Court Opinion

ID: 8298287
Source: CourtListenerOpinion
Date Created: 2022-10-17 11:09:41.329785+00
Date Added: 2024-06-11T16:44:10.874258
License: Public Domain

DISSENTING OPINION.
B. J. Tarver, Sp. J.
The complainant’s assignment of errors correctly states the material facts involved in this controversy, and the same is here copied, viz.:
£< Thomas O’Conner died intestate, in Knoxville, October 19, 1882, without issue, leaving a widow (the complainant) his sole distributee, and his brothers and sisters (the defendants) his heirs at lawn He left a valuable real and personal estate, and was in debt about $500,000. His widow administered on the estate, and has paid all the debts except about $10,000 and some interest, and the balance of the personal estate is merely nominal, having no market value.
*98“ Tlie defendants have realized over $200,000 in cash from the real estate, and will realize $50,000 more. At the time of said O’Conner’s death three parcels of his real estate were incumbered with purchase-money liens, as follows: (1) Sanford lot, about $1,000; (2) the MofFatt farm, .about $5,000; (3) the one-half interest in the Williams-McKinney place, about $13,000.
“About $10,000 of the lien upon the third purchase was resting upon it at the tinlo O’Conner purchased it, and was for purchase-money due from O’Conner’s vendors to Samuel McKinney, from whom said vendors had purchased it. The $3,000 was the amount which said O’Conner owed his vendors upon this purchase, who conveyed the interest sold to O’Conner, retaining in face of the deed a lien for the payment of the $3,000; also a recitation that said O’Conner assumed and agreed to pay the $10,000 incumbrance on the land to McKinney. O’Conner accepted the deed and went into possession. The other liens were for purchase-money due direct by said O’Conner to his vendors, and said liens were retained in the deeds conveying him said real estate. The administratrix did not pay off said liens out of the personal estate, but the lien-holders foreclosed them by sale of the property, and the proceeds of sales were applied in discharge of the said liens. The heirs demanded that the administratrix should re-imburse them to the extent that proceeds of said lands were applied to the discharge of said liens, etc.
*99“ The Chancellor decreed that the administratrix was bound to re-imburse said heirs this money out of the personal estate, and rendered judgment against her for about $24,000 and all the costs of the several causes in which said liens were enforced. The complainant has brought the case here, and has assigned three errors to the action of the Court below.”
Complainant’s second assignment of error is: “ The $10,000 purchase-money due from O’Conner’s vendors to McKinney was a primary liability resting upon the land, and that O’Conner’s undertaking as to said incumbrance was merely secondary, and, as between the heirs and personal representatives, his personal estate is not liable.”
This precise question has not heretofore been before this Court, and is practically an open one in Tennessee. Our Code system for administering estates of decedents does not provide for the state of facts presented by this assigned error. ¥e have the opportunity of deteraiining this question under the light of adjudged cases in Courts of last resort, and gaining from them whatever of wisdom they may afford.
The Chancery Court of England, more than two centuries ago, held that where one acquired real estate already incumbered, if he did no more than assume or undertake to discharge it, as between himself and his vendoi’, the real estate so acquired continued the primary fund for its payment, and the personal liability of the purchaser was merely *100auxiliary. This proposition received the approval of its finest judicial minds, and was never ■ questioned by them. Some uncertainty and collision in the adjudications of the English High Court of Chancery came in when it was attempted to determine what amount of contracting with the in-cumbi’ance owner by the purchaser would make his (purchaser) personal liability primary and not secondary. Some of the Judges held if the last purchaser or taker entered into a contract with the prior incumbrancer, and bound himself to discharge it, or if the incumbrance was deducted from the gross price at which he purchased, then his liability was primary. But the weight of the adjudged cases in England was. against this last proposition, though supported by many fine lawyers. The better opinion held the purchaser’s liability merely secondary, and the real estate the burden-bearer, primarily liable for the discharge of the incumbrance. We refer to the able and exhaustive opinion of Chancellor Kent in Duke of Cumberland v. Cadnington, 3 Johns. C. H., 252 et seq., in which he collects and reviews the English adjudged cases bearing on this question during a period of more than a century.
The most distinguished law writers in England concur with Chancellor Kent in the result reached by him in his review of the eases.
Mr. Spence says: “ The rule — the one making personalty the primary fund — only applies to those debts which were properly the debts of the testator. *101In all other cases, wliere the real estate was the original debtor and came to the possessor as such, it must continue to bear the burden, even though the testator, when he purchased the estate, entered into a collateral contract, or covenant, or gave a security for the payment of the debt;, that the estate first burdened must, first be resorted to.” 2 Spence’s Equity, 385.
Mr. Powell on Mortgages says: “A purchases an estate subject to a mortgage, and covenants with the mortgagee to discharge the same. A’s personal estate not liable to exonerate the land purchased.” This author, continuing in the same connection, adds: “ The personal estate not having received any addition to its funds by reason of the mortgage.” These citations from Powell are quoted and approved by Sir Wm. Grant in Hancock v. Abbey, 11 Vesey, 139.
It will be noted that these two eminent masters of the law go further than the case in hand. It does not appear from the record that the intestate gave any bond, covenant, or other obligation to the incumbrancer, McKinney, to discharge his debt.
Williams on Executors says: “Again, if a man buys an estate subject to an existing mortgage, the laiids remain the proper fund for its discharge, and the heir or devisee cannot throw the debt upon the personalty as the primary fund for its payment.” 2 Williams on Executors, 1535, 1536; 2 Roper on Legacies, 957, 958; 8 Jarman on Wills, 477; Adams’ Equity.
*102Redfield on Wills, 878, after stating the rule making the realty incumbered when acquired the primary fund for its payment, says: “ In order to make the purchaser’s .personalty primarily liable, the purchaser must by contract make himself personally liable and directly- liable to the owner of the incumbrance; and even a covenant or bond for the purpose will not be sufficient unless accompanied with circumstances showing a decided intention to make thereby the debt personally his own. * * * This rule prevails in most of the States of this Union; only three have attempted to vindicate a different rule, and in those three States there is no separate Chancery Court.”
Condent v. Condent, a New Jersey case decided in 1886, and reported in 4 Central R., 132, is to the same effect. See also Mount v. Varess, 33 N. J., 264; Sutherland v. Harrison, 86 Ill., 366; Hunt’s Appeal, 92 Pa., 494; Bispham’s Equity, Sec. 344; 3 Pomeroy’s Equity, Sec. 1206; Story’s Equity, Secs. 574-576, 1248, 1248e; 2 Lomax on Executors, 413; 2 Leading Cases in Equity, Part II., 922.
In the case in hand the intestate had no negotiations with the owner of the incumbrance touching it, in any particular. He gave no note or other obligation to his vendors for the payment of the debt upon the land at its purchase. The deed conveying him the land contains a recital of the existence of the incumbrance and intestate’s assumption and promise to pay it, and the intestate accepted the deed and went into possession of the *103land under it. “This is the head and front of his offending ” in this direction. It will he noted that the principle applicable to these facts has not been questioned in England or the States of this Union (excepting throe) during a period of two hundred years, and that there has been no conflict upon it, but only upon the question, What acts of the purchaser will make the incumbrance his debt and his personal estate primarily liable for its payment? and that the weight of authority upon this phase of the question was adverse to the primary liability of the purchaser.
Sir Wm. Grant, in 15 Yesey, 198, says: “Where a person becomes entitled to an estate subject to a charge and then covenants to pay it, the charge still remains primarily on the real estate, and the covenant is only a collateral security, because the debt is not the original debt of the covenantor.”
It is well settled by the ablest Courts and law writers in this and the mother country “ that the personal estate will not be primarily liable unless the testator has not merely made himself answerable for the payment of the mortgage, but has made the debt directly and absolutely his • own, or has, in some other way, manifested an intention to throw the burden on the personalty in ease of the land.”
We are aware it has been objected that the high authorities cited to sustain the principle laid down above are not Tennessee authorities, and therefore not binding on this Court; that we have *104a system of statutes of our own regulating the administration of decedents’ estates, and that this system, as explained by our adjudged cases, should determine and settle the question raised by the second error of complainant’s assignment. Is this objection well taken? There are no provisions of our Code touching the administration of estates that provide for a case circumstanced as is the one in hand. It is not a creditor seeking under these laws to subject realty to sale in .order to pay his debts; nor an administrator or executor .for the creditor seeking to reach realty as a means of paying the debts of a decedent. The creditor enforced his lien for purchase-money in the Courts; had sale and payment of his debt from the proceeds of the realty. The heir at law now asks to be re-imbursed the sum paid from the proceeds of his land'. The granting of his prayer depends upon the equity of his case, and whether his land was the primary fund for the payment of the debt paid by his inheritance. Our Code makes both real and personal property assets for the payment of debts, the latter the primary and the first the auxiliary fund for payment, unless this order has been changed by the decedent in his life.
As between legatee or distributee on the one hand, and the devisee or heir at law on the other, our Code and the adjudged cases of this Court permit the decedent to determine which shall be the primary and which the auxiliary fund for paying debts and legacies. Ills intention or pur*105pose thereupon, either express or by necessary implication, is sufficient to control the question, provided its certitude is reasonably apparent.
"We are not shut up to a will alone for this intent; we may get it from the res gesice — the facts of the transaction, connecting the decedent with the incumbrance. It may be express or by necessary implication. Bispham’s Equity, 347, 348.
It is to be noted that the Judges, in the cases cited su/pra, considered and interpreted the facts of the transaction to find proper evidence of the decedent’s intention to charge his personalty in ease of the burdened realty.
Lord Cooper, in 1 Peere Williams, 347, after detailing the facts of the transaction, said: “ The covenant was only an additional security for the satisfaction of the lender, and was not intended to alter the nature of the debt.”
Chancellor Kent, 3 Johns. C. II., 362, after saying there must be a direct dealing with the owner of the lien debt, adds: “And that will not be enough, unless the dealings with the mortgagee be of such nature as to afford decided evidence of an intention to shift the primary obligation from the real and personal fund.”
2 Story’s Equity, Sec. 1248c, on the same point, has this language: “And even a covenant and bond for the purpose will not be sufficient, unless accompanied with circumstances showing a decided intention to make thereby the debt personally his *106own.” Mr. K.edfield on Wills, in nearly identical language, lays down tlie same rule.
The inquiry is not, did the decedent charge the McKinney land primarily with the $10,000 incum-brance — this debt had been fastened upon it before intestate’s purchase — but it is, did Thos. O’Conner intend to relieve the land by throwing upon his personalty the primary liability of its payment? If we are precluded from considering and interpreting the facts of the purchase for the answer to the question (he dying intestate), we have no evidence of an intention to exonerate the land with his personalty; and hence, clearly, the heir cannot call on the distributee to re-imburse him for the discharge of the McKinney debt.
But considering the facts of the purchase of the McKinney land by the intestate, is there proper evidence of intent to exonerate ? The vendor’s lien in favor of McKinney was fastened on the land, being retained in the face of the deed to intestate’s vendors. O’Conner made no contract with the lien owner; gave no note or other obligation to him for it. He merely accepted a deed from his vendors, which dryly recited the existence of the incumbrance, and that intestate assumed and agreed to discharge it; but nothing further was ■ said or done by him in the direction of its discharge. This fixed lien was left by the parties undisturbed, a primary charge upon the land.
It is clear this purchase was made for the benefit or increase of the real estate. This fact, *107under tlie old rule (which, will he discussed below), was evidence of an intention and purpose on the part of the purchaser that the land purchased should be the primary source of its payment. Evidently the intestate intended his personalty to be in aid of the realty merely. For the reasons stated, and under the high authorities cited, I hold that the McKinney land was first liable for the payment of the McKinney $10,000 debt, interest and cost, and that the heir is not entitled to a recovery against the administratrix for re-imbursement therefor.
We feel less certain in disposing of the three one thousand dollar notes given by the intestate to his vendors on the purchase of the McKinney land. These notes are for an additional sum, needed to acquire the half of the McKinney land, were in aid of the purchase, and come under the rule laid down by Mr. Lomax, as follows: “ So, in cases where the lauds come to the deceased by descent or devise (will purchase vary the rule?), his concurrence in the mortgage deed and his personal covenant for the payment of the money on the assignment or transfer of the mortgage, being only by way of additional security to the mortgage, will not alter the burden as between his real and personal representatives. And the same principle, if other estates are added to the security on a further sum lent, or if there be a covenant on his part increasing the rate of interest. And it seems that if the sum borrowed by him and *108added to the original mortgage be comparatively small, equity will not consider that he had different intentions as to these different sums, but will charge the real estate with the whole.” See 2 Lomax on Executors (margin), 248.
The sum covered by the three notes is small compared with the incumbrance debt, being a little less than one-third its size. According to the rule above given, equity will not consider he had a different intention as to these different sums, and, therefore, the real estate should be charged with both sums as the primary source of payment.
Complainant’s first error assigned denies the right of the défendants to re-imbui’sement on these facts: The intestate bought of Sanford real estate at the price of $1,650; paid $550 cash, and gave notes for balance. He purchased of Moffatt real estate at $4,500, and gave his notes therefor. Each vendor made a deed of the real estate sold by him to intestate, retaining lien for purchase-money upon the land conveyed. Each enforced his lien upon the real estate against the heirs at law', and had their debts paid from the proceeds thereof. These proceedings were after death of intestate, and the realty so sold v'as situated in or near the city of Knoxville. The presumption is that this realty was bought by the intestate on speculation, and he intended and purposed to pay the sums due thereon from the proceeds thereof when sold.
Complainant insists that no case has been passed *109upon by this Court identical in its facts and defenses with the one in hand. We have found none determined by Courts of last resort in the United States, except one or more adjudged by the Supreme Court of Massachusetts, wherein the Court briefly held that the contract of purchase was a “ personal ” one, upon which the purchaser might have been sued, judgment had, and the debt collected from his personal estate; and for that reason held the personalty the primary fund for payment, and the realty merely in aid of it.
Complainant admits that the non-lien creditor cannot subject the land to sale for the payment of his debt until he shows complete exhaustion of the personalty, or its insufficiency to pay debts. She insists the lien creditor can proceed to enforce his lien upon the realty in the first instance, without reference to the personalty; that there is neither statute nor decision of this Court settling the identical question presented here; that the question is equitable, to be settled by deciding where the superior equity is; that complainant’s contention is supported by the superior equity, the controversy being between the heirs at law and distributee, creditors and legatees having no interest therein.
On the last analysis, lying back of the fact of a “ personal contract,” on which the Massachusetts cases put the primary liability on the personalty, is this inquiry: Was the contract for the increase-benefit of the realty or of the personalty ? Its *110answer- determines which estate is first liable. If the realty, by this test, is first in liability, the contract made for the purchase-money, though capable of being ripened into a personal judgment against the purchaser, is secondary in its character and in aid of the realty.
This rule was formulated and used by the Courts of England more than two hundred years ago in settling questions identical with those now before this Court; and since its introduction into the judicial history of the mother country we remember no decision of her Courts questioning its soundness. It should be noted that at the date of its first use, personalty constituted the only fund for the payment of debts in England. A favoritism, the outgrowth of the old feudal system, so completely “hedged the realty about” that it was rarely made to pay debts of decedents. In the United States, property of a decedent, of all kinds, is and has been applied to the payment of his debts. It has been made so now in England. Our institutions and laws constitute a soil more favorable to the growth and vigor of this old rule than that of its origin, and in this country we would expect to see it oftener applied and its authority less questioned than in the land of its nativity. This old rule has been cited and approved by the Supreme Court of the United States in McLearn v. McLearn, 10 Pet., 644. Judge McLean, in delivering the opinion of the Court, quoted Lord El den as saying, in 7 Vesey, 334, *111that “ the principle upon which the personal estate is first liable in general cases is that the contract primarily is a personal contract, the personal estate receiving the benefit.” Judge McLean, continuing, says: “And so, if the contract was in regard to the realty, the debt is a charge upon the land. It is in this way that a Court of Chancery, by looking at the origin of the debt, is enabled to fix the rule between the distributees.” We state, generally, that many of the State Courts and law writers in the United States cite and approve this “ rule,” but they need not be referred to here with more particularity.
When the “rule” was adopted in England, personal property did not have its present volume or importance. The mortgages upon real estate were nearly, without exception, for borrowed money, and vendor’s liens were very rare, and cut no figure in the current litigation of that day. The Courts, in that formative period, explained the facts of the transaction from which grew the debt to ascertain the intent of the debtor to chai’ge his real or personal estate with its payment. Those able Judges had little of precedent to guide them, but much of good common sense, and large acquaintance with and understanding of the motive and purpose moving to action in the affairs of everyday life. To this circumstance is largely due the excellence of those early decisions. These fathers of our inherited jurisprudence, guided by their practical good sense and level-headed wisdom, in*112terpreted the making of the debt for the increase of and benefit to the personalty to mean that the debtor intended that estate should be -burdened primarily with its payment. Hence, all debts for personal property, services, loaned money, and mortgage debts, which made up the considerations supporting the great bulk of the indebtedness of that period, were held to be for the benefit of the personalty; and, consequently, it was first chai’geable with their payment. These Judges were too clearheaded not to know that the converse of this rulé, when applied to real estate, was axiomatically true also; but as the occasion of its application was rare, there being few land transactions, there are few rulings of the Courts upon it to be found in the early reported cases. If the personalty receiving the benefit coming from the creation of a debt means that the debtor intended it should first be chargeable, why does not the same result follow to the realty, when it gets the benefit? Why should it be, true as to personalty and untrue as S to realty ?
The Courts proceed, in principle and reason, upon the same line when they sift the facts to determine the relative liability inter partes of two or more persons, jointly and severally bound upon the same instrument. If it is reasonably certain, upon weighing the facts, that one signed with the intent to be bound as principal, and the others as sureties, the Courts do not hesitate to so declare their rights and to enforce them accordingly.
*113Likewise, the determination of the many questions arising in the settlement of partnerships, involving the conflicting rights of firm and individual creditors as to their priorities of payment from firm and individual means, is largely controlled by the intent and purpose of the parties impressed upon the particular transaction. In fact, the rule giving the several priorities is the outgrowth and fruitage of the express or presumed intent of the parties to the transaction in relation thereto. Death and intestacy do not affect the question, and the “personal contract.” idea, though a prominent fact, is silent, while the Courts give expression to the intent of the parties in settling and fixing the relative liability of persons and funds in the two classes of eases hereinbefore referred to.
Also a tract of land subject to a' lien is sold off from the lien debtor successively, in separate parcels, at different times, and conveyed by deeds registered when made. The lien, if enforced by sale of the land., must be in the inverse order of alienation. The first sub-purchaser may force’ this order in the sale of the parcels. This equity grows out of the presumed intention of the several sub-purchasers, and may be enforced, notwithstanding death and intestacy have intervened.
O-th-er contentions might be cited wherein the express or presumed intention of the parties impressed upon the transaction is the controlling fact with the Courts in fixing the liability of persons or funds, but those named are deemed sufficient *114for this purpose to show the constant practice of the Courts in giving a controlling influence to the intent of parties in settling the larger part of the current litigation of the day.
Where the claims of creditors have been paid with no opposing statute nor adjudications of this Court, and where the title to both realty and personalty flows from the same source — the intestate —why should not his intent impressed upon his property control the question which it shall enrich, his heir or his distributee? What good reason is there for making this an anomaly, an exception to a rule of such general application ?
This Court, in Mason v. Swan, 6 Heis., 457, goes far to sustain this rule. Swan sold a lot to Mason by parol, who put valuable improvements on it, but did not pay purchase-money. Swan died, and Mason disaffirmed the contract and sued for the value of the improvements. This Court held the lot the primary fund for the payment. Judge Nicholson, speaking for the Court, said: “ The real estate, and not the personal, is benefited by the ' improvement, and equity necessarily fixes the liability for the benefit on the real estate.”
The principle of Swan v. Mason has been applied to- similar facts by nearly all the Courts of this Union, and. the reason of the rule, whenever 'applied, is the same — viz., the realty, having received the benefit, must he held first liable for the payment therefor. The “personal contract” on the part of Swan had no bearing in the decision.
*115John Marshall, of Franklin, Tenn., a great name in the law, sat as Special Judge in Franklin v. Armfield, 2 Sneed, 356, 357. This great lawyer held the executor, who had paid off an incum-brance upon a parcel of land, partly with his own means and partly with assets in his hands, was entitled to be re-imbursed therefor, and that the land, relieved from the burden resting on it when it came to the devisee, was chargeable therewith as the primary fund.
The “personal contract” theory, as a test to determine which estate is to be first . chargeable with a debt, has been shifting and unfixed in its nature, as may be seen in the overruling of Campbell v. Findley, 3 Hum., after an interval of half a century, by Stovall’s ease in 2 Lea by a divided Court, and the century of discordant opinions in England, and to some extent in Hew York, as to what makes a binding personal contract in the sense of the rule.
It should be observed that the two foremost States in intelligence, wealth, and culture, have cleared up the question by clean-cut legislative enactments providing that the descended realty of decedents shall, in all cases, be the primary fund for payment of any debt fastened upon it by mortgage, etc., when it came to the heir, unless there is a clearly expressed intention to the contrary in the will of decedent.
The better rule, we think, is to let the answer to the inquiry — which estate got the benefit — fix *116the primary liability. If the debt is for borrowed money, and is secured by a mortgage on real estate, the personalty has been benefited thereby; and the Courts for more than a century held these facts, by necessary implication, evidence of the decedent’s intention to charge his personalty with the burden of discharging the mortgage debt in exoneration of the realty; not an intention shown in a will, but impressed upon and inhering in the very fiber of the transaction from which came the debt. When the debt is the price of land bought, why will. not these facts, under the same rule, evidence an intent to charge the incumbered land primarily, as the debt was made for the increase of the land? Why shift the rule, and say the personalty is the primary fund to pay because it is the “ personal debt ” of the decedent ?
In strictness, the canons of descent devolved upon the heirs only the excess of the market value of the realty over the incumbering unpaid purchase-money, with the privilege to them, upon discharging that debt, to be invested with the fee-simple. The intestate took just this interest in the realty purchased, and no more was transmitted to his heirs. He consented to the retention by his vendors of so much of the realty purchased as would be sufficient to pay its price, and thereby appropriated and set apart that interest as means charged with the payment of the price of the realty.
Presumably the purchases from Moffat and San*117ford were on speculation, and intestate intended to pay the debts created in the purchase from the proceeds, when sold. As between the heir and the distributee, should not that intent of intestate to make the realty first liable to pay off the burden be effective, not as an intent evidenced by a will, but one impressed upon and woven into the very texture of the transaction by the intestate himself?
Does public policy or public good, or the uniformity of the rules for administering the estates of decedents, favor or oppose the settlement of these open questions, as already indicated? It can only be a practical question Avhen the distributee and heir are not the same person, which is rarely the case. Under our laws 'of distribution and descent, the heir and distributee _ are never different persons, except when one dies circumstanced as was Thomas O’Conner, or without wife, or hus-baud, or children, where the distributee is an old, and perhaps needy, parent.
The intestate was largely in real estate speculation in a growing city, where real estate was rapidly enhancing in value. The purchases were made with the expectation of early sales, at fine profits; he meets a sudden death; no testament is made providing for his childless widow, and if the personalty is to relieve the realty of the in-cumbrance for its purchase-money, the heir will be eni’iehed and the widow and distributee impoverished. The superior equity is certainly in her *118favor. The heir is in a Court of Equity asking that equity be done. Will equity re-imburse the heirs at the expense of the distributee?
The reasoning upon the- first error assigned by complainant is equally applicable to the three one thousand dollar notes given to intestate’s vendors in the purchase of the McKinney land. We reach a conclusion as to this error with less certainty than we had as to the McKinney incumbrance; hut still we feel justified in holding that the heirs are not entitled, in equity, to be re-imbursed for sums- paid upon the Moffat and Sanford parcels of land from the proceeds of said lands.
This disposes of the third assigned error of complainant adversely to the claim of the heirs at law; and upon the whole case we hold that the Chancellor is in error and should he reversed, and that the heirs at law pay the cost of this cause in this and the Court below.
Entertaining these views, I am compelled to dissent from the opinion of the majority of the Court in this case.