Opinion
14685
May 17, 1938.
Before OXNER, J., Greenville, February, 1938. Affirmed.
Suit by John Albert McDavid and others against Isadore E. McDavid, Sr., and others to secure an order permitting plaintiffs to mortgage certain realty as to which they are remaindermen, for a sufficient sum to pay off back taxes and other expenses. From a decree granting relief as prayed, the named defendant and certain others appeal.
Master's report follows:
This cause was referred to me to take testimony and report my findings of fact and conclusions of law. I have held a reference and taken testimony, a copy of which is submitted herewith.
I find that one Andrew W. McDavid died a resident of this country during the year 1912, leaving considerable farm property. He left as his sole heirs at law, a widow and four sons. The widow is long since dead; the four sons are living and are all parties to this action. The son, Andrew W. McDavid, referred to in this proceeding as Andrew W. McDavid, Sr., is fifty-nine years of age. He is married and has six children, of whom four are adults, one a minor above fourteen years of age, and one a minor below fourteen. Another son, Isadore E. McDavid, herein referred to as Isadore E. McDavid, Sr., is fifty-seven years of age. He is also married and has four children, of whom two are adults and two are minors above the age of fourteen years. His wife lives with him on a portion of the property in question, and she is made a party to this proceeding as well as the four children. Another son, James P. McDavid, is fifty-five years of age. He is married and has seven children. Three of these are adults, three are minors above fourteen years of age, and one is a minor below the age of fourteen years. The fourth son, Raven I. McDavid, referred to in this proceeding as Raven I. McDavid, Sr., is fifty-three years of age. He is also married and has three children, two of whom are adults and the other is a minor above the age of fourteen years. None of the children of these four sons of Andrew W. McDavid, deceased, has any children, and only one, James E. McDavid, is married. The four sons of the said Andrew W. McDavid and all of their children (adults and minors) are parties hereto. The adult defendants all file answers. The minor defendants likewise answer, being represented by a guardian ad litem.
By the fifth item of the will of Andrew W. McDavid disposition is made of the lands which constitute the subject-matter of this action. That item reads:
"I give, devise and bequeath unto my son, Isadore E. McDavid, the Barksdale Charles place consisting of eighty acres, more or less, and the Ridgeway place of one hundred and fifty-seven acres, more or less, for and during his natural life, free from any debts or contracts of his, and at his death to his children, absolutely, the child or children of any deceased child or children to take the share the parent would have taken if living, but should he die without leaving any child or children living then said property is to go to my sons, A.W. McDavid, Jr., James P. and Raven I. McDavid upon the same terms and limitations as the property herein given them upon terms and limitations. If said property shall descend to any child or children of my said son, said land is not to be sold or partitioned until the youngest child reaches the age of twenty-one years."
It will be noted that the property in question goes to Isadore E. McDavid (mentioned in this proceeding as Isadore E. McDavid, Sr.), for his life and at his death to his children, with the provisions, however, that "should he die without leaving a child or children living, then said property is to go to my sons, A.W. McDavid, Jr., James P. (McDavid), and Raven I. McDavid, upon the same terms and limitations as the property herein given to them." And with the further provision that if any child of said Isadore E. McDavid should die leaving children, the share of that child should go to said child's children.
Since there is a possibility of the property's going to A. W. McDavid, Sr., James P. McDavid and Raven I. McDavid, Sr. (should Isadore E. McDavid, Sr., die without living issue), and since the will provides that it shall go to them, if at all, burdened with the same terms and conditions as are imposed by the will on property left to them, it is necessary to refer to those portions of the will under which each of said sons take.
Item Four fixes the terms, conditions and limitations of the devise to A.W. McDavid, Sr. The pertinent portions of it read:
"To my son, A.W. McDavid, Jr., for * * * and at his death the same to go to his children absolutely. I mean by the `children' that it shall include any child or children of his whether living at the time of my death or born after that time. That the child or children of any deceased child or children shall take the share the parent would have taken if living. * * * That if he dies without leaving any child or children living, the said property to go to my three sons (Isadore E., James P. and Raven I.) upon the same terms and limitations as the other property hereinafter given them upon terms and conditions."
Item Six fixes the terms, conditions and limitations for any property going to James P. McDavid. Its pertinent parts read:
"Unto my son, James P. McDavid, for * * * and upon his death the same to go to his children, share and share alike, the child or children of any deceased child or children to take the share the parent would have taken if living: that so long as his widow shall remain unmarried and my said son shall leave children surviving him, she shall have a home on said property with said children * * * that if my said son shall die without leaving any child or children living, said property to go to my said other three sons upon the same terms and limitations as the other property herein devised to them."
Item Seven fixes the terms, conditions and limitations of any property going to the son, Raven I. McDavid. The pertinent parts of it read:
"Unto my son, Raven I. McDavid, * * * for and during his natural life * * * and at his death to his children, share and share alike, the share of any deceased child or children to go to their child or children; that if he dies without leaving any child or children living, the said property is to go to my said three other sons upon the same terms and limitations as the other property given them."
It is alleged in the complaint (and I find from the testimony that these allegations are true) that upon the death of Andrew W. McDavid, his son, Isadore E. McDavid, who is a party defendant, went into possession of the property referred to in Item Five of the will and has remained thereupon, farming the said lands and occupying the same as a home up to the present time; that for some years after he went into possession thereof he spent considerable sums of money in erecting buildings and improving the property, but of recent years he has let the property deteriorate badly in value, due to his neglect to keep the buildings in proper repair; and since 1928 he has let the annual taxes accumulate until now, not including the year 1936, there is due against the property the sum of Twelve Hundred Sixty-one and 44/100 ($1,261.44) Dollars. The tax authorities are about to sell the property for these unpaid taxes. If it is sold for non-payment of taxes, whether it falls into the hands of the county, State Sinking Fund Commission, or a private purchaser, it is most unlikely that it will be put in proper repair. Its value is already much less than it would have been had it not been permitted to run down through lack of repair and proper cultivation. And the longer these repairs are delayed the more rapidly the property may be expected to depreciate in value.
The life tenant, Isadore E. McDavid, Sr., files an answer in which he admits the non-payment of taxes and the lack of proper repairs, but he alleges that he has not purposely neglected to pay the taxes nor has he purposely permitted the property to fall into disrepair. Due to the distressed farm conditions which have existed for the last several years, he alleges he has been unable to produce a sufficient amount on the farm to keep the taxes paid and to make the necessary and proper repairs. He has used the entire income from the property, he testifies, to furnish a home and a living for himself and his children, which children have lived with him on the property. The children who are owners of the fee and who bring this action were all minors until recently, and two of them are still minors. Should the lands be sold for taxes, he alleges in his answer and so testifies, he would have no source of income whatsoever, and therefore have no means by which to support his children who are yet minors. He also alleges in his answer, and so testifies, that the property in the hands of any person who might purchase it at a tax sale might reasonably be expected to deteriorate rapidly in value and be materially less valuable at the time of falling in of the life estate than it is at the present time. But he testifies farming conditions have improved, and he will be able out of the income from the farm during the year 1936 to pay the 1936 taxes, and that under the present conditions he will be able hereafter to make a sufficient amount to pay the current taxes, keep the property in proper repair, and furnish a livelihood for himself and his minor children, and at the same time have a surplus from which a gradual reduction in back taxes can be had.
The plaintiffs herein, who are the children of Isadore E. McDavid, Sr., bring this proceeding for the purpose of securing an order of the Court permitting them to mortgage the property referred to in Item Five of the Andrew W. McDavid will for a sufficient sum to pay off all back taxes, to make needed repairs upon the property, and pay the costs and expenses of this proceeding and for obtaining the loan, alleging that it will be for the best interest of themselves, a portion of whom are adults and a portion still minors, as well as the contingent remaindermen, present and prospective, adults and minors, for the Court to permit the giving of such a mortgage, binding all interest, present or prospective, vested or contingent, in the said lands, whether such contingent remaindermen be in esse or yet unborn. The money could not be had, they testify, on any mortgage which did not carry all interests.
All persons having a present, prospective or contingent interest in the property, who are now in esse, are made parties, and all such file answers. Those who are adults admit the allegations of the complaint and of the answer of the defendant, Isadore E. McDavid, Sr., and consent for such a mortgage to be given; but the minor defendants, through their guardian ad litem, allege that the obligations which it is desired to pay from the proceeds of such a mortgage are the true obligations of the life tenant, Isadore E. McDavid, Sr., and the fee in the property should not be subjected or bound to the payment of them.
Ordinarily taxes and repairs are obligations of the life tenant. Certainly taxes do not constitute a lien on the fee where possession is in a life tenant, in this State (see Campbell v. Williams, 171 S.C. 279, 172 S.E., 142). But there are circumstances under which the life tenant can hold the owner of the fee for taxes and other expenses of the life tenant in administering the estate. And especially can he do so if the life estate is non-productive.
See Ogden v. Allen, 225 Mass. 595, 114 N.E., 862. It holds:
"While the rule is settled that generally taxes, interest, and other expenses, are to be charged to and payable out of income it is also held that where the property is unproductive and yields no income that such expenses are chargeable to principal, as otherwise the whole income might be used in the payment of such expenses and the life tenant receive nothing."
The finding in the Ogden case is cited with approval in Spencer v. Spencer, 219 N.Y., 459, 114 N.E., 849, Ann. Cas., 1918-E, 943. And in 26 R.C.L., 1383, it is held:
"Where real property held in trust is unproductive, the taxes and other necessary expenses incurred in administering the trust are to be charged to and paid out of the corpus of the estate, as otherwise the whole income might be used in the payment of such expenses and the life tenant receive nothing."
The testimony in the instant case is to the effect that the lands in question have produced little more than enough during several years past to pay the expenses of their cultivation. I can well see how this might have been the case. Many — very many — of our best farmers have not been able to meet production expenses since 1929. That farm lands were a liability rather than an asset from 1929 to 1933 or 1934 is well known — such a liability in many cases that the income from them since then (still meager) has not been sufficient to permit the "catching up" of back deficits. Taxes upon, and repairs to, farm property in this county have been paid for those "lean" years in hundreds of cases by the farm owners securing loans from the Federal Land Bank and other lending agencies. Therefore, I am forced to the conclusion, and I so find, that the life estate in the lands described in the complaint has been well-nigh non-productive for the period covered by the unpaid tax accounts and for the time during which the lands and the buildings thereon have fallen into disrepair.
But the question which really presents itself here is not: Who should pay these taxes and make the repairs? The life tenant does not deny that he is morally, if not legally, liable for them. But, says he: "I cannot. I have no money and no property upon which I can secure the money." The adult plaintiffs, who are his children, and owners of undivided interests in the fee, concede that the life tenant is unable to furnish the money for this purpose, and bring this action to secure permission from the Court to mortgage their interests and that of their minor brothers for money to make the payments. The life tenant answers that he is willing to bind his life estate also, and in addition, by his testimony, agrees that a reasonable portion of his annual income therefrom be used to pay the carrying charges and an annual curtailment of such a loan. But the minor fee owners through their guardian ad litem object to the mortgaging of their interest in the property. They contend that the debts which it is desired to pay are not their obligations, that to mortgage their property to pay those debts would be to subject them to the possibility of a loss of their interest in it, whereas the worst which could befall them now would be for the property to fall into further disrepair. But then, upon the death of the life tenant, they would have something (the land in its deteriorated state), whereas if it be mortgaged and then sold under the mortgage they would have nothing.
This contention of the minors is well worth careful consideration. Their property rights should be protected as best the Court can protect them. But after all, there is no such thing as absolute safety in property rights and values. What seems best today may have become the worse possible thing a year from now. The Court is here concerned with an existing fact. What is for the best interest of the minors in the light of conditions as they now are. "What," the Court asks itself, "would a practical, conservative business man do under like circumstances? Let his property be sold for taxes knowing it would badly deteriorate in value, or mortgage it and take a business chance on saving the present value?"
And furthermore here are two minor sons living with their parents on the property which those parents are about to lose for non-payment of taxes. The parents testify (and I find it to be true) that if the property is sold they will have no means by which they can support those minor children. Hence, it cannot be doubted that the minor children of the life tenant will presently suffer, as well as have their property come to them at some future date badly deteriorated in value if the taxes are not paid.
The life tenant testifies that with returning prosperity he should be able to use the lands so as to produce enough to pay current expenses, carrying charges on the mortgage which it is desired to put on the property, and at the same time have enough remaining from the income of the land to furnish a support for his family which includes his minor children. And I find and hold that he can reasonably be expected to do that. He testifies further that with the land sold he will have no income and sees no way by which he can support and maintain his family, and I likewise find and hold that to be true.
Of course, as has been said already, it is the duty of these childrens' father (the life tenant), to support them. To permit the giving of a mortgage will be paramount to requiring the children to support themselves — certainly to the extent of so much of the mortgage debt as might be raised against their interest in the lands. But in Workman v. Workman, 174 S.C. 490, 178 S.E., 121 and 122 (a Sumter, South Carolina, case) it is said:
"I find that any sale of the land for taxes would only be the life estate of the plaintiff and the rights and interests of the other parties to the action cannot be affected by tax sale, but the plaintiff alleges that her children are dependent upon her for a support; that all of her children are parties to this action; that her daughter, Rose Abbott Workman, is entirely dependent upon the plaintiff for a support; that her daughter, Frances Douglas Workman, is a student at Coker College, and that she is indebted to Coker College for the expenses incurred in 1932; that the said Frances Douglas Workman obtained a scholarship in 1933, but she has to make some payments to the said college; and that at the time of this action the said Frances Douglas Workman was in her third year at college and this daughter should be educated. I find that the plaintiff's other two children are attending the public schools in Sumter, S.C.; they need clothing; they need to have other expenses paid, and all of these facts the plaintiff shows as matters of necessity for the sale and disposition of part of the premises passing under the will of the testator, and in which the plaintiff has a life estate.
"Now it is the plaintiff's duty to support her children if she can and has the means. If she has not the means, then the childrens' property should support them; that is a general statement of the law as I understand it."
Always the Court looks for that which is for the best interest of the minors. Property would be of little value to one gaining his majority, if during his minority he has been forced to live in destitute circumstances. A well-kept and properly educated young man faces life upon coming to maturity with a far greater prospect of a happy and prosperous life, even though he possesses nothing of property, than does one who has valuable property and is uneducated and under-nourished.
But it has been urged by the guardian ad litem that the Court should not, and for that matter cannot, by its order, bind the interests or rights of unborn children of the life tenant or unborn contingent remaindermen. There is the possibility, he contends, that there may yet be born to the defendant, Isadore E. McDavid, Sr., other children who will share equally with those children of Isadore E. McDavid, Sr., now in esse and parties to this action. (And likewise there may yet be born other children to the three sons of Andrew W. McDavid (the elder), who take should Isadore E. die without issue living at the time of his death.)
In support of this contention the case of DesChamps v. Mims, 148 S.C. 52, 145 S.E., 623, is cited.
But there is a wide difference between the facts in the DesChamps case and those of that under consideration. In the DesChamps case there had been no person in esse to represent the children of the life tenant as a class, nor had any effort been made by any of the parties to the suit of the Court itself to protect the interests of children yet unborn. On the other hand, the Court held in the DesChamps case that the rights and interests of those yet to be born had been ignored completely and the property in question dealt with just as if it had been the absolute property of the life tenant. In the present case, however, there are living representatives before the Court of every possible interest in and to the property which it is desired to mortgage. There is nothing which might be of interest to children yet unborn that is not of equal interest to those now before the Court.
Beginning with Bofil v. Fisher, 3 Rich. Eq., page 1, 55 Am. Dec., 627, and coming down to the present, through a long line of well-considered cases, the South Carolina Courts have uniformly held that contingent remaindermen not in esse are bound, provided others, and all others, in esse, having the same interest, are made parties.
In the recent case of Workman v. Workman, 174 S.C. 490, 178 S.E., 121, which has already been cited on another point, the facts were very nearly the same as in the case under consideration. There the land in question was willed to the plaintiff, "For and during her life and at her death to her children then living, the child of any deceased child taking the parent's share, if none be then living then to those of my kindred who would be entitled to my property under the Statutes of Distribution of South Carolina then of force." The life tenant brings the action requesting that she be permitted to sell a portion of the land to pay taxes and other expenses which had been incurred in supporting her children. And although the possibility of additional issue was not extinct she was permitted to sell the land for the purpose desired.
Here it is not desired to sell any portion of the land, but to mortgage the entire property. Still the principles of law involved are the same. If one has a legal right to sell land, he would likewise have the right to mortgage it.
I have given this matter careful consideration. I have weighed the advantages and disadvantages of permitting the mortgage to be given. And it is my opinion that it would be for the best interest of all parties to the proceeding, as well as contingent remaindermen yet unborn, and especially the minor children of the life tenant, to permit the giving of the mortgage as prayed for. Therefore, I recommend that the plaintiffs do be given permission and authority to give their note or notes, and their mortgage or mortgages, for the purposes set forth in the complaint, said mortgage or mortgages, to bind every and all interest or interests, vested or contingent, in the premises, provided, however, that the life tenant, Isadore E. McDavid, Sr., join with them in the execution of said note or notes and mortgage or mortgages.
And in order more fully to protect the interests of the minors, I further recommend that the defendant, Mrs. Ethel M. McDavid, wife of the life tenant and mother of the minor children of the life tenant, do be appointed trustee with authority to take possession of the mortgaged premises and rent the same from year to year during the life of the mortgage obligation. And from rents I recommend that said trustee do be required to pay taxes, interest on the mortgage debt, and a reasonable annual curtailment on the principal of the mortgage obligation, and then pay over to the life tenant the balance of such rents. However, I do not recommend that such a trusteeship be made a condition or provision of the mortgage itself, nor do I recommend that it shall be the duty of any such mortgagee to see that the trustee performs her duty as such.
E. INMAN, Master.
Decree of Judge Oxner follows:
This matter having been referred to E. Inman, Master for Greenville County, to take testimony and report his findings of fact and conclusions of law, he has held a reference, taken testimony and reported thereon.
Now the matter comes before me on exceptions to the Master's report, as filed by the guardian ad litem.
The Master finds, and I likewise find and hold, that all parties now in esse having any interest or title, vested or contingent, in the property which is the subject of this action, are before the Court and that any order or decree passed herein will bind every interest therein of such as may be in esse or may hereafter be born.
During my experience on the bench I have undertaken to give most careful attention to all matters wherein interests of minors were involved. I have carefully considered this matter. While there may be a few minor statements of law contained in the report of the Master to which I am not prepared to accede, I fully agree with his major holdings of fact and conclusions of law. I wish to take this opportunity of commending the guardian ad litem in this case for the zeal, ability and earnestness with which he has presented the interests of these minors.
It is clear that it is both the moral and legal duty of the life tenant, Isadore E. McDavid, to pay these taxes. The law also devolves upon him both the moral and legal obligation to support his minor children if he is able to do so. But when, as in this case, he is unable to do so, and the necessity as here presented arises, the Court will take proper steps to insure a home for these children and their support. It is obvious that unless the relief sought is granted, these minor children will be without a home until the life estate falls in, and in addition to this, to insure their support, very probably their interests would have to be encumbered. It is therefore clear to me that the Court has the power, and necessity is here presented for the exercise thereof, to grant this relief in order to properly protect the interests of the children of the life tenant. The matter that has given me most concern is the power of the Court to bind those who shall take, in the event that the life tenant should die leaving no children. A possibility of this is exceedingly remote, however, and furthermore, it seems to me that the case of Workman v. Workman, 174 S.C. 490, 178 S.E., 121, is conclusive on this point.
Therefore, it is ordered, that the Master's report herein be, and the same is hereby, confirmed and made a part of the judgment of this Court, except in so far as it may be hereinafter modified or enlarged upon.
Since the holding of the reference and the filing of the Master's report, the life estate of the defendant, Isadore E. McDavid, Sr., has been sold for taxes. There is yet time, however, for the lands to be redeemed. But it is more important now than when the Master filed his report that this tax obligation be speedily liquidated.
It is further ordered, that the plaintiffs, John Albert McDavid and Allen Marrett McDavid and Isadore E. McDavid, Sr., each individually, together with Isadore E. McDavid, Jr., and Giles McDavid by Allen Marrett McDavid, their general guardian, do be, and they are hereby authorized and empowered to execute a note or notes and a mortgage or mortgages in a sum or sums not to exceed Three Thousand ($3,000.00) Dollars, said note or notes and mortgage or mortgages to be made payable to such person, firm or corporation as may be willing to make such loan or loans. The rate of interest and the terms and conditions of the said note or notes and mortgage or mortgages shall be left to the discretion of those herein authorized to execute them. The property to be mortgaged is the two tracts of land described in the complaint and hereinafter described. And said mortgage or mortgages, shall bind every and all interest or interests, right or title, vested or contingent, in such lands, to such an extent as to give the purchaser or purchasers, at any foreclosure sale under said mortgage (should there be any such sale), a good, fee-simple title, free and clear of all conditions and limitations.
And let the proceeds of such loan, or loans, be used to pay the costs and expenses of this action, including a reasonable attorney's fee, the payment of abstract and recording fees in connection with the closing of such loan or loans, the payment of taxes on the land mortgaged, and the making of needed improvements and repairs to the mortgaged property. And let the defendant, Ethel M. McDavid, who will hereinafter be designated trustee, be the person to determine what improvements and repairs are to be made, and such improvements and repairs are to be made under her direction and supervision.
And it is still further ordered: That in order to more fully guard and protect the interests of the minors, and the possible interest of any who may hereafter be born with an interest therein, that the defendant, Ethel M. McDavid, do be, and she is hereby, appointed trustee with authority to take possession of the mortgaged premises and rent the same during the life of the mortgage obligation. And from the rents and profits of said mortgaged lands said trustee shall pay taxes, interest on the mortgage debt and a reasonable annual curtailment on the principal of the mortgage debt, or debts, and then pay over to the life tenant the balance of such rents and profits. And said trustee shall give a proper bond in such sum as may be determined to be proper for the faithful performance of her duty as such, the amount of said bond and the conditions thereof to be left open for future determination and a future and further order or orders of this Court. But it is to be distinctly understood that the qualifying of such trustee and the faithful performance of her duty shall not be a condition or provision of any mortgage or mortgages given, nor shall it be the duty of any such mortgagee to see that such trustee has qualified, or after qualification, performs her duty as herein set forth.
But it is ordered, that this entire matter remain open during the life of any loan, or loans, which may be made with any portion of the property herein described as security, for additional and further orders, should any be desired, which may more effectively carry out the intent and purpose of this decree — that is, to save and preserve the lands in question as a home for the minor children of the life tenant, and in doing so protect, as well as can be, the interests and rights of any after-born children of the life tenant, should there be any, and of the contingent remaindermen.
Mr. S.E. Colvin, Jr., as guardian ad litem and for appellants, cites: As to interest of unborn children: 3 Rich. Eq., 1; 101 S.C. 1; 148 S.C. 52. Liability of life tenant for payment of taxes: Secs. 2567, 2569, 2605, Code 1932; 95 S.C. 295; 172 S.E., 142; 17 A.L.R., 384; 21 C. J., 951.
Mr. Jas. M. Richardson, for respondent, cites: Minors' property: 115 S.C. 42; 174 S.C. 490; 121 S.E., 122; 115 S.C. 14. Power to bind interest of unborn children: 132 U.S. 662; 48 L.R.A., 809; 40 L.R.A., 127; 66 S.C. 155; 31 S.C. 113; 22 S.C. 232; 80 S.C. 80; 174 S.C. 490; 178 S.E., 121.
May 17, 1938. The opinion of the Court was delivered by
The decree of Honorable G. Dewey Oxner, Circuit Judge, being satisfactory to this Court, we adopt it as the opinion of the Court. In reporting the decree, let the description of the lands be omitted. There shall also be reported the Master's report.
MR. CHIEF JUSTICE STABLER and MESSRS. JUSTICES BONHAM and FISHBURNE concur.
MR. JUSTICE CARTER did not participate on account of illness.