Case ID: nc_6/html/0092-01.html
Source: Caselaw Access Project
Author: {"author": "By tee Court.'", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

M’Kenzie and wife v. Benj’n Smith, ex’r of Wm. Dry.
    From New-Hanoveiv
    Liability of a legatee for interest upon the, value of his legacy, to the executor and creditors. The general liability of a legatee to refund, is measured by the value of his legacy; but whether he be liable for interest upon that value, depends upon the particular circumstances of the case.
    if he have good reasons to believe that the debt is just, and no dispute exist as to its amount, he ought to contribute his rateable part of the debt immediately upon demand made. If he be guilty of improper delay, lie shall be charged with interest.
    On bearing the bill and answer in this case, on a motion to dissolve the injunction, it was ordered and decreed, that the injunction be dissolved as to part of the recovery at Law, and that as to the other part, the injunction be retained until further order. It was further ordered, that, this case be transmitted to the Supreme. Court, for decision on the following point: Whether a legatee, to whom a legacy is delivered over by the executor, who does not know that debts exist, shall be liable afterwards to refund the mere value of the property delivered to him, at the value when delivered to him, and no more : or whether the executor, having subsequent notice of existing debts, and giving notice to the legatee thereof, and demanding of him to refund his proportion of the legacy delivered, for the payment of the debts, shall not, on the refusal- of the legatee to do so, be entitled to charge the legatee with interest on the value of the property delivered over, from the time of such notice, and refusal.
    
      Gaston, for the legatee.
    What is the general liability of a legatee to the executor, when he is called upon to refund ? It is for the value of the property delivered oyer, and not for any profits which may have accrued during’ his possession of it. In examining this question, some aid may be derived from the different acts of Assembly on the subject. In the act of 1715, ch. 28, the Legislature, in speaking of the extent of the executor’;', liability, use the words “ value of the appraisement,” and declare that the legatee shall refund “ out of the share received by him.” The executor was liable to creditors only to the value .of the appraisement: he paid legacies by the appraisement; and if his liability is coextensive only with the appraisement, why should the liability of a legatee extend further ? This construction of the act of 173 5, is aided by the act of 1723, ch. 10, which directs that estates of deceased persons shall no longer be appraised, but shall be sold, and an account of the sale relumed into the Clerk’s office by the executor or administrator, who then becomes liable to the amount of the sale and no further, instead of the amount of the appraisement, as before. This view of tiie executor’s liability is confirmed by the act of 1789, ch. 23, which directs the executor or administrator to distribute ■ ho estate within two years after probate of the will, or administration granted, taking from the legatee or next, of kin, a bond with security, conditioned for his refund irr; his rateable pari of any debt or debts truly owing by the deceased, wMch shall be afterwards sued for and recovered, or otherwise duly made appear. If the legatee is liable to pay interest, he is in a worse condition than a common bailee : for if by accident ho lose his legacy, or it bo destroyed, his liability will still continue $ whereas a reasonable degree of diligence and care in keeping the property bailed, would excuse him from any liability fu»* the loss or destruction of the property bailed.
    Are there any circumstances in this case which alter the general liability of the legatee ? The case states, that the. executor gave notice of an existing debt, called on the legatee to refund his rateable, part, and the lega - tee refused. The act of 1789 never intended that the legatee should be obliged to refund simply upon the demand of the executor; he shall refund “ when debts shall be sued for and recovered, or otherwise duly made appear.” The difficulty in the case arises from the meaning of the words “ duly made appear.” Do they mean a mere exhibition of a demand by a creditor ? Such a construction would lead to ruinous consequences. A claim will often be unliquidated, so that the executor cannot tell how much is due : doubts may also exist as to the justness of the demand made. It can only be in cases where the justness of the debt and its amount can be made duly, to appear, that the legatee is bound to refund upon a mere demand. The case does not state whether the debt, of which the legatee was called on to refund his rateable part, was of this description; and until this fact appear, the Court cannot say whether the legatee has been guilty of any default in not refunding' upon the demand of the executor.
    «3. Henderson, for the executor.
    The executor is liable for the assets which come to his hands ; and it is immaterial how the assets arise ; whether they be the original estate on hand at the death of the testator, or the increase of that estate. He is liable for money out at interest, and the interest which accrues after the testator’s death. He is liable for the slaves on hand at the death, and their increase afterwards, and also for the hire of the slaves up to the time that he delivers them to the legatee. The liability of the executor is not confined to the increase of the estate up to the time of delivering it over; for the act of 1789 only intended to benefit the legatee, by enabling him to get his legacy earlier: it did not intend to impair the rights of creditors. How stood’ the rights of creditors before 1789 ? Surely their rights and the executor’s liability were co-extensive with the estate out of which their claims were to be satisfied.
    
      But whatever general rule the Court may think proper to adopt in relation to this subject, the legatee in this case must be liable for interest Here he was duly notified of the debt, called upon to refund, and he refused. If a suit is to be brought where the executor acknowledges the justness of the debt, and has no wish to resist its payment, who shall suffer the consequences ? Not the executor ; he is in no fault, he has. no assets. He shall suffer who is in fault, and that is the iegatee 5 for he has the assets, and lie has notice of a debt which is to be satisfied out of the assets.
   By tee Court.'

The general liability of a legatee to refund is measured by the value of Ins legacy $ but whether he shall be chargeable with interest upon that value, or upon any part thereof,-for not refunding when he has notice from the executor of existing debts, and lie is called upon to refund his rateable part, and be refuses, must necessarily depend upon the particular circumstances of the case. If he has good reason to believe that the debt is just, and there be no dispute as to its amount, he ought to contribute his rateable part immediately upon demand made : and if the executor take from him no refunding bond, still he ought to contribute with the same promptitude as if- he had given a bond $ for here he is to contribute for the relief of the executor, from whom the creditor exacts his debt de bonis propriis. The refunding .bond is given for the benefit and ease of the executor, that after two years creditors may bo turned over to the legatees for their money : and as in cases where no bond is given, the executor shall recover interest if the legatee be guilty of improper delay in refunding his rateable part of the debt, so in cases where a bond is given, there seems to be no good reason why the creditor shall not have interest, if the legatee has been guilty of such delay. But the circumstances of each case must be looked to, in deciding whether the legatee shall be chargeable with interest. It does not appear in the case before the Court, what were the circumstances attending the debt, nor whether those circumstances were made known to tire legatee when the executor gave him notice of the debt and called upon him to refund. It is surely not a general rule, that a legatee shall pay-interest $ and there not appearing in this case any peculiar circumstances to charge him, judgment must be cm tered in his favour upon the point sent to this Court.