Court Opinion

ID: 6807328
Source: CourtListenerOpinion
Date Created: 2022-07-23 18:48:56.800095+00
Date Added: 2024-06-11T16:03:30.814588
License: Public Domain

Lacy, J.,
dissenting, said:
In the year 1866 Hugh M. Nelson, of Clarke county, died, and his will was probated in the same year. His wife was the sole beneficiary under the will, and she qualified as executrix under the same. In 1867 she .filed her bill in the circuit court of Clarke county, in which she asked that the creditors of her husband be convened, and be compelled to prove their debts in that suit, and that they be enjoined from proceeding at law to assert the same; that she desired that all her husband’s creditors, of whom she was one, should be satisfied, and their debts paid; that her husband’s debts were about equal to his estate, and that she had other large estate of her own in the city of Boston, and that she had already paid some of her husband’s debts out of her own property; that after applying the proceeds of *492her husband’s personalty, it would take all, or nearly all, of the proceeds of the land to p.ay his debts, saying, “it is, therefore, desirable and proper to make sale of his land as soon as practicable, first having all the claims against the estate audited. This course will avoid an accumulation of costs of- suits and interest, and then enable her, without trenching materially upon her separate means to satisfy her husband’s creditors, of whom she is one,” and “'that the court will, as soon as practicable, decree an account to be taken of the debts of the estate concerning all the creditors of the same by publication before a master commissioner of the court, to prove their several claims, and enjoining them in the meantime from suing or proceeding at law; that a sale of the land in suitable parcels may be decreed under the supervision of the court, and the moneys arising therefrom distributed and paid over as justice may require.”
She filed with this bill her husband’s will, wherein, after giving her all the property he had, which he said came by her, he left her his sole executrix, and requested that the court would not ask security of her unless his creditors desired it, “and as she is worth in her own right property double the balance of any estate of mine, which will come into her hands as my said executrix, I hope my creditors will not require her to give security. I wish my said executrix, as soon as possible after my death, to sell my whole estate, both real and personal, and pay off my debts. I wish my said executrix, immediately after my death, to employ counsel able in the law (naming them), to consult and advise with them as to the proper steps-to be taken in the premises; and as soon as practicable, after my death, to sell to the highest bidder all my property, pay off my just debts, and if any portion is left after paying all my just debts,-I give and bequeath it to my dearest wife and her heirs forever.” She filed with her bill also the sales of the personal property of her husband, the deed by which he held title to the land, and -a copy of the deed of trust he had given on the land to secure a large debt due Douglas Grordon.
*493Whereupon a decree was entered referring the cause to a commissioner in chancery, who is directed to inquire into, ascertain, settle and.state the several niatters of fact and of account referred to in the bill and exhibits filed therewith, and particularly to ascertain and state, 1st. The amount and value of the personal estate of Hugh M. Nelson, the testator, which has come into the hands of complainant, his executrix, or to which said estate was entitled; 2d. The amount and character of the debts due from said estate, distinguishing such as are specific liens, and upon what part of his estate; 3d. The real estate of which testator died seized, any specific liens thereon, and what payments, by whom and out of what funds have been made since his death; 4th. What payments of debts due from the estate have been made by his executrix before and since the probate of his will and out of what funds ; 5th The value and annual value of his real estate, and whether the outstanding debts, including such as the executrix may have paid out of her separate estate, could be discharged in a reasonable time out of the rents and profits; 6th. A settlement of the executorial account of the complainant so far as she may have proceeded up to the time of such settlement. To convene the creditors, take proof of their debts, stating the same and their character, report whether a sale of the real estate be necessary, &c. And leave was given the “ executrix, in case any of the creditors shall be seeking to obtain any undue advantage or impose unnecessary costs by 'proceedings at law, to apply. by petition, stating circumstances upon the proof of this, for orders restraining such proceedings.”
This order was executed by the commissioner and in 1868 he reported with an account of the debts and their character showing only one preferred debt, and reporting then the debts of the appellees, Kownslar and others, which it is now claimed they have lost by their laches, and so held in their opinion by the majority. The said commissioner also reported as directed an account of the executorial account so far as she had proceeded. *494The report showed an. amount of proved debts of $27,770.76, and a claim of the executrix for payment, unsupported, as the commissioner- states, by any evidence except the -unsworn statement of her attorney in Boston, of $8,627.06. The effect of the opinion of the majority is to pay this unproved debt wholly unsupported by any legal evidence and leave unpaid the legally proved and duly ascertained debts mentioned above as due to the appellees, Kownslar and others, and the ground for this decision which reverses the circuit court and the well established rule of law as well, is that the said creditors were guilty of laches in maintaining their claims.
The statute provides, that when the assets of the decedent in the hands of his personal representative, after the payment of funeral expenses and charges of administration, are not sufficient for the satisfaction of all demands against him, they shall be applied first to the debts due to the United States; secondly, to taxes and levies assessed upon the decedent previous to his death; thirdly, debts due as personal representative, trustee for persons under disabilities, guardian or committee, when the qualification was in this state, in which debts shall be included a debt received by a husband acting as such fiduciary in right of his wife; fourthly, all other demands ratably. No payment shall be made to creditors of any one class until all those of the preceding class or classes shall be fully paid; but a personal representative who, after twelve months from his qualification, pays a debt of his decedent, shall not thereby be personally liable for any debt or demand against the decedent of equal or superior dignity, whether it be of record or not, unless before such payment he shall have notice of such debt or demand. Chapter 126, sections 25, 26, Code of Va., 1873.
This executrix paid the debts without regard to this statute. And when the real estate was afterwards sold and bought by her, she is excused by the opinion of the majority from paying for it, upon the ground that she has thus become a creditor of the estate. She did become a creditor, so far as she paid debts, *495which are duly proved; hut does the unsworn statement, the mere letter of a lawyer in Boston, prove this? Could she, however, thus become a preferred creditor f Did she acquire thus any other right to he paid in full than other creditors, in the teeth of the statute, which declares that the debts shall he paid ratably. It is said that the report does not show that these debts were not of superior dignity. I think it does. The reference to the commissioner was to report all debts, their amount and character; he does report them, and their amount and character, reporting one preferred debt, and all others without distinction. But it is said this report was not excepted to, and was confirmed, and that it has remained too long to be disturbed. Now, what sort of foundation is there for this position ? This estate was in the hands of the court to be administered. The court has here taken an account of all debts, their amount and character.
The report only reported the debts and their amount and character, and the statement of the transactions of the executrix so far as she had proceeded, and a balance appeared in her favor of .$2,535.82, as of January 1st, 1868; she had only then received $5,878.21. The report in no particular appeared to be a final settlement, nor, indeed, a settlement of any sort. It only purported to he a statement of affairs so far as they had progressed ; large amounts were still to come in and be disbursed from the sales of real estate valued at nearly $50,000. The object of the suit was chiefly to sell this real estate; the prayer in the bill was for the sale of this real estate; it had not yet been sold. The reference to the commissioner was to report concerning this real estate. On what was an exception to he based? There was no order for disbursement or distribution. What the executrix had done might or might not appear to be a violation of the rights of any of the parties, when the assets were all brought in; and the commissioner himself stamps upon the report its informal character and want of finality, for he concludes by saying: “ It may be proper to state that I have no doubt that the complainant has paid more money for the estate *496than she is credited with in the foregoing account, but she has hept no account, and I could only credit her with the amounts evidenced by such vouchers as she has presented.”
As to the $8,627.06, it was only reported as a claim against the estate on the part of the executrix, presented to the commissioner and unproved. The decree of the court approved and confirmed the report, ordered a sale of the real estate to meet the debts of the estate generally, and concluded thus: “ And it being suggested, as also appears by said commissioner’s report” (the $8,627.06 may be here referred to), “that there are other outstanding claims against the estate, the said report is recommitted to the same master commissioner under the same terms as the former oi’der, to audit and state and report to the next term of the court all such claims,” and perpetuated an injunction against Arnett, guardian, &c. Now what part of this report was confirmed? The value of the personal property was reported ; the debts due the estate, and their character, one being reported as the only lien upon the estate, real or personal; the value of the real estate as of $48,125, the debts, so far as ascertained, at $27,070.79 ; that the land would have to be sold, and should be divided into two parts. All this was definite, and concluded by the report, and approved by the court; but there was no complete report of the debts, and the report was recommitted. Until the debts were ascertained, and the assets brought in, it could not be known whether the debts could be paid in full or not, and if, in plain violation of the statute, any debts had been paid in full, whilst others of the same class had been omitted, was not this at her own risk ? But there was nothing yet developed to show either that the' debts had been paid in full, or that all debts would not be paid in full. The effect of the report was not of more effect than to report a statement of some of the debts and the payments made. The payments, which the commissioner so reports, were chiefly payments on the Gordon debt, which had priority over all others as to the main source of supply for *497the payment of debts—the real estate. Was there then any reason for exception to this report? Was any creditor in anywise concluded by it? The charge of laches against the creditors for this reason is altogether groundless. The land, the whole of which had been valued at $87.50 per acre, was divided into two parts as the commissioner had recommended, and two hundred and fifty acres sold to the executrix at $100 per acre, which contained all the improvements, including the elegant mansion thereon. This was less than one-half the farm which contained five hundred and fifty acres, three hundred acres being left unsold, and the proceeds of the sale so far made, together with the personal property sales, was enough to satisfy the proved debts; and if this money had been promptly paid, the accumulation of costs of suit and accumulation of interest, which the complainant seemed to dread so much when she filed her original hill in the cause, might have been prevented. But she did not comply with her purchase.
This sale was reported to the court October 16th, 1869, and the fact reported that $7,500 had been offered for the residue which had been declined; which report was approved by the court October 18th, 1869, and there was decree for sale of residue of the land on November 3d, 1870. More than a year after-wards, the same special commissioner reported again that he was now offered only $15 an acre for the three hundred acres, and it should not he sold for less than $40 per acre; which report contained the following significant language: “With regard to the sale to Mrs. Nelson, the widow and executrix, which the court approved and confirmed, the undersigned reports, that it having been well understood that Mrs. Nelson had not the cash means to comply strictly with the terms of sale, whilst the arrangement was highly beneficial to the creditors in securing the satisfaction of their claims in? a reasonable time, the commissioner has not attempted to enforce her purchase by any attempt to resell her land, has made no deed, hut *498allowed her to pay in discharge of the specific lien upon the whole land as much as she could from other sources. Thus she has actually paid upon the Gordon deed of trust {the first and only specific lien) since the' last term, about $1,500, and expects to pay during this term $1,000 more. She has, besides, paid interest upon some of the other claims, and has indeed substantially complied with the terms of her purchase. Under all the circumstances, your commissioner would recommend as best for the creditors that the matter be left open,” &c. The court, the executrix, and the special commissioner, thus appearing- by the record as having full in view all the time “what was best for the creditors,” and what “ensures the satisfaction of their claims in a reasonable time.”
The creditors, who now are to lose their claims for their laches in not pressing with more diligence their collection, did not remain satisfied with these fair promises and this commendable regard for their best interest very long, hut on the 6th day of June, 1872, moved for a rule, which was awarded against this purchaser, to show cause why she should not comply with the terms of her said purchase, or have the said land resold at her cost and risk. Upon the hearing of the cause upon this rule and the said report of special commissioner, mentioned above, on the 8th of November, 1872, the court declared its opinion that Mrs. Nelson had not been in default in her payments, and discharged the rule, and made an order of reference to take a further account of debts due by the estate.
It would seem that neither the court in administering this estate, nor the executrix at this time, considered these creditors as wanting in diligence in demanding their debts. Their effort to speed the progress of the cause and to get in the assets of the estate was defeated. They were then exercising too much diligence and concern about the debts which they have been considered as abandoning by their want of diligence.
The report under this order was returned May 30th, 1873, *499and fl,807.98 more of debts reported. On the 24th of February, 1874, not having yet complied with her purchase, the executrix came in and filed her petition for dower, upon the ground that she did not know the amount of her husband’s debts at the time of his death. And alleging, that “she is a large creditor of her husband’s estate, on account of her payment of debts which have not been taken into account, and praying that an opportunity might he given her of proving the same before a commissioner.” This was in 1874, and her husband died in 1866. Her diligence in the matter of electing as to taking under the will, or demanding dower, had not been very striking during the eight intervening years.
And further she says: “Petitioner has, since the death of her husband, occupied the dwelling and curtilage, and her son has occupied and cultivated the farm.” And she agreed to have her dower commuted, and asked to have that done. This led to another decree of reference—for an account of the debts the executrix had paid; the amount of the real estate again; the value of her dower, and a further account of debts—May 19th, 1874. Her deposition was taken to show that she had made no election to take under the will, and her son’s deposition as to his entire control of the farm.
Her son says: “ I have had control of the farm. I have had it in my possession to do as I chose with the proceeds. I cultivated the farm just as I chose. My mother has had the use of the house and orchard; my mother has never taken possession of the estate as devisee of my father.” The anxious creditors who had been so long kept at bay, and who, upon their motion for a rule to compel her to comply with her contract of purchase, had been informed by the court that she was in no default in complying with her purchase of this land, had, perhaps, thought that she was at least holding it as purchaser, or this long enjoyment of undisturbed possession of this valuable estate by the son would not have been without earnest protest by them.
*500The commissioner reported that she was entitled then to elect, and that her dower so elected was worth $10,562.99. This commissioner took the report of 1868, so far as it went, as a basis, and reported the debts and the executorial account as of that date. She was allowed the unproved debt of $8,627.04, stated in supplemental statement of commissioner’s report of 1868, and the report brought the estate in debt to her $15,816.68 of principal, and $5,973.81 of interest, aggregating $21,790.44; and a further account was reported of debts of $3,780.05; and the special commissioner again reported that he had been unable to sell the three hundred acres of unsold land.
The creditors now excepted: 1st. Because dower is allowed her; 2d. Because she is allowed credit for all of the debts paid by her, many of them being payments in full, and thus defeating the rights of other creditors who have not received anything •to a distribution pro rata with those paid; that if Mrs. Nelson "had paid the debts in full as executrix, she had committed a ■devastavit in not paying all pro rata; and if she claimed as assignee of the debts paid, she could stand in no better position than the creditors who have been paid. The cause was submitted to the court for decree therein in vacation, any exception to commutation being withdrawn; this was in June, 1874. The circuit court kept the case until March, 1875, when a decree was rendered overruling all the exceptions, and by consent commutation of dower was allowed the widow, not to preclude an appeal to be hereafter taken by the creditors. -
It is too clear to be disputed, and is in effect admitted, that all the debts the widow had chosen to pay were paid in full, while other creditors were paid nothing on their debts which appear to be of equal dignity. This is contrary to the law of this state; but the excuse set up for it is that the creditors had so long acquiesced in these payments and that now upon the authority of Harrison v. Gibson, Stamper v. Garnett and Hatcher v. Hall, by their laches they have lost their right to demand their pro rata share of their claims under the law of this state. This is a *501singular use to make of these cases. What laches can he ascribed to these creditors ? They have been in court pressing these debts with all the means at their command from a period commencing within a year after the death of the debtor. They were enjoined. in effect, at the outset from claiming their debts in any other suit; they have been convened and have proved their debts; they have submitted themselves to the court as they were compelled to do; they have seen the assets brought under the control of the court, the whole estate taken in hand by the court; they have been assured that the chief object of the executrix was to pay their debts in full in a reasonable time and with as little delay as possible. They have been assured by the court that in its opinion the indulgence to the executrix in her delay in complying with her purchase was the best for their interest. Not being able to see how it could he so, they have come in and demanded that by summary proceeding she he compelled to comply with her purchase, hut they were promptly suppressed by the court and compelled to sit quietly by while the court held this valuable property in its own hands, enjoined them -from touching it, and protected the executrix and her son in the use and full enjoyment of it without rent or charge, and are then told, after the lapse of eleven years of futile endeavor on their part, and complete and undisturbed control of all the property (under the wing of the court) by the executrix and her son: it is true that the law has been disregarded and some debts paid in full and others not paid at all by the executrix, but you should have prevented it; it was only by your acquiescence that this was possible ; you have lost your debts by your ladies. All this and more they have alleged in a petition filed by them in the cause subsequently for a rehearing. In 1875 the residue of the land was sold to the son for $5,775. This was reported to the court November 11th, 1875, and it was referred to one of the commissioners of the court in November, 1876, to report what amount each creditor yet unpaid would get *502in the distribution of the small funds now in hand, bio furthej proceedings appear in the record until May term, 1878, when the petition for a rehearing was filed by the creditors, which was allowed as to the rights of the creditors to have their debts paid pro rata; this is assigned as error in this appeal. The account was then taken upon this basis of the equal rights of the creditors under the law to a pro rata share of the estate, and on the 1st of June, 1881, it was decreed accordingly, and this is assigned as error by this appeal. Other depositions were then taken by the appellant, a'nd in February a petition was filed for a rehearing of the decrees of March 29th, 1878, and June 1st, 1881, by the appellee, which was denied by decree of that date, when the appellant applied for and obtained an appeal to this court.
Some alleged errors in the commissioner’s report are set forth in the argument, but where interest has been allowed on the whole item on one side, it has been so allowed on the credit on the other, to the period when the rest is had, and the result is the same as if the credit had been applied at the time contended for ; and there is no error in the account.
I have not seen, nor do I think the record, upon the closest scrutiny, discloses any laches or neglect on the part of the appellants in the prosecution of their claims. The only delay has been on the other side, and under the authoritative power of the court, which the appellees could correct only by appeal, and under the decisions of this court, they were entitled to wait until final decree in the cause' before they appealed. They obtained a correction of the error against them by a petition for a rehearing, and in this they only exercised an undoubted right.
I say nothing upon the question of election under the circumstances of this case. But I am clearly of opinion that there is no error in this cause of which the appellant can complain. The effect of the opinion of the majority is to deny to the appellees their plain legal rights, and I, with all deference, think *503it is unsustained by any precedent. No case has been produced where the statute for the pro rata distribution of assets has been thus disregarded, and I venture to say that none can be found; but as the decision of this court, it is authority to which the appellees must how. I am of opinion to affirm the decree of the court below.
Lewis, P., and Hinton, J., concurred in the opinion of Richardson, J.
Fauntleroy, J., concurred in the opinion of Lacy, J.
Decrees reversed.