Hare v. Pendleton

HODGES, J.

This suit was instituted by the appellee, W. A. Pendleton, in the district court of Grayson county, against Silas Hare, administrator of the estate of one Samuel Bailey. The purpose of the suit was to recover the value of attorney’s fees for services rendered to the executor of the will of Samuel Bailey in Oklahoma. The material facts are as follows: Samuel Bailey died in 1912 at his residence in Pottawatomie county, Okl. He left a will, in which he devised all of his property to Sherman Spencer, a nephew who was at that time residing in the state of Wisconsin. There were some col-' lateral relatives, but no wife or children. By the terms of the will B. F. Hamilton, of Oklahoma, was named an executor. The estate consisted of real and personal property to the value of §6,000, situated in Oklahoma, and personal property consisting of $54,000, on deposit in the state. National Bank of *949Denison, Tex., and $1,700 in notes executed by a party who resided in Oklahoma secured by a mortgage on Oklahoma real estate. After the making of the will, and before Bailey’s death, Hamilton, knowing of his appointment as executor, engaged the legal services of the appellee, who was a practicing attorney in Shawnee, Okl. The employment was made for the purpose of assisting in the proceedings to probate the will and in the conduct of the administration and settlement of the estate. A few days after the death of Bailey, F. H. Roily, another attorney residing in Shawnee, Okl., was employed by Hamilton to represent him in all matters concerning the estate. The two were not partners, but associated for that case, Pen-dleton being regarded as the leading attorney. The probate of the will in Oklahoma was resisted by Amelia Parker and others, collateral relatives of the testator, upon the ground of mental incapacity and undue influence. The contest was lengthy, and was prosecuted to the Supreme Court of the state of Oklahoma. The litigation, however, resulted in a judgment probating the will. Both Pendleton and Reily represented the executor in all of those proceedings, and no question is made as to the value of the services then rendered. A short time after the filing of the will for probate, and while the contest was still in progress, Hamilton ascertained the existence of the deposits and notes in the bank in Texas; and accompanied by Riley, one of his attorneys, made application to be appointed temporary .administrator of the estate in Texas. After considerable litigation in the county and district courts of Grayson county an agreement was entered into by all of the parties interested, which provided, in substance, that the appellant, Silas Hare, should be appointed permanent administrator in the state of Texas to take charge of all of the Texas property, perform all the duties incident to that position, and hold the estate for final distribution among the proper parties when the contest then pending in Oklahoma was finally decided. Some time after the 'appointment of Hare as administrator, Spencer, the beneficiary under the will, settled with Amelia Parker and others, and the contest was ended. In the course of his administration in Oklahoma Hamilton paid out all of the funds in his hands without compensating either the appellee or Riley for the legal services rendered by them in that state.

It appears from the evidence that at the time the appellant was appointed administrator of the estate in Texas the parties interested desired to have final distribution made in Texas in order to avoid the inheritance tax required under the laws of Oklahoma. In the course of his administration the appellant settled up all the claims against the estate in Texas that had been presented for payment except some not involved in this controversy, and a claim of the appellee for $10,000 as the value of legal services rendered by him to Hamilton, the executor, in the state of Oklahoma. In February, 1917, the appellee presented that claim to the appellant for allowance, and it was rejected. This suit followed in an effort to establish the claim against the estate in Texas.

In a trial before the court judgment was rendered in favor of the appellee for the sum of $7,500, and the appellant, as administrator, prosecutes this appeal. While Spencer, the beneficiary under the will, was named as a party defendant in the appellee’s original petition, he was never cited-and is not concerned in the result of this proceeding, except in so far as it may diminish the residue to be paid over to him as legatee in the final distribution. It appears that the appellant had filed his account for a final settlement, and had been ordered to pay over a part of the funds in "his hands to Spencer, and to retain an amount. ..sufficient to cover this and other claims to' await the result of pending litigation. There are some other facts material to be considered, not included in the foregoing statement, which will be mentioned in the course of this opinion.

The record shows that two administrations are still pending on the estate of Samuel Bailey — one in Oklahoma, under the will, with Hamilton as the executor; and the other in Texas, without the will, with the appellant as administrator. Hamilton, the Oklahoma executor, in the management of the estate in his hands, incurred a liability to the appellee for attorney’s fees for legal services which, for the present, will be regarded as having been rendered for the benefit of the estate being administered by Hamilton. The facts present this question: Can such a claim, if reasonable, be made a charge against the estate of the same decedent being administered in Texas, when it is shown that the funds belonging to that estate in Oklahoma have been exhausted and that the executor is insolvent? Or, to state the question in a different form, can the estate in Texas be made to pay any portion of the expense of administering the estate in Oklahoma when it is not shown that any of the funds of the Oklahoma estate' have passed into the hands of Texas administrator?

The appellant has raised by demurrer some preliminary questions which should first receive attention. The first proposition asserted is that liability for attorney’s fees incurred in the course of administration is the personal obligation of the legal representative, and cannot be made a charge against the estate in favor of the attorney rendering the service. The other contends *950that legal services rendered in a proceeding to probate .the will, or in resisting the contest. of the probate of the will interposed by the heirs of the decedent, cannot- be made a charge against the estate in any event. In passing upon these and other questions growing out of this controversy, we must assume that the laws of Oklahoma are the same as the laws of Texas, as no proof upon that subject was offered. The only provisions of our statute authorizing the legal representative of a decedent to charge the estate in his hands with expenses incurred for the services of an attorney are to be found in article 3623, which are as follows:

“Executors and administrators shall also he allowed all reasonable expenses necessarily incurred by them in the preservation, safe-keeping and management of the estate, and all reasonable attorneys’ fees that may be necessarily incurred by them in the course of the administration.”

Article 3624 is as follows:

“All such charges as are provided for in the precedingd|rticle shall be made in writing, showing specifically each item of expense and the date thereof, and shall be verified by the affidavit of the executor or administrator, and filed with the clerk and entered upon the claim docket, and shall be acted upon by the court in like manner as other claims against the estate.”

While these provisions seemingly contemplate that the allowance for reasonable attorney’s fees and other expenses of administration shall be made directly to the legal representative, our Supreme Court has held that, inasmuch as the estate is the sole beneficiary of the liability incurred and must ultimately make payment, such claims may be presented and collected by the parties to whom payable, as other claims against the estate. Reinstein v. Smith, 65 Tex. 247; Portis v. Cole, 11 Tex. 157; Caldwell v. Young & Morgan, 21 Tex. 800; Jones v. Lewis, 11 Tex. 359; Adriance v. Crews, 45 Tex. 181; Price v. McIvre, 25 Tex. 769, 78 Am. Dec. 558; Gammage v. Rather, Admr., 46 Tex. 105.

Counsel for appellant have cited a number of cases from other states, among them the state of California, which support the proposition that liability for attorney’s fees in such instances is the personal obligation of the legal representative. B.ut, under the authorities above referred to, we think the rule is otherwise in this state. The case of Rein-stein v. Smith, supra, was one in which an effort was made by the original creditor to establish against an estate a claim for indebtedness incurred by the legal representative in operating a plantation. The question before • the court was, could the estate be made responsible to him directly? In disposing of that question Justice Stay ton said:

“If the administrator had, from his own means, paid out the sums of money and furnished the articles, for the purpose and as alleged by the plaintiff, his right to reimbursement would be clear, as would it had he obtained them upon his own credit. In our opinion, just as clear is the right of one who has furnished money or goods to an executor or administrator, upon the credit of an estate, to be used for such a purpose. Such a claim becomes a claim against the estate, which an executor or administrator may approve, and the probate court allow and cause to be paid, or upon which, in the event this be refused, a suit may he instituted in any court having jurisdiction.”

It is true the court was discussing a claim for expenses incurred in the management of a plantation; but claims of that character are in the same category with “reasonable” attorney’s fees which an administrator or an executor may lawfully incur in the management of an estate, and are to be proved and settled in the same manner. While some of the cases referred to above were decided under a former statute, the amendment thereafter adopted did not so alter the law as to change the equitable rule applied. In the cases of Houston v. Mayes, 77 Tex. 266, 13 S. W. 1036, and Richardson v. Kennedy, 74 Tex. 509, 12 S. W. 219, Justice Henry refers to article 3624 as pointing out a method of procedure that should be followed in establishing claims for the expenses of administration, and states the reasons for the distinction between these and ordinary claims. But there is no necessary conflict between the ruling there made and that announced in Reinstein v. Smith. At the time the latter decision was rendered the law was the same as it is at present. The purpose of article 3624 is to provide a method of procedure when claims for expenses in managing the estate and for attorney’s fees are presented by the executor or administrator himself, and not by some third party. If the claimant be one other than the legal representative, there is no logical reason why the claim should not take the usual course provided by statute for allowing and establishing claims generally. Eastland v. Williams, 92 Tex. 113, 46 S. W. 32; De Cardova v. Rogers, 97 Tex. 67, 75 S. W. 17.

Passing to the consideration of the second proposition: Were the services upon which the claim of appellee is founded such as could be made a charge against .the estate of the decedent in any event? Both the pleadings and the evidence show that the principal part, if not all, of the legal services rendered by him to Hamilton^ the Oklahoma executor, were in resisting the contest of the heirs at law to the probate of the will in that state. As will be seen, article 3623 of our statute limits the liability of the estate for such charges to “reasonable attorney’s fees that may be necessarily incurred” by the legal representatives “in the course of the administration.” But conceding that the services performed by the appellee were rendered in the course of the administration in the *951state of Oklahoma, and might properly constitute a charge against the estate in the hands of Hamilton, the executor in that state, still does it follow that such services might also be made a charge against the administration in Texas? While the pleadings of the appellee may be treated as sufficient to constitute a legal proceeding to establish a claim against the estate being administered by the appellant, he admits in his brief and argument that he’ can have no standing for a judgment upon that, claim in a court of law, and relies mainly upon the equitable right to be subrogated to whatever claim Hamilton may assert for reimbursement against the funds being administered in Texas. The rule invoked is announced in Norton v. Phelps, 105 U. S. 393, 26 L. Ed. 1072, as follows:

“Persons dealing with a trustee must look to him for payment of their demands, and, * * * ordinarily, the creditor has no right to resort to the trust estate to enforce his demand for advances made or services rendered for the benefit of the trust estate. But, while this is the rule, there are exceptions to it; and where expenditures have been made for the benefit of the trust estate, and it has not paid for them, directly or indirectly, and the estate is either indebted' to the trustee or would have been if the trustee had paid, or would be if he should pay, the demand, and the trustee is insolvent or nonresident, so that the creditor cannot recover his demand from him, or will be compelled to follow him to a foreign jurisdiction, the trust estate may be reached directly by a proceeding in chancery.”

After quoting the above from a Mississippi decision (Clopton v. Gholson, 53 Miss. 466), the court adds:

“The ground and reason for this rule are that the trustee has an equity of his own, for reimbursement for all the necessary expenses to which he has been put in the administration of his trust, which he can enforce by means of the legal title to the trust estate vested in him; and that his creditor, in the eases supposed of his insolvency or absence from the jurisdiction, may resort to the equity of the trustee, upon the principle of equitable substitution or attachment, for his own security,”

The same doctrine has, in effect, been recognized and applied by the Supreme Court of this state. Caldwell v. Young et al., 21 Tex. 801,

But inasmuch as the attorney who performs the services can have no greater right than the executor would hold after having paid the fee, this important question remains to be answered: Could the executor in Oklahoma claim reimbursement from an estate being administered by the appellant in Texas, for expenses incurred in the administration of an estate in Oklahoma? We do not understand the rule announced above to go that far. It merely recognizes the right of an executor to reimburse himself from the trust fund in his hands, for the benefit of which the legal services were performed or expenses incurred. In none of the cases examined by us has he been permitted to resort to funds in the hands of an .independent trustee acting in a different jurisdiction. The common-law right of a trustee for reimbursement for expenses incurred by him in the execution of the trust grows out of his relation to the property placed under his control, not upon any implied contract with the grantor or testator, to be personally responsible therefor. His equitable lien is therefore logically limited to that property. Should this prove insufficient, he may call upon the cestui que trust for whose benefit the trust had been undertaken. 2 Perry on Trusts, §§ 909 and 910.

It is clear that neither the estate in Texas nor the administration here pending received any benefit from the result of the Oklahoma litigation. Establishing the will in the courts of Oklahoma gave it no standing in Texas; for when offered' for probate in this state as an instrument which had been probated in another state or upon an original application, it would still be subject to contest upon any grounds sufficient to impeach its validity. Article 3276, Rev. Civ. Stat.

Creditors holding claims against the decedent may resort to any jurisdiction where the estate is being administered, because of the privity existing between them and the estate from which their debts may be satisfied. But it is well settled that there is no privity between an executor in one state and an administrator controlling assets left by the same decedent situated in another state. Hill v. Tucker, 13 How. 458, 14 L. Ed. 223; Cherry v. Speight, 28 Tex. 516; Jones v. Jones, 15 Tex. 463, 65 Am. Dec. 174; Carrigan v. Semple, 72 Tex. 306, 12 S. W. 178; Green v. Rugely, 23 Tex. 539; Simpson v. Knox, 1 Posey, IJnrep. Cas. 569. Each legal representative derives his commission from a different) sovereignty, and is governed by different laws regulating the methods of procedure and allowances for the expenses of administration. Chapter 20 of our Revised Civil Statutes, which provides for the classification and payment of claims, recognizes three distinct classes: (1) Funeral expenses and expenses of last sickness; (2) expenses of administration and expenses incurred in the safe-keeping and management of the estate; (3) debts for which the decedent was liable.

But it is also contended that, under the provisions of article 3289, Hamilton had a legal right to qualify as executor in Grayson ■county, Tex., and that he failed and refused to exercise that right for the fraudulent purpose of defeating the claim of’ the appellee. It is true that the article referred to confers upon foreign executors, under certain conditions, the right to apply for and receive letters testamentary in this state. But in order to secure such official standing there *952must be a compliance with article 3276, which requires the filing of a certified copy of the foreign will, together with the evidences of its probate in the other state. The same article also provides that in those proceedings the “validity of such will may be contested in the same manner as the original might have been.” Thus the formal securing of letters testamentary in this state is made contingent upon the absence of a contest, or its failure. Article 3290 provides that, upon the grant of letters to a foreign executor, he shall enter into a bond, whether required by the terms of the will or not.

If the right of the appellee to resort to the funds in Texas depends upon the right of Hamilton to gain control of them for the purposes of administration and distribution, no such equity can arise till Hamilton becomes invested with the credentials provided for in the statute. While the law permits Hamilton to apply for authority to assume control of the administration in this state, he is under no legal obligation to do so. He has the option to refuse to undertake the additional burdens without impairing his legal standing in the state of his domicile. He cannot be charged with a fraud in failing to do that which he might legally refuse to do.

The proposition .that resisting the contest of the probate of the will in Oklahoma was a service which inured to the benefit of the estate in Texas is untenable, even admitting that such services may fall with, the statutory designation of proper charges incurred in the course of the administration in Oklahoma ; for if a will when offered here may be again subjected to the same contest that had been made against it in Oklahoma, and assailed upon the same ground, it is evident that the judgment probating the will in that state gave it no standing in Texas. We therefore conclude that the trial court erred in rendering a judgment for the appellee. The record is such as to authorize us to reverse that ruling, and here render a judgment in favor of the appellant, and it is so ordered.