Opinion
14868
April 21, 1939.
Before MANN, J., Greenville, November, 1938. Reversed and case remanded.
Action by W.C. Beacham, as executor of the last will of Mary Ross Chipley, deceased, etc., against W. Rushton Ross and others for permission to render an accounting, wherein W.C. Beacham, individually, was brought in as a defendant. From a decree modifying the findings of the Master, the defendants appeal.
The Master's report follows:
This cause again comes before me for the purpose of finding the amounts due the defendant-legatees under the decision of the Supreme Court, 187 S.C. 398, 197 S.E., 369. Two references have been held that the interested parties might present such additional evidence as they desired. At these references the plaintiff and all of the interested parties were represented by counsel. The testimony is appended.
After careful consideration of all of the facts in the cause in the light of the decision of the Supreme Court, I make the following findings and recommendations:
1. Executor's Compensation. I find that the executor paid himself commissions on receipts and disbursements for the year ending July 24, 1927, although he made no return for this period as required by law. The executor's return shows the receipts for this period amounted to $6,354.76, commission on which at 21/2% amounted to $158.87; disbursements $1,536.47, commission on which at 2 1/2% amounted to $38.41; total commissions for this period, $197.28. The executor, individually, should therefore reimburse the estate in the amount of $197.28, excess commissions which his report shows he collected from the estate, and I recommend that his account be surcharged with this amount. In making this excess collection, I am satisfied the executor thought he was acting within his rights and did so in good faith.
2. Interest due Mrs. Margaret Ross Pope Naff. The Supreme Court holds that the executor should be held accountable for interest on the annual balances due Mrs. Naff at the rate of interest such money would have drawn had it been deposited in the savings department of the executor's bank, the Peoples National Bank of Greenville, over the period in question. I find this interest amounts to $882.74 to September 30, 1938, and recommend that the executor, individually, promptly paid Mrs. Naff or to her attorney this amount.
3. Loss on Cotton Mill Stocks. Under the ruling of the Supreme Court, I find the cotton mill stocks held by the executor until February 10, 1937, could and should have been sold by him when the other stocks were sold on June 28, 1927. I also find that the actual net loss (not including any interest) to the estate, by reason of his failure to do so, amounts to $4,381.63. I, therefore, recommend that the executor, individually, be required to immediately pay to the legatees or their attorney the sum of $4,381.63.
4. Attorney's Fees. I find the attorneys for the executor, although the return of the executor shows the proposed final accounting provided for a fee of $250.00, rendered services justifying a larger fee. I, therefore, find that the attorneys for the executor should have a fee of $1,500.00. This to include services rendered in connection with the appeal to the Supreme Court. They have been paid $250.00, and I recommend that they be allowed an additional fee of $1,250.00.
5. Costs. I find that the costs in the case should be charged against the estate up until the executor's proposed final accounting, dated March 31, 1937, was filed with the Master on April 9, 1937. I find that all costs subsequent to that date, viz., April 9, 1937, including all costs incurred in connection with the appeal to the Supreme Court, in which the defendant-legatees were the prevailing parties, except for the costs of the reference on June 30, 1938, should be paid by the executor, individually. The costs in the reference of June 30, 1938, which was held exclusively for the benefit of the defendant, Mrs. Ross H. Lebby, and in which the executor was the prevailing party, amounting to $5.80, should be charged against Mrs. Lebby. I find the costs subsequent to April 9, 1937, including $179.23 Supreme Court costs, chargeable against the executor, individually, amount to $248.03. I understand some part of this has been paid by the executor out of the funds of the estate. I recommend that his account be surcharged with such amounts and that he immediately reimburse the estate for the same. The costs to and including April 9, 1937, amount to $11.75.
It was admitted in open Court by the attorneys for the executor and the executor, individually, and also the attorney for the defendant-legatees, that they had an understanding when the case was appealed to the Supreme Court that all costs in the Supreme Court would be paid out of funds of the estate, and that in the event the appellants were the prevailing parties, Mr. Beacham, individually, would reimburse the estate for the amount.
SUMMARYI further recommend that the executor, individually, immediately make the reimbursements to the estate and the payments to the legatees as herein found, and that in the event he fails to do so, he be charged with the legal rate of interest on such amounts, and that judgments be entered against him by Mrs. Naff, if she be so advised, for the amount due her, and by the legatees for the amounts herein found to be due them. I further find the executor, individually, should make the payments herein recommended direct to the legatees, or their attorney, and on which he will be entitled to no commission.
Mr. R.N. Ward, for appellants, cites: Liability of trustee: 105 S.C. 432; 90 S.E., 37; 140 S.C. 517; 139 S.E., 161; 197 S.E., 442; 167 A., 358; 57 A., 694; 172 A., 212. Demand: 130 S.W. 364; 114 F., 947; 5 F.2d 553; 245 P., 668; 283 S.W. 448; 46 A.L.R., 389. Res judicata: 118 S.C. 470; 111 S.E., 15. Recovery of interest: 146 S.C. 355; 144 S.E., 73; 2 Speer, 594; 34 S.C. 518; 13 S.E., 660; 76 S.C. 308; 56 S.E., 952; 2 F.2d 205. Payment of costs: 170 S.C. 219; 170 S.E., 153; 79 S.C. 388; 60 S.E., 938; 43 S.C. 262; 21 S.E., 2; 2 McC. Eq., 1; 26 S.C. 196; 1 S.E., 814; Rice Eq., 51; Bailey Eq., 274; 2 Hill Eq., 26; 3 Strob. Eq., 81; 2 McCord Eq., 76; 2 McCord Eq., 186; 169 S.C. 263; 168 S.E., 705.
Messrs. R.E. Babb and Blythe Bonham, for respondent, cite: Laches: 171 S.C. 269; 21 C.J., 210; 43 S.C. 436; 21 S.E., 277; 1 S.C. 400. Negligence: 106 S.C. 310; 159 S.C. 109. Commissions to executor: 9 Rich. Eq., 71.
April 21, 1939.
The facts out of which this controversy arose are fully set out in the Court's opinion reported in 187 S.C. 398, 197 S.E., 369, 374. On that appeal the judgment of the Court below was modified in certain respects and the case remanded for further proceedings consistent with the opinion. The Master thereafter held several references and duly made his report on October 10, 1938, to which exceptions were taken by the plaintiff. The matter was duly heard by his Honor, Judge Mann, who filed a decree modifying the findings of the Master as to the amount of loss on mill stocks, and rejecting his recommendations as to costs, commissions on surcharges and the entering of judgment, and as to the amount of attorneys' fees which should be allowed against the estate.
Upon consideration of the questions presented, we are convinced that the findings and conclusions of the Master are correct, except as to the time the cotton mill stocks held by the executor should have been sold.
In its former opinion the Court said:
"Of course, an executor is entitled to a reasonable time for the conversion of stocks belonging to an estate, and what would be reasonable in one case might not be in another. Courts of equity, therefore, will look to the facts and circumstances of each particular case. The Court below will be governed by this rule in determining the loss sustained by the appellants, and the case will be sent back to that Court for such determination, among other things."
With this decision before him, the Master found that the cotton mill stocks held by the executor should have been disposed of when other stock was sold by him on June 28, 1927; and that the loss to the estate, by reason of his failure to do so, amounted to $4,381.63. The Circuit Judge did not agree with this finding. He held that a reasonable time for the sale of the stock would have been between January, 1931, and the summer of 1934, and thereby fixed the amount of loss to be borne by the executor at a very low figure, in view of the fact that the stock had then greatly depreciated in value.
It is clear from a reading of the former decision of the Court that it does not sustain, when correctly construed, the conclusions reached by the Circuit Judge. Nor does it fully support the findings of the Master, as we have indicated, as to when sale of the stock should have been made by the executor. We said: "The executor had thirty-nine months after he came into possession of the stocks to dispose of them before the depression struck in October, 1929. After that time, these securities rapidly depreciated in value, and he having failed to sell them when he should have sold, found himself in a dilemma as to what should be done. He held on, however, and a loss was sustained by the estate: and as the testimony clearly indicates that such loss was due to the negligence of the executor, we hold that it is chargeable against him." Also: "He sold a portion of such securities, presumably by order of the Court, at a time when he was able to realize good prices therefor; and no good reason is made to appear why he could not have disposed of all of them at that time, or within a reasonable time, and in the same way." And while the Court held that the facts and circumstances of each particular case should be looked to, and that what might be reasonable in one case might not be in another, it also pointed out that a trustee should not invest trust property in stock, and that any cotton mill stock investments should be disposed of by him at the earliest opportunity. In the same connection, it rejected, too, as being without merit, the contention of his counsel, that the executor should be excused for failure to dispose of the stock before he did for the reason that the testatrix made these investments herself.
The plaintiff qualified as executor on August 24, 1926, and has continued to serve in that capacity ever since. As indicated in our former opinion, he is a man of recognized honesty and wide business experience; and no doubt it was the possession of these very qualities, known to the testatrix, which influenced her in selecting him as an executor of her will. It also appears that a very friendly relationship existed between the executor and the legatees, and this doubtless rendered him immune from an inquisitorial proceeding for a number of years. Moreover, he did not have to qualify as the executor of Mrs. Chipley's will, if he did not wish to do so; but once the trust was accepted by him, it cannot be denied, and is not, that it was his business and legal duty to execute it in accordance with law. The record shows, however, that having qualified, he paid little or no attention to the duties of his office. His testimony is to the effect that he should have sold these stocks long before he did, but did not do so because the business of the estate was overlooked.
Under the admitted facts, we do not think it may soundly be held, as contended, that the legatees themselves were negligent in not demanding that the stock be sold and are, therefore, in pari delicto with the executor. Moreover, their failure to act in the matter before they did, even if they were under any duty in the circumstances to do so, which we do not concede, cannot save the executor, a man of much business ability, with full knowledge of the business trends of the time, and fully aware of the hazardous character of these assets of the estate, from the result of his own inexcusable failure to perform the legal duties imposed upon him under the trust. Upon due consideration, we hold that the reasonable time for the sale of the stock in question would have been between August 24, 1927, and October, 1929. This liberal holding, in view of the facts disclosed, gives to the executor all that he is entitled to.
The case, therefore, must be remanded to the Circuit Court for the purpose of determining the average price of the stock in question between August 24, 1927, and October, 1929; and, based upon such average price, of determining the amount of the actual loss (not including interest) to the estate by reason of the executor's failure to sell these securities within the period of time named. When such amount is so found and fixed by the Master, the appellants herein will be given judgment against the executor therefor.
As thus modified, we approve and adopt the report of the Master. Let it be reported.
The decree of the Circuit Court is reversed, and the case is remanded to that Court for further proceedings consistent with this opinion.
MR. CHIEF JUSTICE STABLER and MESSRS. JUSTICES BONHAM, BAKER and FISHBURNE concur.
MR. JUSTICE CARTER did not participate on account of illness.