Michigan Trust Company v. Ferry/Opinion of the Court

[Argument of Counsel from pages 347-351 intentionally omitted]

Mr. Jsutice Holmes delivered the opinion of the court:

These are suits brought in the circuit court for the district of Utah upon decrees of the probate court of Ottawa, Michigan. The defendant demurred to the complaints, the circuit court sustained the demurrers, and gave judgments for the defendant, and these judgments were affirmed by the circuit court of appeals. 99 C. C. A. 221, 235, 175 Fed. 667, 681. A short statement of the facts alleged at great length in the complaints will be enough.

William M. Ferry died in 1867, domiciled in Ottawa county, Michigan. His will was proved, and the defendant, Edward P. Ferry, was appointed executor by the Ottawa probate court, qualified and entered upon his duties. In 1878 he removed to Utah, and becoming incompetent, was put under the guardianship of two sons, W. Mont Ferry and Edward S. Ferry, in 1892. In 1903 residuary legatees and devisees petitioned the Michigan probate court that the defendant be removed from his office of executor, that he be ordered to account for the unadministered residue of the estate, and that the Michigan Trust Company be appointed administrator de bonis non with the will annexed. Notice of the petition and time and place of the hearing was given by publication and also was given to the defendant and his guardians personally in Utah. The guardians, by order of the Utah court, appeared and asked for the appointment of a guardian ad litem, which was made, and an answer and cross petition praying for affirmative relief were filed. Lawyers were retained and paid out of the defendant's estate by order of the Utah court. There were various proceedings, the end of which was that the plaintiff was appointed administrator de bonis non, the cross petition was denied, and it was decreed that the defendant was indebted to the estate for $1,220,473.41. The defendant being entitled to one fourth of the above sum as residuary legatee, he was declared liable for $915,355.08, and ordered to pay it over within sixty days to the Michigan Trust Company. The defendant also had been appointed by the same court executor under his mother's will, and after proceedings like those that we have described was declared liable for $16,458.81, which, too, he was ordered to pay to the plaintiff within sixty days.

Ordinarily jurisdiction over a person is based on the power of the sovereign asserting it to seize that person and imprison him to await the sovereign's pleasure. But when that power exists and is asserted by service at the beginning of a cause, or if the party submits to the jurisdiction in whatever form may be required, we dispense with the necessity of maintaining the physical power, and attribute the same force to the judgment or decree whether the party remain within the jurisdiction or not. This is one of the decencies of civilization that no one would dispute. It applies to article 4, § 1, of the Constitution, so that if a judicial proceeding is begun with jurisdiction over the person of the party concerned, it is within the power of a state to bind him by every subsequent order in the cause. Nations v. Johnson, 24 How. 195, 203, 204, 16 L. ed. 628, 631, 632. This is true not only of ordinary actions, but of proceedings like the present. It is within the power of a state to make the whole administration of the estate a single proceeding, to provide that one who has undertaken it within the jurisdiction shall be subject to the order of the court in the matter until the administration is closed by distribution, and, on the same principle, that he shall be required to account for and distribute all that he receives, by the order of the probate court.

The court below, admitting the power of the Michigan court to adjudge the true state of the account of the assets in the defendant's hands, and to require him to transfer them to his successor, denied its power to adjudge him liable for assets converted verted to his own use, and to decree that he should pay the amount from his own property. We believe that this is the law in some of the states (United States use of Wilson v. Walker, 109 U.S. 258, 27 L. ed. 927, 3 Sup. Ct. Rep. 277), but it is no less well established in many that an executor must account for all the property that has come to his hands, and the proceedings end with a decree that he pay over the sum with which he is chargeable, either to his successor or the ultimate distributees; such a decree indeed being a condition precedent of the cumulative remedy on the bond. Storer v. Storer, 6 Mass. 390, 392, 393; Cobb v. Kempton, 154 Mass, 266, 269, 28 N. E. 264; Murray v. Wood, 144 Mass. 195, 197, 10 N. E. 822; Probate Ct. v. Chapin, 31 Vt. 373, 376. In Beall v. New Mexico, 16 Wall. 535, 540, 21 L. ed. 292, 294, it is recognized that some states have made it the duty of an administrator who has been displaced to account to the administrator de bonis non, and very many decisions to that effect are cited correctly in 2 Woerner, Am. Law of Administration, 2d ed. § 352, p. 748. Vide id. § 536, pp. 1181, 1182.

As there can be no doubt of the power of the states to give the larger scope to an account, which indeed is not illogical in view of the fuller modern development of the notion that an executor holds all the assets in a fiduciary capacity, the only question in any case is what the state has seen fit to do. Upon this question courts of other jurisdictions own great deference to what the court concerned has done. It is a strong thing for another tribunal to say that the local court did not know its own business under its own laws. Even if no statute or decision of the supreme court of the state is produced, the probability is that the local procedure follows the traditions of the place. Therefore we should feel bound to assume that the Michigan decree was not too broad, in the absence of statute or decision showing that it was wrong.

But unless and until the supreme court of Michigan shall decide otherwise, we are of opinion that the probate court was right. The statutes provide for charging an executor in his account with the whole of the goods of the deceased that come to his possession, and with waste in case of neglect to pay over the money in his hands, or of loss to the persons interested. Liability on the bond is stated as alternative. Comp. Laws 1897, §§ 9428 9435; Comp. Laws 1857, §§ 2977, 2984. It is said by the supreme court that money received by an administrator, and unjustifiably paid out, is still in his hands in contemplation of law, and that parties interested may surcharge or falsify his account (Hall v. Grovier, 25 Mich. 428, 432, 436); and again, that the assets of an estate are not regarded as administered until they have been collected and applied as required by law or the will of the testator; until that time the jurisdiction of the probate court remains (Lafferty v. People's Sav. Bank, 76 Mich. 35, 50, 43 N. W. 34. See farther, Stevens v. Ottawa Probate Judge, 156 Mich. 526, 533, 534, 121 N. W. 477, arising out of this case. Re Saier, 158 Mich. 170, 173, 122 N. W. 563.) In short, Michigan in a general way adopted the Massachusetts probate system (Campau v. Gillett, 1 Mich. 416, 417, 53 Am. Dec. 73), according to which assets are not administered by being converted to the executor's own use, but must be charged to him in his account. If the defendant properly was charged in his account with all that came to his hands and that was not distributed according to law, it was within the power of the probate court to order him to distribute that amount or to pay it to his successor in the trust (Lafferty v. People's Sav. Bank, 76 Mich. 35, 71, 43 N. W. 34).

It follows from what we have said that a petition to the probate court that the defendant be ordered to account covered all his receipts as executor, and that notice of the petition was notice that the accounting would have that scope. The decree upon the account was made with full jurisdiction, and, apart from the insanity of the accountant, could be sued upon (Storer v. Storer, 6 Mass. 390; Cobb v. Kempton, 154 Mass. 266, 269, 28 N. E. 264), and was entitled to full faith and credit elsewhere (Fitzsimmons v. Johnson, 90 Tenn. 416, 428, 429, 433, 17 S. W. 100). It is true that it could not be enforced in Michigan while the defendant remained out of the state. But while the want of power to enforce a judgment or decree may afford a reason against entertaining jurisdiction (Giles v. Harris, 189 U.S. 475, 488, 47 L. ed. 909, 912, 23 Sup. Ct. Rep. 639), it has nothing to do with the validity of a decree when made. A decree in equity against a defendant who had left the state after service upon him, and had taken all his property with him, would be entitled to full faith and credit where he was found. The judgment of a court 'may be complete and perfect, and have full effect, independent of the right to issue execution.' Mills v. Duryee, 7 Cranch, 481, 485, 3 L. ed. 411, 413. See Kimball v. St. Louis & S. F. R. Co. 157 Miss. 7, 8, 34 Am. St. Rep. 250, 31 N. E. 697.

Jurisdiction is power, and the power of the Michigan court was not affected by the insanity of Ferry. The authority of the state to remove him and to require his account to be settled at the same time remained, and therefore, subject to any restrictions that might be imposed by the 14th Amendment, it was for the state to determine how he should be represented, and what steps should be taken to protect his rights. As the jurisdiction extended only to the cause, and not to any independent proceeding for guardianship, the orders made necessary were orders in the cause. But we do not perceive what more could have been done to secure Ferry's rights. Still less do we see any ground for declaring the decree invalid because of the 14th Amendment. The steps taken were concurred in by the only courts that had anything to say about it, the Utah court that controlled his person, and the Michigan court that controlled the cause. On the whole case our opinion is that the judgment should be reversed.

Judgment reversed.

Mr. Justice McKenna and Mr. Justice Lamar dissent. Mr. Justice Van Devanter took no part in the decision.