7 N.C. 194 | N.C. | 1819
Lead Opinion
"I give and bequeath unto my brother, John L. Miller, three negroes, Pompey, Cheyney and Clarissa, and their future increase to him and his heirs forever."
"I will that all my just debts and funeral expenses be paid by my executors, out of my property, or the money arising by the sale of such asmy executors may deem necessary to be sold."
That the tract of land devised to Robert Fleming, contained five hundred acres, and the stock in trade bequeathed to him, amounted to fifteen hundred dollars: that Robert Fleming was an alien, incapable of holding lands.
That some short time after the death of the testator, James G. Brehon recovered a judgment against Robert Fleming and Marmaduke Johnson, in Warren County Court, for one thousand pounds, or thereabouts, sued out his execution thereon, and the money was about to be raised out of the property of Johnson; to avoid which, and to indemnify Johnson against the payment of this money, it was agreed between Robert Fleming, Robert H. Harwell and Johnson, that the land devised to Fleming should be sold to Johnson for one thousand pounds or thereabouts; that in pursuance of this agreement Johnson discharged Brehon's judgment, and Fleming and Harwell, as executors of the last will of Thomas Miller, executed to him a deed for the land. That the parties pretended publicly, that this sale was made for the purpose of paying the debts of Thomas Miller: but in fact, it was made for no other purpose than to discharge Brehon's judgment, and to keep Johnson indemnified.
That in consequence of this sale, and the application of the purchase money to the payment of the debts of Fleming, the debts of the testator were left unpaid. That Fleming soon afterwards died, intestate and insolvent. That (197) since his death, the creditors of Thomas Miller had sued Robert H. Harwell, the surviving executor, and recovered judgments to the amount of five hundred pounds and more; to satisfy which, the three negro slaves bequeathed to the Complainant, had been sold by Harwell, the executor, and purchased by *152 William Miller, guardian to the Complainant, at the price of $1,123: That the said purchase was for the benefit of the Complainant, and that William Miller gave his own bond for the purchase money, payable on the ___ day of ___. The bill prayed that Harwell, the executor, might be decreed to deliver up to Complainant, William Miller's bond: that he and Johnson might be decreed to pay to the creditors of Thomas Miller, their respective demands, at least to the amount equal to the value of the land sold to Johnson, in order that such payment might be applied in exoneration of the specific legacy bequeathed to the Complainant: and that Complainant might have such other relief as in Equity he was entitled to.
To this bill, Harwell and Johnson demurred, and, for cause of demurrer, shewed, that it appeared by the Complainant's own shewing, that he was not interested in the question made in the bill, relative to the land, or the sale or proceeds thereof; and that it appeared by his own shewing, that he was not entitled to have the bond of William Miller delivered up to him. They also answered and denied the fraudulent combination charged in the bill, relative to the sale of the land.
The case was sent to this Court, and the Judges were divided in opinion upon the questions arising on the demurrer. The Chief-Justice and Judge Hall being of opinion, that the demurrer should be sustained, and the bill dismissed; and Judge Daniel, (who sat for Judge Henderson) being of opinion, that the demurrer should be overruled, and relief be decreed to the Complainant. The bill is filed by a specific legatee, (198) who claims to be placed in the shoes of the creditors of the testator, and to have reimbursed out of the sales of the real estate, the value of his specific legacy, which has been taken to satisfy their demands. It appears from the case, that the testator gave to his executors, a general power to sell so much of his property as would pay his debts; and this must be taken as a charge upon all his estates, both real and personal. He then gave the Complainant a specific legacy of some negroes, and devised his land to Robert Fleming, an alien. He appointed Robert Fleming and Robert Harwell, his executors, who, by virtue of the power given to them by the will, and in their character of executors or trustees, sold the land to Johnson, who had full notice of the trusts of the will. Johnson has not paid the purchase-money to the trustees, nor to the creditors of the testator. He has applied the money to the payment of a debt which the trustee, Fleming owed, and for which payment *153 he was bound, as Fleming's security. He contends, that this payment, being made by the consent, or at the request of the trustee, discharges him from all further liability.
I will examine, 1st. Whether the complainant can be placed by this Court, in the situation of the creditors of the testator; and, 2dly, Whether he can sustain his bill against Johnson, under the particular circumstances of this case.
1st. It appears that the creditors of the testator had a lien on both the real and personal assets, for the payment of their debts. The Complainant, who was only a specific legatee, had not other lien, but on the specific property bequeathed to him. It is said by Lord Hardwicke, that "It being the object of a Court of Equity, that every claimant upon the assets of a deceased person, shall be satisfied, as far as such assets can, by any arrangement consistent with the nature of their respective claims, be applied in satisfaction thereof, it has been long settled, that where one claimant has more than one fund (199) to resort to, and another claimant only one, the first claimant shall resort to that fund on which the second has no lien." 2 Atk., 446. I Ves., 312. If, therefore, a specialty creditor, whose debt is a lien on the real assets, receives satisfaction out of the personal assets, a simple contract creditor shall stand in the place of the specialty creditor against the real assets, 1 Vern., 455. 1 Eq. Ca. Ab., 144. 2 Vern., 763. 2 Atk., 436; and legatees shall have the same equity. Ch. Ca., 117. 1 P. Wms., 730. So where lands are subject to the payment ofall debts, a legatee shall stand in the place of a simple contract creditor, who has been satisfied out of the personal assets. 3 P. Wms., 323. These authorities shew, that the Complainant has a right to stand in this Court in the place of creditors who have exhausted the fund set apart to satisfy him, and be reimbursed out of that fund which the creditors might have resorted to, but which they have left untouched.
2d. Has the Complainant, under the circumstances set forth in the bill, and admitted by the demurrer, a right to call on the Defendant, Johnson, for satisfaction? I admit that where the trust is general, as, to pay debts, the purchaser, although he has notice of them, is not obliged to see the money applied. 1 Bro. Ch., 186. 2 Fonb., 148. But I hold the money should be paid, and without any collusion of the trustee to defeat the object of the trust. It is held, that purchasing from an executor shall never protect any person who has full knowledge that the money will be misapplied. 2 Br. Ch., 434. 4 Br. Ch., 125, 130. 2 Vern., 616. 7 Ves., 152. Johnson has never paid the purchase money; or if he has, it was with a full knowledge of the *154 trust, and in direct violation of it. The payment of Fleming's debt, to which he was security, cannot screen him from paying the purchase money properly. I think the Complainant (200) has a right to resort to this money for satisfaction, and that the demurrer should be overruled.
Addendum
The facts forming this case are shortly these. Thomas Miller died in 1806, having first made his will, by which he appointed Robert Fleming and Robert H. Harwell his executors; both of whom qualified, and whom he directed to sell such part of his estate for the payment of his debts as they might think proper. He also devised to R. Fleming, one of his executors, a tract of land in Warren County, and bequeathed to him his stock in trade, to the amount of $1,500; and to the Complainant, his brother, he bequeathed three negroes. After the death of the testator, Brehon recovered a judgment against Fleming, and M. Johnson, as his security, for about one thousands pounds, and an execution issued, which would have been levied upon Johnson's property; to avoid which, he and the two executors made an agreement, whereby he became the purchaser of the land for the price of one thousand pounds. This sale was ostensibly made for the purpose of paying the debts due from the estate, but was, in reality, the result of a combination between the executors and Johnson, to discharge Brehon's judgment. The consequence of the sale was, to leave the debts unpaid, and to expose the Complainant's legacy, as the only fund out of which the creditors could obtain satisfaction. This has accordingly been sold, to satisfy the judgments against the executors, which the Complainant alleges, *157 ought to have been paid by the sale of the land. William Miller, guardian of the Complainant, became the purchaser of the negroes in trust for the Complainant, and gave his bond for the payment of the purchase money. Fleming, who was an alien, died soon after the sale, insolvent. The prayer of the bill is, that the bond of William Miller may be delivered up, and the Defendants decreed to pay such sum of money as the Complainant is entitled to. (204)
The Equity relied upon in the bill, consists in this, that the Complainant has lost his legacy, because the price of the land was not applied to the payment of the debts. To support this ground of equity, it ought to be shewn that the land was liable to the payment of the debts, and that a specific legatee is entitled to call upon the devisee of the land, in exoneration of his bequest. If either no power had been given to the executors, to sell such property as they thought fit, for the payment of debts, or they had omitted to exercise the power, the Complainant's legacy would have been first liable, and on that proving deficient, the creditors would have resorted to the land. Had the debts been satisfied out of the Complainant's legacy, he could not stand in the place of the bond creditor, because the devisee of land is as much a specific devisee, as the specific devisee of a chattel. 3 P. Wms., 324. With less reason can such a claim be made where simple contract debts have exhausted the legacy. The principal rule in marshaling assets is, that when a creditor may resort to both the real and personal estate, and a legatee can only resort to the personal, if that be insufficient to pay both, the creditor will be confined to the real estate: or if he has been satisfied out of the personal, if that be Court will permit the legatee to stand in his place and receive satisfaction out of the real estate, to the amount of what has been taken from the personal. 1 P. Wms., 679. But this rule can only operate where the real estate is charged with the payment of debts or legacies, or where the creditor has a lien upon it, except where the donee is heir at law, and then against him, the lands will be liable to the specialty debts, in case of the personal estate. 3 Atk., 272. Amb., 127. In this case, there is nothing stated in the bill whence it can be inferred that the debts were due by specialty, and it must be taken for granted, that they were not so. They have therefore been paid out of the proper and primary fund, and this would be a sufficient reason for refusing relief. But if the debts had (205) been due by specialty, contribution could not have been claimed against the specific devisee of land. I have considered Fleming as the devisee of the land, notwithstanding the statement *158 in the bill that he was an alien; and I believe the law to be well settled, that an alien may take by devise, although there be some cases and dicta to the contrary. The question occurred before Lord Hardwicke, in Knight v. DuPlessis, 2 Ves., 360. 7 Cranch, 618, who said he did not remember any doubt or distinction, made between a grant, conveyance, or devise to an alien; for an alien might take; the only consideration, therefore, would be, for whose benefit. And this opinion is adopted by the modern writers on devises. Powell 316. 3 Cruise, Title Devise.
As the Complainant, then, would be entitled to no relief in this view of the case, it is to be enquired whether his claims are strengthened by the power given to his executors to sell, and the execution of the power by the sale of the land. The testator has not placed the burthen of the debts upon any particular part of the estate; it is, therefore, left to the operation of law, and it was entirely in the discretion of his executors as to what part should be sold. Had they disposed of the Complainant's legacy for that purpose, he could have no claims against Fleming, as the cases cited prove: and it is difficult to imagine that Harwell and Johnson should be responsible to him, the one for selling, and the other for purchasing land, which was chargeable with no claim, either of his or the creditors. Upon the supposition of the combination charged in the bill, between Johnson and the executors, no one can call them to account for the misapplication of the purchase money, who would not have an interest in the land if it had remained in Fleming's possession till his death. Whether this would be the heir at law of the testator, of Fleming, or the Trustees of the University, claiming by escheat, it is not necessary to determine. The Complainant is announced only in the character of a specific (206) legatee, claiming satisfaction for his legacy. It is certainly not to be approved of, that the land should be sold avowedly to pay the debts of the estate, and afterwards, that the money should be applied to different objects; but if the transaction had been called by its true name, a sale for the benefit of Fleming, upon what ground could it have been assailed? The devise was to him: he was an inhabitant of the State, and a few years longer life and residence, would have entitled him to the rights of citizenship. It is altogether improbable, that the State, or any person claiming under her, would have disturbed him in the enjoyment of the land, had he chosen to keep it.
Long v. Short, 1 P. Wms., 403, has been cited by the complainant's counsel, to show, that the specific devisee of land *159 should contribute with another specific legatee to the payment of debts. But in that case, both devises were derived from the same subject, which was separated into a fee and lease for years; and a devisee of a term for years being as much a specific devisee, as a devise of lands in fee, to defeat either would equally disappoint the intent of the testator: and the devisees were decreed each to contribute in proportion to the value of the respective premises. But the deficiency was made to fall upon the lands of inheritance, only so far as it arose from the payment of specialty debts; as to the simple contract debts, they were chargeable solely on the leasehold. The case does not prove anything towards establishing the point that the lands were bound to contribute in this case to the Plaintiff's legacy. Upon the whole, it appears to me, that the Defendants have equal equity with the Complainant. The land has been applied to the benefit of him to whom it was devised; and when the testator directed a sale for the payment of his debts, it is not to be presumed that he meant a sale of the lands, neither in point of law, nor according to the usage of the country, which is rather to pay debts with personal property; and the Defendants having the law in their favor, the bill must (207) be dismissed.
Cited: Robards v. Washington,
Addendum
This case comes on upon a general demurrer. The bill does not state that any of the debts which the specific legacy of the Complainant was sold to pay, were specialty debts that bound the heir or devisee. It is therefore proper to examine the question, as if that legacy had been sold to satisfy simple contract debts only. What difference there might be in the case, provided those debts had been due by specialty, and bound the heir and devisee, it is not necessary now to examine. Admitting the fact, that the debts discharged by the sale of Complainant's legacy, were simple contract debts, it cannot be successfully contended, that Fleming, the devisee, was bound to contribute, because, in this State, lands are bound for the payment of debts of all kinds. It is true, that the statute of 5 Geo. II, ch. 7, as well as our own statute law, imposes upon lands that liability, and an execution taken out would subject them, as well as the personal estate, in the hands of any person who is the owner of both. But after the death of that person, the lands cannot be legally subjected to an execution issuing upon a judgment obtained against his executor or administrator. The executor or administrator has nothing to do with the land. It descends to the heir, or goes to the devisee; and neither of them can be divested of it without notice, without being made a party to some proceeding instituted against him for that purpose. How this was done before the year 1784, or whether any regular mode was pursued, does not appear. It appears probable, that there was no regular mode; for the act of 1784, ch. 11, in its preamble declares, that "Whereas doubts are entertained, whether the real estate of deceased debtors, in the hands of heirs and devisees, shall be subject to the payment of debts upon judgments obtained against executors or administrators, in order to remove such doubts in future, and to (201) direct the mode of proceeding in such cases, be it enacted, c." The act then directs a scire facias to issue, to give the heir or devisee notice, c., and in the 5th section, power is given to the heir or devisee, to plead that the executors or administrators have assets in their hands to pay the judgment, or have wasted or concealed them: and to have an issue made up to try that fact. If upon the trial of such issue it shall be found that they have assets, no judgment can be *155 pronounced against the heir or devisee, upon the scire facias. So that it is clear, lands cannot be made liable to the payment of simple contract debts, except where there is no personal estate in the hands of the executors or administrators.
It would appear strange, then, to say that Fleming, as devisee, should contribute to the payment of simple contract debts, when the land devised to him was not answerable as long as there was personal estate. Heirs and devisees cannot be sued, in the first instance, for simple contract debts. Lands cannot be subjected to the payment of such debts, except in the way pointed out by the act of 1784. The act of 5 Geo. II, as well as an act of 1777, makes lands liable: the act of 1784, points out the mode of proceeding against them after the death of the debtor.
But, it is said, the executors in this case were authorized by the will, to sell any part of the estate they pleased, for the payment of debts; and, as they thought proper to sell the land devised to Fleming, the proceeds of that sale are liable to the payment of debts, and therefore the Complainant is entitled to recover the full amount of his legacy, out of the proceeds of such sale. On this part of the case, it is to be observed, that the testator himself might have subjected any part of his estate he pleased to the payment of debts: if he has not done so, the law will do it for him. I think he has not done so: for, by giving the executors the power to sell the real estate, he has not transferred the liability of the personal estate to the payment of debts, to the real estate: in other words, the executors have not, by the will, power to ruin one legatee by selling his legacy, and place another in the full enjoyment of his (202) legacy, because they do not think proper to sell it. The right of compelling contribution remains as it would, if one legacy was sold by execution and another not, which was equally bound for the debt. Let us then suppose, that the land in question had been devised to A B, and not to Fleming, and the executors had thought proper to sell it. Certainly A B would have a right to call upon the legatees of the personal estate to make his devise good to him, because it had been sold to satisfy debts for which it was not liable, but for which their legacies only, were liable. If this be correct, the money for which the land was sold being in the hands of Fleming, is where the law would place it: for, if that money had gone in discharge of debts, the Complainant's legacy would be bound to make it good. The reason why power is frequently given to executors to sell property at discretion to pay debts, is, that they may not be tied down to the slow mode of proceeding *156 pointed out by law, by applying to Courts for permission to sell property, when they shall be notified of debts existing against the estate.
Another circumstance has been relied upon, and that is, that Fleming is an alien, and cannot hold lands. Whether he can hold lands or not until office found, I shall not enquire: I shall only refer, in support of the affirmative of the proposition, to Co. Lit. 2 Barb. 52 B., 129. Dyer 2 B. Powell on Devises, 316. 10 Mod., 128. 7 Cranch, 619. I Mass., 256. Suppose, for the sake of argument, that the heirs at law are entitled: this suit is not brought by the Complainant in that character. It does not appear who the heirs at law are. The bill is brought by the Complainant to compel Fleming to make good his legacy, which was sold for the payment of debts, or to contribute thereto. Whether the land be devised to an alien; if it be, whether the heirs at law be entitled, or whether it escheats, matters not. It is not liable to the payment of debts (203) until the personal estate be exhausted. Whatever view, therefore, I have been enabled to take of the subject, I am convinced the demurrer should be sustained and the bill dismissed.
