Wilkes v. Harper

The Chancellor. Some of the principles of equity upon which the complainants found their claim to relief in this case have been so often examined and enforced in this court, that it is not necessary to do more than merely to state them at this time. It is perfectly well settled, as a general principle of equity, — 354 — that where one person, or his property, stands in the situation of a surety for the payment of a debt, for which payment another person, or his property, is primarily liable, the one who is secondarily liable, upon payment of the debt to the original creditor, is entitled to be subrogated to all their rights and remedies of the creditor, as they then exist, against the principal debtor or his property. And where the original creditor has even an equitable lien upon the property of the person primari ly liable to him, such lien may be upheld and enforced in favor of the substituted creditor, in preference to any subsequent lien or claim upon such property, unless it be a legal lien, or title acquired by a bona fide mortgagee, or purchaser, or pledgee, for a valuable consideration and without notice of the prior equitable right. And in all cases, in respect to mere equitable liens, the maxim prevails here, that he who is prior in time is strongerJ in right. It is also a settled principle in this court, that the general lien of a judgment upon the real estate of a debtor is subject to all the equities which existed against such real estate ■in favor of third persons, at the time of the recovery of such judgment. And a court of equity will control the legal lien of ■the judgment creditor so as to protect the rights of those who have prior equitable interests in, or liens on such property, or ■the proceeds thereof. In the recent case of Buchan v. Sumner, ante, p. 165,) I had occasion to apply this principle to the case of an equitable lien of a partner, upon real estate received by the firm in payment of .a partnership debt, and where the legal title to the land was taken in the name of both the copartners. And it was there held, that the general lien of a judgment, recovered against one of the copartners for his individual ■debt, was subordinate to the equitable right of his copartners to have the whole proceeds of the land appropriated to pay the debts of the firm, and to equalize the claims of the copartners ¡upon such proceeds, as partnership funds. It remains to be seen whether either of these equitable principles, or all of them combined, are sufficient to support the claim of the complainants, in the present case., to an equitable priority .over the legal — 355 — lien of the judgment of the defendants upon the real estate of Horatio Wilkes, devised to him by his father. In examining this question it must be borne in mind, that the executors, as such, were not authorized to sell any portion of the residuary real estate of the testator for the purpose of distribution. And the only part of the real estate which they had any control over as executors, was the share of Mrs. Jeffrey; which was devised to the executrix and executors, as trustees, to sell the same and pay over the proceeds to her. The testator had therefore made a perfect discrimination between his real and personal estate, instead of placing the proceeds of the whole in the hands of his executors for distribution. Notwithstanding this, and although Horatio Wilkes’s share of the real estate was devised to him directly and absolutely, the complainants contend that as he has wasted some part of their several shares of the personal estate, which has come to his hands as one of the executors, they have an equitable lien therefor upon the real estate to which he was entitled as a devisee of his father, to make good their loss; and that this lien is entitled to a priority over the legal lien which some of his other creditors have acquired, on such real estate, by their judgment^ This is a new principle, which I think has never been recognized as existing, by this court or by any other court of /■equity. It is true, he derives his authority as executor under the will of his father, as well as the title to the real estate which is devised to him absolutely for his own use ; but that does not appear to be an equitable hypothecation of his interest in the real estate as devisee, as a security for the faithful performance of his trust as executor. Indeed, if such an equitable principle exists, it would be unsafe for any one to deal with a devisee in relation to the estate devised, where such devisee was also an executor, without first inquiring and ascertaining that he had duly administered all the personal estate which had come to his hands as executor. ? For notice of the existence of the will under which the title to the real estate was derived, would be notice to a purchaser or mortgagee of such real estate, as well as to judgment creditors of the devisee, of this equitable hvpothe — 356 — cation of his real estate as security for the discharge of his duties as executor. The equitable lien, if any exists in such a case, would "not arise from the fact of his wasting the personal , estate, which came to his hands as executor, but from his neglecting to distribute it among the creditors and legatees as soon as practicable after the death of the testator. And the legatees would have the right to file a bill, to enforce their equitable lien upon the real estate of the devisee, the moment he neglected to pay over any of the proceeds of the personal estate to which they were entitled. I am satisfied, however, that no such lien existed in favor of the complainants, on account of their shares of the personal estate which the acting executor received and appropriated to his ówn use. They, have even less claim to an equitable lien on account of their shares of the real estate, which they had authorized him to receive for them for the purposes of distribution. Whether the devisees themselves sold their several undivided portions of the lands, which they held with him as tenants in common, and allowed him to receive the whole purchase "money, or whether they empowered him to sell and convey, as their attorney, does not appear. But in either case, the receipt by him of their several shares of the purchase money for the mere pur-, pose of distribution, as their agent, would not give them a lien upon other real estate devised to him. Nor would his appropriating, the whole proceeds of such sale to his own use give them such a lien. For, it would be but an ordinary debt recoverable against him in his private- capacity, and not in bis . character of executor or devisee. If any equity exists, therefore, in this case, in favor of the complainants, or any of them, . which entitles them to a preference over the legal lien of the judgment of the defendants, it must arise out of the payment of the debt due from the estate of the testator to the Misses Garnett. .That question I will now proceed to consider. Had the Misses Garnett, and the other creditors of the estate of C. Wilkes,, if there were, any others, a legal or an equitable lien upon the .real estate of Horatio, Wilkes as the devisee of his father, at the time of the recovery of the judgment of these <3e357 fendants, which those creditors could have enforced, to the exclusion of or in preference to the claims of the proper creditors of Horatio Wilkes for his own debt ? As the law then stood, the surrogate could not order the sale of real estate, for the payment of the debts of the decedent, after the expiration of three years from the time of granting letters testamentary or of administration, even upon the application of the creditors, and where the personal estate of the decedent was insufficient to pay his debts. (2 R. S. 100, § 1. Idem, 108, § 48.) The only way, therefore, in which the Misses Garnett, or any other creditors of the decedent, could have reached the real estate in the hands of the devisees, or of any of them, was by a suit in equity, under the provisions of the revised statutes relative to proceedings against heirs and devisees. (2 R. S. 450.) There was no estate, real or personal, in this case, which was not disposed of by the will of the testator. The provisions of the statute relative to proceedings against the next of kin, and against heirs, may therefore be laid out of view here. But, to have entitled the creditors to sustain a suit to reach the real estate of the testator, in the hands of his devisees, in January, 1837, it would have, been necessary for such creditors to state in their bill, that the personal estate of C. Wilkes which came to the hands of his executrix and executors, or of any of them, was not sufficient to pay his debts; or that, after due proceedings before the proper surrogate and at law, the creditors were not able to collect such debts from the personal representatives of the testator, nor from his legatees to whom a part of his personal estate had been paid on account of their legacies. (2 R. S. 452, § 33. Idem, 456, § 60.) Or, at least, the creditors would have been required to show a state of facts which would render any proceedings, by them, against the executrix and executors, or against the legatees, wholly unavailing for the recovery of the debt, or the particular part of it claimed by the bill. I have examined the bill in this cause with great care, and have not been able to find any averment, or statement of facts, which clearly and conclusively shows that the Misses Garnett, at the time of the docketing of the judgment of these defen — 358 — dants, and for some time afterwards, could not have recovered their debt by a proceeding before the surrogate, against the executrix and executors, to compel them to render an account of the personal estate of the testator, and to pay such debt out of such estate. Although it is stated in the bill that Horatio Wilkes had become insolvent about the latter part of 1836 or the beginning of 1837, it is not alleged that he was then entirely destitute of property, so that if he had been cited before the surrogate and ordered to pay the debt of the Misses Garnett, at the time of the recovery of the judgment of these defendants, nothing could have been obtained from property then in his hands; although such property may have been wholly insufficient to pay all of his debts. I do not think, however, that the rights of these parties depend upon the question whether Horatio Wilkes had or had not wasted the assets in his hands, as the acting executor, previous to the recovery of the judgment of these defendants, or upon the question whether he was or was not then in a situation. in which, by a proper proceeding against him, he might have been compelled to pay this debt to the Misses Garnett. But the right of subrogation depends upon the question whether, at the time their debt was paid by Hamilton Wilkes, in behalf of himself and the other complainants, the Misses Garnett could have filed a bill against the complainants, to restrain them from reviving their judgment, and to have the real estate of Horatio Wilkes, upon which it was a lien, applied to the payment of that part of the debt of the testator which these complainants, as legatees or devisees, were legally or equitably bound to pay. Before the real property devised to either of the devisees could be reached by any of the creditors of the estate of Charles Wilkes, so as to subject the share of such devisee to his or her proportion of the debt, according to the new provisions on this subject contained in the revised statutes, it would be necessary for such creditors to show that they had exhausted their remedy at law against the several legatees, to whom the personal estate had been delivered in payment of their legacies. And here the case made by the complainants wholly fails to show — 359 — that the Misses Garnett, at the time of the payment of their debt by Hamilton Wilkes, in May, 1840, had any lien, either at law or in equity, upon the real estate devised to Horatio Wilkes, for that part of their debt which any of these complainants were bound to pay, either as legatees or devisees of Charles Wilkes. For the statute only makes the devisees and legatees liable for their proportionate parts of the debts of the testator, according to the legacies which they have received, and the real estate devised to them ; although the other legatees and devisees are insolvent and wholly unable to pay any thing. (2 R. S. 452, §§ 28, 31. Idem, 455, §§ 52, 53, 61.) The creditors, therefore, could not, in any form of proceeding, have reached the real estate devised to Horatio Wilkes, so as to overreach the lien of the prior judgment, so as to make it liable for the part of the debt of the testator for which the complainants were liable as legatees or devisees ; but only for the proportionate part of Horatio Wilkes as a devisee, for which proportionate part of the debt neither the complainants nor their property was holden. All that was necessary for these complainants to do, therefore, to release themselves and their property from further liability, was to pay their proportionate parts of the debt, according to the provisions of the revised statutes on the subject. And having voluntarily paid that part of the debt for which they did not stand in the situation of sureties for Horatio Wilkes, they were not subrogated to the rights and remedies which the creditors previously had as against the lien of the judgment. They probably might have secured to themselves that remedy by taking an assignment of that part of the debt, instead of paying the demand of the Misses Garnett in full. But having neglected to do so, they have no lien upon the real estate in question, which is entitled to a priority, either at law or in equity, over the lien of the judgment of these defendants. The injunction was therefore improperly granted in this case; and it must be dissolved, with costs to be taxed.