Deberry v. Ivey, 55 N.C. 370, 2 Jones Eq. 370 (1856)

June 1856 · Supreme Court of North Carolina

55 N.C. 370, 2 Jones Eq. 370

FRANCES A. DEBERRY and others against HENRY W. IVEY.

An executor is not an insurer of the assets of the estate; so that if he acts in good faith and with reasonable diligence, he is not responsible for their loss.

Where assets had been collected by an attorney in a dislant State, and lost by his insolvency, the said attorney being, in public estimation, altogether trustworthy at the time of such employment, the executor was held not liable for the loss.

Cause removed from the Court of Equity of Northampton County.

The bill is filed by the widow and next of kin of Henry Deberry, also by the same parties as legatees under the will of the said Ilenry, against the defendant, as his executor, praying an account of certain assets that came into his hands, or which ought to have come into his hands; and if not so, which were lost by his negligence, and for which he is accountable.

The defendant qualified as executor in December, 1844. In 1846, a petition was filed against him in the County Court of Northampton, in the name of the plaintiffs, with the exception of Mrs. Deberry, (who, nevertheless, sued in the capacity of guardian for some of the children,) praying an account and settlement of the estate of Henry Deberry, which was answered by defendant, an account ordered and stated, and being returned to Court was, on motion, affirmed, and decrees passed against the defendant in favor of the several parties plaintiff for their respective shares, and the money paid thereon.

But there had come into the hands of the defendant a bond on one John Drew Deberry, for $930,70, due on 8th of February, 1838, and another on George Spiers and Isaac Pipkin, for $550, due on 21st January, 1842, which had not been collected at that time, and which were not included in the account then taken, but which, the bill alleges, have either been collected since then, or might have been; and if not collected, the defendant has made himself liable to account for the same by his gross negligence.

The answer of the defendant admits that the two bonds above stated, came to Ms bands as tbe executor of Henry Deberry; but be denies that tbe same have ever been collected by Mm, and says that although he has acted in good faith, and made diligent exertion to do so, he has not been able to malee such collections. The defendant, in his answer, says that when these papers were received by him, George Spiers was insolvent, and had removed to parts unknown to the defendant. Pipián, his surety, lived at Memphis, in Tennessee, and was solvent. John D. Deberry, the obligor on the other bond at that time, also resided in Tennessee, in the town of Jackson, and was believed to be in doubtful circumstances. Being advised by counsel, that he could not pursue these debtors, as executor, without making probate of the will and qualifying in Tennessee, under the same instruction and advice, he endorsed the said bonds to one Atlas J. Peebles, a proper person to entrust with such a charge, in order that suits might be brought, in his name, in that»State, he being about to remove thither, and did so remove shortly afterwards. He states further that, by his advice, Mr. Peebles put the bonds in question into the hands of B. B. Blume, Esq., an attorney at law, who resided at Memphis, and who was represented to him as a lawyer, able, diligent, and of business habits, and a man of character and standing. He says that he had known Mr. Blume in North Carolina as a lawyer, and that his character was such as altogether entitled him to confidence, and that he knew no lawyer at Memphis but him. As a proof of his confidence in Mr. Blume, he shows that at the same time he entrusted him, for collection, with notes due himself to the amount of about $200. This was about February, 1845.

The answer further states that Mr. Blume brought suit against Pipkin, obtained judgment and collected the money in August, 1846; that Pipkin filed a bill in a Court of Chancery, and obtained an injunction restraining Blume from paying over the money to him, which was not dissolved until May, Í849 ; but the defendant was not advised of this dissolution until afterwards in 1852, when he went in person to Memphis; at which tim.e, Blume had become insolvent, without his ever having suspected that such an event was lilcely to occur.

He, further answering, states that Allen Deberry, of Tennessee, had become the surety of John D. Deberry, and in order to indemnify himself, had taken a conveyance of a tract of land, but had agreed to allow the said John D. a right of redemption for one year, on paying the sums for which he was liable. By an arrangement made by Mr. Blume, the said John D. had agreed to let the defendant have the light-of redemption, in order to make good the debt due him, as executor ; and he was applied to, to know whether he would sanction this arrangement, being informed, at the same time, that the land was worth more than the sums for which it had been thus pledged, and that this was the only chance to save any part of the debt. Under the advice of counsel, and with the approbation and consent of three of the plaintiffs, (the only ones who were adults,) lie did advance the sum of $1585 for that purpose ; that afterwards Mr. Blume sold this land for $2235, and received on the same $1106,41, which in 1847, was duly transmitted to him and paid over to plaintiffs. Eor the remainder of the purchase-money, he received notes, payable in one and two years.

He further says, that the sum which he thus advanced was allowed him in the settlement and decree made in the County Court of Northampton; that he subsequently discovered that Blume collected all this money for the land, as also the money coming to him individually, but that ho was unable to obtain any of it from him except the sum above stated; that defendant went to Memphis in 1852, in person, when he found that Blume was utterly insolvent, and all he could do was to take his notes for the amount collected. He says, in the mean time, that he had frequently written to Blume about the business, and received encouraging letters as to the state of the business, and promising promptness and diligence in the management of the same.

Insisting that the money having been thus entirely lost, he submits that the loss should fall on the estate of the testator, and not on him.

There were replication to the answer, commissions and proofs, which are sufficiently noticed in the opinion of the Court.

The cause was set down for hearing on the hill, answer, exhibits and proofs, and sent to. this Court by consent.

Moore, for plaintiffs..

Badger and Barnes, for defendant.

Nash, C. J-.

The bill charges that the defendant ivas duly qualified as the executor of the last will of'Henry Deberry, and that the plaintiffs, under his will, are legatees; that the defendant, as such executor, among other things, took into his possession two bonds, one executed by John D. Deberry, for the sum of $930,70, the other by George Spiers and Isaac Pipkin, for $550; both of which bonds, it is alleged, were good, the obligors able to pay, and which were not collected, but lost to the estate through the negligence of the defendant.

The answer admits the taking into possession, by the defendant, as the executor of Henry Deberry, of the two bonds set out in the bill, and avers that the obligors were all insolvent, except Pipkin, the surety of Spiers, w;ho, it is alleged, removed to parts unknown to the defendants; that John D. Deber-ry and Isaac Pipkin at the time the bonds came into his hands, resided in Tennessee, the former at Memphis, and the latter at Jackson. Soon after his qualification, he -was advised by his counsel to endorse the bonds over to Mr. Atlas J. Peebles, then a citizen of this State, but who was about to remove to the State of Tennessee, as he, the defendant, could not sue in Tennessee without having the will proved there. This was done, and the bonds, by direction of the defendant, were placed, by Mr. Peebles, in the hands of Benjamin B. Blume, a practicing attorney of the Memphis bar. The defendant alleges that Mr. Blume was the only member of that bar with -whom he wras acquainted; that he had known him while a citizen of this State, settled in Northampton as a lawyer; that he then bore the character of an able lawyer, and energetic collector, and an honest and upright man; but before entrusting the business to him, he made diligent enquiry as to his standing and character at Memphis, and found it to be the same as when he lived in this State; that the bonds were endorsed to Mr. Peebles, who handed them to Mr. Blume immediately on his arrival in Tennessee. Peebles left this State in February, 1845; suit was instituted against Pip-kin, which was duly matured to judgment, and the money collected by Blume. Pipkin obtained an injunction to enjoin Blume from sending the money to the defendant, which was duly dissolved. As to the Drew Deberry bond, the defendant states, that Drew was indebted to Allen Deberry, and the latter, for the purpose of securing his debt, purchased the land of John D. Deberry, and by a provision in the contract, the debtor had a right to redeem at any time within twelve months, upon his debt being paid; that Mr. Blume took from J. D. Deberry an assignment of his right to redeem; and the defendant, by the advice of his counsel, and with the knowledge and assent of two of the plaintiffs, the only adults at that time, did redeem the land, which was afterwards sold by Mr. Blume, as his agent, part for cash, and the balance in two annual payments, secured by bonds, and carrying interest .from the date. The cash payment, amounting to upwards of one thousand and one hundred dollars, was immediately remitted by Mr. Blume to the defendant. The answer further alleges that, soon after he had sent on to Mr. Blume the bonds he held, as executor, he sent on other bonds to him for collection, belonging to him individually, and that he has never received a cent upon them from Mr. Blume. The latter finally failed with a considerable portion of the money due the estate of the testator in his hands, which has been lost. The answer further states that he made several trips to Tennessee upon the business, and repeatedly wrote to Mr. Blume to hasten the collections, who always replied that he could collect the money, and would, immediately on doing so, remit it to him.

The answer is fully sustained by the proofs. Has the defendant been guilty of such negligence in the collection of the bonds in question as subjects him to the loss sustained? This is the sole question submitted. There is, indeed, no controversy about the facts. For what degree of negligence is an executor answerable ? An executor, like other trustees, is not an insurer, nor to be held liable as such in taking-care of the assets which come to his hands, nor in collecting them. He is answerable only for that crassa negligenUa, or gross neglect, which evidences mala fides. The estates of deceased persons are deeply concerned in the existence of such a principle. If an executor was put into the position of an insurer — answerable for any neglect, however slight — unprotected by an honest endeavor to perform his duties, honest and responsible men would rarely be found willing to incur the responsibility; and those only would incur it who calculated the probable gain and loss. Beall v. Darden, 4 Ire. Eq. 76; Freeman v. Cook, 6 Ire. Eq. 373. When the bonds in question came into the hands of the defendant, the obligors had all left the State; John D. Deberry and Isaac Pipkin resided in Tennessee; one in Memphis, and the other in a neighboring county. John D. Deberry was in questionable circumstances, and George Spiers insolvent, and removed to parts unknown. It was the duty then of the defendant to make every prudent and reasonable effort to recover or secure the money due on the bonds. He was obliged either to go to Tennessee and take out letters testamentary there, or to employ an agent, properly authorised, to bring suit there. He pursued the advice of his counsel, and transferred the bonds, by an endorsement, to Mr. Peebles, who was well known to him, and who was about to remove to Tennessee. Early in the year 1845, the bonds were placed in the hands of Mr. Blume, a gentleman of high standing at the Memphis bar, and who had been recommended to him by gentlemen whose opinions were entitled to his confidence, and at that time, it appears, he was worthy of the trust. What more could the defendant have done towards the discharge of his duty ? If lie had gone to Memphis in the first instance and taken out letters there, he would have been obliged to put the bonds in the hands of a lawyer, and trust in his vigilance and honesty in the transaction of the business. lie could not remain there; that, the law did not require, and would have been attended with unnecessary expense to the estate. In this/then, there was no negligence of any kind. Was there any in the succeeding parts of the transaction ? It is alleged that he suffered too long a time (three years) to elapse after the dissolution of the injunction obtained by Pipkin, before he took the necessary steps to collect the money from Plume. Let it be remembered that he had every reason to put confidence in Plume ; and to his repeated letters, the answers wore, that he was using every exertion to collect the monies due upon the different payments for the land, and that those payments were upon a credit of one and two years, and that, in the mean time, he had received a remittance from Plume, to an amount equal to that of both the bonds, as originally due upon them; and as to the Pipkin debt, Plume did not inform him of the dissolution of the injunction.

Ve are not enquiring whether the defendant might not, by greater diligence, have collected the full sum due the estate of Henry Deberry, but whether he has acted in good faith. Taking into view the distance at which he lived from Memphis, where the money was to be collected, the high character of Mr. Plume, as a lawyer and a man of business and integrity, the fact that the defendant had entrusted him with his own claims to collect, of which he has not received anything, and that he received no information that there was danger of Plume’s breaking, until he had entirely failed, we have no hesitation in saying, not only that the defendant has not been guilty of gross neglect, but we are satisfied that, throughout the business, he has acted with good faith, and has used every degree of vigilance which the law required.

It was objected in the argument here, that there was no evidence in the case to show that Pipkin had enjoined Plume from sending the money collected out of him to the defendant. The real existence of such a record is not the question before us, but whether the defendant had such evidence as should have satisfied a reasonably prudent man that such was the fact. The answer states that the defendant had received a copy of the bill, and had answered it, and the letters of Blume spoke of the suit, its progress and termination. The enquiry is not whether such a suit did exist, but whether the defendant had such proof as ought to have satisfied -a reasonable man using ordinary diligence, that such was the fact. ¥e think the circumstances stated did so authorise him.

The defendant has been guilty of no such negligence as ought to subject him to make good to the estate of his testator the amount of the bonds, or any part of them. We think he used the necessary diligence in their collection.

The defendant must hand over to the plaintiff the notes of Blume, mentioned in the pleadings; and the latter, upon receiving such notes, must execute to the defendant a release for the same. Each party must pay his own costs.

Pbb Cuktam. Decree accordingly.