Case ID: sc-eq_20/html/0275-01.html
Source: Caselaw Access Project
Author: {"author": "Dunkin, Ch.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Ex parte—Maria Shackelford, ex’rx of Richard Shackelford, deceased. In re—John Porter et al. v. J. W. Cheesborough, ex’or of John Porter, Jun. et al.
    
    Where two parties took a bond payable to them, or either of them, as executrix and executor of the same testator — the Court, regarding them as trustees of the estate, when the executor afterwards became executor also of the obligor in the bond, on the petition of the executrix would not allow him to deny his fiduciary character, nor her to be met with the technical objection, that the bond was extinguished by the appointment of her co-obligee as the executor of the obligor; and although all the assets of the obligor’s estate which had come into tlie hands of the executor, had been appropriated to the payment of other debts, decreed the bond debt entitled to priority of payment out of other assets yet to be administered.
    If the obligee in a bond appoint the obligor his executor, no action can lie at law, and the debt is extinguished; but in such case, equity raises a trust, not only for a residuary legatee, but for the next of kin.
    Although an executor, who is the obligee of the testator, accept and qualify on the will, he may, on failure of assets coming into his hands, sufficient for its payment, sue the heir in a court of law, for the bond debt due to him by his testator.
    In reference to the question of extinguishment, it is immaterial, in this tribunal,, whether the assets of an estate were applied to debts of an equal or lower degree.
    Where the executor of two testators had kept joint accounts, and on a separation of the accounts by the Master, had obtained a decretal order for the payment, by the receiver, of a debt found to be due him for advances made the estate of his first testator, and had assigned this order — the Court refused, on the hearing of a subsequent report on the accounts, to confirm tire recommendation of the Master to set off, against the sum assigned, the value of a negro, of the estate of the second testator, which had been sold by the executor previous to the first hearing, and not then accounted for, holding that there was no privity in the connection of the executor with these two estates, and that the rights of third parties had intervened since the decree.
    
      On appeal from the decree of Johnson, Ch. at Charleston, February, 1846.
    John Porter, of Prince George, Winyaw, who outlived his son, John Porter, jr., by his will directed the income of his estate to be applied to the maintenance of his son’s children and the payment of his son’s debts, and devised the whole in certain parts to his son’s children as they came of age. John Porter, jr., was at the time of his death insolvent, but in February, 1829, his executors obtained an order from the Court of Equity, authorizing them to borrow money on the credit of the estate. The money was borrowed on notes discounted by the Bank of the State, which George T. Ford became liable to pay as endorser, and was expended chiefly in paying simple contract debts. Mr. Cheesborough, executor of both estates, kept a joint account.
    These bills were filed in March, 1841. The first bill, by the devisees of John Porter, sought to have the accounts of the estates of John Sorter and John Porter, jr., separately taken, and for a receiver. The second bill, by George T. Ford, sought to charge the estate of John Porter with the money borrowed for the estate of John Porter, jr. Mr. D. L. McKay was appointed receiver, and the accounts of Mr. Cheesborough were referred to Mr. Gray, who was directed to separate them, and to ascertain the amount of the debts and assets of the two estates, and to give notice to creditors.
    The accounts being analized, the Master found that the estate of John Porter was indebted to the estate of John Porter, jr., in $2,158 97; and to the executor in $926 23. The case was heard on the bills, answers, report and evidence, in March, 1843, and a decree made on the construction of the will of John Porter. And the claims of the complainant, Ford, as a creditor of John Porter, were disallowed, and a sale of the estate of John Porter, jr., and a further account, were directed. (See the decree, Speers’ Equity, 496.)
    In June, 1844, a further order was made as to the accounts between the two estates, respecting sums paid,on a joint purchase, and the receiver was directed, out of the estate of John Porter, to pay to Mr. Cheesborough, the executor, the sum of $926 23, found due to him by the report of 16th March, 1843, with interest from the date of the report.
    The Master, in obedience to the orders, sold the estate of John Porter, jr., in December, 1844. At this sale, J. W. Cheesborough purchased a slave, Sye, for $450, and did not pay the money. In January, 1845, he assigned the decree in his favor against the estate of John Porter to R. F. W. Allston and J. H. Allston, to secure them for certain endorsements.
    In February, 1845, Mary L. Shackelford presented a petition, praying payment out of the assets of John Porter, jr., of a bond of John Porter, jr., dated 1st May, 1824, and on the hearing of the petition, the Court referred it to Mr. Gray to take evidence of the petitioner’s debt. At the same time an order was made on the petition of George T. Ford, directing the Master to take evidence in support of the claim for the money borrowed from the Bank, as a charge against the estate of John Porter, jr.
    On the 16th May, 1846, Mr. Gray made his report of the sales of John Porter, jr.’s estate, and set forth an account between the two estates, — and found that the bond claimed by Mrs. Shackelford was a just debt, and ought to be paid; and that the claim of George T. Ford was for $7271 85, paid by him on the 24th January, 1844, in satisfaction of notes endorsed by him for the use of the estate of John Porter, jr., and the Master disallowed the claim.
    The Master further reported, that J. W. Cheesborough, before the hearing of the cause in 1842, had sold a slave, Jim, belonging to the estate of John Porter, jr., for which he had not accounted; and stated an account, charging the price of that slave, and of the slave purchased by him at the Master’s sale in December,. 1844, and interest, as a set off against the sum of $926 23, found due to him by the former report.
    To this report, Mr. Ford, and R. F. W. Allston and J. H. Allston, excepted. Mr. Cheesborough died on the 21st August, 1845, and no administration has been taken out on his estate.
    The cause came on to be heard before his Honor Chancellor Johnson, and on the 20th February, 1846, his Honor pronounced the following decree:
    Johnson, Ch. In considering the exceptions on the part of R. F. W. and John Allston, which I propose first to notice, it ought to be kept in mind, that the trust confided by the will of John Porter, senior, to the defendant Cheesborough, was to apply the income from his estate to the payment of the debts of his son, John Porter, junior, if the assets of his estate should prove insufficient to pay them; and as between Cheesborough, the executor, and the devisees of Porter senior, he had no right to resort to that estate, until the whole assets of the estate of Porter, junior, was exhausted. I think, therefore, that the price of the negro Jim was properly applied to the credit of the amount which Cheesborough was in advance for the estate of Porter, senior.
    The case is somewhat different as to the price of the negro Sye : when he was sold, Cheesborough had ceased to have any control over either estate, and all the powers he had, as executor, were transferred to the receiver. Sye belonged to the estate of Porter junior, and Cheesborough had no right to appropriate the proceeds of the sale to the debt due him by the estate of Porter senior, without the consent of the receiver, nor had the receiver a right so to apply it, without the consent of Cheesborough, and without any contract or agreement between them on the subject: The estate of Porter senior, remained debtor to Cheesborough in the amount he had advanced, and he debtor to the estate of Porter junior, the price of Sye. And the Allstons would be entitled under their assignment to the balance due Cheesborough from the estate of Porter senior, after deducting the price of the negro Jim.— But the fact that Cheesborough was embarrassed with debt, bordering on insolvency, if not actually insolvent, and that no money was paid, or note taken, for the price of Sye, furnish strong grounds to suppose that there must have been some agreement or understanding between the parties, which rendered the payment of the money or the giving of a note unnecessary, — and as the evidence was not directed to these circumstances, probably from inadvertence, I shall direct a further inquiry into it.
    
      The first and third exceptions in behalf of George T. Ford, were abandoned in the argument — and the second and only-remaining exception raises a question of priority of payment between Mrs. M. L. Shackelford and Mr. Ford. The claim of Mrs. Shackleford is upon a bond executed by Porter, junior, in his life time, made payable to her as the executrix, and Cheesborough, the executor, of Richard Shackelford, deceased, or either of them, and was unquestionably entitled to be preferred to any debt the executors of Porter might create after his death. But the executors of Porter were authorized, by an order of the Court, to borrow money on the credit of his estate, to meet pressing demands, — and Ford lent them his name to enable them to raise the money, — and has since been obliged to pay it. Priority is claimed for him on two grounds. 1st. That the money borrowed was applied to the payment of judgments against the testator in his life time, or specialty debts contracted by him, or both — but this is not sustained by the evidence. 2d. That Cheesborough being entitled equally with Mrs. Shackelford to receive the money due on the bond, and being in possession of the funds of Porter, out of which it Avas to be paid, was in effect a páyment of the bond debt. My first impression was, that the Shackelford debt ought to be preferred, but more reflection has induced me to change that opinion.
    The trust confided to Cheesborough, arising out of Porter’s will, was to pay his debts in the order prescribed by law, according to which, bond debts rank amongst the favored, and for that purpose the whole of the estate is confided to his care and management, tie had no discretion, but was bound 'to apply the assets as directed by laAV. If he was now alive and a party to this proceeding, as he must have been if living, there could be no question about it, and his death cannot alter the relative rights of the parties. The answer to his claim to this debt preferred in that case, would be “ you were entitled to receive it, you had in your OAvn hands funds which the law set apart for the payment. If you have diverted them from their legitimate purpose by wasting or misapplying them, it is your own folly.”
    It is ordered and directed, that the Report of the Master be so reformed as to give the demand of Ford priority over that ■of Mrs. Shackelford, and that the Master do ascertain and report Avhether there was any contract or agreement between Cheesborough and the receiver, that the price of the negro Sye should be appropriated towards the payment of the debt ■due to Cheesborough on account of his advances for the estate of Porter junior, and if any, at what time.
    
      From this Decree, the parties interested appealed, viz:
    R. F. W. Allston and J. H. Allston insisted that the amount due to J. W. Cheesborough by the estate of John Porter, should be paid to them, subject only to the Solicitor’s lien.
    And Mrs. Shackelford, that she is entitled to the rights of a bond creditor of John Porter, junior.
    Yeadon for appellant,
    Mrs. Shackelford. Cheesborough stood in the double relation of executor of both of the Porters — so the bond debt cannot be considered as extinguished.
    Mitchell for appellant,
    Ford. There is no evidence of any consideration for the bond. It is not the property of the estate of R. Shackelford. There was nothing behind the bond to be considered by equity, therefore it was considered only in its legal position. Pride vs. B-, in Rice’s Equity, referred to in Shoot vs. Carter, Spears, 533. One advancing money to an estate, if he can shew the money to have been used in paying the debts of the estate, even though an executor or an administrator, may go against the estate instead of against them, and stand in the place of those whose debts he has paid. Mrs. Shackelford is part owner with the executor of Porter, Jr. of this debt, and must share the same fate, viz: that of an executor with funds in hand.
    Petigru for Allston et al.
    
    The debt of Portor, Jr. cannot be set off against that of Porter, Sen. because one person was executor of both. These estates, (it is established by a decree,) are not to be blended.— Vide Montagu on Set-off, 17th page. There must be mutual debts for set-off — both due on the commencement of the action, <fcc. There is no mutuality here. This debt was assigned, and the assignee claims the benefit of it, while the Master has set it off against the debt of another testator. An executor, a creditor in funds, is paid, or his debt extinguished, and only then. Berry vs. Izzard. 11 Yesey, 90.
   Per Curiam.

Dunkin, Ch.

The bond, which is the subject matter of the second ground of ^appeal, was executed by John Porter, the defendant’s testator, and was conditioned to pay $ 1,121 58, “to Mariah L. Shackelford, executrix, and J. W. Cheesborough, executor, of the estate of Richard Shackelford, or either of them.”

There is no doubt that, if the obligee appoints the obligor his executor, no action can lie at law, and the debt is extinguished. This is fully established by the leading case of Wankford vs. Wankford, 1 Salk. 299. But it is equally well established, as was declared by Sir William Grant, in Berry vs. Usher, 11 Ves. 87, that, in such case, Equity raises a trust, not only for a residuary legatee, but for the next of kin. In Wankford v. Wankford Justice Powell and Lord Holt both agree that “ there would be a great diversity where the obligee made the obligor executor, and where the obligor made the obligee his executor; for, in the last case the debt is not extinct, but only upon supposal that the executor has assets, which he may retain to pay himself; for though the obligee may give the obligor the debt, yet that will not hold vice versa, but in case of failure of assets, the executor may sue the heir.”

It appears on the face of this instrument, that the money was due to Maria L. Shackelford and J. W. Cheesborough, as executors of Richard Shackelford. In this Court Cheesborough would not be permitted to deny his fiduciary character. In 1839 he, as executor of John Porter, confessed a judgment to M. L. Shackelford, which, if it have no other effect, was a recognition by him of the original trust.

It is true that, as executor of Porter, Cheesborough received assets; but it has been judicially ascertained that all these assets were appropriated by him to other debts of his testator. There are other assets of John Porter, (the obligor in the bond,) now to be administered. The petitioner asks to be ranked as a bond creditor in the distribution of these assets. She is met by the technical objection, that the debt of the obligor is extinguished by the appointment of Cheesborough, one of the obligees, as his executor. But it has been shewn that, even at law, this is not necessarily and absolutely a release of the debt, as Lord Kenyon, in a note to Wankford vs. Wankford, is reported to have said, “the proposition that if A owes B a sum of money, and choose to make him his executor, though B will not act, his legal remedy is extinguished, is a proposition too monstrous to admit of any argument.” So it has been seen, that though an executor, in such case, accept and qualify on the will, he may, on failure of assets, sue the heir in a Court of law, for the bond debt due to him by his testator. In this Court, both Cheesborough and Mrs. Shackelford are regarded as trustees for the estate of Richard Shackelford. The surviving trustee has proved that all the assets of the obligor, which came to the hands of his executor, have been applied to the discharge of his other debts. In reference to the question of extinguishment, it is immaterial, in this tribunal, whether the assets were applied to debts of an equal or lower degree. The estate of Porter is not discharged from the debt, because all the funds of that estate have been accounted for, and it has been proved that they were not diminished by any appropriation for the payment of this debt. If Cheesborough were yet alive, he might well be held responsible to the estate of Shackelford for this irregularity in his administration. But on what principle can it be insisted that Porter’s estate, which has not paid the debt, should be discharged, or that the remaining assets should be exonerated, because the previous assets have been otherwise appropriated ? In the judgment of the Court there is error in so much of the Chancellor’s decree as sustains the complainant’s second exception to the Master’s report.

' D. L. McKay was appointed receiver of the estates of John Porter and John Porter, Jun. on the 10th July, 1841. According to the report of the Master, in March, 1843, the estate of John Porter, the elder, was indebted to the executor, J. W. Cheesborough, $926 23, and in June, 1844, a decretal order was made, directing that sum to be paid, with interest from the date of the report, out of the assets of John Porter, the elder, in the hands of the receiver. In January, 1845> this decree was assigned to R. F. W. Allston and J. H. Alisten.— In May, 1846, the Master reported that J. W. Cheesborough. before the hearing of the cause, in 1842, had sold a slave, Jim, belonging to John Porter, Jr. for which he had not been charged in the account. By the recommendation of the Master, the Circuit decree directed that this amount should be deducted from the sum heretofore decreed to be paid to Cheesborough from the estate of John Porter, the elder. But it is not perceived that there exists any privity in the connection of Cheesborough with these estates. The rights of third persons have intervened since the decree of June, 1844, and the claim of the assignees is entitled to the protection of the Court, to the extent set forth in their ground of appeal.

It is ordered and decreed that the decree of the Circuit Court be reformed, according to the principles of this decree. It is further ordered that the Master re-sell the negro, Sye, on the terms prescribed by the former order, the original purchaser having failed to comply with the terms of sale.

Decree reformed.