Lerch v. Oberly

The opinion of the court was delivered by The Chief Justice. The question of law which has been argued in this case before this court, relates to the legal destination of the surplus proceeds of lands sold for the payment o'f the debts of a -decedent, under the order of the Orphans Court of the county of Warren. The fund in question is a surplus remaining after the settlement of the administration, and the dispute is, whether such surplus is to be considered, with regard to the parties now before the court, as real or personal estate. The intestate left surviving him one child, who died subsequently to the sale and during her minority, and the contestants for the fund are the heirs-at-law and the personal representatives of such infant. On the part of the heirs-at-law, who are the respondents in this court, it is insisted that the rules of equitable conversion apply to the facts of the case, and that the object of the sale of the real estate of the intestate being simply to pay the debts of the estate, the land cannot be considered converted into money in judicial consideration, except to the — 578 — extent necessary to effectuate such purpose. As a consequence of this theory, it is further contended that as this money came to the heir of the intestate impressed with the character of realty, such heir, being an infant, could not remove such character, and that, therefore, its devolution must now be regulated by the law of inheritance, and not by the rules of distribution. There can be no doubt, either as to the existence or fixed character of the doctrine of equity to which reference is thus made. The principle is established by a multitude of cases, that where real estate is directed, either by the owner or by the order of the law, to be converted into money for a particular object, and a surplus remains after the accomplishment of such object, such surplus, as between the heir and personal representative of such owner, will be regarded by a court of equity as land, and will descend as such. The authorities on this subject will be found fully collected in connection with the conspicuous cases of Fletcher v. Ashburner, and Achroyd v. Smithson, in 1 Lead. Cas. in Eq. 775 and 809. And this transubstantiated real quality, as Lord Hardwicke terms it, (3 Atk. 446,) with which, in the estimation of equity, such surpluses have been impressed, remains until their absolute owner, being sui juris, has manifested an intention to divest them of such character, and to treat them as personalty. And, accordingly, by force of these principles, which are not to be disputed, it is now urged that as the purpose of the order of the Orphans Court, in the present case, was to effect a payment of the debts of the estate, the sale of the lands in excess of such purposé, will not, in point of equity, accomplish a conversion, and that the surplus money now in controversy retains its notional impress of realty, and must descend as such to the heir-at-law. The reply of the counsel of the appellants to this insistment was, that the order of the Orphans Court was not simply an order for a sale of the land to pay the debts of the estate, but that it embraced another purpose, which was the benefit of the heir of the decedent; and that, consequently, — 579 — a conversion out and out has occurred, the result being, that the money came to the heir as personalty, and must be distributed as such. But is this assumption founded in the facts of the case ? The statute by force of which the sale in question was made, after empowering the Orphans Court, in case of a failure of the personalty, to order a sufficiency of the real estate to be sold, contains this provision; “ That, where any houses and lots, or lands, are so circumstanced that a part thereof cannot be sold without manifest prejudice to the heirs or devisees, the said court may, at their discretion, order the whole, or a greater part than is necessary to pay such debt, to be sold; and the surplus money arising from such sale shall be distributed among the heirs or devisees, according to the law of descents in the former, and the will of the testator in the latter case.” In the instance now before us, the Orphans Court directed the entire property to be sold, on the ground that the sale of a part would be a manifest prejudice to the heirs. Now, I think it is clear that the entire purpose of this sale was to obtain a fund with which to pay the debts of the decedent. Such sale was a necessity, and would have been ordered, no matter how disastrous it might have been thought to the interest of the infant. , The provision of the act authorizing a sale, under the circumstances specified, of more land than might be necessary to produce the requisite amount, is merely a legislative direction to, do as little injury as possible to the heir-at-law or devisee. I see nothing in this course of proceeding which seems to indicate any intention to alter the nature of the property with regard to its heritable capacities. It does not appear to. me to differ from a general direction to sell lands for a special purpose, in which case it is clear that by the rules of law already adverted to, such direction and sale will operate to convert the fund so far only as it disposes of it. The statutory procedure falls short of effecting a conversion out and out; the conversion, as it seems to me, being for a limited purpose only, the surplus fund in , question came to the heir-at-law of the decedent as realty for all the purposes of succession. — 580 — The cases upon this subject are somewhat conflicting, but I think the above conclusion is sustained by a preponderance of authority. Cooke v. Dealey, 22 Beav. 196; Banks v. Scott, 5 Madd. 493; Wright v. Rose, 2 S. & S. 323; Bourne v. Bourne, 2 Hare 35; Jermy v. Preston, 13 Sim. 356; Sweezy v. Thayer, 1 Duer 286; Merick v. Bavier, 6 Ired. Eq. R. 524; Lloyd, v. Hart, 2 Barr 473. But had I arrived at a different result, I should not have felt at liberty to decide this case on the general doctrine, for to my mind it is clear that our decision must rest upon the same foundation as the case of Snowhill v. Snowhill, 2 Green’s C. R. 20. In that case, the lands of an infant had been sold by virtue of a special act of the legislature, which had been enacted on representations that such sale would be for the benefit of the'infant. The sale having taken place, the infant heir being still in his minority died intestate, and the question arose whether the fund, the produce of the sale of the laud, passed to the heirs or to the next of kin of the infant. The Chancellor regarded the fund as personalty, but his decision was reversed in the Court of Errors.* This case in my opinion, is not to be distinguished in the least degree, from the present case; and it has been the unquestioned law of this state for over thirty years. It is a decision of the highest court in the state, and I do not think we are free to say that it has not, in practice, been followed. The law is uncertain, indeed, if the final conclusions of this court, after so long a lapse of time, are not to be considered as unalterable, so far as judicial action is concerned. Nor am I able to perceive any reason which should incline this court to a reversal of this decision. Such a result would, clearly, be not consistent with the policy on this subject, as exhibited in the legislation of the state. If we refer to our laws authorizing the sale of the lands of infants, or those of lunatics, we find the rights of the heir-at-law carefully guarded ; the statutory provisions being, that the proceeds of such sales “ shall be considered relative to the statutes of descents and distribution and for every other purpose, as real estate of the same nature as the — 581 — property sold.” With this system, it is plain the decision referred to is in perfect harmony. Indeed, it would be an obvious incongruity if the proceeds of the sale of lands of an infant, sold by an order in the course of administration of an estate, should, on the death of the infant, go to the next of kin, while the proceeds of a sale made on a direct application for the benefit of the infant, should pass to the heir-at law. By adhering to the decision of the Court of Errors, in the case under consideration, we avoid any such inconsistency. Nor should we forget, that by the operations of established rules, our courts of equity produce a similar result, for in these tribunals it is a fixed principle never to permit the property of an infant to be changed from personal to real, or from real to personal, so as to affect the succession to it. 2 Atk. 413; 1 P. Wm. 389. Such course is also eligible in respect to the circumstance that it removes all tempts,tion from the relatives of infants to endeavor, after a conversion of lands into money, to divert them from the line of descent. In my opinion, this point, which is the only substantial one in the case, should be considered as res adjudicaba,. The decree of the Chancellor was also objected to because, costs were awarded against the defendants in the court below. But I find no error in this. It is true that such defendants were before the court in a representative character, but it is obvious that, in this controversy, they stand in the place of the next of kin, who are the contestants for the fund in question, against the heirs-at-law. Under such circumstances they should not be permitted to carry on this litigation except at the risk of costs. Administrators are not compellable, unless indemnified, to prosecute doubtful claims for the benefit of the next of kin. These were the only points raised on the argument. I think the decree should be affirmed, with costs. It is proper to say that no question was made with regard to the standing, in this court, of the appellant ■ in this case. The appeal was from a refusal of the Chancellor to dismiss a — 582 — temporary injunction, restraining a suit- at law for the purpose of the proceeding in chancery. Such refusal was with costs against the party making the motion. Whether such an order is a proper subject of appeal has not been mooted, and is not decided. The decree of the Chancellor was affirmed by the following vote: For affirmance — Beasley, C. J., Elmer, Fort, Kennedy, Ogden, Vail, Wales. 7. For reversal — Bedle, Dalrimple, Vredenburgh, Woodhtjll. 4. Footnotes [*] The decision of this court is not reported. See 1 Green’s C. R. 30.