Case ID: mass_28/html/0175-01.html
Source: Caselaw Access Project
Author: {"author": "Wilde J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Mary Johnson versus Nathaniel F. Ames et al.
    
    
      It seems that the heirs of a deceased partner are legal representatives within the meaning of St 1823, c. 140, giving to this Court equity jurisdiction in disputes “ between copartners &c. and their legal representatives,” if the requisite measures have been pursued to render such heirs liable to respond the demand of the surviving partner.
    The St. 1788, c. 66, and St. 1791, c. 28, limiting the time for bringing suits against heirs, executors and administrators, apply only to demands of creditors of the estate of the deceased, and not to claims on specific property held by the de ceased in trust for other persons and which has come into the hands of the heir, executor and administrator.
    But if the property held in trust had no ear-mark and is not distinguishable from the rest of the property of the deceased, the party entitled to it must claim as a general creditor.
    A surviving dormant partner, being a creditor of the firm, may file his claim before commissioners of insolvency upon the estate of the deceased active partner, and they may allow it upon the condition that the payment of it shall be postponed until all the demands against the partnership shall have been paid in full.
    If the commissioners reject such claim of the surviving partner, he may prosecute it at common law, giving notice at the probate office, pursuant to the statute, and it he recovers, he may reap the benefit of his judgment after the demands against the partnership shall have been paid in full.
    Where after the dissolution of a dormant copartnership the dormant partner suffered the partnership effects to remain in the hands of the active partner, upon hie promise to pay therewith the partnership debts and account for the balance, and the property became so intermingled with the individual property of the activo partner that it could not be distinguished, and upon his death the dormant partner filed his claim before commissioners of insolvency on the estate of the deceased, and, they having rejected the claim, by his own subsequent laches his remedy as a creditor became barred, it was held that he could not annul the arrangement first made and maintain a bill in equity against the administrator or heirs for his share of the partnership property, on the ground that it was joint property held by them in trust.
    Bill in equity, commenced in April 1829, by the executrix of Seth Johnson against the administrator, widow and heirs of Ezra Hyde.
    The bill sets out, that on October 21, 1809, it was agreed between Johnson and Hyde, that Johnson should advance to Hyde large sums of money, to be used in trade, which was to be carried on solely by and in the name of Hyde, and that Johnson should receive, besides the sums advanced, one half of the clear gains of the trade ; that in pursuance of the agreement Johnson did advance large sums, and thereby became a dormant partner of Hyde; that Hyde immediately entered into an extensive business in merchandise, which he carried on until a short period before his death, making from it great gains, during which period divers settlements took place ; that early in 1823 the copartnership was by mutual agreement dissolved ; that as Hyde had carried on the business in his own name alone, and was alone responsible for the debts, (which the plaintiff believes amounted at the time of the dissolution to $ 50,000 or $■ 60,000,) it was agreed that the property of the copartnership should for the time remain with Hyde ; that Hyde agreed that he would diligently collect the effects and apply them in payment of the outstanding debts, and would render an account of all his doings therein, and as soon as could conveniently be done, would pay over to Johnson the sum he had advanced, with his moiety of the profits ; that thereupon Hyde took under his charge the whole property, which, as the plaintiff believes, was sufficient to pay the debts and leave a surplus to repay Johnson’s advances and to divide as profits ; that before the debts were paid, Hyde died, leaving a widow and children ; that letters of administration on his estate were granted to Ames the defendant, and as it was impossible to distinguish the private property and debts of Hyde from those of the copartnership, and as the whole property was nominally Hyde’s, Ames took the whole property under his control ; that Hyde’s estate was represented to the judge of probate as apparently insolvent, whereupon commissioners of insolvency were appointed, and six months were allowed to creditors to present arid prove their claims ; that claims to the amount, as the plaintiff believes, of $ 40,000 or $ 50,000 were proved and allowed ; that Johnson presented his claim for the balance of his capital and his share of the profits, amounting to $¡ 3000, for allowance; that most of the creditors objected to its allowance, on the ground that their demands became due from Hyde while carrying on the trade, in which Johnson was a silent partner and consequently liable for the payment of the same demands, and that Johnson was not by law entitled to be paid, until their demands had been fully paid ; that upon that ground the commissioners made their report to the judge of probate, disallowing Johnson’s claim, and for the same reason Johnson acquiesced therein and did not give notice, witliin twenty days, of his intention to prosecute his claim at common law ; that thereupon, as the plaintiff believes, it was agreed and understood by Johnson, Ames, and all the parties interested in the estate, that in case the administrator should collect assets sufficient to pay the debts, and there should be any surplus, then Johnson, as being specifically interested in the property, would have a good claim in equity upon the same, to the amount of his interest in the capital stock and profits, as before stated, and the administrator, widow, heirs and next of kin to Hyde, to whom such surplus might come, would stand chargeable as trustees therefor ; that after the report of the commissioners and an order for the payment of the partnership debts, Ames received assets sufficient to pay their full amount and leave a considerable balance ; that Hyde had, at his death, divers parcels of real estate and certain personal property, which have not been required for the payment of his debts ; that all the real and personal estate which has come into the hands of Ames, subject to Hyde’s debts, and all which has or may come into the possession of the widow and heirs, have and will come charged with a trust in favor of the plaintiff, to the amount of Johnson’s interest in the copartnership property at the time of its dissolution. The prays for a discovery and relief. The defendant Ames pleads in bar, that after the death of
    Hyde, viz. on July 23, 1823, letters of administration were granted to Ames, and that he accepted the trust; that by St 1791, c. 28, it is enacted, that no administrator shall be held to answer to any suit, unless commenced within four years after his accepting that trust, provided he gives notice of his appointment in the manner prescribed by St. 1788, c 66, and that Ames gave such notice ; that if the laintiff, in her own right or as executrix, ever had any cause of action, as alleged, she did not commence any suit within fo years. And insisting on his plea, Ames admits that the intestate died possessed of certain leasehold estate, &c. but he avers that he accounted therefor at a probate court held on September 26, 1825, and he denies that other property has come to his hands which has not been inventoried and accounted for ; and he denies that any agreement was made by him to account with Johnson.
    The plea of the widow and heirs of Hyde sets out the grant of administration to Ames, the representation of insolvency, the report made on January 17, 1825, of claims allowed by the commissioners, the allowance of the administrator’s second account on February 7th 1825, without objection on the part of Johnson, the presentation of a third account on September 26, 1825, and the allowance of it after public notice, and the decree of the judge of probate, that the whole amount of claims allowed and interest should he paid, there appearing to be a balance more than sufficient for that purpose ; it further alleges, that by St. 1788, c. 66, where certain demands against the estate of any person deceased, arise by virtue of any agreement that could not be claimed until after the term of three years from the time of notice of the appointment of an administrator, the agreement not being in full force during that term, the claimant may have his remedy against those who inherit the estate, if such claim be made within one year from the time of its becoming due ; and it further alleges, that if the plaintiff or her testator, had any such claim, the same arose within one year from September 26, 1825, hut that neither of them gave notice of such claim, nor was a suit brought therefor.
    
      
      March 25th, 1830
    The administrator, widow and heirs severally plead the proceedings which took place in the administration of Hyde’s estate, and that Johnson did not within twenty days after the report of the commissioners, give notice in writing at the probate office, of his intention to have his claim determined at common law ; and they then plead the St. 1784, c. 2, barring the claim of a creditor under such circumstances, unless he shall find some other estate of the deceased, not inventoried or accounted for by the administrator ; and they deny that there is any not accounted for.
    In the defendants’ answer in support of their plea, they severally deny any agreement or understanding with the administrator, that after the payment of debts, Johnson should have a claim in equity to the surplus, or that the administrator, widow and next of kin would stand chargeable as trustees, &c; or that Johnson did expressly give notice to the administrator that such was his right, as alleged in the bill; and they deny that any estate has come to their knowledge, which has not been inventoried or accounted for.
    
      Fletcher and Aylwin, for the defendants.
    The trust, if any, alleged in the bill, is a trust by implication only, and consequently is within the operation of the statute of limitations. Further, where there are concurrent remedies at law and in equity, the statute of limitations is a bar in equity. Coster v. Murray, 20 Johns. R. 576. The bill, in fact, is not founded upon any trust, but upon an agreement that Hyde should take the property, pay the debts, and account to Johnson for such sum as should be due to him for capital advanced and for his share of the profits ; and an action at law might have been maintained upon this, as upon any other agreement. Scott v. Surman, Willes, 404 ; Sturt v. Mellish, 2 Atk. 612. The plaintiff’s testator had a remedy at lay-' under the peculiar jurisdiction respecting claims against insolvent estates. St. 1784, c. 2 ; Wilby v. Phinney, 15 Mass. R. 122. Commissioners of insolvency might have reported that the claim of the plaintiff’s testator should be allowed, to be paid after the other debts; or the commission might have been opened after the other debts had been paid, and the plaintiff’s testator have been allowed to take a future dividend. Dodge v. Breed, 13 Mass. R. 537 ; Sewall v. Sparrow, 16 Mass. R. 24 , 1816, c. 62 ; St. 1821, c. 72. This estate was represeated in 1823 to be insolvent, and the debts allowed by the commissioners were ordered to be paid in full in 1825. Johnson neglected to pursue the course .pointed out by the statute, to have his claim determined at common law, after it had been rejected by the commissioners. He might still, however, for more than a year after 1825, have applied to the judge of probate to open the commission ; but this also he neglected, and after the lapse of more than another year this suit was com menced. He lost his remedy by his own laches. There is no equity to support the suit as against the administrator. The whole property which came into his hands has been distributed, and after four years from his appointment it is too late to require him to call upon the distributees to refund. Nor are the heirs at law liable to the plaintiff’s demand, under St. 1788, c. 66, § 5, since it might have been claimed against the administrator.
    
      Shaw and Bartlett, for the plaintiff.
    The first plea is not a bar to the suit, because the statute of limitations therein relied on, has reference to the claims of creditors only. Johnson was not a creditor of Hyde. They were tenants in common of the partnership property, and Hyde retained the custody of it upon trust to pay the partnership debts and account to Johnson for the surplus ; aqd upon Hyde’s death the property went into the hands of the administrator charged with the same trust. Johnson, being only a dormant partner, had no right to take possession of it as surviving partner. Gow on Partn. 334 ; Johnson v. Ames, 6 Pick. 330 ; Lord v. Baldwin, ibid. 352, and cases there cited. The suit then is not against the administrator as upon a demand existing against Hyde at the time of his death, but it proceeds upon the ground, that the administrator having more property than was required to pay all claims against the firm, the character of trustee was superinduced upon him. The statute of limitations is no bar in equity to a trust. Kane v. Bloodgood, 7 Johns. Ch. R. 90 ; Decouche v. Savetier, 3 Johns. Ch. R. 190; Prince v. Heylin, 1 Atk. 493; Coster v. Murray, 5 Johns. Ch. R. 532 ; Trecothick v. Austin, 4 Mason, 29.
    
      Nor can the plea of the widow and heirs be sustained; If the surplus was distributed among them, the plaintiff has an equitable right against them. Supposing that this claim did not exist within the four years subsequent to the appointment of the administrator, it is objected that it was not made against the heirs within one year after the cause of action accrued. But no cause of action has accrued, as a balance has never been struck. After the administration was closed, a creditor whose debt had not been paid might have enforced payment against Johnson, and thus the balance would have been altered. But the statute pleaded does not apply, for this is a claim not by a creditor, but by a cestui que trust, and it is made against the widow and heirs, not as having assets by descent, but as holding trust property.
    The third plea is by all the defendants, and is founded upon Si. 1784, c. 2, which provides, that the claim of a creditor which has been rejected by commissioners of insolvency, shall be barred, unless he shall give notice within twenty days of his intention to have it determined at common law and shall prosecute his action as soon as may be. The answer is, that this was not the claim of a creditor which could be thus enforced, and it was rejected by the commissioners because it could not be brought into competition with the claims of creditors. If they had reported that he was a copartner with the deceased and that his demand should be allowed after the other claims were settled, and the estate turned out to be solvent, such allowance would have been inoperative.
    This is a trust arising in the settlement of an estate, and the Court have equity jurisdiction in the case by virtue of Si. 1817, c. 87 ; but without relying upon that statute, it is clear the plaintiff comes under Si. 1823, c. 140, giving power to the Court to hear and determine in equity all disputes between co-partners &c. “ and their legal representatives,” in cases where there is no adequate remedy at law. The words legal representatives will embrace all persons who come into the same trust as volunteers or as beneficially interested, such as guardiáns, executors, administrators, heirs and distributees ; the provision may not extend to purchasers. Whether any of the oartnership property remains specifically or not, is immaterial; 
      for if it does not, it has been applied to the private debts of Hyde. The plaintiff’s testator had no remedy at law, for whether an action will lie between partners depends on the fact of a balance having been struck, or on the operation of the action itself to strike a balance.
    
      April 2d, 1831.
   Wilde J.

delivered the opinion of the Court. The plaintiff having failed to recover in an action at law against N. F. Ames, administrator of the goods and estate of Ezra Hyde deceased, now seeks relief in equity against him and the widow and heirs of the deceased.

In delivering the opinion of the Court in the former action, it was suggested by the late chief justice, that a remedy might perhaps be had on a bill in equity. This suggestion was made for the consideration of counsel, and was not intended to intimate an opinion upon a question which had not been discussed nor deliberately considered. I apprehend, however, that there can be little doubt, that a remedy may be had in equity, if it has not been lost by the laches of the plaintiff or her testator.

It has been objected that the heirs are not the legal representatives of the deceased, within the meaning of Si. 1823, c. 140. Undoubtedly heirs generally are not to be so considered. But if the requisite measures had been pursued to render the heirs liable to respond the plaintiff’s demand, then we think they might have been considered as the legal representatives of the deceased, within the true meaning and intention of the statute. But the opinion we have formed on the main question raised by the pleadings, renders it unnecessary for us to decide upon this point.

The defendants plead in bar of the plaintiff’s suit, the proceedings in the court of probate under the statute of 1784. c. 2, for the distribution of insolvent estates ; also the statute of limitations of 1788, c. 66, and the statute in addition thereto, of 1791, c. 28. The question is, whether upon the facts charged in the bill, and those averred in the defendants’ pleas, the plaintiff’s suit is barred by both or either of these statutes.

It has been contended, that these statutes were intended to operate only upon demands against the estates of deceased persons, and that the plaintiff does not claim as creditor, but as the joint owner with the defendants, of property held in trust by them. By the 2d section of St. 1791, c. 28, it is enacted, that all suits against executors or administrators in that capacity, shall be barred, unless the same shall be commenced within four years from the time of their accepting that trust respectively. This limitation is not expressly confined to suits of creditors, but it must be construed in connexion with the statute to which it is an addition ; and in this connexion, there can be no doubt that it was intended to operate only upon suits commenced by creditors. It was so construed by Story J. in the case of Trecothick v. Austin et al. 4 Mason, 29, and the statute does not seem to admit of any other reasonable construction. So the 5th section of St. 1788, c. 66, which gives and limits tire remedy against heirs, provides only for demands against the estates of deceased persons.

We are however of opinion, that upon the facts stated in the bill, the plaintiff has no remedy in equity, excepting for his claims as a creditor, it appearing by the bill that the partnership property was suffered to remain in the hands of Hyde, the active partner, and that after his death, it came into the hands of his administrator and has become so intermingled with the mass of the intestate’s property that it cannot now be distinguished from his own. This arrangement was assented to by the plaintiff’s testator, he relying on the promise of his deceased partner to account with him, and to pay over any balance which might be found due after the payment of the partnership debts. With a full knowledge of the state of the concern, he elected to consider himself as a creditor, and made his claim accordingly before the commissioners, for allowance. If by his own laches his remedy as a creditor has been barred, the plaintiff cannot now be allowed to waive or disannul this arrangement, and trace his share of the partnership property wherever it may be found, even if this were practicable. A part of the partnership property, no doubt, has been sold ; what part, does not appear ; and a part of the property for which the defendants are called upon to account, is real estate, purchased by the intestate in his own name, and it is not averred that there was any declaration of trust in writing, as required by the statute. These are insuperable objections to charging the defendants as trustees in their own right, and therefore it is not necessary to consider the question whether, if they could be so charged, this Court has any jurisdiction in cases of trusts of this description. The law on this point is laid down by Mr. Justice Story, with his usual clearness and accuracy, in the case of Trecothick v. Austin et al. 4 Mason, 29, already cited. “ If,” says the learned judge, “ there is any specific personal property in the hands of a testator, belonging to others, which he holds in trust or otherwise, and it can be clearly distinguished from the testator’s own property, it is not assets in the hands of his executors, but is to be held by the executors as the testator himself held it. But if the testator has money or other property in his hands belonging to others, whether in trust or otherwise, and it has no ear-mark, and is not distinguishable from the mass of his own property, the party must come in as a general creditor, and it falls within the description of assets of the testator.”

.Considering then the plaintiff’s demand in right of her testator, as a demand against the estate of Hyde, the intestate, the question is, whether the matters and things disclosed in the pleas are sufficient to bar this suit.

The general effect and operation of the statutes of limitations upon suits in equity, were fully discussed and deliberately considered in the case of Farnam v. Brooks, 9 Pick. 242. In that case it was decided, that the general statute of limitations operates with us ex vigore suo in equity, as well as at law, excepting in cases of direct trusts, which were never directly subject to an action at common law, these being mere creatures of a court of equity, and not within the view of the legislature when the statute was passed ; but that other trusts, such as trusts resulting from partnerships, and the like, are to be held liable to the operation of the statute. This is substantially in conformity with the decisions in chancery in Eng land, excepting that the courts of equity there do not consider tile statute as binding upon them ex proprio vigore. The general principle is, that where there is a concurrent remedy at law and in equity, the same bar may be pleaded, in whichever jurisdiction the suit may be brought. Kane v. Bloodgood, 7 Johns. Ch. R. 90 ; Robinson v. Hook, 4 Mason, 150 ; Trecothick v. Austin, ibid. 30. Now it is clear that the plaintiff, or her testator, had a remedy at law, notwithstanding the rejection of his claim by the commissioners. He might have given notice at the probate office of his intention to prosecute a suit at law, and according to the principles laid down in Wilby v. Phinney, 15 Mass. R. 116, it is difficult to perceive on what ground such an action could have been successfully defended. Johnson, the testator, was a creditor for the capital advanced, and for his share of the profits, and there was an express promise by Hyde to pay the same, as is charged in the bill. We .think therefore the testator had a remedy at law, if he had seen fit to pursue it. He would not have been entitled to a share in the distribution of the assets to the prejudice of the creditors of the firm ; but after their debts were paid, no further obstacle remained to prevent him from obtaining the fruits of his judgment. And without commencing an action, if he had applied to the judge of probate to open and extend the commission of insolvency after the partnership debts had been paid, there can be little doubt that a remedy might have been had under the commission. But if the plaintiff’s claim was contingent, as has been contended, and could not have been ascertained and enforced against the administrator of Hyde’s estate, it might have been enforced against his heirs, if there had been no laches of the plaintiff and her testator. We have, however, no doubt that an action might have been maintained against the administrator of Hyde, after the rejection of the plaintiff’s claim by the commissioners. We think therefore, that the pleas in bar are sufficient, and that the defendants ought not to be held to answer further to the bill.

Bill dismissed. 
      
      
        Shaw C. J. did not sit in the cause.
     
      
       See, as to the construction of St. 1823, c. 140 (Rev. Stat. c, 81, § 8), Miller v. Lord, ante, 11; Pratt v. Bacon, 10 Pick. 123; Russell v. McLellan, 14 Pick. 63; May v. Parker, 12 Pick. 34.