Opinion
13390
April 22, 1932.
Before SEASE, J., Clarendon, 1931. Affirmed.
Action by Thomasine S. Appelt against Harriet Annie Sprott and others, to settle the estate of W.T. Sprott, deceased, wherein M.A. Morris was appointed receiver. From the decree against Morris and Fidelity Deposit Company of Baltimore, surety on the receiver's bond, Morris and the surety company appeal.
REPORT OF SPECIAL REFEREE, GEORGE D. LEVYI am met in the beginning with the fact that the return as filed shows an admitted deficiency of $547.57.
The Receiver, M.A. Morris, entered into a bond for the faithful discharge of his duties with the Fidelity Deposit Company of Maryland as surety. The amount of the bond is $2,500.00 and the bond company by its attorney appeared and by evidence and argument helped the Receiver in making the best showing he could.
The Receiver claims to be uneducated, but states that he employed J.M. Appelt who was competent and whose wife was interested as a party in this action, to keep the books for him. He signed an application for the bond in which he agreed to deposit the money in bank subject to counter signature of the company's agent. He did thus deposit a part of the money but soon stopped and is very vague as to what he did with it. He now claims he has lost some little papers and the book produced is not claimed to be an original record or even kept contemporaneously with the transactions recorded and the physical appearance of the book would not so indicate.
The Receiver cannot claim ignorance of the requirements of a Court order for the payment of money as several such orders were obtained under which he made such payments. He knew the attorneys in the case and the agent of the bond company, a lawyer, would not advise any payment without such an order, so he kept the matter secret from all of them and now comes in with claims for repairs and other unauthorized payments and large discounts made of rents due which are all supported only by his very vague statements and cannot be allowed, not only because not authorized but also because not proven. Besides this it would be unfair to use the general funds of the estate to benefit certain particular heirs to whom the lands were devised.
I have allowed the repairs on the Richbourg house, as this is supported by vouchers and this is not opposed by the attorneys.
Restating the whole account, with above corrections, it appears to be as follows:
MISCELLANEOUS DISBURSEMENTS 1926 RECEIPTS From acct. of J.M. Gamble, former Receiver .................... $ 469.90 Rent — Joe Boswell ...... $ 100.00 " Selwyn David ..... 105.00 " John Dennis ...... 73.50 " Andrew Gibson .... 105.00 " George Weathers .. 157.50 " Cantey Gibson .... 98.00 " Eddie Gibson ..... 98.00 " York Gibson ...... 105.00 " Lutie Gibson ..... 101.50 " W.D. Richbourg ... 135.00 " M.J. Davis ....... 400.00 _______ 1,478.50 1927 Rent — Selwyn David ..... 105.00 " John Dennis ...... 73.50 " Andrew Gibson .... 105.00 " George Weathers .. 140.00 " Cantey Gibson .... 98.00 " Eddie Gibson ..... 98.00 " York Gibson ...... 105.00 " Lutie Gibson ..... 101.50 " W.D. Richbourg ... 135.00 " M.J. Davis ....... 400.00 _______ 1,361.00 1928 Rent — John Dennis ...... 44.75 " Selwyn David ..... 100.00 " Andrew Gibson .... 84.50 " George Weathers .. 118.00 " Cantey Gibson .... 82.00 " Eddie Gibson ..... 88.00 " York Gibson ...... 95.00 " Lutie Gibson ..... 101.50 " W.D. Richbourg ... 135.00 " Louis Alsbrook ... 427.00 _______ 1,275.75 Interest on Deposits ............. 111.91 Rent — J.E. Reardon, Dec. 1925, Jan. and Feb., 1926 at 25.00 .. 75.00 Rent — J.E. Reardon, March, 1926 to July, 1929, at 20.00, 40 months, $800.00 less $100.00 claimed uncollected ... 700.00 ________ 886.91 __________ Total Receipts ................ $5,472.06 3 Bond Premiums ........................................ $ 37.50 Bond premiums, J.M. Gamble ............................. 10.00 Jan. 1927, Taxes, state and county ..................... 87.45 Jan. 1927, Taxes, state and county ..................... 50.85 Jan. 1927, Taxes, state and county ..................... 154.08 Jan. 1927, Taxes, Town of Manning ...................... 52.50 Aug. 23 — Shingles (Richbourg house repairs)[*] 5.75 Aug. 26 — Shingles (Richbourg house repairs)[*] 5.75 Aug. 15 — Shingles (Richbourg house repairs)[*] 8.60 Willis Dingle (Richbourg house repairs)[*] ........ 15.00 Willis Dingle (Richbourg house repairs)[*] ........ 7.50 Sept. 5 — Rawlinson — Lumber (Richbourg house repairs)[*] ................................... 8.46 Nov. 4 — N.D. Thames, services ................... 8.50 Jan. 14, 1928 — Insurance premium ................ 41.39 Feb. 15, 1928 — Insurance premium ................ 45.20 Feb. 14, 1928 — O. Delahanty — Plumbing 70.50 Feb. 13, 1928 — State and county taxes ........... 331.27 Feb. 13, 1928 — Town of Manning, taxes ........... 52.50 Jan. 23, 1929 — Town of Manning, taxes ........... 52.50 Jan. 23, 1929 — State and county taxes ........... 171.20 " " " " ............. 58.53 " " " " ............. 99.26 Jan. 30 — Insurance premiums ..................... 45.20 Dinkins Stukes, atty. fee ............ 100.00 Rent papers[*] ......................... 3.00 Ledger[*] .............................. .50 Trespass notices ....................... .50 Geo. D. Levy, Special Referee .......... 200.00 Commission 10% agreed upon ............. 547.20 Advance medicine York Mack ............. 3.00 Paid E.B. Brown, Receiver .............................. 984.92 Total disbursements ......................... $3,258.61 _________ Amount Deficiency ........................... $2,213.45 _________ $5,472.06 Items marked (*) allowed though made without Court order; orders made for all other disbursements.
In addition to above, the receiver should be charged with interest which the money would have earned if properly deposited, which would be at least $60.00 which would make amount for which judgment should be given against him and Fidelity Deposit Company surety on his bond $2,273.45.
All of which is respectfully submitted.
DECREE OF JUDGE SEASEThe appeal was argued in Sumter, and Judge Sease issued his decree as follows:
W.T. Sprott died leaving a will in which he devised various tracts of land to his children and provided that his estate should be held together and the income used for the support of his widow and the payment of debts and expenses; the final division to take place after his widow's death. After the death of the widow this action was brought to settle the entire estate and to pay the debts.
A receiver was appointed to collect the rents due the estate pending litigation and to hold same subject to the further order of the Court. M.A. Morris was appointed receiver, gave bond, and entered upon the discharge of his duties. He acted as receiver for several years, collected large amounts of rents, and filed no statement of account with the Court as required by law. Obtaining no statement of his acts from the receiver and being dissatisfied with the management of the estate, an order was obtained removing said receiver from office and requiring him to account. Pursuant to this order he did file an account with the referee appointed to receive same and take evidence in regard to the accounting. In this account filed by him the receiver showed that he was short more than $500.00. In addition to this, without the knowledge of any one of the parties, he claims to have made a contract with an illiterate negro carpenter to repair various houses, at a total cost of $1,100.00.
Both before and after this contract is claimed to have been executed, orders of the Court were obtained on petitions of the receiver for the payment of various claims against the estate, such as taxes, insurance, repairs, etc.
In his application for a bond the receiver bound himself to deposit all of the funds received in a bank to his account as receiver to be drawn only on the counter signature of the local agent of the bonding company. The receiver did not deposit the money in the bank and claims to have put out $1,100.00 on the repairs contract illegally entered into, and has not been able to produce a single receipt, voucher, canceled check, or other evidence of such payment. A bare statement of the above facts, which all appear clearly from the testimony, shows a gross disregard of his duty and a course of conduct that cannot be approved or condoned by this Court. The receiver should not have credit for commissions under such circumstances, especially as in his order of appointment it was provided that he was to receive 10 percent., which is more than the legal rate. But the referee has allowed this 10 per cent. commission, amounting to $547.20, and I will not disturb his finding in that regard as the complaining attorneys have expressed a desire simply to shield the estate from loss. The attorney for the bonding company has very urgently insisted that some of the charges for comparatively small amounts are incorrect, but the trouble is that the confusion and uncertainty and the necessity for an accounting all arise out of the failure of duty on the part of the receiver, for which the bond company is responsible, and the commissions improperly allowed will amount to considerably more than all of the items that there is any reasonable grounds for considering at all.
Where a trustee has clearly failed in his duty and improperly administered his trust, the burden is upon him of proving clearly all of the items of credit which he claims; and I would have approved the report of the referee if he had allowed no commissions; and I think the receiver and the bond company are being very leniently treated in this matter.
It is therefore ordered, adjudged, and decreed that judgment be rendered in this action in favor of E.B. Brown, the present receiver, against M.A. Morris as principal and Fidelity Deposit Company of Maryland as surety, in the sum of $2,273.45, with interest from August 15, 1930, and for all costs of this accounting.
It is further ordered that the said E.B. Brown as receiver shall proceed to collect the said judgment and hold the amount so collected as receiver with the other funds in his hands belonging to said estate, subject to the further order of this Court.
It is further ordered that the said E.B. Brown as receiver shall be allowed a reasonable per cent. of the amount collected on said judgment as his commissions for handling said funds.
This proceeding came up for a hearing at the regular term of the Court of Common Pleas for Clarendon County, S.C. in March, 1931, was marked heard, and actually heard by me while holding Court in Sumter County, by consent of the parties.
Mr. Fred Lesesne, for appellant, cites: Expenditures made by receiver in good faith may be approved after they were made: 18 S.C. 289; 18 S.C. 44; 23 S.E., 380; 45 S.C. 469; 34 Cyc., 276.
Messrs. Charlton Durant and Lee Moise, for respondents.
April 22, 1932. The opinion of the Court was delivered by
The report of the Special Referee, George D. Levy, Esq., and the decree of the Circuit Judge, Honorable T.S. Sease, both of which will be reported, state fully the facts and legal issues involved in this cause, one in equity. After a careful examination of the entire record, we are unable to sustain any of the exceptions of the appellants. Accordingly, our judgment is that the decree appealed from be, and the same is hereby, affirmed.
MESSRS. JUSTICES STABLER and BONHAM concur.