Opinion
No. 33150.
June 6, 1938. Suggestion of Error Overruled June 30, 1938.
1. WILLS.
Under will directing executor to hold all of testator's property in trust and to give to his wife annually during her lifetime all of the net income therefrom, it was executor's duty to pay income direct to wife in absence of any necessity for the appropriation thereof to the payment of testator's debts.
2. WILLS.
Under will directing executor to hold all of testator's property in trust and to give to his wife annually during her lifetime all of the net income therefrom, dividends declared on testator's corporate stock after his death were prima facie "income," and, in absence of a showing to the contrary, it was executor's duty to pay dividends to wife unless she owed him, as executor, money to the payment of which he could apply that income.
3. EXECUTORS AND ADMINISTRATORS.
The chancellor properly overruled a motion for a continuance of accounting proceedings by the administratrix of an executor who was directed to give to testator's wife all of the net income from property held in trust, so that evidence to prove that wife owed executor, as such, money to the payment of which he could apply income in his hands, could be procured and introduced, where it did not appear that executor had any claim that could result in a judgment against wife, and, in absence of a showing why executor should not have paid income to wife, chancellor properly directed administratrix to do so.
4. WILLS.
Where an executor was also the trustee of the corpus of an estate charged with the duty of paying income therefrom to testator's widow, and it appeared that testator's debts had been or would be paid out of other money in executor's hands, his duty as trustee for widow came into operation, and he should have acted in accordance therewith, as against contention that after executor's death all money belonging to testator's estate remaining in executor's hands should be paid by his administratrix to the administrator de bonis non of testator's estate.
APPEAL from the chancery court of Leflore county; HON. R.E. JACKSON, Chancellor.
H. Talbot Odom, of Greenwood, for appellants.
Appellee was not entitled to receive $3040.00, because she was indebted to the estate in a greater amount.
We contend that the lower court had no authority to direct the administratrix of the former executor to pay out the funds of the estate. She could do nothing except turn over all monies and properties in her hands and belonging to the estate to B.B. Provine, administrator de bonis non.
Hayes v. National Surety Co., 169 Miss. 676, 153 So. 515; Sec. 1632, Code of 1930; Hayes v. Holoman, 165 Miss. 494, 144 So. 690.
The trust created by the will of G.A. Sperry is one which may be reached by creditors of Mrs. A.E. Sperry, the cestui que trust of the trust.
Merchants National Bank Trust Co. v. Port Gibson Oil Works, 165 Miss. 314, 141 So. 283; Dibrell v. Carlisle Humphreys, 51 Miss. 785.
B.B. Provine, as administrator de bonis non with the will of G.A. Sperry annexed, can enforce the payment of the estate of an indebtedness of Mrs. Sperry to the trust by retaining the net income of the trust estate.
Restatement of the Law of Trusts, sec. 251.
A.H. Bell and R.C. McBee, both of Greenwood, for appellee.
The administrator de bonis non has no interest in the funds of the estate that have been administered. He is interested only in the funds that come to his hands, or in claims that he should recover for the benefit of the estate. Should he have received the $3040.00 income when there were no debts to be paid, and the state of the record in the condition that it now is? The appellee contends that he should not have received it.
The interpretation of Section 1633 of the Mississippi Code of 1930 as made in Hayes v. Holoman, 165 Miss. 494, 144 So. 690, applies only when there are debts of the decedent to be paid from the funds in the estate and not to cases where there are no debts or other claims on the funds that the executor of the deceased executor has in his possession.
It is the established doctrine that an administrator de bonis non can maintain a suit only for such goods, chattels, and credits, as remain unadministered by the former administrator.
Morse v. Clayton, 13 S. M. 380.
Whether the previous administrator acted agreeably to law or not, are matters with which the administrator de bonis non has no concern. The distributees and creditors are alone interested in that inquiry.
Stubblefield v. McRaven, 5 S. M. 141; Byrd v. Holloway, 6 S. M. 325; Searles v. Scott, 14 S. M. 94; Gray v. Harris, 43 Miss. 421; Hayes v. National Surety Co., 169 Miss. 676.
The remaindermen cannot now complain that the funds were given to the appellee. The decree as to them is final and they are forever bound by it and the administratrix of the executor and the administrator de bonis non cannot pull their chestnuts out of the fire.
Sec. 22, Code of 1930.
We respectfully submit that the motion to dismiss the appeal should now be sustained and the appeal dismissed for want of interest in the appellants. If mistaken in this, then under the state of the record in this case, the court could have done nothing but order the income paid to the life tenant for no obligation is charged in specific terms against her and the question of whether or not the appellee was indebted to the estate of the deceased G.A. Sperry was not before the court for decision, neither was there any debt to be paid from funds in the estate, and the remaindermen, who alone would receive the benefit of a decree ordering the funds paid to the administrator de bonis non are content with the judgment and did not appeal.
The appellants have absolutely no more right whatever, in law or equity, to hold the income solemnly given this appellee by her husband in his last will and testament when no judgment has been rendered against her than an injured man has to hold the automobile that struck him and belongs to the man who drove it at the time. Here is a situation where a husband contemplating death gives unto his ". . . good wife, Aliph Elnore, all of the property, real, personal, and mixed, of which I shall die seized and possessed, to be held in trust for her and during her natural life by my executor for her benefit . . ." with further provision that the net income be paid to her annually, yet the court records of the chancery court of Leflore County and of the Supreme Court disclose a determined effort on the part of the appellants, and the late W.D. Garner, to take this income from her and to hold it as a part of the corpus of the estate for the benefit of the remaindermen and let her wait and wait and wait until such litigation as may be filed by them and concluded before she gets a penny.
If a set-off can be claimed by the appellant, it can be only one of the following classes of set-offs: (a) set-off as established in actions at law by statute; (b) equitable set-off.
If it is in the nature of the former, then the statute is applied and the constructions thereof establish the right to claim its advantages. We believe all will agree that this is not such a set-off as can be claimed in an action at law, and since it is not an action at law, we shall not discuss that possibility of the case. This leaves us, therefore, only to deal with set-offs in equity, and of that kind limited to the subject of trusts. And this discussion limited further to the pleadings in this cause.
The pleadings as shown by the record show positively that there is the sum of $3040.00 held by the trustee of the trust fund as income; the will attached to the final account of the appellant shows definitely that it is due to be paid to the appellee, Mrs. A.E. Sperry; the final account of the appellant, Mrs. Anna T. Garner, does not seek to recover any item from the appellee, Mrs. A.E. Sperry; its only purpose is for a direction of the court as to whom to pay the money in her hands so she may retire from the cause after abiding by the directions of the court. The court directed the income to be paid to Mrs. A.E. Sperry, in accordance with the provisions of the will.
By this holding the Chancellor, in effect, held that it was the intention of the settlor, or testator, to provide that the income should be paid to the life tenant under the terms of the will. If this is not true, then he decided that the debt had not been established and the income not subject to the payment of such a claim made by the appellant.
Every test as set forth by the Section 25, page 77, Vol. 1 Restatement of Law on Trust favors an interpretation of this instrument as one that the settlor intended to give his wife the income for life annually, and not that it be withheld from her under any circumstances.
Where a trust is created to pay the income to a beneficiary for a designated period, the trustee is under a duty to the beneficiary to pay to him at reasonable intervals the net income of the trust property.
1 Restatement of Law on Trusts, page 467, sec. 182.
How much should the trustee pay the beneficiary of the net income? All. What does "all" mean. All is defined in the Standard Dictionary of the English Language as follows: "The entire quantity or extent of; . . . as much as possible; the utmost possible; . . . the whole collectively considered; the complete totality." To withhold any part or all of the net income for any purpose would be a breach of the trust; the trustee could not perform his duties by retention of the net income; the essence of the trust is that he "give" rather than "hold" the net income. The trust fails if the net income is not given to the life beneficiary. That is the purpose.
All that the authority cited by counsel for the appellant from Sec. 251 of Restatement of Law on Trusts said, is that if the intention of the creator of the trust was that the part of the trust estate held for the benefit of one person could be used for another purpose, it should thus be diverted. The court in this case held that it was not the intention of the creator of the trust to divert the net income from any purpose save to give it to the appellee, Mrs. A.E. Sperry.
The appellant is unlawfully withholding the property of the appellee, Mrs. A.E. Sperry and deliberately applying the doctrine of set-off when no claim has ever been established, and no lien of any sort exists against the funds that are held.
A set-off in equity is not authorized by the mere circumstances of mutual and independent cross demands, without circumstances from which it can be inferred that one debt was contracted on the faith of the other, or that there was an agreement between the parties that one debt should be deducted from, or set-off against, the other, or some other intervening equity which renders the interposition of a court of equity necessary for the protection of the demand sought to be set off.
57 C.J. 363, sec. 7; Calhoun v. Markow, 151 So. 547.
The owner of property may, in the free exercise of his bounty, so dispose of it as to secure its enjoyment to the objects of his bounty, without making it alienable by them or liable for their debts, and this intention, clearly expressed by the founder of the trust, must be carried out by the courts.
1 Perry on Trusts, sec. 386a; Nichols v. Eaton, 91 U.S. 716, 23 L.Ed. 254; 38 Cyc. 238; Leigh v. Harrison, 69 Miss. 923, 11 So. 604, 18 L.R.A. 49; Mitchell v. Choctaw Bank, 65 So. 278; In re Flint's Will, 193 N.Y. Supp. 319.
G.A. Sperry died, leaving a will by which he bequeathed and devised his property as follows:
"I hereby give and bequeath to my good wife, Aliph Elnora, all of the property, real, personal and mixed, of which I shall die seized and possessed, to be held in trust for and during her natural life by my executor, for her benefit upon the following terms and conditions, that is to say: my executor shall take possession of all of said property, real, personal and mixed, of which I shall die seized and possessed and give to her annually during her lifetime all of the net income from said property, and at her death, all property then on hand and in the control and possession of my said executor is hereby bequeathed to my four sisters, Mrs. C.W. Brown, Minter City, Mississippi, Mrs. G.C. Pruitt, Minter City, Mississippi, Mrs. Tom Buntin, Jackson, Tennessee and Mrs. Neal Anderson, Jackson, Tennessee, and to the children living at that time of my deceased sister, Mrs. G.W. Johnson, formerly of Lake Wilson, Minnesota, said four sisters to each have a one-fifth interest and the children then living of my said deceased sister to have a one-fifth interest." The will then nominated W.D. Garner as the executor thereunder. Garner qualified, administered the testator's estate for several years when he died, and his widow, Anna T. Garner, was appointed as administratrix of his estate, and B.B. Provine was appointed administrator de bonis non cum testamento annexo of Sperry's estate. The corpus of Sperry's estate, consisting principally of corporate stock owned by Sperry at the time of his death, was delivered to Provine by Mrs. Garner.
On March, 9, 1937, Mrs. Garner filed a fourth and final account for her husband as executor of Sperry's estate, from which it appears that when W.D. Garner died he had received and had not disposed of two dividends on the corporate stock owned by Sperry at the time of his death, and also some additional money received from other sources. Provine, Mrs. Sperry and the remaindermen under Sperry's will were summoned to appear and contest this account. It appears from the petition accompanying this account that Garner had practically finished the administration, of Sperry's estate and had collected all moneys due Sperry "except a claim against Mrs. A.E. Sperry, widow of G.A. Sperry, deceased, and upon which the said W.D. Garner as such executor during his lifetime filed suit in this court, and which said suit is now pending."
On May 6, 1937, the chancellor made an order fixing the courthouse at Cleveland, Mississippi, as the place, and 10 o'colck A.M. of Saturday, July 3, 1937, as the time for hearing objections to this account and making a final disposition thereof.
On July 2, 1937, Provine filed an answer to Mrs. Garner's petition approving the final account accompanying it and praying that the money therein admitted to be in Mrs. Garner's hands be paid over to him. On the same day, July 2, 1937. Mrs. Sperry filed exceptions to this final account, denied that she was indebted to Sperry's estate, alleged that it was the duty of W.D. Garner to pay over to her the two dividends received by him on the corporate stock owned by Sperry at the time of his death and prayed that the $3040.00, representing these dividends, withheld from her by W.D. Garner be paid direct to her. On July 3, 1937, the remaindermen under Sperry's will joined in the prayer of Provine's petition. The case then, on July 3, 1937, came on for hearing before the chancellor at the appointed place, and Provine and the remaindermen filed the following motion for a continuance:
"Come the administrator de bonis non and the remaindermen herein by their respective solicitors, and respectfully move the Court that this cause be continued for a short time so that these parties may offer testimony in order to show their respective rights and claims to all of the funds belonging to this estate and in the hands of Mrs. Anna T. Garner as administratrix of the estate of W.D. Garner, deceased, and shown by her fourth and final account herein."
To this motion was attached the following affidavit:
"Personally appeared before me the undersigned authority in and for said county and state, H. Talbot Odom and R.V. Pollard, who being by me first duly sworn severally state on oath that they have not had time to procure any evidence necessary to refute the claims made herein on behalf of Mrs. A.E. Sperry and to prepare their defense thereto and submit their respective clients to said funds as against the claims of the said Mrs. A.E. Sperry but can and will do so if given only a short time; that this motion is not made for delay but on order that justice may be done."
This motion was overruled by the chancellor, who then rendered a decree approving the account and directing that the $3040.00, representing the dividends on Sperry's corporate stock, be paid to Mrs. Sperry, and the remainder of the money in Mrs. Garner's hands be paid to Provine. From this decree Provine and the remaindermen appeal.
Under Sperry's will it was W.D. Garner's duty to pay the income derived by him from Sperry's property direct to Mrs. Sperry in the absence of any necessity for the appropriation thereof to the payment of Sperry's debts, which necessity does not here appear. The dividends on Sperry's corporate stock declared after his death are prima facie income (cf. Brown v. Sperry, this day decided), so that, nothing here appearing to the contrary, it became Garner's duty to pay these dividends to Mrs. Sperry unless she owed him, as executor, money to the payment of which he had the right to apply this income.
As we understand the argument of counsel for the appellants, the continuance of the case was desired in order that they might procure and introduce evidence which would prove these two last mentioned facts. The trouble here is that the chancellor was not advised, or at least it does not so appear from the record, what the character of Garner's claim against Mrs. Sperry was, or that he in fact had any such claim that could result in a judgment therefor. This being true the chancellor was not in error in overruling the motion for a continuance, and since no reason appears from the record why Garner should not have complied with his duty to pay this income to Mrs. Sperry, the court below committed no error in directing his administratrix to so do.
It is said by counsel for the appellants that all money belonging to Sperry's estate which remained in the hands of W.D. Garner should be paid by his administratrix to Provine as administrator de bonis non of Sperry's estate. This is true as to all money in Garner's hands which he held as executor charged with the duty of applying so much thereof as would be necessary to the payment of probated claims against Sperry's estate, but that rule does not apply here. Garner acted in a dual capacity, first, as executor of Sperry's estate, and second, as trustee of the corpus thereof, charged with the duty of paying the income therefrom to Mrs. Sperry. Since it appears that Sperry's debts had been, or would be, paid out of other money in Garner's hands his duty as trustee for Mrs. Sperry's benefit came into operation, and he should have acted in accordance therewith.
Affirmed.