Opinion
No. 27908
Decided June 12, 1940.
Administrators and executors — Interest chargeable on funds deposited in checking account — Probate Court order disregarded and funds deposited in fiduciaries' banks.
APPEAL from the Court of Appeals of Darke county.
Joseph Menke and J. Ed Williams, administrators de bonis non of the estate of V.S. Marker, deceased, filed their second partial account in the Probate Court of Darke county, Ohio, on February 25, 1935. Thereupon certain creditors and heirs at law filed exceptions to the account, raising the question whether such administrators should account for interest on the funds in their hands since their appointment on November 30, 1927.
The Probate Court without a hearing certified the cause to the Court of Common Pleas of the same county. The Court of Common Pleas held that these exceptions were not well taken and rendered judgment in favor of the administrators de bonis non.
On appeal to the Court of Appeals that court reversed the judgment "because the judgment was against the weight of the evidence in failing to require the administrators to account for interest in some amount," and remanded the cause to the Court of Common Pleas.
Upon retrial in the Court of Common Pleas it was held "that said administrators are liable for interest and that said exceptions should be sustained and further finds that the amount for which they should be charged and the time for which they should be charged is as follows, to wit: At 2 per cent on $40,000 from August 1, 1933, to July 1, 1934, and at 2 per cent on $20,000 from July 1, 1934, to September 1, 1934, and at 2 per cent on $15,000 from September 1, 1934, to February 25, 1935, and, in all, for the sum of $945."
The cause was again taken to the Court of Appeals on questions of law and that court held that interest should be charged at the rate of 4 per cent from July 1, 1928, to July 1, 1933, and 2 1/2 per cent from July 2, 1933, to January 1, 1935. The judgment specified upon what amounts these rates of interest should be computed but these amounts are not important here.
The administrators de bonis non, feeling aggrieved, filed a motion to certify the record to this court, which was allowed and the cause is here for determination.
Mr. T.A. Billingsley and Messrs. Peck, Shaffer, Williams Gorman, for appellants.
Mr. Stanley E. Mote and Mr. A. Alvin North, for appellees.
The administrators de bonis non maintain that the Court of Appeals, by increasing the rate of interest with which such administrators are chargeable, erroneously substituted its judgment for the judgment of the Court of Common Pleas and that since the facts are disputed the appellate court had no power to do more than reverse the judgment and remand the cause.
Previous to the time the administrators de bonis non were appointed, the Probate Court had found that the estate was in process of litigation on various matters and ordered and adjudged that the funds be left invested at 4 per cent until occasion should require their payment according to law.
This order remained in full force and effect up to the time of the filing of the second partial account and was binding on the administrators de bonis non. Therefore they cannot now be heard to say that they did not know of it. Thomas v. Chamberlain, 39 Ohio St. 112, 121; Bray v. Darby, Admr., 82 Ohio St. 47, 58, 91 N.E. 861. When the administrators de bonis non received into their hands the assets of the estate amounting in value to approximately $50,000 (increased later to more than $60,000) they caused the whole to be converted and placed on deposit in checking accounts, one-half in the Peoples Savings Bank and one-half in the Farmers National Bank. In the former bank J. Ed Williams was cashier, stockholder and director, and in the latter bank Joseph Menke held like positions. The funds were carried in such checking accounts (which provided no interest whatsoever) for the whole period of six and one-half years. The administrators de bonis non each testified that his bank at the time of the receipt of the funds was paying 4 per cent on time deposits and continued to pay at this rate until the Federal Government, in or about March 1933, ordered them to pay not to exceed 2 1/2 per cent. Up to the time the order of the Federal Government was issued the administrators could have placed the money in time deposit accounts instead of checking accounts and received interest at the rate which the Probate Court had previously prescribed in its order. They chose to place the funds in their banks without interest. In doing so they not only violated the order of the Probate Court but used the funds in the business of their own banks.
During the six and one-half-year period the estate was involved in a tremendous amount of litigation. In the whole period there was actually only an interval of thirty days or less in which no lawsuit was pending. If the administrators de bonis non considered that the money should be kept in checking accounts for the reason that distribution was anticipated at an early date, modification of the court's order with reference to interest should have been sought. Anyhow the funds would have rested as safely in interest-bearing time deposit accounts as in noninterest-bearing checking accounts and could have been made readily available for distribution by the terms of the contract of deposit.
The facts which have been recited are undisputed. The only legal conclusion that can be derived therefrom is that the administrators de bonis non were chargeable with interest at the rate of 4 per cent for the whole six and one-half-year period. The Court of Appeals was lenient in charging them only 2 1/2 per cent after the Federal Government issued its order. Of that action the creditors and heirs at law do not complain in this court.
The Court of Appeals was justified in entering the judgment as a matter of law on the undisputed facts. The judgment of the Court of Appeals will be affirmed.
Judgment affirmed.
WEYGANDT, C.J., DAY, ZIMMERMAN, WILLIAMS and HART, JJ., concur.