Court Opinion

ID: 5464179
Source: CourtListenerOpinion
Date Created: 2022-01-09 19:46:33.240631+00
Date Added: 2024-06-11T08:33:02.046313
License: Public Domain

Curiq, per Sutherland J.
(after stating the facts.) The case turns upon the construction of the covenant, and the effect and operation of appointing Elliott an executor. There is no dispute as to any material fact. The covenant was not denied, on the argument, to be a personal one upon which the defendants are responsible in their individual character, and not as executors.
1. What, then, is the true construction of the covenant ? It is unnecessary to cite authorities, to show the rule of interpretation, that the whole covenant, with its context, is to be taken into consideration; and that is to be considered the covenant, which, from such consideration appears to have been the true intent and meaning of the parties. If the intention of the parties be doubtful, that construction is to be adopted which is most beneficial to the covenantee. Testing this covenant by these rules, and there can be no doubt, *8071. That if the judgment assigned was satisfied or extinguished by operation of law, it was as much a breach of the covenant as though it had been paid in money or discharged by a release; for if it was satisfied, in judgment of law, neither the sum of $698, nor any other sum, was due upon it: 2. That the covenant implies that the sum due and unpaid is due to the covenantors at the time of the assignment: 3. That it was due to them as the representatives of Caleb Hopkins, the plaintiff in the judgment: and 4. That it was due upon the judgment.
2. The breach of the covenant is said to be the necessary result of the judgment creditor’s appointing the judgment debtor one of his executors, and his acceptance of the trust.
It is undoubtedly true, as a general rule, that if a creditor appoint his debtor his executor, or one of his.executors, and be do not renounce the trust, such appointment shall operate as a release or extinguishment of the debt, or the action for it, upon the ground that such must have been the intention of the testator; because, by making the debtor an executor, he voluntarily destroys the only remedy or means by which the debt can be collected. The rule is universal, that when the remedy is suspended by the act of the party entitled to it, it is destroyed forever. The consequence is the same, if the debtor is a co-executor with others; for one executor cannot sue another. (Thomas v. Thompson, 2 John. Rep. 471. Toll. L. Ex. 272, Loud. ed. 1800, ch. 4, s. 9. 8 Rep. 136. Bac. Abr. Executors, &c., (A) 10. 2 Bl. Com. 512. Plowd. 184. Wankford v. Wankford, 1 Salk. 299. 11 Mass. Rep. 259. 12 id. 201. Off. Ex. 31, 32.)
But there is one qualification as universal as the rule itself ; that where the testator does not leave funds sufficient for the payment of his debts, the debts due from the executor shall not be discharged ; because the testator shall not be permitted, by a voluntary release, to defraud his creditors of their just claims. In such a case, therefore, the debt due from the executor, shall be considered assets in *808his hands, for the payment of the debts of the testator. By consi(jering it assets, the difficulty is avoided as to the means of enforcing payment. It cannot be assets in the hands of the executor, until it ceases to be a debt due to them, and has, either in fact, or in judgment of law, been paid to, and received by them. Choses in action, or debts due to the testator upon judgment, statute or specialty, are not assets till actual recovery and receipt. (6 Rep. 58. Noel v. Nelson, 1 Ventr. 94. Com. Dig. assets, (D). Bac. Abr. Executors & Administrators, (H) 2. Toll. L. Ex. 272. 1 Starkie, 32. 2 Vern. 299.) If an executor release a debt due to the testator, in judgment of law, he shall be considered as having received it, and it shall be assets in his hands. (Cocke v. Jennor, Hob. 66. Cro. Eliz. 43.)
Ifj then, there be a deficiency of assets, in this case, and of consequence, the debt due from the executor becomes assets, in judgment oflaw, is ceases to be an outstanding debt, and becomes money in the hands of the executor. The judgment against Elliott, therefore, was paid and discharged ; and the covenant of the defendant, that the sum of $698 was due and and unpaid, was broken.
The opinion of Holt, Ch. J. in Wankford v. Wankford, (1 Salk. 306,) is explicit upon this point. He says, “ when the obligee makes the obligor his executor, though it is a discharge of the action yet the debt is assets; and the making him executor, does not amount to a legacy, but to payment and a release. If A. be bound to B. in a bond for £100, and IhenB. make A. his executor, A. has actually received so much money, and is answerable for it. And if he do not administer so much, it is a devastavit.
This subject is very ably and perspicuously treated by Mr. Justice Jackson, in Stevens v. Gaylord, (11 Mass. Rep. 259.) In page 269, upon this particular point, he says, as soon as the debtor is appointed administrator, (if he acknowledge the debt,) he has actually received so much money, and is answerable for it. This is the result with respect to an executor; and the same reason applies to an administrator, as the same hand is to receive and pay, and *809there is no ceremony to be performed in paying the debt, and no mode of doing it, but by considering the money to be now in the hands of the party in his character of administrator.” The sureties in the administration bond were, accordingly, held liable for the amount, as though it had been actually received. So also, in Winship v. Bass, (12 Mass. Rep. 199,) it was held that the sureties of an executor, who was a debtor to the testator, at the time of his appointment, were responsible for the debt, upon the principle, that it must be considered as having been actually received by the executor.
But it is contended by the defendant, that, even admitting there are assets sufficient for the payment of the debts of the testator, the result is still the same ; for a debt due from an executor, to the estate of his testator is assets for the next of kin, as well as for creditors; and they are entitled to, and can obtain the fruits of it in Equity, if not at law. The general rule, I apprehend, to be otherwise. The appointment by a testator of his debtor as executor, is considered in the nature of a specific bequest to him of the debt, not to be paid unless there are sufficient assets to pay the debts. But if there are, then to take preference of the general legacies. This is the general doctrine as laid down by Toller, 274, (London ed. of 1800,) in support of which he cites 2 Blackstone’s Commentaries, 512, and Hargrave’s note on Co. Litt. 264, b, note (1.) It was said by the counsel for the defendants, that these authorities did not support the doctrine for which they were cited ; that although Blackstone does state such to be the rule, yet no such doctrine is to be found in the case to which he refers as his authority; (the case of Wankford v. Wankford, 1 Salk. 303.) Now upon an examination of that case, it will be found that Mr. Justice Powell, in his opinion, does state the doctrine, in terms, as laid down by Blackstone and Toller. After remarking, that the extinguishment of the debt in' such cases takes place, not by way of release, but as a legacy or gift by the will, and where that specific debt, or any part of it, is expressly devised by the will to pay a lega*810cy, it will, be assets to pay- su.ch legacy, because the testator intend to extinguish the debt; he says, “But where there is no such special devise, the-debt shall be extinguish-eel, notwithstanding any other legacies ,” That is, the ap? pointment of his, debtor an executor is prima fade,, evidence of the testator’s intention to give him the-debt by way of lega cy; and where that presumption is not repelled by some provisions of the will, inconsistent- with- such intention,, the ex-tinguishment shall take effect, although there may not be as, sets to pay the other- legacies. The note of Hargrave, also, sustains the doctrine of Toller. “ Still; however, (ho- says) when the creditor makes the debtor his executor, it is to be considered- but as a specific bequest or legacy, devised to the debtor to pay the debt-; and, therefore, like other-legacies,it is not tobe paid or. retained till the other debts are-satisfied.”
Now, if it is. to be considered as a specific bequest, then it is entitled to. priority of satisfaction over the general legacies. For in case of a deficiency of assets, to pay. the debt; all the general legacies must abate proportionably. But a specific legacy is not to abate at all, unless there be npt.sufficient without it. (2 Bl. Com. 513.)
Whenever, from the whole will, it appears, that it was not - the intention of the testator to discharge the debt;, by making- his debtor his , executor, then the executor- shall be trustee to the amount of. the debt for the legatees or next of kin. (Toll. L. Ev. 274; Carey v. Goodinge, 3 Br. Ch. Cas. 110; Cas. Temp. Talb. 340.) Now, no such intention appears from the provisions of this will. It is not to be inferred from that part which directs, that- all sums of money,.bonds or judgments', that may be in the hands of his-executors, shall be divided between his two sons ; because a judgment against one of his-executors never could be in, the. hands of his executors, as a judgment.
But admitting that the-judgment is. assets for-the next of kin; if' it is assets, it- ceases to be a judgment, and, in contemplation of law, has become money in the hands of the executor. Nothing, therefore, can,he due and.'unpaid- upon it; nor can it-be assigned;
Judgment for the plaintiffs,