Court Opinion

ID: 6672862
Source: CourtListenerOpinion
Date Created: 2022-07-20 21:13:45.914185+00
Date Added: 2024-06-11T16:00:36.238991
License: Public Domain

The opinion of the Court was delivered by
Willard, A. J.
Complainant’s first exception presents a question of fact, whether $600 was a proper allowance to him, instead of $350, allowed by the Commissioner and approved by the Chancel*484lor, as a disbursement to an overseer employed by him upon one of the plantations under his control as administrator, mm testamento annexo. No question is made by the defendants as to the propriety of some allowance to the complainant, they not having excepted to that part of the decree of the Chancllor that sustains the allowance made by the Commissioner. It is, therefore, a question merely of the amount proper to be allowed.
The concurrence of the judgment of the Commissioner and of the Chancellor, as to the force and effect of the evidence, throws upon the complainant the burden of showing a Olear state of facts, entitling him to the amount claimed, admitting of no reasonable doubt as to the correctness of his charge.
It is enough to say that he has not supported his demand by such clear evidence of the necessity and propriety of such disbursement, as to place the conclusions of the Commissioner and the Chancellor clearly in the wrong as to such matter of fact.
Under such circumstances this Court will not disturb their conclusions of fact. This exception should be overruled.
The second exception of complainant was abandoned on the argument of the cause.
Complainant’s third exception is as follows: “Because the rents and profits of the real estate devised by the testator for the support of his family, were not assets in the hands of the administrator for the payment of debts, after the administrator had assented to the devise, and the same had vested in the parties beneficially intrusted therein according to the terms of the devise.” The proposition of law stated in this exception is not considered by, nor involved in the decree, as broadly as it is here laid down. As a proposition effecting the basis of the accounting, which had already taken place before the Commissioner, the Chancellor was only bound to consider it so far as it was brought before him by exceptions to the Commissioner’s report.
The only exception of the complainant to the Commissioner’s report, involving the proposition, to any degree, is as follows: “Because the administrator should have been allowed credit for the payments made by him since September, 1865, for the support and education of the testator’s family, out of the income and rent of that portion of the estate specifically bequeathed and devised by testator for that purpose, for the reason that the devises and bequests of the will, in favor of the family, were assented to by the administrator when the estate was solvent, and the right to the income thereof was *485not subject to the control and discretion of the administrator, but the said income was a trust fund for that specific purpose.”
The case does not involve any question of the effect of assenting to a specific legacy, on the subsequent powers of the administrator over assets affected thereby. Nor does it involve any question of the right of the administrator as it regards the control and disposition of the rent and income of land specifically devised. There is no trust created by the will for the maintenance of the family out of the general income of the estate, or out of any fund left in the administrator’s hands. On the contrary, it would seem that the testator looked to his specific devises and bequests, contained in the third clause of the will, as a fund sufficient for that purpose, until his estate should be settled and distributed.
The question presented to this Court is simply whether the general assets of the estate could be applied to the maintenance and support of the family, after the estate had become insolvent. This proposition was correctly solved by the decree in the negative.
The first exception of the defendants, the creditors of the testator, is based on the decision of the Chancellor, to the effect, in substance, that the complainant is not liable to the specialty creditors, although the estate is insufficient to pay their demands, notwithstanding that assets have been applied by him to the payment of simple contract creditors, leaving the specialty debts unpaid, on the ground that, at the time such simple contract debts wore paid, assets sufficient were reserved for the payment of the specialty debts, and although such assets have been lost by events for which the administrator is not responsible.
Apart from the relief afforded in such cases, upon the principles governing Courts of Equity, it is perhaps questionable, whether an administrator can be defended from liability to the specialty creditors, when voluntary payment is made to simple contract creditors, leaving known specialty debts unprovided for, and where such fact is charged by way of devastavit.
It is laid down in Bac. Abs., Executor, (L., p. 1,) as one of the instances of a devastavit, the payment of debts out of legal order, and the payment of legacies before creditors.
Judge Story says, (Story’s Eq. Juris., § 90,) “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, *486that 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 be clearly entitled to it, upon the ground that, otherwise, they will be invariably subject to an unjust loss for what the law itself deems an accident.” Again, he says: “ But to found a good title to such relief, it seems indispensably necessary that there should have been no negligence or misconduct on the part of such executors or administrators in the payment of the assets; for, if there has been any negligence or misconduct, that, perhaps, may induce a Court of equity to withhold its assistance.”
Our own cases leave this question open. There is the strongest reason to support the doctrine laid down ’by Story.
The bearing of this question on the responsibility of executors and administrators, and on the facility of administering estates, is highly important, as cases affected by it are constantly occurring. The facts of the present case illustrate its bearing in the most usual and most important form.
An administrator cum testamento annexo holds abundant assets to satisfy all the claims of creditors, and to fulfil the objects of the will, according to the terms of which he is bound, subject to the rights of creditors, to administer the estate. Among the claims against the estate is a contingent liability of the testator, that may or may not, according to circumstances, become a charge on the assets. In the present case the contingent liability arose out of a guardian's bond, to which the testator was surety.
The primary liability rested upon the guardian or his estate.
Even after the fact of liability has been ascertained, there yet remains the necessity of ascertaining its extent, before the assets can be applied to its extinguishment.
This amount may, as in the present ease, have to be ascertained by judicial proceedings, and, even after that is done, the extent to which contribution by co-sureties can be compelled, after exhausting the remedy against the principal, may have to be ascertained by further legal proceedings. Under these circumstances, it is the duty of the administrator to hold in his hand the assets of the estate, so far as they are applicable to the payment of debts of the grade of such contingent liability, or of an inferior class, until the actual ex-tinguishment of such contingent liability. If that is the absolute duty of the administrator, then it is of no importance how small may be the contingent liability, or how large the amount of assets. *487If that is the law, the simple contract creditor must await the satisfaction of all liabilities, absolute and contingent, and the settlement of all disputed claims, before he can demand payment, however insignificant the extent of his claim, and however abundant the assets of the estate may be for all purposes of administration.
That this is not the legal notion of the rights of the simple contract creditor is obvious, from the fact that under such a state of facts he is entitled to judgment at law against the administrator in respect of the assets; the effect of which judgment is an admission of assets at the date of its recovery.—Brown vs. Hellegas, 2 Hill, 447; Caldwell vs. Micheau, 1 Sp., 6, 276; Williams on Exors., 1770, et seq.
As an administrator, with ample assets for all purposes, could not defeat the recovery of a judgment by a simple contract creditor by pleading merely the fact that prior demands still remain actually uusatisfied, the recovery of such a judgment would furnish no evidence of a devastavit by the administrator, but would operate as a legal partition of the fund satisfying the simple contract debt with part, and leaving the rest subject to the claims of prior creditors.
It may be a question whether at law the administrator could protect himself, where such partition of the assets had been made, unless resulting from a judgment, or decree, recovered without his fault, binding the assets.
What the Court of law may do, through the operation of its judgments, is it not competent for the Court of Equity to do by a simpler and less expensive process ? What may be accomplished at law, but is there attended with the disadvantage of a multiplicity of suits, involving unreasonable expense and complication, may always be done, by simpler means, by a Court of Equity, providing the thing to be done is not beyond the reach of equity, or contrary to its nature. It is not to be questioned that equity will, and daily does, administer the assets of decedents’ estates, by applying them to the satisfaction of debts of an inferior grade, when debts of a superior grade are in dispute or not in a condition to be discharged, and for that purpose, apportions the assets substantially as they would be apportioned under the operation of a judgment de bonis testatoris. It is clear, then, on fixed equitable principles, that where an administrator has already done that which the Court of Equity would have ordered done under the circumstances, it will sanction his act, and afford him protection from any evil consequences that might arise at law, from such course of action; and *488it is equally clear that the qualification made by Story, that he must have acted prudently, is applicable in determining how far he is entitled to protection.
In Swift vs. Miles, (2 Rich. Eq., 147,) although sureties of an administrator were charged on the principle of a devastavit, on account of the payment of simple contract debts, leaving debts of a higher class unprovided for, yet the devastavit did not simply consist in the payment of the simple contract creditors, but in the fact that the administrator, as party to a partition suit among the distributees, allowed the realty to be distributed without making provision for the payment of the specialty creditors. Ch. Dunkin places the decision of the Appeal Court, distinctly on the ground that the administrator was charged as a party to the partition suit, with the protection of the rights of the creditors, which he wholly neglected.
The misapplication of the personal assets, by paying simple contract debts in preference to specialty debts, was not the real point at issue in that case, although Ch. Johnson, in his Circuit decree, viewed it wholly in that light, for the personal assets, thus misap. plied, had been replaced out of the sales of the realty, and such restored fund applied to the specialty debts. The real misapplication on wdiich the case turned, according to the judgment of the Appeal Court, was that which took place when the administrator suffered the proceeds of the realty to be distributed without provision made for the specialty creditors. It must be conceded that the case just noticed treated the application of the personal assets to the payment of simple contract debts, leaving the specialty debts unprovided for, as a misapplication of such assets. It must, however, be borne in mind that it was not a question in that case, whether the course pursued by the administrator in paying out assets to the simple contract creditors was justified by the condition of the estate, and the situation of the debts, respectively, at the time, but upon subsequent conduct of the administrator tending to defeat the rights of the specialty creditors. It must also be borne in mind that such an application, in derogation of the established order, by payment, is a devastavit in itself, unless justified by the peculiar situation of the estate at the time. It would not be a sound construction of Swift vs. Miles, to hold that it determined that, under all conditions and circumstances, the payment of simple contract creditors before specialty creditors, is a devastavit against which equity cannot relieve. The present question does not turn on the peculiar *489wording of the statute of 1789. The principle of priority does not depend on that statute, although it established the order of priority. Reference was made in argument to an expression that occurs in Com’r vs. Greenwood, (1 Des., 450,) where it is said, “that this Act is directory to executors and administrators in the disposing of the assets of the deceased, and, therefore, if they should administer them contrary to the directions of that law, and the estate receive an injury, they might be held to answer in an action for devastavit.” It is evident that the Court was not considering the distinction between mandatory and directory statutes, in using the expression “directory.” The object of its use appears to have been to show that the Act conferred duties on the executor and administrator, for the neglect of which they would be liable, in opposition to the idea that it merely created rights of priority as among creditors, without imposing on the executor or administrator any duty in respect to such priority, for the disregard of which they could be held liable to such creditors. In order to support the right of equity to afford relief in a case like the present, it is not necessary to weaken the force of the statute by artificial construction.
It may be assumed that the duty imposed upon the executor or administrator, is indispensable, and that even the Court of Equity cannot relieve him from its performance. The question then remains, whether setting apart an ample fund for the payment of the creditors having a prior demand, under circumstances satisfying a Court of Equity as to its propriety and prudence, is not a substantial compliance with the requisitions of the statute.
That it is within the power of the Court so to do, without impairing the force and effect of the statute, appears to be without question.
Both the Commissioner and the Chancellor concur in holding that the circumstances of the estate justified the appropriation of a part of the assets to the payment of the simple contract creditors at the time such payment was made, and there is no ground to interfere with their conclusions in this respect.
The question just considered must be solved by the state of facts existing at the time the payment to the simple contract creditors was made.
The subsequent loss of assets presents a totally different question, to be solved on a different state of facts, and by the application of altogether different principles. The loss of assets will be considered under the defendants’ third exception.
*490The second exception of defendants objects to the allowance to the administrator of a credit for payment of a sealed note of testator. It is not alleged, nor does it appear, that twenty years had elapsed from the date of the note at the time of such payment, although, if the date of the note is correctly stated in the defendants’ fourth exception to the Commissioner’s report, the period of twenty years must have been within a few days of expiring. As the case stands, the legal presumption of payment, arising from lapse of time, does not apply to it. It is, therefore, a question whether the administrator had reasonable ground to suppose that the note had been paid, or that it was intended by the parties as merely evidence of an advancement made by the father to his son. It was held, in Gee vs. Hicks, (Rich. Eq. Cas., 5,) in regard to the onus probandi in such cases, that the legal presumption is, that the debt is the debt of the deceased ; a contrary presumption can only be raised by showing fraud and collusion between the executor and administrator and the creditor; that if the objection is in point of law, it must appear that it was not a subsisting debt; if as to matter of fact, some suspicion of its correctness must be created by evidence. The Commissioner and Chancellor having found this issue of fact in favor of the complainant, upon evidence of a doubtful and presumptive character, this court will not disturb their conclusions.
The defendant’s third exception is grounded on the proposition that the delay of the complainant in administering the estate precludes him from setting up a loss of assets by casualties of war and other inevitable causes. This proposition was denied by this Court in Fitzsimmons vs. Fitzsimmons, (1 S. C., 400,) and under that ruling the third exception should be overruled.
The defendant’s fourth and last exception is based upon the refusal to charge the complainant with $4,000 invested in Confederate securities in 1863. It is not charged that this sum was a loan to the Confederate government in aid of rebellion against the United States, or even that the securities were purchased directly from the Confederate government, or its agents. It must therefore be assumed that the investment consisted in purchasing in the market obligations of the Confederate government already in circulation. It must also be held, upon the evidence and facts found, that this purchase was made with Confederate currency. It must therefore be regarded as simply converting a Confederate promise to pay a demand, without interest, into one to pay on time with interest. It is not made to appear *491that this conversion prevented the administrator from availing himself of any opportunity that might present itself to dispose of the depreciated securities in his hands. Nor does it appear that the retention of the Confederate currency would have prevented the loss occasioned by the destruction of the Confederate power. The point is not distinctly made that the administrator became possessed of this Confederate currency in an improper manner. It appears that the §4,000 of Confederate money was received for the hiring of slaves. Such transactions, as well as necessary sales of perishable produce, were only practicable at that time with reference to such currency. In the absence of distinct allegations and proof, it must be assumed that this Confederate currency came legitimately into the hands of the administrator, and that the loss that occurred by the depreciation of such securities was not enhanced by the fact that the currency was changed into securities of a more permanent character. The exception should be disallowed.
No ground appears in the exceptions brought before us by the supplemental brief — taken in the course of the accounting under the decree — for interfering with the account taken under such decree. It appears that the complainant’s exception proceeded upon a misapprehension of the effect of the report of the Special Referee, and as it regards the defendant’s exception to such special report, they appear to have been passed upon pro forma by the Circuit Judge, and under the practice of this Court cannot be heard here.
The decree of the Chancellor should be in all things affirmed.
Moses, C. J. and Wright, A.,J., concurred.