Opinion · Ohlaw Ohio
IN RE LEIBY, 157 Ohio St. 374 (1952)
105 N.E.2d 583
- Type
- Opinion
- Court
- Ohlaw Ohio
- Jurisdiction
- Ohlaw
- Date
- 1952-04-23
- Topic
- general
IN RE LEIBY, 157 Ohio St. 374 (1952) 105 N.E.2d 583 IN RE ESTATE OF LEIBY: LEIBY, ADMR., APPELLEE v. COSGROVE, APPELLANT. No. 32702Supreme Court of Ohio. Decided April 23, 1952. Concealed or embezzled assets — Proceeding to discover — Nature and purpose of — Section 10506-67 et seq., General Code — Statutory remedy not available — To collect debt — Or obtain accounting and judgment for claimed balance due — Or adjudicate rights under contract. 1.
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IN RE LEIBY,157 Ohio St. 374(1952)
105 N.E.2d 583
IN RE ESTATE OF LEIBY: LEIBY, ADMR., APPELLEE v. COSGROVE, APPELLANT.
No. 32702
Supreme Court of Ohio.
Decided April 23, 1952.
1. Section 10506-67et seq., General Code, provide a summary inquisitorial proceeding to recover specific property or the proceeds thereof belonging to a trust estate, title to which was in a decedent at his death or in a ward when his guardian was appointed, or to recover property, belonging to a trust estate, concealed, taken or disposed of after the appointment of a fiduciary. Resort may not be had to these sections to collect a debt due a decedent, to obtain an accounting and judgment for any balance found due, or to adjudicate rights under a contract. (Goodrich, Admr., v.Anderson,136 Ohio St. 509, andIn re Estate of Black,145 Ohio St. 405, approved and followed.)
2. A summary proceeding under Section 10506-67et seq., General Code, was instituted to recover proceeds of "pay roll" checks, payable to the decedent and signed and indorsed by him, cashed by an employee who distributed the proceeds thereof partly in payment of wages to decedent's employees and partly to the decedent. Such transactions occurred each week for a period of over five years prior to the death of the decedent. The employee claimed to have paid to the decedent all such cash remaining after the payment of wages, whereas the administrator claimed a lesser sum was paid to the decedent.Held:The relief sought by the administrator was in fact an adjustment of the accounts of the parties, was a judgmentPage 375for the balance claimed to be due, with the statutory penalty, and is not within the purview of Section 10506-67etseq., General Code.
This cause originated in the Probate Court of Franklin County where a "complaint for concealing assets" was filed by the administrator of the estate of Robert S. Leiby, deceased, under Section 10506-67, General Code. The complaint contains the following allegation:
"The undersigned respectfully represents that he is the administrator of the estate of Robert S. Leiby, deceased; that he has good reason to and does suspect that Verda Cosgrove has concealed, embezzled or conveyed away,or that she is or has beenin the possession ofmoneys, goods, chattels, things in action, or effects of said Robert S. Leiby, deceased." (Emphasis supplied.)
Upon the filing of the complaint a citation was issued to and served upon the respondent, Verda Cosgrove, who appeared to answer. Evidence was taken by a master commissioner appointed by the Probate Court.
The report of the master commissioner to the Probate Court reviewed the evidence and made certain findings of fact and conclusions of law. The evidence is summarized in part as follows:
"The decedent, Robert S. Leiby, for many years prior to his death operated, as an individual and sole owner, the Robert S. Leiby Co. engaged mainly in sheet metal contract work. The respondent, VerdaPage 376Cosgrove, was employed by the decedent as bookkeeper and secretary from 1926 to the time of Leiby's death. As such she had charge of all of the books of account having to do with the decedent's business. She made up the pay roll each week. Employees were paid in cash and one check to cover all cash required for pay roll was written each week and cashed at the Ohio National Bank. Thereafter such cash was in the hands of respondent who distributed it to the pay envelopes. Included in such weekly distribution was $50 to the decedent, who was carried on the pay roll at this figure. The decedent had but one checking account which was used indiscriminately for his business and personal expenditures. From 1944 to the time of his death the decedent took a diminishing interest in his business. He was or became a heavy drinker. He spent less and less time at his office. In 1948 he had a severe back injury which incapacitated him for several months. Finally he contracted tuberculosis from which he died in the spring of 1949. Commencing in 1944 and continuing through 1948, the respondent from time to time drew the weekly pay roll check for cash in excess of the amount required to meet the pay roll as shown by the company's books. These excesses by years were as follows:
1944 7,270.85 1945 9,800.00 1946 10,000.00 1947 10,000.00 1948 13,000.00 1949 1,400.00
"At the end of or during each year the approximate amount of such excesses were [sic] by the respondent charged to various other items of company expense such as purchases, inventory, repairs and the like.Page 377
"* * * The respondent claims that she gave all of the money in cash to the decedent when and as she drew it in excess of pay roll requirements; that thereafter she rigged the books on instructions from the decedent; that, in fact, the whole operation was a scheme by the decedent to reduce income taxes; and that she fully explained all her manipulations of the book accounts to the decedent and proceeded solely on his instructions. To the contrary, complainant claims that respondent kept the money and that decedent did not know of her manipulations of the book accounts."
In addition to these summarized facts, the record discloses that practically all the pay roll checks in question were payable to the decedent, Robert S. Leiby, and were signed and indorsed by him. It is undisputed also that it was the custom of the decedent to receive money, which was chargeable to his drawing account, at the same time that wages were paid to employees, and that it was the custom to pay both employees and the decedent these sums in cash.
The master commissioner made the following findings of fact:
"1. The respondent, Verda Cosgrove, made withdrawals of cash from the decedent's bank account in excess of pay roll requirements in the amounts and for the years shown as follows:
1944 7,270.85 1945 9,800.00 1946 10,000.00 1947 10,000.00 1948 13,000.00 1949 1,400.00 Total $ 51,470.85
"2. The respondent, Verda Cosgrove, retained possession of said funds so withdrawn.Page 378
"3. Said funds are the property of and belong to the estate of Robert S. Leiby, deceased."
From these facts the commissioner concluded:
"3. The respondent is guilty of having been in the possession of moneys of the estate of Robert S. Leiby, deceased, in the amount of $51,470.85.
"4. Judgment should be rendered in favor of William C. Leiby, administrator of the estate of Robert S. Leiby, deceased, against the respondent, Verda Cosgrove, for the sum of $51,470.85 together with penalty of $5,147.08 as provided by G.C. 10506-73."
The Probate Court confirmed the findings of the master commissioner and entered judgment accordingly.
An appeal was thereupon prosecuted to the Court of Appeals which court affirmed the judgment.
The cause is before this court upon the allowance of a motion to certify the record of the Court of Appeals.
Section 10506-67, General Code, is as follows:Page 379
"Upon complaint made to the Probate Court or Common Pleas Court of any county by a fiduciary, creditor, devisee, legatee, heir or other person interested in the trust estate, or by the creditor of any devisee, legatee, heir, or other person interested in the trust estate, against the fiduciary or any other person suspected of having concealed, embezzled or conveyed away or of being or having been in the possession of any moneys, goods, chattels, things in action, or effects of such estate, said court shall cite the person so suspected forthwith to appear before it to be examined, on oath, touching the matter of the complaint. The Probate Court shall also have power to initiate proceedings on its own motion."
Section 10506-68, General Code, provides:
"The court in which such complaint is made shall forthwith proceed to hear and determine the matter."
Section 10506-69, General Code, provides:
"If a person so cited, refuses or neglects to appear and submit to an examination, or refuses to answer interrogatories lawfully propounded, the court issuing the citation shall commit such person to the jail of the county, there to remain in close custody until he submits to its order and direction in that behalf."
Section 10506-71, General Code, provides:
"If required by either party, the Probate Court shall swear such other witness or witnesses as may be offered by either party touching the matter of such complaint, and cause the examination of every such witness, including questions and answers, to be reduced to writing, signed by the witness, and filed as aforesaid."
Section 10506-73, General Code, is as follows:
"By the verdict of a jury, if either party requires it, or without, if not required, the court shall determine whether the person or persons accused is or are guiltyPage 380of having concealed, embezzled, conveyed away, or been in the possession of moneys, goods, chattels, things in action or effects of the trust estate, and if found guilty, the court shall assess the amount of damages to be recovered on account thereof; or the court, in its discretion, may order the return of the specific thing or things concealed or embezzled, or may order restoration in kind. The court shall have authority to cite into court all persons who claim any interest in the assets alleged to have been concealed, embezzled, conveyed or held in possession, and at such hearing shall have authority to hear and determine questions of title relating to such assets. In all cases except when the person so found guilty is the fiduciary, the court shall forthwith render judgment in favor of the fiduciary, or if there be no fiduciary in this state, in favor of the state, against the person or persons so found guilty, for the amount of the moneys or the value of the goods, chattels, things in action, or effects so concealed, embezzled, conveyed away or held in possession, together with ten per cent penalty and all costs of such proceedings or complaint; except that such judgment shall be reduced to the extent of the value of any thing or things specifically restored, or returned in kind, as herein provided. If the person so found guilty is the fiduciary, the court shall forthwith render like judgment in favor of the state against him for such amount or value, together with penalty and costs as aforesaid."
It is urged by the administrator that these sections are applicable for the reason that the decedent at all times had title to such funds.
This court has construed the above statutory provisions and determined the scope of the inquiry which may be pursued thereunder. The earliest of those cases isGoodrich, Admr., v.Anderson,136 Ohio St. 509,Page 38126 N.E.2d 1016, paragraph one of the syllabus of which is as follows:
"The purpose of Sections 10506-67 to 10506-77, inclusive, General Code, relating to proceedings to discover concealed or embezzled assets of an estate, is not to furnish a substitute for a civil action to recover judgment for money owing to an administrator or executor, but rather to provide a speedy and effective method for discovering assets belonging to the estate and to secure possession of them for the purpose of administration."
In the case ofIn re Estate of Black,145 Ohio St. 405,62 N.E.2d 90, this court held as follows in the syllabus:
"1. Sections 10506-67 and 10506-73, General Code, provide a summary means, inquisitorial in nature, to recover specific property or the proceeds or value thereof belonging to a trust estate, title to which was in a decedent at his death or in a ward when his guardian was appointed; or to recover property, belonging to a trust estate, concealed, taken or disposed of after the appointment of the fiduciary.
"2. A complaint filed under Section 10506-67, General Code, involves a charge of wrongful or criminal conduct on the part of the person accused."
"5. Resort may not be had to Section 10506-67et seq., General Code, to collect a debt, obtain an accounting or adjudicate rights under a contract."
It is to be noted in the instant case that the finding of the master commissioner is limited to holding that the respondent was "guilty of having been in the possession of moneys of the estate of Robert S. Leiby, deceased." This finding is only that at some time some funds were in the possession of the respondent. No evidence was offered tending to trace these funds into her personal estate. The administrator assumed noPage 382burden other than to show that at the time of cashing the checks the respondent had a transitory possession of the proceeds thereof.
The report of the master commissioner erred in treating the regular weekly sums delivered to the decedent as part of the pay roll. The decedent was not an employee. What he received was from profits and, hence, was not a deductible item for income tax purposes as were the wages paid to the employees.
The finding against the respondent appears to be based entirely on an assumption by the master commissioner that the decedent was carried on the pay roll of his company at $50 per week and was computed by subtracting from the total of all the checks drawn by the decedent the amount of the regular pay roll plus this claimed $50 distribution to the decedent, thereby charging against the respondent the total amount stated in the checks excepting the weekly pay roll and the $50 for the decedent.
This position disregards the fact that in each weekly pay roll check, signed and indorsed by the decedent, there was by his authority included cash withdrawn for his personal use. In the handling of this money the respondent clearly bore a trust relationship to her employer. She came into possession of the cash upon instruction of the decedent for disbursement pursuant to his direction.
The reconciliation of the transactions between the respondent and the decedent involves a question of accounting. The respondent claims she paid all this money to the decedent, whereas the administrator claims she paid only $50 a week. The finding against the respondent was arrived at by a balancing of the amounts representing the excess of the checks over actual pay roll payments and the sums that the administrator claims were delivered to the decedent.Page 383All the elements of an accounting between the parties thus appear in their transactions. The word, "accounting," is defined in Words and Phrases (Perm. Ed.), as "an adjustment of the accounts of the parties and a rendition of a judgment for the balance ascertained to be due."
The administrator now asserts a claim of ownership of funds allegedly handled by the respondent over a period of five years and three months. The report of the master commissioner does not find that any of the funds are in her possession now or were in her possession at the time of decedent's death or were in her possession at any time otherwise than in transition; nor does it appear that she owns any property, real or personal, to which any such funds are traceable.
Instead, he finds only that respondent had "been in possession" of the money, the amount of which he determined by a process of accounting between the parties. The finding of the master commissioner results in the inclusion in the estate of the decedent the proceeds of checks signed and indorsed by him more than five years prior to his death. Such moneys clearly are not subject to recovery by summary judgment under Section 10506-73, General Code, and the proceeding instituted by the administrator herein was not one cognizable under Section 10506-67et seq., General Code.
There was nothing shown by the facts in this case, as found by the master commissioner, which entitled the administrator to a summary judgment in this large sum plus a statutory penalty. Title to the money in question in this case was not in the decedent. The administrator's remedy was an action at law for the recovery of the money due or for an accounting between the parties.
The General Assembly, by its appropriate use ofPage 384language in these sections, has limited the use of this summary proceeding to actions to recover specific property or the value thereof belonging to a trust estate, title to which was in a decedent at his death, or to the recovery of property belonging to a trust estate concealed, taken or disposed of after the appointment of a fiduciary. If cases like this one were authorized by such statutory provisions, administrators could call on recipients of decedent's checks payable to "cash" and require them to prove payment of the proceeds thereof to the decedent. In this case, the record discloses that in 1947 and 1948, respectively, 20 checks totalling $1,714.63 and 20 checks totalling $2,217.24 were written by the decedent payable to "cash" and appear to have been indorsed by taverns and clubs. The administrator might equally seek to require the indorsees and all others who cashed such checks to account for the proceeds thereof. Certainly no one would contend that the indorsers of those checks could be proceeded against summarily under Section 10506-67et seq., General Code, for the amount of such checks plus ten per cent penalty.
For the reasons stated, the judgment of the Court of Appeals is reversed and final judgment is rendered for the respondent.Judgment reversed.
MIDDLETON, TAFT and HART, JJ., concur.
ZIMMERMAN and STEWART, JJ., concur in paragraph one of the syllabus but dissent from the judgment.
WEYGANDT, C.J., dissents.Page 385