Scott v. Patchin

— 261 — The opinion of the court was delivered by Ross, J. The right of the orator to maintain his bill against Henry Patchin and his grantees of real estate which Henry Patchin took by the devise of his father-, Lyman Patchin, is conceded, as it must be. The' legacy to the orator was clearly made a charge upon the property given to Henry Patchin by the will of Lyman Patchin. We do not think that the payment of the orator’s and other legacies and debts charged thereon, was a condition precedent to the property vesting in Henry Patchin. The fact that the legacies and debts charged thereon were to be paid out of the property bequeathed to Henry Patchin, as well as the fact that the orator’s legacy was not payable for several years after the decease of the testator, and then only on condition tha't the orator survived to attain his majority, is inconsistent with such holding. Henry Patchin could not pay the legacies charged thereon “ out of the real and personal estate designated to him,” if he took no title to any portion of it until he had first paid such legacies and charges; neither could it have been the intention of the testator that he should retain the identical personal estate received under the will, for fifteen years, the earliest time at which he could discharge the first installment of the orator’s legacy. Hence the. property, both real and personal, received by Henry Patchin under the bequest, was charged with the payment of the orator’s and other legacies, and the performance of the duties therein specified. It must also be conceded that the defendants, who are grantees of Henry Patchin of real estate so charged by the will of Lyman Patchin, took the same affected with notice of the charge. The will, having been duly probated and recorded, was constructive notice of its contents to all who purchased from. Henry Patchin; so that, as regards the orator, they took the same subject to his rights to have his legacy, as it became due from time to time, paid out of such property. Though purchasers for value, they were purchasers with notice of the equities of the orator in such estate. By the will, the orator’s legacy was charged as much upon the real estate as upon the personal estate designated to Henry Patchin. Whatever might have been the rights of the purchasers — 262 — of the real estate to have had the personal estate first exhausted to discharge the legacies charged on both, against Henry Patchin, if he had retained the title of the personal property, they have no such right against the orator. The right of the orator to have, hold and enforce payment from all and every portion of the security furnished him by his grandfather, the testator, cannot be taken away nor diminished by the manner in which such purchasers and Henry Patchin have dealt, as between themselves, with such security when affected with notice of his paramount rights thereto. Neither has the orator been guilty of any such laches in enforcing his rights against Henry Patchin as will discharge the real estate purchased from him from the payment of his legacy. On the agreed case they knew as much as he did in regard to the pecuniary circumstances of Henry Patchin, down to the time he became insolvent in 1873. Having notice of the orator’s right to enforce payment of his legacy out of the property they were purchasing, it was their duty, and not the orator’s, to forefend themselves against any ultimate loss which might result to themselves by the failure and insolvency of Henry Patchin. They were relying upon the covenants of warranty of Henry Patchin, and it behooved them to see to it that he was able to answer pecuniarily and make good his covenants. Neither is it seriously contested that the orator has the right to enforce payment of his legacy from Lyman S. Patchin as the surety of Henry Patchin on the bond given to the Probate Court for the payment of the debts and legacies of the testator, Henry Patchin being the residuary legatee under the will. In such a case, by the bond, the executor and residuary legatee and his sureties agree to pay and discharge the debts and legacies of the testator; and the legatees have the right to enforce the payment of their legacies, in equity, at least, against the signers of the bond without first having obtained an order of the Probate Court for the payment of the same. Hence, on the agreed facts the orator has the right to enforce payment of his legacy from the owners of the real estate charged therewith by the will of the testator, or from the surety on the bond given to the Probate Court for the payment of the same. — 263 — The question in regard to which of these two securities for the payment of the orator’s legacy, must ultimately respond thereto, as between the purchasers and owners of the real estate, and the surety on the bond, is not raised by the pleading ; but is fairly raised by the agreed facts. Inasmuch as this questiou has been principally dwelt upon and elaborated in argument, and all the parties are before the court, and all desire it determined, although no cross-bill has been filed, and issue joined, between the defendants in this respect, we have concluded in this case, without making it a precedent for any future case, to treat the agreed case like a referee’s report, and render such judgment thereon as this court might if the pleadings had been amended and enlarged,. as they might have been, so as to include, and present, this question for adjudication. In considering this question, it is helpful to keep in mind the precise legal relations, to these two securities for the payment of his legacy, of the orator, of the surety on the bond, and of the purchasers of the real estate charged, to Henry Patchin and to each other. As regards the orator, the real estate is the primary security, the one provided by the testator. Henry Patchin, by force of the will, took only so much of the real and personal estate designated to him therein, as remained after the payment of the orator’s and other legacies charged thereon, or the equity of redemption therein. The language of the will is, “ on the following terms and conditions : By his paying out of the real and personal estate designated to him the aforesaid legacies,” &c. By accepting the property thus charged, it became the legal duty of Henry Patchin to pay the orator’s legacy. The property received by him was to respond to the payment of the legacy into whosesoever hands it might come with notice of the charge. When the defendants, purchasers of the real estate so charged, took conveyance thereof from Henry Patchin affected, by the record of the will, with notice of its contents, they obtained only the rights of Henry Patchin therein, and hence received it burdened with the obligation to pay the orator’s legacy. In other words, they received property set apart by the testator for the payment of the orator’s legacy in the first instance. As between such pur — 264 — chasers and Henry Patchin, it was his duty to pay the legacy, and they, severally, took his covenants warranting the title to their respective purchases to secure the discharge of this duty by him, and to forefend themselves against having their purchases respond to the payment of the orator’s legacy. There is nothing in the agreed case tending to show that these purchasers relied at all upon Lyman S. Patchin to defend the title to the real estate purchased by them of Henry Patchin; or that any of them before making their respective' purchases ever exchanged with Lyman S. one word on that subject; or that they ever knew that he was surety on the bond to the Probate Court. Hence, there is no privity of contract between these purchasers and Lyman S. Patchin ; nor did they make their purchases, and part with their money therefor, relying on the fact that he was surety on the bond of Henry Patchin to the Probate Court. The law has furnished to the orator, without any intervention or solicitation from him, the bond, signed by Lyman S. Patchin as surety, to Probate Court, as a second security for the payment of his legacy. By the terms of the bond Henry Patchin, as principal, and Lyman S. as his surety, agree to pay this and the other legacies, in consideration that Henry be released from returning to the Probate Court an inventory of the estate not specifically devised to others.. As between them, it is the duty of Henry Patchin to pay the legacies and save Lyman S. harmless therefrom, the same as it is his duty to the purchasers of the real estate to save them from such payment. Lyman S. received none of the property charged with the payment of the orator’s legacy. He had constructive notice, at least, of the contents of the will, and, legally, is presumed to know, and probably did know, that the payment of the legacies, for which he became surety by the terms of the bond, was made a charge upon the property designated to Henry in the will. The legal presumption is that he signed the bond influenced by such knowledge. The payment of the legacy was already amply secured on the property, which has come to the purchasers, when he signed the bond. He therefore stands in the place and relation of a surety for the payment of a debt which is already amply secured — 265 — to the holder of the debt on other property. When such surety is compelled to pay the debt to the holder, he is entitled to be subrogated to the rights of the payee to any security which such payee may hold for the payment of the debt, and may enforce payment therefrom, both against the original debtor and against those who have succeeded to the rights of the original debtor in the security. Hence, as between the purchasers of the real estate charged with the payment of the orator’s legacy and the surety on the bond, it is the legal duty of the former to pay the orator’s legacy. The next subject for consideration on the facts agreed upon, is the distribution of the legacy among the purchasers from Henry Patchin of the real estate charged with its payment. As before shown, Henry Patchin took but an equity of redemption in the property devised. The purchasers of the real estate from him took no more than he had in the same; that is, they severally purchased his right of redemption. If Henry Patchin had retained sufficient of the real estate received under the bequest to discharge the payment of the orator’s legacy, it would be the duty of the court, as between Henry Patchin and such purchasers, to charge the payment of the whole legacy upon that part of the real estate retained by him. The real estate, in this State, charged with the payment of the orator’s legacy, is all of the property included in .the bequest that is now before the court. The purchasers thereof, as between themselves, severally took the right thereto which Henry Patchin had at the time of their respective purchases. Inasmuch as if Henry Patchin had retained any of the estate charged with the payment of the orator’s legacy, it would have been the duty of the court, at the instance of purchasers with covenants of warranty, to have used the real estate so retained for the payment of the legacy, it follows that the last purchaser must first redeem, and so on in the inverse order of the alienation until the legacy is fully paid. This is the doctrine established in Lyman v. Lyman, 32 Vt. 79, and Root v. Collins, 34 Vt. 173. It applies wherever the charge upon the real estate alienated is in substance a mortgage thereof, or where the alienor has only an equity of redemption to convey, and the debt charged — 266 — is one which belongs to him in the first instance to pay. Hence, the purchasers of the real estate charged with the payment of the orator’s legacy, must pay the same in the inverse order of the time of their respective purchases. The only remaining question is, the time when the several purchases are to be valued for the purpose of distributing the charge in this order; whether at the time of their several purchases, or at some other period. Some of these purchases were made as early as 1868 and 1864; and others as late as 1873 and 1874. There ordinarily would be, and was in fact, during that time considerable variation in the value of the same property. Doubtless, too, some of the purchasers have materially increased, or lessened, the value of their respective purchases by improvements or the reverse. As stated by the late Chief Justice Redfield, in Danforth v. Smith, 23 Vt. 259 : “ The general rule of equity is, that all the estates concerned, whether defined by quantity of interest and duration, or by extent of territory, shall contribute according to their relative value at the time the contribution becomes obligatory, which is when the debt falls due ; for until that, there is no power to compel payment or contribution.” We think this is the rule to apply between the respective purchasers and owners of the real estate, in this State, charged with the payment of the orator’s legacy. This fixes the time of valuation to be the time when the first installment of the orator’s legacy became due and payable. In this respect the levying creditor stands the same as a purchaser. So far as appears, we think, that all the defendants were properly made parties to the bill. That some of them have ceased to have any interest in the subject of litigation is a good reason why the Court of Chancery should allow them to retire from the controversy without costs, but nothing more than that. The decree of the Court of Chancery is reversed, and the cause remanded, with a mandate according to the views herein expressed. Note. — This case was heard at the General Term, 1879, and fell to the lamented late Chief Justice Piekpoint. There was a diversity of views expressed in consultation. At the request of the Chief Justice, the — 267 — writer prepared the substance of the foregoing opinion, except upon the last two points, and he expressed his approval. He took the case for consideration upon the last two points, but his state of health was such that he, probably, had neither time nor strength after discharging the necessary duties of his office to give further consideration to the ease. Since his decease, the views written for his perusal have been submitted to the other members of the court who participated in hearing the case, and they, concurring, deputed the writer to finish up the opinion, and dispose of the case, as has been done. The views presented to Judge Pierpoint were in accord with those entertained by Judge Barrett, who participated in the hearing, and also submitted some views in writing.