Case ID: rawle_3/html/0199-01.html
Source: Caselaw Access Project
Author: {"author": "Gibson, C. J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

[Philadelphia,
    April 2, 1831.]
    KRAUSE assignee of MOLL against BEITEL and another.
    in error.
    Testator, after giving certain portions of his real estate to certain of his children at a valuation, and declaring, that in case it was refused by all his children, it should be sold by his executors, and that all his estate or the value thereof should be equally divided among his ten children, naming his seven sons and three daughters, all three of which daughters were married women, proceeded, “ and if one or the other of my children should depart this life, then his bequest or legacy shall come to the heirs of his body.” Held, that the bequest to the daughters was not to then separate use, but passed to their respective husbands.
    
      The interest of a.trustee of an insolvent debtor, in the debts of the insolvent, is exactly that of the insolvent himself, as they stood affected by countervailing equities, at the time of the assignment.
    Where, therefore, a trustee brought suitagainst two administrators with the will annexed, to recover a legacy given to the insolvent’s wife, it was held to be a good defence, that one of the defendants had actually paid a debt for the insolvent before his discharge, and had been sued for another debt, which he had since been compelled to pay.
    Writ of error to the Court of Common Pleas of Lehigh county.
    In this action of assumpsit, in which the plaintiff in error, John J. 
      
      Krause, assignee of John Moll, for the use of the creditors of the said John Moll, was plaintiff below, and the defendants in error, Christian F. Beitel and Frederick JVewhardt, were defendants, a case was stated for the opinion of the court below, which it was agreed should be considered as a special verdict. In substance it was as follows :
    
      Loreniz Newhardt, on the 28th of December, 1815, made his will, which after his death, viz. on the 8th of August, 1817, was duly proved, by which, after devising certain portions of his real estate to certain of his children, and affixing a value to some of those portions, he declared, that if any of his children should refuse to accept the property at the value he had affixed to it, then the eldest son should be entitled to take it, and if he refused the next, and so on to the youngest; and if all the sons refused it, the same right should devolve upon the daughters in succession, according to their respective ages; and if all the children should refuse it, at the valuation, he directed that his executors should sell it. ' He then proceeded, “ And all my estate,' or the value thereof, shall be equally divided amongst my ten children, to loit, Frederick, Christian, John Jacob, Peter, John David, Daniel, Elizabeth (the wife of John Moll), Anna Maria (the wife of Daniel Yunt), and Salome (the wife of George Yunt), and, if one or the other of my children should depart this life, then his bequest or legacy shall come to the heirs of his body.” The testator appointed his son Frederick, and his son-in-law John Mall, his executors.
    On the eighth of September, 1820, the said executors were dismissed from their trust, and letters of administration with the will annexed, were issued to Frederick Newhardt and Christian F. Beitel.
    
    On the fourth of December, 1820, John Moll was discharged under the insolvent laws, and on the sixth of February, 1826, John J. Krause his assignee, gave bond, which was approved by the court.
    After payment of debts and specified legacies, there remained in the hands of the defendants as administrators of the deceased, from the valuation and proceeds of his lands, in money and securities, the sum of-- dollars, of which .sum the proportion of the cash bequeathed to Elizabeth Moll the wife of John Moll, was two hundred and sixty-eight dollars and seventeen cents. From the time letters of administration were granted to Frederick Newhardt and Christian F. Beitel, the moneys of the estate were paid into the hands of Christian F. Beitel, who had the papers of the estate in his charge, or possession, and who yet retained in his hands the said sum of two hundred and sixty-eight dollars and seventeen cents; but-he always consulted and confederated with his co-administrator, Frederick Newhardt, in relation to, all the affairs of the administration. John Moll and Elizabeth his wife were both in full life at the time the action was brought, and had six children living.
    On the 27th of November, 1816, John Moll and Frederick Newhardt executed their joint single bill to John Biery, for the payment of one hundred and fifty dollars, on demand, with interest from the date. Frederick Newhardt was the surety, and John Moll alone beneficially interested in the said bill. Suit was brought on the said bill, and judgment obtained in the Court of Common Pleas of Lehigh county, on the nineteenth of April, 1820, for one hundred and sixty-six dollars and fifty-seven cents. On the 2nd of December, 1820, George Yunt lent to Frederick JVewhardt, and paid to Biery for him, one hundred and seventy-two dollars and seventeen cents, the principal and interest due on the said judgment, of which he took an assignment ; the costs, amounting to eight dollars, were also advanced to him by Yunt. At the same time, as an additional security to Yunt for his advancement, JVewhardt pledged to him a bond given by John Jacob Newhardt to Frederick Newhardt and John Moll, executors of Lorentz Newhardt deceased, dated July 31, .1820, in -the penalty of two hundred pounds, conditioned for the payment of one hundred pounds on the 15th of August then next, being money belonging to the estate of the said Lorentz Newhardt, which bond was received by the said Frederick Newhardt from the said Christian F. Beitel, one of the administrators with the will annexed of the deceased, as part of the legacy bequeathed by the deceased to the said Frederick JVewhardt, and came into the bands of Beitel, as one of the administrators vtith the will annexed of the deceased.
    In the month of March or April, 1821, Yunt purchased the said Frederick Newhardt’s plantation in South Whitehall township, for fourteen hundred dollars ; six hundred payable down, and the residue in payments of one hundred dollars each; and on the 4th of June, 1821, Yunt re-assigned to Frederick Newhardt, the said bond, as and for one hundred and eighty dollars cash, and it was accepted by Newhardt as so much on account of the first payment. Afterwards Yunt received, as agent of Newhardt, from John Jacob Ne.whardt, several sums of money, amounting together to one hundred and ninety-six dollars and eighty cents, for which receipts were endorsed on the bond. The money thus received was paid over by Yunt to Newhardt, as he received it. The sum of sixteen dollars and forty cents was afterwards, viz. on the 7th of February, 1824, received by Frederick Newhardt himself from John Jacob Newhardt.
    
    On the 8th of August, 1820, Frederick Newhardt endorsed for the accommodation of John Moll, bis promissory note of that date for one hundred and seventy dollars, payable sixty days after date to the order of the said Frederick Newhardt at the Northampton Bank, which was discounted at the said bank, and the proceeds carried to the credit of the said John Moll. On the 10th,of October, 1820, the said note was protested for non-payment. Suit was brought upon it by the bank, who qn the 5th of January, 1821, obtained a judgment against the said Frederick Newhardt, who on the 16th March, 1826, paid one hundred and fifteen dollars and twenty-eight cents to the cashier of the bank on account of the judgment.
    The said svm of one hundred and eighty dollars and seventeen cents, with interest from the 2d of December, 1820, and the said sum of one hundred and fifteen dollars and twenty-eight cents, with interest from 16th March, 1826, were still due to the said Frederick JVewhardt, and were claimed to be set off against the plaintiff’s demand.
    The question for the opinion of the court below was, whether in a suit by the trustee against the administrators with the will annexed, to recover the legacy bequeathed by the testator to the wife of the insolvent, the matters stated in the case as having taken place between John Moll, the insolvent, and Frederick JVewhardt, one of the defendants, formed a set off or equitable defence in favour of the defendants.
    The court was of opinion, “ that the liabilities contracted by Frederick JVewhardt, before the assignment by John Moll to the plaintiff according to the case, having been discharged by the said Frederick JVewhardt, before this action was brought, do, for the amount of moneys so paid by the said Frederick JVewhardt for and on account of the said John Moll, furnish an equitable defence in this action according to the repeated decisions of the courts in Pennsylvania. And the court, therefore, upon the whole of the case stated, give judgment in favour of the defendants, each party to pay their own costs.”
    The following errors were assigned in this court:—
    
      First. The court erred in giving judgment, on the case stated, in favour of the defendants.
    
      Second. The court erred in deciding, “ that the liabilities contracted by Frederick JVewhardt before the assignment by John Moll to the plaintiff, according to the case, having been discharged by Frederick JVewhardt before this action was brought, did for the amount of moneys so paid by the said Frederick JVewhardt for and on account of the said John Moll, furnish an equitable defence to this action.”
    
      Third. The court should have given judgment for the plaintiff on the case stated, for the following, among other reasons:
    1. That by the assignment executed by John Moll on the 4th day of December, A. D. 1820, the time when he was discharged' under the insolvent laws, the right of John Mott to the legacy in question was divested from him, and vested immediately in his trustee.
    2. That in order to constitute the subject of a set-off or defalcation under the 5th section of the act of 26th March, 1814, entitled “An Act for the relief of Insolvent Debtors,” there must have been mutual subsisting debts at the time of the discharge, upon which a recovery could then have been had.
    3. That inasmuch as Frederick Newhardt was merely surety for John Moll to third persons for the matters stated in the case, which liabilities had not been discharged at the time of John Moll’s dischage as an insolvent debtor, but for which Moll was then liable to the original creditor, Frederick JVewhardt■ had no subsisting debt against Moll at the time of the discharge, and therefore has no debt to defalcate.
    4. That as between a debtor of an insolvent and the trustee under the insolvent laws, mutual credit, which alone existed in this case, is not the subject of defalcation in Pennsylvania.
    
    
      5. That if any debt actually existed in favour of Frederick NewJiardt against John Moll at the time of the assignment and discharge of Moll, it was a contingent debt, which is not the subject of defalcation in Pennsylvania.
    
    6. That in an action against two to recover a debt jointly due by them, a separate demand due to one of them cannot be set off.
    
      Brooke, for the plaintiff in error,
    cited Act of 20th March, 1814, sec. 4, 5. Purd. Dig. 389. Lessee of Willis v. Roto, 3, Yeates, 520. Kennedy v. Ferris, 5 Serg. & Rawle, 397. Wickersham v. Nicholson, 14 Serg. & Rawle, 118. Babbington on Set-off, 116, 117, 118. Lighty v. Brenner, 14 Serg. & Rawle, 132. 17 Johns. Rep. 113. Perry v. Boileau, 10 Serg. & Rawle, 208. Frost v. Carter, 1 Johns. Ca. 73. 6 Johns. Ch. Rep. 286. Buel v. Gordon, 6 Johns. Rep. 126. Stat. 4 and 5 Ann. c. 17. Stat. 2 Geo. 2. c. 22. 3 Bl. Com. 154. Marks & al. v. Barker & al. 1 Wash. C. C. Rep. 178. Steigleman v. Jeffries, 1 Serg. & Rawle, 477. Heck v. Shner, 4 Serg. & Rawle, 249. Shaw v. Badger, 12 Serg. & Rawle, 275. Light v. Stoever’s Ex’ors. 12 Serg. & Rawle, 431.
    
      J. M. Porter, for the defendants in error,
    combatted the positions taken by the counsel for the plaintiff in error, and contended further, that by the will of Lorentz Newhardt, the legacy given to his daughter, was for her sole and separate use, and that no interest in it vested in her husband John Moll, which he was capable of passing to his trustee under the insolvent laws. He cited Lodge v. Hamilton, 2 Serg. & Rawle, 49. Ingraham on Insolvency, 223, 227, 228. Jamison v. Brady, 6 Serg. &. Rawle, 466. Torbert v. Trvining, 1 Yeates, 432. King v. Deihl, 9 Serg. Sp Rawle, 409. Scott v. Pine, 2 Serg. Sp Raivle, 59. Deihl v. King, 6 Serg Rawle, 31. Bitzer’s Ex’or. v. Hahn Sp Wife, 6 Serg. Sp Rawle, 238. Mifflin v. Neal, 6 Serg. Sp Rawle, 460. Ferree v. Commonwealth, 8 Serg. Sp Rawle, 315.
   The opinion of the court was delivered by

Gibson, C. J.

Nothing in the will indicates an intent to limit the bequest in favour of Elizabeth Moll, to her separate use. The limitation to her heirs in case of her death was probably inserted to prevent the legacy from lapsing; but it is manifest from its being used also in reference to the testator’s sons, that it was not intended to control the marital rights of the husbands of his daughters.

The remaining point 1 take to be equally clear. As regards cross demands, the trustee of an insolvent estate, stands in a situation perhaps less, but certainly not more, favourable than that of any other assignee; his interest in the insolvent’s debts being exactly that of the insolvent himself as it stood affected by countervailing equities at the time of the assignment. The creditors are not purchasers in the first instance, and the trustee takes for their benefit, consequently subject to all the rights which may grow out of the original transaction. It is immaterial, therefore, whether the liability set up as a defence were originally absolute or contingent, the relations of the parties being unalterable by the accidental insolvency of one of them. Here one of the defendants had actually paid a debt for the insolvent before his discharge, and was sued for another, which he has been compelled to pay since, and it conflicts with no provision of the legislature to allow the defendants the benefit of these payments, not perhaps as a set-off but as a defence, that would be made available by a chancellor; as was held in Frantz v. Brown, (1 Penn. Rep. 261,) without the aid of any statutory provision whatever. We do not perceive, therefore, that' the court below erred in doing substantially the same thing in an action at law.

Judgment affirmed.