Case ID: tenn_53/html/0465-01.html
Source: Caselaw Access Project
Author: {"author": "\n      Freeman, J.,", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

J. K. Miller, Adm’r, v. N. G. Taylor et al.
    
    Statute oe Limitations. Insolvent estates. A defendant to a bill filed by an administrator to settle an insolvent estate, answered that on a day named there had been a final settlement of all accounts between himself and the decedent. Afterwards, and more than two years and six months from the date at which the statute began to run in favor of the administrator, the defendant, by permission of the court, amended his answer, claiming that large amounts were due him as of a date prior to said settlement. Held, "the amendment ■ did not relate to the filing of the original answer and the claims were barred.
    Cases cited: Rodgers v. Rodgers, MS. Op., Jackson, 1871; Martin v. Blakeman, 5 Heis., 50; Grofford v. Cothran, 2 Sneed, 495.
    PROM CARTER.
    Appeal from the decree of the Chancery Court.
    BartoN for complainant.
    R. McFarlaND and R. McKee for N. G. Taylor, said:
    ****** * *
    The administration of insolvent estates in Chancery is regulated by Code, s. 2362 to 2397.
    It may be conceded that the statute of two years in favor of personal representatives, applies as well to insolvent estates as any other, and that the filing of an insolvent bill does not affect this bar. This is clearly to be inferred from s. 2376 and 2378 of the Code.
    And, for sake of the argument, it may be further conceded, that upon the filing of an insolvent bill, creditors, not made parties by name, and by process, are not parties to the cause until they “ come in,” in the language of the Code, and have themselves made parties, or until they file their claims with the clerk and take his receipt as provided in s. 2378 of the Code; and further, that the statute of two years continues to run against them until one or the other is done.
    But it is denied that it is absolutely essential that the ansioer be filed within the two years and six months to prevent the bar, but, upon the contrary, if the creditor becomes a party to the record before the bar of the statute, then it matters not when the answer is filed, and if further time is given, this time is not to be counted, but is simply to be regarded as the law’s delay.
    When time is given to answer, the answer, when filed, is in all respects to have the same effect as if filed at the time required by law, otherwise the giving of time means nothing.
    Section 2376 of the Code, which is relied upon for the complainant, provides that “all creditors who shall fail to bring suit for their demands, or to come in under these proceedings and present their claims within the time prescribed by law, shall be forever barred and prohibited from becoming parties to such proceedings.”
    This was not intended to apply to, nor can it have any effect upon, a person who has already been made a party to the cause, or has already “ come in” and been made a party.
    It is clearly intended to apply to those creditors who are made parties by name, but who are called upon and are allowed by law to “come in” and present their claims and be made parties.” See s. 2373.
    They are required to “ come in” and present their claims and be made parties; that is, present a petition showing that they have claims and be made parties. This must be done within the time allowed by law, or the claims filed with the clerk, as provided in s. 2378. •
    But there is nothing in this to show that the answer must be filed in any particular time; and, in fact, it is clear that those creditors who are not specifically called upon to answer some allegation, need not answer at ■ all, but may simply be made a party for the purpose of proving their claim and having an account taken thereof and a decree therefor: s. 2373.
    Section 2378 provides that, “ to save the operation of the statute of limitations, any creditor may present his claims to the Clerk and Master of the court after the bill is filed, as well in vacation as in term time, and apply to become a party to the proceeding and the clerk shall give the creditor a receipt for his claim, which presentation and application to the clerk,
    
    
      if done within the time prescribed by law, shall prevent the operation of the statute of limitations.”
    This is clearly applicable to those creditors not made parties by name, and is intended to prevent them from becoming barred by the expiration of the time between the filing of the bill and the term of the court, which is the only chance they would have to be formally made parties.
    But this does not require them to file cm answer setting up their claims within the time to prevent the bar; but this mere application to the elerh, without more, prevents the operation of the statute after that date; and surely if they apply in term time and are formally made parties, this will have an equal effect.
    
    The-case of Reid v. Huff, 9 Hum., 345, is relied upon.
    There is nothing in that case in conflict with the views here maintained. That was an insolvent bill. The bank of Tennessee was made a party, and called upon to answer distinctly as to the origin and amount of their claims. Instead of this the bank filed a paper purporting to be a list of their claims, specifying four bills of exchange, hut did not even file the bills of exchange themselves.
    
    The court held that this paper was not an answer sufficient to establish the claims of the bank without •more. That the bank should have answered cmd filed the bills of exchange.
    
    The cause in that case was remanded to be properly proceeded with; and no intimation is given that the bank would not be allowed to file their answer when the cause should be remanded, or that the statute had barred them pending the suit.
    It is argued that in causes of this character the filing of the answer is the commencement of the suit by the creditor, and that the statute runs until this is done; but it was surely never intended by the Legislature that each creditor, no matter how small his claim, must of necessity incur the expense of having an answer filed or lose his claim. This would unnecessarily encumber the record and accumulate expense.
    Section 2372 of the Code provides that each of the creditors and others interested in the estate may have himself made a party to the proceeding in equity: 1, to prove his demand; 2, to have an account thereof; 3, * and a decree for whatever he may be entitled to receive. .
    To do this, it was certainly not intended that they should be required to do any thing more than either to have an order made entering their names as parties of record, or to file their claims as provided in s. 2378, and to prove their claim upon - the taking of an aceount.
    
    To require them to einploy counsel, present a petition to be made a party, and then file a regular and formal answer, would compel all creditors having small claim to abandon them entirely, as the expense of olleeting would be more than the claim in manycases.
    But assuming, for the argument, that in all cases an answer is necessary, why is the filing of an answer to have an effect different from any other answer in chancery ?
    
      Section 2363 provides that tbe proceeding shall be conducted upon equitable principles, as a creditor’s bill against a trustee, according to the rules and 'principles governing courts of equity.
    
    The practice of allowing time to answer is almost universal, and certainly an answer filed by leave of the court, or by consent, after the expiration of the time allowed for , filing an answer, must have precisely the same legal effect as if filed within the three first days of the appearance term. There can, in the nature of things, be no difference as to the legal effect. * * * By the original bill, the court became vested with the jurisdiction to try all matters between the complainant and N. G. Taylor; both parties were in court.
    Now, after this, an amendment is made, praying that the estate be also administered as an insolvent estate. What effect can this have upon the determination of the rights of the parties, as to the ‘defendant, as involved in the original cause, and as also involved by the special prayer of the amended bill. The litigation of these questions between the complainant and N. G. Taylor as prayed for in the original bill, so far from being enjoined by the amended bill, the amended bill specifically prays that all the relief therein prayed for be granted, and that all transactions with N. G. Taylor be settled; so that the litigation set on foot by the original bill must be prosecuted to a final decree upon the rules of law applicable to that case. The administration of the estate as insolvent does not affect, these questions. It only affects the payment of the decree after it is rendered. The effect is precisely the same as if the original bill, as to the matter with N. G. Taylor, had been in a different court, or had been an entirely separate cause. The filing of the insolvent bill does not necessarily enjoin such a suit: Code, 2383, 2384; but the same is allowed to proceed to judgment.
    How the filing of this insolvent bill is to effect the questions involved in the original cause; or the rules by which that cause is to be tried, is hard to conceive, particularly when the original cause is not enjoined, but on the contrary an express prayer that the questions therein involved be settled according to the prayer of said bill.
    But suppose, for argument, that the original bill was entirely out of the record, and we had nothing but the amended bill. This amended bill makes N. G. Taylor a party, and prays a settlement of all accounts. Taylor comes in, and upon the record got time to answer; and this before any question arises as to the statute of limitations. Will it be held that the time which elapses between this and the actual filing of the answer is to operate to bar him under the statute?
    On the contrary, is not an answer filed, by leave of the court or by consent, after the time for answering has expired, to have the same legal effect, so far as the statute of limitations is concerned, as if filed within the three first days of the term, and is there in this respect any difference between an answer to an insolvent bill and any other?
   Freeman, J.,

delivered the opinion of the court.

On the 9th of June, 1866, Miller, as administrator of A. M. C. Taylor, filed his original bill against Virginia Taylor, widow of A. M. C. Taylor, deceased, and Mary Taylor, minor heir of said A. M. C. Taylor, A. J. Tipton, N. G. Taylor et als., creditors of the estate of said A. M. C. Taylor, and creditors generally. The bill alleges that the administrator had prepared an inventory of the personal estate of his intestate; also an account of sales of personal property sold, which had not been presented to the County Court at that time; but that on examination into the affairs of his intestate, it would be elear that the personal estate would not be sufficient, by a large amount, to meet the indebtedness, though he was unable to state, or even approximate, the deficiency.

The bill refers to several debts due creditors of the estate; one, in form of a revived judgment, on which an execution was expected to be issued, and asks an injunction against said judgment, together with a general injunction against all creditors of the estate, restraining them from bringing suits or attempting to enforce the collection of their claims until further order of the court; and on final hearing the court was asked to declare the rights of all the parties to the suit, and order the sale of so much of the real estate as would raise a fund sufficient to meet all the just indebtedness of the estate, and make such other decrees as the circumstances of the case or the interest of the estate might demand.

This bill states that the administrator finds several notes on N. G. Taylor, a brother of the deceased, among the papers of the deceased, specifying one of them, and says that he is informed and believes said N. G. Taylor will insist that, his intestate is largely indebted to him on settlement,' and in support of his claims “will go far back into the records of the past, and produce old and musty notes and accounts, running back almost, if not quite, to the days of their 1 oyhood, and of date long antecedent to the date of the notes referred to.”

The bill then goes on to suggest an argument against the validity of such claims, based on the recognized shrewdness and business qualities of said N. G. Taylor, and the improbability of his giving his note when the par,ty to whom it was given was largely in his own debt. It then goes on to state, that the complications of the business of the administration, as indicated by the above, and other allegations contained in the bill, between the intestate’s estate and the said N. G. Taylor, specially demanded the assistance of a court of equity, in order to a full and fair settlement of the matters of account between them, and then specially asks that the court will institute such proceeding and special inquiries as will compel the said N. G. Taylor to make full answer as to all the transactions between the parties since the death of their father, requiring him to establish his statements by strict proof in each and every particular. Complainant requires him to make a full and fair statement and exhibit of all the many transactions between them, showing the balance due at each settlement, etc.

This bill was taken for confessed, and, by consent of all parties and on motion of complainant’s counsel, a decree was made for a general account of the assets and liabilities of the intestate’s estate; and it was further ordered that the Master shall “make a special report as to the state of the accounts between the estate and the said N. G. Taylor, reference being had to the discovery sought in the bill of complainant.” This decree was made at the December Special Term, I860.

It seems, however, that answers were afterwards filed by the parties, except N. G. Taylor, before the clerk made his report in pursuance of the above order. At the time of the above decree it was ordered that the Master advertise in the Jonesboro ugh Union Flag, a newspaper published in the town of Jones-borough, Tenn., requiring all creditors of the estate to file their claims with the Master on or before the first day of March, 1867.

At the September Term, 1866, before this, leave liad been granted to complainant to file an amended bill.

On the 20th of March, 1867, an amended and supplemental bill was filed, which, among other things, states that the administrator had found from the reports of the Master, in pursuance of previous order of the court, that the estate, both real and personal, would not be sufficient to pay the debts, and then says complainant is forced to suggest the insolvency of the estate, and asks that it may be administered as an insolvent estate in the Court of Chancery.

The bill states that the creditors of the estate were already before the court by the original bill, and most of them had filed their claims, and that they were so numerous that it would occasion great inconvenience and expense to have process issued for them on the amended bill, concluding by asking that publication be made, notifying all creditors of the estate, and defendants to the original bill and this amended bill, of the filing of the same.'

We need not stop here to point out the irregularities in these proceedings, as all the parties seem to have waived them, and have come in under them to prove their claims without objection.

N. G. Taylor filed his answer, which purports to be an answer to the original bill only, on the 30th of April, 1868, in which he gives a history of the transaction between himself and deceased brother with great particularity, referring to settlements, with their dates, reasons for making them, and circumstances attending them; explains the giving the note for $500 as for borrowed money, when A. M. C. Taylor was indebted to him, satisfactorily perhaps, and says that on the 24th of September, 1859, he succeeded in getting a settlement with his brother of all matters unadjusted between them, and that the $500 note was reported lost, but was included in that settlement and, he thinks, a receipt taken against it.

On taking the account, filed March, 1870, in pur-snance of previous decree, N. G. Taylor presented a large number of claims dated previous to the time of the alleged settlemeut as given' in his own answer, to wit, September 24th, 1859; and it being urged against these claims that N. G. Taylor could not go behind the date of settlement as found in that answer in order to meet this, upon affidavit made, he was allowed to file an amended answer, in which he claims that the statement in his former answer, that the settlement of 1859 embraced all prior claims, was a mistake, and goes on to explain how the mistake occurred. We may remark here, that under the circumstances of the case, and the particularity and the tone of the chai’ges in the bill, and the like particularity of the answer, as well as the detail of the circumstances, with such minuteness, said answer drawn by the respondent, himself a lawyer, that the propriety of allowing this amended answer, to say the least of it, was very doubtful. However, that question is not before us in the aspect of the case as presented by counsel, and we do not decide on the question.

On this state of the case it was heard at March Term on one point, and a decree rendered, which settled the question as to a large amount of the claims of N. G. Taylor presented in the amended answer, from which he has appealed to this court.

It seems that, in order to raise the questton, as we infer, by consent or agreement of counsel, a motion was made to take the amended answer off the file, upon the ground that all the claims sought to be set up in the same were barred by the statute of limitations barring suits against intestate estates before said answer was filed.

The court, on this motion, held that the cause was then properly before the court as an insolvent bill, and that N. G. Taylor, having entered his appearance and asked for time to answer, at September Term, 1866, could not now avail himself of the informalities in not suggesting the insolvency in the County Court, or so stating in the bill; and thereupon proceeded to hold that, as the- proof showed that letters of administration were granted on the 7th of November, 1865, and N. G. Taylor a resident of the State, all claims held by him were subject to be barred by statute of two' years, and all claims not put in suit within two years and six months from 1st of January, 1867, when statute of limitation commenced to run, either in courts of law or presented and set up in answer in this case, as provided by law, were barred; and thereupon the motion to take the answer off the file was allowed so far is it set up claims not asserted in original answer. This presents the main question’ in this case for our decision.

We may remark here, before discussing the single question presented by this decree, that the original bill is one substantially, on the part of the administrator, to administer his trust under the direction of the Court of Chancery — a jurisdiction that has been well settled in England since the reign of Charles II., and is known as a bill of conformity, probably, as Mr. Story suggests, because the executor or administration in such case undertakes to conform to the decree, or the creditors are compelled by the decree to conform thereto. He says they are not to be encouraged, however, because of the danger of executors and administrators keeping creditors out of their money longer than otherwise would be the case. Such a bill, however, might well have been filed in a Court of Chancery by the administrator against all the creditors under a long train of decisions, extending from the time of Lord Somers, in 1697, down to the present time. See Sto'ry Eq. Jurisp., vol. 1, ss. 542, 543, 544, and case of Thompson v. Brown, 4 Johns’ Ch. R., 619. In this last case Chancellor Kent gives an exhaustive review of the authorities on the subject, and lays down from the authorities and decisions the correct practice on such bills. Such bills may be filed under these decisions either by the administrator or executor, or by a creditor; but the practice seems to have been the same in both cases. It will be seen from the authorities above referred to, however, that under such bills an injunction could not be granted against creditors bringing suits at law on their claims till after an order for an account of assets and liabilities of the estate, and was not grantable, as done in this case, on preliminary application to the Chancellor.

Under the bill, in this aspect of it, from the time of the decree ordering an account, this decree is for the benefit of all the creditors, and they may all come in under it and prove their claims, and all will be enjoined from bringing suits elsewhere in such claims. See 4 J. C. R., 653,

We need not further allude at present to the orig-iual bill, or discuss its precise bearing on the rights of the parties in this litigation.

We proceed to the question directly presented in the decree. Were all claims not sued on in a court of law, or presented by answer, in this case, or filed for allowance with the Clerk and Master, barred within two years and six months from 1st January, 1867, by the statute of limitations?

The question of the bar of the statute of limitations, in case of claims against insolvent estates, was before us in two cases at the last term at Jackson. In one, the case of P. M. Rodgers v. Rodgers et als., it was held, after thorough consideration of the question in an opinion by Judge Deaderick, that “ the statute of limitations apply alike to the administration of solvent and insolvent estates.” In that case letters of administration had 'been granted July, 1866; suggestion of the insolvency of the estate had been made to the County Court at September Term, 1866, and notice given, under s. 2330 of Code, requiring all creditors to file their claims with the clerk before the 22d of January, 1867. On the 29th of June, 1868, the administrator filed his bill in the Chancery Court, transferring the administration to that court, enjoining all further proceedings of the County Court. An account was ordered in the Chancery Court, and on taking the account, George R. Brasfield, administrator, etc., on the 21st of May, 1869, filed a transcript of a judgment obtained against complainants’ intestate in 1861, but was disallowed by the Master, which was sustained by the Chancellor, and this court held that he Avas correct in so doing. It does not appear in the opinion in that case Avhether Brasfield was made a party to the bill.

The same principle was held in the case of Martin, adm’r, v. James Blakemore, adm’r, 5 Heis., 50. In this case thei creditors filed the bill transferring the administration to the Chancery Court.

Is there anything in this case that distinguishes it from the above cases?

We are compelled to assume that the insolvency of the ' estate was suggested on the filing of the amended and supplemental bill, Avhich, though called and treated as an amended and supplemental bill, was more properly an original insolvent bill, and ought to have been filed as such in strictness.

The administration was granted 7th November, 1865; the statute of limitation commenced to run on the 1st of January, 1867, in favor of the administrator; so that, unless there is something in the former proceedings that took the case out of the principle of the above eases, the claim was barred, other things being out of the Avay.

We held in the two cases referred to, that the 'filing of the claim against the estate was the time at which the statute of limitation must be applied, and if barred then, it must be rejected.

Now, admitting that in the original litigation on the original bill in this case, the claims of N. G. Taylor against the estate of A. M. C. Taylor were involved, and that N. G. Taylor was so far an actor in said suit that the claims then involved were saved from the bar, as being filed in - time,' or suit commenced on them in time (and we think this the correct view of that proceeding), still we must look to the state of the pleadings iii that suit to see what claims were being prosecuted by him, and there we find no claims that are presented in his last answer. Qn the contrary they are, by the very terms of that answer, excluded, and shut out from being presented, so that he was compelled to make the affidavit in the record, and get leave to file his amended answer on the 24th of September, 1870, in order to have them oefore the court, and at issue as claims against the estate.

We hold that on well-settled principles, repeatedly argued before this court, the claims presented in this answer can only be considered in reference to the statute of limitations, as filed at the date of filing said answer.

In the case of Crofford v. Cothran & Neil, 2 Sneed, 495, in reference to the effect of an amendment, where, if allowed to relate back to the time of bringing the original suit, it would save the bar of the statute, this court say: “It may be conceded that in general, and for most purposes, the amendment in a case like the present will relate back to the day on which the original process is sued out; but this fiction of relation can not be allowed to obtain where it would work injustice to the opposite party, by taking from him the benefit of an existing legal defense to the action. In a ease, therefore, where the time of the commencement of the action may become important in reference to the statute of limitations, or other matters of defense, the effect of an amendment a,hanging the form of the action, must be restricted to the time when, from the record, it appears to have been granted. From that time only can the plaintiff be regarded as rightly in court.” We think this principle sound, and if so, it must apply with much more force where the amendment, as in this case, for the first time, presents a new and distinct cause of action or claim, and that new claim is barred at the time of the amendment by the statute. The simple principle is, that a party can not be permitted by an amendment to save the bar of the statute as against his claim or cause of action, as presented in the amended claim, and that the time of the amendment, as to the statute of limitation, is to be -considered as commencement of the suit in the form in which it is then presented by the amended pleading. We think the principle equally applicable to proceedings in courts of chancery as at law.

We need not in this opinion reply to the able and ingenious argument of counsel in favor of the claim of Taylor, as we consider the two manuscript cases referred to as conclusive of the question, that the filing of the claim, whether with the clerk or by answer, is the presentation for the first time, in a case like the present, of the claim of the creditor for adjudication; and that when it is so presented, that all legal defenses may be presented against it— one of which is the statute of limitations — and the bar of two years and six months having been com-píete in this case before the presentation of the claim in the amended answer of 24th March, 1870, we hold it might well be interposed as a defense to the claims then presented.

This is a conclusion of this question.

As to the effect of the statute of limitations of six years on other claims presented, we do not think the question is presented in such form in this record as that we can properly decide it.

The decree of the Chancellor will be affirmed as to the question appealed from, and case remanded to the Chancery Court to be further proceeded in. Defendant N. G. Taylor will pay the costs of this court, and of the court below as to the amended answer presenting these claims.