Chandler v. Wynne , 85 Ala. 301 ( 1887 )

STONE, C. J.

Bartholomew Boyle died intestate in 1875, and Needham Lee became his administrator. On petition and schedules filed by him, the estate was decreed insolvent, October 7, 1877. On April 7, 1878, E. H. Kelly filed a claim against the insolvent estate, for over $9,000; andón June 27th, 1878, JohnT. Milner filed aclaim for over $24,000. Each of these claims was in form an account, and each was claimed as a balance due to the claimants respectively, as surviving partners of partnerships which had existed between them and Boyle in his life-time. It is not pretended that either of the partnerships has ever been finally settled, or any balance ascertained. The accounts purport to set forth moneys of the respective firms, received and converted by Boyle in his life-time, and payments alleged to have been made by the survivors, on firm account. Neither account purports to set out a full and detailed statement of the partnership dealings. No exceptions or objections were filed to either of these claims, within twelve months after the decree of insolvency, nor „at any time, until the institution of the present proceedings. No decree of the court approving the claims has ever been rendered; no payments have ever been made on them; no partial disbursements ordered, and it is not shown that any assets have come to the administrator’s hands for disbursement. It is averred in the petition, after shown, that whatever of personal assets the decedent left, has been expended by the administrator in chief in the payment of expenses and costs of administration; and on coming to a settlement in 1887, nothing was found in his hands.

The'present proceeding was - instituted January 20, 1888. It is a petition by the administrator d.e, bonis non, addressed to the Probate Court in which his administration is pending, and makes the heirs of said Boyle, the intestate, parties defendant. Its prayer is to have certain lands, property of decedent, decreed to be sold for the payment of said alleged debts to Kelly and Milner, there being no personal property for their payment. No objection has been taken to the mere form of these proceedings, and we have discovered no ground for such objection. Many defensive reasons are urged why the prayer of the petition should not be granted. The Probate Court held the defense good, and dismissed the petition.

The first defense relied on is the statute of limitations of six years, and laches, under which it is contended that the claims, for the payment of which a sale of the lands is sought, are barred, and furnish no ground for such sale. To this it is replied, that under the influence of our statutory system, the Kelly and Milner claims have become fixed debts and quasi-judgments against Boyle’s estate, and the statute of limitations of six years operates no bar. — Code of 1886, §§ 2238, 2244, 2245.

At the time Boyle’s estate was declared insolvent — October 7, 1877 — the statute on the subject o£ filing claims against such estates was the same as it is now. Nine months were allowed, for filing, and claims not so filed, with certain exceptions, were forever barred.' — Code of 1876, § 2568; Code of 1886, § 2238. Three additional months, making twelve, were allowed to file objections to such claims; but, at that time, only the personal representative, or some creditor of the estate, was authorized to file objections. — Code of 1876, § 2575. The act approved December 4, 1878 — Sess. Acts, 69 — extended the privilege to heirs, legatees, devisees and distributees; but this was more than twelve months after the estate was declared insolvent. — Code of 1886, § 2245. This enactment does not affect this case.

The statute, Code of 1886, § 2244 (2574), declares that, “If no opposition is made, .... within twelve months after the time when the estate was declared insolvent, such claim must be allowed against the estate without further proof.” The opposition here meant includes any and all objections to the claim which might be filed under section 2245 of the Code of 1886. The particular contention of appellant, as we have shown, is, that inasmuch as the claims of Kelly and Milner were filed, verified, before the expiration of the nine months allowed for filing claims, and no objections were interposed within twelve months — thus establishing their claims “against the estate without further proof”— they thereby became qitosi-judgments, and cut off all defenses to them as such, no matter from what quarter such defenses may come.

It is certainly true, that when a claim has been filed against an insolvent estate, and not objected to in time, it becomes an ascertained and fixed debt against the personal representative, and against the personal assets in his hands; and, to that extent, it is no longer open to defenses which merely assail its justness as a proper charge. It is open only to defenses which accrue after the time for filing objections has expired. This has been very many times decided.' — Thames v. Herbert, 61 Ala. 340; Thornton v. Moore, Ib. 347; Clark v. Knox, 70 Ala. 607; Randle v. Carter, 62 Ala. 95; Eubank v. Clark, 78 Ala. 73; Moore v. Winston, 66 Ala. 296. In Heydenfeldt v. Towns, 27 Ala. 423, there are some expressions which go beyond the doctrine announced above; but in that case the question did not arise as it does in this. If it was intended to declare that a claim filed against an insolvent estate, and not objected to in the twelve months, becomes, in all cases, so far a judgment as to furnish conclusive evidence of the. debt in a suit to subject lands for its payment, later rulings have qualified that doctrine. In Randle v. Carter, 62 Ala. 95, 104, this court said: “In Heydenfeldt, v. Towns, 27 Ala. 429, it is said that the decree in favor of the creditor, in the course of the insolvent proceedings, has, as matter of evidence, a larger operation than a judgment at common law against the personal representative; that it is, as against the heir or devisee, prima facie evidence of the debt or demand.” In this latter case, the ruling in Heydenfelt v. Towns, was expressly approved when applied to personal assets, and approval withheld when applied to real estate.

But let us consider this question on principle. Before December 4, 1878, only the personal representative and the creditors were, or could be, parties to proceedings in insolvency of estates. Heirs, devisees, legatees, distributees, were not permitted to be heard. They were said not to be affected by them. As to them, the proceedings were res inter alios acta. — McGuire v. Shelby, 20 Ala. 456 ; Randle v. Carter, 62 Ala. 95; McMillan v. Rushing, 80 Ala. 402. Would it not be monstrous to hold that the heirs are concluded by a proceeding of which they had no notice, and in which they had no right to appear, if by chance they had learned that it was pending ? If the statute had declared, in ’terms, that the effect of proceedings in insolvency, in in which they are denied the right to appear, should be to establish a debt, under which lands descended to them could be sold, without any right in them to question the existence of the debt, such statute would be palpably unconstitutional. Wilburn v. McCalley, 63 Ala. 436. And such doctrine, applied to such a case as this, is all the more shocking, when, by inattention or indifference, a careless administrator, or careless or interested creditors, may fail to file objections to claims, and thus establish them, no matter how groundless they may be.

As we understand the position taken by the appellant, it is not denied that, if Boyle’s estate had remained solvent, then the heirs could interpose any defense to the present application, or to the claims on which it is founded, which their ancestor could urge if living. Our many rulings have settled this doctrine too firmly, to leave even a pretense for further dispute. — Teague v. Corbitt, 57 Ala. 529; Steele v. Steele, 64 Ala. 438; Scott v. Ware, Ib. 174; Trimble v. Fariss, 78 Ala. 260; Warren v. Hearne, 82 Ala. 554. Can a reason be urged why this rule, at least before December 4, 1882, does not apply to insolvent estates?

Tbe reason on wbicb tbe rule rests is, that while tbe title of the personalty is in tbe personal representative, and as to it be represents all parties in interest, sucb is not tbe case with realty. Tbis descends to tbe beirs, and in every step tbe personal representative takes in regard to it, be interferes with tbe descent. All tbe power tbe statutes give him over tbe land is in tbe interest of tbe creditors, and is in antagonism to the rights of the beirs at law. — Teague v. Corbett, 57 Ala. 529; Steele v. Steele, 64 Ala. 438, 455; Trimble r. Fariss, 78 Ala. 260, 266; Clark v. Knox, 70 Ala. 607, 622. And tbis is alike and equally true of insolvent, as it is of solvent estates. We bold that, with exceptions to be noticed further on, there is neither a difference, nor ground for a difference on tbis question, between solvent and insolvent estates; and when proceedings are instituted to subject lands to tbe payment of debts of an insolvent estate, “whatever would operate to defeat and bar tbe debt as a legal, subsisting demand, enforceable against tbe intestate if living and sued, will defeat and bar it when tbe personal representative seeks to charge tbe descended lands.” — Steele v. Steele, 64 Ala. 438; Warren v. Hearne, 82 Ala. 554.

When, on proper proceedings, an estate is declared insolvent, it does not put an end to suits then pending against tbe personal representative. It, however, changes tbe status of all common-law suits, which have for their object tbe fixing of a money liability on tbe estate represented. These are retained, and permitted to be prosecuted to judgment, for tbe purpose of ascertaining whether any thing, and bow much is due. If a money judgment is recovered against tbe estate, it is not enforceable by execution, as ordinary money judgments are. It is certified to tbe court of probate, for equal allowance with tbe other debts of tbe insolvent estate, and shares only pari passu with them in tbe disbursement. — Code of 1886, §§ 2250, 2251. Money demands, however, or claims solvable in money, asserted against tbe estate, if not in suit when tbe decree of insolvency is pronounced, stand on a different footing. On sucb claims no suit at law can afterwards be instituted. Their assertion, and any litigation growing out of it, must take place in tbe Probate Court in wbicb the administration is pending, and can be had no where else. The claim must be filed, verified, within nine months after the decree of insolvency, or after the accrual of the claim. — Code of 1886, § 2238. If no opposition or objection is filed to the claim within twelve months after the decree of insolvency, then “such claim must be allowed against the estate, without further proof.” — § 2244. If objection is filed to the claim within twelve months, “the court (of probate) must cause an issue to be made between the claimant and the objector, in which issue the correctness of such claim must be tried as in an action at law, if required;” and if the issue, either in whole or in part, is found in favor of the claimant, to the extent so found, it becomes an established claim against the estate without further proof. — §§ 2245, 2246. Claims thus established become fixed liabilities of the estate, having many of the qualities of prima facie judicial ascertainment. This for the obvious reason, that no other proceeding or suit is open to the creditor of an insolvent estate. A judgment against a personal representative, rendered on a liability not barred when the suit was brought, merges the liability in the judgment, and fixes a new departure from which to compute time necessary to perfect a bar. — Scott v. Ware, 64 Ala. 174; Yondell v. Pugh, 53 Miss. 295. So, a claim established against an insolvent estate in the Probate Court, must, prima facie, have the same effect; for no other form of judicial trial is open to such claimant.- Heydenfelt v. Towns, 27 Ala. 423; Randle v. Carter, 62 Ala. 95. So effectually does a decree of insolvency ascertain that there are debts of the estate in excess of personal assets, that on such decree, the personal representative may obtain an order to sell lands for the payment of debts, without taking any evidence to show the necessity of the sale. — Code of 1886, § 2258. We think, however, that the proper interpretation of the statute last referred to is, that it makes only a prima facie case. To hold it conclusive would be, perhaps, to make it unconstitutional. — Stoudenmire v. Brown, 57 Ala. 481; Zeigler v. S. & N. R. R. Co., 58 Ala. 594; Wilburn v. McCalley, 63 Ala. 436. It would certainly overturn the rulings of this court in Teague v. Corbitt, 57 Ala. 529; Steele v. Steele, 64 Ala. 438; Clark v. Knox, 70 Ala. 607, and Trimble v. Fariss, 78 Ala. 260.

Our insolvent system was intended to be complete, .and we do not doubt it includes and provides for all claims that can be brought within its provisions. Does it meet every class of cases ?

It will be remembered that each of the two claims against Boyle’s estate, brought to view in this case, is preferred in the character of surviving partner, claiming a balance due on partnership account,'and not pretending that any settlement of either partnership has ever been had. Aside from these two claims there are no debts. Are these claims of such a character as, not being objected to within the twelve months, they become established claims against the estate, so as to authorize an order of sale without proof of indebtedness?— Code of 1886, § 2258.-

While we concede that all claims against insolvent estates, absolute or contingent, legal or equitable, must be filed within the nine months, to entitle them to share in the disbursement, there are claims which, in their nature, forbid that anything shall be done in the Probate Court beyond the mere filing. We will not undertake to define or declare to what classes of cases this principle applies, but will confine our ruling to the case in hand. We hold, then, that claims, to be “allowed against the estate without further proof” (Code, § 2244), merely because they were filed and verified in nine months, and not objected to in twelve months, must be of a character which, if objected to, the Probate Court can determine their correctness, on “an issue to be made up between the claimant and the objector.” — Code, § 2245. To hold otherwise, would be to declare that a claim would be entitled to allowance, if filed and not objected to, while the same claim, if objected to, could not be allowed, because the Probate Court is without jurisdiction to ascertain its correctness. The legislature can not be supposed to have intended so incongruous and inequitable a system as this would imply.

The claim in the present case being between partners, growing out of partnership dealings, and the accounts not settled between themselves, the question of debit and credit depends on the entire accounting and adjustment of the entire effects of the respective firms. — Broda v. Greenwald, 66 Ala. 538. This can not be had in the Probate Court. Only the Chancery Court can settle partnership accounts between partners. — Vincent v. Martin, 79 Ala. 540; 5 Wait’s Act. & Def. 149. The claims relied on in this case, although not objected to, do not amount to prima facie proof of indebtedness from decedent, which will authorize a decree ordering a sale of lands for their payment. It is nowhere shown or claimed that a final settlement has been had, nor can we learn from anything averred or proven what would be the state of the accounts, if stated and settled. On the contrary, the accounts on their face prove that no settlements have been had, and Milner’s claim shows, prima facie, that it is incorrectly stated.

Controlled by the principles stated above, we hold that the proceedings in insolvency in this case have cut off none of the defenses which the heirs could otherwise make to the claims of Kelly and Milner. To them, the claims are simply accounts, barred in six years, prolonged to six years and six months by reason of Boyle’s death. — Pickett v. Hobdy, 63 Ala. 609; Lewis v. Ford, 67 Ala. 143; Lee v. Downey, 68 Ala. 98; Bond v. Smith, 2 Ala. 660; Teague v. Corbitt, 57 Ala. 529; Scott v. Ware, 64 Ala. 374; Steele v. Steele, Ib. 438; Trimble v. Fariss, 78 Ala. 260; Warren v. Hearne, 82 Ala. 554. To them the affairs of the several partnerships are unsettled, with no act in recognition of their continued existence, for a period much longer than is requisite to perfect the statutory bar to any suit for their settlement; in this behalf, also, prolonged to six years and six months. Bradford v. Spyker, 32 Ala. 134; Brewer v. Browne, 68 Ala. 210.

The inquiry may arise, if we have not left creditors, situated as Kelly and Milner were, without remedy for the enforcement of their claims. If we were to declare absolutely what mode of redress was open to them, our ruling would be dictum. But their claims being purely equitable, and not susceptible of ascertainment in any proceeding known to the common law, should they not, after presenting and filing them, have invoked the powers of the Chancery Court to have them adjudicated and. established, thus presenting the running of the statute ? This, it would seem, was the only means open to them of putting their claims in shape for allowance in the insolvency. This is but a suggestion.

The judgment of the Probate Court is affirmed.

Clopton, J., not sitting.