ship. It follows that they will have the power to do all things necessary to accomplish this purpose, and in so doing the personal representative may not interfere, unless it appears that they are misusing their powers. It is their duty to notify those who have been dealing with the firm of the death of the partner and the consequent dissolution of the firm, and of the fact that they are winding up its affairs. It is also their duty to fulfil existing contracts, to dispose of the partnership assets to the best advantage, to pay all debts, and to turn over to the executor or the administrator the proper proportion of the surplus. They are not usually entitled to compensation for their services and they are required to account for good-will. In all such cases, it will probably be better for the surviving partner or partners to make the representative an offer to buy the interest of the deceased at a fair price and on reasonable terms. If the proposition so made is fair, the representative should accept it, obtaining, if necessary for his protection, the consent of the beneficiaries or an order of court authorizing the sale. REVIEW QUESTIONS 1. Why is it necessary to turn the personal assets into cash? Are specific legacies exempted from sale? 2. In your state, when is it necessary for an administrator to get an order from court to sell personalty? 3. What personal property should be sold first? Should a personal representative endeavor to make profit? What is his duty in regard to risky or speculative holdings? If a legatee will take any of the personal property at not less than its appraised value, should the representative sell to him? 4. What is the usual method of sale of decedent's goods in your state? Is the sale ordered by the court? What are the usual terms? 5. Which securities should be sold first? What should be done with notes and claims? 6. What advantage is there in consultation with beneficiaries as to the disposal of personal assets? May the representative buy any of the personalty himself? 7. In selling a going business, how may the value of the good-will be saved? How soon should a going business be sold? Should the representative continue the business himself? 8. May a representative wind up a partnership? Why not? What is the effect of the death of a partner on the partnership? If a partnership agreement provided that, on death of a partner, his associates should purchase his share at a price based on the last inventory, what would the representative do? Where surviving partners are winding up a business, what can the representative do? What is the duty of surviving partners in such cases? What is the simplest way to close up the affairs of a partnership? CHAPTER XVI SELLING REAL ESTATE § 123. The Usual Course as to Real Estate In the settlement of an estate, the real estate does not usually figure, unless: (1) there is not enough realized from the personal property to pay the debts, or (2) the will gives the executor power to sell or mortgage real estate. Except in these two cases neither the executor, the administrator, nor the court of probate, has any more power or authority over the real property of the estate than an outsider. On the death of the owner, real estate goes at once either to the heirs at law or, if there is a will, to the devisees. The representative is responsible for the payment of the transfer taxes, and he must secure repayment of that part of his advances that is properly a charge on the real estate. (See §139.) Sometimes the heirs or devisees will authorize the representative to collect rents, but in such case he gets his authority from their consent and is responsible to them for what he does and not to the court. In some states the statutes authorize him to collect rents. § 124. Paying Debts from Personal Estate Real estate is to be used for paying debts only where the personal assets are not enough, unless the will has directed the sale of real estate for that purpose. After the representative has advertised and inventoried all the just debts and claims of every kind, it is his duty to pay them from cash on hand or deposit, from such money as he may collect and from the sale of personal effects. It is only when these funds are shown to be insufficient that he can secure an order or license from the court of probate to sell, lease, or mortgage the land to secure more money. § 125. Selling Real Estate to Pay Debts The statutes of the state of New York provide that any real property or interest in real property may be mortgaged, leased, or sold for the payment of debts, funeral expenses, or expenses of administration. A debt is defined by the New York Code as "any claim or demand on which a judgment for a sum of money could be recovered in an action." When such procedure is necessary, the representative may apply by petition for an order to mortgage, lease, or sell the real property of the decedent. The petition must set forth facts showing that the personal assets are not sufficient to meet the just demands. and claims against the estate, and must give a schedule of the debts and claims as allowed by him against the estate. All those interested in the real estate are cited to appear at the hearing. The debts and claims as filed are taken to be valid unless some one of those interested objects. In case of objection, the merits of the claim or claims criticized are determined by the court. If it appears necessary to raise money to pay debts from the real estate, the court makes an order directing the representative to mortgage, lease, or sell the whole or such part of the real property as the court may have decided upon. If there are several parcels, the decree must direct sale in the following order: 1. Property that went to the heir by descent and which he has not yet sold. 2. Property so inherited that has been sold. (Any property sold by the heir or the devisee before the estate is settled, is sold with the possibility of having a charge for debts upon it.) 3. Property devised by will that has not been sold. It is the duty of the executor or the administrator to execute the order of sale, subject to the approval of court, and to report what he has done. The court may then confirm or reject the mortgage, lease, or sale, and may extend the order to other parcels of land or require a re-execution of the order upon other terms and conditions. In each state it is necessary to follow closely the statutory procedure, as the result of such an order is to divest the heir or the devisee of his title to real property. It is a matter in which it would be well to have the aid of counsel. It is to be remembered that under no circumstances may an executor or an administrator buy in the property himself. Such a purchase would be void. It is usual under the statutory proceeding to require the personal representative to give bond for the faithful performance of the duties imposed by the order, and to account for all moneys received by him when required by the court. § 126. Selling Real Estate under Will Not infrequently an executor is empowered or directed to sell some parcels of real property to pay debts or to pay legacies or to create a trust. The exercise of such an instruction may be merely discretionary or it may be mandatory. When real property is sold in this way by an executor, it is legally considered as converted into personalty. As stated in legal phrase, a positive mandate to sell, works a conversion of real estate into personal property and this conversion relates back to the death of the testator. That is, in such case, a court of equity will consider that the executor has converted the real estate in question into personal property, from the date of the testator's death. |