Edes v. Garey

46 Md. 24 | Md. | 1877

Robinson, J.,

delivered the opinion of the Court.

This is a bill in equity by residuary legatees, to enforce the personal liability of sureties on a testamentary bond for a devastavit, alleged to have been committed by an executor.

Such a proceeding it must be admitted, is under our practice an unusual one, for although an executor strictly speaking, may be considered as a trustee, and as such, may be held accountable in a Court of equity for the proper administration of the trust, yet it is clear the sureties maintain no such, relation. On the contrary, their obligation being one of contract, the remedy for a breach of it must as a general rule be by an action at law on the bond.

No case can be found in this State in which it has been held that they are liable in equity. The question was not decided in Knight and Wife vs. Brawner, et al., 14 Md., 1, for the reason that no objection having been made in the' Court below as to its jurisdiction, this Court was precluded by the Act of 1841, chap. 163, from considering such an objection on appeal.

The decisions however in analogous cases are all with one accord against the jurisdiction now claimed. In Boteler & Belt vs. Brooks, 7 G. & J., 143, where an application was made to the Chancellor to compel the sureties on a trustee’s bond to bring into Court, the proceeds of sale of mortgaged premises sold in pursuance of a decree in equity, it was held, that although the trustee as an officer of the Court, was bound to obey its orders in all matters concerning the trust, yet the sureties on his bond maintained no such relation. The Court said :

“They have no official duties to perform; assume no responsibility to the Court, but in general, enter into a merely pure legal contract of suretyship, incapable of coercion, except through the medium of the appropriate forum for the enforcement of such contracts — a legal tribunal.”

The doctrine thus laid down, was sanctioned and approved in Brooks vs. Brooks, et al., 12 G. & J., 31-9, subject however, say the Court, as all other general notes, to some exceptions. In that case, a trustee to sell real estate, under a creditor’s- bill, wasted the funds, and died before an audit was made, without leaving any estate upon which an administration could be had, and it was held, that inasmuch as an action at law could not under such circumstances be maintained on the trustee’s bond, the sureties thereon, ought to be held accountable in equity, otherwise the parties entitled to the trust fund, would be without remedy.

The practice in England is strictly in accord with these decisions, and in Williams on Executors, vol. 1, page 538, •it is said: “That no suit in the first instance, has ever been instituted in equity against the obligors of a testamentary bond,” in support of which, the author refers to Bolton vs. Powell, 14 Beav., 275. In that case, a bill was filed by the administrator de bonis non, of David Bolton, against the representatives of William Bolton and the sureties on his bond, alleging a devastavit by the said William as administrator of David, and Sir John Romilly, Master of Rolls, said :—

“The proper course as it appears tome, was, to have instituted proceedings in a Court of common law in the name of the obligee of the bond, for the purpose of enforcing the penalty. I am confirmed in that view of the case by the circumstance, that no case has been found in equity (though if the jurisdiction existed in equity, there must have been many,) in which any such suit has been instituted in the first instance in a Court of equity.”

If there be any exceptions to the general rule thus laid down, it is clear both upon principle and upon authority, that there must be special and peculiar circumstances making the exercise of jurisdiction necessary to the protection of the rights and interests of parties. The inquiry then is, are there any such facts and circumstances in this case ?

Under the will of Edes, Carson was appointed both executor and trustee, and the bill alleges, that as executor he received large sums of money belonging to the estate, which he transferred to the banking house of Carson.& Co., of which he was a member, whereby the same became wholly lost and wasted — that the Orphans’ Court, upon the application of Carson, passed an order directing him to transfer to himself as trustee under the will, the amount remaining in his hands as executor — that under the will it was his duty as executor to have kept together the whole estate until the death of the testator’s mother, a contingency which had not happened when said order was passed — that the order was ex parte, and never in fact, and in good faith complied with by Carson; nor was any security given by him for the money thus unlawfully directed to be transferred to himself as trustee, except an unrecorded conveyance of certain lots of ground in Baltimore City to himself as trustee for the parties in interest under the will, which said unrecorded conveyance was found among his papers after his death.

That subsequently, a bill was filed by one Heflebower, in behalf of himself and other creditors of Carson, alleging an insufficiency of the personal estate to pay his debts, and praying for the discovery and sale of the real estate, and that under these proceedings, the several lots of ground conveyed by Carson to himself as trustee, to'secure the appellants, parties in interest under the will, were sold, and the proceeds of sale brought into Court for distribution. That among other creditors, the complainants came in by petition, claiming to be general creditors of the decedent for and on account of the balance due by him qn his final administration account, also for money received by him under a voluntary deed of trust executed by the complainants, and also claiming under the unrecorded deed to himself as trustee, a specific lien upon the proceeds arising from the sale of the several lots of grounds mentioned in said deed. That the specific lien and preference thus claimed, was allowed by the Court, and the sum of eleven thousand, nine hundred and sixty-three dollars and fifteen cents, being the entire net proceeds of sale arising from the sale of said lots, was under the order of the Court, paid to the.complainants.

The bill further alleges, the appellees had personal knowledge of these matters, having been of counsel for Carson, as executor and trustee, and especially advising him in regard to said transactions.

These are the special facts and circumstances which the appellants contend, ought to exempt this case from the operation of the general rule of law, and sufficient to justify the exercise of jurisdiction hy a Court of equity, for the purpose of enforcing the personal liability of the sureties on Carson’s administration bond ; and yet when considered separately or together, they present nothing more or less than an ordinary case of a devastavit by an executor, for which the complainants hada plain, adequate and complete remedy at law. There is not a particle of evidence necessary to prove either one or all the material facts averred in the bill, but what could be offered in a Court of law, and upon the facts thus established, it was within the province of a jury under instructions from the Court, to have determined the rights and liabilities of the parties.

The death of Carson, the executor, in no manner affected the liability of his sureties as surviving obligors in an action at law; and as to complication of accounts, or mutual and adverse claims, or controlling equities, we have not been able to find anything in this record, to justify the jurisdiction of a Court of equity upon such grounds. On the contrary, under the proceedings in Heflebower’s creditors’ bill, Carson’s entire estate, real and personal; the names and amounts due to his creditors; the amount remaining in his hands as executor under the will of Edes: the sums received under the conventional deed of 1866; the amount received by these complainants by virtue of their specific lien, under the unrecorded deed to Carson, as trustee for parties in interest under the will; all of these matters are ascertained, and if the appellees were liable as sureties on the testamentary bond, the jury could have had but little difficulty in ascertaining the precise amount which the appellants were entitled to recover. If the sureties on a testamentary bond are under such circumstances, to be held liable in equity, it is difficult to imagine a case in which the jurisdiction may not he exercised.

For these reasons we are of opinion that the demurrer to the hill was properly sustained, and here we might rest our decision, but inasmuch as the whole case has been fully argued and considered, we deem it proper to add, that even conceding the jurisdiction now claimed, we are of opinion that under the facts and circumstances disclosed by the record, the appellants are precluded from recovering against the appellees as sureties of Carson.

The clause.in the will under which this controversy arises, is certainly obscure, and it may not be easy to determine when the duties and liabilities of Carson as executor ceased, and those as trustee began. Be this as it may, one thing is certain, the Orphans’ Court considered his duties as executor at an end, upon the passage of his final administration account, and accordingly they directed the funds thus remaining in his hands, to be transferred to himself as trustee under the will. This order was passed by a Court having jurisdiction of the subject-matter, and of which the appellants, parties in interest under the will, are presumed to have had notice. No objection was made to the action of the Orphans’ Court in the premises, nor has any appeal been taken from the order' thus passed. But this is not all. When a bill was filed by tbe creditors of Carson for the sale of his real estate to pay debts, we find these appellants coming into Court by petition, and alleging that the Orphans’ Court, by its order of May 8th, 1867, directed Carson to transfer to himself as trustee under the will, the money., and also the■ stocks remaining in his hands as executor, and. that they had in the life-time of Carson, .expressly reqxiested him to secure the money thus in his hands as executor and trustee, and that in pursuance of such request,, he did, by a deed executed but not recorded, convey to himself as trustee for the appellants, certain lots of ground in Baltimore City ; that these lots had been sold under the decree passed in the suit of the creditors. The appellants further claimed that under the unrecorded deed to Carson himself as trustee, they were entitled to a specific lien upon the proceeds arising from the sale of said lots.

Here then is not only a recognition by these appellants of the order of the Orphans’ Court, but an admission also that under it, Carson had transferred to himself, as trustee, the money remaining in his hands as executor, and that the unrecorded deed was executed expressly at their request and for the purpose of securing the money thus held by him as trustee. The specific lien thus set up hy th¿ appellants was allowed hy the Court, and they received the entire proceeds of the sale of the property conveyed by the unrecorded deed, amounting to over eleven thousand dollars.

Having thus treated Carson as trustee under the will, and having received the proceeds of the property which was conveyed hy him to secure the money thus held hy him, as trustee, the appellants now sue the sureties on his administration bond, and say that it was his duty under the will, to have kept the estate together as executor until the death of the testator’s mother, and that the order of the Orphans’ Court is invalid, and that Carson never in fact transferred to himself as trustee under the will, the money and funds remaining in his hands as executor. This is certainly claiming at one time in one right, and then at another time setting up a claim not only inconsistent with, but in fact utterly denying the first. “A man shall .not he allowed ” says the Court of Exchequer, in Gave vs. Mills, 7 H. & W., 927, “to blow hot and cold, to claim at one time and deny at another.”

Nor is it any answer to say the claim to and receipt hy the appellants, of the entire proceeds arising from the sale of the property mentioned in the unrecorded deed, worked no injury to the sureties on Carson’s administration bond. If the money remaining in his hands as executor was not in fact transferred hy Cai’son to himself, as trustee under the will, and if the unrecorded deed was not as it purports on its face, executed for the purpose of securing the money thus held by him, then the claim to and receipt by the appellants of the eleven thousand dollars, being the entire proceeds arising from the sale of the property thus conveyed, was in law a fraud upon the general creditors of Carson, who upon the facts now alleged by these appellants, were entitled to participate in the distribution of of that fund. And whether you say the appellants are estopped by such proceedings, or by whatever name you may call it, common sense and common justice requires that having claimed and having received, the entire proceeds from the sale of the property conveyed by the unrecorded deed, upon the express ground that it was executed by Carson to secure these appellants on account of the money belonging to them and which he held as trustee under the will, they shall not now be permitted to deny these facts in a suit brought against the sureties on the administration bond.

(Decided 1st March, 1877.)

Before concluding this opinion, it is but proper to notice an objection made by the counsel for the appellants on the ground that the respondents had demurred to part of the bill, and answered the rest of the hill. The right to do so, provided the demurrer and answer apply to different and distinct parts of the bill, and be not inconsistent with each other, is too well settled to be questioned. See Story on Equity Pleading, sec. 442, and the cases cited. The demurrer in this case was properly sustained, and the decree below will he affirmed.

Decree affirmed.