Opinion
13738.
MAY 16, 1941.
Petition for injunction. Before Judge Jackson. Morgan superior court. March 3, 1941.
J. G. Faust and W. F. Manley, for plaintiff.
Miles W. Lewis, for defendants.
1. The petition by a legatee, to set aside a default judgment against the executrix, showing that the judgment was against the executrix individually and in her representative capacity, based upon two promissory notes, the individual obligations of the executrix, that the will did not authorize the executrix to execute the notes as obligations of the estate, that she had used funds belonging to the estate to pay on the notes and also to pay on the judgment, and that she had refused upon request by petitioner to institute proceedings to cancel the judgment, and praying for injunction against threatened enforcement of the judgment and for its cancellation, stated a cause of action; and it was error to dismiss the suit on general demurrer.
2. Paragraph 16 of the petition sought recovery of funds belonging to the estate that had been paid on the notes more than four years before the filing of the suit. It was not error to sustain a special demurrer assailing this paragraph on the ground that the claim was barred by the statute of limitations of four years.
No. 13738. MAY 16, 1941.
On February 9, 1937, W. H. Adams filed suit in Morgan superior court against Mrs. M. H. Higginbotham, individually and as executrix of the will of M. H. Higginbotham, deceased. Paragraph 2 of the petition alleged that "said defendant" was indebted to petitioner upon a promissory note dated March 28, 1930, and due in thirty days, a copy of which, attached as an exhibit, showed that it was signed by "Mrs. M. H. Higginbotham, executrix." Credits of $25 and $19 appeared thereon, dated July 1, 1930, and September 10, 1930. Paragraph 3 alleged "that said defendant" was indebted to petitioner in stated amounts upon a promissory note, dated November 13, 1928, and due on demand, a copy of which was attached as an exhibit. This note recites that it is for the purchase-money of "one model 28-47 Buick sedan, motor number 2057682," and is signed "Mrs. M. H. Higginbotham." It shows credits thereon running from October 1, 1931, through May 2, 1933, totaling $550. Paragraph 4 alleged that "the defendant is therefore indebted to petitioner in the sum of $470.06 principal, besides interest and attorney's fees, on said promissory notes, and that the same is past due, and defendant refuses to pay same." The prayers were for (1) "judgment for the principal, interest, and attorney's fees due on said notes, the same to be against the said Mrs. M. H. Higginbotham individually and de bonis testator is against the goods, wares and tenements of the estate of the said M. H. Higginbotham;" and (2) process "directed to the said defendant, requiring her to be and appear at the next term of said court to answer this complaint." On June 7, 1937, judgment was entered in favor of the plaintiff and against the "defendant" individually and as executrix of the will of M. H. Higginbotham, deceased, in the amount sued for, directing that "the same be recovered of the defendant generally and of the property of the estate of M. H. Higginbotham, deceased, in her hands for administration de bonis testatoris." On June 12, 1937, execution issued on said judgment against Mrs. M. H. Higginbotham individually and as executrix, for the amount of the judgment.
On February 27, 1940, Millard H. Higginbotham as a legatee under the will of M. H. Higginbotham, deceased, filed a petition which as amended was against W. H. Adams and Mrs. M. H. Higginbotham individually and as executrix of the estate of M. H. Higginbotham. The amended petition alleges, in substance, that on November 13, 1928, Mrs. M. H. Higginbotham executed to W. H. Adams a promissory note for $653.50 for a model 28-47 Buick sedan, motor number 2057682, signed by her as an individual; that on March 28, 1930, a second note was given to W. H. Adams for $202.58, signed by "Mrs. M. H. Higginbotham, executrix;" that W. H. Adams filed suit on said two notes against Mrs. Higginbotham individually and as executrix; that Mrs. Higginbotham filed no defense either individually or as executrix, and on June 7, 1937, a judgment was rendered in favor of W. H. Adams against Mrs. M. H. Higginbotham individually and as executrix of M. H. Higginbotham, and execution issued on said judgment, copies of the suit and of its exhibits, and of the judgment and the execution, being attached and marked as exhibits; that the note signed by Mrs. Higginbotham with the suffix "executrix" following her signature is her individual obligation, and is not the obligation of the estate, and the executrix had no authority to execute the note on behalf of the estate; that the other note was also an individual obligation and was given by Mrs. Higginbotham for the purchase of a Buick car, and was in no way an obligation of the estate. Paragraph 10 asserts that Mrs. Higginbotham was induced to sign said notes by W. H. Adams. It is further alleged, that on or about September 15, 1939, the M. H. Higginbotham estate sold a tract of land to J. R. Stephens, and $371.52 paid for the land was applied to the execution; that petitioner has requested the executrix to institute proceedings to set aside the judgment against the estate and to recover the $371.52 of the estate's money paid thereon; that she has failed and refused to bring such action; that petitioner as a legatee under the will of M. H. Higginbotham brings this suit to protect his interest as a legatee and the interest of the other legatees of the estate, and to protect the estate; and that W. H. Adams is threatening to levy the execution upon assets belonging to the estate, and will do so unless restrained by the court. The plaintiff seeks recovery of the amounts paid on the notes before judgment, and alleges that such payments were illegal and that Adams received them with knowledge that the executrix had no authority to make such payments.
Demurrers to the petition as amended were filed by W. H. Adams, upon the ground that the allegations are insufficient to authorize the relief sought, and specially to paragraph 16 seeking recovery of $550 paid between 1931 and 1933, on the ground that such payments were made more than four years before the filing of the suit and were barred by the statute of limitations. Judgment was rendered, sustaining the demurrers and dismissing the action, and the plaintiff excepted.
1. The first question encountered is whether the petitioner as a legatee has the right to maintain this action against a third person. The general rule on this subject is that creditors and heirs may sue third persons only in the name of the representative of the estate. Code, § 113-1512; Hardwick v. Thomas, 10 Ga. 266; Worthy v. Johnson, 8 Ga. 236 (2) (52 Am. D. 399); Edwards v. Kilpatrick, 70 Ga. 328; 21 Am. Jur. 940, § 1003. It is also the law, that, in the absence of fraud and collusion between the executor and a creditor, a judgment regularly rendered in a court of competent jurisdiction in favor of the creditor and against the executor is conclusive upon legatees and creditors, as to all matters adjudicated. Morris v. Murphey, 95 Ga. 307 ( 22 S.E. 635, 51 Am. St. R. 81); Houston v. Campbell, 151 Ga. 180 ( 106 S.E. 87); Stringer v. Wheeler, 161 Ga. 91 ( 129 S.E. 634); Clark v. Tennessee Chemical Co., 167 Ga. 248 (5) ( 145 S.E. 73). Assuming for the present that the judgment attacked by the petition is regular on its face, the right of the petitioner to maintain this action is, on application of the foregoing rulings, dependent upon whether or not it alleges fraud and collusion. Neither of the words "fraud" or "collusion" is found in the petition. That is not required by the law. Sylvania Insurance Co. v. Johnson, 173 Ga. 679 ( 160 S.E. 788). It would not be sufficient in law for the pleader to make the general averment that the judgment assailed is the result of fraud and collusion. Such a general statement would be a mere conclusion of the pleader, without fact to support it, and would have no validity as an allegation. What the law demands is an averment of the facts that constitute fraud and collusion; and if such facts are set forth, that is sufficient. Coleman v. Coleman, 113 Ga. 149 ( 38 S.E. 400). We think the averments in the present case, when measured either by their fair and reasonable meaning or by previous constructions of this court, constitute allegations of fraud and collusion. It is alleged, that the judgment under attack is based upon two promissory notes, the individual obligations of the executrix; that she used funds belonging to the estate to make payments amounting to $550 on the notes; that she suffered a default judgment thereon, and has used funds belonging to the estate to make a payment on the judgment; and that upon request of petitioner she refused to institute proceedings to set aside the judgment. The notes show that the consideration of one was the purchase-money of an automobile bought by Mrs. Higginbotham, and that both are signed by her as an individual. Her signature on one is followed by the word "executrix," but this does not have the effect of making the note an obligation of the estate or preventing it from being her individual undertaking. Code, § 4-401. The petition further charges that the will did not authorize the executrix to execute the notes on behalf of the estate, and that for this reason no attempt on the part of the executrix to bind the estate by such notes would be effective. If these allegations are true, and they must be so taken on demurrer, the executrix has violated her trust and injured the estate and derived a personal benefit therefrom. The plaintiff in judgment knew that he had no right to sue the estate and was not entitled to a judgment against the estate, and despite this knowledge he procured a default judgment and has received as payment thereon money belonging to the estate.
Permitting a default judgment might be attributable to negligence rather than collusion and fraud, but for the facts that before judgment the executrix had unlawfully applied funds belonging to the estate to her personal debt, and after the judgment she had used the estate's money to make a payment on the judgment, knowing all the time that the obligation was hers, and that she had no right to apply the estate's money to the payment thereof. The bad faith of the creditor is indicated by his seeking a judgment against the estate in a suit setting up only the individual obligation of the executrix without any attempt to allege a reason why the estate should be held liable therefore. If the averments of the petition are true, the creditor could not have made allegations to show liability of the estate. If such allegations had been made and were false, they would have constituted a fraud authorizing a court of equity to set aside the judgment. Hamilton v. Bell, 161 Ga. 739 ( 132 S.E. 83). His judgment is not rendered valid simply because he refused to make essential allegations because they would have been false. By knowingly leaving out such averments, which were essential to entitle him to a judgment, then taking a judgment by default against a willing executrix, the fraud is consummated by other methods it is true, but fraud nevertheless. "Such judgment will be open to attack whenever and wherever it may come in conflict with the rights or the interest of third persons. . . Fraud is not a thing that can stand, even when robed in a judgment." Smith v. Cuyler, 78 Ga. 654 (2), 660 ( 3 S.E. 406); Crawford v. Williams, 149 Ga. 126, 132 ( 99 S.E. 378). A case very similar on its material facts was before this court in Clark v. Tennessee Chemical Co., supra. There the will directed that the real estate of the testator be kept together until a daughter attained the age of twenty-one. The executor gave a note, purporting to be the obligation of the estate, for the purchase-money of fertilizer to be resold, and this court said: "Such a transaction is a fraud upon the estate and devisees and legatees of the testator." Suit was brought on the note, the executor made no defense, and permitted the creditor to take a judgment de bonis testatoris; and this court held that equity would enjoin enforcement of the judgment and prevent application of funds belonging to the estate to the payment thereof, "upon the ground that such judgment was obtained by fraud and collusion between the executor and the creditor." While it is stated in the case last referred to that the executor was insolvent, it can not be said that such insolvency is a prerequisite to the maintenance of such an action by the legatee. In Morris v. Murphey, supra, after holding that other creditors may impeach and set aside a collusive judgment that may operate as a fraud, it is said: "Such creditors may also have their election to proceed against the administrator and his bondsmen." See Home Mixture Guano Co. v. Woolfolk, 148 Ga. 567 ( 97 S.E. 637), where facts no stronger than those in the present case were held to constitute fraud and collusion. We are here dealing with an executrix, and there is no requirement of law that such executrix give a bond. The petitioner as a legatee was interested in the estate, and he has the right to attack the judgment against the estate, without regard to the solvency or insolvency of the executrix. In this view it is immaterial whether the suit on the notes could have been amended, as contended by the defendants in error; because a cure of all defects in the pleadings would not have altered the right of the legatee to attack the judgment for fraud and collusion. The general demurrer should have been overruled.
Certainly it will be understood that we do not mean to intimate that any such fraud or collusion actually existed as a matter of fact. We are dealing only with the allegations of fact in the present petition, which, as indicated above, must be treated as if true for the purpose of decision where considered on demurrer.
2. Paragraph 16 of the petition sought recovery of total payments of $550 on the notes, made more than four years before the filing of the suit. This paragraph was assailed by special demurrer on the ground that it was barred by the statute of limitations. This demurrer was properly sustained. Code, §§ 3-706, 3-711; Cannon v. Lynch, 112 Ga. 660 ( 37 S.E. 858).
Judgment reversed in part, and affirmed in part. All the Justices concur.