Opinion
No. 42951.
December 8, 1952. Motion for Rehearing or to Transfer to Court En Banc Denied February 9, 1953.
APPEAL FROM THE CIRCUIT COURT OF THE CITY OF ST. LOUIS, ROBERT L. ARONSON, J.
S. C. Rogers, St. Louis, for appellant.
T. S. McPheeters and Edward A. Haid, St. Louis, Bryan, Cave, McPheeters McRoberts, St. Louis, of counsel, for respondents.
Virginia Poe Saracino instituted this suit on March 26, 1948, against St. Louis Union Trust Company, a corporation, and John S. Poe, as Testamentary Trustees under the will of John D. Poe, deceased. John S. Poe died while the case was pending in the trial court and on May 18, 1951, Meta Poe, Trustee of the estate of John S. Poe, deceased, filed an entry of appearance, motion and answer. The petition was in Six counts. All have been disposed of except Counts I and II, which were dismissed by the trial court. Plaintiff has appealed as to them. Plaintiff makes claim against defendant trustees for $10,000 in Count I under the doctrine of equitable contribution for Federal estate taxes allegedly paid out of her share of the estate of John D. Poe, deceased, by the executors of his estate. In Count II plaintiff claims one-third of $9,289.20 paid to said trustees by an insurance company for a fire loss sustained by the trust estate.
We consider the two counts separately, first taking up Count I, which was dismissed for failure to state a claim. We here add to the statement on Count I a few details of the agreed-upon facts stipulated at the hearing on Count II to avoid unnecessary repetition.
Virginia Poe Saracino, plaintiff, is the widow of John D. Poe, who died testate February 26, 1943, a resident of St. Louis, Missouri. His will was executed January 4, 1938. It made provisions for his then wife, Mary, and set up a trust estate of "all the rest, residue and remainder" of his estate. All beneficiaries of the trust estate predeceased testator except his son, John S. Poe, who became the sole testamentary trust beneficiary. The St. Louis Union Trust Company and John S. Poe were named as executors of his estate and also as testamentary trustees of the residuary trust estate. The trust was to determine upon the death of John S. Poe and the trust estate was to pass under the provisions of his will, if any, or to his descendants.
After the death of his first wife, John D. Poe married plaintiff. She, after his death, married Michael Saracino.
John D. Poe did not change his will. He died intestate as to plaintiff. She became entitled to one-half of the personal property and a life estate in one-third of his real estate, together with other statutory allowances.
John D. Poe's will was probated, letters testamentary were issued to the executors aforesaid, and his estate was administered, and duly and finally settled and closed. The executors received their final discharge October 31, 1947. Plaintiff received one-half of the personal estate and a dower interest of one-third for life in the real estate of John D. Poe, deceased.
It is further alleged in Count I that John D. Poe's will contained no provision as to the payment of the Federal estate taxes; that the value of said estate totaled $185,305.85 after all deductions allowed by law (evidently for arriving at the net estate for computing the tax as we understand the total value of the estate was $206,686.47), and $114,400 of said $185,305.85 represented real property passing immediately upon testator's death to the testamentary trustees, who took charge thereof and held the same subject to the laws of the state of Missouri Section 462.280 RSMo 1949, V.A.M.S. that the debts and, in addition, the Federal estate tax of $27,350.02 were paid out of the personal estate of said deceased; that the executors aforesaid took charge of the said personal estate (approximately $65,699.63 after deductions as aforesaid) and paid and advanced taxes therefrom, and administered and duly closed said estate; and that $5,206.85 of said estate subject to said estate tax consisted of life insurance.
It is further alleged that the Federal Estate Tax law, 26 U.S.C.A. § 810 et seq., and amendments, required defendants "as executors of said estate" "to advance" the Federal estate tax on said real property, personal property and insurance out of the property being administered by them and, under said authority, defendants as executors paid the United States government the Federal estate tax of $27,350.02 on July 24, 1944, out of said personal property, including plaintiff's one-half thereof, and have failed and refused, although due demand has been made, to apportion said tax, as in equity and justice they should do, and pay plaintiff the proportionate part of said tax assessed against said real property and insurance, alleging $10,000, with interest thereon, should be repaid to plaintiff.
Summarized, as stated in plaintiff's brief, the payment of the Federal estate tax out of the personal estate, without allocating to the real estate, which constituted approximately two-thirds of the estate, the portion of said tax incurred on account of the real estate, reduced plaintiff's participation in the assets of the estate; and she claims approximately $9,100 should be refunded to her.
The trial court was of the opinion that the judgment of the probate court approving the final distribution of the estate of John D. Poe, deceased, was conclusive on the issue that said executors performed their duties properly, and that Count I failed to state a claim against defendants.
The Federal Estate Tax law in general contemplates that the tax "shall be paid by the executor to the collector", 26 U.S.C.A. § 822(b), and "paid out of the estate before its distribution" Id. § 826(b). Fernandez v. Wiener, 326 U.S. 340, 345, 346, 66 S. Ct. 178, 90 L.Ed 116. The tax is payable out of the whole estate and, subject to exceptions stated in the act (see, for instance, Id. § 826) or testator's directions in his will, the act does not designate out of what funds the tax is payable but leaves it to the states to determine the ultimate impact of the tax. Fernandez v. Wiener, supra; Riggs v. Del Drago, 317 U.S. 95, 98, 101, 63 S.Ct. 109, 87 L.Ed. 106, 142 A.L.R. 1131; In re Poe's Estate, 356 Mo. 276, 201 S.W.2d 441, 443[3-7]; Priedeman v. Jamison, 356 Mo. 627, 202 S.W.2d 900, 903[4].
Many Missouri cases are to the effect that the approval by the probate court of the final settlement of an administrator or executor is a judgment entitled to the same favorable presumptions which are accorded to the judgments of all courts of record. Plaintiff's petition admits the estate of John D. Poe, deceased, was "administered, duly and finally settled and closed June 20th, 1947, and the residue of his property was disposed of according to the provisions of the laws of Missouri and said will, that is to say, one-half of the personal estate and a dower interest of one-third for life in the real estate to plaintiff". Plaintiff is not suing the executors of the estate of John D. Poe, deceased. She is suing the trustees of the estate created by his will.
As pointed out in State ex rel. Hendrix v. American Surety Co., Mo.App., 176 S.W.2d 67, 69[1-4], citing authorities, time and opportunity is afforded all interested persons to contest the correctness of the final settlement of a decedent's estate, with the right of appeal; and the approval, et cetera, as here, by the probate court of the final settlement of the administration of the estate constitutes a final judgment, conclusive on all matters included or necessarily involved in the settlement.
Equity, in the absence of fraud inducing such a judgment, is not available for relief, the only remedy to aggrieved parties being by appeal to correct errors unaccompanied by fraud. Cooper v. Duncan, 58 Mo. App. 5, 10.
The judgment is conclusive on the distributees, Young v. Byrd, 124 Mo. 590, 28 S.W. 83, 40 Am.St.Rep. 461; and reference to In re Poe's Estate, 356 Mo. 276, 201 S.W.2d 441, 444, discloses that plaintiff actually appeared and filed exceptions to the final settlement of the executors on like grounds urged in the instant suit.
In the Missouri cases stressed by plaintiff the executors were parties to the action and the administration of the estate had not been finally closed but was still pending. In re Brant's Will, 40 Mo. 266; In re Bernheimer's Estate, 352 Mo. 91, 176 S.W.2d 15; O'Day v. O'Day, 193 Mo. 62, 91 S.W. 921, 4 L.R.A., N.S., 922. Cases stressed by plaintiff from foreign jurisdictions involved different facts and do not rule the foregoing issue. See, for instance, In re Mellon's Estate, 347 Pa. 520, 32 A.2d 749.
While said judgment approving said final settlement stands, it is conclusive that the executors properly administered the estate and plaintiff does not state a claim for pro-rating the Federal estate tax to the several beneficiaries of the John D. Poe, deceased, estate. We need not inquire into other possible grounds for reaching the same result.
In Count II plaintiff, as stated, claims, under her dower rights, one-third of certain insurance proceeds paid to defendants as trustees for a fire loss.
An agreed statement of facts and evidence was offered on said count, and we make reference to the facts stated in paragraphs three, four, five and six of this opinion.
The testamentary trustees took charge of the trust estate and, by agreement with plaintiff as to her dower interest, have administered said estate since the death of John D. Poe.
Twenty days after the death of John D. Poe a fire occurred at a store and office building owned by him at the time of his death and $9,289.20 was paid by the insurer to the trustees on account of said fire loss. The trustees used said $9,289.20 insurance money, plus $872.71 rental income, in "restoring the premises to tenantable condition" after the fire. No part of this money was paid to plaintiff, but all of it stands accounted for.
The evidence further established that as a result of the fire the monthly rents dropped from $1,250 to $735, and after the building was restored to a tenantable condition increased to $1,320 in November and December, 1943. The trustees made monthly payments on account of the rentals to plaintiff, after reserves for repairs, insurance, taxes and contingencies, and transmitted semi-annual statements to plaintiff covering their administration of the property. The annual payments to plaintiff were in the neighborhood of $3,000 up to February 26, 1947, and for years ending February 26, the payments totaled $7,600 in 1948, $6,900 in 1949, and $9,200 in 1950.
We understand plaintiff proceeds on the theory the insurance was procured by John D. Poe, although this is not explicitly established by the record. Plaintiff, characterizing the making of the building tenantable as a permanent improvement, cites authorities to the effect that as between a widow and an heir or devisee, the widow takes her dower according to the value of the property at the time of the assignment of the dower; and as dower had not been assigned, plaintiff contends she is entitled to one-third of the insurance money as well as one-third of the rentals after the use of the insurance money to make the building tenantable. Rankin v. Oliphant, 9 Mo. 239, 240; Campbell v. Murphy, 55 N.C. 357, 363(5); 28 C.J.S., Dower, § 13, note 51, page 79, Id., 207, § 98d, notes 21-24. The Rankin case involved new construction, permanent improvements on unimproved land; and the Campbell case involved the proceeds of an insurance policy for the total loss by fire of a building which was not reconstructed.
The building here involved was not destroyed. The trial court concluded putting it in a tenantable condition after the fire was not a permanent improvement in the sense used in plaintiff's authorities, but constituted a restoration of the building by repairs to its former condition. Plaintiff's authorities do not establish error in such ruling. The record states the trustees were in charge under an agreement with plaintiff as to her dower interest. She took no steps to have her dower assigned at the time of the fire. She has accepted the trustees' monthly payments of her interest in the rents, which payments were substantially increased, in part, by the application of the insurance money to the restoration of the building. She was advised as early as September, 1943, of an increase in her monthly payments as of that date. The policy issued to testator protected the fee. Plaintiff is not objecting to the trustees deducting the insurance premiums as an expense in accounting to her for the rental income. It appears that plaintiff and the trustees united in restoring the building to a tenantable condition. If plaintiff be entitled to dower rights in the insurance money or one-third of the rents, including the increase attributable to the use of the insurance money, she, clearly we think, may not successfully claim both. Cope v. Ricketts, 130 Kan. 823, 288 P. 591; Culbertson v. Cox, 29 Minn. 309, 13 N.W. 177; Rendahl v. Hall, 160 Minn. 502, 200 N.W. 744, 745[4], 940. The court took the case of Brough v. Higgins, 2 Grat. 408, 43 Va. 408, under facts similar to the instant case and a like result was reached. The foregoing also applies to the rental income used in repairing the building. The conclusion of the trial court accords with sound reason and equal justice. 46 C.J.S., Insurance § 1143, notes 58-60, page 22; 33 Am.Jur. 841, § 332, nn. 16-19; 1 American Law of Property 161, § 2.23, nn. 7, 8; 5 Appleman, Insurance, 503, § 3364, nn. 40-42; 2 Thompson, Real Property, 511, § 805, n. 40; 1 Restatement, Property, 384, § 123(1).
The judgment of the trial court as to each count is affirmed.
WESTHUES and BARRETT, CC., concur.
The foregoing opinion by BOHLING, C., is adopted as the opinion of the court.
All concur.