Farmers State Bank v. Chick , 143 Wash. 614 ( 1927 )

In November, 1922, Ralph Hyde Chick and wife were the owners of an undivided two-thirds interest in a farm in Lincoln county. The other one-third was owned by Florence Hyde Chick, mother of Ralph Hyde Chick. At that time, the owners joined in executing a mortgage on the farm to the John Hancock Mutual Life Insurance Company, in the sum of $42,000. In October, 1923, the same parties also executed a chattel mortgage against the prospective crop for 1924 in the sum of $11,700, in favor of the Farmers State Bank of Reardon.

Florence Hyde Chick died in March, 1924, and the son, Ralph Hyde Chick, was thereupon appointed administrator with the will annexed. Under the will, he was devised all of the estate save some minor bequests. The estate was insolvent. On October 7, 1925, the bank presented its claim under the chattel mortgage to the administrator and it was approved by him and the court. During 1924 the crop was sold and there was paid to the bank on account of its claim interest then due and $2,147.35 on the principal. On November 3, 1924, Ralph Hyde Chick individually executed a new chattel mortgage to the bank upon the prospective crop for 1925, to secure the balance due on the previous chattel mortgage. Thereafter the bank advanced the further sum of $782.10 for the protection of the 1925 crop. In July, 1925, a receiver was appointed who harvested the crop, and after the expenses were paid, a net sum of $13,198.97 was realized and deposited with the county clerk to abide the decision of the court as to the parties entitled thereto. In September, 1925, the bank sought foreclosure of its chattel mortgage on the 1925 crop and for re-payment of the advances made thereon. It made, as one of the parties defendant, the insurance company, which had in the meantime foreclosed its mortgage, and sheriff's certificate had issued to it in April, 1925. The insurance company cross-complained, and sought to establish a lien against the crop and the sale thereof, and also for the taxes paid and interest on the foreclosure judgment during the year of redemption.

The trial court, on March 4, 1926, entered a decree holding: First, that the insurance company had a prior lien upon the crop and its proceeds from the date of the sale to the end of the redemption year, which would be April 25, 1926, for interest on the sale price, and for taxes, with interest until the date of redemption; second, that the bank have judgment against Chick individually in the sum of $10,902.60, with interest and attorneys fees, which judgment was declared a lien upon eight-ninths of the crop and its proceeds, subject, however, to the insurance company's lien; third, that the estate was entitled to an undivided one-ninth of the crop and its proceeds, subject to the insurance company's lien; fourth, that the one-ninth interest of the estate be charged with one-third of the insurance company's lien, and the eight-ninths interest set apart to the bank be charged with two-thirds of the insurance company's lien.

The court made further provision for the holding of the fund until the time for redemption should expire, and for some other matters not directly involved in this appeal. No redemption was made, and the fund thereupon was divided as provided in the decree. The estate thereupon appealed. After it had appealed the bank cross-appealed.

[1] The respondent insurance company has moved to dismiss the cross-appeal because it was not taken within ten days after the estate's appeal, as required by Rem. Comp. Stat., § 1720 [P.C. § 7294].

The record discloses that the cross-appeal was not taken for a period of five weeks after the estate's appeal, and under our decisions the cross-appeal must be dismissed. Mottet v.Stafford, 94 Wash. 572, 162 P. 1001.

[2] The estate has presented three assignments of error. The first is that the court erred in decreeing a foreclosure of the bank's chattel mortgage against more than a two-thirds interest of the 1925 crop, and in holding that the estate was only entitled to one-ninth interest therein. This contention must be sustained. At the time the chattel mortgage on the prospective 1925 crop was given, it was signed by Ralph Hyde Chick representing the community that owned two-thirds of the property. The other one-third belonged to the estate of his mother. No mortgage was executed upon behalf of the estate, nor was any directed to be made by the probate court. It was the contention of counsel for the bank, concurred in by the trial court, that, since it was the custom of landlords and tenants for the tenant to receive two-thirds of the crop and the landlord one-third, although there was neither lease nor agreement to this effect, the court should consider that Chick, as tenant, was the owner of two-thirds of the estate's share, or two-ninths of the crop, and this, added to the six-ninths which he owned by reason of his ownership of two-thirds of the real estate, made eight-ninths of the crop which would be subject to the chattel mortgage.

The reasoning adopted, however, is fallacious. The estate's share was never mortgaged to the bank, nor was any agreement of any kind ever entered into on its behalf for the raising of the crop. It may be true that Chick personally is entitled to receive from the estate proper recompense for his services in raising the crop, but that is a matter that must be presented to the court for approval. It would in no sense justify the court in declaring a mortgage executed personally by Chick to operate against any compensation he may receive from the estate.

[3] It is next urged that the court erred in charging the interest of the estate in the 1925 crop with any portion of the insurance company's lien for interest on the purchase price and taxes. At the time the insurance company foreclosed its real estate mortgage, it failed to make the administrator a party defendant. It did, however, make the other persons who inherited under the will defendants, and thus the decree of foreclosure determined their rights. But the estate itself had rights that were not affected by the proceeding.

Rem. Comp. Stat., § 1464 [P.C. § 9969], provides:

"Every executor or administrator shall, after having qualified, by giving bond as hereinbefore provided, have a right to the immediate possession of all the real as well as personal estate of the deceased, and may receive the rents and profits of the real estate until the estate shall be settled or delivered over, by order of the court, to the heirs or devisees, and shall keep in tenantable repair all houses, buildings and fixtures thereon, which are under his control."

We think it clear that, under this section, the rights of the administrator to take possession of the estate and handle it for the benefit of creditors, heirs and others interested can not be gainsaid.

The administrator represented a large number of creditors of the estate and others who were interested in the proper disposition of the assets thereof. One of these assets was the right of the administrator to take possession of the estate's one-third interest in the farm and produce a crop thereon. The right to do so, however, could be terminated by a superior right such as the mortgage foreclosure. But to terminate that right it was necessary to make the administrator as such a party defendant. Not having done this, the administrator as such retained possession of one-third of the farm and raised the estate's share of the crop.

The right to charge the crop with interest on the purchase price of the certificate sale is provided in Rem. Comp. Stat., § 602 [P.C. § 7917]:

"The purchaser from the day of sale until a resale or redemption, and the redemptioner from the day of his redemption until another redemption, shall be entitled to the possession of the property purchased or redeemed, unless the same be in the possession of a tenant holding under an unexpired lease, and in such case shall be entitled to receive from such tenant the rents or the value of the use and occupation thereof during the period of redemption: . . . Provided further, That as to any land so sold which is at the time of the sale used for farming purposes, or which is a part of a farm used at the time of sale for farming purposes the judgment debtor shall be entitled to retain possession thereof during the period of redemption and the purchaser or his successor in interest shall if the judgment debtor do not redeem have a lien upon the crops raised or harvested thereon during the period of such possession for interest on the purchase price at the rate of six per cent per annum during the period of possession and for any taxes with interest: . . ."

It will be readily seen from reading the statute that Chick's share, or two-thirds of the crop, is chargeable with the insurance company's lien, because his right to possession, except on payment as set out therein, was foreclosed. But the estate's right, never having been foreclosed, continued to run unaffected by any requirement of the statute.

[4] The lien provided in Rem. Comp. Stat., § 602, for interest on the purchase price and taxes, is superior to any lien of chattel mortgage executed after the original real estate mortgage. Mount v. Rockford State Bank, 134 Wash. 479,236 P. 82.

Argument has been made that the administrator is not a judgment debtor as contemplated by § 602, supra, entitling him to retain possession. In this connection is cited NorthwestTrust Safe Deposit Co. v. Butcher, 98 Wash. 158, 167 P. 46, where, in construing the homestead provision of § 602, which provides that the judgment debtor shall have the right to retain possession of the homestead during the period of redemption, we held that the right could only be exercised by the original mortgagor, and not by his successors in interest. It is unnecessary here to determine whether the administrator who takes possession by operation of law has the same standing as the original debtor, since the rights of the administrator flow clearly from the probate statute. [5] In this connection, should be noticed the fact that only two-thirds of the lien of the insurance company for interest on the purchase price and taxes goes against the crop share of Ralph Hyde Chick. While as heir of his mother he would receive title to the one-third of the whole property and thus become the sole owner of the title to the farm, yet he had, during the redemption year, possession of only two-thirds of the property, the other one-third being in possession of the administrator. Being therefore, in possession of but two-thirds of the whole, being entitled to but two-thirds of the crop — it follows that but two-thirds of the interest on the purchase price and taxes should be charged to him.

We conclude, therefore, that the crop should be divided as follows: Two-thirds thereof to Ralph Hyde Chick, subject to two-thirds of the taxes paid by the insurance company, and two-thirds of the interest on the purchase price during the redemption period; and secondly, to the mortgage and advances made by the Farmers State Bank. One-third thereof to the estate of Florence Hyde Chick.

The judgment is reversed, with instructions to enter a judgment in conformity with this opinion.

MACKINTOSH, C.J., PARKER, and TOLMAN, JJ., concur.