Case ID: tenn_14/html/0053-01.html
Source: Caselaw Access Project
Author: {"author": "Green, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Dulles and others vs. Read and others.
    
    The act of 1827, ch. 54, sec. 4 and 5, does not repeal the act of 1784, ch. 11.
    Where the personal estate of a deceased debtor has been exhausted, the administrator, or any bona fide creditor, for himself and in behalf of other creditors, may, by the act of 1827, ch. 54, file a bill to subject the real estate to the payment of the debts of the deceased.
    When a hill is filed by a creditor under the act of 1827, a court of equity will enjoin other creditors, who have not obtained judgments against the real estate, from proceeding at law, and will decree a sale of the land, the proceeds of which will be rateably distributed amongst all the creditors.
    All creditors, whose debts are shown to exist during the investigation, arc entitled to come in under the decree, whether the debt is mentioned in the bill or not.
    Where a hill is filed under the act of 1827, ch. 54, the administrator must be made a party.
    This is a hill filed on the 3d of February, 1833, by the complainants, for themselves and others, creditors of George Bacchus, deceased, against the administrator and heir of said Bacchus, and other creditors, praying that the real estate, descended to the heir in the State of Tennessee, part of which is an equity of redemption,, may be divided pro rata among all the creditors who have brought suit in this State, the personal estate being wholly exhausted, and the real estate being insufficient to pay all the debts. No judgments had been obtained against Matthew Watson, the administrator, except one in the Federal Court in favor of the United States Bank, which binds all his personal assets, and they are not sufficient to pay that judgment. The suits at law by complainants and the defendant creditors, were almost all of them brought on the same day. The bill alleges that administration was granted without the knowledge or consent of the complainants and other creditors whom they represent. The bill further states, there was an understanding. or agreement believed to have been made by the complainants with the other creditors, which prevented the former from applying to have the administration repealed, and that the administrator, although all the personal effects were exhausted, intended to let the defendant creditors have judgment upon the plea of plene administrcwit in his favor, and appeal from the judgments to be rendered in favor of complainants, in order that the defendants might then proceed by scire facias to subject the real estate. The bill prays an account of the personal assets, and of the real estate, and that the amount due to creditors may be ascertained, and that the real estate be sold and the proceeds divided pari passu among all the creditors, and that the creditors be enjoined from prosecuting their suits at law to exhaust the estate by costs, &c. The intestate, George Bacchus, died in May, 1831, and administration was granted to defendant, Matthew Watson, at the January term, 1832, of the county court of Davidson county.
    To this bill the defendants, Matthew Watson, the administrator, Peleg Brown, Read, Bicknell and several other creditors, filed a general demurrer. Other creditors were willing for a decree, and united with complainants in their prayer to that effect.
    This demurrer was sustained by the circuit judge, and the complainants appealed to this court.
    
      F. B. Fogg, for the complainants.
    The decisions of this court in the case of Boyd and Armstrong, Gilman and Tisdale and other cases, are so familiar to the court, that it is barely necessary to refer to them to show that the mode of reaching real estate for the debts of deceased persons in the hands of heirs, is exclusively regulated by the statute laws of the country. The decisions in those cases show what mode the law had pointed out before the passage of the act of 1827, chap. 54'. This law introduced a new system, and expressly author-ízed, m all cases where the personal estate was exhaust- , , , ... . , r , , , ed b7 the administrator m the payment of debts, and where just debts remained due, an application to a court of equity for the sale of real estate, which application might be made either by the administrator, or any bona fide creditor, which suits were to be prosecuted as suits in equity. It could not be intended by the word bona fide creditor in the act, that it should be a judgment creditor having a lien on the lands, for if a creditor had a judgment affecting the lands, he would take out execution and sell the lands, and it would be a vain and useless thing to make such a provision. This act gives an equitable remedy, where a legal remedy only existed before; it gives a power to be asserted in equity only, either by the administrator, or if he refuses or neglects to do it, by any bona fide creditor whose debt remains unpaid. The court are to be informed that the personal estate has been exhausted in the payment of bona fide debts; therefore they must decree a general account of all the personal assets: they are to be satisfied that the debt or debts for which the sale is sought, is justly due and owing; therefore, they must have an account taken of such debts and their nature.
    The court must decree the sale of such part of the real estate as will be least injurious to the heirs; therefore, they must have a report from the clerk of the nature and condition of the real estate, to prevent its sacrifice, to protect the rights of creditors, and the rights of heirs also. The object of the act was to prevent sacrifices by execution sales at law, and provides that the suit shall be conducted as other suits in equity. In truth, to all intents and purposes, it places all real estate upon the footing of equitable assets. When assets are equitable, a court of equity in England acts upon the principle that a debt by simple contract, and a debt by specialty, are equal. Willes, 524: 1 Jacob and Walker, 45: 3 P. Williams, 342: 1 Freeman, 305: 2 P. Williams, 412: 2 Freeman, 49: 2 Eq. Cases Ab. 459: 1 Dickens, 382: 2 Freeman, , . n . . ,. ¶ 175. A court or equity inclines to construe assets to be equitable. Lith vs. Prince, 1 B. C. C. 138': 1 Dickens, 3S7: Jeremy on Equity Jurisdiction, 525 to 543: West’s Reports, temp Hardwicke, in notes to page 323; Ran. on Assets, 317 to 328. Lord Talbot in 3 P. Williams, 323, puts the interposition of a court of equity upon the principle, that by the devise of lands to trustees to pay all the testator’s debts, the testator intended all his creditors should be equally paid their debts; and on another occasion, (Morris vs. Bank of England, Cases, temp Tal. 220,) he places its interference on this broad principle, that by natural justice and conscience all debts are equal, and the debtor himself is equally bound to satisfy them all. It is well known to the counsel of complainants, that a court of equity in England does not interfere by injunction in favor of one creditor against another to prevent his getting a judgment against the executor or administrator to secure his preference out of the personal assets, until a decree quod computet is obtained, which operates in the nature of a judgment in favor'of all creditors. This bill does not seek to interfere with the preference the executor or administrator has a right to give over funds in his control, and in cases where a court of equity has no original primary jurisdiction. What analogy is there between the cases? In this case real estate is the fund; all the debts are to be paid out of redi estáte as well as personal, and a court of equity has jurisdiction given by statute to sell real estate. Surely then, if it has power to sell real estate, to give a good title in fee simple, it has power to make that jurisdiction effectual, by preventing a sacrifice of that fund which is thus to be appropriated, from being sold for costs of suit, and by executions at law. It is founded upon a reasonable construction of a statute of Tennessee altering the common law of England. Such a statute, thus altering the common law, is the law of England also, as to traders, by 47 George III, 11 George IY, and 1 William IY.
    The creditors of the intestate are all citizens and residents of other States, the intestate resided in another State, the administration was taken out in this State to reach real estate, which is the only fund; that real estate is wholly insufficient to pay they debts, and a court of equity has original and statutory jurisdiction to order sales of that real estate and take an account of the debts. All the creditors who have sued in Tennessee are parties, the administrator is a party, but one set of creditors has united with him, and they have filed a joint demurrer.
    They wish to seize upon all the floating timbers and spars of the shipwrecked vessel and drown the other passengers; we wish to build a raft and save the whole crew, though they must be contented to have less than a full allowance of provisions.
    
      Washington, for defendants.
    1st. The act of 1827, ch. 54, sec. 4, is no repeal of the act of 1784, ch. 11. There is no repealing clause in the last of said acts, nor any inconsistency in their provisions. Any creditor of an intestate, therefore, may, notwithstanding the passage of the act of 1827, bring suit at law for the recovery of his debt, and adopt the mode prescribed by the act of 1784, of reaching the real estate. If this be so, how does it come to pass that for simply doing' what the law permits him to do, he is liable to be enjoined from doing that very thing? Such a construction cannot be given to the act of 1827, without making it operate as a repeal of the act of 1784. The repealing effect of a law ought to depend upon its terms, upon its construction, and not upon the acts of individuals, that may or may not be done .under it.
    2d. If the injunction can be employed to restrain a creditor from proceeding at law, s.0 soon as the bill is filed, it is an effectual ouster of the jurisdiction of the court of law. And, if the injunction cannot be employed, it leaves all parties unrestrained in the race of diligence, and gives to each the advantage of his superior diligence, according to the forum to which he may resort.
    3d. This bill cannot be maintained, unless it is held that by the act of 1827, the real estate of an intestate is made equitable assets for the equal payment of his debts, and that the filing of a bill creates a lien upon them in favor of the parties thereto.
    May it not, on the other hand, be contended, that the act of 1784 makes the real estate of an intestate legal assets, to be reached in the mode prescribed by that act; and that the issuing or service of a sci. fa. upon the heir, creates, a lien upon them, in favor of each judgment creditor, according to the priority of his judgment? So long as the remedy provided by the act of 1784 remains unimpaired, the benefits intended to be secured by it, must result to him who pursues it, to the full extent of the operation of that remedy, in the same manner as the appropriate effects contemplated by the act of 1827, must flow from that act to him who prosecutes his bill under it.
    That the act of 1827 did not intend to draw into the court of chancery the whole administration of the assets, is certain; because, by its very terms, it presupposes the previous disbursement of all the personal assets. There is no good reason why a different rule should prevail as to the distribution of the real assets, from that which' exists in relation to the personal assets, if the legislature really meant that this distinction should take place, they could have said it, and not have left it to doubtful implication. In fact, to sustain this construction, the court will be compelled to press into its service, a host of implications, unwarranted by the phraseology of the statute, and at variance with the whole course of prior legislation on the subject. The statute does not authorize the injunction, and yet it has been allowed against defendants who have done nothing, either against law or against conscience.
    If the bill is sustained, it must be implied, that all distinction as to the dignity of debts, was intended to be abolished. It must also be implied, that the creditor who is permitted to bring his bill under the act of 1827, need not himself be a judgment creditor, and that none of the defendants to such a bill need be judgment creditors, and that such parties as are judgment creditors and such as are not, are to stand upon an equal footing. It must also be implied, that the exhausting of assets, by the administrator in the payment of debts, which is spoken of in the act, is unnecessary to have been ascertained by the verdict of the jury, but that such exhaustion may be proved before the court of chancery, which will involve that court in the necessity of investigating the accounts of the administrator respecting the disbursement of the personal assets, as between him and creditors who are satisfied, and when the object of the bill is merely to subject the real assets.
    4th. Under the act of 1784, the heir has a clear, specific and adequate remedy against the danger of the real estate’s being burthened with debts which ought to be paid out of the personalty, and a full opportunity of investigating the administrator’s accounts. But, under the act of 1327, the very predicate of the bill is, that the personalty has been exhausted in a due course of administration; and there is nothing to be done under such a bill but to' establish the debts of the complainants and subject the real estate, that is, where the bill is filed by a creditor; and no person will ever hear of such a bill being filed by an administrator, for the obvious reason that it is no part of his duty to do so, and he is not exposed to any liability for not doing so, having disbursed the whole of the personalty and terminated his functions. Under such a bill, therefore, you throw upon the creditor, or upon the heir, in all cases where he chooses to contest the due administration of the personal fund, the necessity of investigating the administrator s accounts, without any possible means of doing so fully and accurately.
    In the case of a general bill filed by all the creditors, or hy one for himself and all the rest, the danger has to be encountered of defeating the jurisdiction of this court, if it shall turn out upon investigation, that the administrator has not exhausted the personal estate by a single dollar,. or by a single quarter of a dollar, or by a single cent. And this hazard, any one creditor, however small his demand, has a right, according to the assumption of this bill, of exposing the other creditors to, notwithstanding they may foresee the hazard, and in despite of all legal preferences which they may have gained, short of the actual satisfaction of their claims.
    By the employment of the injunction, as in this case, the creditor who files a general bill, may, whether other creditors choose to come in as parties to it or not, compel them' to desist from the use of the remedies which they have thought proper to adopt, even although such bill may be filed within a day of their obtaining final judgment by sci. fa. against the heir, and after having incurred all the costs incident to the course of litigation which they were pursuing, and to relinquish all the legal advantages which they may have obtained by their superi- or diligence. This is an - effectual ouster of the jurisdiction of all other courts, notwithstanding that jurisdiction may have attached; and it is an abolition claimed for this statute,, of all distinction in the order of paying debts, and which equality is only brought about as between part of the creditors, namely, such of them as have not procured satisfaction out of the personal fund. Such a bill also devolves upon this court the exercise of law jurisdiction, by introducing as parties, those who are not judgment creditors. In many cases the creditors might claim by contract sounding entirely in damages, which this court could not decree, without being invested, with jurisdiction derived from a source heretofore unknown to the constitution of the court. In many cases, the debts of certain creditors might not be yet due; and still they would be prosecuting a suit and getting a decree, when no cause of action had accrued. In this court, under such a bill, the heir would he deprived, in many cases, of an important defence against the claims of simple contract creditors, which might be successfully made at law. If this bill can he sustained, it must be upon the ground that the statute makes the real estate a trust fund in the hands of the heir for the payment of the debts of the ancestor, in equal proportion among the creditors. The statute being in existence at the time of the death of the ancestor, and when the debts were contracted, by its very terms creates the trust, and the heir takes the real estate, subject to that encumbrance. It is, therefore, an express trust, not derived from implication, not made such by any legal fiction, but by the ancestor’s own act and agency, in contributing to the passage of the law, and in making the contract with reference to its operation, whereby the encumbrance in favor of his creditors, existed at the moment of his death, and his heir was constituted a trustee to the extent of this encumbrance. If this be so, the statute of limitations could not be pleaded by the heir or defendant, to such a bill as this, to the claim of any creditor. At any rate, whether this last position is sustainable or not, there would be a difficulty in the application of the statute of limitations made for the peculiar protection of administrators, to the claims of the creditors in such a bill as this, which would produce a difference in administering the law, in different forums, and would thereby occasion serious injustice. If one of the creditors in this bill were to sue the administrator in a court of law after the expiration of two years from the date of his qualification, there is no doubt but that his debt would be barred. If, on the other hand, he forbears to sue at law, and brings such a bill as this, which ]le carmot rjo until the personal estate is exhausted, and in contemplation of law it takes two years to do that, he is either barred before he begins, or he is not barrable as against the heir, under four years; so that the injurious consequences resulting from the innovation attempted by this bill, meet us in every direction, and are of a nature neither to be avoided or tolerated. But this court has decided in the case of this very heir, that this land is no trust fund in his hands for the payment of the debts of his ancestor; for by an order and decree of this court, an allowance has been made for the support and maintenance of the heir, out of the rents and profits, until the land is subjected.
    6th. By steadfastly adhering to the rule of the English law upon this subject, our way is plain, and we neither interfere with, nor violate the rights of any creditor. In England, creditors may come into a court of equity for an account and distribution of the assets; and equality is the rule of distribution there, without regard to the nature of the claims of creditors, except judgment creditors, and they are entitled to a preference. After a decree against the administrator, (by which, it will be observed,'his liability is fixed,) then, and.not before, will an injunctionbe granted against other creditors, (judgment creditors excepted,) who are not parties to the decree, against their proceeding at law to establish their claims. The reason given for this is, that the decree is not pleadable at law; and inasmuch as it also fixes the liability of the administrator, if other creditors not parties to it, were permitted to proceed at law, he might, in a case of deficiency of assets, be rendered chargeable beyond the extent of the assets which come to his hands. This reason, it is obvious, does not apply to a judgment creditor, who became such before the date of the decree;'nor does it authorize the tying up of any creditor’s hands, and preventing him from getting a judgment, if he can do so before the other creditors who have had recourse to a different forum, can get a decree. A preference is therefore given to a iudg- ° j „ r ■ ° ,• . , ment creditor, and that preference is not subject to be disturbed. The gaining of that preference is the result of superior diligence, and does not tend to inflict an injury on any one. Martin vs. Martin, 1 Vesey, sen. 213: 4 Johnson’s Ch. Rep. Thompson vs. Brown, 638: Mac-tior vs. Lawrence, 7 Johnson’s Ch. Rep. 206: 4 Yesey, jr. 638, 643.
    The reason why a decree is not pleadable to a suit at law, is, that in England a court of equity is not a court of record, and the remedy there for the enforcement of a decree, is by attachment. Here a court of equity is a court of record. Act of 1801, ch. 6, sec. 44, 45. The remedy here also, is by execution. Act of 1787, ch. 22, sec. 2. A decree here has the same effect as a judgment at law.
    Those who hold that the act of 1827 constitutes the real estate a trust fund, forget, or entirely overlook, that previous legislation had created another jurisdiction, for the purpose of reaching this fund in a different manner, and that that previous legislation still exists in full force.
    Why has the court of equity in England, drawn into it self, under certain circumstances, the entire administration of intestate’s estates? It was upon this principle that administrators are deemed trustees, and the whole assets a trust’fund for the payment of the debts of the intestate generally. That in conscience, there was no difference between the obligatory force of one debt and another, whether due by bond, note or otherwise. Trusts have constituted a head of equity jurisdiction, from the earliest times. But, at the same time there was another jurisdiction in that country, to wit, the courts of common law, which held cognizance of the distribution of these assets; and their rule of distribution recognized certain preferences and allowed certain advantages as the reward of superior diligence. Here then, was a direct conflict of jurisdiction; neither would yield, and the matter was. reconciled at last; not, however without some encroach- ...... , . , ment upon the jurisdiction ot the courts ol common law by the court of equity, after it had proceeded in the exercise of its peculiar jurisdiction as far as a decree, assuming to cut .off, by injunction, the further exercise of jurisdiction by the courts of common law, where no judgment had been obtained. Just so in this case. There are two jurisdictions through which this land may be reached, and to either of which a creditor may resort. And until there is a decree in this court in favor of the creditors who have filed their bill here, by which the heir or lands descended would be bound, there is no ground for restraining the other creditors from proceeding at law. The case above cited from 1 Vesey, sen. 213, is directly in point.
    7th.' What then is the force and effect of the act of 1827? Is it to be considered a nullity, or must the court give it' some meaning? To these questions it is a good reply, that it is sufficient for my purpose, if I have shown, that under the circumstances disclosed in the bill, it gives no authority to prevent the defendants from subjecting the land by another method, if they think proper. But, if I am called upon to find out a meaning for the act, that it may not remain a dead letter upon the statute book, I would say it was intended to provide a cumulative remedy, by which the creditors, or such portions of them as thought proper, after having established their claims by judgments at law against the administrator, might come into this court by bill, for the purpose of subjecting the land, instead of attaining the same object by sci. fa. under the act of 1784. And, if the complainants in such bill could get a decree before the creditors could get a judgment by sci. fa. then the heir, ifhe could not plead the decree against a judgment upon the sci. fa. would have a right to enjoin the creditors proceeding by sci. fa. But the creditors in the bill would have no right to enjoin them before they obtained a decree, and there is no occasion to do it alter wards.'
    
      G. S. Yerger and S. Watson, argued on the same side.
   Green, J.

delivered the opinion of the court.

This case depends entirely upon the construction to be given to the act of 1827, ch. 54, sec. 4 and 5. It is not the business of this court to determine as to the policy of the change in Our law which that act produced. That was a question for the legislature. Our duty is to expound and enforce the act.

In order to understand the more clearly what was intended by the provisions of this actj it will be useful to consider the evils which existed, and which it was intended to remedy.

Cases were not of unfrequent occurrence where a party dying would leave but little personal property, and a real estate consisting of one tract of land, Or one town lot, out of which numerous small debts would have to be paid. The personal fund being exhausted, each creditor who remained unpaid, must reach the land through the administrator, according to the provisions of the act of 1784. Here two striking evils present themselves. In the first place, the immense accumulation of costs would go far to diminish a fund already insufficient to pay the debts. In the next place, the estate would be sacrificed in satisfaction of a few of the first judgments that might be obtained; when, if it had been brought to sale under favorable circumstances, with a view to all of the debts, it might well nigh have extinguished them all. To remedy these evils, which existed in the mode of reaching real estate in the hands of the heirs, as prescribed by the act of 1784, and not to repeal that act, was the object of the act of 1827. It provides, that where the personal estate may be exhausted in the payment of debts, leaving just debts unpaid, the administrator may file a bill in chancery, and obtain a decree for the sale of the land, or so much thereof as may be necessary for the payment of the debts which may be shown to exist. Now, the very nature of the mischief proves, that the Legislature intended that the administrator should bring in all the creditors by the bill he was authorized to file. We have seen that one of the mischiefs was found in the number of suits, and the consequent great accumulation of costs. To remedy this, the act of 1827 intended to have but one suit, and but little costs. The other evil was, that creditors, instead of getting their judgments all at once, would obtain them at different periods, and consequently a few of the first would exhaust the whole estate. The act of 1827 intended, that the Chancellor, having an account of all the debts before him, and an exact knowledge of the character, description and probable value of the estate, should take the land into the custody of the court, and direct its sale for the benefit of all, under such circumstances as would insure the best price. It was easily to be seen, that at such a sale, at which all the creditors would be interested in making the property sell for the best price, where any impropriety in the sale could be corrected by the Chancellor and a re-sale ordered, and where an undoubted title would be vested in the purchaser by a decree of the court, a much larger sum would be produced for the estate, than could have been obtained without the intervention of this act.

If this be a just view of the state of things, would not the Legislature have been guilty of great folly, if it had been intended by this act that more than one bill should be filed by the administrator? If that were the intention, and a bill must be filed for each creditor, instead of saving costs, there would be a greater accumulation of them. Better in that case to have left the remedy as it was by the act of 1784. As we think it must be seen, that in the case where the administrator files a bill, all the creditors must be brought, or, at their election, may come in and share rateably, it is next to be considered, what are the consequences it the administrator refuse to do so. JLhe act does not make it compulsory upon the administrator. to file a bill, but authorizes him to do so if he thinks proper.

The Legislature supposed that as the administrator would generally be an heir, or the near connection of the heirs, and as one of the objects of this act was to protect the interest of the heirs, and preserve as much of their inheritance as possible, that he would in most cases choose to avail himself of this means for a speedy and cheap adjustment of the estate. But if he neglected or refused to do so, the act further provides, that any bona fide creditor whose debt remains unpaid, may come in and file a bill for the attainment of the identical objects which would have been obtained bad the administrator filed one. The act says, “on the prayer of the administrator or of any bona fide creditor,” thus showing beyond a doubt, that they intended the bill should have the same effect, which-soever of these characters should file it.

If it has been shown that it would be absurd to suppose the Legislature intended the administrator to file a separate bill, to subject portions of the land to the payment of every separate creditor, it follows, that, it is equally absurd to suppose that it was intended that each creditor should file a bill as a remedy for the recovery of his debt; such a construction would aggravate every evil the act was intended to remedy.

It is insisted that the act restricts the satisfaction to such debts as are “shown to exist in the bill,” and that creditors whose debts are not mentioned and set forth in the bill, are excluded. It is further insisted, that as the court only gets jurisdiction in cases where the personal estate is exhausted in the payment of debts, if it should appear before final decree, that the administrator was chargeable with one dollar, which had not been exhaust the payment of debts, the court could not go on, but must dismiss the whole proceeding.

These objections stick too closely to the letter, and wholly disregard the design and purport of the act. By “the debts shown to exist in the bill,” is meant all such debts as in the course of the investigation, which is originated by such bill, may be shown to exist. The provision in relation to the exhaustion of personal assets, “before any decree shall be made,” was only intended to preserve the policy of our former Legislation upon this subject; but surely the Legislature ought not tobe charged with the folly of intending, that if, after all the creditors are called in, and proceedings at law are stopped, it should appear by a mistake in the administrator’s accounts, or otherwise, that a small sum was yet in his hands unexhausted, that therefore, the court would have no jurisdiction to go on with the cause. Should any assets be found in the hands of the administrator, the Chancellor, before he decrees a sale of the land, must apply and exhaust them; consequently the administrator was a proper and necessary party to the bill, because the Chancellor can only know how the estate has been administered by an investigation of the administrator’s accounts, which can only be done effectually by having the administrator before him.

We think this injunction was proper. The objects of the act could not be accomplished but by the exercise of the injunction powers of the court restraining any proceedings against the heir by scire facias, the fund being by the act placed in the custody of the court on filing of the bill. The powers of the court of chancery depend upon the act of Assembly, and are not to be restricted by the rules of the chancery court of England. Let the decree be reversed, and the demurrer be disallowed.

Decree reversed.