Court Opinion

ID: 7935671
Source: CourtListenerOpinion
Date Created: 2022-09-08 23:09:16.737213+00
Date Added: 2024-06-11T16:33:31.993091
License: Public Domain

Grant, J.
The material facts in this ease are these: October 25, 1875, one William Little, being the owner of the land involved in this controversy, deeded it to one Phineas P. Nichols, and Nichols at the same time gave to Little a purchase-money mortgage on the same land for $2,500. The mortgage was recorded October 28 of the same year, and on the same date was assigned by Little to Henry O. Lewis. This mortgage was held by Lewis until his death, in 1884. Mr. Lewis died testate, *252naming Mr. Nichols and two others as the executors of his last will and testament. They accepted the trust, and duly qualified, September 29, 1884. This mortgage was inventoried among the assets of the estate, but the note was not mentioned, although it appears to have been produced by the defendant upon the hearing of this cause in the court below. June 8, 1885, the probate court made an order of distribution of the estate under the will of Mr. Lewis. By this order the mortgage in question was assigned to the defendant, who in 1890 instituted foreclosure proceedings by advertisement. This mortgage was a part of the full amount due her- as legatee. She gave her receipt therefor to the executors, who filed the same in the probate court. The executors have not been absolutely discharged.
March 19, 1885, Nichols contracted to sell this land to Nathan Crow, the father of the complainants. Mr. Crow paid Nichols $700 at the execution of the contract. He subsequently paid the attorney for the defendant $700, and the balance was paid to Nichols on or before October 1, 1886, at which date Nichols executed to him a warranty deed. Complainants obtained their interest in the land by purchase from their father. Nichols represented to Nathan Crow that the land was unincumbered. Nichols up to that time had borne'a good reputation, and Crow placed implicit confidence in his representations. A gross fraud was perpetrated upon him by Nichols, but of this neither Mi. Lewis. nor the defendant nor the co-executors of Nichols had any knowledge.
The points urged by complainants are these:
1. That the debt of the executor Nichols must be treated as cash in his hands, and as such accounted for by him.
2. That the land contract became in Nichols’ hands a security, one of the assets of the estate, and belonged with the mortgage.
*2533. That payments made to Nichols both before and after the transfer of the mortgage to the defendant should be applied upon the mortgage.
This bill was filed to enjoin the foreclosure proceedings. The decree directed the two payments of $700 each to be applied upon the mortgage; that the remainder of said mortgage debt was a lien upon the land; and further held—
“ That the nomination by said Henry O. Lewis, in his will, of Phineas P. Nichols, one of his executors, did not operate to discharge said mortgage nor the lien on the land, but that said mortgage became and was assets of the estate in the hands of said executors, to be inventoried and treated as other like assets of said estate; that the distribution and assignment of said mortgage to defendant was valid, and vested the ownership thereof in said defendant.”
Complainants alone appeal.
In England it is the general rule that if a debtor is appointed executor of the will of his creditor, and accepts the trust, the debt is thereby released. But equity presumes the debt to have been paid, and treats it as an asset in the hands of the executor, for the payment of debts and legacies. In America this equitable rule prevails at law also, in the absence of statutory provisions. Woerner, Adm. § 311, and the authorities there cited. In many of the states the liability of executors and administrators, under such circumstances, is fixed by statute. The application of this equitable doctrine does not operate to discharge a lien by which the debt is secured. Woerner, Adm. § 512; Kinney v. Ensign, 18 Pick. 232; Soverhill v. Suydam, 59 N. T. 140.
In Kinney v. Ensign the land had been twice mortgaged. The mortgagor was appointed administrator of the second mortgagee, and included in the inventory the debt due from himself. It was held that he had the *254right to redeem as against the assignee of the prior mortgage. Shaw, C. J., who delivered the opinion, said:
“The true and substantial ground is that the taking of administration by the debtor is not in fact or in law, to all purposes, payment of the debt. As between the administrator himself and those beneficially interested in the estate, he is held to account for it as a debt paid, from convenience and necessity, because the administrator cannot sue himself, and cannot collect his own debt in any other mode than by crediting it in his administration account. On technical grounds, as well as on considerations of policy, an administrator is not permitted to show that he could not collect a debt due from himself.”
In the present class it is immaterial that the note which the mortgage was given to secure, and which was referred to in the mortgage, is not mentioned in the inventory. Its production by the defendant upon the hearing leads to the presumption that the note was delivered to Lewis by Little, was among the assets of the estate, and was, with the mortgage, transferred- to the defendant. The mortgage and note were treated as assets belonging to the estate by the executors, by the probate court, and by the legatees. Under these circumstances the legal title to both, by the assignment of the executors, passed to the defendant.
At the time of the assignment to defendant there was nothing upon record to indicate that complainants’ father had any legal or equitable defense to the mortgage, nor to cause any suspicion that Nichols intended to defraud him. If he had examined the record in the office of the register of deeds before paying Mr. Nichols, he would have found a record of this mortgage, and' could easily have protected himself from the fraud which Nichols was practicing upon him. It would certainly be most inequitable to visit the consequences of his implicit confidence in Nichols upon- the defendant, whose legal right it was *255to rely upon this record. Granting that both parties are innocent* the complainants’ grantor put it in the power of Nichols to commit the fraud, and, according to all the authorities, they must bear the consequences.
Nichols owned the equity of redemption. This interest was entirely distinct from that of the mortgage. A mortgagee acquires no interest in it except by foreclosure. It did not become an asset of the estate by the appointment of Nichols as executor, -and' his acceptance. What•ever good morals may have required on the part of Nichols upon receipt of the money-for the sale of this interest, neither the estate nor the defendant acquired .any interest in the money received after the estate was closed as to the defendant.
Complainants have a complete remedy at law upon Mr. Nichols’ warranty of title. It affords no ground of equitable relief against the defendant that’ Nichols has absconded, and left no property which can be seized to .satisfy complainants’ damages.
Decree affirmed, with costs.
The other Justices concurred.