Court Opinion

ID: 6947311
Source: CourtListenerOpinion
Date Created: 2022-07-24 01:27:08.961461+00
Date Added: 2024-06-11T16:07:57.545753
License: Public Domain

Opinion by Treat, C. J.: First. The cause of action sought to be enforced by this bill was never exhibited against the estate of Parker. There was a final settlement of that estate more than one year before the commencement of this suit. The creditors and devisees of Rider have, therefore, lost all remedy against the estate. R. S., ch. 109, sec. 102. It is insisted that, as the creditors are barred by the lapse of time from assigning a breach of the bond as against the estate of the principal, the sureties to the bond are thereby discharged. However plausible this position may at first seem, it cannot be sustained. As a general rule, whatever discharges the principal operates to discharge the surety. But the rule is subject to this exception: where the discharge is caused by operation of law, and not by the voluntary act of the creditor. A familiar instance is the case of a discharge in bankruptcy. It is no part of a contract, that the creditor shall make use of active diligence to enforce the obligation of the principal. There must be some affirmative act on the part of the creditor, which will discharge the surety—some act that changes the character of the contract, or is calculated to injure the surety. The rights of the creditor against the surety are not impaired by mere delay, except where the surety has the right to require the creditor to prosecute the principal, and actually insists on the right by giving him notice to prosecute. Theobald, in his treatise on Principal and Surety, at page 88, thus correctly states the law on this subject: “ Forbearance, or mere passiveness, for any length of time, on the part of the creditor towards the debtor, will not discharge the surety; because, until called upon by the surety, the creditor is under no obligation to sue the debtor.” The following cases are in principle precisely like the one before us : Sibley vs. McAllaster, 8 New Hampshire, 389; Johnson vs. Bank, 4 Smedes and Marshall, 165; Cohea vs. Commissioners, 7 ibid, 437; McBroom vs. Governor, 6 Porter, 32; Hooks vs. Bank, 8 Alabama, 580. In each of them, the creditor had lost all remedy against the estate of the principal debtor, by a failure to present his claim against the estate within the time required by law, yet it was held that the sureties were not thereby discharged. Second. The attempt on the part of Eikelburner to administer on the estate of Rider in Scott county, was not authorized by law. The Probate Court of that county had no jurisdiction over the estate. The will, which was the foundation of the administration, was properly admitted to probate in Morgan county ; and, on the death of Parker, an administrator de bonis non of Rider should there have been appointed. The Probate Court of Morgan county had acquired full jurisdiction of the estate; and the right to retain that jurisdiction, until the estate should be fully administered, was not affected by the death of Parker. The 70th section, 109th chapter, R. S., applies only to cases where the same Court has jurisdiction of both estates. The acts of Eikelburner, in reference to the estate of Rider, are not binding on the creditors or devisees of the estate. Third. Those of the creditors who labored under none of the disabilities named in the saving clause of the 115th section, 109th chapter, R. S., and who failed to exhibit their claims against the estate of Rider within two years after the grant of letters of administration to Parker, are precluded by the express provisions of that section from all participation in the estate inventoried or accounted for during that period. The object of these provisions is to facilitate the settlement of estates, so that creditors and distributees may ascertain how much they are entitled to receive from the estate, and may not be unreasonably delayed in obtaining it. Creditors are required to make known their demands within two years after the grant of administration. Those free from disability, who neglect to comply with this requisition of the statute, must rely for the satisfaction of their debts on subsequently discovered estate. Thorn vs. Watson, 5 Gilman, 26. The time within which claims must be presented against an estate, is to be computed from the date of the letters of administration, and not from the date of the notice to creditors to exhibit them. The omission of the administrator to give the notice does not relieve the creditors from the necessity of presenting their demands. The statute operates whether publication is made or not. Thrash vs. Sumwalt, 5 Alabama, 13; Cawthorne vs. Weisinger, 6 ibid, 714. The fact that there was no administrator for a part of the two years, did not prevent the creditors from exhibiting their claims against the estate of Rider, and thereby avoiding the operation of the statute. It is a sufficient exhibition of a claim against an estate to file the claim, or a copy thereof, with the Probate Court. R. S., ch. 109, sec. 116. The creditors had the legal right to administer on the estate of Rider, and failing to exercise the right, they ought not to. complain that there was no administrator. The limitation of two years commenced running on the grant of administration to Parker, and continued to run after his death. It is a well settled principle of law, that when a statute of limitations begins to run, it will continue to run until it operates as a complete bar, unless there is some saving or qualification in the statute itself. Rhodes vs. Smethurst, 4 Meeson and Welsby, 42; Cotterell vs. Dutton, 4 Taunton, 826; Peck vs. Randall, 1 Johnson, 165; Sacia vs. DeGraff, 1 Cowen, 356 ; Rogers vs. Hillhouse, 3 Connecticut, 398; Langford vs. Gentry, 4 Bibb, 468; Granger vs. Granger, 6 Ohio, 17. There is no exception in the statute in question which arrests or suspends its operation after it has once commenced to run. Fourth. The case shows that the property inventoried and sold by the administrator of Rider, or nearly all of it, was the partnership property of Webb and Rider. Webb, as the surviving partner, had the legal right to retain the partnership effects, and settle up the affairs of the partnership. Partnership effects are first to be applied to the payment of the joint debts; and, when they are discharged, the surplus belongs equally to the surviving partner and the personal representative of the deceased partner. The latter has, however, the right, and it is his duty, to insist on a prompt settlement of the partnership by the former, and a division of the surplus. In case the surviving partner is guilty of laches or bad faith in closing up the concerns of the partnership, it is the duty of the administrator to file a bill in equity to enjoin him from disposing of the property, and receiving the outstanding debts, and have the effects- of the partnership placed in the hands of a receiver for final adjustment and distribution. It is insisted on the part of the creditors that Webb waived his right to retain the joint property, and settle up the affairs of the partnership, and assented to the sale of the property by the administrator. If such was the case, the administrator became responsible for the proceeds of the sale; and his sureties are liable to the creditors and devisees, if he did not faithfully account for the same. But it is contended on behalf of the sureties, that the property was taken and sold by the administrator against the consent of Webb; and that subsequent to the sale, an arrangement was made between them, by which Webb was permitted to receive the property, as surviving partner, and apply it in the adjustment of the partnership concerns. The proof is inconclusive and unsatisfactory, and as the cause must be remanded, the parties will be permitted to adduce any additional evidence on this branch of the case. As the case now stands, the proof shows, at least, that the administrator became chargeable with all of the property inventoried, which was not bid off at the sale by Webb and Linkins; and the creditors are entitled to a decree for an account to that extent. The collection of the note of Benjamin, by Eikelburner, was unauthorized ; and unless the proceeds have been applied in the payment of the debts of Rider, the sureties of Parker are responsible therefor. If, upon a further investigation of the case, it shall turn out that Parker disposed of the partnership property with the assent or acquiescence of Webb, then, as administrator, he became chargeable with the proceeds; and if he has not faithfully accounted for them, his sureties must make good the loss sustained by the creditors. Their liability, so far as the partnership creditors are concerned, extends to the whole of the property received by the administrator, and not accounted for; but as to the individual creditors of Rider, only to one half of the property, for after the joint creditors are i>aid, Webb is entitled to a moiety of the surplus. But if, on the other hand, it shall appear that the property, or any part thereof, was surrendered up in good faith by the administrator to the surviving partner, on his claim of right to dispose of it in winding up the affairs of the partnership, then the sureties are not to be hold responsible for what was thus returned to Webb. Fifth. The heirs of Parker are not necessary parties. The object of the suit is not" to charge the estate of their ancestor. The creditors and devisees of Rider have now no cause of action against his estate. The sole object- of the suit is to charge the sureties on the bond. But the devisees of Rider should be made parties. After the debts are paid, they are entitled to the residuum of the estate. They are therefore directly interested in defeating the claims of the creditors, for in the proportion the amount of the creditors’ demands is diminished, will their claim against the sureties be increased. If an administrator de bonis non of Rider shall be appointed and made a party, it will not be necessary to make the devisees parties. The administrator would represent their interests. The decree of the Circuit Court must be reversed, and the cause remanded, with leave to the complainants to amend the bill, and to both parties to take additional testimony. The costs of this appeal to be equally divided between the parties. Decree reversed.