Pharis v. Leachman , 20 Ala. 662 ( 1852 )

GrOLDTHWAITE, J.

The bill is filed by a creditor of Charles L. Roberts, on behalf of himself and other creditors, to obtain administration of the legal assets of the estate, and also to subject to the payment of the debts of the estate, certain real and personal property, which, it is alleged, have been fraudulently added to the trust property of the widow and children. The complainant is not a creditor with a lien ; but the bill shows a judgment against the intestate, an execution and return of “no property” during his life, and a report of insolvency by his administrator. The administrator of Roberts, who is also the trustee, and the widow and children, who are the cestuis que trust, are with, others, made defendants to the bill.

The first question presented in the argument is, .as to the right of the complainant, upon tbe case made by bis bill, to come into a court of equity. It may be conceded, that ordinarily a creditor, to entitle bimself to tbe assistance of tbe Court of Cbancery upon an allegation of fraud in tbe debtor, must stand as a creditor with a lien, in wbicb case tbe obstacle wbicb prevents its enforcement will be removed, and tbe patb left clear; (Planter’s & Merchant’s Bank v. Walker, 7 Ala. 928; Dargan v. Waring, 11 Ala. 988;) or as one wbo bas exhausted his legal remedies, without being able to obtain satisfaction of bis debt, tbe end wbicb it was tbe object of those remedies to accomplish. Hadden v. Spadder, 20 John. 554; Beck v. Burdet, 1 Paige, 368; Roper v. McCook, 7 Ala. 319.

In tbe one case, a judgment binding tbe realty, or tbe issue and delivery to tbe officer of an execution binding tbe per-sonaljproperty, must be shown; and in tbe other, tbe prosecution of tbe debt to judgment, issue of execution and return of no property. Tbe application of these rules, however, belongs to tbe relation of debtor and creditor purely, and while this relation exists in tbe present case, it is found in connection with other circumstances, wbicb are of themselves sufficient to authorize tbe interposition of a Court of Cbancery. In other words, tbe creditor in tbe present case asserts bis right to tbe aid of that court, not merely because be is a creditor, but for tbe additional reason, that bis claim is connected with matters of administration wbicb render tbe interference of Cbancery indespensable. The equity of tbe complainant, therefore, depends upon considerations applicable to tbe jurisdiction of Cbancery in relation to administrations, rather than those wbicb apply to tbe simple relation of debt- or and creditor.

Upon this branch of Cbancery jurisdiction, while we incline to tbe opinion that it would be necessary to reduce to judgment a claim sounding in damages merely, it is certainly true that in England, for upwards of a century, creditors without a lien, without even having obtained a judgment, have maintained their bills against executors and administrators, for discovery and account of assets, and satisfaction of their debts. Joseph v. Mott, Pre. in Ch. 77; Davison v. The Earl of Oxford, 3 P. Williams 401; In the matter of Sir Charles Cox, 3 P. Williams, 341. In this State we do not find that the point berg raised has been expressly decided; but the jurisdiction of equity over executors and administrators, for the protection of creditors, upon considerations which apply with the same force to general creditors, as to those with a lien, or those who have exhausted their legal remedies, has frequently been sustained. Thus, in Kennedy v. Kennedy, 2 Ala. 572, the jurisdiction of equity, in compelling executors to apply the property of their testator to the payment of debts and legacies, is based upon their character as trustees in that court. In Blakey v. Blakey, 9 Ala. 394, the jurisdiction is rested upon the double ground of the fiduciary relation of administrators, and the inadequacy of the powers of the Orphans’ Court to afford a discovery of assets. In Dement v. Boggess, 13 Ala. 143, the court asserts, as a clear legal proposition, that courts of Chancery have jurisdiction over estates in the direction and control of executors and administrators, and in protecting the rights of creditors, as well as decreeing distribution of assets, by virtue of its original powers, which remain unimpaired by statutory inhibition. Again: in Hunley v. Mosely, 17 Ala. 796, Mr. Justice Parsons, in delivering the opinion of the court, says: “ It therefore follows that a court of equity may restrain the Orphans’ Court, from proceeding to a final settlement, when it is necessary that matters purely of equitable cognizance should be adjudicated and ascertained, in order to reach the end of justice.”

The principle to be extracted from the decisions to which we have referred is, that the jurisdiction of courts of equity in matters of administration, in relation to the enforcement of claims of creditors and the distribution of assets, is sustained upon considerations essentially distinct from those which influence such courts in affording assistance to creditors whose demands are not connected with administrations. In the one case the jurisdiction is original and primary, resting upon its general powers in relation to the settlement of estates ;in the other, it is ancillary, or in aid of the legal tribunals whose powers are found inadequate to the emergency.

A Court of Chancery having jurisdiction of the subject matter, it remains only, as to the question now under consideration, to inquire whether the facts disclosed by the bill, aré sufficient to authorize the withdrawal of the administration from a court of concurrent jurisdiction, in wbiclitbe proceedings have been commenced; and this point also we consider determined by our own adjudications. Whenever the powers of tbe Orphans’ Court are inadequate to the exigency, and cannot afford a sufficient remedy, resort may be had to a court of Chancery: Leavins v. Butler, 8 Por. 381; Scott v. Abercrombie, 14 Ala. 270; Dement v. Boggess, supra. Here the bill in effect charges the deficiency of legal assets to satisfy the complainant’s demand, and seeks to supply the deficiency out of property, which, it is alleged, has been fraudulently placed by the intestate under cover of the trust. The Orphans’ Court can deal only with the rightful administrator as such, and Leachman as the personal representative cannot administer the property, the title to which is in him, as trustee, being bound by the fraud of his intestate, (Rochelle v. Harrison, 8 Por. 352; Densler v. Edwards, 5 Ala. 81; Dearman v. Radcliff, ib. 82; Roden v. Murphy, 10 Ala. 804;) although the estate has been declared insolvent, (Marler v. Marler, 6 Ala. 367.) If the legal assets are insufficient, and the rightful administrator as such cannot administer the property subject to the claims of creditors, and fraudulently held, it follows, that the Court of Chancery is the only forum in which relief can be obtained, and the allegation of these facts is sufficient to withdraw the proceedings from a court whose powers are inadequate to the exigency. Neither do we entertain any doubt, that the administrator of the intestate, as such, was properly made a party to the bill, the object of which was, to reach property which could only be made subject to the payment of the debts of the intestate upon a deficiency of assets, which can be ascertained in no other mode than by taking an account with the personal representative.

In relation to the statute of non-claim: The bill alleges the presentation of the claims of the complainant within eighteen months after the grant of letters, and although the benefit of the statute is claimed by the defendants Leachman and Sarah Roberts, by way of plea, the answers do not positively deny the presentation, although the answer of the former avers that if such was the case it has escaped his recollection. Under these circumstances, proof of the fact by one witness is sufficient. Heartt v. Corning, 3 Paige 566. One witness swears to tbe admissions of tbe administator, that tbe claims were presented in due time; but these admissions were made after tbe eighteen months bad expired, and it is insisted that tbe fact in issue cannot be established by admissions of this character. The rule of the English authorities, founded on the case of Bauerman v. Radenius, that the admissions of the party to the record are in all cases receivable in evidence, is not generally recognized as law to its foil extent in the American courts, (Cow. & Hill’s Notes to Phillips’ Ev. 163, and cases there cited;) and in this State it has been repeatedly held, that the admissions of a merely nominal plaintiff, made at a time when he had no real interest, were inadmissible to charge the party actually in interest. Chisholm v. Newton 6 Wiley, 1 Ala. 371; Copeland & Lane v. Clarke, 2 Ala. 388; Brown v. Foster, 4 Ala 282; Head v. Shaver & Adams, 9 Ala. 793. The case of an executor or administrator is, however, different from that of a naked trustee, and although he will not be allowed by his act or admission to create a claim against the estate, yet the rule established in this, as well as several of the other States, is, that he may by his promise or admission revive one already created, although such promise has the effect of charging the estate. Newhouse v. Redfield, 7 Ala. 598; Hall, Weeks & Co. v. Darrington, 9 Ala. 502; Forsyth v. Ganson, 5 Wen. 558; McIntire v. Morris, 14 Wen. 90; Manson v. Felton, 13 Pick. 206; Farmer v. Gray, 21 Pick. 245. While we are not folly satisfied with the decisions referred to, we do not feel ourselves at liberty to depart from them; and although the statute of non-claim is not a statute of limitations, and the bar created by it cannot be removed by a subsequent promise, (Branch Bank of Decatur v Hawkins, 12 Ala. 755,) yet the principles which govern the two statutes are in some respects analogous. It would be a strange anomaly, to hold that an admission by the personal representative in relation to the claim itself, of which he might know nothing, would be received as evidence to charge the estate in his hands, and yet hold that the admissions of the same party, not in relation to a claim against the estate, but as to an act entirely personal, and attached to him solely in his representative character, could not be received as evidence of such act. We are therefore of the opinion, that the admissions of tbe administrator, Leacbman, made by bim during tbe continuance of bis representative character, although after tbe expiration of tbe eighteen months from tbe grant of letters, are evidence of tbe fact of presentation; and if they are to be regarded as evidence of this fact against tbe administrator, they are equally evidence of tbe same fact against tbe other parties. Tbe admissions of tbe personal representative which will take tbe debt out of tbe statute do not bind tbe heir, for tbe reason that tbe one represents tbe personal, and tbe other tbe real estate, and the admission of tbe administrator, operating only on tbe 'estate which be represents, is as to tbe heir an act inter alios. But in relation to tbe presentation of claims, tbe administrator represents tbe whole estate.

As to the weight of this evidence, we may remark, that the fact to be proved is not of a character that requires any high degree of proof to satisfy the mind. The witness swears positively to the admission of the administrator, and although be was evidently mistaken in the time when the conversation took place, an immaterial fact, it is highly improbable that be could have been so, as to the character or extent of the admissions themselves, which under the circumstances cannot be regarded as loose or casual. The testimony of this witness is corroborated, by the payments which are admitted to have been made by the administrator to the complainant, both before and after the termination of the eighteen months, as well as by bis return on oath after that period, of the judgments as existing debts against the estate. The presumption arising from the payment is, that the person paying has made the payment correctly — that be has inquired into, and is satisfied with the title of the receiver; and the fact of the payment is therefore evidence of the right of the receiver. James v. Biou, 2 Sim. & Stu. 600; 1 E. C. Ch. R. 608. It was the duty of the administrator not to have paid any debt which the statute of non-claim bad barred. It was bis duty, in the report of insolvency not to have included any such claim as an existing debt against the estate, and the presumption is, that in these respects be has discharged bis duty. We regard the evidence as to the due presentation of the claims as sufficient.

We come now to tbe real merits of tbe case. Tbe bill makes a demand upon a family of slaves known as Lucy and her children, on the ground that, although included in the trust deed, they were in reality the individual property of the intestate, derived by gift from his father-in-law, Wood-liff Beville. The answer of Mrs. Roberts -denies the gift; but upon this point it is entitled to no weight, as the statement she makes as of her own knowledge, that these slaves were taken from the possession of her husband by her father, and retained in possession by him for a year immediately prece.ding his death, is not only disproved by the evidence of Thomas L. Beville, Hall and Edgeworth, but also by her own witness, Richard Roberts; and the rule is, that an answer disproved in a material statement loses its weight as evidence. Geiger v. Hall, 1 Call, 191. Neither do we attach any importance to the testimony in relation to the occasional absence of these slaves at 'Woodlrff Beville’s; it is entirely too loose and uncertain to base anjr conclusion upon, and the continuous possession for five years by the intestate is sufficient, unless rebutted by satisfactory proof, to raise the presumption of a gift. Olds v. Powell, 7 Ala. 652; Hooie v. Harrison, 11 Ala. 499; Merriweather v. Eames, 17 Ala. 330. The limited circumstances, however, of Roberts at the time he received the possession of these slaves, are sufficiently established; and it also appears from the depositions of two of the complainant’s witnesses, Murphy and Robinson, that about the same time he was reputed to have failed in business, and the latter states that he believes the fact of-his embarrassments was generally known about Erie, the place where he then resided. Under these circumstances, it is not probable that a man of ordinary prudence, having a just regard for the interests of his daughter, would confer the absolute title of slaves intended for her benefit, upon her husband. The testimony of Mrs. Brooks and Mrs. Beville is positive and circumstantial, as to the slaves going into the possession of Roberts as a loan; that his failure in Madison county was at the time assigned by the owner as the reason for making this disposition of them, and that the other members of the family were called upon as witnesses to the arrangement. These are family witnesses, it is true, but the facts deposed to by them are in accordance with the motives which ordinarily regulate human conduct under similar circumstances, and in all respects consistent with the subsequent acts of "Woodliff Beville. Without attempting to reconcile the testimony of these witnesses with that of Thomas L. Beville upon the same point, or discriminating as to the position they respectively occupy to the parties in interest, it is sufficient to observe that, under all the circumstances, we consider the evidence as sufficient to establish the fact, that the slaves referred to went into the possession of the intestate Roberts as a loan, and not as a gift; and this fact being established, we see nothing in the continuous possession of Roberts, in the will of Woodliff Beville, or in the conduct of any of the parties to the transaction, which would authorize, us to infer that the intention of the lender, as declared at the time of the delivery of the possession, was subsequently changed.

Neither can the complainant in relation to these slaves derive any assistance from the second section of the statute of frauds, in relation to non-registered loans. Clay’s Dig. 254, § 2. The law upon the clause referred to of that statute, as settled by this court, is, that if the owner resumes the possession of the property before the creditor enforces his lien upon it, it cannot afterwards be made subject to the debts of the borrower. Maull v. Hays, 12 Ala. 199; McCoy v. Odom, 20 Ala. A lien lost or destroyed is the same as if it had never existed, (Otey v. Moore, 17 Ala. 280;) and the executor of the lender having taken possession of the slaves before the creditor had enforced his lien, it is the same in legal effect as if the lender himself had resumed the possession of the property; and the creditor having failed to fasten his claim upon the property, during the existence of his lien, cannot afterwards assert it against the same property when in a different condition. Even if the slaves did not go into the possession of the executor, their appropriation and possession under the will of Woodliff Beville, would be sufficient to prevent the creditor from subjecting the property, after the loss or destruction of his lien. McCoy v. Odom, supra. As to these slaves, therefore, the demand of the complainant cannot be sustained.

In relation to the eighty acres of land which was purchased from Foster, the answers admit the purchase, but deny that the consideration was paid to tbe vendor before tbe intestate received any portion of tbe trust funds; but upon these points insist, that tbe purchase was made for tbe benefit of Mrs. Roberts, and tbe land paid for in part with tbe trust funds, and in part with money raised on tbe credit of tbe trust funds; and as to tbe improvements on this tract, tbe answers also insist, that they were made by tbe trust slaves in tbe possession of Roberts, with tbe exception of some carpenter’s work, which was paid for out of tbe trust funds. Tbe evidence, however, shows that tbe last installment of tbe purchase money for this land was paid by Roberts, about tbe time it fell due in January, 1841, and that be did not receive any payment from the trust funds until the 20th of December in the same year. In the absence of any other testimony, this is conclusive to establish the charge in tbe bill, that this land was purchased with the individual funds of Roberts. So also in relation to the improvements on this tract, the evidence shows conclusively, from the different estimates placed upon them by the different witnesses who have been examined as to their value, that they were worth from six hundred to a thousand dollars, and that they were paid for by Roberts before he received any portion of tbe trust funds. The slaves Moses, Betsy and Berry, for which eight hundred and fifty dollars were paid, and tbe purchase made on tbe 14th July, 1841, are similarly situated; and the lot No. 91, exchanged for one-half of the eighty acre tract, of course occupies tbe same position as the land for which it was exchanged.

As regards the improvements which were made on the lot purchased on tbe 14th July, 1841, the answer insists that they amounted but to five hundred and ninety dollars, and that these improvements were also paid for out of tbe trust funds. Tbe evidence however shows very clearly, that they could not have cost less than one thousand dollars, and that of the amount expended upon them the greater portion was paid out of the individual funds of the intestate, and the purchase of the lot having been made from tbe same source, and no portion of the trust funds traced into the lands or the improvements, no lien can result in favor of tbe trust estate, although the estate of tbe trustee will be responsible for the deficiency, as for other debts. Vernon v. Vawdry, 2 Atk. 119; Cox v. Bateman, 2 Vesey, 19.

The correctness of the conclusions to which we have arrived upon the evidence, may be tested by a condensed view of the transactions to which we have referred. The total amount expended by Roberts for the eighty acre tract, the lot on Province street, and all the improvements, with the slaves Moses, Betsy and Perry, according to the evidence, amounted to near seven thousand dollars, and it is also proved that, during these expenditures, he received but a little over eleven hundred dollars from the trust funds. Nothing whatever is shown to have been realized from the "trust slaves; no loans contracted, or money raised in anticipation of, or on the credit of the trust funds; and indeed no attempt whatever made to account for the enormous disproportion between the amount shown, to have been invested, and the actual amount received. The conclusion therefore, that these investments were made with the individual funds of the intestate, is irresistible; and upon the deficiency of the legal assets of his estate, they must be applied to the demands of his creditors, as also the hire, rents and profits arising therefrom, to be computed from the service of the bill. Backhouse v. Jetts, 1 Brock. 500.

In taking an account of what is due to the complainant, a material question arises, as to whether his demand is to be credited with the claim upon William Inge, which the evidence shows has been wholly lost. The receipt for this claim is given by the attorneys for the complainant, and states upon its face that it is to be credited on the judgments of the complainants against Roberts. No objection is raised as to the authority of the agents; but it is insisted that this credit should not be allowed, for the reason that it was not intended by the parties to have been received as an absolute payment, and has not and could not have been collected at any time since its receipt on account of the insolvency of Inge. By the terms of the receipt it was received as an absolute payment, and although instruments of this character are open to explanation, we do not regard the evidence of the only witness who has been examined upon this point, as sufficient to repel the presumption created by the language of the receipt. He bas no recollection as to wbetber it was received as an absolute payment, but deduces his conclusion that it was not from the fact that he had never received any instructions from his principal to take it as such, and from the insolvency of the person against whom the claim existed. Evidence of this character is not sufficient to outweigh the terms of the receipt, and this credit must be allowed.

Another question which will also arise in taking the account is, as to the credit claimed on the judgment of the complainant from the hire of the slaves Esther and Martha, from the 14th July, 1842, the time of the sale, to the rendition of the judgment for their conversion at the suit of the trustee. These slaves were trust property; the sale of them by Bob-erts was without authority, and a note given for the purchase money could, after the recovery against the purchaser, have been successfully defended. So also, the agreement to credit the hire upon the individual debt of Boberts was without consideration, and it would be contrary to equity to enforce it in favor of one who has no claim to the allowance, the purchaser having been charged, as in this - case it appears from the evidence, with damages from the date of the transfer.

In relation to the claim which is advanced for the hire of the trust slaves, the general rule laid down by the counsel for the defendant in error is unquestionably the correct one. The father is' bound to provide for the maintenance and support of his children, and it is not allowed, as a matter of course, out of their own property. 2 Story’s Eq. § 1854 a; 1 Rop. Leg. 758. It is, however, equally true, that if the instrument creating the trust gives to the father this benefit, he is entitled to the advantage of it. Thompson v. Griffin, 1 Craig & Phil. 317. The question, therefore, here becomes one of intention, and construction upon the will of Woodliff BeviUe; and by the terms of that instrument it is provided, “ that the slaves that will be coming to Sarah Boberts, are to be placed in the hands of a trustee, to manage the same for her own use and the use of her children, and that no person is to deprive the said Sarah and her children of the use of the same or any part thereofand in another part of the same instrument the testator adds, “ All the property which I have given to my daughters is for their own use, and not to be taken from them by any person or persons whatsoever.” The intention of the testator to be ascertained from these clauses we think was, that the daughter, Sarah Boberts, and her children were entitled to the use and possession of the trust slaves against all persons; and if this be the correct construction, it follows necessarily, that during the time they so enjoyed the possession the conditions of the trust would be fulfilled. The evidence upon this point is, that these slaves were employed about the house, and the record furnishes no testimony that any of them were hired out, or that Mrs. Bob-erts and her children had not the use of them at all times.

It is also urged, that by the statute of this State, Olay’s Dig-173, § 7, the widow is entitled to the dwelling house in which her husband resided at the time of his death, free from rent, until her dower is assigned. This position is correct, (Inge v. Murphy, 14 Ala. 289; Shelton v. Carrol, 16 Ala. 148,) and in taking the account of the rents and profits of the real estate, the profits of the dwelling and premises occupied by Boberts at the time of his death must not be computed.

This disposes of all the points which legitimately arise in the case. The decree in the court below must be reversed, the costs in this court to be paid by the administrator, Leach-man, and allowed as a claim against the estate of his intestate. The decree to be rendered should refer it to the master: First, To take and state an account of what may be due to the complainant upon his demands as stated in the bill, and such other creditors of the estate as shall come before the master upon reasonable notice, prove their demands, and contribute to the expenses of this suit their just proportion, to be settled by the master;

Secondly, To take and state an account of the assets in the hands of Leachman, as administrator, which must, under the direction of the master, be applied to the debts and other charges against the estate, in the due course of administration according to the laws of this State;

Further, That the west half of the east half of the northwest quarter of section eleven, township twenty-one, and range two east, as divided by a line running north and south through said east half of said north-west quarter, and the other lands described in the bill, and the slaves Moses, Betsey and Perry, if tbe assets in the hands of said Leachman, as administrator, are insufficient to pay the debts of the estate in the due course of administration, be decreed subject to supply the deficiency of the debts proved before the master; and that a receiver be appointed, to take into possession all of such real estate, except the premises in the possession of the said Roberts at the time of his death, and hire and rent out the same under the direction of the master, and to receive the rents and profits and hire of the same, under the direction of the master, first giving security to be approved by him.

In ease of a deficiency of assets in the hands of the said Leachman, as administrator, after a due administration of the same, and paying the charges and expenses thereof, to pay the debts proved on the account before the master, such deficiency must be raised from the hire, rents and profits of the slaves and real estate in the hands of the receiver, and from the sale of said slaves and real estate, as also the sale of the other lot in Eutaw as described in the bill; such sale to be made under the direction of the master.

If the hire, rents and profits in the hands of the receiver, and the sale of said slaves and real estate are not sufficient to pay said debts, the master must take and state an account with the said Leachman, of the hire of said slaves, and rents and profits of said real estate from the service of the bill upon him, not computing the rents, &c., of the premises in the possession of said Roberts at the time of his death, and that said Leachman be decreed to pay the amount due on such account to the demand of the complainant and the other debts against the estate proven before the master.