Case ID: sc-eq_8/html/0334-01.html
Source: Caselaw Access Project
Author: {"author": "Johnson, J., O’Neall, J.,", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

John J. Schnell v. John Schroder, Jacob H. Boyer, and James H. Marshburn and wife.
    gure(y t0 an administration bond will be relieved against a decree obtained by a distributee against the administrator, if it appear, that the administrator had made payments to the distributee before the decree, which were not credited in the account settled by it, although there is no direct evidence of intentional fraud, or collusion.
    A purchase of the equity of redemption by the mortgagee extinguishes the mortgage debt; and the effect is the same, whether the purchase is by a direct contract with the mortgagor, or at a sale of the land by execution under a junior judgment.
    Where a relative has been permitted to reside in a family, as a friend, without an intention manifested to charge him for his board, he cannot afterwards be called upon to pay for it. What was originally a gratuity cannot be converted into a debt.
    A debt due by an administrator to his intestate’s estate is assets in his hands; and if the administrator of an intestate become also the administrator of one of the distributees, his liability for the distributive share of the latter, in the estate of the former, attaches upon his second administration : and if he also become the guardian of the sole distributee of his second intestate, his liability attaches upon him in the latter character; and for a default in paying over funds in his hands, to which his ward is intitled, as distributee of the distributee of the first intestate, the sureties to the guardianship bond are alone responsible.
    The ordinary has no jurisdiction to ascertain and fix' the liability of the surety to an administration bond, and a decree against him, for the default of his principal, is a mere nullity, and wholly inoperative.
    If the defence, of a surety to an administration bond, to an action at law against him, for the recovery of the amount of a decree against his principal, is such as constitutes a complete legal bar, be is not intitled to come into equity to injoin the proceedings at law, but will be referred to his legal remedy.
    A party making a payment has a right to direct the application, and if he fail to direct it, the party receiving may apply it to such of the debts of his debtor, as he deems proper. But the proper application of pay. ments is a question of fact, and is often to be collected from the circumstances attending the transactions between the parties. In settling the account between a distributee and the administrator, who was insolvent, with a view to ascertain the liability of the surety to his administration bond, certain payments, and advances, of money, and goods, made by the administrator to the distributee, were ordered to be applied to the distributee’s share of the estate, in the hands of the administrator; although the distributee had obtained a decree against the administrator, for the amount due him for his distributive share of the estate, in which these payments, and advances, were not credited, and the distributee claimed to apply them to other debts, due to him by the administrator: it appearing, that these other debts were not only of a suspicious character, but that, from the circumstances attending the transactions between the parties, it could not have been their intention, that the payments, and advances, should be applied to these debts.
    In making up an administrator’s account with a distributee, the payments should be deducted, first from the interest due in each year, and then, if there be an excess, from the principal, of the sum in the hands of the administrator.
    This was a bill by the surety to an administration bond, to injoin proceedings at law, in an action brought against him, on bis bond, for the recovery of a sum due by his principal, upon the administration of his intestate’s estate.
    The intestate, Jacob H. Boyer, died in 1817, leaving three children, Mrs. Schroder, the wife of the defendant, John Schroder, the defendant, Jacob F. Boyer, and a Mrs. Wirtemburgh, who were the distributees of his estate. The defendant, Schroder, took out administration of the estate, and the complainant, and one Harman Crone, became the sureties to his administration bond. Mrs. Wirtemburgh afterwards died, leaving an only child, a daughter, who has since intermarried with the defendant, Marshburn. The defendant, Schroder, also administered on the estate of Mrs. Wirtemburgh ; and was subsequently appointed the guardian of her child. The defendant, Boyer, filed a bill against Schroder, for an account of his father’s estate, and obtained a decree against him for $1,144.81, with interest from the 20th January, 1826; and Marsh-burn and wife also filed a similar bill against him, and obtained a decree for $1,144, with interest from May, 1818. They then summoned the complainant, as surety, to appear before the ordinary, whp made a decree against him, conforming to the decrees in this Court, against Schroder: and they afterwards brought an action at law against him, on the administration bond ; whereupon this bill was filed. The bill charged, that the decrees against Schroder, were obtained by fraud, and collusion, and with intent to defraud the complainant; Schroder, and the other surety to his bond, being, both of them, utterly insolvent: and it was alleged, that nothing was in fact due by Schroder, either to Jacob F. Boyer, or to Marsh-burn and wife, upon his administration of the estate of Jacob H. Boyer.
    The defendants, by their answers, denied all fraud, or collusion; but the defendant, Schroder, stated, that he had, at various times, advanced to Jacob F. Boyer, small sums of money, and goods, to Va^ue> *n ^le whole, of $966,53, with which he had not been credited, in the settlement of his accounts, but which he intended to discount, if it was ever in his power to pay Boyer.
    The defendant, Boyer, admitted, that he had received of Schroder, $137,91, which ought to have been credited^ as of 1st January, 1819. He also admitted, that he had, from time to time, received of Schroder, goods, and clothing, and small sums oí money ; but he was surprised to find the amount, for which he was liable, stated so high as $966,53, and thought there must be a mistake, as to the amount: but admitting that it might, by possibility, be correct, he insisted, that the amount should be credited against other demands, which he had against Schroder, who, even if this sum were deducted, was indebted to him in upwards of $2,500.
    The cause came on to be heard before De Satjssure, Chancel, lor, at Charleston, in May, 1828.
    To shew fraud and collusion between the defendants, Schroder, and Boyer, in the settlement of the accounts, upon which the decree was founded, the complainant proved, that Boyer had very slender, or no means, of subsistence, other than his share of his father’s estate, in the hands of Schroder ; that he was dissipated in his habits, and never engaged in the steady pursuit of any business; and that he lived almost entirely in the family of Schroder, who clothed and fed him, for which no charge had been made, and no credit had been allowed in the account. He also gave in evidence declarations of Schroder, that he owed Boyer nothing, and that the latter had eaten, and drunk out, all that he was intitled to from his father’s estate.
    On the other hand, the defendant, Boyer, introduced evidence to shew, that he lived in the family as a friend, and relative ; and that he was occasionally employed as an assistant, in the store, kept by Schroder : and that his board on the one side, and his services on the other, were, at the time, considered, and intended, to be gratuitous. To shew that Schroder was indebted to Boyer, for other demands, to which the latter was intitled to apply the money, and goods, which he had received from the former, two notes of Schroder’s, to Boyer, were produced; one for $162, dated 1st June, 1816 ; and the other for $400, dated in October, 1825. A bond of Schroder, to Boyer, dated 11th March, 1818, for $1,036.51, was likewise given in evidence ; but it appeared, that this bond was secured, by a mortgage of a lot of land in Charleston, and that this lot had been sold, by execution against Schroder, at the suit of another creditor, under a judgment junior to the mortgage, and had been purchased at the sale by Boyer, for an inconsiderable sum.
    
      It also appeared, that the $137.91, which Boyer admitted, in his answer, that he had received from Schroder, was received in goods, purchased by Boyer, at the sale of his father’s estate.
    The Chancellor, was of opinion, that the evidence was altogether insufficient to make out the charge of fraud, and collusion, even as to Boyer; and that as to Marshburn, and wife, no evidence had-even been offered, which in the remotest degree affected them. That as to Boyer, it appeared, that although he had received money, and goods, from Schroder, yet the latter was indebted to him, in a much larger amount, on the bond and notes ; and they certainly had a right to adjust and apply their cross demands, as they thought proper: and as the decree had been taken without crediting the advances of money, and goods, against Boyer’s share of his father’s estate, it was too late to apply them to that demand now. And the same rule would apply to the charge for board ; besides, that it was evident, that no charge was ever intended to be made for board, and being originally gratuitous, it could not be afterwards made the foundation of a debt. His Honor, therefore, dismissed the bill, as to all the defendants, with costs.
    The complainant appealed, and the appeal was argued, at Charles, ton, in. February, 1829.
   Johnson, J.,

delivered the opinion of the Court.

Departing from the order which the counsel for the complainant have pursued, in arguing the grounds of appeal in this case, I will consider them first, in reference to the state of the account be. tween the defendants, Boyer, and Schroder; and without intending to decide, whether there was, or was not, any intentional fraud, and collusion between them, I think I shall be able to demonstrate, that injustice will be done to the complainant, if he is to be concluded by the decree by which the account was settled.

I will premise, that the decree is predicated on an equal parti, tion of the whole nett proceeds of the personal estate of Jacob H. Boyer, amongst his three children; which gave to Jacob F. Boyer, the sum of $1,144.91, the amount of the decree, in which no credit was asked, or allowed. In the investigation, before the ordinary, when the complainant was a party, it was discovered, that Boyer had purchased, at the sale of the estate, property, to the amount of $137.91, which would leave a balance due to him, of only $1,007 ; and Schroder states, in his answer, that, in addition to this, he had made other advances to Boyer, in money, and goods, amounting in all, to $828.62. Boyer, in his answer, admits, that he had, from time to time, received from him, goods, clothing, and money, in small sums, without stating the amount; although he expresses his surprise, at its amounting to so much : but, so far from contesting the charge, he seems impliedly to admit it, by a proposition to apply it to the payment of other accounts between them. If this amount is to be credited to the account of the estate, then Schroder will be only indebted to him, in the sum of $178.38. Boyer insists, however, that it should be applied to the payment of his other demands, which consist of the two notes, amounting together, to $562 ; but whether the advances were made before the date of the notes, and could not, therefore, have been intended to have been applied to the payment of them, or, whether there was any agreement, that they should be so applied, does not appear. Admitting, however, that they must be so applied, there would still be a balance of $404,53, applicable to his demand against Schroder, on account of the administration.

In regard to Schroder’s bond, I am very clear, that if, as it is stated, the lot was sold under execution, subject to the mortgage, and purchased by Boyer, the bond is extinguished. The equity of redemption, was all that Schroder had in the lot, upon which an execution could operate ; and that having been sold, and vested in Boyer, his right to redeem was gone. The mortgage vested the lot in Boyer, subject only to this right to redeem; and having purchased in that, the land became absolutely his, and he cannot have both that, and the purchase money. Boyer had, unquestionably, the right to buy, and Schroder to sell, and release his equity of redemption ; and whether he sells, or it is sold under legal authority, the legal consequences, are precisely the same.

No account has been stated between these parties, but the facts above referred to, have been collected from the Chancellor’s notes of the evidence taken on the hearing ; and they are used, only as furnishing a strong, if not irresistible presumption, that injustice would be done to the complainant, without a further investigation of them through a reference to the master. I ought to add, that I concur entirely with the Chancellor, as to the charge for board. It is clear, from all the circumstances, that it was never intended that Boyer should pay for his board in Schroder’s family, into which he was received as a relative, and friend ; and if originally a gra. tuity, it cannot now be set up as a debt.

I come now to consider the case in reference to the liability of the complainant, for the amount claimed by the defendants, Marshburn, and wife, as the distributive share of Mrs. Wirtemburgh, in her father’s estate; to which, as her distributees, these defendants are now intitled. Schroder also administered on the estate of Mrs. Wirtemburgh, and is unquestionably bound, to account to Marsh-burn, and wife ; but all the authorities concur, that a debt due by an administrator, to his intestate’s estate, is assets in his hands. Whatever, therefore, Schroder owed to Mrs. Wirtemburgh, Whether on this or on any other account is immaterial, constituted so much of her estate in his hands, for which he is bound to account, as her administrator, to all persons interested in her est.ate ; and his liability to Marshburn, and wife, must be referred to that character. The same result follows, from a consideration of the nature of the undertaking of the surety to an administration bond. The whole object, end, and aim, of the bond, is, to secure the payment of the proceeds of the estate, to those who may be legally intitled to receive them. Now, upon the death of Mrs. Wirtemburgh, Schroder, himself, as her administrator, was alone intitled to receive her dividend, of the estate of her father, Jacob H. Boyer. It was in his hands, and the condition of the bond was not only legally, but literally, fulfilled. Again, the undertaking of the surety, is in reference to the law, which intitles him to be relieved, if there are well grounded suspicions, that the administrator is wasting the estate, by revoking his administration, or compelling him to find other security ; and without his own consent, neither the occurrence of any adventitious circumstances, nor the act of any one, could change the character of that liability. But if it be true, that he is liable for the funds, which the administrator is intitled to retain in his hands, it is in vain that you revoke his administration, and grant another, for that would not divest him of his right to retain the funds.

joyner BaSey^ra.

But the claims of Marshburn, and wife, upon the complainant, are removed still one degree further. Schroder was appointed, and I suppose regularly, and upon sufficient security, the guardian of Mrs. Marshburn, when she was an infant; and the necessary consequence of this was, that the amount in his hands, to which she was intitled, as distributee of her mother, became so much held by him, in trust for her, as her guardian : and according to M’Dowell v. Caldwell, 2 M’C. Ch. 55, the sureties to his guardianship bond are responsible for it.

The decree of the ordinary is wholly inoperative, as to the complainant. As the surety, he is under no obligation to account before the ordinary; but his undertaking was, that his principal should account, and he had accounted in the Court of Equity. The ordi. nary has no jurisdiction to enforce the bond, and his decree as to the surety, is a mere nullity.

The circumstances referred to, constitute a complete bar to the right of Marshburn, and wife, to recover at law ; and there was, therefore, no necessity for the complainant’s coming into this Court for relief. As to them, the bill must, therefore, stand- dismissed.

The decree of the Circuit Court, so far as it dismisses the bill as to the other defendants, is reversed : and it is referred to the master, to state an account between the defendants,,Schroder, the administrator of Jacob H. Boyer, and Jacob F. Boyer, the distributee ; in which the complainant must be allowed to shew, what sums have been paid, and advanced, by Schroder to Boyer, either in cash, or otherwise, on that account.

Nott, J., and Cojlcock, J., concurred.

The cause again came up, before De Saussuke, Chancellor, in January, 1830, upon-exceptions to a report of the master, made in pursuance* of the foregoing decree. So much of this report, as is material, is as follows.

“ It was contended by the defendant, Boyer, that Schroder was indebted tó him, for a large quantity of bacon sold to him. The claim was not only a very old one, but the evidence to sustain it was altogether insufficient; and I therefore rejected it.

But the principal difficulty in this case arises from two notes of Schroder’s, produced on the part of Boyer, and to the extinguishment of which, he insisted that he had a right to apply the advances, received by him from. Schroder.

The first note is dated in 1816, and is made payable to “ Jacob Boyer.” There was no evidence of the consideration ; nor did it appear that the payee was the Jacob Boyer, who is the party to these proceedings. His father, whose name was also Jacob, was iiving at the date of the note ; and it is much more probable, that the note was given to him, than the son. Considering the circumstances of suspicion attending this very stale claim, and in the absence of any evidence to clear up the mystery, I have rejected it.

The other note bears date in October, 1825. It appears, from-Mr. Ford’s testimony, that the note had been prepared by him, at the time it bears date ; but it was not signed by Schroder, until March, 1826, on the evening before the day, on which a meeting was to be had before the ordinary, for the investigation of Schroder’s accounts. This was after Boyer had obtained his decree against Schroder, and long after all the advances had been made by tlie latter. The inference that I draw from these circumstances is, ihat the note was a settlement in full of all the transactions between the parties, up to the time it bears date; and this view may derive force from the fact, that the note was prepared before the proceed. ings were instituted, upon which Boyer obtained his decree against Schroder, as administrator. Boyer, indeed, alleges that the note was given as an acknowledgment for a sum of money loaned about the year 1819, for which he had not before possessed any voucher; but no evidence of this loan, or of Boyer’s ever having means to make it, were produced before me.-

H. A. De Saussure, for the motion.

Dunkin, and Pepoon, contra.

The circumstances in which the parties stood to each other, and the time when the note was executed, seem to indicate that there was collusion between them. It appears strange, that Schroder should have given a note at this late day, if his advances, previously made, had been intended to be applied to this loan. The advances greatly exceed the loan, and if the note was the acknowledgnient of an old debt, why was not a counter-acknowledgment given for the advances ? It seems to me, that it was incumbent on Boyer, from the suspicion thrown upon this note, to have produced additional, and full evidence, of the consideration. This hé has failed to do, and I think, therefore, that he ought hot tó be allowed to set it up now, to the prejudice of the complainant; but that he shoiild be left to pursue his remedy against Schroder, and not fasten this suspicious- debt, on the surety to his administration" bond.

I therefore respectfully report, that the advances made by Schrbder to Boyer, amount to $966.53, which must be deducted from $1,144.91, the amount of the decree against Schroder. This leaves the sum of $178.38, on which I recommend interest to be calculated, from 1st January, 1819, due to Jacob F. Boyer, from his portion of his father’s estate, in the hands of Schroder, the administrator.

All which is respectfully submitted.

M. I. KEITH, Master.”

To this report, the defendant, Boyer, excepted, but the exceptions were overruled by the Chancellor. He then gave notice of appeal, and at the present term, moved to reverse the order of his Honor.

O’Neall, J.,

delivered the opinion of the Court.

This Court is satisfied with the conclusions of the master, on the questions of fact submitted to him. Independently of the very suspicious character of the claims set up on the part of the defendant, Boyer, it is worthy of remark, that both the note of 1816, and the claim for bacon sold, were, each of them, barred by the statute of limitations, before the note of 1825 was given. In legal contempla» tion, they were regarded as paid ; and this legal presumption is much fortified by the fact, that the parties considered it necessary, that a note should be given, in 1825, only for the money alleged to ^ave ^een previously loaned. We might well conclude, that this was the only unsettled transaction between them.

As to the note of 1825, f did at first feel some difficulty; but on a careful examination of the case, 1 am satisfied that the master’s conclusion is correct. A party paying money has, at the time he pays it, the right to direct how it shall be applied ; but if he does not direct the application, then the party receiving it may apply it to such debt of his debtor, as he may choose. On what account money paid, or articles delivered, were paid, or delivered, and received, is always a question of fact; and the proper answer to the inquiry, is often to be collected from the circumstances attending the transaction. In the case before us, the money paid, and the articles furnished, to Boyer by Schroder, were all anterior to the note. If they had been intended as payments on account of the money loaned, the note could not have been given; for they greatly exceeded it in amount. It is more in the ordinary course of things, that the administrator should have made these advances, on account of Boyer’s distributive share of his father’s estate, which was in his hands; and this is fully sustained by the fact, that the parties did not, when liquidating an old debt, apply them to its payment.

The master’s mode of making up the account, however, is erroneous. The payments, and advances, in money, or goods, to Boyer, should, in the years, when paid, or delivered, be deducted, first from the interest then due on his distributive share; and if they exceed the interest, the excess should be deducted from the principal, and the interest computed on the balance. The case is therefore remanded to the master, to make up the accounts according to these principles.

Johnson, J., and Harper, J., concurred.

Order modified.