Broderick v. Reid , 164 Ga. 474 ( 1927 )

Gilbert, J.

This case, on preliminary phases, has been twice before us. Columbia Drug Co. v. Reid, 158 Ga. 375 (123 S. E. 269); Broderick v. Reid, 159 Ga. 395 (126 S. E. 15). After an examination of the case made by the present record, we affirmed the judgment of the trial court, directing a modification in one respect. Before the remittitur was sent out, a motion for rehearing was filed. We granted a rehearing to clarify one of the rulings, and in order to deal specifically with an assignment of error made by the Columbia Drug Company. The opinion and the headnotes as originally prepared have been withdrawn, and the case is now decided upon the whole record in the light of the motion for rehearing.

The evidence authorized the findings that J. .H. Reid died intestate in January, 1917, owning a retail drug-store, the liabilities of which exceeded its assets; that for about four years prior to the death of J. H. Reid, E. E. Broderick had managed the business under a power of attorney; that after the death of Reid, Broderick continued to manage the business for about two years, under an agreement with the deceased, and later with the heirs, that the business would eventually be given to a son of Broderick; that the purpose of continuing the business by Broderick was to free it from debt as far as possible, to the end that it might become of some value to his son; that such plan was later changed, the son deciding to become a physician and not to take over the drugstore; that then Broderick advised R. S. Reid, brother of the deceased, of his desire to be relieved of the burden of managing the business, and suggested that R. S. Reid become administrator; that R. S. Reid was duly appointed temporary administrator, and obtained from the ordinary a judgment authorizing him to continue tbe business as a “going concern” for the purpose of making a. sale thereof; that Eeid was never appointed permanent administrator; that among the debts due by J. H. Eeid just prior to his death, and while the business was managed by Broderick, was an amount due his bank; that it became necessary to secure funds with which to continue the business and to protect the credit of the concern at the bank, and accordingly E. S. Eeid and E. E. Broderick became indorsers on a note or notes for the amo ant due the bank; that at the death of J. II. Eeid this indebtedness existed, and thereafter the bank pressed its claim upon the indorsers, and thereupon a new note for $6,425.16 was executed as a renewal, Eeid alone signing as indorser, Broderick having declined to do so; that Broderick retired from the management, and Eeid began to direct and manage; and that after the management was turned over to Eeid by Broderick, the former reduced the indebtedness on said note to $3200. Eeid distributed, equally to the heirs, the insurance collected on the life of J. H. Eeid, amounting, after payment of funeral expenses, to $2800, donating one half of the $700 due him to E. E. Broderick.

The general rule, varied in some States by statute, is well settled that an executor or administrator who carries on a business or trade on behalf of the estate without being empowered by law to do so becomes individually answerable for all debts contracted by him while so engaged. Robert v. Tift, 60 Ga. 566; Stephens v. James, 77 Ga. 139 (3 S. E. 160). In this State there are certain statutory exceptions, but they are not applicable to the present case. Civil Code (1910), § 4012. The above rule is especially applicable, forbidding a temporary administrator to carry on such business or trade. Irvine v. Wiley, 145 Ga. 867 (90 S. E. 69); Henry v. Collins, 155 Ga. 886, 891 (118 S. E. 729), and cit. Substantially all of the authorities, however, agree that there are exceptions to the foregoing rule, or perhaps it is more accurate to say there are instances where the rule does not apply. Compare Hosher v. Fitzpatrick, 146 Ga. 525 (6) (91 S. E. 780). The authorities cited by plaintiff in error in the course of the discussion of the subject mention such cases. See 11 R. C. L. 142, § 149; 24 C. J. 59, § 3. The case of Swaine v. Hemphill, 165 Mich. 561 (131 N. W. 68, 40 L. R. A. (N. S.) 201), involved facts constituting such an instance. The facts in some particulars are strikingly like those in the present case. The business of the deceased was carried on, by the consent of the heirs, for a number of years. During some of these years the business was successful, and no complaint was made by the heirs. Afterwards, due to causes not within the control of the administrator, the business incurred losses, and then the heirs made complaints. Also, as in the present case, there were interested minors. The case was decided by the Supreme Court of Michigan, and was very fully considered. In the report in 40 L. R. A. (N. S.) are elaborate annotations in which authorities are collected, establishing the general rule and the exceptions. In the opinion is found a quotation from an opinion written by Mr. Justice Cooley in the case of Brown v. Forsche, 43 Mich. 492 (5 N. W. 1011), as follows: “Formal proceedings for the settlement of an estate are never necessary if all parties concerned cazi agree-to dispense with them. [Citations.] Family arrangements for this purpose, it is said, are favorites of the law, and, when fairly made, are never allowed to be disturbed by the parties, or by any others for them. . . Such an arrangement may be made after an administrator is appointed, as well as before; and if the administrator is afterwards summoned to render his accounts, the court will accept as satisfactory, so far as it goes, the settlement the parties concerned have made.” As to family agreements as a consideration for contracts of settlement, see Belt v. Lazenby, 126 Ga. 767 (3) (56 S. E. 81).

The same principle' is laid down in Merkel’s Estate, 131 Pa. 584 (18 Atl. 931), in which-the principle applicable to the exception is applied to creditors. So far as it has been observed, these authorities in discussing the acts of administrators we assume had reference to permanent administrators. Since permanent administrators can not carry on the business or trade of the estate without first obtaining permission from the ordinary, it appears that in the absence of such permission the same rule applies as to temporary administrators. Certainly in this State temporary administrators have no such authority as a matter of law. If the temporary administrator in this case depended for his protection upon any authority under the law as administrator, it would necessarily follow that judgment would have been rendered against him. He claims authority, however, not under any such authority givezi him by law as administrator, but solely by reason of the consent of all the interested parties, heirs at law and creditors. He went through the form of obtaining authority from the ordinary. If he had rested there, such effort would have availed him nothing. The order does tend to show his good faith in the matter. He asserts that all interested parties consented. If so, such authority does not rest on the appointment as temporary administrator, but rests upon the consent of all heirs and the conduct of creditors in extending credit to Eeid as temporary administrator of the estate of J. H. Eeid. The auditor found, under the evidence, that there was such consent and course of dealing by the creditors. These findings were approved by the judge of the superior court, and under the evidence we think the findings were authorized. For at least two years after the death of Dr. .J. H. Eeid, E. F. Broderick continued to carry on the business by consent of the parties, his power of attorney having expired with Dr. Eeid’s death. Broderick did not apply for or obtain appointment as -administrator. Some or all of the creditors,'from a time prior to the death of Dr. Eeid until the bringing of this suit, were familiar with the condition of affairs and dealt with the estate. Invoices were made out in a manner tending to show that the credit was not to Eeid individually, but to the estate. The auditor was authorized to find that the Columbia Drug Company knew all of the facts as to the authority of E. S. Eeid and did not look to him. In such circumstances, in equity the drug company may be held to be estopped. The evidence supports the finding that the estate is liable, and not the defendant, Eeid. Whether true as to all creditors is immaterial, since only the Columbia Drug Company is before this court complaining of the judgment rendered.

It is pointed out in the brief of plaintiff in error, Broderick, that the answer and cross-petition of Eeid contains no prayer for a judgment in his favor for any amount on account of payments made by him on the note due the bank, and that the note itself evidences a debt not due by the estate of J. H. Eeid. The answer and cross-petition was equitable in its character. It set out the facts indicated above, and contained at its conclusion a prayer for general relief. Hnder a general prayer the plaintiff may have such relief as is consistent with and entirely within the scope of the pleadings. Peek v. Wright, 65 Ga. 638; Hickson v. Mobley, 80 Ga. 314 (5 S. E. 495); Copeland v. Cheney, 116 Ga. 685, 687 (43 S. E. 59); Pound v. Smith, 146 Ga. 431, at page 435 (91 S. E. 405); Wimpee v. Burt, 148 Ga. 418 (96 S. E. 993). In this instance the prayer for general relief, together with the facts alleged, was^sufficient to-authorize the finding. Moreover, the payments by R. S. Reid to the bank, though credited on a renewal note executed after the death of J. H. Reid, were really in extinguishment of the debt incurred before the death of the latter Reid, and constitutéd a liability of the estate.

The third, fourth, and fifth headnotes do.not require elaboration.

Two of the heirs of J. H. Reid, who are parties in the case, are minors represented by their father as next friend. It is argued that they could not legally consent to the operation of the drugstore by R. S. Reid. Conceding this to be true, it would not, under the circumstances, alter the judgment. This is a proceeding in equity; and even if the maxim that parties coming into a court of equity must do equity is not applicable to these minors, nevertheless the evidence authorized the finding that the estate of J. H. Reid was bankrupt at the date of his death, for some time previous thereto, and continuously so thereafter; and that R. S. Reid did not take charge of the business for two years after the death of the intestate, during which time Broderick continued in charge. The auditor found that R. S. Reid had acted throughout in perfect good faith, that he received no remuneration -whatever, either in property or money, but that he sustained a considerable financial loss by reason of the rendering of his services. These findings were authorized. In these circumstances the minors as heirs have not suffered any money loss by reason of the course pursued by R. S. Reid. See the reasoning in Robert v. Tift, 60 Ga. 566, and Moore v. Lampkin, 63 Ga. 748.

While the amount involved is not large, the litigation has been vigorous and extended. A receiver was appointed, and the case was referred to an auditor, who heard evidence introduced by all parties interested. The.record evidences a painstaking hearing before the auditor and careful consideration. His findings were approved by the court below in their entirety. We have carefully examined the case, and find no error except as indicated in the fifth headnote. If there are other instances which would seem to indicate that a contrary finding should be made, they are unimportant and are overshadowed by the necessity for bringing to an end the litigation before all of the assets are consumed by expenses, in which event general creditors would especially suffer. After a reconsideration of the case, we are again fully convinced that the ends of justice and equity require an affirmance of the judgment, with the direction given in the fifth headnote.

Judgment affirmed, with direction.

All the Justices concur.