Opinion
No. 33656.
April 17, 1939.
1. EXECUTORS AND ADMINISTRATORS.
The sureties of administrator of assets consisting of choses in action can be held liable, as respects such assets, only for amount which could have been collected by administrator in exercise of reasonable diligence, and which as proximate result of want of diligence was afterwards lost to estate.
2. EXECUTORS AND ADMINISTRATORS.
Where last administrator had recovered everything recoverable from former administrator and other parties to whom original administrator had improperly paid part of decedent's insurance money, decedent's widow was not entitled to a recovery against former administrator on ground that if former administrator had properly accounted as to herself and sued as to the other parties, assets improperly paid could have been recovered with less expense.
3. DAMAGES.
In absence of statute, attorney's fees are not recoverable unless facts are of such gross or willful wrong as to justify the infliction of punitive damages.
4. EXECUTORS AND ADMINISTRATORS.
Where former administrator and her sisters at time of receipt of portion of decedent's insurance money improperly paid to them by original administrator were advised by that administrator, who was an attorney, that they were so entitled, decedent's widow was not entitled to recover from former administrator and her surety attorney's fees expended by widow in recovering the money improperly paid.
5. PRINCIPAL AND SURETY.
Sureties are not liable for or in respect to exemplary or punitive damages.
APPEAL from the chancery court of Washington county; HON. J.L. WILLIAMS, Chancellor.
Leonard E. Nelson, of Vicksburg, for appellant.
Unless agreed payment and reasonableness of the actual contingent attorney's fees set out in the bill be conceded as admitted by the answer, it was error on the part of the lower court to exclude appellant's offered evidence thereof, unless it be the law that such an expense or damage is not recoverable on the bond.
The trial court erred in rendering the final decree against the appellant and in favor of the appellee, that is, in not rendering a final decree in favor of appellant against the appellee. The trial court's decree says and means that appellant's bill and proof do not warrant any relief whatever for the appellant, either as specifically prayed for or under the prayer for general relief, in effect, that appellant is without any remedy whatsoever. Appellant is legally and equitably entitled to reparative relief.
National Surety Corp. v. Laughlin, 172 So. 490; Weyant v. Utah Sav. Tr. Co., 9 A.L.R. 1119.
The generally accepted rule is that a judgment or decree against an executor or administrator is conclusive against the sureties on his bond, although they were not parties to the proceedings, and cannot be collaterally questioned by them in an action on the bond, their only remedy being by way of appeal, writ of error, or application for a new trial, or by a direct proceeding in equity.
24 C.J. 1079; 50 C.J. 196; 65 C.J. 1083.
As the bond covers the duty to make a just and proper final accounting as to all property received and acts done during the entire course of administration, the general rule is that the sureties are liable for assets of the estate which their principal received before as well as after the execution of the bond, in case of the principal's conversion or maladministration in respect of such assets or failure to render due account thereof.
24 C.J. 1062.
A debt due to the estate from an executor or administrator becomes assets of the estate and is covered by the administration bond.
24 C.J. 1062; Ordinary v. Connolly, 75 N.J. Eq. 521, 72 A. 363, 138 Am. St. Rep. 577.
The requirement that a surety either indemnify or reimburse the creditor or obligee against losses and expenses in proceeding against the principal is learnedly discussed in the well reasoned case of Bingham v. Mears, 27 L.R.A. 257: "There is authority for the doctrine that upon indemnifying the creditor against the expenses of the proceedings the surety may, in equity, compel him to first exhaust his remedies against the principal debtor. Brandt, Suretyship, par. 238. But in this case no offer of idemnity appears to have been made. . . . But in all such cases equity required that the creditor should be saved from delay, from expense, and from all risk . . . but even in such cases equity never interposed its aid without exacting the most ample protection of the creditor against all damages because of delay, and all expenses of other proceedings than those against the surety, and the most complete idemnity against all loss because of the creditor's right of recovery against the surety being postponed."
Even if the surety in the instant case had entitled itself to all equitable consideration by the payment of the full penalty of its bond to the appellant, the penalty of the bond being only $1,500 and the debt of the principal to the appellant being $3,186 and interest, still the surety would not be subrogated to the rights of the appellant against the principal, because the debt is not paid in full.
Fidelity Deposit Co. of Md. v. Wilkinson County, 109 Miss. 879, 69 So. 865; Sec. 3733, Code of 1930; 60 C.J. 745; Magee v. Leggett, 48 Miss. 139.
D.S. Strauss, of Greenville, for appellee.
Neither the facts in the instant case, nor the law applicable thereto, support the contention that there is any liability on the appellee in the instant case.
While the bill of complaint bristles with allegations of fraud and conspiracy and cheat, there is not only an utter absence of any proof to support these allegations, but on the contrary the proof shows at the most a mere mistake on the part of the appellee's principal, in thinking she and her sisters were entitled to the money. As a matter of fact they were advised to this effect by the first administrator, who paid the money to them.
And when the mistake is discovered, without any request to proceed to recover the assets of the estate, she was instantly removed as administratrix, and the matter taken out of her hands. And now the appellant seeks to recover from the appellee, when the appellant herself placed it beyond the power of appellee's principal to recover the property subsequently recovered.
While acting as administratrix, Hillery did not occupy the relation of a guarantor or insurer of the debt due by herself to the estate.
Sec. 1648, Code of 1930; National Surety Corp. v. Laughlin, 172 So. 490.
In the case of Aetna Indemnity Co. v. State, 101 Miss. 703, at page 722, this court lays down the principle applicable herein: "Of course, it must appear in every case that the guardian was solvent and could have been made responsible during the currency of the second bond. In short, it must be shown that the wards have actually suffered loss by reason of the neglect. If it were shown that the guardian was insolvent, and that at no time during the life of the second bond could the amount have been collected, the second bond would not be liable for the neglect, because no damage was done by it."
The principle of law governing the instant case is laid down in the case of New York Indemnity Co. v. Myers, 161 Miss. 784, at page 793: "Executors and administrators, in the administration of the estate, are not required to use the highest degree of skill, but only ordinary care and diligence. They are not required to exercise any higher skill and prudence than that which is imposed upon any other agent or trustee; they are not insurers or guarantors. The measure of their care in the management and closing of the estate is that which an ordinarily prudent man would exercise under like circumstances in the management of his own affairs. 11 R.C.L., sec. 140, page 133. And the liability of the surety on the bond of an executor or administrator is coextensive with that of the principal, and does not extend further. 11 R.C.L., sec. 351, page 303."
There is no showing in the instant case that any attorney's fees was incurred to remove or displace Hillery.
Appellant is not asking for a reasonable fee for the recovery in the instant case, even if one were allowable, but a fee incurred by her in the collection of the assets of the estate.
This is the fourth appearance of the same matter, in various aspects, in this Court, and we refer to the opinions in two of those appeals for a fuller statement of the material facts. National Surety Corp. v. Laughlin, 178 Miss. 499, 172 So. 490, and Moyse v. Laughlin, 177 Miss. 751, 171 So. 784.
Jayne was the original administrator. He was removed and Bessie C. Hillery was appointed to succeed him. Later she was removed and Laughlin was appointed. As a result of the litigations conducted by the last administrator, everything was recovered that could be recovered from the four parties to whom Jayne had improperly paid part of the insurance money. Subsequently this suit was brought against Hillery and her surety seeking a further recovery, including the attorney's fees expended by the widow in the prior litigations. This suit is bottomed upon the allegation that had Hillery properly accounted as to herself, and sued as to the three other parties, during her administration, these debts could have been then recovered, and without the expense to appellant later incurred by her.
When the assets received by an administrator consists of choses in action, the utmost for which the sureties of the administrator can be held liable, as respects such assets, is the amount thereof which could have been collected by the administrator in the exercise of a reasonable diligence, and which, as a proximate result of the want of diligence, was afterwards lost to the estate. National Surety Corp. v. Laughlin, supra; Aetna Indemnity Co. v. State, 101 Miss. 703, 722, 57 So. 980, 39 L.R.A. (N.S.) 961. The proof here shows that the full amount due the estate by the guardian of the illegitimate was collected with interest by the last administrator, and that he collected also from Hillery's two sisters everything which Hillery could have collected from them during her term. And as to Hillery, when she became administratrix, all she had left of the money which had been paid to her was what she had put into a piece of real property jointly with her sisters, and she had no other property or means besides. The successor administrator obtained the proceeds of that property and that is all that Hillery could in final effect have done, so far as the record now before us shows.
Had Hillery, during her administration, turned over to the estate her undivided interest in the real property, as in point of law she ought to have done, it might to some extent have reduced the court costs subsequently expended; but there is nothing in this record upon which a dependable decree could be based as regards the probable extent that the court costs would thereby have been so reduced. We cannot fix an arbitrary portion at one-third of the costs, or at some other arbitrary percentage, for it would be only a guess whether the arbitrary figure would or would not be correct; and thus we do not reach the point that the far greater part of the costs is not competently proved.
This leaves only the contention by appellant that she is entitled to recover the attorney's fees expended by her in the previous litigations. The rule in this state is that, in the absence of statute, attorney's fees are not recoverable, unless the facts are of such gross or willful wrong as to justify the infliction of punitive damages. Yazoo M.V. Railroad Co. v. Ice Power Co., 109 Miss. 43, 67 So. 657; Kalmia Realty Ins. Co. v. Hopkins, 163 Miss. 556, 566, 141 So. 903. The statutes allow fees to the attorney for the administrator, but these, when properly rendered, are paid out of the estate. We think it better not to engraft exceptions upon the rule as hereinabove stated.
Although Hillery knew when she received this money and so knew during the subsequent period of her administration that the widow was alive and in point of law knew, therefore, that the widow was the sole distributee, this does not prove that Hillery knew or realized in point of fact that she and her sisters were not entitled to the one-fifth distributive share each in the insurance money. At the time they received the money they were advised by the original administrator, who paid it to them and who was an attorney, that they were so entitled, and even the chancellor, although of another district, was of that opinion in Lewis v. Jefferson, 173 Miss. 657, 161 So. 669. The case is not one for punitive damages, and therefore not one for the allowance of attorney's fees, — leaving aside the general rule that sureties are not liable for or in respect to exemplary or punitive damages. 17 C.J., p. 988, citing, among others, Lizana v. State, 109 Miss. 464, 469, 69 So. 292.
Affirmed.