Kimball v. Moody

CHILTON, 0. J.- According to the English doctrine, if a debtor makes his creditor, or the executor of his creditor, his executor, this alone is no extinguishment of the debt, though there be the same hand to receive and to pay ; yet, if the executor has assets of the debtor, it is an extinguishment, for the reason, that the person to receive is the same person who ought to pay the money. — Woodward v. Lord Darcy, 1 Plow. 185 ; Fryer v. Gildridge, Hob. 10 ; Williams on Executors, 943. The extinguishment of the debt is upon the supposition that the creditor has assets which he may lawfully retain to pay himself. — Powell, J., in Waukford v. Waukford, 1 Salk. 303 ; Williams on Executors, supra. This doctrine would seem very naturally to result from the power which the executor, under the English law, possesses over the personal estate or assets. It is laid down as an elementary rule, which obtains both at law and in equity, that an executor has an absolute power of disposal over the whole personal effects of his testator or intestate; and that they cannot be followed by creditors, or legatees, either general or specific, into the hands of the alienee. — Whale v. Booth, 4 Term R. 625 ; Nugent v. Gifford, 1 Atk. 463 ; Williams on Executors, 670. He may pay debts due from his testator, and retain assets of equal value, or dispose of absolutely or mortgage the assets, and such mortgage may be by actual assignment, or by deposit; and although the purchaser, or mortgagee, knew that he was dealing with an executor, he is not bound to see to the application of the purchase money. In the language of Lord Thurlow, in Scott v. Tyler, 2 Dick. 725, “ His title is complete by sale and delivery. What becomes of the price is no concern of his.” — See Williams on Executors, 671, and cases cited in notes, (ed. of 1841.) Such being the general powers of an executor over the assets, as recognized by the English law, it might very well be assumed as reasonable and just, that, having sufficient assets and the right to set them apart for his individual use in payment of a debt due to him from the estate, if he failed to clo so, he should not be allowed, nor should his personal representative be permitted, to maintain an action for the recovery of the demand. If he failed to pay it by retaining, this was Ms folly, and he thereby lost his debt, the right of action being extinguished. — Plow. 185. [138] . But this rule cannot be applied here to the extent to which it obtains in England. So far as the reason on which it is based applies here, it must be recognized ; but our legislation has made a very great change upon the law as it is held in England. The personal representative, with us, is expressly prohibited by statute from talcing the goods at their appraised value, or from disposing of them except at public sale. He cannot, therefore, retain the assets, and acquire the absolute right to them, in satisfaction of his demand. He is bound to pay the debts in money, if the estate be solvent; and if it be insolvent, he has no right of retainer, but the debts are to be paid pro rata. Now the reason why the demand is considered extinguished is, that the personal representative, who is to pay and to receive, has the means of making the payment — that is, when, he receives assets which he may thus appropriate to his debt, he ought so to appropriate them ; and the law considers them so appropriated, and the debt consequently extinguished. Let the same rule obtain here, modified according to our law; as he has no right to take the assets, except it be money, and appropriate the same to the payment of his debt, or retain them, the demand cannot be 'considered as extinguished, unless it be shown that he had moneys in his hands adequate to the satisfaction of his demand, and which he lawfully might appropriate, or, rather, retain in extinguishment or payment of such demand. If Ready had moneys of the estate of his testator, Ed. Sims, which he ought to have retained, the court should consider that as done which he ought to have done— will consider the demand extinguished by the retainer. But to hold the demand extinguished, because personal goods other than money came to his hands, which our law forbids him to retain, but which it requires should be sold at public outcry so far as may be necessary for the payment of debts, is to make the law inconsistent with itself, which is absurd. Here, there can be no transmutation of the assets, other than money, in the hands of the executor, from his fiduciary to his individual use in satisfaction of his demand. In England it is otherwise. Hence, there is an obvious propriety in holding that the receipt of assets other than money sufficient to pay the debt, works no extinguishment of the demand. The [139] courts which have ruled otherwise seem to have overlooked this distinction. 2. Let us in the next place briefly consider the equity of the bill, subjecting it to the test we have above laid down. The bill shows that Ready was the personal representative of the estate of John C. Sims, the creditor, and of Ed. Sims, the debtor, and that consequently he had the right to retain. 2 Wms. Ex’rs, 768, mar. p. (ed. 1841) ; 1 Rolls’ Abr. 922 ; Hobart, 10 ; 6 Paige’s R. 415-425. It further shows that Edward Sims died in August, 1840, some three years after the indebtedness accrued, and that Ready and one Banks qualified as his executors, and so continued to act until the death of Ready in February,, 1852 ; Banks, the other executor, dying in the summer or fall of the same year. The bill likewise avers, “ that the said Edward Sims, at his death, was seized and possessed of a very large estate, real and personal, a large portion of which remained unadministered at the death of the said executors,” and which has since gone into the hands of Moody, the appellee, who has been appointed administrator with the will annexed, de bonis non, of Edward Sims; that the appellant has been duly appointed administrator de bonis non of John C. Sims. It is then averred that Ready did hot retain for the indebtedness now sought to be collected, 'that the executors of Sims did not pay, nor has Moody the administrator paid, any portion thereof. It thus appears from the face of the bill, that Ready had eleven years and more, within all which he could have paid this demand. It was made his duty by law to have reduced sufficient of the assets of the estate of Edward Sims into money to pay the debts of that estate. The bill shows that the estate was very large, and that after twelve years administration upon it, a large amount of assets remained unad-ministered, and which have gone into the hands of Moody, the administrator de bonis non. As the contrary is not shown by the bill, we must presume the executor did his duty — that he reduced the assets into money of sufficient amount to satisfy the debts. At all events, if he did not do so, he ought and could have done so, and must be considered as having done it. It is fairly inferable from the bill that he could have retained ; and under these circumstances, Ready would [140] have been concluded, and the doctrine of retainer, as it is recognized by all the cases which we have seen, and under the modification we have before mentioned, would apply. It follows, therefore, that the demand must be considered as extinguished. The bill shows that Ready had assets which he could have applied to the debt, and which it was his duty to have applied i n the regular course of administration ; and if, having these means and this power, and more than eleven years in which to pay himself, he failed to do so, it is the result of his negligence and mismanagement. We have ■ seen no case which would exempt this from the influence of the doctrine of extin-guishment. True, a doctrine-in Page v. Patton, 5 Peters 311, seems to indicate that this doctrine would not apply, where all debts are placed upon an equal footing ; but we are unable to see the reason for this distinction, and the learned judge gives none. It is also intimated in that case, that the doctrine of extinguishment rests on a presumption of retainer which may be rebutted ; but this must be considered as applicable alone to the continuation of the right to retain while the same person is to pay and receive, which right is not taken away by appropriating assets to the payment of other demands which might have been retained in satisfaction of the claim due to the administrator. Upon the whole, while we would not push the doctrine to the extent to which it is carried by the opinion of the chancellor, but must give it a modified application, by requiring it to be shown that the administrator or executor had such assets as he could have applied by an appropriation of them to the extinguishment of the claim due him ; yet, when, as in this case, the estate is very large, and more than eleven years elapse, during all which time the administrator has ample power to make the appropriation and satisfy his demand, the law will raise the conclusion that he has done so, and if he has not, it is his fault, which cannot be set up by the administrator de bonis non of the estate of the debtor as a ground for a resort to equity. 3. If, however, this view were incorrect, the bill on its face shows an entire want of equity upon another ground. As to the demand due from Edward Sims to John 0. Sims, and [141] which was not collected by Ready, no reason is shown why it might not just as well be recovered at law. The legal remedy is full, adequate, and undisputed. No discovery is sought, and no impediment to a complete legal remedy is averred. As to the claims embraced in the receipt, it is not pretended that any particular fund is in the hands of Moody as administrator of Edward Sims, to which a trust may attach. If the money was collected by Edward Sims, there is no averment that it has been preserved separate from his other money ; and having, as it is said, no ear-marks, it cannot be identified or followed. The bill is not filed to obtain the possession of the choses in action upon the ground of a conversion by the administrator in chief, or of a deposit merely with Edward Sims. But it is a bill to recover so much money from the estate of Edward Sims, upon the ground of his indebtedness to the estate of John C. Sims, in consideration of bills placed in his hands to be collected or used by him. It cannot be maintained upon the principle of account, nor is any discovery sought, the answer not even being required on oath. In short, if it can be maintained, then there is no demand created by a sale or transfer of an intestate’s property which might not be collected by bill in equity. The bare fact that a purely legal demand is due to a trustee, and that the proceeds will be trust effects, is no ground for resorting to equity to collect it, when the legal remedy is adequate, specific, and perfect. — Code, § 602; 1 Story’s Eq. § 76; Maury’s Adm’r v. Mason’s Adm’r, 8 Port. 217; 8 Ala. 744 ; 10 ib. 864 ; 16 ib. 423 ; 21 ib. 378 ; 8 Port. 339 ; 14 Ala. 514 ; 9 ib. 351. Our conclusion is, that there is no error in the decree of the chancellor prejudicial to the complainant, and the decree is consequently affirmed.