Opinion
Opinion filed May 2, 1933.
Executors and Administrators — When Action of Commissioners of Estate on Claim Presented Becomes Judgment — Bills and Notes — Obligation of Surety — Note Presented against Estate of Deceased Joint Maker Erroneously Characterized as "Contingent" — Principal and Surety — Effect on Primary Liability of Joint Maker of Note When in Fact Signing as Surety — G.L. 3303 — "Contingent Claim" — Character of Claim against Estate of Joint Maker of Note — Effect on Legal Rights of Payee of Note Presented to Commissioners of Estate of Joint Maker and Erroneously Allowed by Them as "Contingent," after Probate Court Approved Report and Estate Closed for More Than Two Years — G.L. 3276 — Effect of Final Decree of Probate Court Allowing Final Account of Executrix without Statutory Notice — Equity — Jurisdiction of Probate Courts in Settlement of Estates and When Equity Will Interfere Therewith — Accident and Mistakes Obstructing Enforcement of Legal Rights as Ground of Equity Jurisdiction — Question of Laches Not Raised by Demurrer — Insufficiency of Record To Bring Question of Laches before Supreme Court — Burden of Proof as to Laches — Limitation of Equitable Relief against Estate of Deceased Executrix as to Unpaid Absolute Claim against Estate She Had Administered, Erroneously Allowed by Commissioners Thereon as "Contingent."
1. Neither indorsement of word "Approved" on note presented to commissioners on estate, nor allowance of claim evidenced thereby, amounts to judgment thereon, action of commissioners only becoming judgment when report is made to probate court and accepted, and such acceptance indorsed thereon or otherwise evidenced.
2. Where note was marked "Approved" by commissioners on an estate, but in their report to probate court note was therein characterized as contingent claim, probate court's acceptance of such report established claim as contingent, though it was not such in fact.
3. Note signed by corporation and two individuals as joint makers, held erroneously characterized as "contingent" claim against estate of deceased maker in report of commissioners on such estate, since note was fixed liability and could be proven as debt.
4. Obligation of surety is measured by his contract.
5. That one signing note as joint maker was in fact surety thereon did not affect his primary liability to payee, but only showed relation of makers to each other.
6. Under G.L. 3303, upon death of joint maker overdue note became valid and absolute claim against his estate, and it was duty of commissioners on his estate to allow it as such and not as a "contingent claim."
7. Where probate court never made order for payment of overdue note, which should have been allowed as valid and absolute claim against estate of deceased joint maker, but was erroneously allowed as a "contingent claim," or gave it subsequent approval, executrix could not be pursued in probate court or elsewhere in proceedings at law, nor could plaintiff more than two years after estate was closed in probate court reopen commission to have mistake of commissioners corrected, or proceed to perfect his claim as contingent one.
8. Final decree of probate court allowing final account of executrix, having been made without compliance with G.L. 3276 as to notice, is without force.
9. Equity will not interfere in settlement of estate unless there is found in record a strictly equitable claim against estate.
10. Jurisdiction of probate court in settlement of estates is absolute and exclusive as to all claims of absolute or legal nature, and court of chancery only aids probate court in regard to strictly equitable matters.
11. Matter of accident and mistakes, which obstruct enforcement of legal rights by ordinary course of courts of law, constitutes one of original and most salutary functions of court of equity.
12. Where commissioners on estate marked note presented by payee "Approved," but in report to probate court erroneously characterized it as a "contingent claim," and report was accepted by probate court, these, and other circumstances in case, held to entitle payee, whose claim was unpaid, to equitable relief.
13. Demurrer to bill does not raise question of laches.
14. Question of laches held not before Supreme Court on chancellor's findings, burden of proof of which was on defendant and he having failed to procure necessary findings.
15. Where commissioners on estate erroneously allowed note which was valid and absolute claim against estate as a "contingent claim," and their report was accepted by probate court, and executrix in good faith proceeded with administration of estate, relying upon advice of probate court, and her final account was allowed without claim having been paid, in action in chancery to recover amount thereof from estate of executrix, held that plaintiff was only entitled to amount ratable division of available assets among all creditors would have given plaintiff.
APPEAL IN CHANCERY. Bill against estate of executrix to recover amount of note which had been presented to commissioners on estate of her husband, which she administered, as joint maker. Such note, instead of being allowed by commissioners as absolute claim was allowed on their report as "contingent." The commissioners' report was approved by the probate court for the District of Marlboro, and final account of executrix allowed without any payment having been made on such note. Defendant demurred to bill and excepted to the chancellor's adverse ruling thereon, the benefit of such exception being saved by order of chancellor. Heard on bill, answer, and findings of fact by the chancellor after the September Term, 1931, Windham County, Davis, Chancellor. Decree for the plaintiff. Both parties appealed. The opinion states the case. Reversed, pro forma, and remanded, with directions.
Frank E. Barber and Ernest W. Gibson, Jr., for the plaintiff. Herbert G. Barber for the defendant.
Present: POWERS, C.J., SLACK, MOULTON, THOMPSON, and GRAHAM, JJ.
C.O. Robbins and Dennison Cowles, under the firm name Robbins Cowles, carried on a partnership business in Brattleboro for a long time prior to January 1, 1918. The firm did its banking business with the Peoples' National Bank, and from time to time borrowed money therefrom. On or about the date mentioned, the members of the firm formed a corporation under the name Robbins Cowles, Inc., and the business continued under the same ownership and management. The corporation assumed the bank debts of the partnership, and on September 15, 1918, to cover such debts, it gave the Peoples' National Bank a four months' joint note for $10,000 signed by the corporation and by C.O. Robbins and Dennison Cowles. On the face of this note, the individual signers were joint makers, but in fact the note was given for the sole benefit of the corporation. All this was known to the bank when the note was taken. The Peoples' National Bank was afterwards consolidated with the Vermont National Bank under the name Vermont-Peoples' National Bank, and the note passed into the hands and became the property of the new corporation. On October 18, 1918, C.O. Robbins died testate. His widow, Alice W. Robbins, was the executrix of his estate. Commissioners were appointed and this $10,000 note, then overdue and unpaid, was presented to them. The commissioners allowed the note by indorsing on it the word "approved" over their signatures, and returned it to the plaintiff. When the commissioners made their report to the probate court for the district of Marlboro, wherein the estate was being settled, this note was therein characterized as a contingent claim. The plaintiff, understanding that the note was allowed as an absolute debt, did nothing toward its enforcement until after Mrs. Robbins' death as hereinafter recorded. It took from the corporation, from time to time, renewal notes, but not in payment of this note which it never surrendered, nor did it ever intend to release the signers of it.
Mrs. Robbins proceeded with the administration of her husband's estate, paid or settled all the other claims allowed against it, but paid nothing on the $10,000 note here involved. Each year she filed her account with the probate court and the same was examined and allowed. These reports showed the payments made on the claims proved and her other charges and expenditures. On December 6, 1928, she filed her final account which was also examined and allowed, and the probate court thereupon decreed to her the rest and residue of the C.O. Robbins estate, the value of which was $968.08. This final account made no reference to the note in question, nor did any of the annual accounts. As the probate records stood, it was wholly ignored and left undisposed of. No notice of the hearings on any of these accounts, annual or final, was given to the plaintiff by publication or otherwise, and it knew nothing of them until after the death of Mrs. Robbins, which occurred on April 16, 1930 — over a year after the Robbins estate was closed on the books of the probate court. During the time she was acting as executrix, Mrs. Robbins received from the estate, under an order of the probate court made December 2, 1918, an allowance for her support of $100 per month, which amounted in all to $5,533. During this time, on numerous occasions, Mrs. Robbins called at the bank, and talked with the assistant cashier about this note; and she frequently went to the store of Robbins Cowles, Inc., and talked with Mr. Cowles about their paying the note so that she could close her husband's estate. But she did not disclose to the bank that the note was allowed as a contingent claim, and, perhaps, was under no obligation to do so. But she left the bank with the impression that the estate was holden for the note. And the plaintiff was, in fact, misled into allowing the matter to drift along until it was too late to save itself. The probate court never made an order requiring the administratrix to pay this note or any of the other allowances.
The plaintiff brings this bill in chancery claiming that it should recover the whole amount of the $10,000 note, less the amounts paid on the renewal notes amounting to $1,100. The defendant demurred to the bill, and excepted to the chancellor's adverse ruling thereon — the benefit of which exception was saved by order of the chancellor. Fairbanks v. Keiser, 86 Vt. 210, 213, 84 A. 610. The chancellor then heard the case on its merits, filed his findings to the effect above stated, and thereupon rendered a decree for the plaintiff for the above sum of $968.08, with interest thereon from December 6, 1928, and costs. Both parties appealed.
Neither the indorsement made by the commissioners on the back of the note, nor the allowance of the claim evidenced thereby amounted to a judgment thereon. The things that count in such matters are the report made to the probate court and its acceptance by that court. Not until such acceptance was indorsed thereon or otherwise evidenced did the action of the commissioners become a judgment. Hodges, Exr. v. Thacher, 23 Vt. 455, 464; Adarene v. Marlow's Estate, 33 Vt. 558, 559; Riley v. McInlear's Estate, 61 Vt. 254, 261, 17 A. 729; Sowles v. Quinn, 61 Vt. 354, 356, 17 A. 493. The judgment actually rendered, then, established this claim as contingent. But it was wholly unwarranted. There was nothing contingent about it. "Contingent" implies futurity. It properly applies to a claim that may never become absolute; but not to one that has already become absolute. A contingent claim under G.L. 3390 is one "where the liability depends upon some future event which may or may not happen, and therefore makes it more wholly uncertain whether there ever will be a liability." Sargent's Admr. v. Kimball's Admr., 37 Vt. 320, 321. It must be one that "cannot be proved as a debt before the commissioners." This note was nothing of this kind. It was a fixed liability and could be proved as a debt.
The obligation of a surety is measured by his contract. Standard Oil Co. v. National Surety Co., 234 Ky. 764, 767, 29 S.W.2d 29; Ryan v. Shannahan, 209 Cal. 98, 285 P. 1045, 1046; Gordon Delworth, Inc. v. Abbott, 258 Mass. 35, 154 N.E. 523, 524. So the fact that Robbins was a surety on this note did not affect his primary liability to the plaintiff, but only shows the relation of the makers to each other. East Bridgewater Savings Bank v. Bates, 191 Mass. 110, 77 N.E. 711, 712. In the hands of the bank the note was the joint note of the signers. Upon the death of Robbins, by force of the statute, G.L. 3303, Hogan Hogan v. Sullivan, 79 Vt. 36, 39, 64 A. 234, it became a valid and absolute claim against his estate. It was, therefore, the duty of the commissioners to allow it as such, and they had no right to allow it as anything else. Their report was wholly unwarranted. As we have seen, the court never made an order for the payment of the claims allowed. It is quite probable that its approval of the annual accounts would amount to the same thing as a previous order to pay, as to all claims shown thereby to have been paid in whole or in part. But this claim was not mentioned therein. So it is apparent that in the absence of such an order, Bank v. Kidder, 20 Vt. 519, 523, or subsequent approval, the executrix could not be pursued in the probate court or elsewhere in proceedings at law. The plaintiff cannot now reopen the commission to have the mistake of the commissioners corrected, or proceed to perfect his claim as a contingent one. The final decree, having been made without compliance with G.L. 3276 as to notice, is, to be sure, without force. Bioni v. Haselton, 99 Vt. 453, 459, 134 A. 606; In re Allen, 82 Vt. 365, 380, 73 A. 1076, 26 L.R.A. (N.S.) 232. But it would do this plaintiff no good to go to the probate court for a new decree for the record would be against it.
It is quite true that equity will not interfere here unless there is found in the record a strictly equitable claim. For the jurisdiction of the probate court in the settlement of estates is absolute and exclusive as to all claims of an absolute or legal nature, and the court of chancery only aids the probate court in regard to strictly equitable matters. Goff v. Robinson, 60 Vt. 633, 641, 15 A. 339. But as was said in Dickey v. Corliss, 41 Vt. 127, 130, "the matter of accident and mistakes, which obstruct the enforcement of legal rights by the ordinary course of the courts of law, constitutes one of the original, and one of the most salutary functions of a court of equity." We think this case comes within the spirit of that one. There, the plaintiff presented partnership notes to the commissioners on the estate of one of the partners. The commissioners examined them and returned them to the plaintiff. They did not signify any objection to their allowance, nor did the administrator object thereto. The commissioners failed to include the notes in their report, which was duly filed and allowed. The plaintiff, believing that they were properly allowed, did nothing until it was too late to get the commission reissued.
It was held, in effect, that the responsibility for the situation in which the plaintiff found himself was with the commissioners and that he was not chargeable with fault or neglect; that he had a right to presume that the commissioners would do their duty as prescribed by law in making up and filing their report; and that he was not called upon to supervise this work or to see that it was correctly done. It was further held that the plaintiff was entitled to the aid of a court of equity to save himself from the impending loss of his debt. This case was approved by this Court in Freeman v. Holt, 51 Vt. 538, 543, wherein Judge Ross says that it presented a case of "mistake or inadvertence of the commissioners, and not of the neglect of the orator." Dickey v. Corliss was again approved and its doctrine applied in Batchelder v. White's Admr., 82 Vt. 132, 135, 71 A. 1111. In that case the orator presented to the commissioners of White's estate, a statement of a note signed by White. It was held that this was a sufficient exhibit of the claim evidenced by the note; and that since the commissioners failed to include it in their report and his statutory remedies had expired without his fault, the plaintiff was entitled to a remedy in chancery.
On the authority of these cases, we hold that the plaintiff has established his right to a remedy in chancery.
Of the demurrer, little need be said. No question of laches is raised by it, as we have repeatedly held. Our last case is Fenwick v. Sullivan, 102 Vt. 28, 32, 145 A. 258. Nor is that question before us on the findings; for the burden of proof was on the defendant, Bufton v. Crane, 101 Vt. 276, 281, 143 A. 382, and he has not procured the necessary findings.
But the plaintiff is not necessarily entitled to the whole of its claim. The executrix apparently acted in good faith, relying upon the advice of the probate judge. Neither she nor her estate should be penalized. All that the plaintiff can fairly claim is so much as a ratable division of the available assets among all the creditors would have given it. This sum is not shown by the record. So the case will have to be remanded for a determination of it.
Decree reversed, pro forma, and cause remanded. Let the amount to which the plaintiff as a creditor for the amount unpaid on the $10,000 note would have been entitled on a pro rata division among all the creditors of the available funds of the estate of C.O. Robbins be determined. And if the plaintiff has already received from said estate more than its pro rata share of such funds on other debts proved against said estate, let such excess be deducted from the amount first mentioned. Let the plaintiff have a decree for the amount so determined with costs in the court of chancery. No costs are awarded in this Court.