Byrd v. Jones , 84 Ala. 336 ( 1887 )

SOMERYILLE, J. —

1. While a creditor of a solvent estate is not a party, either necessary or proper, to a proceeding in the Probate Court having in view the settlement of such estate, he may nevertheless become a party by appearing and inaugurating a contest of the account of the personal representative under the authority of section 2143 of the present Code (1880). — Code (1870), § 2519. This section authorizes “any person interested” to appear and contest any item of the account, to examine witnesses and introduce any legal evidence in support of his contest. That a creditor may often be “a person interested,” within the meaning of this statute, there can, in our opinion, be no doubt. Our whole system of legislation in reference to estates of decedents rests on the theory that creditors have a primary interest in all proceedings pertaining to settlements of such estates, and the policy of the law, as expounded by this court, has been to afford them every reasonable opportunity • to protect that interest by intervening as parties. Kelly v. Garrett, 67 Ala. 304; Phillips v. Smith, 62 Ala. 575; Smith v. Phillips, 54 Ala. 8; Code, 1886, §§ 2157, 2180, 2228.

The ease of Owens v. Thurmond's Adm'r, 40 Ala. 289, in no wise conflicts with this view. It is there decided that a creditor of one of the distributees of a decedent’s estate is not a person interested in such estate, within the meaning of this statute, which appeared in the Code of 1852 as section 1812 — such interest being regarded as too uncertain and remote. In that construction of the statute we fully concur.

The interest which creditors haVe in the settlement of this estate is manifest. The original and out-going administrators, Byrd and Stringfellow, are being brought to a final settlement. If certain claims are allowed to them by the Probate Court the estate will probably be rendered insolvent. If objections are sustained to these claims a different result may follow. Their final discharge will acquit them of liability to creditors for any damage or devastavit suffered by their negligence or wrongful acts. Under this state of facts we hold that any creditor of the estate is interested in the settlement proposed to be made, because he is interested in preventing -the estate from becoming insolvent by the improper allowance of illegal claims, which would operate to reduce the pro rata amount to be distributed among such creditors.

2. The Probate Court, in our judgment, properly decided that Isaac Owens was prima facie such a creditor of the estate of Stephen Byrd, deceased, as entitled him to appear and contest the administrator’s account. The decree rendered on December 19, 1874, in the Chancery Court of Monroe county, against Byrd in his lifetime, and in favor of Isaac Owens and Brainard Owens, for over thirty-six hundred dollars, which had been presented as a claim against the estate within the time required by law, was presumptive evidence of this fact. Nor was this presumption affected by the fact that a petition had been filed in the Chancery Court by the administrators of Byrd alleging the satisfaction of this decree by compromise with the solicitor of the claimants, they being then minors under twenty-one years of age. That question was one within the equitable jurisdiction of the Chancery Court, and entirely collateral to the present proceeding. The Probate Court very properly declined to enter upon the investigation of this litigated issue, which was shown to be pending and in process of adjudication by the Chancery Court. The prima facie validity of the debt is all that is requisite. — Phillips v. Smith, 62 Ala. 575. The decision, moreover, of that court in sustaining the demurrer to the petition of the administrator was itself prima facie favorable to the validity of Owens’ claim. It would be bad policy, wo may add, to permit an administrator to escape the pursuit of a vigilant creditor by dragging him into a court of chancery, as it might often tempt him into selfish and unnecessary litigation.

3. There is no error in the ruling of the Probate Court allowing Owens to intervene on the final settlement, and to contest the account of the appellants. The assignments of error, based on the various exception's growing out of this phase of the case, must, accordingly, be overruled. The creditor, having a right to appear and contest any item of the out-going administrators’ account,.could prove any neglect of duty, or failure to discharge the trust that would operate to deprive the administrators of the right to any credit claimed. The solvency or insolvency of the decedent’s estate was a material fact bearing on this point. If the estate was solvent the administrators would be justified in paying all the valid and subsisting claims. If insolvent he should have first paid the preferred claims and after these the remainder only pro raid. The fact that the estate had not been formerly declared insolvent by judicial ascertainment would not preclude the contesting creditor from showing it to be so in fact. No one has the right to invoke the jurisdiction of the Probate Court so as to establish this fact judicially except the administrator on his own report of the status of the estate, and it is attributable to his. own neglect if he fails to do so. — Code, 1886, § 2223. His breach of duty ought not to prejudice the rights of creditors. All unpreferred claims paid by appellants were paid at their own risk of the solvency of the estate — that is, of the sufficiency of the property of such estate to pay its debts. There was no error in the action of the Probate Court in allowing this issue to be collaterally made foj: the purpose of presumptively ascertaining the administrator’s right to credits claimed by them for the payment of the unpreferred debts.

The evidence, in our opinion, was sufficient to show a prima facie case of insolvency, the fact presented on this inquiry arising, as it does, collaterally. As said in a former case touching this point: “ When a fact arises collaterally, the rules of evidence never exact as cogent proof in affirmation of its verity, as where it is directly in issue. If the notes of the intestate, and other presumptive evidences of his indebtedness, which are presented for payment to the administrator, exceed in amount the assets of the estate, which are available for the payment of debts, a prima facie case of insolvency exists. It is immaterial that some of these claims are in litigation, and are alleged to have been settled. If they are in the forms of promissory notes, or other like written acknowledgments of indebtedness, which are in the possession of the creditor, the law does not presume they are paid, but the onus of such a defense is cast upon the maker.” — Life Asso. America v. Neville, 72 Ala. 517. On such a collateral issue, the claims presented in the forms of itemized accounts, properly verified by affidavits showing their correctness, may now be considered as a portion of the indebtedness presumptively at least, until the contrary is proved, — (Code, 1886, §§ 2773; 2143) although on a direct issue a higher measure of proof might be required. Prima facie validity being established, the court will not, in the absence of creditors, enter upon any inquiry as to any alleged defense to the claim, whether it be payment, the bar of the statute of limitations, or other matter of mere confession and avoidance.

5. In view of the probably insolvent condition of the estate the administrators were not justified in paying in full the unpreferred debts. They could do this only by themselves assuming the risks of a deficiency of assets. — Code, 1886, §§ 2079-2080. The most they can now claim is to be subrogated to the rights of the creditors whose claims they have satisfied, and to receive their pro rata dividends, as in the case of a judicially ascertained insolvency. — Shelton v. Carpenter, 60 Ala. 201; Bates v. Vary, 40 Ala. 421; 437; Kimball v. Moody, 27 Ala. 130; 138; Smith v. Bryant, 60 Ala. 235. There was no error in the action of the court striking from the administrators’ account the various items of credit of this class.

6. The testimony of the witnesses Watkins and More-land as to the declarations of Stephen Byrd claiming ownership of the land conveyed by him to A. P. Byrd, and asserting the transfer to have been to defraud certain of his creditors, was admissible. He, as vendor, was allowed to remain in possession of the premises for many years extending to the day of his death, and asserted his ownership by the collection, and presumptively also the appropriation of the rents. This raised such a prima facie case of fraudulent combination on the part of the . vendor and vendee as to authorize the declarations of the vendor to be admitted in evidence against the vendee as if the declarations were his own.— Weaver v. Yeatman, 15 Ala. 539; Goodgame v. Cole, 12 Ala. 77; Humes v. O'Bryan, 74 Ala. 65.

7. The court properly refused to allow proof to be made as to the declarations of Mrs. Byrd explanatory of the mode by which she came into possession of the notes of Chapman and Mixon. Sources of title can not be proved in this manner. — Guy v. Lee, 81 Ala. 163; Daffron v. Crump, 69 Ala. 77.

8. We have examined the other rulings of the court, and after rejecting all evidence to which objection was properly taken, we are of the opinion that the other rulings of the court are free from error, with one important exception. This relates to the notes of Chapman and Mixon allowed to be retained by Mrs. Byrd the widow of the decedent, with the full value of which the administrators were charged, aggregating with interest nearly two thousand dollars. There being no children the widow was entitled, under the statute, to select for herself, in addition to exemptions of certain specific property, personal property of any kind, including money, or choses in action, not exceeding in value the sum of one thousand dollars. — Code, 1886, §§ 2546-2547. This right she could exercisé either prior or subsequent to any formal administration of her husband’s estate. — Mitcham v. Moore, 73 Ala. 542; Little v. McPherson, 76 Ala. 552. And if the property selected exceed in value the amount to which she was entitled she would be liable to creditors of the estate only for the excess in value over her lawful exemptions. — Cameron v. Cameron, 82 Ala. 392.

The retention of these notes by the widow was tantamount to such selection. This was done under the form of a compromise of her claim of interest in the decedent’s estate, which necessarily included her exemptions. The arrangement was consummated by the distributees, and was reduced to writing under date o£ April 7th, 1888. It was fully acquiesced in by the administrators, and their consent to it is sought to be converted, on the present settlement, into a devastavit to the full amount of these notes with interest. The Probate Court erred in charging the administrators with the full amount of these notes. They should have been credited with a deduction of the widow’s exemption to the extent of $1,000, with interest from April 7th, 1888 to the date of settlement, August 15th, .1887, which would amount to $348.43 — making a total of thirteen hundred and forty-eight and forty-three hundredths dollars. The measure of the administrators’ liability, in this proceeding, can not be permitted to exceed the injury which the creditors, and others interested in the estate, have sustained by the alleged devastavil. — Eubank v. Clark, 78 Ala. 73.

The judgment will be corrected to this extent, and as corrected will be affirmed at the costs of the appellees.