Case ID: cow_9/html/0339-01.html
Source: Caselaw Access Project
Author: {"author": "Savage, Ch. J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

*Roswell L. Colt, (who is impleaded with Peter A. Jay, administrator, with the will annexed, of Jacob Le Roy, deceased,) appellant, against Mary Elizabeth Lasnier, Countess D’Aitz, and Nicholas Gilbert, administrator de bonis non, with the will annexed, of Joseph Lasnier Dulary, deceased, respondents.
    ALBANY,
    Dec. 1827.
    Any person receiving from an executor the assets of his testator, knowing that such disposition of them is a violation of the executor’s duty, is to be adjudged conniving with the executor to work a devastavit, and is accountable to the person injured by such disposition directly, on a bill filed by him.
    E. g. Where the executor, being one of a trading firm, with the knowledge of the firm, mixed the funds of his testator’s estate with those of the firm, and they were thus employed in trade; field, that the firm were liable for these funds to a legatee of the testator;
    And this, even admitting that the funds had been carried to the account of the executor, and the account as to these closed on the partnership books.
    The English and American cases upon this doctrine stated and commented upon, both as they respect the rights of legatees and creditors. Per Savage, Ch. J. delivering the opinion of the court.
    The executor, or, if he be dead, his personal representative, should be a party to the investigation; and the cause may stand over after a hearing and opinion given upon the merits, till he be made a party. Per Betts C. Judge, sitting for the chancellor, and giving reasons.
    An administrator de bonis non is the full representative as to all effects not duly administered; and may seek a discovery and account of them in whosoever hands they may be, so long as they belong to the estate. Per Betts C. Judge sitting for the chancellor, and reasoning in support of his decree.
    
      Semb. persons beneficially interested, e. g. legatees, may sue in their own names, without the aid of an administrator de bonis non, those dealmg with an executor, knowing that such dealing is a misapplication of the testator’s property. Per Betts C. Judge sitting for the chancellor, and, reasoning in support of Ms decree.
    The general rules as to who are necessary parties in a court of equitj adverted to as laid down by different chancellors and judges. Per Betts C. Juiige, sitting for the chancellor, and reasoning in support of Ms opiMon that a new party should be introduced.
    The ordinary course in chancery, where a want of proper parties appears at the hearing, is for-the cause to stand over in order that they may bo added. Per Betts C. Judge, arguendo, sitting for the chancellor.
    *A cause was directed to stand over, at the hearing, without costs, in order to add parties, inasmuch as the defendant should have objected by plea or demurrer. Per Betts C. Judge sitting for the chancellor.
    On appeal from the court of chancery-. The case below was as follows : Joseph Lasnier Dulary died in the city of New York, some time in January, 1807, leaving the whole of his estate by will to his only daughter, Mrs. D’Aitz, one of the respondents, she then residing in Gaudaloupe. The will appointed her executrix, and Jacob Le Roy of the city of New York, executor. Jacob Le Roy alone proved the will. He was at the time, and so continued till his death, in 1815, in partnership with the appellant, Colt, under the firm of Jacob Le Roy & Son, with whose capital the funds of Dnlary’s estate were mixed, and used in their joint business or trade; both being with the knowledge and consent of the appellant. The bill was filed by the respondents in the court below against the appellant, as surviving partner, to obtain from him an account of those funds.
    The answer insisted upon two grounds of defence: 1. That, stopping With the case as above stated, the firm, as such, were never accountable to the respondents hut only to -Jacob Le Roy; and 2. It sets up, in addition to the above case, and by way of avoidance- and defence, a matter not touched by the bill; that if the firin was originally accountable, yet in November, 1814, in the lifetime of Le Roy, the executor, he ordered the accounts of Dulary’s estate to be closed upon the partnership books, and transferred to his (Le Roy’s,) account only, which was done.
    The court of chancery, after amending the bill as to parties in the manner hereinafter mentioned, decreed the account prayed; whereupon the appellant brought his appeal to this court.
    The cause was decided in the court below by Betts, late C. Judge sitting for the chancellor, pursuant to the statute (sess. 49, ch. 303,) who gave the following reasons for his decree, to which the reader is referred, in connection with the opinion of the chief justice delivered in this court for a sketch of the proofs upon both points of the defence :
    *Betts, C. Judge. Two objections to the case, made on the part of the complainants, are raised by the answer; either of which, if sustained, will defeat this suit upon the merits: It will be important to consider these, before adverting to the other points in the cause.
    It is first contended that the co-partnership of Jacob Le Roy & Son was never responsible to Dulary, or his representatives, for the effects of Dulary’s estate in their hands; that all the responsibility incurred by the house was with Jacob Lc Roy individually, who was one of the concern; and, accordingly, they were to account to him alone.
    This is the general bearing of the answer, though its language is not throughout consistent with this objection.
    In his first answer, the defendant insists that the account of the estate was closed and settled by the firm with Jacob Le Roy, the latter part of 1814, or early in 1815; “from which time,” he says, he considered he had nothing further to do with the account, or with any of the affairs of the estate, and had a right to, and did consider himself discharged from any further liability thereon.
    In his further answer, the defendant says, “ by his former answer he meant to, and does aver, that from the time Jacob Le Roy gave orders to close the account, he did not and does not consider the firm answerable to Dulary or his representatives.”
    This language undoubtedly implies, that there was a period in. which such liability did exist, and that the defendant was conscious he had for a time been under such relationship to Dulary or his representatives, that they might have recovered the effects of the estate from the firm. If the court adopts and acts upon this import of the answer, it wholly obviates the objection that the partnership were never answerable; and the defence would rest upon the effect of the settlement referred to and set up as a bar to this action. It might, however, be deemed an undue stress upon the terms of the answer, to fix upon the defendant so important a consequence by mere implication.
    Where no disposition is manifested by a party to suppress or evade the truth, the principle of this court is,' to avoid Concluding him by nice and exact constructions of his pleadings; and it rather aims to deal with them with a view to their general scope and broad sense.
    The plain tenor of both answers is, to resist the plaintiff’s claim because neither the defendant nor the house of Jacob Le Roy & Son ever had any direct dealings with the estate of Dulary; and, in all transactions connected with it, acted as the mere servants or agents of Jacob Le Roy. Assuming the facts to be so, would they exonerate the defendant from responsibility in this action ?
    Had the house of Jacob Le Roy & Son possessed them selves of these funds tortuously, then according to the old authorities, this remedy could not be had against them, there being no privity upon which to support an account. (Dalison’s Rep. 99, case 30.)
    And the rule has been carried so far as to deny the action, where the property was not obtained directly from the party entitled to it, or avowedly for his use. (Fitz. ab. Accompt, pi. 97. Fitz. N. B. 119 b. 1 Vin. Abr. 142. 1 Roll. Abr. 118, pi. 5 and 6. Though Roll, puts the proposition with a dubitatur.)
    
    The party claiming would undoubtedly now be permitted to waive the tort, and. proceed for the value of the property, upon the implied assumpsit. The action of assumpsit is sustained upon facts far less indicative of an undertaking to pay, or of a liability in good conscience. CLamb v. Bunce, 4 M. & S. 275.)
    And when, from all the circumstances, a promise or direct liability to the demandant might be inferred, the party holding money or property belonging to another has always been compelled to account to the owner, or his representatives, for it. (Brooke’s Ab. Accompt, pi. 8 and 24. Fitz. N. B. 116 Q. Ibid. 118 B‘. note a. Tripler v. Olcott, 3 John. Ch. Rep. 473.)
    But, although the legal authority over the estate was possessed by Le Roy, after the death of Dulary, and he had been specially entrusted with moneys during the lifetime of Dulary, yet the proofs in the case most abundantly establish that the co-partnership had the exclusive possession and use *of all the funds ; and Mr. Hilton and Heyer prdve payments of rent and dividends of stock to the firm, from time to time, and that the defendant himself had given receipt for such dividends in the name of the firm. In this respect, the firm acted as assumed trustees in behalf of the heirs and representatives of Dulary. (Mason v. Roosevelt, 5 John. Ch. Rep. 541.)
    The answer admits the moneys of the estate were used in the business of the firm; and to fix beyond all question their own idea of their relationship with the estate, an account was opened and continued to December 31, 1814, upon the books of the co-partners, charging themselves and crediting the estate with moneys on hand, rents and dividends of stock received, and interest thereon, $1719 09. This would be conclusive evidence in any court, that the firm acquired.and held the moneys as belonging to Dulary’s estate and not to Jacob Le Roy ; and would subject them to account to him during his life, and his representatives after his death. (Fitz. Abr. Accompt, 6 & 45. (a) This objection accordingly is overruled.
    The next ground of defence going to the merits of the plaintiffs demand, is, that in November, 1814, Le- Roy, the executor of Dulary, ordered the accounts of that estate closed upon the partnership books, and transferred to his account solely. The answer alleges this direction, and that the change immediately took place. The account of the firm with the estate, as written up by the defendant, closes the 31st of December, 1814, and is then carried to the individual account of L'e Roy.
    
      It is to b,e remarked, that, the answer cannot be receive.fi as proof' for the defendant to this point, there being no allegation in the bill calling for this statement..
    The testimony of Gordon, whose general character is. supported, goes very strongly to prove this point in the defence.
    He says he balanced the hooks of the partnership on the 31§t of December, or very shortly after; and that after the change of accounts, Mr, He Roy frequently had the books *at his dwelling-house, and was in the habit of inspecting them daily in the counting-house. And the witness speaks of a faint' impression, that he furnished He Roy a copy of this account subsequently. This may be corroborated by the testimony of Mr, Jay, who found a copy of Dulary’s account with He Roy’s papers after his death; and that copy not being furnished me, I am probably to infer it corresponds with the present state of the books,
    Enough is here proved, if Gordon is to be credited, to establish the fact that the account was altered with the assent and approbation of He Royfor apart from all reference to the copy of the account, it is wholly improbable and incredible that a particular- of so much importance to. him should have escaped his notice, He was made individually liable to hi's testator’s estate for near $12,000,«of moneys lent to the firm; and his own account with the co-partnership must accordingly have been varied t.o bis advantage to that amount. If he was not, in his then state of health and' mind, accustomed to acquaint himself with all the dealings of the house, or if, there being no call for settlement or advances in behalf of the estate, it is not to be supposed his attention would be directed to that particular account, yet he must be deemed so, far watchful of his own interests as to know how his individual account stood with the firm, And if shown conusant of the change, his consent and direction to its being made must necessarily be implied.
    This branch of the case, it is therefore manifest, rests essentially upon the accuracy of the witness Gordon. He fixes the time this account was written up, from general recollection, without aid from any concurrent acts which he can now recall. In a strict scrutiny of his testimony, it would not escape remark, that he, after all, had nothing to guide his memory but the date of the charge, and his usual habit of finishing that business. The account and date is in the hand-writing of the defendant; the witness did no more than make up the balances of the Respective accounts, and this he usually accomplished the last of the year or by the middle of January.
    The defendant resides in Baltimore or Paterson, and the decided preponderance of evidence is, that he was not in the city of New York between the 25th of November, 1814, and the 31st of January, 1815. Le Roy died the 13th of February; and the defendant was then at Trenton, attending the sitting of the New Jersey Legislature.
    The defendant’s permanent residence being out of the state, it was incumbent on him to show he was in the city long enough to write the accounts appearing in his hand, between the 31st of December and middle of January, the period fixed by Gordon; or otherwise prove positively that Le Roy had seen and approved this account.
    I do not, however, dwell upon the proofs bearing on this inquiry, because, assuming this fact to be established as set up by the defendant, my decision will be placed upon another principle, that whenever the change in the manner of carrying on the accounts may have taken place, it not bqing accompanied by an actual transfer of the funds, the responsibility of the co-partnership is not affected by it. A new adjustment or statement of the accounts, and passing the amount to the credit of Le Roy with the firm, without an actual payment, is no legal acquittance. (1 Chit. PI. 25; Buffer y. Harrison, Cowp. 565, Crane v. Drake, 2 Vern. 616. Dickerson v. Lorkyer, 4 Yes, 42. 1 Equ.. Cas. Ah. 240.)
    It is not set up by the answer that the firm paid over the money to the executor at the settlement. The effect of the arrangement, as represented by the answer, was, that the firm held the money and Le Roy assumed the debt.
    The only consideration to support this transfer is the supposed indebtedness of Le Roy to his co-partnership
    
      Lord Hardwicke ruled such assignment to a bona fide creditor good against the children of the testator. (Nugent v. Gifford, 1 Atk. 463.) Yet he recognised Crane v. Drake, because there he perceived a contrivance to produce a devastavit ; and that accordingly the assignee was not a bona fide purchaser. 01
    * Crane v. Drake was this : The testator owed the plaintiff £100. The defendant, knowing that debt, bought of the executor a lease-hold estate, paying £150 in cash, £200 in a debt due him by the testator, and the balance, £550, in a debt due him, the defendant, by the executor. The testator died possessed of a great personal estate, which the executor wasted. The master of the rolls decreed for the plaintiff; and, on appeal, the lord chancellor affirmed the decree, saying, “ the defendant was a party, and consent ing to, and contriving a devastavit.” (2 Vern. 616.)
    The present case comes fully within the view taken of Crane v. Drake by Lord Hardwicke. The case of Nugent v. Gifford has never been yielded to. Lord Kenyon questions it in most direct terms, and says he would have given a contrary decision. Bonneyy. Ridgard, 1 Cox, 145. And in Hill v. Simpson, it is considered an exception from the well established doctrines on this subject. (7 Ves. 152.) 
    
    Lord Thurlow ordered bonds of the testator, pledged by an executrix for her own debt, to be delivered up. The pawnees knew they were receiving the testator’s effects.
    He says, if one concerts with an executor, by obtaining the testator’s effects, and applying them in extinguishing the private debt of the executor, contrary to the duty of the office of executor, such concert will involve the seeming purchaser or pawnee, and make him liable for the full value. (Scott v. Tyler, 2 Dick, 724, 5.)
    Suits against those purchasing of factors or agents, or against creditors who receive in payment of their particular debts bills drawn by factors or vendees, is a common head of equitable relief. (Mitf. 129, 130. Lisset v. Reave, 2 Atk. 394. Bowen v. Robinson, 2 Caine’s Cases Er. 341, Bay v. Coddington, 5 John. C. Rep. 54. S. C. 20 John. Rep. 658. Himley v. Cowing, 7 John. C. Rep. 278.)
    It is true, executors stand on different, and, in some respects, higher grounds than agents, factors or trustees ; for *though in equity they are mere trustees for the performance of the will, yet in many respects, and for many purposes, third persons are entitled to consider them absolute owners of the assets in their hands. (7 John. Ch. Rep. 17.) And, therefore, in case of a fair sale, the court will never disturb the possession of the purchaser because the executor has misapplied the proceeds. But the cases already cited make it most manifest, that no one, knowing their character, can deal with them for the security of his individual claim on the executor by means of the testator’s assets. And Lord Thurlow goes still further, in Scott v. Tyler ; for there the bankers swore they were ignorant of the, will, and believed the bonds they received were the sole property of the executrix. The consideration of the rule, as understood and applied in England, has been more particular, on this occasion, inasmuch as chancellor Kent, in a late case, seemed inclined to adopt Nugent v. Gifford, and Whale v. Booth, as affording the true rule—that the executor had the absolute property in the assets, and could transfer them to his own benefit without any actual equivalent. (Sutherland v. Brush, 7 John. Ch. Rep. 17.) It is true, the chancellor, in a subsequent case against a guardian, seems to retract this doctrine, and to hold that an executor could not apply the assets in satisfaction of his own debts, nor part with them, but for a fair price paid; yet the point was not before him as to this power of an executor, and he does not question, in terms, the previous case. He says, the latter and better doctrines now is, that a creditor deals' at his peril when he takes from an executor assets, knowing them such, in satisfaction of his own debt. (Field v. Schieffelin, 7 John. C. Rep. 150.)
    Here the partnership knew perfectly the nature of these funds, and took them to cover an old debt against a partner they supposed to be insolvent.
    The settlement alleged to have been made the 31st of December, 1814, cannot, therefore, avail the defendant against this claim.
    The determination of these two points disposes of the defence upon the merits.
    "“Objections are however, taken, that the action is brought by improper parties, and that necessary .parties are not made defendants.
    There is no weight in the first objection. An administrator de bonis non is the full representative of the testator as to all effects not duly administered.  Com. Dig. Admr. [B. L] Farwell v. Jacobs, 4 Mass. Rep. 634.) He can therefore, seek a discovery and account of assets, in whosoever hands they may be, so long as they belong to the estate.
    There are also well defined cases in 'which persons ben eficially entitled to the assets can, without the aid of the administrator, sue in this court those dealing with an exe cutor, knowing he misapplied the testator’s property, f 1 Madd. Treat. 287. Crane v. Drake, 2 Yern. 616.)
    Two cases before cited are those of daughter's legatees prosecuting the executors, and those who had obtained assignments of effects from the executors. (Scott v. Tyler, 2 Dick. 712. Bonney v. Ridgard, 1 Cox, 145.)
    Dickenson v. Lorkyer is this very case, as to the plaintiffs. That was a bill filed by the administrator de bonis non, and a particular legatee, against a trustee under the will, and another who had obtained a discharge of his bond from the trustee bona fide, but without actual payment. (4 Yes. 35.)
    The remaining objection, that the proper and necessary parties are not made defendants, appears to me, at least to a certain extent, well taken.
    
      The question of who are proper and necessary parties, so constantly recurring in the proceedings of this court, has never yet been solved by any rational and plain rule of discrimination. It is clear, the general proposition, that all whose interests are to be affected by the decree, must be before the court, gives but little definite instruction; for it still rests uncertain what degree of remoteness of interest will excuse .bringing in parties, or prevent their uniting!
    The well established exception of creditors and legatees excludes a wide class, who all have material connection *with the subject matter in suit, and is so broad in its operation as to render the rule senseless or nugatory in a great variety of its applications!
    The subject has been maturely considered in England and this country, and the difficulties of fixing a rule which shall be precise, yet invariably accurate, have been found so multiform and serious that the courts, after attempting to bring innumerable special, cases under some common principle, have in the end concluded, as Lord Eldon expresses himself, “ that it must be a point always to be modified by the court according to the exigencies of the case or, as Chancellor Kent puts it, to “ leave the question to the discretion of the court, that usually being governed by considerations of conveniency;” or, as chief justice Marshall expresses it, “ the rule addresses itself to the policy of the court—it is framed by the court itself, and is subject to its discretion;” or, as Mr. justice Story, who reviews with great discrimination all the important cases then extant, says, “ the rule is not so inflexible "that it may not fairly leave much to the discretion of the court.” (Cockburn v. Thompson, 16 Yes. 325. Wise v. Blackly, 1 John. Ch. Rep. 437. Elmendorf v. Taylor, 10 Wheat, 167. West v. Randall, 2 Mason’s Rep. 181.)
    Yet whether this direction be absolute, such as to pass upon each case, as noves impressionis, or is only exercised in points of conveniency, touching the numbers or residence of parties ; it has in no approved book been applied to retaining a party defendant, who palpably has no interest in the subject of litigation, and disclaims all connection with it.
    
      Is the defendant so circumstanced ?
    The defendant stands in the relation of debtor to the es» tate; and if proceeded against in that character by the legatee solely, the bill would be dismissed, unless clear proof was produced that he had collusively arranged his debt with the executor. Lord Eldon says, “that sort of bills are maintained on the ground of collusion alone.” (Doran «. Simpson, 4 Yes. 664.) In the note to Elmslie v. M’Auley, (3 Bro. C. C. 627/Eden’s ed.) many cases are collected, establishing the principle that a creditor or legatee cannot make a debtor to the estate a party, unless there be collusion, insolvency or some special case. Crane v. Drake was a case of collusion. • Burroughs v. Elton, in of its features, was a suit against a debtor by a creditor of the estate, the executor being insolvent and unwilling to act. (11 Yes. 34.) Berkley v. Dorrington, decided by Lord Hardwicke, considers collusion and insolvency, the special cases permitting this form of redress; but Lord Eldon, in citing and approving that case, carries the doctrine to other instances, as it is also accepted and applied, in this court. (Alneger v. Rowley, 6 Yes. 748. Long v. Majestre, 1 John. Ch. Rep. 305.)
    The argument for the defendant assumes, that he is responsible to the representatives of Le Roy solely, and that a recovery of them by the defendant would be for the benefit of the plaintiff".
    That is the usual course of proceeding, and it is quite plain that this court may require executors to collect the assets in behalf of creditors, and will control the proceedings in case of a reluctant or insolvent executor, and under fit circumstances appoint a receiver to guard the rights of creditors. (Ulterson v. Main, 2 Yes. jun. 94.) But apart from the circuity of this mode of proceeding, which a court of equity will always endeavor to avoid, (1 Com. Dig., 226, H.,) and in the simplest manner practicable render persons ultimately responsible, immediately so in behalf of creditors, (Riddle u.Mandeville, 5 Cranch, 322,) it might be attended with important disadvantages to the plaintiffs.
    For should the court direct a suit by the representatives of Le Roy against the defendant, it would thereby treat the transactions as a bona fide loan by one of the co-partners for the business of the firm, and the recovery might be subject to a full accounting upon the partnership dealings, and depend upon the eventual balance. It might prove in the result that Mr. Le Roy was in arrears to the concern to the 1 full amount of the loan.
    The complainants ought not to be exposed to such contingency ; and it clearly appearing that the defendant has in his possession some of the effects of the estate, they may well maintain their bill directly against him alone, for the discovery and payment of the-amount. Such is the governing *principle in Long v. Majestre, (1 John. Ch. R. 305.) This must, however, be limited to the monies received by him since the death of Mr. Le Roy, the executor.
    On the 18th of February, 1815, the defendant caused to be sold (he receiving the proceeds) $4000 of U. S, new six per cent, stock, belonging to Dulary’s estate. For the present value of that stock, and the dividends which might have been received since its disposition, and the interest thereon, he must account to the plaintiffs. (Waite v. Whorwood, 2 Atk. 159.) This stock the plaintiffs have a right to follow, as never converted by the executor, and still belonging in specie to the estate. For the residue of the demand, the claim against the defendant is as the survivor of Jacob Le Roy & Son.
    It must be borne in mind that the original indebtedness of the copartnership was not directly with the estate of Dulary, but mediately, through Jacob Le Roy, his executor or trustee.
    Dulary, in his lifetime, might probably at his election have maintained his action against the firm for the monies they had received, upon the implied assumpsit; or, against Jacob Le Roy alone, upon his direct undertaking.
    But in this court, all the features of the relationship are disclosed, and to be acted on; and the plaintiffs are not necessarily entitled to recover of the defendant the extent of their demand against Le Roy; and he, in no event, ought to be responsible for more than that.
    The account then, to be taken, in consequence of the decision of this court, must necessarily be with the co-partnership of Jacob Le Roy & Son, upon "the footing Of the responsibility of that concern to the executor of IDulary’s estate, to an amount, however, not beyond the jtist claim ' of the estate upon the executor. For the house will not here be required to pay inore than the complainants could collect of the executor. To decree the whole demand against the concern, might be highly unj list; as when the defendant turns rúnnd to the representatives of Mr. Lé Roy for á contribution, they may be enabled to show a mttch less amount in arrear to Dtilary’s estate.
    *It is accordingly manifest, that the account against the defendant, representing the Co-Partnership, would be carried on under great embarrassment and inconveniency, without joining the representatives of Jacob Lé Rby; and moreover, that "the court could not pronounce a decision on Such 'accounting that would be final, in regard to the rights Of "either party.
    " Should it appear in this case, that the firm had actually and bona fide repaid any portion of the monies to the executor, such 'amount must be deducted from the recovery here : but th'e representatives of Jacob Le Roy would not be excluded thereby, from "afterwards preventing the plaintiff’s recovering of them, by controverting and disproving th'e fact of such re-payment to the executor.
    And thus, where a real deficit existed, the plaintiffs might be barred collecting it by means of a decree of this court, freeing each party separately from its payment, when the recovery would have been certain and easy, had the proceeding been against all parties at the same time.
    The prejudice to the defendant in carrying cm this cause, without joining the representative of Jacob Lé Roy with him, Would be "more probable, because he loses all the advantage and protection of the executor’s individual account against the estate. Whatever that may be, it 'ought to apply to the credit of the house, and go in diminution of this claim. And besides, he is to look, for ahy excess, beyond what the concern Ought to pay, to a partner, who is represented by both parties to be insolvent.
    These considerations render it important, that the account should now be taken in a way to conclude the rights of all parties; and so that, if practicable, the court may impose the burthen according to the equitable liabilities of the respective parties.
    The strong probability is, that the partnership books exhibit ah the credits the executor can substantiate against the estate. The court cannot, however, assume that fact. They do not conclude the representatives of Mr. Le Roy from showing greater credits. And they are no admission, by the ^defendant, of the state of Mr. Le Roy’s individual demands .upon the estate.
    It is apparent that the state of the executor’s account with the estate, becomes an important consideration in the case. That the defendant cannot exhibit; and without submitting to be charged for the balance on the books, he had a right, in behalf of the partnership, to require the cause to be so framed, in respect to parties, as that the executor’s accounts might be adjusted, before the liability of the firm was fixed; (United States v. Howland, 4 Wheat. 108;) and he is in time with the objection of a want of proper parties at the hearing, after answer and proofs, (Harding v. Handy, 11 Wheat. 103,) and need not plead that matter in abatement.
    Formerly bills were dismissed when the proper parties were not brought in. (1 Harr. Pr. 29, note L.) The practice in England and in this country is now, to order the cause to stand over, that the necessary parties may be added.  (Milligan v. Millage, 3 Cranch, 220. Harding v Handy, 11 Wheat. 163.)
    I shall accordingly order this cause to stand over, to the end that the representatives of Jacob Le Roy, deceased, may be made parties defendants, but without costs, as the defendant might have taken the objection preliminarily, by plea or demurrer. (Mitchell v. Bailey, 3 Mad. Rep. 61.) Or at the election of thé complainants, let a decree be entered against the defendant solely, for the $4000 U. S. six ■ per cent, -stock, and a reference be had to the-master, to . state the value at the time of his report; (Harrison v..Harrison, .2 .Atk. 121; Hart v. Ten Eyck, 2 John. Ch. Rep. 119 ; Bowlet v. Herbert, 1 Yes. Jun. 297;) the defendant to replace the stock, or pay such v.alue, with the dividends from the time of its. transfer, and,interest on the dividends. The same rule of damages obtains at law. (2 East, 211. ,2 Taunt. 257.) Complainants to recover costs.
    Decree accordingly.
    Subsequently, a supplemental bill was filed by the comdainants, making:Peter A, Jay, administrator of J. Le oy, deceased, a party, and praying relief against him.
    The administrator filed his answer, admitting, the allegations in the bill, and submitting:to:the. decree of the court.
    *The cause being again placed upon the calendar, and a reference to a master, to take an .account -upon the basis declared.in the above opinion, being.moved, the court, at the sitting, January- 23, 1827, ordered.the .same .accordingly.
    D. B. Ogden, for the appellant,
    contended that the house of Le Roy & Son were to be considered the mere agents or bankers, of Le Roy, the executor,-.and were accountable to him only; and that they had accounted, the balance of moneys in. the house being, by order of Le-Roy, the executor, charged to his individual-accounts.
    
      J. I. Roosevelt, for the respondents.
    The discussions of counsel were confined almost exclusively to the evidence in. the case bearing upon the points .taken by the appellant.
    
      
       See also Wilson v. Moore, 1 Mylne & K. 337 ; Cond. 77-85.
    
    
      
       Potter Gardner, 12 Wheat. 498: 6 Cond. 606, Wormley v. Wormley, 8 id. 421. Champlin v. Haight, 10 Page, 274. Eland v. Eland, 4 M. & C. 420. Wood v. White, id. 482. 2 R. S. of New York 4 ed., 141, §78.
    
    
      
       Oglesby v. Gilmore, 5 Geo. R. 56. Heffernan’s adm’rs. v. Gryme’s adm’rs. 2 Leigh, 512, 525. Coleman v. MeMurdo, 5 Randol. 51. Hagthrop v. Hook’s adm’rs. 1 Gill. & John. 270. See also 1 Kelley, R. 80. 3 id. 261. 1 Ventr. 275. Freem. 462, Bac. Ab. tit. ex’rs. b. 2. 1 Salk, 306.
    
    
      
       Anon. 9 Atk. 14. O’Bryen v. Heeney, 2 Edw. 242. Van Epps v. Van Dusen 4 Page 64. Nash v. Smith, 6 Conn. 422. See further Am. Ch. Dipoy Waterman, tit. Parties. Court Jeffrey, 1 Sim. & Stew. 105.
    
   Savage, Ch. J.

There are certain facts in this case about which there is no dispute. These are,-that Dulary, in his life time, had money in the hands of J. Le Roy & Son. That at the death of Dulary, Le Roy was appointed executor, together with Mrs. D’Aitz. That Le .Roy alone.proved the will, and took possession of all.the property; and that the estate went into the firm of Le Roy & Sons, who opened an account with, transacted the business, and used the funds of the estate, as part of their capital. And it seems to be admitted, that if this state of facts had existed at the death of Le Roy, then the firm must be held accountable to Dulary’s representatives. Whether conceded or not, such must undoubtedly be the consequence.

The important fact in dispute is, whether the firm of Jacob Le Roy and Son accounted with J. Le Roy, the executor, in his life time, and transferred to his private account the funds in the hands of the firm; and the important question of law is, whether such accounting and transfer upon the books, without an actual payment of the funds themselves to the executor, discharges the firm from the claims of Dulary’s representatives.

*1. As to the fact: Was the transfer ever in fact made in the life-time of Le Roy, and with his assent ? The allegation comes from the appellant in his answer, and is not responsive to the bill. The appellant must therefore prove the fact, or he can claim no-benefit from it.

The only evidence consists of the testimony of Gordon, who states that the account was written up before the middle of January, 1815; and Le Roy’s knowledge is an inference from the fact that the books were carried to his house every night for safe keeping, and that he attended his counting-house almost daily till his death. The account is written in the hand-writing of the appellant Colt; and Gordon swears that Colt was in New York in the month of December, 1814, and thinks he was there also in November, and in January, 1815. His cross-examination, however, shows that he has no distinct recollection about it, and presents facts as to the letter-book, and as to Le Roy’s signing notes, which render it very doubtful whether Colt was in fact in the city at the times when Gordon supposes he was.

The testimony of Roulet, and several exhibits, go strongly to prove that Colt was not in the city of New York in the month of December, 1814, or in January, 1815, till the 31st, but in Baltimore, where he resided. He is then shown to have been absent early in February ; and till he was sent for on account of the death of Le Roy. The character of the books themselves kept by Colt, is attacked by other testimony, and it is proved that several of the entries could not have been made when they purport to have been entered. All these circumstances, together with the want of certainty and precision in Gordon’s testimony, which appears upon his cross-examination, and with the admitted fact that after the death of Le Roy, and on the, 20th of February, he, in the name of the firm, transferred to himself certain stocks belonging to Dulary’s estate, render it at least doubtful, whether the books were written out, and the account of Le Roy stated in his life time. It was the duty of Colt to have established, beyond a reasonable doubt, the fairness of the transaction. At the death of Le Roy, he must have known the importance of proving this account correct, unless, indeed, he thought as *C. P. White testifies he stated to him, that this estate would never be called for. It was in his power then to have put the matter out of dispute. He has failed in my judgment, to prove what is necessary to exonerate him from the liability which once rested upon him, and of which he seems to have been sensible.

I am of opinion, therefore, that the appellant has not proved the fact, asserted by his answer; that he had accounted with the executor of Dulary’s estate.

2. But suppose the fact to be precisely as he states it; that the account was closed by directions from Le Roy, as executor, in the life time of Le Roy; does it follow that he is discharged from the claims of the respondents ?

The power of an executor over the assets of his testator and his right to appropriate them to the payment of his own debts have often been the subjects of judicial enquiry.

The first case I shall notice is, Humble 3. Bull, (2 Vern. 444, A. D. 1703.) By the will in this case the executor was to raise £2000 for the testator’s daughter, out of the profits of a printing office, in which the testator held a term of 21 years. The executor first mortgaged, and then assigned tne term for £1800. It was insisted, that there was no necessity of selling to pay debts, and Humble, the purchaser, having notice of the will, must take it subject to the £2000. The court was of opinion, that the executor might sell as he should judge necessary; and if a specific or residuary legatee was injured by such sale, a remedy existed against the executor, but not against the purchaser. This decree was reversed in the house of Lords; they, of course holding that the legatee had a remedy against the purchaser, who had notice of the wrongful act of the executor.

Crane v. Drake, (2 Vern. 616, A. D. 1708,) was the case of a creditor of the testator against the purchaser from the executor. The consideration of the purchase was £200 due from the testator, £550 due from the executor, and £150 in cash. The purchaser had notice of the plaintiff’s .debt. The plaintiff had a decree in his favor at the rolls, which was affirmed on appeal to the lord chancellor, upon the ground *that the defendant was a party consenting to, and contriving a devastavit.

The next case is Nugent v. Gifford, (1 Atk. 463, A. D. 1738.) There the executor assigned, in payment of his own debt, a mortgage term held by certain trustees for the benefit of the testator. The plaintiff, who purchased from the executor, claimed to have the benefit of his purchase as against the daughters of the testator, who were creditors by virtue of a marriage setttement. Lord Hardwicke decreed in favor of the plaintiff. He said, at law the executor has power to alien the assets of the testator; and no creditor can follow them. The demand of the creditor is personal against the executor, in respect of the assets in his hands ; but no lien on the assets. If the alienation is not fraudulent, and is for valuable consideration, this court suffers it as well as at law ; and the reason he gives is, that a purchaser from an executor has no power of knowing the debts of the testator. He states the third objection to have been, that it was a devastavit, because the consideration was a debt of the executor’s own; in answer to which, he observes, there is no difference between this and the money paid down, provided it be done bona fide. A sum of money bona fide due, is as good and valuable a consideration as any. The lord chancellor cites Crane v. Drake, without expressing any dissatisfaction with it;. and adds, here was no notice of any debts due from the testator,- and this was a debt under a settlement, which was a private transaction in ‘ a family. Although, therefore, broad principles were laid down, yet the decision, rested on the want of notice in the purchaser of the creditor’s debt.

This case has been mu’ch remarked upon by subsequent jurists. Lord Alvanley, the master of the rolls, in Andrew v. Wrigley, (4 Br. C. C. 137, j states,- that the executor was also residuary legatee; and says, it was not necessary for a purchaser from the executor and residuary legatee, to en-quire whether the debts were paid.

The case of Mead v. Lord Orrery, (3 Átk. 235, A. D. 1745,) came before lord Hardwicke, a few years afterwards. The plaintiffs were residuary legatees of old John Mead. They claimed from the defendants the avails of a certain ^mortgage, belonging to his estate, and which had been assigned by the executors, of whom young John Mead was one,as a security for his conduct as receiver of the estate of the duke of Buckinghamshire. The defendants insisted that John Mead, the younger, died indebted to the estate of which he Was the receiver, and that the defendants were entitled to have out of the mortgage the amount due from him ; arid aterred, that the executors had the power to assign the mortgage. Lord Hardwicke discussed the case at some léngth; and concluded that there was no pretence for setting aside the assignment,- as the executors had the legal right, and there whs no color of fraud: that as two executors joined in the assignment who had no interest,' and there wails' a purchase for valuable consideration, it ought not to be affected by an account to be taken of assets in favor of residuary legatees.

In Taner v. Ivie, (2 Ves. Sen. 466, 9,) the same question came again before the same learned chancellor, where he took occasion to speak of the general principles contained in the preceding cases. Among other things, he says, “ If there is collusion between an executor and another person, as to paying one part of a testator’s estate into the hands, of that other, both would he liable to make satisfaction; but at the hearing, no such fraud or collusion was made out, as' was sufficient to charge Hull, (the assignee' of the mortgage) and make him answerable, which was the ground of my determination ; not upon, any general principle, that an> assignee, or person taking security for an estate from an executor is not to- be answerable. I do- not know that there can be any such principle in these cases. They all depend on circumstances.” He then states that the case of Nugent v. Gifford was founded on Crane v. Drake, where there was a contrivance between the executor and assignee to make a devastavit; but the cases before him did not come up to it. What is said here, Lord Eldon considers a retraction of the broad principles previously advanced. (17 Ves, 164.) Lord Hardwicke, he thinks, was startled at the extent of his own doctrines. The doctrine of Nugent v. Gifford, received the approbation of Lord Mansfield in Whale v. Booth, (4 T. R., 625, n.) where he holds, that the power of the executor over the *testator’s effects is absolute, with one exception; when a contrivance appears between the purchaser and executor to make a devastavit. That case was much qualified by Far v. Newman, if not overruled by the same judges who decided Whale v. Booth, with the exception of Lord Mansfield, whom Lord Kenyon had succeeded. But in the court of chancery, the cases of Nugent v. Gifford, and Mead v. Orrery have not been supported, in their full extent, by any case that I have seen; and in Taner v. Ivie, Lord Hardwicke himself qualifies them.

The case of Bonney v. Ridgard, (1 Cox, 145, A. D. 1784), came before Sir Thomas Sewall, and afterwards before Lord Kenyon, master of the rolls. The testator devised his estate to his wife and three daughters, and appointed his wife executrix. She married Ridgard, and he and his wife mortgaged the premises, and afterwards assigned the equity of redemption, the consideration of which was principally a debt due from Ridgard, to the purchaser Barnard. The sale was in 1752, and no bill was filed till 1783. Lord Kenyon decided against the claim, on the ground of lapse of time; but expressed his opinion on the merits. He says nothing can be clearer, than that an executor may go to market with his testator’s assets; and that, in general, a purchaser will not be bound to see to the application of the money; but common honesty requires, that if there is either express or implied fraud, the parties shall not avail themselves of it. .Then, as to the facts of the case, he states the consideration for the assignment; and adds, “ this satisfies me that this money was not raised for fair, legal purposes. The fund in the hand of the widow was applicable to the payment of debts, and after that, to certain defined purposes declared by the will. Barnard (the purchaser) had full notice of the will. He knew that after the debts were paid, this fund ought to be so applied, and he therefore connived at its being misapplied.” 'In a note to this case are found.the rules,which .are supposed to govern this question at the present day, to wit: a party dealing with the executor is responsible if any way conniving at his breach of trust. As a general rule he does not become a party to the fraud by buying or receiving the assets as a pledge for money advanced at the time; .and as a #general rule, he is such party by buying or taking them in pledge in satisfaction of an antecedent debt of the executor. There are exceptions to both rules.

The same question was agitated in Scott v. Tyler, (2 Dick. 725,) where Lord Thfirlow’s opinion is fully expressed, that the title of a purchaser from an executor, of his testator’s assets, is complete by sale and delivery, and what becomes of the price is no concern of the purchaser ; but fraud and covin will vitiate any transaction. If one concerts with an executor or legatees, by obtaining the testator’s effects at a nominal price, or at a fraudulent undervalue, or by applying the real value to the purchase of other subjects for his own behoof, or in extinguishing the private debt of the executor, or in any other manner contrary to the duty of the office of executor, such concert will involve the seeming purchaser, or his pawnee, and make him hable for the full value. As to what shall amount to fraud, Lord Alvanley asks, (4 Br. C. C. 137,) can there be a stronger case of a devastavit than an executor aliening the property of his testator to pay his own debts, the alienee knowing at the time that debts of the testator were due 1 This remark receives the full approbation of Lord Eldon. (17 Ves. 162.)

The only other case which I think it necessary to cite from the English books, is that of McLeod v. Drummond, (17 Ves. 153 to 172,) where this doctrine is very fully and ably discussed, and all the important cases are collected and reviewed. Lord Eldon manifestly considers the doctrine advanced in Nugent v. Gifford, Mead v. Orrery, and Whale v. Booth, to be unsound and untenable. Upon Whale v. Booth he remarks, that he is not prepared to follow even Lord Mansfield. He cites with approbation the remark of the master of the rolls, in Hill v. Simpson, (7 Ves. 152,) that for the first time he was of opinion, that a general pecuniary legatee had a right in equity to follow the assets. He adds, the case of a residuary legatee is stronger than that of a pecuniary legatee. He has, in a sense, a lien upon the fund; and may come here for the specific fund. If it is wrong as against a creditor, for the executor to apply the fund in payment of his *own debt, why is it not equally wrong, both in law and equity to allow a third person, wilfully and fraudulently, to take from the executor that money, which, in his hands, the residuary legatee can call for as a specific property of the testator ? The whole scope of his argument is, to prove that the purchaser, or banker who receives the property of the testator from the executor, knowingly for purposes inconsistent with his duty as executor, is responsible for such- property to' the' creditors or the persons in interest.

This subject was briefly discussed by'th’e late Chancellor Kent, (7 John. Ch. Rep. 21,)where he seemed inclined to adopt the cases of Head v. Orrery, Whale V'i Booth, and Nugent ®. Gifford, though they are5 certainly considered as overruled in England. But in Field v. Schieffelin, (7 John. Ch. Rep. 150,) he goes into a more full examination of the cases, and observes, they all' agree in this; that the purchaser is safe if he is no party to any fraud in the executor" and has no knowledge, or proof that the executor intended to misapply the- proceeds, or was- in fact, by the very transaction, applying them to- the extinguishing of his own private, debt. The later and the better doctrine is, that in such" case he does buy át his peril; but that if he has no such proof or knowledge, he is not bound' to enquire into- the state- of the trust, because he has no means to support the enquiry, and he may safely repose ori the general presumption that the executor is in the due exercise of his trust. This is precisely the doctrine of Lord Thurlow, Lord Kenyon and Lord Eldon, and also of Chancellor Dessausure. (4 Des. 526, 7.)

It seems to me, therefore, the correct rule, both in England.and in this state, is, that anyperson receiving from an executor the assets of his testator, knowing that this disposition of them is a violation of his duty, is to be adjudged as conniving with the executor; and that such person is responsible for the property thus received, either as a purchaser or a pledgee. ■ The payment by the executor, of his own private debt, with the assets of his testator, is considéred clearly a devastavit, both by Lord Alvanley and Lord Eldon.

*Dpon this principle, the firm of J, Le Roy & Son con tinned responsible for the estate of Dulary, in their hands, notwithstanding the transfer, even if done by Le Roy himself.

According to the cases referred to, the receiving of the assets belonging to the estate, in payment of a private debt of the executor, was an act of connivance and collusion to make a devastavit, even if the appellant then thought Le Roy solvent. But when we consider the facts in the case showing that he must have been conusant of the fact of Le Roy’s insolvency, particularly his declaration to Mr. Jay, that the house was insolvent when he came into it; and as he had kept the books himself, and could not but know their then situation, there is no room left to doubt that he knew the transfer which is set up, if sanctioned, deprived Mrs. D’Aitz of ever realizing any part of her property from Le Roy.

In conclusion, therefore, I am of opinion, that the decree made by the court of chancery be affirmed; 1. Because the appellant has failed to show that the transfer of the account was made in the life time of Le Roy, and by his consent and direction; and 2. If it was so, and the transfer of the account was equivalent to a transfer óf the funds, still, under the circumstances of this case, Colt was not discharged from his liability to the residuary legatee. This case' then is precisely that in which, by the latest decisions both English and American, the residuary legatee has a right to pursue the assets in the hands of the purchaser.

Woodworth and Sutherland, Js., concurred: and

Per totarn curiam,

Decree affirmed. 
      
       But see Wilson v. Moore, 1 M. & K. 337.
     
      
       See also, Wilson v. Moor, 1 M & K. 337, per Lord chancellor.
     
      
       “ The General rule,” says Lord Lyndhurst, “ as to which there is no dispute, is this : where legacies alone are charged, the purchasers of the real estate are hound to see to the application of the purchase money. Where debts are charged generally, or where debts and legacies are charged generally, the purchasers of the real estate are not bound to see to the application of the purchase money.” Johnson v. Kennett, 3 M. & K. 624. Overruling S. C. 6 Sim. 384.
     
      
      " [1] Cheek v. WhtkinSj 2 Simon & Stew. 199. Cubbidge v. Boatwright, 1 Rus. Ch. Cas. 549. Pannellu. Hurley, 2 Coll. 241. Wilson v. Moore, 1 M. & K. 337. Keane v. Robarts, 4 Madd. 357, 358, per Sir J. Leach. Eland v Eland, 4 M. & Cr. 427, per Lord Cottenham
     
      
      
        .) And vid. 6 Cowen, 497.