First Security Trust Co. v. Lentz

Stacy, C. J., after stating the ease: The right of the plaintiff to bring this action and to seek the advice of the Court on an existing state of facts, upon which a decree or some direction in the nature of a decree may be founded, is supported by a number of decisions, notably Balsley v. Balsley, 116 N. C., 472, 21 S. E., 954, Tyson v. Tyson, 100 N. C., 360, 6 S. E., 707; Little v. Thorne, 93 N. C., 69, and Tayloe v. Bond, 45 N. C., 5. It may be observed in limine that with the exception of the homestead right and the rights of a widow, which generally are superior to the rights of creditors, the debts of a decedent must be paid, if he leave anything with which to pay them, and if his estate be not sufficient to pay his debts in full, then they are to be paid in classes, with those of the last class, if and when reached, sharing ratably in what is left. C. S., 93; Murchison v. Williams, 71 N. C., 135. But he has nothing to give away until his debts have been paid or his obligations have been fulfilled. Equity, which delighteth in equality, as well as the law, which commands the right, requires that a man shall be just before he is generous, for generosity ceases to be a virtue when indulged in at the expense of creditors. *405 In considering the will now under review, regard should be had to the construction heretofore placed upon it by the Superior Court of Catawba County as appears from the judgment entered at the September Term, 1926, to which no exception was taken, and from which no appeal was prosecuted. Preliminarily, it should be stated that little Blanche F. Lentz, the child born after the making of her father’s will, and whose father died without making any provision for her, is entitled to such share and proportion of her father’s estate as if he had died intestate. C. S., 4169; Christian v. Carter, 193 N. C., 537, 137 S. E., 596; Sorrell v. Sorrell, 193 N. C., 439, 137 S. E., 306. This is conceded on all hands. With respect to the order of affecting assets, of the priority of their application, the general rule is, that in the absence of any controlling direction by the decedent to the contrary, the personal estate is primarily liable for the payment of the debts of the deceased. Moseley v. Moseley, 192 N. C., 243, 134 S. E., 645; Pate v. Oliver, 104 N. C., 458, 10 S. E., 709; Murchison v. Williams, 71 N. C., 135; Robards v. Wortham, 17 N. C., 178. Next in order usually come estates devised for the payment of debts. Then estates descended or undevised. And lastly estates specifically devised, subject to, or generally charged with the payment of debts. Galton v. Hancock, 2 Atkyns, 428; Donne v. Lewis, 2 Brown’s C. C., 256; Hinton v. Whitehurst, 68 N. C., 318; Graham v. Little, 40 N. C., 407; Shaw v. McBride, 56 N. C., 173; Knight v. Knight, 59 N. C., 134; University v. Borden, 132 N. C., 477. It should he observed, however, that while the personal estate is originally liable, yet the testator may exempt it, in whole or in part, by express words or manifest intention, from the payment of all or a part of his debts. Webb v. Jones, 2 Brown’s Cha. Rep., 60. Here, the testator has charged his “lumber business” with the payment of the debts arising from such business, in ease of his personal estate, and in definite and unequivocal language he undertakes to exonerate his personal property from the payment of any debts arising from the operation of the lumber business; but he specifically charges his personal estate, bequeathed to his wife in item 9 of the will, with any and all debts existent at the time of his death, and funeral expenses, except indebtedness contracted in connection with the lumber business, while in item ten the cost of administration is specifically charged against the residuary devise. Hence, the personal property must be held exempt from the primary burden of paying the debts of the lumber business. This is in accordance with the judgment of the Superior Court of Catawba County entered at the September Term, 1926. But as the liabilities of the lumber business exceed the assets of said business to the extent of something more than $15,000, and the record *406 shows other debts not yet paid, with no adequate provision made for their payment, the question presented for decision is, what property shall next be taken to pay these debts? Again, attention is directed to the fact that in seeking to ascertain the intention of the testator, regard must be had to the construction heretofore placed upon the will by the Superior Court of Catawba County, to which no exception was taken and from which no appeal was prosecuted. If, after following the rule above stated, it should become necessary to resort to the fourth-class, or to the estates specifically devised, including the property bequeathed to the widow in lieu of dower, we think the devisees in this class and the widow who, by reason of the peculiar provisions of the will, as heretofore construed by the Superior Court of Catawba County, seems to stand on a parity with them, are entitled to equality of contribution as among themselves. Murchison v. Williams, supra. But the executor is not required to adjust the question of contribution as among the devisees in the fourth-class and the widow who stands-on a parity with them. It may proceed in-the most expeditious and judicious manner for the settlement of the estate, having regard, of course, for the order of affecting assets, or the priority of their application, and leave the devisees of the fourth-class and the widow to settle their differences among themselves. Bruton v. McRae, 125 N. C., 206, 34 S. E., 391. This' course seems not to have been followed in the court below, hence ■ the judgment will be vacated and the cause remanded for further proceedings, not inconsistent with this opinion and as the further rights of the parties may require. Leave will he granted the' parties to file additional exceptions to the report of the referee, if so advised, or the matter may be heard and determined on the exceptions already filed. , In view of the position taken by some of the parties that the judge was without authority to change the report of the referee — -the reference being by consent — it is sufficient to say that, in a consent reference, as well as in a compulsory one, upon exceptions duly filed,- the judge of the Superior Court, in the exercise of his supervisory power and under the statute, may affirm, amend, modify, set aside, make additional findings and confirm, in whole or in part, or disaffirm, the .repoft of a referee. Contracting Co. v. Power Co., 195 N. C., 649, 143 S. E., 241; Mills v. Realty Co., ante, 223, 145 S. E., 26. Error arid remanded.