Standard Rubber Co. v. Carberry

Qua, J. These are petitions in equity brought in the Probate Court under G. L. (Ter. Ed.) c. 205, § 7A, to en [505] force the obligations of the respondent Carberry as principal and of the respondent Great American Indemnity Company as surety on the bond of said Carberry as administratrix of the estate of William F. Carberry, deceased. Formerly such obligations could have been enforced only by action at law upon the bond, and this proceeding is governed by the principles which would apply to such an action. Hemenway v. Harrigan, 287 Mass. 149, 152. Before they filed their petitions the petitioners had severally recovered judgment against the respondent Carberry as administratrix, and she had neglected upon demand to pay the same or to exhibit property of the estate upon which the executions could be levied. See G. L. (Ter. Ed.) c. 205, §§ 20-23; c. 205, §§ 1, 7A; and c. 198, § 1. The Probate Court held that this was a breach of the bond in each instance and ordered the respondents to pay the amounts of the original executions and that executions issue from the Probate Court therefor. It becomes necessary on this appeal to deal with certain alleged defences urged by the respondent surety. We have considered only matters argued. After the judgments against her in the law actions, the administratrix filed and, after notice, procured allowance by the court of a “First and Final Account” wherein it appears that all the assets of the estate were exhausted by various losses and by the payment of charges of administration and of various preferred claims, but in which nothing appears to have been paid to the judgment creditors. “The account was intended by the administratrix to show an exhaustion of all the assets of the estate by payments to preferred creditors.” The surety argues that the allowance of this account is a defence, citing G. L. (Ter. Ed.) c. 197, § 5. Prima facie, failure to pay an execution on demand is a breach of the bond, though a final adjudication of insolvency of the estate would be a defence. Harmon v. Sweet, 221 Mass. 587, 591. Chamberlain v. Barrows, 282 Mass. 295. McKim v. Roosa, 183 Mass. 510. That indicates the nature of the bond which under this proceeding the petitioners are entitled to enforce. The fatal difficulty [506] with the surety’s contention as applied to this case is that the defence based upon the allowance of an account showing exhaustion of the estate in paying preferred claims is merely an alternative or substitute for the 'defence, based upon completion of insolvency proceedings, and is available, as the statute itself indicates, only against creditors who are not themselves entitled to preference. Fuller v. Connelly, 142 Mass. 227, 228. Harmon v. Sweet, 221 Mass. 587, 597. See Keith v. Molineux, 160 Mass. 499, 502; McIntire v. Parker, 195 Mass. 155. The claims of the petitioners were for truck tires sold to the administratrix in connection with a business which the court had authorized her to carry on and on notes “procured for a portion of the account.” The business, necessitated the use of the trucks. The judge was justified in finding these charges to be expenses of administration and therefore preferred claims. G. L. (Ter. Ed.) c. 198, § 1. The Probate Court may authorize an administrator to continue the business of the deceased only “for the benefit of the estate for a period not exceeding one year.” G. L. (Ter. Ed.) c. 195, § 7. Such continuance is therefore simply a part of the process of settling the estate. Gordon-Tiger Mining & Reduction Co. v. Loomer, 50 Colo. 409, 415. Reinstein v. Smith, 65 Texas, 247. Why claims of this kind resulted in judgments against the administratrix as such does not appear. See Anglo-American Direct Tea Trading Co. v. Seward, 294 Mass. 349. But this does not affect their standing as preferred claims. The allowance of the account derives no added force as a defence from G. L. (Ter. Ed.) c. 206, § 23, as that section deals only with accounts showing payments to persons entitled to distributive shares in an estate. Knowles v. Perkins, 274 Mass. 27, 34. See Moulton v. Thompson, 291 Mass. 308, 312; G. L. (Ter. Ed.) c. 198, § 18. The short statute of limitations is not a defence to this proceeding on the bond. It appears that the question whether that statute was a bar to the original actions at law was in fact fully litigated in the District Court. It cannot be tried out again in this proceeding, and the surety [507] is bound by the decision equally with the principal. Dawes v. Shed, 15 Mass. 6. Robinson v. Hodge, 117 Mass. 222. Heard v. Lodge, 20 Pick. 53. McKim v. Haley, 173 Mass. 112, 114. Hemenway v. Harrigan, 287 Mass. 149. In the first two cases just cited the defence had not in fact been litigated in the original action, but the implication is clear that if it had been the surety would have been bound. As to the defence of loches, it is enough to say that if that defence is open in this proceeding, it is an issue of fact, and no facts are shown by the report requiring a finding of loches as matter of law. Hawkes v. First National Bank of Greenfield, 264 Mass. 538. Alvord v. Bicknell, 280 Mass. 567, 571. Decrees affirmed.