215 Mass. 242 | Mass. | 1913
The first of these cases is an action upon the bond given to the Judge of Probate by the first named defendant as one of the trustees under the will of Nathaniel Weston, with the other defendant the American Surety Company (hereinafter called the company) as surety. There was a breach of the bond,
Henry E. Weston and his brother William H. Weston were duly appointed and became trustees of the fund in question, then amounting to about $150,000. By the will of Nathaniel Weston, the testator who created the trust, the income of the fund was to be paid to his nephews Edward S. Weston, Henry E. Weston, William H. Weston and Lawrence W. Jenkins, during their lives. On the death of each nephew the share of the principal of which he received the income was to be paid “to his issue if any, and in default of issue, to whomsoever he may by will devise and bequeath the same, or order it to be paid over to. And in default of issue and a testamentary disposal of the same, to my [the testator’s] heirs at law.” By a codicil to his will, the testator provided as follows: “I revoke so much of my will as relates to my nephew Lawrence W. Jenkins and make no provision for him.”
Edward S. Weston died in 1882; the share of the trust fund of which he had the income has been properly disposed of; and no question arises in reference thereto.
Henry E. Weston had a power of attorney from his brother William, and had the' active management of the trust, though William signed some papers with him, and was aware of some parts of his conduct. He never filed any account in the Probate Court. He misappropriated much of the income and about $123,000 of the principal of the trust fund. In 1902 he was removed by the Probate Court from his position as trustee. His cotrustee, William H. Weston, died on May 21, 1905, leaving no
The two trustees, Henry and William, on their appointment in 1896 gave separate bonds, each in the sum of $150,000, to the Judge of Probate, but each with the same surety, the company. They gave at the same time their joint written agreement, under seal, to the company, whereby, in consideration of the company’s having become surety upon the two bonds mentioned, they agreed, among other things, that they would at all times indemnify and save the company harmless from all damages, liabilities and expenses whatever; that the company should at its option have and be entitled to exercise in their names or otherwise all their rights, remedies and privileges in the premises; that nothing in the agreement nor any act of theirs in the premises should operate to abridge, defer or limit the right of the company to become subrogated to all rights or remedies, or to limit or abridge or in any way interfere with any rights, remedies or privileges, whether by subrogation or otherwise, of the company; and that the right of the company to subrogation was affirmed and extended to all their rights and privileges in the premises.
The plaintiff now contends that execution should issue for the full amount of the deficiencies in the principal of the fund, with interest on the different items thereof from the respective dates of their conversion, and for the income not paid to William or to William’s assignee with interest thereon, up to the limit of the amount of the judgment with interest thereon. Only the company defends the suit; and its contentions will be dealt with hereafter.
By the terms of the statute in force both when this bond was given and now, the proceedings herein are to be “conducted in like manner as is provided [by statute] relative to actions on bonds given by executors and administrators.” Pub. Sts. c. 143, § 18. R. L. c. 149, § 29. Those provisions applicable to this case are found in the third clause of Pub. Sts. c. 143, § 20, and R. L. c. 149, § 31, that “if the action is brought for a breach of the condition in not accounting for the estate as required by law, execution shall be awarded, without expressing that it is for the use of any person, for the full value of all the estate of the deceased that has come to the hands of the. executor or administrator, and for
So too we are of opinion that the obligation of a surety upon a probate bond is the same as that of the principal. The principal and the surety are jointly liable, not severally, or jointly and severally, as was the case with the bond sued on in Briggs v. McDonald, 166 Mass. 37, 40. If the surety has not been wholly discharged (Thayer v. Finnegan, 134 Mass. 62), only one judgment can be rendered against both; and that judgment is for the default of the principal, and for the amount for which he is liable. As was said by Loring, J., in Bassett v. Fidelity & Deposit Co. 184 Mass. 210, 214: “This is more than a technical rule of law, it is an instance where the true character of a surety’s liability comes to the surface.” The rule often has been declared by this court. See for example Chapin v. Waters, 110 Mass. 195,197; Choate v. Arrington, 116 Mass. 552; McKim v. Hibbard, 142 Mass. 422, 428. So it was said by Wells, J., in Choate v. Arrington, ubi supra (p. 556): “The surety is liable for whatever is fairly chargeable to his principal in the official capacity on account of which the bond was given.” Of course it can make no difference that in this case the principal, though named as a defendant, has not been found, has not been served on, and has not appeared. The surety is still liable for the default of the principal, and to the full extent of that default, not exceeding the amount of the judgment.
But it is upon a hearing in equity that the amount for which execution is to issue, that is, in this case, the amount of the assets which are not satisfactorily accounted for, is to be determined; and it is only to enforce payment of the amount equitably due that process is to issue. Pub. Sts. c. 143, § 20. R. L. c. 149, § 31; c. 177, § 10. Shurtleff v. Ferry, 138 Mass. 259. The amount to be paid is not necessarily the vbole amount for which account has not been rendered in the Prol ate Court, but that which has not been accounted for either to the Probate Court, or by payments made directly to or for the benefit of the parties entitled thereto,
Applying the principle stated to the facts before us, it appears that until the death of William H. Weston in May, 1905, the income of the fund was payable to Henry E. Weston and William H. Weston, one half to each. But upon the company’s paying the amount of this defalcation in both principal and income, it would by operation of law be subrogated to the rights of these beneficiaries for life from the date of the bond by which its liability was created. Stetson v. Moulton, 140 Mass. 597. Blake v. Traders’ National Bank, 145 Mass. 13. And by the joint agreement of these trustees with the company, made when the bonds were executed, they expressly created a conventional subrogation against both of them. Accordingly, if this income or any part of it should be included in the amount now to be paid by the company, as soon as it was received by the new trustee it would be his duty to pay this income over to the company as the equitable assignee of both the Westons, and this would of itself create a satisfactory accounting for that income; that is, the case would stand as if the income up to May, 1905, had been properly accounted for by the principal in the bond; and that result would have been brought about by the forced payment of that income upon the execution now to be issued, and its immediate repayment to the company. This is a needless circuity, such as the law does not favor and ought not to allow. Railroad Co. v. Smith, 21 Wall. 255. North Chicago Rolling Mill Co. v. St. Louis Ore & Steel Co. 152 U. S. 596. It is true of course that the right to subrogation strictly so called does not arise in favor of a surety until he has paid the debt for which he is bound, and there is no occasion to cite authority for the rule;
It follows that neither the income misappropriated nor interest on the principal sums so misappropriated, up to the date of the death of William H. Weston, or the date of the judgment if as appears that preceded his death by some days, should be included in the amount for which execution is to issue.
William H. Weston had a power of appointment by will over one half part of the fund. He exercised this power in favor of one Pratt, a creditor of his. We need not determine the validity of this appointment as against William’s other creditors. Disregarding for the moment the claim set up by the company, it is manifest that if the appointment comes under the general rule that its effect was to subject the appointed property to the claims of his creditors, then the fund must be paid to the administrator of his estate for distribution among them, for his estate was insolvent. Olney v. Balch, 154 Mass. 318, 322, explaining O’Donnell v. Barbey, 129 Mass. 453. Clapp v. Ingraham, 126 Mass. 200. Tuell v. Hurley, 206 Mass. 65. See Fleming v. Buchanan, 3 DeG., M. & G. 976, and In re Hadley, [1909] 1 Ch. 20, 35. If it could be successfully contended that Pratt was not a volunteer and was entitled to take the appointed property in spite of any claims of creditors (as to which see Beyfus v. Lawley, [1903] A. C. 411; In re Lawley, [1902] 2 Ch. 673, and [1902] 2 Ch. 799; and Patterson v. Lawrence, 83 Ga. 703), then Pratt would be entitled to receive it. But the company contends that Pratt as William’s appointee claims merely under the latter, and that as William’s negligence was at least partially responsible for Henry’s defaults, and as it is entitled against William both to the equitable subrogation of a surety and also to a full conventional subrogation under the joint agreement of Henry and William which has been stated, so it now is entitled to the full benefit of William’s own interest and also of that of all who claim under him, including the principal of the one half part of the fund of which William made an appointment. But we can
It follows that the company is to be charged with one half of the principal sum found by the assessor.
For the reasons already stated, the interest on the other half of this sum is not to be included in the amount for which execution is to issue. That income did belong to Henry; the right to it now is vested in the company; and it is satisfactorily accounted for by giving the benefit of it to the company. As to the principal of this half part, it is not yet ascertained who will be entitled to receive it upon the death of Henry. If he should marry and have issue, they doubtless would claim to be so entitled. If he should have no issue, but should make an appointment of the fund by will, the same questions would arise which have been stated in regard to the appointment made by William in his will. If he should die without issue and having made no appointment, it may be that his estate or the estate of William would become entitled to the fund, and there might be a question between the creditors and the company as to their respective rights. But we do not know what
Judgment was entered for the penal sum of the bond, with interest thereon. If the amount for which execution is to issue exceeds that penal sum, this was correct. Harris v. Clap, 1 Mass. 308. Warner v. Thurlo, 15 Mass. 154. Bank of Brighton v. Smith, 12 Allen, 243. White v. French, 15 Gray, 339. Bassett v. Fidelity & Deposit Co. 184 Mass. 210. George H. Sampson Co. v. Commonwealth, 202 Mass. 326, 339. Rogers v. Abbott, 206 Mass. 270, 275. Rowe v. Peabody, 207 Mass. 226, 237, 238. If this was not so, we cannot say that it was wrong. Certainly the defendant was not aggrieved, for it can be held only for the amount for which execution is to issue. The defendant has not argued this point; but we cannot pass it over, for it was expressly reserved by the report for our consideration.
It follows that the judgment must be affirmed, and that execution must issue for the sum of $123,825.99.
So ordered.
The second case is a bill in equity,
In Stetson v. Moulton, 140 Mass. 597, the bill was brought after the facts had been settled and the equitable rights of the plaintiff had become vested, and the decision merely upholds the right of the surety to be subrogated to the rights and remedies which those whom he has been compelled to pay held against his principal. Both that case and the decision in Commonwealth v. Gould, 118 Mass. 300, 307, go to show that the present bill cannot be maintained. Nor can this plaintiff find any comfort in such cases as Ingersoll v. Coram, 211 U. S. 335, or Coram v. Davis, 209 Mass. 229, in which equitable claims against the shares (determined or to be determined in the Probate Court) of distributees in an estate in the course of administration were litigated. Here it has not been determined, it is not for us now to determine, and as to the share of which Henry E. Weston was to take the income it cannot now be determined by any court, who are the parties that will become entitled.
The only question is whether, under the prayer for further relief, the bill should be retained, as was done in Lenz v. Prescott, 144 Mass. 505, to secure to the plaintiff such rights as may come to it upon facts that may arise in the future. But the administration of the fund must be had in the Probate Court, and it is uncertain what facts will be hereafter developed. For example, it is not for us now to determine the liability to a succession tax of the property that has been appointed by William, or of that which will or will not be appointed by Henry. Sts. 1909, c. 527, § 8, and 1912, c. 678, § 3. Emmons v. Shaw, 171 Mass. 410. Minot v. Treasurer & Receiver General, 207 Mass. 588. Attorney General v. Stone, 209 Mass. 186. Burnham v. Treasurer & Receiver General, 212 Mass. 165. Nor can we now declare the right of the parties to the fund, as was done in Holmes v. Holmes, 194 Mass. 552. No present ground is shown for equitable relief; and the decree of the single justice
So ordered.
Hitchcock J. The writ was dated February 18, 1904. The assessor was James D. Colt, Esquire. Henry E. Weston was removed as trustee on December 22, 1902. This action on his bond was brought in the name of the judge of probate for the benefit of W. C. Cogswell and William H. Weston, trustees, and' for William H. Weston personally. William H. Weston died on May 21, 1905, leaving no issue, and leaving a will by which he exercised a power of appointment, as described in the opinion, in favor of one Pratt, a creditor.
Filed in the Supreme Judicial Court on January 20, 1906, and amended on November 7, 1906, November 3, 1911, and October 25, 1912.
De Courcy, J.