CASES

IN THE

SUPREME COURT

OF

SOUTH CAROLINA.

PARKS v. MCDANIEL.

[75 S. C. 7, 54 S. E. 801.]

EXECUTORS AND ADMINISTRATORS Care Required of.An executor must manage the estate committed to him with the same care and diligence that a prudent and cautious person would bestow on his own concerns, and consequently is liable for losses to the estate due to his negligence. (p. 879.)

EXECUTORS AND ADMINISTRATORS Payment of Judgment by Subrogation-Burden of Proof. If the payment by an executor of a judgment obtained against him is assailed, the question is not merely whether he was negligent in the conduct of the suit leading to the judgment, but whether he acted in such bad faith toward his trust or in such utter disregard of his duty, as would warrant the setting aside of the judgment, or in depriving him of any equitable right to be subrogated to the position of the judgment, or in treating the judgment as of no avail as a protection for its payment. The burden of proof is upon the party assailing the payment of the judgment, at least to show the invalidity of the claim, and that the judgment was the result of the executor's breach of duty. (p. 880.)

EXECUTORS AND ADMINISTRATORS Payment of Judg ment by Subrogation.-A statute providing that a nonregistered physician cannot recover for his services does not apply in an action against an executor to require him to account for the payment of a judgment obtained against him by such a physician for services rendered his testator. (p. 881.)

P. B. Mayson and J. W. DeVore, for the appellant.

Shepp and Brothers, for the appellee.

8 JONES, J.

Mrs. Sallie E. McDaniel, late of Edgefield county, South Carolina, died in November, 1901, leaving a will under which defendant, Winchester McDaniel, qualified as

executor, which, after providing for the payment of funeral and other expenses incident to the settlement of her estate and bequeathing some specific articles of personal property, bequeathed and devised the remainder of her estate, real and personal, to Mrs. Josie Parks, the plaintiff, and Mrs. Lillie Thurmond. Mrs. Parks, having purchased the interest of Mrs. Thurmond in said estate, brought this action against the executor for an accounting and alleges that in such accounting the said executor should be refused credit for the amount paid by him, $560.76, in settlement of a judgment for said sum recovered against him as executor in favor of J. J. Burch on the ground that he "negligently and with total indifference to the interest of the estate and in utter disregard of his duty as executor," permitted judgment by default to be recovered for a sum largely in excess of what the estate was indebted to the said J. J. Burch. The action resulted in the following decree:

"The only issue in this case is the right of defendant to credit for some $560.76, alleged to have been paid by him to one J. J. Burch in satisfaction of a judgment recovered by Burch against the defendant as executor of the will of Sallie E. McDaniel. It is not denied that the defendant's

allowance of the judgment against him was an act of negligence. He did not contest its justice when he ought to have done so. And now he must show its justice in this action.

"The account is separated into two parts, that for January, February, March, April and June, 1901, rendered in South Carolina, and aggregating $256, after a credit of $100; and that for April and May, 1901, rendered in Georgia, aggregating $274.25.

"The first account is not allowable, under the South Carolina statute.

"The second account is discredited on its face. For thirtythree days' service this doctor charged $274.25. Only a very small part of that was for medicine. The far greater part of it was for 'extra attention.' The items thus characterized must be eliminated; there is no sufficient testimony to sustain them. It is enough to allow the charges described as 'visits and mileage,' and those for medicine.

"Let the master make the calculation and report the account due. It is so ordered."

The general rule undoubtedly is that where one accepts the trust of an executor he must manage the estate committed to him with the same care and diligence that a prudent and cautious person would bestow on his own concerns, and consequently is liable for losses to the estate due to his negligence: Taveau v. Ball, 1 McCord Eq. 456; Glover v. Glover, McMull. Eq. 153; Sollee v. Croft, 7 Rich. Eq. 34; 3 Williams on Executors, 6th Am. ed., 1805; 11 Eney. of Law, 911. While ordinarily a fiduciary voluntarily paying a claim against the estate in his charge is fully protected by being subrogated to the rights of claimant, still a court of equity may protect him in the payment of an invalid claim if satisfied that he has acted under the circumstances as a prudent person would do in managing his own affairs. This applies to voluntary payments, but when a payment is made pursuant to the judgment of a court of competent jurisdiction. against the fiduciary, it is 10 not the voluntary act of the fiduciary, but a compliance with a mandate of the court under compulsion. When such a payment is assailed, the question is not merely whether the fiduciary was negligent in the conduct of the suit leading to the judgment, but whether he acted in such bad faith toward his trust or in such utter disregard of his duty as would warrant a court in setting aside the judgment or in depriving him of any equitable right to be subrogated to the position of the judgment creditor, or in treating the judgment as of no avail as a protection for its payment. In such case the burden of proof is upon the party assailing the payment of the judgment, at least to show the invalidity of the claim, and that the judgment was the result of the fiduciary's breach of duty.

In the case of Tompkins v. Tompkins, 18 S. C. 1, it was sought to prevent the executors from being allowed credit for payment on a judgment against them in favor of Jennings, Smith & Co., on the ground that said judgment was not authorized by law and was irregular, null and void. The circuit court disposed of the contention by saying at page 15: "It was no part of the inquiry referred to the referee to try the validity of the judgment. It was found that the executors paid it in good faith, they regarded it as a valid claim and it was certainly binding on the estate until it was set aside." Responding to an exception taken to this ruling, the supreme court, at page 28, said: "We see no error in the conclusion reached by the circuit judge in reference to this mat

ter.

Even though there may have been technical informalities in this judgment, yet there is no evidence that the debt on which the judgment was recovered was not a valid claim against the estate which has been extinguished by the executors, and they, therefore, should have credit for the amount paid by them." In 11 Encyclopedia of Law, 911, the case of Cameron v. Morris, 83 Tex. 14, 18 S. W. 422, is cited to sustain the proposition that a payment under an order of court, in the absence of fraud, is not a breach of duty, and the executor or administrator is not liable for the 11 amount paid, though the claim was invalid. In Harrison v. Turnbull, 95 Va. 721, 64 Am. St. Rep. 830, 30 S. E. 372, 41 L. R. A. 703, it was held that a decree establishing the claims against a decedent's estate and ordering sale of real estate to pay them is a complete bar to an action against the executor for a devastavit, the complaint not impeaching the judgment of fraud.

If we grant that the judgment paid by the executor in this case is not final and conclusive as against all in privity with the executor, in determining the validity of the claim as indebtedness due to J. J. Burch by the estate, but that it is only prima facie evidence of the justice of the claim and its payment, it is manifest that it was a fundamental error in the circuit court to hold that it was incumbent on the executor to show the validity and justice of the claim, whereas he should have held that it was incumbent on the plaintiff to show the contrary. Let us, therefore, consider the evidence with the burden of proof properly placed and in view of the judgment against the executor.

The account disallowed in toto by the circuit court was for medical services rendered and medicines furnished to the testatrix by Dr. J. J. Burch in South Carolina from January 5 to April 12, 1901, aggregating, after a credit of $100, a balance of $256. This account was disallowed under the statutes, section 1112 et seq., relating to the qualifications of physicians, etc., to practice in this state. Section 1113 provides: "In no case wherein the provisions of this article shall have been violated shall any person so violating receive a compensation for services rendered." Subject to objection by defendant, it was shown that J. J. Burch is not a registered physician in South Carolina. But the question was not whether J. J. Burch should recover for such services because of the alleged violation of the statute, but whether the executor was guilty of such misconduct as should in equity prevent him Am. St. Rep., Vol. 117-56

from receiving credit for money paid on a valid judgment. So far as J. J. Burch was concerned, he was not a party to this suit and his right to recover on the account could not be 12 again called in question. He has been paid. The executor makes no claim as physician and the statute does not apply. If he be regarded as in the shoes of J. J. Burch under the statute, then he must stand as one holding a claim which has been legally adjudged to be a valid claim against the estate. Moreover, the complaint does not allege that J. J. Burch was not entitled to recover because not a registered physician in this state, and that the executor was negligent in not resisting the claim on that ground. Plaintiff sought to have the complaint amended in this regard, but Judge Memminger refused to allow such amendment. The testimony shows that the only objection which the plaintiff ever made to the executor's payment of the claim was that the charges were excessive. We think, therefore, that the circuit court erred in disallowing the executor credit for payment of the judgment because of the statute relating to physicians.

The judgment paid by the executor also included an account for medical services rendered and medicines furnished to Mrs. McDaniel while she was in Georgia, from April 13, to May 16, 1901, aggregating $274.25. The circuit court held that this account is discredited on its face, as the greater part of it is for "extra attention" at the rate of one dollar per hour, and he holds that there is no sufficient testimony to sustain these items, and accordingly he refused the executor credit therefor. Here again the court gave no effect whatever to the judgment against the executor establishing the correctness of these items. Notwithstanding there was a judgment by default of answer, the statute required the plaintiff to make in that suit proof of his unliquidated account, and it appears that J. J. Burch was examined as a witness as to the correctness of the account, anl the judgment recites that plaintiff, Burch, proved his complaint to the satisfaction of the court. In view of this the account could not be said to be discredited on its face.

It being incumbent on plaintiff to at least show the invalidity or incorrectness of the account, let us examine the testimony 13 submitted. It was not questioned that Dr. J. J. Burch rendered the special attention for which he charged, as no witness suggested that the account was wrong in that particular. The question was whether the charges for such