Kirman v. Powning , 25 Nev. 378 ( 1900 )

The facts sufficiently appear in the opinion. The appellant instituted this action to foreclose a mortgage. A demurrer to the complaint was interposed and sustained, and a judgment rendered in favor of the respondent. The appeal is taken from the judgment and the order sustaining the demurrer.

The facts shown by the complaint are that C. C. Powning died intestate at Washoe county, Nevada, about the 4th day of November, 1898, leaving an estate therein; that on the 6th day of December, 1898, an order was made by the district court of said state in and for said county appointing the respondent administratrix of the estate of said decedent, and that on said day letters of administration were regularly issued to her as administratrix of said estate, and that ever since she has been and is the appointed, qualified, and acting administratrix of said estate; that on the 17th day of December, 1896, at said county of Washoe, the said C. C. Powning, deceased, executed and delivered his certain promissory note, bearing date of that day, to the appellant, by which he promised to pay appellant, on or before June 17, 1897, $2,500 at the banking office of the Washoe County Bank, with interest at the rate of 8 per cent per annum from date until paid, a copy of which note is fully set out; that to secure the payment of said principal sum and interest mentioned in said note the said Powning executed under his hand and seal, and delivered to the appellant, a mortgage bearing date of December 17, 1896, conditioned for the payment of said sum and interest, which mortgage was duly acknowledged and certified and recorded on the 19th day of December, 1896, in the office of the county recorder of Washoe county in Book M of Mortgages, page 537.

A copy of the mortgage, containing a description of the real estate covered thereby, with the indorsements thereon, is fully set out in the complaint.

It is further shown:

That there is due and unpaid to the appellant on said note and mortgage the principal sum and interest thereon at the specified rate, amounting to $400.

That on the 31st of December, 1898, and within the time allowed by law for the presentation of claims against the estate of said C. C. Powning, the appellant presented his said claim, duly verified, to the administratrix of said estate for allowance, and filed the same with the clerk of the court for the amount hereinbefore set forth.

That thereafter, and within the time allowed by law, the respondent considered said claim, and allowed the same by statutory limitation, and thereafter she ``notified appellant to be and appear before the judge of said court, and show cause why said claim should be allowed.

That, pursuant thereto, appellant appeared before said judge to show cause, as aforesaid, and offered said judge, sitting in chambers, the original note and mortgage hereinbefore set forth, for the purpose of attaching the same to said claim as filed. Counsel for respondent interposed no objection to said offer, and appellant left said original note and said original mortgage with the said judge for the purpose of attaching the same to said claim, and making the same a part thereof, and said judge retained said note and mortgage until the ___ day of June, 1899.

That on the 15th day of May, 1899, said judge considered said claim, and, while in possession of said note and mortgage, rejected the same.

That the claim presented is in the words and figures following: "In the Second Judicial District Court of the State of Nevada in and for Washoe County. In the Matter of the Estate of C. C. Powning, Deceased. Creditor's Claim. The undersigned, a creditor of the estate of C. C. Powning, deceased, presents his claim against the estate of said deceased, with the necessary vouchers for approval, to wit: Estate of C. C. Powning, deceased, to R. Kirman. To note and mortgage, dated Reno, Nevada, December 17th, 1896, recorded December 19th, 1896, at 46 min. past 9 a. m., in Record M of Mortgages, page 537, records of Washoe county, Nevada, which note and mortgage is hereby referred to and made a part of this claim, $2,500; to interest on same to December 17, 1898, $400 — total, $2,900."

To this claim there was attached the statutory affidavit. The appellant asks for a decree of sale of the land in the usual manner, the proceeds to be applied to the discharge of the amount due, and for the usual relief in proceedings of foreclosure, waiving recourse to any other property of said deceased other than the property described in the mortgage.

The important question to be considered is made by the claim of the respondent that no action can be maintained against the representative of a deceased person to foreclose a mortgage upon any property of the deceased, under the statutes of this state regulating the settlement of the estates of deceased persons, unless the same has been presented to such representative within the time and in the manner prescribed by said statute.

In support of this contention it is argued that the statute giving to the representative of a deceased person possession and control of all the property of the intestate, the right to maintain actions to recover the possession of all the real estate of the deceased, and damages thereto, the right to the rents, issues, and profits of the same, and the imposed duty to keep the same in reasonable repair, the duty to inventory and appraise all the estate of the deceased, and his many other duties regarding accounting, sale of property, order of the payment of debts, shows that such was the intention of the legislature in the passage of the act.

While the question is not a new one, and there seems to be some conflict in the decision of the question between the courts of the various states, such conflict doubtless arising from the form of the various statutes, or the language used therein, yet, so far as this court is concerned, because of the recent passage of the act regulating the settlement of estates of deceased persons, the question is comparatively new, and a just and reasonable determination involves the judicial construction of the act, aided, in some respects, by the opinions of other courts upon statutes in many points similar to our own, where such opinions seem to be based upon sound logic and reason.

Briefly stated, by the requirements of said act "all persons having claims against the deceased" must within a certain time file the same, with necessary vouchers, with the clerk of the court; if the claim be not filed within the time specified, "it shall be forever barred."

It is further required that such claim shall be supported by affidavit, the form and contents of which are fully set out in the act. It is made the duty of the administrator within a certain time to endorse thereon his rejection or allowance of such claim, and within a limited time thereafter he is required to present all claims allowed by him to the district judge for his approval or rejection.

Quoting from the act, it is further provided that: "All claims, when approved by the judge, shall be ranked among the acknowledged debts of the estate, to be paid in due course of administration. If the claim be founded upon a bond, bill, note, or other instrument, the original instrument need not be filed, but a copy with the indorsements may be attached to the statement of the claim and filed therewith, and if the claim be secured by mortgage or other evidence of lien, it shall, or a certified copy from a record, be attached to the claim and filed therewith." (Comp. L. 1900, secs. 2893-2896.)

A mortgage is something more than a "claim against the deceased." It is a lien upon the specific property described therein, carying with it the right, in case of default, of action to foreclose, and by such proceedings have applied to its discharge the proceeds arising from the sale of the specific property.

The district judge acting in probate matters under the sections above cited has no power or authority to determine the question of the validity or invalidity of the lien of the mortgage, or to make any decree or order for the sale of the mortgaged premises upon the presentation of the claim as defined in the statute. His allowance or rejection of the claim does not determine the validity of the lien created by the mortgage. It is not sufficient to say that the act prescribing the order of the payment of the debts of the decedent confers authority upon the district judge to determine in this manner the validity of the mortgage lien.

The statute makes a distinction between liens of mortgages and "claims against deceased persons."

"If the claim be founded upon a bond, bill, note, or other instrument, the original instrument need not be filed, but a copy with all indorsements may be attached to the statement of a claim and filed therewith, and if the claim be secured by mortgage or other evidence of lien, it shall, or a certified copy from a record, be attached to the claim and filed therewith." (Comp. L. 1900, sec. 2896.)

That the legislature did not intend that the rights of the mortgagee and the validity of the mortgage lien should be determined in the summary manner prescribed by the statute is not only apparent from these provisions of the act, but also from the subsequent section providing that, when any sale is made by an administrator, pursuant to the provisions of this act, of land subject to any mortgage which is a valid claim against the estate of the deceased, the purchase money shall be applied, after paying the necessary expenses of the sale, first to the satisfaction of the mortgage, and the residue in due course of administration; and such application shall be made without delay, and the land shall remain subject to such mortgage until the purchase money shall have been actually so applied; and that no lien against any estate shall be affected by the statute of limitations pending the proceedings for the settlement of such estate. (Comp. L. 1900, sec. 2943.)

It seems to us that the language used in this section, taken in connection with the language used in the sections above quoted, is conclusive of the question. It preserves, in direct terms, the lien of a mortgage upon the land sold until the proceeds arising from such sale have been actually applied to the discharge of the mortgage lien. It has been claimed that the words "valid claim," used in the last section, must be held to mean a claim against the deceased which has been duly presented in the manner required by the provisions heretofore cited.

We are not disposed to give to the words used the strained and technical construction contended for, in view of the further provision of the same act requiring that it shall be liberally construed, to the end that justice may be done all parties. (Comp. L. 1900, sec. 3055.) The legislature, by the use of the words "valid claim against the estate of the deceased," construed with the other language used in the same section, clearly intended that lands sold by the administrator, which were justly chargeable with the payment of a mortgage lien, should be subject to sale divested of such lien only upon the actual application of the proceeds as specified.

By this provision valuable property charged with such liens may be used for the purposes of administration without impairing any of the rights of the mortgagee.

To place a different construction on the statute requires that we should not only ignore the last clause contained in the section, which declares that "no lien against any estate shall be affected by the statute of limitation pending the proceedings for the settlement of such estate," but must hold, in direct contravention thereof, that the failure of the mortgagee to present his lien within a few days after notice of appointment or failure to sue upon the same within a few days after presentment and notice of rejection shall operate as a perpetual bar to any action to enforce the same.

We have examined a large number of cases decided by the courts of other states.

Woerner, in his work on the American Law of Administration, correctly states the general rule, as we believe, governing the majority of these cases. He says: "Actions to foreclose mortgages or to enforce other collateral securities or liens are distinct from the allowance of the debts so secured; and since, generally, probate courts have no jurisdiction of such actions, the limitations and conditions imposed on the parties enforcing the payment of simple debts against executors or administrators are not applicable. Thus, mortgages or vendors' liens may generally be foreclosed without having proved the debt in the probate court, or making the affidavit of claimants presenting demands against administrators, or proceeding within the time required for the presentation of claims against deceased persons; nor, on the other hand, does the probate of the claim affect the holder's right of foreclosure. For the same reason the right of foreclosure gives the holder no remedy against the general assets of the estate, and does not give such a claim a preference thereto, and his claim in this respect for any deficiency is barred like any other claim, unless he presents the same in proper time." * * * (Woerner, Admn. 409; 8 Am. Eng. Enc. Law, 2d ed., 1070. See, also, authorities cited in footnotes to text of the above authorities.)

The Supreme Court of Washington, discussing the same question, under a statute with provisions similar in many respects to our own, says: "As to the first objection raised by the defendant, we think that the plaintiff's rights, under his mortgage, as to the lands mortgaged, were not barred by a failure to present his claim secured thereby to the executrix; that the failure to present his claim would only operate to prevent him from making any deficiency that might remain after exhausting the mortgaged property out of the testator's other estate." (Scammon v. Ward (Wash.), 23 P. 439.)

It is necessary to notice briefly one other question raised. It is claimed that the facts shown by the complaint do not constitute a sufficient filing or presentment of a claim to save the bar of that provision of the act which declares that no holder of any claim against an estate shall maintain any action thereon unless it shall have been first filed, and under the conditions specified. (Comp. L. 1900, sec. 2899.)

The point of this contention is that a strict compliance with the provisions of this section requires that the appellant should have attached copies of the note and mortgage to his claim, or the statement thereof, as provided for by section 2896, supra.

This contention is correct if we are required to construe the words "may" and "shall," used in the last clause of said section 2896, as mandatory.

We do not believe it was intended that the language should be given such construction.

Taking the language of sections 2803 and of 2896, and we are of the opinion that it was the manifest intention of the legislature that formal and technical pleading should not be required in the presentation of claims; that the court should investigate these claims in a summary manner without pleadings that required the skill and learning of an attorney at law in their preparation; that by such procedure expense and delays to both claimants and the estate should be avoided.

"This act shall be liberally construed, to the end that justice may be done all parties, and a speedy settlement of estates at the least expense secured," is the declaration of said section 3055, and, if this statutory rule is to be applied to any of the provisions of the act, it seems most appropriate to apply it to those sections regulating mere matters of pleading, and not of substantive law.

We are of the opinion that a claim, or statement of a claim, properly verified, which shows the nature and character and amount of the same, and the liability of the estate of the decedent, and, if there is future litigation as to the fact of presentment, it can be distinguished from all other similar claims, and is sufficient to bar another proceeding upon it, is a sufficient compliance with the terms of these sections of the statute when given the liberal construction of the statutory rule above quoted.

Of the authorities from the courts of other states examined, the following decisions of the Supreme Court of Alabama are cited, and are, as we believe, considered with the provisions of the statute of that state regulating the settlement of estates of deceased persons, based upon sound reason. (Flinn v. Shackleford, 42 Ala. 202;Bibb v. Mitchell, 58 Ala. 657;Agnew v. Walden, 84 Ala. 502.)

Quoting from the opinion in Flinn v.Shackleford, supra, Mr. Justice Byrd, speaking for the court, says: "The code declares that ``all claims against the estate of a deceased person must be presented within eighteen months after the same have accrued or within eighteen months after the grant of letters testamentary or administration; and if not presented within that time are forever barred.' * * * The statute previous to the adoption of the code was, in substance, upon this subject, the same as the above provision. This court has long held that under this statute it is not necessary for the claimant to present the original claim to the executor or administrator in order to hold them liable, and the presentation of a copy or abstract, or even notice given of the claim, with the assertion of the liability of the estate, and that he looked to the executor or administrator for payment, would be sufficient. * * * The code also provides that every person having any claim against an estate which has been declared insolvent must file the same in the office of the judge of probate within nine months after such declaration, or after the same accrues, verified by the oath of the claimant, or some other person who knows the correctness of the claim, and that the same is due, or the same is forever barred."

The court in this case, discussing the construction to be placed upon this provision of the statute relative to the filing of claims against estates declared to be insolvent, further on in the same opinion, uses the following forceful language: "Such a ruling preserves the analogies which should be observed in the construction of statutes which are inpari materia. Besides, too rigid a rule should not be enforced against parties in a court which has no technical rules established for its proceedings, and which looks to the substantial administration of justice and equity without being held down to the strict rules of the courts of common law."

Our statute regulating this matter also seems to be in harmony with the following rule, tersely stated in the 8th Am. Eng. Enc. Law, 2d ed., 1077: "In presenting claims against the estate to the probate court, or by filing the claim in the office of the probate judge, no formal complaint is necessary. All that is required is that the statement show the nature and amount of the claim with sufficient precision to bar another action, and show also a prima facie right to recover."

There is also one other view to be taken of the matter. It is shown by the complaint that the statement of the claim filed within the statutory time was allowed by operation of the original provisions of section 2896, supra, by the failure of the administratrix to indorse her allowance or rejection of the same. (Stats. 1897, p. 136, sec. 111.)

It is further shown that thereafter the appellant was notified to appear and show cause before the district judge why said claim should be allowed, and that he appeared before said district judge, and before said claim had been rejected by him, and offered to attach the original note and mortgage to the statement of the claim, and left said note and mortgage with the said district judge for the purpose of having the same attached; that thereafter the district judge rejected the claim, and, it seems, returned to the appellant the original note and mortgage.

While, as above stated, it was the manifest intention of the legislature to dispense with formal and technical pleadings in the presentation of claims against deceased persons, yet it did, in its wisdom, enact as a part of the law regulating these matters that, when appropriate, or the same may be applied as auxiliary to the provisions of the act, and when not otherwise especially provided in the act, all the provisions of the law regulating proceedings in civil cases shall apply in matters of estate. (Comp. Laws, 3067.)

Under the authority of this provision we are unable to understand why, before the final rejection of a claim by the district judge, and even after the time within which a claimant is allowed to file a claim against the estate of deceased persons, the claimant should not be permitted, in furtherance of justice, under the declared rule of the civil practice act, to amend his claim as to any technical matter which does not substantially change the nature and character of the same.

While we have been unable to find, after diligent search, any authority directly in point, yet such an application of the rule seems to be justified by the provisions of the statute, and its application cannot operate to harm or injure any person interested in the estate.

This rule as to the right to amend seems to be supported by the decisions of the Supreme Court of the State of California and the Court of Appeals of the State of Colorado, and we have not been able to find any authority or decision which conflicts with it. (In re Sullenberger's Estate,72 Cal. 549; Dickey v. Dickey,8 Colo. App. 141.)

If, then, the right to amend exists, as suggested above, may not the averments of the complaint be sufficient to justify the court in holding that the statement of appellant's claim was amended by attaching the original note and mortgage thereto?

It is hardly necessary to discuss the objection raised by the respondent that the point of the exception to the order sustaining the demurrer to the complaint is not stated.

If the rule of the statute announced in McGurn v.McInnis, 24 Nev. 370, 55 P. 304, could have any application to the record in the case at bar, it would be sufficient to say that the statement containing the complaint, demurrer, order of the court sustaining the demurrer, and decision thereon constituting the record on appeal, very clearly shows the point of the appellant's exception.

For the reasons above given, the judgment and order appealed from will be reversed, and the cause remanded for further proceedings in accordance herewith.

UPON PETITION FOR REHEARING.