be treated as personalty or as a part of the real estate, but in view of the fact thathe widow’s rights are not affected by the determination of that question, she being given the same proportion under our statute whether the rent be treated as personalty or as a part of the realty, it is immaterial to decide that question. This court decided in Stull v. Graham, 60 Ark. 461, that rents accruing after the death of the owner from a lease for a term of years executed by the owner is personal property which goes to the representative of the decedent, but the converse of that proposition is that rents accruing after the death of the owner not arising from a lease executed by him constitute accumulations from the real estate, as contended by counsel for defendants, and should be treated as real estate. We do not deem it necessary to settle that controversy, for, as before stated, the rights of the widow are not affected by it. She is in any event entitled to her proportionate part of the rents whether they be treated as part of the personalty or as accumulations from the realty. The statute (Kirby’s Digest, § 77) provides that until the widow’s dower be apportioned she shall be paid her proportion of the rents of the realty, and her rights under that section have been fully recognized in decisions of this court. Menifee v. Menifee, 8 Ark. 9; Trimble v. James, Admr., 40 Ark. 393. Her proportionate part of the rents under Kirby’s Digest, section 2709, as hereinbefore interpreted, is one-third as against creditors and one-half as against collateral heirs. The widow’s dower rights in the real estate were subject to the mortgage thereon, and if the dower had been assigned while the property was thus encumbered the portion set aside to her should have been subject to one-half of the encumbrance. Hewitt v. Cox, 55 Ark. 225; Salinger v. Black, 68 Ark. 449; Crosser v. Crosser, 121 Ark. 64; Less v. Less, 131 Ark. 232. A wrongful appropriation of funds of the estate belonging to the creditors or heirs to the discharge of that part of the encumbrance to which the widow’s dower was subject, would call for the application of the doctrine of subrogation so as to compel the widow to contribute her proportion to the discharge of the encumbrance. Salinger v. Black, supra. It appears, however, that the executor collected the rents and discharged the mortgage out of the same, with the acquiescence of all of the parties in interest, using the rent derived from the mortgaged property pro tanto and the balance out of the rents of other real estate. This having been done with the consent of the parties, it is too late now for either to ask for a change of the rule and an accounting of the funds so applied. The only fair and equitable method to dispose of this feature of the controversy is to treat the net amount of the rents after payment of the mortgage debts as the proper amount for distribution and to dispose of it in accordance with.the terms of the statute regulating the widow’s dower. (5) Mayo owned a small piece of real estate situated in the State of Ohio, which was formerly his home when he lived in that State. Its value is shown to be about $1,000 with rental value of $6.50 per month. Since the death of Mayo the property has been occupied by one of the collateral heirs. Of course, it is conceded that the widow’s dower in land situated in the State of Ohio is fixed by the laws of that State, but it is contended by counsel for the widow that the rent which has accrued since the death of the testator should be treated as part of the personal estate which is subject to distribution here at the domicile of the testator. It is shown under the laws of the State of Ohio to a widow is not entitled to rents out of real estate of which she is to be endowed until after a petition for assignment of dower has been filed in the court of proper jurisdiction. Fast v. Umbaugh, 22 Ohio Cir. Ct. R. 409. It results from that state of the law that the widow can claim nothing here out of the rents of the property in Ohio. Any other remedy she may have for assignment of her dower in the Ohio real estate must be pursued there and must be controlled by the laws of that State. (6) There is another item in the report of the executor which forms a part of the controversy in this case. It is the item of $573.56, shown to be the profits resulting from the operation of the business of the decedent by the executor. The statement in the report of the executor is ambiguous in that the item is referred to as gross profits, but the executor charges itself with the full amount which is tantamount to treating it as the net profits of the business. The rights of the widow in the personal estate of the deceased husband are fixed by the amount of the property as it stands at the date of the death of the husband, but there was no authority for the personal representative to operate the business, and he did so at his peril. However, when a profit is derived the trustee must account for it, and the widow is entitled to her proportion for the reason that the earned profit is treated as a portion of the estate as it existed at the time of the death of the testator. The widow is entitled to her proportionate part of that item, treating it as personal property belonging to the estate. It is believed that this discussion is sufficient to enable the chancellor to allot the dower of the widow without further controversy as to her rights. The decree is, therefore, reversed and the cause remanded for further proceedings in accordance with this opinion. MoCULLOCH, C. J., (on motion to modify opinion). Learned counsel for defendants contend that the conclusions of law announced in-the original opinion were based on a misconception of the facts concerning the quantity of the property of the estate necessary to pay the debts, and of the rulings of the chancellor as to the law applicable thereto, and they express the fear that if the opinion stands as written it will lead to the conclusion that we mean to hold that the shortage in the widow’s allowance of dower out of the personalty should be made up from the realty. (7-8) We do not think that the opinion can be so construed, even if it be found that the facts are not as assumed, but, to allay the fears of counsel, we say that the chancellor was correct in holding that under the statute the widow’s dower “is divided into two classes for the purpose of estimating dower, real and personal,” and that the dower “is to be set apart in each class separately and no deficiency in one class can be made up from the other. ’ ’ Answering the further inquiry of counsel, we say that in case that two-thirds of the personal property is insufficient to pay the debts, the same rule of apportionment of the rents applies as that stated in the opinion with reference to the personalty, except as to the deduction of the amount used in discharge of the mortgage, which constituted an encumbrance on the real estate; that is to say, the widow is entitled to one-third of the rents as against creditors, and one-half as against collateral heirs. What we meant to hold concerning the widow’s share of the rents is that she would not have been entitled to dower out of the mortgaged property free of the encumbrance, if the encumbrance had not been discharged by the executor out of the rents, and that the rents used in discharge of the encumbrance should, under the facts of this case as decided in the original opinion, be deducted from the gross amount, and dower assigned out of the balance — one-third as against creditors and one-half as against heirs.