Browne v. Fidelity & Deposit Co. of Maryland ( 1904 )

Ida L. Campbell was regularly appointed guardian of the estate of her minor children by the County Court of Tarrant County and qualified in the manner required by law, executing a bond with the Fidelity and Deposit Company of Maryland as her surety. The estate consisted of lands which belonged one-half to her in her own right and the other half to her wards. The County Court entered an order requiring the guardian to sell all of the lands belonging to the estate, which she did, and F.M. Browne bought one lot at the price of $5000, paying $1000 cash, and giving four promissory notes for $1000 each payable to Ida L. Campbell, or order, due respectively at one, two, three and four years from their date, July 24, 1900, and on the same day Mrs. Campbell, in her own right and as guardian of the minors, conveyed the tract of land to F.M. Browne reserving a vendor's lien to secure the payment of the four notes. About six months after that date and before either note became due F.M. Browne paid to Ida L. Campbell the amount of each of the four notes less 10 per cent discount, which she allowed him for advance payment.

On January 28, 1901, Mrs. Ida L. Campbell sold and conveyed to Mary Roberts a tract of land for $1225, of which $500 was paid in cash and three notes of $241 each payable to Ida L. Campbell, or order, due at one, two and three years from date, retaining a vendor's lien upon the land, which notes were sold and assigned by Ida L. Camppell to W.T. Lee.

Mrs. Campbell appropriated all of the money to her own use, and having become insolvent, the County Court of Tarrant County removed her from the guardianship of her minor children's estate and at the same time, without giving notice, appointed W.M. Massie guardian of the estate of the said minors and he qualified according to law. Massie instituted this suit in the District Court of Tarrant County against Mrs. Ida L. Campbell and the fidelity and deposit company on the guardian's bond, joining F.M. Browne as a defendant, charging that Mrs. Campbell and Browne converted the said notes to the use of Mrs. Ida L. Campbell.

The fidelity and deposit company made a settlement with Massie as guardian of the said minors and paid to him the amount of money which would have been due upon the notes executed by Browne, which settlement was approved by the County Court of Tarrant County, and by the same order the court, in so far as it had the power, subrogated the fidelity and deposit company to the rights of Massie as guardian. The fidelity and deposit company then amended its pleading in the case, setting up all of the facts, and making Browne a party defendant to its plea claimed one-half of the four notes with interest thereon.

Brown pleaded (1) that Massie was not lawfully the guardian of the estate and had no right to sue as such, praying that the suit be abated; (2) by demurrer and special pleas a misjoinder of parties defendant and of causes of action shown on the face of plaintiff's petition; (3) he pleaded the facts of his case in answer to the claim of the plaintiff and of the fidelity and deposit company.

The trial court gave judgment against Browne for the amount of the notes with interest thereon foreclosing the lien upon the land, which judgment was by the Court of Civil Appeals affirmed.

These articles of the Revised Statutes are pertinent to the questions involved:

"Art. 1867. The rights, powers and duties of executors and administrators shall be governed by the principles of the common law, when the same do not conflict with any of the provisions of the statutes of this State."

"Art. 2558. The provisions, rules and regulations which govern estates of decedents shall apply to and govern such guardianships, whenever the same are applicable and not inconsistent with any of the provisions of this title."

At common law executors and administrators had authority without an order of court to compromise or compound debts due to the estate and to execute releases therefor which, if valid between individuals, would be binding upon the estate which the administrator or executor represented. Chase v. Bradley, 26 Me. 531; Wyman's Appeal, 13 N.H. 18; Woerner on Administration, sec. 326; Wilks v. Slaughter, 49 Ark. 236. If there were no provision of our statute in conflict with the common law rule, the settlement made by Mrs. Campbell with Browne would be held binding upon the wards' estate and Browne discharged from the debt.

The following article of the Revised Statutes prescribes the procedure by which executors and administrators may compromise debts due to the estates they represent:

"Art. 1987. Whenever an executor or administrator may deem it for the interest of the estate he represents to purchase any property or to exchange any property, or take any claims or property for the use and benefit of the estate in payment of any debt due the estate, or to compound bad or doubtful debts due the estate, or to make compromises or settlements in relation to property or claims in dispute or litigation, it shall be his duty to present an application in writing to the county court, at a regular term thereof, representing the facts; and if the court upon the hearing of such application shall be satisfied that it will be for the interest of the estate to grant the same, an order to that effect shall be entered upon the minutes, setting forth fully the authority granted." Under this article it was the duty of Mrs. Campbell, when she concluded it was to the interest of her wards' estate to discount the notes, to present an application in writing to the county court, at a regular term thereof, stating the facts, whereupon the court, on investigation, would determine whether the compromise should be made; and if it found the facts to warrant such settlement, to "enter an order fully setting out the authority granted" to Mrs. Campbell. At common law Mrs. Campbell would have had the authority to make the compromise without resorting to the court for authority, but this statute denied to her that discretion by making it her duty to invoke the judgment of the court upon the facts, which is inconsistent with the liberty the common law gave her. Under that article the order of court was not intended for the protection of the executor and administrator in performing an act already authorized, but the authority must be granted by the court in specific terms with such limitations upon the power as it might deem proper. The provisions of this statute are clearly in conflict with the common law upon the subject, therefore the statute must control. Our statute does not belong to that class which the courts of other States have held to be consistent with the common law. We conclude that the guardian, Mrs. Campbell, had not authority to make a compromise with Browne to receive from him a part of the notes without the consent of the county court, and in so far as she released Browne from a part of his indebtedness her act was without authority and void.

Although she could not compromise the notes with Browne and discharge him from the balance of the debt, she had the right to collect the notes without an order of the court. It is true, she could not have forced Browne to pay, neither could he have compelled her to receive the money before the maturity of the notes, but when the parties agreed that the payment be made before the maturity it was not unlawful for her to receive the money, provided she exacted all that would accrue upon the notes, and having collected them in part, her act was valid to that extent and she held the money as guardian. Browne is entitled to a credit for the sum paid by him and was liable to the guardian, who succeeded Mrs. Campbell, for the remainder of the notes.

At common law as declared by our Supreme Court, executors, administrators or guardians have the power to assign promissory notes payable to themselves without an order of the county court conferring such authority so that the assignees could maintain actions against the payees of the notes. Gayle v. Ennis, 1 Tex. 184 [1 Tex. 184]; De Cordova v. Atchison, 13 Tex. 372.

All of the decisions of this court upon that subject were made before the Revised Statutes of 1879 went into effect, when there was no prohibition against the sale of personal property without an order of the court, although there were provisions directing the manner of selling all kinds of property belonging to an estate. At the time the Revised Statutes of 1879 went into effect the law empowered executors and administrators to sell personal effects belonging to the estate without an order of the court, but the revisers introduced into the Revised Statutes the following provisions: "Art. 2113. No sale of any property belonging to an estate shall be made by an executor or administrator without an order of the court authorizing the same." The terms "any property" embrace promissory notes as well as all other kinds of property, and an assignment of a note is a sale of it which passes the title to the assignee if lawfully made. The assignment of the notes to Lee was forbidden by positive statute too plain to admit of construction. The assignment to Lee being unauthorized the title to the notes did not pass and he was liable to Massie, the guardian of the wards, for one-half of the value of the notes. Gillespie v. Crawford, 42 S.W. Rep., 624. In the case cited, Chief Justice Finley of the Court of Civil Appeals of the Fifth District wrote a very clear and logical opinion, in which it was held that such an assignment was invalid and that the assignee was liable for the value of the note. Application was made to this court for writ of error, which was refused, and that decision stands approved.

The fidelity and deposit company, as surety for Mrs. Campbell, was liable to her wards for default of their guardian, and having settled with Massie, the successor of Mrs. Campbell is subrogated to all of the rights of the wards and is entitled to recover from Browne and Lee each the amount the wards could have recovered. Sheldon on Subrogation, sec. 89; Powell v. Jones, 1 Ired. Eq., 337; Fox v. Alexander, Id., sec. 340; Blake v. Bank,145 Mass. 13; Cowgill v. Linville, 29 Mo. App., 138.

The fidelity and deposit company is entitled to recover against Lee one-half of the amount of the notes which were assigned to him with interest to this date, and it is entitled to recover against Brown one-half of the difference between what he paid Mrs. Campbell and the principal of the four notes with interest to this date. It is therefore ordered that the judgment of the District Court, as to W.T. Lee, be affirmed, and that the fidelity and deposit company recover from Lee one-half of all costs of the Court of Civil Appeals and of this court. It is further ordered that the judgments of the District Court and of the Court of Civil Appeals be reversed and this cause remanded as to F.M. Browne, and that Browne recover from the fidelity and deposit company one-half of the costs of this court and of the Court of Civil Appeals.

Affirmed in part and in part reversed and remanded.