LIABILITY FOR NEGLIGENCE 140 19. Executors and administrators are liable for all losses arising to the estate out of their acts in bad faith or negligence. Generally, any departure by an executor or administrator from the rules laid down for the management of estates, by which loss is occasioned, will bring personal liability upon him, unless he can show that such loss was not the result of gross negligence on his part," or for some other valid reason the fault is not to be attributed to him." 142 143 141 If an executor or administrator fail to invest the idle trust funds in his hands,' or if he invest them in such a negligent manner that they are lost," he will be held personally liable.'" And he will incur personal liability if he negligently pay invalid claims against the estate," if he neglect to pay the decedent's debts for so long a time that the estate suffers thereby," and if he neglect to collect, or sue for, a debt or claim owing to the estate, until it has been barred by the statute of limitations, or until the debtor becomes insolvent or absconds; also, if he allow arrears of rent to remain uncollected for years, or neglect to record a mortgage made to the estate, by which a debt owing to the estate is lost. To impose personal liability on an executor or administrator, it is held by most authorities, he must be guilty of gross negligence." Thus, if an administrator give credit by taking the note for six months of one who has purchased at a vendue sale of assets, and the maker of the note fail before it becomes due, the administrator will be exonerated from liability; but, if he take no further steps for a long time to collect the amount, by either demand of payment or bringing suit, it is a case of gross negligence.""" 140100 N. Y. 219, 222 (1885), cited in Woerner Am. Law of Admin., Vol. 2, p. 708. 141 120 Pa. 345 (1888). 142 34 S. C. 275 (1885). 1436 Beav. (Eng.) 188 (1843). 1442 Ware (U. S.) 294 (1846). 1462 Grant Cas. (Pa.) 301 (1854). POWER AS TO CONTRACTS 150 151 20. As a general rule, in the absence of directions in the will or statutory authority, an executor or administrator cannot make an executory contract which will be binding on the estate, even though it be for the benefit of the estate.' Any new promise of a contractual nature, that is, one based on a new and independent consideration, is a personal one for which the representative will be individually liable.' He cannot impose any liability on the estate by making any promissory note, or by drawing, accepting, or indorsing any bill of exchange," though he may draw a bill for the purpose of carrying on the business of the decedent with a view of winding up his affairs, or endorse any negotiable instrument for the purpose of transferring decedent's title, when a transfer is necessary or proper. 154 153 But an executor or administrator has the power, and it is his duty, to perform the contracts of the decedent made in his lifetime, other than those which cannot be properly performed by any person but the decedent himself, as where personal taste or skill is involved. Thus, a contract by which a decedent has become an individual surety to pay money is a continuing contract, for which the estate becomes liable after the death of the surety.' It survives the decedent, is binding on his personal representative, and it is to be completed, not by a personal performance, which the decedent alone may be capable of, but by the payment of money for which the estate is bound, an act which the decedent's representative can do as effectually as the decedent.' 157 155 156 Unless empowered by directions in the will, or authorized by order of court, an executor or administrator cannot bind the estate by borrowing money to be used for the benefit of the estate; for money borrowed without the authority 158 150 L. R. 7 Ch. (Eng.) 123 (1871). 15184 Fed. Rep. 420 (1898); 29 Am. Dec. 255 (1836). 152 101 N. Y. 554 (1886). 153 25 E. C. L. (Eng.) 27 (1833); 14 Hun (N. Y.) 116 (1878); 2 Ohio 56 (1825). 1541 M. & W. (Eng.) 418 (1836); 83 111. 498 1551 Dem. (N. Y.) 547 (1882). 1573 M. & R. (Eng.) 124 (1828). 159 160 59161 mentioned, the liability incurred will be a personal one of the executor or administrator to the lender of the money; the lender cannot, as a general rule, hold the estate for the money loaned. Where, however, money is borrowed without authority by a personal representative for which he has pledged to the lender assets of the estate, the lender, having acted in good faith and without knowledge of the want of authority of the borrower, is not affected in his rights." But where the personal representative borrowed money to pay the debts of the estate, there being funds of the estate on deposit in bank at the time, the court held that it was an unauthorized act, stating that "the safest and therefore the best investment a man can make is to pay his debts, and especially is this true of an estate in process of settlement.' Where a decedent has made a contract for the sale of real estate which could have been enforced against him in his lifetime, the rights and interests of the decedent under the contract pass to the executor or administrator, and he may enforce it against the vendee; in some jurisdictions, he may complete the contract by executing a deed to the vendee. The reason is, that the contract operates as a conversion of such real estate into personal property. Where the contract of the decedent is for the purchase of real estate, no rights or duties are conferred on the executor or administrator, except in cases where the real estate of the decedent is necessary for the payment of debts, or so far as the decedent's promise to pay the purchase money may constitute a debt which the executor or administrator may be required to pay.' If he have not sufficient assets to pay the purchase money, he is authorized, as a general rule, with the consent of the court, to agree with the vendor to rescind the contract. 159 53 Vt. 115 (1880). 16071 Me. 448 (1880). 16151 Conn. 207, 214 (1883). 162 162 Am. & Eng. Encyc. Law (2d Ed.), Vol. 11, pp. 941, 942, citing 25 N. J. Eq. 354 (1874); 2 Greene (Iowa) 522 (1850); 94 Wis. 146 (1896); 12 Kans. 526 (1874). LIABILITY FOR WASTE 21. The waste or misapplication of the assets of a deceased person committed by an executor or administrator is called, in law, devastavit.16 At common law, a devastavit is the name of a writ given to any person who has been injured in his rights in consequence of the misapplication or waste of the assets or property of an estate by one or more executors or administrators, whereby he or they have made themselves liable to answer the damages out of their own estate.1* In England, the subject of devastavit forms a considerable element of the law affecting executors and administrators. In the United States, no necessity exists for a remedy of this kind, because of the simple methods provided by statutes in the several states (which will presently be considered) for calling personal representatives to account, in the probate court, for all property or assets of an estate which come into their hands, or which, by the exercise of reasonable prudence and diligence, might be recovered by them. Hence, in the United States, the term devastavit is used merely "as a convenient designation for such acts of the executor or administrator as render him liable to the estate out of his own means, and has no other significance; and where such liability is found according to the principles of law applicable, the effect of the common-law remedy of devastavit is accomplished by the falsification or surcharge of his account. 166 Instances of waste or misapplication of assets by an executor or administrator (some of which have been mentioned) are the mingling of funds or property of the estate with his own funds or property; the payment of debts of an inferior degree when he has notice that there are outstanding debts entitled to priority of payment; paying in full any debt which has no priority to the exclusion of others, when the estate is insolvent; negligently paying unjust 163 Cent. Dict. 164 Burr. Law Dict. 166 42 Ala. 656 (1868); 26 Conn. 14 (1857). 165 Woerner's Am. Law of Admin., Vol. 2, pp. 1,178, 1,179 claims against the estate, when their illegality might have been ascertained by the exercise of due diligence; paying or assenting to legacies when there are outstanding debts; mismanagement of the estate, misconduct or neglect of duty, such as a collusive sale of the decedent's goods at less than their real value; and, in some jurisdictions, the sale of estate property on credit.1 168 In all cases involving waste or misapplication of the funds or property of the estate, the executor or administrator is liable to the heirs, creditors, or others interested in the estate for the full amount or value of such funds or property.' Generally, unless increased by statute, the liability is limited to the actual amount or value of the funds or property wrongfully converted or appropriated.""" 170 In England, whenever an executor or administrator becomes liable for waste of the assets of an estate, or for a breach of trust in respect thereto, the assets may be sold under execution for his individual debts." In the United States, the remedy of the person injured is by action on the bond of the executor or administrator,' or against the person to whom he has disposed of the assets, if such person have knowledge of the representative's wrongful act." 171 22. DISTRIBUTION Distribution is the division by order of the court, or legal representative having authority, among those entitled thereto, of the residue of the personal estate of an intestate.' 173 Distribution is considered as connected with descent and is included in it, though descent, as we have seen, is properly the devolution of the real property of one who dies intestate to his heirs - the transmission of succession by 167 Am. & Eng. Encyc. Law (2d Ed.). Vol. 11. pp. 971, 972. citing 10 B. Monr. (Ky.) 400 (1850); 32 Miss. 309 (1856); 120 Ind. 319 (1889); 1 Dana (Ky.) 514 (1833); 74 Cal. 536 (1888); 11 Ga. 401 (1852); 21 Conn. 290 (1851). 1687 N. Y. Supp. 523 (1889). 169 48 Vt. 145 (1875). 1704 Doug. (Eng.) 36 (1784); 4 T. R. 173 Bouv. Law Dict. |