Reed v. Marshall

Mr. Justice. Sterrett delivered the opinion of the court, The single question raised by the demurrer in this. case is whether the Statute of Limitations is a good replication to the defendants’ plea of set-off. Both notes given by the plaintiff to the testator in his lifetime, as described in the plea, were overdue and wholly unpaid for more than six years before the death of the latter ; and it is not even alleged that there was any new' promise express or implied in the meantime. Hence, it is claimed that they wefe barred by the statute, and therefore unavailable as a defence, either at law' or in equity, to the plaintiffs’ demand. If the defendants had brought suit on the notes, it is very clear that, without proof of a new promise within six years, the statute could have been successfully interposed as a bar to their recovery ; and it is difficult to see how they are in any better position when they endeavor to avail themselves of the notes as a set-off or cross-demand. In actions at law the bar of the statute is equalty applicable to the defendants’ cross-demand as to the plaintiffs’' claim ; and there is no good reason why it should not be so. Set-off is in the nature of a cross-action, optional with the defendant, and the statute runs against it until pleaded; and so completely is it in the control of the defendant, that even when pleaded, it may be withdrawn: Gilmore v. Reed, 26 P. F. Smith 462. As a general rule, the death of the debtor does not suspend the running of the statute, as respects the right of action, and it may be pleaded by the administrator. It was accordingly held, in Michel-tree’s Administrator v. Veach, 7 Casey 455, that an administrator may plead the statute against a debt which matured less than six years before the death of his intestate, but more than that length of time before suit brought; that the doctrine of McClintock’s Appeal, 5 Casey 360, and kindred cases, has- no application to personal actions against the representatives of a debtor. These latter are cases of direct trust, cognisable in the Orphans’ Court, which is practically a court of equity. Thus, a debt, which has accrued less than six years before the death of a debtor, but more than six years before settlement and distribution of his estate, is entitled to participate in the distribution. The right of the creditor to his just proportion of the assets of the dqpeased debtor vests at the death of the latter, and the law commits them to the care of an administrator in trust for all whose debts were valid and subsisting at the death of the intestate: McClintock’s Appeal, supra; [349] McCandless’s Estate, 11 P. F. Smith 9. On the same principle, an assignment for the benefit of creditors does not stop the running of the statute in an action at law, yet the assignee cannot set it up when distribution is claimed from him on a debt not barred at the time of the assignment. A testamentary trust- to pay debts does not revive such debts of the testator as were barred by the Statute of Limitations at the time of his decease, but Avhen the trust is clear and explicit, and not merely implied, it suspends the running of the statute on debts due but not barred at the death of the testator : Agnew v. Fetterman, 4 Barr 56. These, and similar cases, rest upon the express trust under which the assets are held by the parties charged with their administration. All creditors who have valid and subsisting claims at the inception of the trust have a right to participate in the distribution, notwithstanding the lapse of more than six years from the maturity of their respective claims. From what has been said, it follows that in actions at law the Statute of Limitations may be pleaded against items of set-off in the nature of cross-demands, as well as against the plaintiff’s claim; but in the distribution of assets under express trusts, cognisable in courts exercising equity jurisdiction, the statute cannot be interposed against creditors whose claims were valid and subsisting at the inception of the trust. The notes which the defendants set out in their plea, belong to the former class, and inasmuch as they were barred by the statute even before the death of the testator, the replication of the statute was good, and judgment should have been entered, on the demurrer, in favor of the plaintiff. The'case of Courtenay v. Williams, 3 Hare 539, on which the court below appears to have mainly reste-d its judgment, is not in accord with the current of decisions under our Statute of Limitations. It arose, as the vice-chancellor says, “ under the statute 21 Jac. 1, c. 16, which takes away the remedy against the debtor, unless the action is brought within six years after the cause of action arose; but it leaves the right untouched, differing in this respect, from a more recent Statute of Limitations, by which the right as well as the remedy is barred.” From this feature of the statute, it appears to follow that if the creditor receive into his possession money or property of the debtor, he may return it in satisfaction of his claim, notwithstanding an action brought to recover-it would be barred by the -statute. Judgment reversed and judgment, on the demurrer, in favor of the plaintiff, to be liquidated by the prothonotary of the court below.