Stoughton Wagon Co. v. S. G. Dreyfus Co.

^* Application for writ of error pending in Supreme Court. The one question involved under the several assignments of error filed by the appellant in this cause relates to the action of the court in allowing as a preference the debts incurred by the administratrix in carrying on the mercantile business during the time she was administering the estate, over the debts of general creditors of the decedent, and which debts were existing claims against the estate at the time the administratrix was appointed, and we proceed to consider only the matter of the classification of the claims.

Article 3458, Vernon's Sayles' Texas Civic Statutes, on the classification of claims, provides as follows:

"The claims against an estate shall be classed and have priority of payment as follows: (1) Funeral expenses and expenses of last sickness. (2) Expenses of administration and expenses incurred in the preservation, safe-keeping and management of the estate. (3) Claims secured by mortgage or other liens so far as the same can be paid out of the proceeds of the property subject to such mortgage or other lien, and, when more than one mortgage or lien shall exist upon the same property, the oldest shall be first paid; but no preference shall be given to such claims secured by mortgage or lien further than regards the property subject to such mortgage or other lien. (4) All claims legally exhibited within one year after the original grant of letters testamentary or of administration. (5) All claims legally exhibited after the lapse of one year from the original grant of letters testamentary or of administration."

Article 3460, Vernon's Sayles' Texas Civil Statutes, specifying in what instance the executor or administrator shall pay claims, provides as follows:

"Executors and administrators, whenever they have funds in their hands belonging to the estate they represent, shall pay — (1) Funeral expenses and expense of last sickness, if the claims therefor have been presented within sixty days from the original grant of letters testamentary or of administration, but if not presented within such time their payment shall be postponed until the allowances made to the widow and children, or either are paid. (2) Allowances made to the widow and children, or either. (3) Expenses of administration and the expenses incurred in the preservation, safe-keeping and management of the estate. (4) Other claims against the estate in the order of their classification."

Article 3459, Vernon's Sayles' Civil Statutes, providing for the pro rata payment of claims where the estate is insolvent, reads as follows:

"Where there is a deficiency of assets to pay all claims of the same class, they shall be paid pro rata; and no executor or administrator shall be allowed to pay any claims, whether the estate is solvent or insolvent, except with their pro rata amount of the funds of the estate that have come to hand."

Article 3623, Vernon's Sayles' Texas Civil Statutes, provides as follows:

"Executors and administrators shall also be allowed all reasonable expenses necessarily incurred by them, in the preservation, safe-keeping and management of the estate, and all reasonable attorney's fees that may be necessarily incurred by them in the course of the administration."

Article 3351, Vernon's Sayles' Texas Civil Statutes, giving authority to carry on the business of the decedent, if it shall appear to be for the interest of the estate, was in all probability prompted by a recognition, upon the part of the Legislature, of the business principle that a mercantile business is more valuable as an asset if it is a going concern than otherwise, and for that reason, as a general rule, it would be an advantage to the estate and to all parties interested therein, including the creditors, to have the business operated and carried on until it was sold. The necessary expense to administer such a trust, incurred in the effort to maintain the business as a going concern, certainly should include the cost of replenishing the stock of merchandise; for if the merchandise be not kept up to the standard of such business, and replenished as necessity required, certainly the status quo of the business could not be maintained nor the business "carried on" as contemplated by the statute.

It has been held that attorney's fees incurred in defending a suit against an estate were included in expenses of administration, and entitled to a priority of payment over the general creditors. Williams v. Robinson, 56 Tex. 347; Ackermann v. Ackermann, 99 S.W. 889.

In the case of Rodgers v. Sturgis National Bank, 152 S.W. 1177, the costs incurred by the administratrix in the care, management, and keeping of a herd of cattle belonging to the estate, were allowed as expenses incurred in the management of the estate, and paid in full, although the estate was insolvent.

Article 3352, Vernon's Sayles' Civil Statutes, authorizes any person interested in any estate to file complaint in writing and for good cause shown to obtain an order of the court controlling the action of the executor or administrator in regard to carrying on such business. Under this statute, appellant in this case, if it was not satisfied with the way the administratrix was carrying on the commercial business belonging to the estate, had the right to invoke the powers of the probate court, and ample opportunity to learn, through such a proceeding, the status of such management and operation, and to have the court enter such orders in the premises as might have been necessary to protect and safeguard the rights of appellant and the other general creditors of the estate.

The fact that appellant and the other general creditors did not see fit to invoke the power of the probate court at a seasonable time to protect themselves, but stood by and allowed the administratrix to operate the business at a loss, is not a reason to be urged against recognizing the classification of the claim of appellee as expenses incurred in the management of the estate during its administration, and the allowance of the same as such.

We find no error in the judgment of the district court, and the judgment is in all things affirmed.

Affirmed.