Case Name: John Watson, ordinary, vs. John Whitten
Court: South Carolina Court of Appeals
Jurisdiction: South Carolina
Decision Date: 1832-05
Citations: 3 Rich. 224
Docket Number: 
Parties: John Watson, ordinary, vs. John Whitten.
Judges: Johnson and Harper., JJ. concurred.
Reporter: South Carolina Law Reports
Volume: 37
Pages: 224–241

Head Matter:
John Watson, ordinary, vs. John Whitten.
Action against the surety on the administration bond of C. D'. administrator of J. S. After the death of J. S. his land, which was under mortgage, was sold under fi. fas. junior to the mortgage, and purchased by a stranger. C. D, the administrator, repurchased the land out of the assets of his intestate, taking the conveyance to himself : he then paid the mortgage debt out of the assets of his intestate, and afterwards sold the land at a considerable profit. On bill filed in equity a decree was obtained against him, as administrator, for the advanced price at which he had sold the land. Held, that the surety was liable for the amount of the decree.
The sureties of an administrator are liable for profits over and above legal interest made by an administrator on a prudent investment.
Before O’Neall, J. at Greenville, Fall Term, 1831.
The report of his Honor, the presiding Judge, is as follows.
“ This was an action of debt, on the administration bond of James Whitten and Letty Nichols on the estate of Julius Nichols deceased. The defendant is one of the sureties, Letty Nichols died in 1825, and James Whitten, as survivor, received the money, on account of which the surety is now sought to be made liable.
“The declaration sets out the condition of the bond, and assigns for breach, that the administrator and adminis-tratrix did not well and truly administer, according to law, the goods, chattels and credits of the said Julius Nichols, deceased, and the residue pay over to the persons entitled, but that on the contrary, Letty Nichols, administratrix, died in 1825, and afterwards, at the instance of the children of Julius Nichols, by bill and other proceedings of record in the Court of Equity for Greenville, an account of the administration of the estate of Julius Nichols, deceased, was taken in the said court of Equity; and upon such account, there appeared to be of the assets of the said estate remaining in the hands of James Whitten, surviving administrator, the sum of $3950 88, with interest from 7th February, 1822, the principal sum whereof had come to the hands of the said James in the lifetime of the said Letty, and had not been administered by him in her lifetime, or since her death: out of which sum, it was ordered by the decree of the court of Equity that the said James Wrhitten should pay to John W. Breedlove, a specialty creditor of the estate of Julius Nichols, deceased, a debt amounting to $2748 91, with interest, from 7th July, 1829, on $1790 67; and that he should pay over to the children of Julius Nichols, deceased, two-thirds of the remainder of the said sum; and that the said James Whit-ten has wholly failed to pay the sum unadministered in his hands to the persons entitled to receive it by the decree aforesaid ; that the debt to Breedlove is still due, and the two-thirds of what would remain of the sum in Whitten’s hands after the payment of Breedlove’s debt, is yet due to the children of Julius Nichols, deceased. The defendant pleaded four pleas, viz :
“ 1st. Non est factum.
u 2d. That the aforementioned sum of $3950 88, did not arise from the goods, chattels and credits which belonged to Julius Nichols, deceased, at the time of his death, nor did the said Letty and James, administratrix and administrator, in her lifetime, or he, since her death, receive the said sum from the goods, chattels and credits which were of Julius Nichols at his death.
“3d. That on the eighth day of November, 1817, the said Letty Nichols and James Whitten, in consideration of $568, purchased from William Nichols a tract of land in Abbeville district, which land (after the death of the said Letty, who had intermarried with Edmund Dill) James Whitten and Edmund Dill sold and conveyed to James A. Ward, for and in consideration of the sum of $5000; and that the sum of $3950 88, decreed against James Whitten in the suit in Equity aforesaid, is money arising from the sale of the said land to James A. Ward, and not from the goods, chattels and credits which were of Julius Nichols, deceased, at the time of his death, and which came to the hands of the said Letty and James in her lifetime, or to his hands since her death, to be administered.
“ 4th. That, on the 30th January, 1824, Letty Dill, formerly Letty Nichols, with her husband, Edmund Dill, and James Whitten, administratrix and administrator of Julius Nichols, deceased, accounted and settled the estate of Julius Nichols, deceased, which came to their hands to be administered, with Spartan Goodlett, then Ordinary of Greenville district, and on such accounting and final settlement of the said estate, the said Spartan Goodlett, Ordinary, decreed that Edmund Dill, and Letty his wife, had paid away the sum of $1539 19, more than they had received, and that James Whitten, administrator as aforesaid, had paid out the sum of $398 27 more than he had received, “ which decree remains in full force unrevoked or reversed, as will appear, and remains of record in the office of the Ordinary for Greenville district.”
“ The plaintiff took issue on the plea of non est factum. To the 2d plea he replied, that the said sum of $3950 88, with interest as aforesaid, did arise from the goods, chattels and credits belonging to Julius Nichols at the time of his death: and concluded to the country. The defendant put in the similiter. To the 3d plea the plaintiff replied, that the tract of land mentioned in the decree, belonged to Julius Nichols at the time of his death, and had been by him mortgaged to the Bank of the State of South Carolina to secure the payment of a debt to the bank, of which $1600, with interest from the 1st. March, 1817, remained unpaid at his death ; that after the death of Julius Nichols, the said land was sold by the sheriff of Abbeville district, under sundry writs offi. fa. sued out against Julius Nichols in his lifetime, all junior in date to the mortgage; and was purchased, subject to the mortgage, by William Nichols ; that afterwards, Letty Nichols and James Whitten, as administratrix and administrator of Julius Nichols, applied $568 of the goods, chattels and credits of the intestate to the re-purchase of the said land for the estate of Julius Nichols, and applied the further sum of $1783 75 of the said goods and chattels to the satisfaction of the said mortgage : and afterwards the said James Whitten, as surviving administrator, received the sum of $5000 from the sale of the said land, which he received and held as part of the estate of Julius Niehols, and of which sum, the sum of $3950 88 with interest, as in the delaration mentioned, remained in his hands as assets of the estate of Julius Nichols unadministered, as appears by the decree of the court of Equity aforesaid: and concluded with a verification.
“ To the 4th plea the plaintiff replied, that there is not such a decree of full accounting and final settlement of the estate of Julius Nichols, deceased, by the administratrix and administrator, when required by the court of ordinary, remaining of full force and unrevoked, in the office of the Ordinary of Greenville district, in manner and form: and concluding with an assignment of a day for examination and inspection of the record.
“To the plaintiff’s replication to the 3d plea the defendant rejoined, that James Whitten and Jjetty Nichols, as administrator and administratrix aforesaid, did not apply the sum of $568 of the goods and chattels of Julius Nichols, in their hands, to the purchase of the said land for the estate of Julius Nichols, and did not apply the further sum of $1783 75 of the said goods and chattels to the satisfaction and discharge of the mortgage on the said land, and that the said James Whitten, as surviving administrator, did not receive the sum of $5000 for the sale of the said land as part of the estate of Julius Nichols, and that the sum of $3950 88 arising from the sale of said land did not remain in his hands as assets of the estate of Julius Nichols, unadministered ; and concluded to the country. The plaintiff put in the similiter.
“ The plaintiff proved, and gave in evidence, the bond. He then gave in evidence the bill, answers, exhibits and decree in Equity in the case of Julia Nichols and others vs. James Whitten, administrator, et al. by which the facts stated in the assignment of the breach of the condition of the bond in the declaration, and in the plaintiff’s replication to the defendant’s 3d plea, were fully proved.
“ The plaintiff here closed, and the defendant moved for a nonsuit, on the grounds,
1st. Because the amount ascertained by the decree in the case of Nichols vs. Whitten, did not arise from the goods, chattels and credits of the deceased.
2d. Because the sureties are not liable for a constructive trust cast upon the administrator by operation of equitable principles.
3d. Because the decree was no evidence of the facts asserted in it.
“ I overruled the motion. It is true the balance in the hands of Whitten, the surviving administrator, arose ultimately from the sale of the land, but still it was the personal assets of the deceased. For he acquired title to the land by investing a part of his intestate’s funds in its purchase, and applying another part to the extinguishment of an incumbrance. These two sums so applied, amounted to $2351 75, and for them, with the interest, it would not be pretended but that both he and his sureties were liable. He, however, invested this sum in the land and sold it at a large profit: this profit is the incident of the investment, and must follow it. If he is accountable for the original sum paid for the land, he must be for all that it produces. Being liable to account lor the proceeds of the sale, as administrator, his sureties are liable for its payment. These views I thought a sufficient answer to the two first grounds. Upon the 3d. it appeared to me that the facts stated in the decre were to be taken as true, unless shewn by the sureties to be false. Indeed we had nothing to do with the facts stated in the decree' — the judgment of the court was that to which we must look. As a favor to the sureties, they were permitted to look into the decree, to see that the administrator and administratrix were not charged beyond their undertaking. When they did look into the decree, they were concluded from setting up the same evidence as a defence which their principals had set up, and which had been adjudicated by the decree.
“The defendant then gave in evidence the Ordinary’s decree, mentioned in his 4th plea. It was the mere ex parte settlement of the administrator and administratrix’s account before the Ordinary. It was also made up before the decree in the Court of Equity was pronounced, and was, indeed, insisted and relied on as a defence in that ease. I thought it could not avail the defendant, as being ex parte and open to examination, and having been by the decree of the Court of Equity virtually examined and annulled.
“ The plaintiff took a verdict for $5429 67, of which $3230 81 bears interest from the date of the verdict, 12th October, 1831.”
The defendant appealed, on the following grounds.
1. Because, in the proceedings in Equity it is conceded, and the decree is predicated on the fact, that the administrator of Julius Nichols had fully accounted for and paid out the whole personal estate.
2. Because the decree of the Court of Equity against the administrator, relied on as evidence of the breach of the condition of the bond and to support the replication to the 3d plea, states that the amount therein decreed to be paid the complainants arose from the sale of a tract of land which did not belong to the estate of Julius Nichols at the time administration was granted.
3. Because the decree of the Court of Equity was no evidence of the breach of the condition of the bond, and did not sustain the plaintiff’s case as made by the pleadings.
4. Because the records and proceedings in the Court of Equity were incompetent evidence.
5. Because the decree of the Court of Ordinary was final and conclusive, that the administrator had fully accounted for the personal estate of the intestate, and could only be set aside on the ground of mistake or fraud, neither of which was alleged or proved.
6. Because the plaintiff in this action is estopped by his own decree from alleging that the condition of the bond has been broken.
7. Because the administrator and administratrix paid out more than the amount of the personal estate of the intestate in discharge of his debts, independent of the amount paid to the Bank on the mortgage, and, if sureties are made liable, either for the money arising from the sale of the land or applied to the mortgage, they should be allowed a credit for the sum of $1539 19, with interest, which Letty Nichols, the administratrix, paid out in discharging debts of her intestate, more than she had received of the assets, and which was not allowed in the decree against James Whitten.
J. H. Irby, for the motion.
D. L. Warsaw, contra.

Opinion:
Curia, per
O'Neall, J.
This case was tried before me at Greenville, at the last October court, when sitting in the place of my brother Earle. My conclusion on the circuit has been the subject of review here, and after the able argument which the case has undergone, we are satisfied, for the reasons which are assigned in my report, that the verdict must stand. In addition to what is there said, I will remark that it is true that the undertaking of the sureties does not extend beyond the due administration of the personal estate of the intestate, for to that alone applies the office of the administrator: but yet it may be, that its improper administration may even make them liable for the value ot the real estate. The condition of the bond consists of three parts: — 1st. to make an inventory of the personal estate: 2d. to administer the same accord ing to law: and 3d. to pay over the residue to such persons as may, by law, be entitled to the same. If either of these covenants is broken the sureties are liable, and cannot complain, for their liability arises from the letter of their contract. In the course of an administration according to law, it is the duty of the administrator to pay the debts, so far as the goods, chattels and credits of the deceased extend. If the administrator has assets sufficient to pay the debts, and neglects to do so, and thereby occasions a sale of the real estate at a sacrifice, it is plain that his covenant, to administer according to law, has been broken, and for its breach, he and his sureties are liable for such damages as were sustained on the sale of the land. To this view has been opposed the argument, that the administrator's liability there could not be fixed but by an action on the case for damages, and that, therefore, the sureties will not be liable, although he might be; inasmuch as neither the Court of Equity or Ordinary could fix the administrator's liability to account for the value of the land. If the latter part of this position was true, which I shall shew is not, still I should not hesitate to say that the sureties would be liable. It does not hold, universally, that to charge the sureties it is necessary that there should be a decree against the administrator, or an account before the Ordinary or in Equity. So that his liability is fixed, and its quantum ascertained by the judgment of a court of competent jurisdiction, would seem to be all that was necessary to charge the sureties. In a few cases, this may be done by the judgment of a court of law. If the administrator pleads plene administravit, generally, or -prater a given sum, and in the first case a verdict is found for assets, and in the second, judgment is rendered for the sum confessed by the plea, I should entertain no doubt that either of these would be sufficient to charge the sureties. So, too, if in an action of debt on a judgment suggesting a devastavit, a recovery should be had against the administrator, it would be evidence to charge the sureties on the bond. From these illustrations it would seem that wherever the judgment of a law court has been rendered directly upon the administrator's liability as such, and has fixed its amount, that it would be competent evidence to charge the sureties. Under this rule, if an action on the case was the only remedy against the administrator for negligently or fraudulently permitting the real estate to be sold, I should hold that the judgment at law would be evidence to charge the sureties : for it would conclusively establish the administrator's liability arising from his mal-administration, and the amount of damages for which he should.respond.
But in equity, the administrator would, beyond all doubt, be liable to account for the value of land thus sold in consequence of such a treach of duty; and if authority be necessary to sustain so plain a proposition, I refer to the case of Hart vs. Ten Eyck, 2 Johns. Ch. R. 62. The liability of the administrator, and the amount of it, might be thus established by the decree of a court to which he is bound to account, and the decree df which is generally conclusive, both against him and his sureties. Other cases of liability for or from the real estate may be put. Generally, whenever the real estate, by operation of law, is changed into personalty, and it comes into the hands of the administrator, to be administered as assets, his sureties would be liable for its faithful administration. For then it becomes a part of the goods, chattels and credits of the deceased. If sold under execution, and a surplus remains, or if sold by the decree of the Court of Equity, and the proceeds directed to be paid to the administrator to be applied in payment of debts, in both or either of these cases, it has ceased to be land, and has become personal assets, which the administrator receives as such, and for which he must accordingly account. For rent of land, cases.may be conceived where the sureties would also be liable. The case of Shelton ads. Cureton, 3 McC. 412, disallowed a charge for rents and profits against the administrators, in a case against the sureties. But in that case the charge arose from the occupancy of the administrators (who were also distributees) of the land of the deceased; and I am not disposed to say that where the administrator is also an heir, that his possession and liability to account for rent should be referred to his character as administrator. It is more properly in his character of co-tenant that he is liable to account for rent; and hence, not arising necessarily from his office of administrator, his sureties would not be liable. But if the administrator, as such, receives the rents, issues and profits of the real estate, it is difficult to perceive any reason why his sureties should not be liable for them. They are no longer the land of the deceased : they have issued from it, it is true, but when they become money, it follows that they are personalty. They then become the goods and chattels of the deceased, which have come to the hands of the administrator to be administered. These illustrations of the liability of the sureties of an administrator for or from the real estate were not necessary for the purposes of this case, but they seemed to be necessary to meet the different views which have been presented in the argument, and to satisfy, if possible, the doubts of the learned counsel for the motion. It is said, in the report, the balance in the hands of the administrator for which the surety is now made responsible, is not from the real estate, but from the personal assets of the deceased. The land was bought by the administrator and administratrix, and paid for out of the personal assets of their intestate. This was, as it turned out, a prudent investment: and, under a wise rule of equity, the profit arising from it cannot enure to their own benefit, but must to that of" their cestui que trusts. So far, there is no contest raised by the counsel for the motion against the propriety of the charge against the surviving administrator, but they have attempted to distinguish between his liability and that of his sureties. But I apprehend there is no distinction. If, as administrator, his liability is properly fixed, they must also be liable. It is where he is improperly charged as administrator that they are not liable. The only question on this part of the case is, whether the sureties are liable for profits over and above legal interest made by an administrator on a prudent investment That they are is, I think, too clear to admit of serious doubt. Interest, for which it is conceded they are liable, is nothing but profits which the law presumes an administrator has, or ought to have, made. It proceeds upon two principles : — 1st. That the use of money is always worth the legal interest; and 2d. that a trustee shall not make any gain or profit to himself from the trust fund. If more than legal interest has been received by the trustee, it would seem that he must either account for it to his cestui que trust, or that he makes profit to himself by the management of the trust. This would defeat a cardinal rule in equity, and cannot, there fore, be allowed. But it is supposed that, because an administrator, if he makes an imprudent investment, and loss follows it, must bear the loss, therefore he ought not to be charged with the extra profits on a prudent investment. The rule which compels him to bear all losses arising from investments made of his own mere motion, and to account for all, profits which may result from them, is one calculated to promote both prudent investments and honest management. There is no legal necessity on administrators to make any investment upon their own mere motion. If they choose, they may loan the money at interest, and this then furnishes the only rule by which they will be charged with profits. If they choose to invest the funds, the court of equity is always open to them, and under its order and advice, they will be protected from personal loss. But if this will protect them from loss, it would also follow, that in an investment made by an order of the court, they could make no personal gain. The effect of a voluntary prudent investment made by an administrator cannot give him any other or greater advantages than he would have had if it had been made by the order of the court of equity. He neither loses or gains by it. Upon the purchase of the land by the administrator and admin-istratrix with the personal estate, a trust resulted to the estate, that it should be held and accounted for as a part of it. It became the representative of that,much of the goods, chattels and credits of the deceased, in the hands of the administrator and administratrix tobe administered: and when sold, its proceeds became also goods, chattels and credits of the deceased to be administered. It appeared to be conceded in the argument, that the surviving administrator was properly charged in the decree with the proceeds of the land. If this be so, how can it be that the sureties are not liable under the bond? They undertake that he shall administer according to law. In what does a legal administration consist? Does it not consist in an entire discharge of all the duties which are required at common law and in equity to be performed by an administrator ? It is clear that it does. In equity the administrator's duty required him to account for the land which he bought with the personal estate, as personalty, and hence it follows, that the sureties have undertaken for the performance of this duty : and not being performed, that they are liable for the default.
The motion for a nonsuit or new trial is dismissed.
Johnson and Harper., JJ. concurred.
Levy, for Schroter.
Clinton contra.