Cox v. Phelps

Bunn, C. J.,

(dissenting.) In Ms life time, Nelson G. Hewitt. borrowed of Mrs. Van Horn $6,000, and, to secure the payment of the same, gave his deed of trust on a certain lot described in suit, situated in the business portion of the city of Little Rock. The money was borrowed to put a brick building on the lot mortgaged. The building was erected, and the lot, thus improved, was worth largely more than the amount of the mortgage debt, — perhaps several times more. Hewitt continued to pay, directly and through his agent, the annual interest until his death. He died, having made a will, with provision as to care of Ms property and its disposition at the end of a certain time, or the happening of certain events; leaving it to be managed and controlled in the meantime by certain persons therein named. The testator died at his then residence, in the state of New York, where also his executor and trustee reside. Letters of administration were taken out here, and the appellant, Cox, was appointed administrator. Before his death Hewitt had made Reeve (a debtor to him) his agent here to see to the payment of the interest on the mortgage debt, and taxes, etc. After his death, Reeve, finding that he could not pay the interest (being without means), prevailed on Cox, the administrator, to advance the necessary money to pay each of two instalments of interest, which he did, treating said payments as money paid for the benefit of the estate, and his payments of the same were duly approved and allowed by the probate court, in each of the two annual accounts.

The statute bar had attached to the mortgage debt (the same never having been probated against the estate of Hewitt) before the institution of this foreclosure proceeding, if the payment of the instalments of interest by Cox, the administrator, did not have the effect of fixing a new date from which the statute began to run on the debt. If, however, these payments had the effect of fixing the date of the last one from which the statute began to run, then the debt is not barred by tbe statute.

The rule with regard to the effect of partial payments, as affecting the running of the statute of limitations, is that they must be made by one having authority from the debtor, or by operation of the law in case of his death, as in this instance, to make them for the benefit of the estate or the creditors thereof; for one being required to make such payments, or at least being authorized to do so, can only make a new promise for the deceased when required to do so, or authorized by law to bind the estate by so doing. It is readily to be seen, therefore, that the question, and the only real question, in this ease is were the acts of Cox, as administrator, in paying these instalments of interest, legal, and therefore binding upon the estate of which he was the administrator?

Naturally, we may say, the appellants appeal to our statutes on the subject of the allowance and payment of claims against estates, and the prohibition therein against administrators paying any other than those duly authenticated. I shall not stop to say more on this particular matter than that it is the settled law that no claim capable of assertion, either due or running to a certain maturity in the future, and which is the subject of a judgment of some court of - competent jurisdiction, can be paid without such authentication. This leaves a numerous list of cases, however, which may be paid without such probation within the two years fixed as the statute of non-claim, because they cannot be asserted under the rule at any time within said two years, or for other reason do not come within the statutory definitions of claims to be probated. Walker v. Byers, 14 Ark. 246.

But the question of payment of debts, whether probated or not against an estate, is not involved in this case, but rather the question of the protection of property of the estate by the administrator.

When the annual interest, after the death of Hewitt, was coming due, Dodge, the trustee in the deed of trust, demanded the same of Cox, the administrator. This demand naturally carried with it the purpose of the trustee to forego foreclosure proceedings in case the demand was complied with, on the idea that the payment by Cox, as administrator, would “keep the debt in date,” to use a common expression. The same idea was doubtless entertained by Cox. The situation was this at that time: The interest was due, the debt and mortgage was still unaffected by the statute of limitations; and the trustee informed Cox that he would be compelled to resort to foreclosure proceedings unless the interest was paid; and Cox had no funds in his hands belonging to the estate with which to redeem from the mortgage, either at his own risk or under an appropriate order from the probate court, as provided by statute. If the mortgage property was greatly more valuable than the mortgage debt (which it was in this ease), and a forced sale would be detrimental to the estate, which it plainly would have been under the circumstances, what was the lawful duty of the administrator in the emergency? Plainly, to do just what he did at the time, — protect the impotent estate from irreparable loss, by advancing his own funds, and trust to the probate court, a court of general jurisdiction of the subject, to reimburse him, and necessarily thereby to ratify and confirm his acts, which it did. Reducing the question down to its last analysis, the power of the probate court to approve of such an item in favor of the administrator is called in question, and not only so, but denied by the judgment rendered in this case heretofore by this court, and also by a denial of the petition to rehear.

It is not denied, but really insisted upon, that, if the administrator conceived it to be to the interest of his estate to prevent a forced sale of the mortgaged property, he should have filed his petition in the probate court, under section 198 of Sand. & H. Dig., and obtained leave to redeem from the mortgage by an expenditure of the necessary funds in hands belonging to the estate; or, in case he did not have funds sufficient to redeem without injury to creditors, he might have asked an order to sell the equity of redemption in the lands mortgaged.

The note secured by the mortgage, was in the following words: “$6,000. Little Rock, Ark., August 21, 1879. Three years after date, for value received, I promise to pay to the order of Mary C. Van Horn $6,000, without discount or defalcation, with interest upon the same at the rate of 10 per cent, per annum from date until paid, interest payable semi-annually, and principal and interest payable at the law office of Dodge & Johnson, Little Rock, Arkansas, and secured by deed of trust on lot 12, block 1, City of Little Sock. (Signed) N. G. Hewitt.”

In Hewitt’s life time, the interest was paid up to December 3, 1887, and the two payments by Cox, the administrator, after the death of Hewitt of $602.25 and $600.75 were made on the 22d of December, 1888, and December 23, 1889, respectively.

It appears also that the insurance and taxes had been kept up and paid by Cox as administrator regularly since the death of Hewitt, and all the expenditures had been approved by the probate court without objections on the part of any one, and the query is, what authority was there in Cox, as administrator, to pay the insurance and taxes, more than there was to pay the interest on the mortgage? There can be but two answers to that query. The one is, none; the other is„ if the taxes were not paid, there would be a forfeiture, by law, of the estate of the legatees or heirs; and to prevent that it was not wrong to appropriate the money belonging to creditors, forsooth, to protect the interest of the legatees or heirs; and if the insurance were not paid, these same heirs might suffer loss by fire, and not be indemnified by insurance; and so in that case they would sanction the payment of money belonging to others to save themselves harmless.

Neither was the payment of the two instalments of interest ever in any manner objected to, but only claimed to have been made without authority, and that only after the statute of limitations had barred the mortgage debt, unless these payments removed or postponed the statute bar, which it is claimed they did not, because made without authority.

There can be but one sound legal reason assigned why an administrator is not only not authorized, but also not bound, to protect an estate situated as was this by the payment of interest to prevent a sacrifice of the property. And that is that it is not for the interest of the estate for him to do so. Was it for the interest of the estate in this instance? The appellants (Cox and the heirs and legatees) contend that it was not, because, in effect, they say it turns out to be 'to the interest of the estate to hold these payments void, since this theory cancels the debt, and therefore the mortgage lien, the subject of the statute bar, and appellants thus obtain the propsrty without paying the debt — -without paying for it — for the mortgage debt was for money used in creating the part of the property of the greater value, — the building thereon. The mistake in this is in viewing the action of the administrator, and measuring his duty, from the circumstances surrounding him at the time of the institution of this suit, when, according to the contention of appellants and the judgment of this court, the mortgage debt was barred, rather than defining his duty and measuring his acts at the time he performed them; that is, made the payments of interest. At that time it was manifestly to the interest of the estate that he should have paid the accrued interest. Looking at it through the “hindsights,” however, it is equally manifest that it saved money to the heirs and legatees, not the estate, not to have kept the debt in date by partial payments or otherwise.

I am aware that the courts have nothing to do with the merely moral actions of men, and also that the acts of limitations are good legal defenses, when well pleaded, and applied properly; but I have yet to find a case where one, to prevent a sacrifice of his property, prevails upon his creditor to grant him time on his performance of a part of his contract, and is permitted afterwards to rid himself of the entire obligation because of the favor extended to him. There are some things so inherently wrong that the doing of them cannot be protected by limitations.

It is contended that, in order for the administrator to possess authority to pay the installments of interest, he must have procured an order of the probate court, under section 198 of Sand. & H. Dig., to enable him lawfully to do so. We have seen that he had no money in his hands with which to redeem, and, without the money in hand or in sight, he had no right to ask the court for an order to redeem. (An order would be necessarily of such a nature in terms as he could not comply with). It is also useless to ask an order to sell the equity of redemption; for, having no sufficient means, he could not be relieved by bringing on himself the burden of a forced sale in this way. Besides, the statute after all is manifestly only cumulative, as it provides a mode of doing a duty which is only cumulative of a right and duty already existing, and inherent in the very nature of the office of administrator. Had there never been any such statute, an administrator lawfully in charge of an estate would have the right to redeem the property of an estate when subh redemption would be for the benefit of the same, or its creditors, by payment, if he had sufficient funds on hand, or by foreclosure and sale thereunder to pay off the incumbrance, and to receive the balance over, as the value of the equity of redemption. Without a statute on the subject, he would redeem on his own motion, running the risk of the redemption turning out to be for the interest of the creditors or the estate or not. But whether or not the redemption was for the benefit of the estate could not be determined upon the probable contingency of the running of the statute of limitations, so as to create the statute bar in the future; for, if that were in contemplation, the administrator should refuse to pay at all, and thus put the incumbrancer on notice of what to expect. In such ease it is presumed the latter would foreclose, and subject the property to forced sale, with all its consequences to the estate and its beneficiaries, without means to purchase or redeem.

The statute, while cumulative, as I have said, yet has this advantage to the administrator: If he is able to redeem, and does redeem, under the orders of the probate court, as in the statute provided, he will not be responsible to the estate or its creditors for any lack of the property realizing enough to repay the redemption money. Furthermore, the order to redeem, if essential at all, need not be obtained before, the money is paid or redemption accomplished. Money paid to accomplish that end will be approved as a credit to the administrator by the probate court, if found to have been for the benefit of the estate, and such approval will stand as good as if a previous order had been made. On this identical subject, this court, in Byers v. Stevenson, 42 Ark. 559, said: “The claim never having been proved against the estate, the executor properly had nothing to do with it. The probate court might, indeed, upon the application of any person interested in tbe estate, have ordered bim to relieve tbe property from tbe incumbrance, if funds were in his hands available for that purpose;” citing the statute, Sand. & H. Dig., § 198, which is the very section which appellants say should have been followed in order to confer upon the administrator the authority to redeem. Continuing, this court said: “And it might well have sanctioned the payments made by him as beneficial to tbe estate, and not injurious to tbe creditors. But it refused to allow credit for the sum, etc.” There can he nothing plainer than this language in the foregoing. The probate court might well have sanctioned tbe payment, and allowed credit therefor, and tbe administrator’s act in making tbe payment would have thus been made valid and authoritative; and that, of course, would have carried with it the power to bind the estate by such payments in all respects as the same had been made by the deceased in his lifetime.

With the facts before us, we can not well see the necessity of an administration upon the Hewitt estate in this state, unless it was to preserve this very same property. The Reeve matter seems to have been useless.

I think, for tbe foregoing reason, as well as for some very cogent ones in addition, assigned by tbe counsel for appellees, the decree should have been affirmed in the first instance, and that the motion for a new hearing should he granted.