Court Opinion

ID: 8175404
Source: CourtListenerOpinion
Date Created: 2022-09-09 22:20:30.133521+00
Date Added: 2024-06-11T16:39:55.813702
License: Public Domain

UPON- RE-HEARING.
(Dec. 16, 1903).
This case was decided and the foregoing opinion filed on March 22, 1902. A rehearing was allowed on petition of appellant, because of a doubt as to whether she ought to be held for more than a ratable proportion of the debt, to be, determined by the ratio which the amount received by her from the estate bears to the whole amount distributed, This question was extensively *478discussed on the re-argument and a number of cases cited in support of the contentions of the parties, respectively, but no case expressly deciding the point has been produced. Clark v. Williams, 70 N. C. 679, seems to support, to some extent, the argument of counsel for appellant, and will be noticed later on. It is everywhere held that a suit for re-imbursement by the personal representative, or by a creditor against the distributees, for the payment of his debt, must be in equity, and that all the dis-tributees must be made parties, and that the decree should be against each distributee for his ratable proportion of the debt. From this it is argued that such ratable proportion is the limit of the liability of each distributee, and that he cannot be held for more. An equally strong argument, based upon the same premise, might be made for the contrary of the proposition. If the liability is not joint but several, each distributee being required to pay no more, in any event, than such share; why the necessity for suing all? Upon a joint and several contract, the parties to it may be sued jointly, or each may be sued separately. Where the undertaking is joint, they must all be stied together and the decree is against them all for the whole amount, and, if necessary, one of them may be required to pay the entire amount. If the liability of the distributee is limited to a ratable proportion of the debt, why may he not be sued separately? "Wiry the necessity for suing all together? To this it may be answered that a settlement of the administration account, and proof of the debt against the personal representative, are pre-requisites to a decree. This is true, but it is not the reason assigned by the courts; for they say all the distributees must be made parties, in order to prevent the burden of the whole d.ebt from falling upon one, or such of them as the creditor may elect to proceed against. This is forbidden because it is inequitable, and it does not indicate the limitation of liability contended for. On the contrary, when the courts say all the distributees and legatees shall be made parties, in order to prevent the creditor from requiring the payment of an undue amount from one of the parties, they indicate that there is no limit of liability, short of the amount received, except the equitable principle of contribution, which here concerns the remedy more than the right. They treat the amount received by the distributees as a fund belonging to the estate and liable to the payment of the debt, and the dis-*479tribúteos are brought in as tbe joint holders of that fund, or as being liable for tlie payment of the debt, by reason of their having received from the estate money or property which ought to have been applied to the payment of the debt. Then the court, having them all before it, in order to settle and determine the rights of all the parties by a single deeree, ascertains how much each should pay, to the end that the equities between the dis-tributees themselves may be adjusted and settled, as well as the equity between the creditor or personal representative on the one side, and all the distributees, on the other. It makes two settlements by a single decree and ends all controversies.
This principle is adverted to by Judge Staples in Ryan’s Admr. v. McLeod, 32 Grat. 367, 374. He says: “Our attention has been called, however, to an opinion of Judge Tucker, found on page 113, 2d volume, of his. commentaries, in which he states ‘there is much reason and some authority for the doctrine that each heir should be held responsible only for his portion of the debts.’ And he cites as authority the cases of Mason’s Devisees v. Peter’s Admr. 1 Hunf. 437; Foster and wife et als. v. Crenshaw’s ex’ors, 3 Munf. 514; Hopkirk v. Dennis et als., 2 Munf. 326. It will be found, upon examination, the first two cases only decide that the lands of all the devisees should beai their ratable proportion of the debts, in the first instance, instead of decreeing against one, and turning him around upon the others for contribution — a principle universally conceded and repeatedly acted upon by this Court. The last case—that of Hopkirk v. Dennis—holds tire very reverse of what Judge Tucker supposes. There it was conceded that one of the devisees had wasted his portion of the estate, and was insolvent. The court held that the chancery court erred in not decreeing that the other devisees should pay the insolvent devisee’s portion,' in due and ratable proportions, to the extent of the lands devised.”
The case just quoted from was cited in the former opinion as affirming the proposition decided in Hopkirk v. Dennis. Some other, cases were there cited to the same effect, and it is argued that they do not apply because the proceedings were against the heirs in respect to real estate descended and devised, instead of legatees and distributees to whom the personal estate had been paid oyer, leaving debts unpaid, And it is said that each heir is *480liable for the whole amount because the statute expressly makes him liable. But it is to be noted here that, notwithstanding the liability of each heir to the extent of the value of the land which descended, or was devised, to him, all the heirs must be made parties, so that the principle of contribution may be enforced and applied in such suit, and the liability placed where the court can see that it ultimately belongs, so that the rights of all the parties may be settled once for all, and not by picee-meal. As some of the judges say, a court of equity .always puts the saddle on the right horse in the first instance. This illustration shows that there is nothing in the argument of limited liability^ founded upon the requirement that all the distributees shall be made parties and contribute ratably to the payment of the debt. It is true that, at common law, the real estate of a decedent Was liable in the hands of heirs for record and specialty debts only, and that the statute now makes the real estate liable for all debts. It makes it assets for the payment of debts, in case of a deficiency of personal property. The effect- is merely to place real estate on the same footing as personal property respecting the debts of the decedent, after the personal estate has been exhausted, and proceedings to enforce payment of a debt out of real estate in the hands of the heirs are conducted upon the same principle as that which governs the enforcement of payment out of the personal property in the hands of legatees or dis-tributees.
Another argument is based upon the statute authorizing personal representatives to require the execution, by distributees and legatees, of bonds with security, conditioned to refund due proportions of any debts or demands which may afterwards appear against the decedent and of the costs attending their recovery. Adopting the same line of argument, the court, in Clark v. Williams, 70 N. C. 679, reaches the conclusion that, where refunding bonds have not been taken and one distributee has become insolvent, the others are not required to make up his portion of the debt. This is exactly the opposite of what the Virginia court holds, respécting real estate in the hands of the heirs, v The reason assigned for the decision is faulty. What is the effect of this statute when the personal representative puts it in force? It lays upon each distributee the same burden that a court of equity would ultimately put upon him, and makes him give security *481for the payment of the amount. It goes to the end of any possible future assertion of a demand against the distributees by suit in equity, and requires each one to give bond with security to do that which a decree., settling the rights of all parties in respect to any outstanding and unpaid debts against the estate, would require him to do. It, in no way, indicates or' determines the nature or extent of the primary liability of a distributee or his liability when no bond has been'given. As a bond with security is exacted by this statute, the case stands upon an entirely different footing. The statute does not limit the liability without requiring bond with security. This argues, if anything, that, in the absence of security for his due proportion of the debt, the liability of the distributee would be greater, otherwise the outstanding debts might not be paid. It would not be, in case of the subsequent insolvency of any one or more of the distributees, if each is only liable ratably. Security by each for the payment of his share is a provision against such contingency.
The view adopted by this Court seems to be supported by authorities ps well as reason. In Sanders v. Godley, 23 Ala. 479, the court said: “The chancellor will render a decree in favor of complainant against the respective parties for their several portions as aforesaid, and allow them some short delay for the payment of the same, and shall further decree that if the whole amount he not paid by such tíme execution may issue agamsl any or either of said parties defendants, to the extent of the property respectively received by them, until the whole is paid." The Virginia court makes no distinction between the legatees and heirs in respect to the payment of the debt of a decedent. “Where legatees are called upon to refund at the suit of a creditor, the general principle is that all must be before the court and the burden apportioned among them, if it can be done, without material delay or injury to the creditor. But if some of the legatees are insolvent, the others will be required to malee good the deficiency to the extent of what they have received.” Leake's Ex'or. v. Leake et als., 75 Va. 792, (pt. 9 syllabus). The South Carolina court clearly affirms the same principle. Lanier v. Griffin, 11 S. C. 565, holds: “The demand of a creditor of testator against the legatee, who has received his legacy, leaving a debt of the testator unpaid without available assets for its payment, is, in equity, ip. the nature of ap action for money had *482and received.* * * * IT eld further, that the legatees and dev-isees were liable to the ward to the extent of assets received, hut that no personal liability attached to the executors. Reid further, that the legacies were liable to respond before the lands specially devised could be applied, and that the decree should have established the liability of all the legatees and devisees inter sese to contribution.”
The authorities fully sustain the proposition that the liability of the distributees rests upon the theory of assets of the decedent’s estate in their hands as a trust fund. That being true, each one is primarily liable to the extent of the amount of the fund held by him. “That a creditor may follow assets in the hands of the legatees to whom ' they have been delivered in ignorance of the creditor’s demand, has been an established principle of this- Court from the earliest period, of the decisions in which we have any traces.” Lord Cottenham, in March v. Russell, 3 Myl. & Cr. 31. “If a creditor does not come in till after the executor has paid away the residue, he is not without remedy, though he is barred the- benefit of that decree. If he has a mind to sue the legatees to bring hack the fund he may do so.” Lord Eldon, in Gillispie v. Alexander, 3 Russ. 136. “But the legatees and distributees, although there was an original deficiency of assets, are not at law suable by the creditor. Yet he has a clear right in equity, in such a case, to follow the assets of the testator into their hands as a trust fund for the payment of his debt. The legatees and distributees are in equity treated as trustees for this purpose; for they are not entitled to anything except the surplus of the assets after all the debts are paid. Besides, they, ,in the case put, being ultimately responsible to pay the debt to the executor out of such assets, if the executor should be compelled to pay it to the creditor by a suit at law, may be. made immediately liable to the creditor in equity.” Story’s Eq. Jur. section 1251. “In the course of the administration of estates, executors and administrators often pay debts and legacies upon the entire confidence that the assets are sufficient for all purposes. It may turn out, from unexpected occurrences, or from debts and claims made known at a subsequent time, that there is a deficiency of assets. Under such circumstances they may be entitled to no relief at law. But in a court of equity, if they have acted with good faith and with due caution, they will *483be clearly entitled to it upon the ground that otherwise they will be innocently subject to a n unjust loss from what the law itself deems an accident.” Id. section 90.
It is urged that, conceding the jurisdiction and power of the courts of this state to subject, to the payment of this debt, the fund received by Mrs. Sieg, it ought not to be done, because it is inequitable, and the plaintiff ought to be required to go into another jurisdiction in which the remedy is more complete. This phase of the case has been discussed in the former opinion. It is true, that, in Dickinson v. Hoomas, 8 Grat. 353, 416, Judge Moncure says: “But cases may sometimes occur in which, all things considered, it may be more convenient to turn over the parties to a foreign jurisdiction,” but the plaintiff here is proceeding in the courts of the state in which he was appointed administrator and the process of whose courts was used for the collection of the assets which formed the trust fund for the payment of this debt. In this state, his accounts are to be settled according to the law of this state. To turn him around to a foreign jurisdiction may be as inconvenient and as inequitable as to require this distributee to pay the debt here. Even in Dickinson v. Hoomes, heirs residing in Virginia were made to account for the value of lands in the state of Kentucky, which had descended to them.
We do not believe there is anything in this case which, on equitable principles, requires the courts to decline to take jurisdiction of it. Hence, the decree should be affirmed.

Affirmed.