Woods ex rel. Irwin v. Irwin

Opinion by

Mb. Justice McCollum,

At the instance of the attorney of the estate, the Woods claim against it was purchased by the nephews of the executrix for the sum of one thousand dollars, and ’ in an action upon the claim in their names as trustees, she, acting under his advice, confessed a judgment against the estate for $15,525, and costs. The claim was purchased Feb. 9, 1881, and the judgment was entered Nov. 26,1886. The negotiations for the purchase were conducted by the attorney who recommended it; the assignment of the claim was delivered to him by the sellers, who received his check in payment of the sum for which they sold it, and he immediately made a memorandum on the back of the assignment showing how it was acquired and under what instructions he held'it. These instructions were to collect the claim, account to the purchasers for the money they invested in it, with interest thereon, and to pay the balance to the executrix. When the creditors of the estate attacked the judgment entered on the claim and succeeded in the lower court in setting it aside, he advised the surviving plaintiff and trustee therein to appeal to this court, but the latter declined to do so until indemnity was furnished against all costs and expenses of such appeal. It seems from this that he was anxious to maintain the judgment against the estate. A singular fact in connection with the transaction is that he carefully concealed it from the executrix for whose benefit it was made. For ten years or more the trust feature of it was known only to him and the purchasers of the claim. The silence of the parties to the transaction in reference to the trust created by it is suggestive of a consciousness, or, at least, an apprehension on their part that the law would not enforce the. trust against the creditors of the estate.

We think the evidence in'the case fairly establishes the existence of the facts recited, and that it fully justifies the conclusion that the nephews of the executrix were persuaded by the attorney of the estate to purchase the Woods claim “ with the understanding, intention and instructions ” that he should collect it and pay to her whatever was realized upon it above the cost of acquiring it. Such is the conclusion reached by the learned judge of the court below upon a careful consideration of all the testimony, and we see no reason to doubt the correctness of it. The controlling question arising from and founded upon it is whether the trust in favor of the executrix is enforceable against the creditors of the insolvent estate. The issue is in fact, though not in forpi, between them. The purchasers of the claim are not now demanding, and they have never demanded, anything from the estate on account of it beyond the amount they paid for it, together with interest thereon. The transaction evidenced by the assignment from one of them to Geo. W. Irwin was made to gratify the desire of the attorney of the estate to sustain the judgment, and it does not affect in any degree the rights of the real litigants, nor was it intended to do so. The law does not countenance speculation in claims against an estate by a person charged with the duty of administering it. He is not allowed to purchase such claims for his own profit. If he buys them for less than their face value he can only recover from the estate the amount he paid for them. If, in this case, the executrix had bought the Woods claim with' her own money for one thousand dollars, that would be all she could recover from the estate on account of it. The same rule applies to her attorney, who was her legal adviser in the administration of the estate, and who did most of the work pertaining to it. If she had induced her nephews to buy the claim, as they did, for her benefit, would she have been entitled to the profits, if any, derived from the purchase ? If so, she would have acquired by it an interest in the claim adverse to the. estate she represented, and accomplished by indirection what she could not do directly, and what, the law does not tolerate. The creation of the' trust in her favor was due to the efforts of her counsel, and the parties to the transaction did not inform her that she was the beneficiary in it. But we think these facts do not give additional force to her contention or place her on better ground in this litigation than she would have occupied if she had done for herself what her counsel did for her. To this point the language- of the learned judge of the court below is so pertinent that we quote it. He said: “.It must not be forgotten that this whole business was managed by the counsel for Mrs. Irwin and the estate. It was his duty to protect the estate as much as it was the duty of the executrix, and his knowledge .was her knowledge. As he could acquire no interest for himself antagonistic to the estate, neither could he do so for his client, the executrix. She could not intrust him with the whole management of the estate and thus allow him to secure for herself an advantage which she was not permitted to do herself.” Without further elaboration of the subject we conclude that there is no error in the rulings, instructions or decree complained of. The latter is in conformity with well established principles recognized in the textbooks and enforced in the cases cited in the opinion of the court below, and in the briefs of the appellees.

The specifications of error are overruled.

Judgment affirmed, and appeal dismissed at the cost of the appellant.