Hannum v. Spear

Shippen, J. Two points arise in this case. 1. How far lands in Pennsylvania are bound to satisfy the debts of deceased persons. 2. If they are bound, how far a devise of the debtor’s lands, to pay his debts or legacies, will interfere with that principle. Restraints on the alienation of real property in England, were co-eval with the feudal system. The favourite of that system, next to the lord, was the heir at law. Without his consent, as well as that of the lord, the feudatory could never transfer his estate to another, and he could in no case subject his lands to the payment of his debts. It was by slow degrees, that these feudal obligations were impaired; and to this day, they are not wholly removed; for a moiety only of — 564 — the lands of the debtor, is subjected to the execution of his creditor, in England. Our ancestors, the first inhabitants of Pennsylvania, viewing this system in its true light, and seeing the wisdom as well as justice of subjecting every kind of property to the payment of debts, made it one of their first articles, which they called laws agreed upon in England, before their embarkation to this country, that land should be subjected to pay their debts. This law they confirmed immediately after their arrival here, by the act of union, passed at Chester, in the month of December 1682. In a few years after, they enabled executors and administrators, by conveyance or bill of sale, with the approbation of the court, to sell the lands of a deceased' debtor, for the payment of his debts. It was an object they never lost sight of. The first laws upon that subject, having excepted the *5651 case a 'man’s hav*iug legal issue, in which case -* only half the lands were made liable to debts, they at length took off even that restraint; and by the act of 1700, in order, as the legislature expresses it, that no creditors may be defrauded of their “just debts',” they expressly enact, that ‘ ‘ all lands and houses whatsoever, ’ ’ should be liable to sale, upon judgment and execution, to satisfy creditors. It was no longer in the. discretion of widows, executors or administrators, to sell the lands of deceased persons by conveyance or bill of sale; but to complete their intention that no creditors might be defrauded of their debts, the sales were to be only by execution under a judgment. Is it possible to conceive, that with all this just care of creditors, the legislature should ever mean to leave it in the power of heirs or devisees, by the flimsy expedient of selling the lands of the deceased, before judgment could be obtained against the executor or administrator, entirely to defeat the whole system of their laws in favour of creditors, whose interests they had thought proper to prefer, even to the minor children of the deceased? It has been suggested, that nothing appears in our acts of assembly to make lands assets for the payment of debts, in any other manner than goods and chattels were assets at law in the case of deceased persons. It is apparent from the whole tenor of the acts of assembly, that the legislature meant to afford the creditor equal security for his debt, in the lands of deceased persons, as in his goods and chattels. As to the latter, they are confessedly bound from the death of the debtor; they immediately go into the hands of the executor, or he has an immediate right to reduce them into his possession, and they, or the produce of them, are bound to discharge the debts of the creditor. As to the lands, the executor as such, has neither possession of them, nor power over them, nor is in any sort responsible for them; they are indeed by a kind of fiction, supposed to be in his hands, because the exe — 565 — cution directs the debt to be levied “upon the goods and ‘ ‘ chattels, lands and tenements of the deceased, in the hands ‘ ‘ of the executor. ’ ’ But really and in fact, they are, till sold by execution, in the hands of the heir or devisee; and if the legislature meant lands to 'be a fund, equally with goods and chattels, for the payment of the debts of deceased persons, they must have meant, that they should be bound in the hands of the heir or devisee, in the same manner, and from the same time, as goods and chattels are bound in the hands of the executor; otherwise they would amount to no fund at all, as they might be disposed of by the heir or devisee, at any time before judgment against the estate of the testator. It could surely never be the meaning of the legislature, to mock the creditors, with the prospect of so precarious a fund as this! * At the bar, however, this point does not seem to be pggg seriously contested; indeed, since the act of April 1794, how can it now be contested? For although the act has no retrospection, yet the legislature strongly recognizes the principle, that the lands of deceased debtors are bound from the time of their deaths, not only by the strongest negative implication, when they say that the lien shall not continue longer than seven years after the decease of the debtors, but positively and expressly, by saying that their lands shall be subject to the lien of infant, absent, or non compos creditors, for seven years after those impediments shall be removed; so that I take it, this question is now entirely at rest. The next point to be considered is, how far it is consistent with the above principle, that testators may by their last wills and testaments, direct their lands to be sold for the payment of their debts, for the payment of legacies, or for any other purpose? And although there is not the same necessity here as in England, to exercise the testamentary power in order to do justice to creditors, because, without such kind of devises, the whole real estate in that country would be swept away from the creditors by the heir at law, except in cases of obligations, and other specialties wherein the heir is expressly bound; yet there undoubtedly may be cases where there would be the utmost propriety, as well as necessity, for the exercise of a similar power here, as well for the more easy and fair distribution of a testator’s estate among his children, as for saving the expence attending the recovery of judgments, and selling their real estates by execution. And I see no good reason for limiting or restraining the power in any case, which does not militate against the principle of the lands being expressly charged by law 'faith the payment of the testator’s debts in the first instance; as if a testator devises his lands to be sold by his executors for the payment of his debts, and the executors sell the lands and pay the debts with the proceeds of the sale; and especially if in doing that, they do not vio — 566 — late the directions of the law as to the priority and dignity of debts. I see no more reason, why the purchaser from the executors should be disturbed in his possession of the lands, by any unsatisfied creditor’s issuing a subsequent execution against them, than a purchaser under a sale at the suit of a prior mortgagee can be disturbed by a second mortgagee, where the land did not sell for more than was sufficient to satisfy the first. In both cases the fund is fairly exhausted, and no injustice done, nor law infringed. But this does not appear to me to be the case, where the testator directs his land to be sold for payment of legacies. A purchaser from executors under such * a power, must know or ought J to know, that in the first instance the land is charged by law with the payment of the testator’s debts; that he was bound to be just before he is generous; and that although a testator unincumbered with debts, might legally give such a power to his executors, yet it is impossible for him to do it, to the prejudice and exclusion of his creditors, who have a legal security in the land. The testator in his life time, if indebted could not make a gift, or execute a voluntary conveyance of his land; such a gift or voluntary conveyance would be deemed fraudulent as against creditors. If this could not be done in his life time, a fortiori he could not do it by his last will, which does not take effect till his death, from which moment it is pledged by law to those creditors. It has been contended, that when a testator devises his land to be sold by his executors for any purposes whatsoever, even for the payment of legacies, yet, when the money arising from the sale comes into the executors’ hands, it will be considered as assets, out of which the debts must be first paid. To this I answer, that under such a devise, the executor is a trustee for the particular purpose mentioned in the will, and he is authorized to sell for that purpose only. The power might as legally have been given to another person as to the executor; and how in that case could the produce of the sale be considered as assets for the payment of debts? The executor, as executor, has nothing to do with the land; and as a trustee, he must be considered in the same light as if he was not executor; unless in the case of a devise to pay his debts, in which case he is a trustee for the creditors. Upon a contrary idea, the executor selling land for the payment of legacies, must appear in a truly ridiculous situation. As an executor, it is said, he is bound to pay the debts out of the money raised by a sale, under a power to sell for the benefit of legatees; and as a trustee for those legatees, he is compelled to commit an express breach of trust by paying those debts. I can find no instance in the books of a devise of a power for the sale of land for the payment of legacies, where the produce of such sales was ever considered assets for the payment of debts; although in every case that can possibly bear the — 567 — construction of a devise for the payment of debts, the judges appear inclined to give that construction, for this evident and just reason, that, unless it be under such devises, the lauds cannot be made subject to the payment of debts. There is certainly greater reason in .this country to comply with the will of the testator, and not to divert his intention, as no injustice can possibly be done to his creditors by it, they having a prior legal security in the lands. *For these reasons, I think the sale by the executors r ¡^g of Elizabeth Ring to James Hannum could not have * entitled him to hold the land, against the judgments and executions of creditors; and as he could not be secured in his title, he had a good defence against the action brought on the obligation; and consequently, that the judgment should be reversed. Smith, J. Before the argument, I stated to my brethren and to the counsel concerned, that if the general question, whether the debts of a testator be a lien on lands sold by his executors pursuant to a power in his will, in all cases, must be determined in this case, I should not probably think myself at liberty to give an opinion thereon, unless the distinctions which had occurred to me, and agreeably to which I had acted, should be taken, viz. that all debts secured by mortgage or judgment, as well as .specified and scheduled debts are so far liens, as that the purchaser is to see that the consideration money is duly applied to the payment of these debts in due order. The reason I mentioned this was, that I as executor, sold lands of the testator, and would have sold more could I have done it to advantage, and paid part of divers judgments with the money. I divided it nearly in proportion to those 1 did pay, but it was so small a proportion of the whole, that to several judgments for inconsiderable sums, I did not take the trouble of paying any. This was done at a time, when I believed that the estate would not be sufficient to pay all the debts. I might therefore be supposed to be under the influence of prejudice, and of having in fact prejudged the point in a certain degree. The general position was brought before the court, and the distinctions not made at the bar; consequently, I do not think myself at liberty to go into a regular discussion of the question. But as the judges who have spoken before me, think it necessary that I should declare my opinion, I have no hesitation in saying, that I join in the opinion delivered by the president. I think, that the purchaser of lands sold bona, fide by an executor, pursuant to a power given in the will, is bound to see that the purchase money is duly applied to the payment of such debts as I have mentioned; but his title cannot be affected by other creditors, there being no collusion between the purchaser and executor, but the sale being fair, open and regular. Many titles depend on such sales; their — 568 — legality Ras never been disputed, and it is for the benefit of all parties that the)’ should be supported; the inconveniences can neither be great nor frequent. However in strictness, it is not necessary to decide this point in the present case, because the power given by the will, was to sell for the payment of legacies; the testatrix having having devised other parts of *her estate to her executors respectively; to wit, one part to Jacob Chandler, subject to the payment of this very mortgage, under which he permitted the land in question to be sold, after he had joined in the sale of it to Hannum, and another part to Joseph Spear, subject to the payment of 300I. in addition to what he had paid before. Could the executors make a good title to Hannum by this power, and under these cirramstances? I think not. For were these devises to the executors even out of the question, they had only a naked power by the will to sell the lands, and divide the residue of the purchase money amongst the legatees, after the payment of the particular pecuniary legacies. This power to sell for the payment of legacies, like all other naked powers, ought to be strictly pursued. It was not even substantially pursued; the sale was made for the payment of debts. The executors had no power given to them to sell for this purpose, and could not give the purchaser a good title; consequently, he was not obliged to pay the purchase money. It may be necessary to add, that this point did not come, before the court at Nisi Prius Had the land been sold under this power in the will, and the money applied to the payment of debts in the first place, and after the debts were discharged, to the payment of legacies, I incline to the opinion, that the purchaser’s title would have been good against the heirs and devisees. If the purchase money was not sufficient to pay all the debts, I will not give any opinion, as at present advised, whether if the consideration money was paid in due degree, so far as it would extend, an unsatisfied creditor might on a * judgment obtained against the executors, have proceeded to levy on the lands. The judgment here must be reversed. Biddle J. I am of opinion, that under.a power granted to executors by will to sell lands for the payment of debts, the vendee would 'obtain a good title, unless prior mortgages, judgments or recognizances, bound the land; but I also think, that under a mere power to sell for the payment of legacies, as in the present instance, the purchaser could not defend himself against the creditors of the testator, though such creditors were not secured by prior mortgages or judgments. I will only observe, that this ground was not taken at the trial. Judgment reversed. [M’Kean C. J. and Yeates J. sat during the delivery of the preceding opinions, one of them at least being necessary to form the court, but neither of them gave any opinion. ] Explained in 13 S. & R., 262. Cited in 8 Pa., 128, in support of the proposition that when lands are sold by an executor under a power to sell for payment of debts, the purchaser takes the land discharged of the lien. ■ Referred to in 10 Pa., 268; 28 Pa., 50; 43 Pa., 153.