Case Name: Smith's Ex'or v. Britton, &c.
Court: Court of Appeals of Virginia
Jurisdiction: Virginia
Decision Date: 1856-01
Citations: 2 Va. (Patt. & Heath) 124
Docket Number: 
Parties: *Smith’s Ex’or v. Britton, &c.
Judges: 
Reporter: Virginia Reports
Volume: 2
Pages: 692–695

Head Matter:
*Smith’s Ex’or v. Britton, &c.
January Term, 1856,
Richmond,
i. Chancery Practice — Suit by Legatees to Surcharge and Falsify Executor’s Accounts — Parties—Testator’s Creditors. — Creditors of a testator may intervene . by petition, and be made parties to a suit brought by the legatees and devisees, tor the purpose of surcharging and falsifying the accounts of the executor. And it makes no difference that their claims will absorb the whole balance found against the executor, for the original parties to the suit can only receive any thing after the creditors are satisfied.
■a. Executors — Accounting—Credits—Payment of I su-rious Debts of Testator. -An executor should be denied credit in his accounts, in, toto, for usurious debts of the testator, paid or retained by him, with knowledge of their usurious character, arid, íd such a case, the principle of equitable relief against the usurious interest only does not apply.
3. Same— Same- Same — Same—Case at Bar. — An executor is obligee in a bond given by his testator in his lifetime, on which is a memorandum in the handwriting of ttíe obligee, sta-ting that the obli-gor agreed to pay ten per cent, interest on it. The bond is usurious, and the executor is not entitled to credit for it in his accounts, though he settles it by charging the estate with the principal and legal interest, only.
In June, 1837, a bill was filed, in the Circuit Court of Fauquier, by P. H. F. Britton and Catherine B.‘ Graham, formerly Brit- j ton, (and her husband,) children of George) Britton, deceased, iu which they state that! their father, George Britton, died in I 1818, leaving a considerable estate, real and personal, which he directed his executor to sell, and, after paying his debts, to appropriate as set forth in his will; and that the executor had returned accounts which were false and fraudulent, which they desired to surcharge and falsify in many particulars which they named. To this bill, they made the executor, Walter A. Smith, and the children of the testator by a second marriage, parties. The executor answered, denying all fraud and mismanagement, and insisted on the correctness of his settled accounts, but ^professed his willingness to have them re-settled by the court — taking those already settled as prima facie correct. The other defendants, such of them as answered, united in the prayer of the bill. The case slept a long time, and then accounts were ordered, and several judgment creditors of the testator appeared before the commissioner, in 1844, and united with the plaintiffs in the effort to charge the executor with a considerable balance. Though they thus took an active part in the suit, they did not become parties thereto until October, 1846, when they filed petitions praying to be made parties. This was done, and, after this time, the real contest was between them and the executor, it being apparent that their claims would absorb any probable recovery against the executor.
These creditors were William R. Almond and Mann Almond, surviving partners of William R. Almond & Co., who claimed, ' by a judgment obtained on the 15th November, 1821, against Britton’s executor, for the sum of $1,942 66%, with interest thereon from the 21st day of March, 1818, till paid, on vs hich execution issued on i the 20th November, 1821; and others, wjiose claims it is not material to notice, as the | whole balance finally ascertained to be due ■ was absorbed bj Almond & Co. Pending ¡these proceedings, Walter A. Smith died, ¡ and the suit was revived against his executor, William Temple Smith.
Various accounts were returned by the commissioners of the administration of Walter Smith on the estate of Britton, to which many exceptions were filed on both sides; some of which were overruled, and some sustained, until a balance of $2,972 74 was ascertained to be due the testator’s estate, and, by a decree of the 13th October, 1848, was directed to be paid to the creditors, with costs.
In January, 1849, Smith’s executor filed a bill of review, in which he set forth many errors in the decree and the report of the commissioner, on which it was founded. Such objections as depended on matters of *fact are omitted here, and it seems necessary only to state the following: 1st. The petitioner insisted that it was erroneous in the court to permit the creditors to intervene in this suit, because their pretensions were foreign to and in conflict with the objects of the suit. 2d. That it was erroneous to refuse to the executor credit for the sum of $265 40, the amount of a bond due by the testator to his executor in his lifetime. It appeared, by the report of the commissioner, that this bond was given by George Britton, the testator, to Walter A. Smith, the executor, and was for $250; that on the face of the paper it bore date on the 6th December, 1817, but that this date seemed to have | been altered from 28th April, 1818; that interest had been charged on it at the rate | of six per cent, from the first date to the' ¡ 14th December, 1818, the time when it was | paid by the executor to himself; and that | this interest corresponded exactly in amount ; with interest at 10 per cent, from the 1 erased date till the said time of payment. It also appeared that, on the back of this bond, there was a memorandum partially erased, as follows: “When this note was ! given, Mr. —— pledged his word to give . me ten per cent, for this and what money I | could borrow for him. — W. A. Smith.” It ! also appeared that the executor had settled ' this bond by charging it to the estate, with j simple interest only. 3d. That it was erro-i neous to refuse the executor credit for the ; sum of $320 17, the amount of a bond due by the testator, on which the said executor was his security. It appeared that this bond was given by George Britton and Walter A. Smith, his security, for the sum of $300, to Alexander Reid, at 6 per cent. | interest, and dated the 28th April, 1818. At : the foot of the bond was a memorandum signed by the obligors in these words: “In i addition to the above interest of six per cent., we agree to give the said Alexander Reid four per cent.” Upon its back is a calculation of interest at 10 per cent., and the receipt of Reid for the debt and interest so calculated.
„ *The bill contended, in respect to these last items, that, under the circumstances, they were not usurious; but that, even if they were, the creditors and legatees of Britton coming into equity to surcharge and falsify the accounts of the executor, and asking the active aid of the court to effect that object, must consent to do equity; and that the court in such case should relieve them only to the extent of the usurious interest.
The court overruled all these objections, though it sustained the bill in respect to some other points, and recommitted the account to be reformed in accordance with the views expressed in his opinion. The portion of the opinion of the court (Judge Scott) bearing on the points above stated, was as follows:
“The court is of opinion that there is no error in so much of the decree in the petition of review referred to, as allows the creditors of George Britton, deceased, the testator of Walter A. Smith, to come in and prove their debts and recover the same in this cause. The legatees who instituted the suit can only recover what is left after payment of debts; and the executor is entitled to the indemnity afforded by a decree of the court against outstanding demands against the estate. This can only be given to him by calling in the creditors, and excluding such as do not prefer their claims before the fund is disposed of. When they have appeared and shewn their right to recover, it would be contrary to the fundamental rules of courts of equity to turn them around to a new suit against the executor; accordingly, it is every day’s practice, when a bill is filed by a legatee, distributee or creditor, against an executor or administrator, for a - settlement of his account, to call before the court all who have demands against the estate in the hands of the executor or administrator, and cause the trust to be executed in all its branches under the superintendence of the court. ■ It is for the benefit of all parties that this is done; and none are more interested that the trust should be wound up in a single suit, and ' all further litigation prevented, than the trustee.
*“ There is no error in refusing credit for the sum paid Alexander Reid, and that retained by the executor for a debt claimed to be due to him. These demands were clearly founded in usurious contracts. The executor had notice of the usurious character of Reid’s claim, and was full-handed with proof. He substantially admits in his answer that the contract on which his claim was founded was usurious; those demands had therefore no legal valid-itj'; they were not debts of the testator; and the executor was not warranted in paying the one or retaining the other. The rule of equitable relief against usurious contracts does not apply. It was a breach of duty in the executor to pay, and a for-tiori to retain for, an usurious demand.”
The commissioner reformed the accounts, as directed, and made his final report; whereupon the court, on the 11th October, 1849, decreed that Smith’s executor should pay out of the assets of his testator to W. R. Almond and Mann Almond, surviving partners, the sum of $2,272 53, with interest on $574 39 from the 10th October, 1849, till paid — that being the whole amount found due to Britton’s estate by his executor, by the reformed report last mentioned. Over and above this, the court decreed all the costs against the executor of Brittonl
From this decree Smith’s executor appealed to this court.
Patton, for appellant:
1. The proceeding by which the creditors came in and made themselves parties to the proceedings by the legatees, is wholly irregular, and, so far as I know, unprecedented. They come in to an abandoned suit, and assert claims, not under, but against and hostile to the suit, of the plaintiffs. They slept on their rights for twenty-six years, and had they brought suit in their own names, would have been barred by lapse of time; but endeavor to shield themselves from the consequences of laches by intervening in a proceeding commenced *by others and, in effect, abandoned by them. But they should not be permitted so to protect themselves. Even where a party brings a suit himself, and lets it sleep on the docket, the time of delay pending the suit will be added to the other lapse of time — a fortiori, that time is to be counted against one intervening, as is'done here. Hayes et als. v. Goode et als., 7Eeigh, 452; West’s adm’r v. Thornton et als., 7 Grat. 177; Smith’s adm’r v. Thompson’s adm’r et als., Idem, 112; Martin v. Hall et als., 9 Grat. 8; Anderson, adm’r v. Burwell’s ex’or, 6 Grat. 405. But, be this as it may, there can be no continuation of any suit or any amendment thereof, which sets up different and distinct rights from those asserted in the original bill; and even in the form of a supplemental bill, new parties, with new interests, and a fortiori new parties with hostile interests, cannot come into equity to prosecute the original bill or to get the benefit of it. Cheatham v. Burfoot, 9 Eeigh, 580. Now, here, the creditors do not even come in by supplemental bill, but come in by petition, seeking to be made parties plaintiff. I submit this view is conclusive against them.
2. As to the alleged usury. In respect to the first bond, there was no usury. Smith only .received his principal and interest; and even though there had been an usurious agreement, he might, as he did in this case, purge it of all taint, by refusing to receive the usurious interest. In 10 Bacon, (new edition), p. 268, will be found the following doctrine: “Nevertheless, it has been held, that if one contract to have more than the statute allows, but he takes nothing of the interest contracted for, he is not punishable by the statute; but if he takes any thing, if it be but a shilling, it is an affirmance of the contract, and he shall render for the whole contract.” It is also said in De Wolf v. Johnson, 10 Wheaton, p. 367: “Although a contract be usurious in its inception, a subsequent agreement to free it from the taint of usury will render it valid.” In 3 Day, p. 356, it is laid down : ‘ ‘A usurious security is given up, *and a new security taken for the principal sum due, and legal interest, is good.” In this case, Smith could, in no other way than he did, free this obligation of its taint, if any had existed. He never did attempt in any way to secure himself any excess beyond six per cent., to which in equity he was entitled, and of which surely equity w'ill not deprive him. See case of Stone v. Ware and Smith, 6 Man-ford, and particularly the argument of Stanard, pp. 547-8, and the authorities referred to by him.
In respect to both bonds, I submit that even if they were usurious, the court should not have refused the executor credit for the principal and legal interest. There is no principle under which he can be deprived of this much. See Key v. Key’s creditors, 2 Grat. 116. I presume the court below, under the influence of Marks v. Morris, 2 Munf. 407, held, that having waived discovery, the creditor was entitled to be relieved from the whole debt. But Marks v. Morris has been overruled by a recent decision. The Bank of Washington v. Arthur, 3 Grat. 173, first shook that case, and Bell v. Calhoun, 8 Grat. 22, entirely overthrew it. And although the Legislature has restored it in cases since the Code, this case is ruled by those decisions.
Morson, for appellees:
1st. The proposition settled by Cheatham v. Burfoot, cited on the other side, is simply, that if the court had not jurisdiction of the original subject-matter of the suit, it cannot take jurisdiction, by a supplemental bill, of what it originally had no jurisdiction. It was a case in which the party originally bringing this suit, had no right to do so, and it was simply held, that a suit originally brought wrong could not be revived or continued by a supplemental bill; jurisdiction being originally wanting, it could not be given to the court by any other proceeding.
On the other hand, whenever a suit is brought for the settlement of a decedent’s estate, it is the more regular *and proper course for all other suits to be suspended, and for all interested in the matter, to come into the pending suit. Story’s Equity Pleadings, $100, note 1. The same authority states that if it appear that the estate is insolvent, all the persons interested will be required to come in, and be made parties to any suit for its settlement; and the bill in this case makes out that very case.
The general policy of courts of equity, to let parties come into pending suits, by petition, to save multiplicity of suits, is referred to in Williams v. Williams, 11 Grat. 95. See also opinion of Moncure, Judge, in Stephenson v. Taverners. 9 Grat. 405. And the courts are becoming more and more liberal in this respect. The intervention of the creditors in this case was then sanctioned by convenience and the best precedents.
2. The bonds were usurious and were properly rejected. The endorsements on the bonds are to be taken as parts of the bonds themselves. In one case the endorsement was by the obligors cotemporaneously with the execution of the bond, and in the other, it was put there by the obligee. The endorsement was in the obligee’s favor in the last case, and he had no right to put it there unless at the time the bond was made arid with the consent of the obligor. Sher-mer v. Beale, 1 Wash. 11; Dandridge v. Harris, Idem, 326; Stone v. Hansbrough, 5 Leigh, 422; Smith v. Spiller, 10 Grat. 318. On these authorities, the presumption is, that the endorsements were parts of the bonds, and they furnish full evidence of their usurious character. Here, then, were usurious bonds which the executor had no right to pay, and he should not be allowed credit for them.
I differ with Mr. Patton as to the effect of Marks v. Morris, the case in 8 Grat., and others which he cited as to the measure of relief. This is not a case to which such principles apply. It is not a bill by a borrower to be relieved from a usurious loan ; it is one requiring an executor to produce his vouchers, and settle his account, and his vouchers are to be considered as though they *were in a court of law. There is no difference between this case and that of Cutting v. Carter, 5 Munf. 223, where the executor paid gambling debts, which his testator, as he thought, was bound in honor to pay, and in which, though he had paid the debts, he was not allowed credits for them. The law does not permit executors to set up their notions of honor or morality against its rules.
Executors. — On all matters pertaining to executors, see monographic note on “Executors and Administrators” appended to Rosser v. Depriest, 5 Gratt. 6.
Executors. — On all matters pertaining to executors, see monographic note on “Executors and Administrators,'’ appended to Rosser v. Depriest, 5 Gratt. 6.

Opinion:
Per Curiam.
All the judges concur in JUDGE SCOTT'S opinion on the bill of review, except CLOPTON, J., who is for reversing the decree.
Decree affirmed.