Allen v. Leach

Wolcott, Chancellor.

William Allen, late of Flew Castle County, died in May, 1859, leaving a will, which was duly admitted to probate in said county on the 1st day of June of the same year, whereby he directed his property to remain as it was until his youngest child should arrive at the age of twenty-one years, and then be sold and the proceeds of the sale thereof equally divided among his children or their heirs. The Spring Grove farm, however, which he had entered into an agreement to sell, he directed, in case of a failure of the purchaser or bargainee to comply with the terms of sale, to be disposed of at the best advantage and the money secured by a loan on good security. The clear rents and profits arising from the real estate in Wilmington he directed to be applied to the support and education of his minor children and to the payment of the annuity of $200 to his widow during her life or widowhood. James Allen, who was the youngest, child of the testator, arrived at his majority the 17th day of August, A. D. 1871. In 1870, James Leach was appointed administrator d. b. n. c. t. a. of the deceased. On the 10th day of October, A. D. 1873, he passed a first account in which he charged himself with seven hundred and eleven dollars and fifteen cents ($711.15), and was allowed credit to the amount of one hundred and twenty dollars ($120), leaving a balance in his hand of five hundred and ninety-one dollars and fifty-six cents ($591.56). The principal item on the debit side of the account was six hundred and ninety-three dollars and fifty-seven cents ($693.57), which was admitted to have been derived from the sale or disposition of the Spring Grove farm and the principal item on the credit side of the account was seventy-one dollars and fifteen cents ($71.15) for commissions. On the 2d day of January, A. D. 1886, he passed another account in which he charged himself with three hundred and sixty-four dollors and ninety-seven cents ($364.97) only, consisting entirely of rents received subsequent to the passage of the first account, and was allowed credit to the amount of three hundred and thirteen dollars and forty-six cents ($313.46), leaving a balance in his hands of fifty-on.e dollars and fifty-one cents ($51.51). One item of the credits was thirty-six dollars and forty-nine cents ($36.49) for commissions. The exceptions were to the commissions allowed in both accounts, namely: Seventy-one dollars and fifteen cents ($71.15) and thirty-six dollars and forty-nine cents ($36.49), respectively, on the ground of fraud and mismanagement of the estate; also, to the items of fifteen dollars ($15) and ten dollars and eighty-six cents ($10.86), in what is called the first and final account, because the administrator obtained a credit therefor in the first account; also> to the neglect or omission of the administrator to charge himself in his second account with the unappropriated balance shown by the first account, and also to the name or title of the second account because it was misleading.

The defendant pleaded: First. The Statute of Limitations. Second. The general issue. Third. That the said balance of five hundred and ninety-one dollars and fifty-six cents ($591.56) shown by the first account of the administrator, with which he did not charge himself in the second account, was a part of a larger sum of money which the said defendant deposited with John McLear & Son, reputable bankers of the City of Wilmington in New Castle County, and the said John McLear & Son thereafter failed and were declared bankrupts in the United States court, and that, the said defendant received only two dividends, amounting to the sum of one hundred and thirty-one dollars and ninety-six cents ($131.96), with which said sum the defendant acknowledges that he is justly chargeable, together with the sum of sixty-three dollars and sixty-seven cents ($63.67), being the difference between the said balance of five hundred and ninety-one dollars and fifty-six cents ($591.56) and the sum of five hundred and twenty-seven dollars and eighty-nine cents ($527.89), which said last-mentioned sum was the amount of the said James Leach’s balance in his account with the said John McLear & Son at the time of their failure. The exceptants replied substantially as follows: To the first plea, that the Statute of Limitations had not run against either of said accounts because the said James Leach did not give any notice, either verbal or written, to the said exceptants within three months, or any notice at any time after either of the same had been lodged in the proper office for inspection. To the second plea the similiter. To the last plea that the said John McLear & Son, with whom the said sum of five hundred and twenty-seven dollars and eighty-nine cents ($527.89) was deposited, were private bankers, and that it was deposited in his own private name as “ James Leach.” That by the terms of the will of the said testator his property was to remain as it then was until his youngest child arrived at the age of twenty-one years. That his youngest child was James 'Allen, who arrived at said age the 17th day of August, A. D. 1871,- at which time the said James Leach should have paid and distributed the said sum of five hundred and ninety-one dollars and fifty-six cents ($591.56) among the children of the said William Allen, the testator. But instead thereof the said James Leach, though he had said sum of five hundred and ninety-one dollars and fifty-six cents ($591.56) in his hands on the 9th day of February, A. D. 1871, yet he wrongfully permitted the sum of five hundred and twenty-seven dolíais and eighty-nine cents ($527.89) to remain on deposit with the said private banking firm of John McLear & Son until after said firm had been declared bankrupt, to-wit,. on the 10th day of November, A. D. 1873. That the said James Leach, on the failure of the said firm of John McLear & Son, appeared, claimed and proved said sum of five hundred and twenty-seven dollars and fifty-six cents ($527.56) as his own private money in his own private name. That the dividends declared by 'William Oanby, the assignee in bankruptcy of the said banking firm, amounting to one hundred and thirty-one dollars and ninety-six cents ($131.96), were paid to and received by the said James Leach as his own private funds; and that the loaning of the said sum of five hundred and twenty-seven dollars and eighty-nine cents ($527.89) to the said private bankers and the placing of the same upon deposit with them was a clear violation of his duty as administrator and in opposition to the express terms of the will of the said William Allen, deceased, and was of itself a gross breach of trust, said will having directed that the proceeds arising from the sale of the said Spring Grove farm should be invested “in a loan on good security.”

Demurrer and joinder in demurrer.

There is no dispute that the period for the distribution of the unappropriated balance shown by the first account had arrived when it was rendered and settled, and so of the balance shown by the second account. The important question raised by the demurrer is whether the Statute of Limitations is a complete bar to the exceptions filed to the accounts of the administrator, James Leach. To answer this question it is necessary to ascertain when the statutory period of limitations began, if it ever did begin. Section 6 of chapter 124 of the Revised Code provides that: “No exceptions to an account of an administrator, executor or guardian settled by the register for the county shall be received and filed in the Orphans’ Court after the expiration of three years from the settlement-of said account.” The statute is absolute and imperative. Looking’ at it alone there are to be found no conditions to limit or suspend its operation except disability of infancy, coverture, or incompetency of mind. No notice, either before or after the time the .account is rendered and settled, is required to- be given to the parties in interest as a condition precedent to the running of the statute. The settlement is, therefore, entirely ex parte and the whole of the time within "which competent and interested persons may assert their right to except to the account might expire, before they had received knowledge that it had been filed in the office of the register for the proper county.

While the fact that an executor, administrator or guardian is required by the law to render his accounts at stated times, of which all persons are supposed to have knowledge, may appear to soften this harsh feature of the statute, yet it does not, inasmuch as he may pass accounts at longer or shorter intervals as he may deem proper with the concurrence of the register, thus excluding this element of theoretical or constructive certainty of knowledge as to the date of the settlement of such an account.

Standing upon the hare statute there would be an' end of all controversy. It stealthily creeps between parties and their rights and there is no power in the court supplied by the statute itself to arrest its motion. But section 21 of article 6 of the Constitution of the State provides that: “An executor, administrator or guardian shall file every account with the register for the county who shall, as soon as conveniently may be, carefully examine the particular’s with the proofs thereof in the presence of said executor, administrator or guardian, and shall adjust and settle the same according to the very right of the matter and the law of the land, which account so' settled shall remain in his office for inspection and the executor, administrator or guardian shall, within three months after such settlement, give notice in writing to all persons entitled to shares of the estate or to their guardians, respectively, if residing within the State, that the account is lodged in the said office for inspection.”

The notice required by this provision of the Constitution, it is admitted, the administrator never gave; and, so far as anything appeal’s to the court, the exceptants remained in ignorance of the doings of the administrator until about the time of the filing of the exceptions to the accounts. But to avoid the effect of such neglect of duty, the defendant’s solicitor contended with much zeal that to allow the statute to be controlled by the Constitution, so far as to fix the date of such notice instead of the date of settlement as the time at which the period of limitation would begin, would amount to a judicial abrogation of the legislative will.

This is a very extraordinary proposition. It involves the assumption that the Legislature may abridge orannul a particular role of conduct prescribed by the Constitution. That is what it amounts to. But the reverse of this is true. The Constitution, whenever it speaks, is the supreme law, and does modify the statute in all ■cases where the latter interferes with or impairs the right secured by the former. At the point of conflict •between the two the statute must yield. It is not necessary to indulge in any speculation or conjecture as to ,whether or not the Legislature intended the settlement of an administration or guardian account to be the beginning of the period of limitation, because it makes no ■difference whether it did or not.

The plaintiffs, relying upon the provision of the Constitution in question, claim that their right to take this proceeding is not barred because no notice as therein required was ever given, and the defendant, relying upon the statute, claims that it is barred because more than three years have elapsed since the settlement of •either account and before the filing of their exceptions. The Constitution and the statute together, therefore, •constitute the law that governs this case as much as if they were both embodied in a single enactment; they are in pari materia and must be construed together. The Legislature could not dispense with the necessity of such notice in order to give effect to the literal terms of the statute; neither can the court. The Constitution imposes a duty; the statute confers a privilege upon the same person acting in a fiduciary or representative capacity. blow, if an. executor, administrator, or guardian, who is in a certain sense a trustee, may interpose the Statute of Limitations against a proceeding- of this kind with the confession upon his lips that he has disregarded the duty enjoined by the Constitution, then the manifest purpose thereof would be defeated.

The object of the notice is that tire parties interested in his accounts may have an opportunity to investigate-the same before their rights are extinguished by the-lapse of time or rendered valueless by insolvency or other circumstances. If this is not its object, we might, explore the breast of the framers of the Constitution in vain to find one.

Seeing, then, what an important part this duty plays-in effecting the ends of justice between parties situated like these, the question naturally arises as to the best and most effectual way of enforcing its observance.. The only practical mode that suggests itself to the mind is to deny the enjoyment of the privilege associated with the duty until its performance is clearly shown. I am, therefore, of the opinion that the defendant is not protected against this proceeding by the shield of' the statute.

Another good reason might be assigned for requiring the performance of the duty before the privilege or protection granted by the statute should be available, and that is that the matters inquired about partake very much of the nature of the subjects within the limits of equity jurisdiction. The Orphans’ Court, sitting as a court of review of proceedings in the register’s office involving matters of a trust character, to' a certain extent, exercises the functions of an equity court. How, one of the requisites to a correct status in a court of equity is the clean-handedness of the party invoking its aid. In such a court an old maxim is that “ He who asks equity must do equity.” The hands of the administrator are anything but clean. He seeks the protection of the statute when it is admitted that he has violated the plain duty imposed by the Constitution. He cannot, therefore, be helped by this court.

. The fact that the administrator lost the greater part of the fund in his hands by reason of the failure of McLear & Son does not constitute a valid and meritorious defense pro tanto to this proceeding. He had no right to deposit the money belonging to the estate with private bankers to his individual credit, nor in fact with any banking institution in that way. When he placed the money to his own credit he elected to take the responsibility for its safe-keeping; besides, there was no time after the settlement of the first account when the money was not payable to the parties entitled, as the youngest child of the testator had reached his majority, the period fixed by him for the distribution of the same under the terms of the will. Again, if there had been a sufficient reason for not distributing the estate as directed by the will, he should have secured it by loan on good security as therein provided. The administrator having disregarded his duty in this respect, he cannot set up the loss of the money as before mentioned to the claim made by the exceptants. Then, as to commissions, they should be forfeited for the same reason. The second account should, therefore, be surcharged with the unappropriated balance shown by the first account plus the commissions allowed in said first account, with interest from the date of its settlement. The commissions allowed in the second account must also be disallowed and the items duplicated from the first account eliminated. Let the order or decree be drawn in conformity with this opinion.

Case Details

Case Name: Allen v. Leach

Court Name: Orphan's Court of Delaware

Date Published: Mar 15, 1894

Citation: 7 Del. Ch. 83