Baldwin v. Alexander , 145 Ala. 186 ( 1906 )

HARALSON, J.

The real estate of a decedent, as is well understood on the death of the ancestor, descends instantly to the heir or devisee. At common law, the real estate was never subject to payment of the debts of the decedent. But this common law rule has been changed by statute in this state. The Code of 1896 (section 125) provides, that “all property of the decedent, except as otherwise provided, is charged with the payment of his debts, and, if necessary may be sold for that purpose;” but it is equally well understood that the lands do not become assets of the estate for the payment of debts, unless the personal property of the*decedent is insufficient therefore. The existence of debts and the insufficiency of personal assets to pay them, are essential conditions for resorting to the lands to pay the debts. — Banks v. Speers, 97 Ala. 560, 11 South. 841 ; Scott v. Ware, 64 Ala. 174 ; Steele v. Steele’s Adm’r, 64 Ala. 439, 38 Am. Rep. 15 ; Stovall v. Clay, 108 Ala. 105, 20 South. 387.

In the case before us, Mills Rogers died in 1888. Whetstone and Davis qualified as his admnstrators, but Davis had nothing to do with the administration. He left the state, never returned and died insolvent. All the property, consisting of lands and personal property,, went into the hands of the administrator Whetstone. He paid all the debts that were presented, or of which he, had any information, and in 1890, he made a final settlement of the estate in the probate court. It is not shown that this settlement was coerced, but it was voluntarily made by him. Under the facts avei’red, the estate was ripe for a settlement, and if it had not been made voluntarily by the administrator, he might have been forced by the heirs to make it. On and after this, settlement, he turned over to the heirs of the estate, Maud Rainey and Mackey Davis, who were his daughters, and the grand-children of the deceased all the assets of the estate. After the payment of the debts of the deceased, there remained in the hands of the administrator, over |20,000.00 of personal property, and this he paid over or distributed to the said two heirs.

In 1895, as is alleged, one Lola McQueen, who had just arrived at age, presented a claim against said estate, and brought suit thereon in the chancery court of Autauga county, making parties thereto said Whetstone as administrator of said Mills Rogers and said heirs at law. After long litigation, she finally recovered a decree at the March term, 1901, of said chancery court for $6,-000.00, which on appeal, was affirmed in this court. After executions were returned “no property” against the administrator as such and personally, suit was brought by said Lola McQueen against the appellants, A. M. Baldwin and J. W. Dimmick, as sureties on the administration bond of said Weststone, and judgment "was recovered against them for $5,703.2,3, which on appeal was affirmed by this court, on the 30th of June, 1905. Complainants, the appellants, paid said judgment with the interest thereon, on the 24th of July, 1905, amounting to $0,000.00.

It is averred that said Whetsone died insolvent in July, 1905, and that said heirs are also insolvent. It is further shown, that the assets of said estate were distributed and turned over to said distributees and heirs by said Whetstone as administrator, in good faith for the interest and at the request of said distributees, without any knowledge or information on the part of said Whetstone, of the existence of said claim in favor of said Lola McQueen, now Lola Daniel, who being an infant of tender years, was not required to present her .claim until she became of age.

It is averred that .the heirs, with the intent of hindering, delaying and defrauding the creditors of the said estate of Rogers, and especially the said Lola McQueen, whose debt was then in suit, either separately or jointly conveyed away the said lands, and said lands are now held by the grantees of the said heirs, Maud Rainey and Mackie Davis, of one or both of them, or by persons claiming under or through conveyances from them; that each and all of the said vendees of said Rainey and Davis, and the purchasers from them, either bought said lands with notice of said fraudulent intent of said heirs, in disposing of them pending the said suit of Lola McQueen, or had notice that the said lands were assets of the estate of the said Rogers, liable for his debts, and liable for the repayment of the debt of the said Lola McQueen, which the said sureties might be compelled to pay, etc.

It would seem, that if Wheststone, the administrator, were alive, and the land of the estate which he turned over to these heirs were still in their hands, and he had paid the judgment rendered against him for Lola McQueen’s claim, and the personal property he had paid over to them, had been spent or made away with by them, and it was no longer possible to have it applied to the reimbursement of the administrator, in such case the lands might be subjected to the payment of said claim. If they could be reached by the administrator for that purpose, it is difficult to see why the complainants, who are his sureties, might not be subrogated to his rights. They stand in his shoes, and whatever he would have a right to do, noAV that lie is insolvent and dead, they Avould have a right to do.

As to the principal of subrogation on which complainants rely, it may be sufficient to quote Mr. Pomeroy on the subject: “Where a surety has actually paid or satisfied the principal’s obligation, or any part thereof, he is entitled to be reimbursed by the principal debtor, and can maintain an equitable action for that purpose.”— 3 Pom. Eq. Juris. (2d Ed.) 1417.

In section 1419 he adds, “The surety who has paid or satisfied the principal’s debt or obligation is entitled to be subrogated to and to have the benefit of all securities which may at any time have been put into the creditor’s hands by the principal debtor, or which the creditor may have obtained from the principal debtor. By the fact of payment, the surety becomes an equitable assignee of all such securities, and is entitled to have them assigned and delivered up to him by the creditor, in order that he may enforce them for his own reimbursement and exoneration.”

The administrator acted in the best faith in turning-over these lands to the heirs. He was not personally profited, by so doing. The heirs could have compelled his action, if he had not distributed the estate without their interference, as he had no • possible excuse for delay. Surety, he could not be punished for doing what the law would have compelled him to do. If he had known of this claim of Lola McQueen, and had taken the risk of turning over the estate to the heirs,' we would have reason for holding that he could not now go on these lands for reimbursement; but he did not know of this claim. Speaking of this subject Judge Story says, “In the course of'the administration of estates, executors and' administrators often pay debts and legacies upon the entire confidence that the assets are sufficient for all purposes. It may turn out, from unexpected occurrences, or from debts and claims, made known at a subsequent time, that there is a deficiency of assets. Under such circumstances they may be entitled to no relief at law. But in a court of equity, if they have acted with good faith, and with due caution, they will be clearly entitled to it, upon the ground, that, otherwise, they will be innocently subjected to an unjust loss, from what the law itself deems an accident.”- — 1 Story’s Eq. Juris. (18th Ed.) § 90. This principle is referred to and quoted approvingly in Moore v. Lesueur, 33 Ala. 237.

In Harkins v. Hughes, 60 Ala. 322, it is said, “An executor or administrator, with full knowledge of outstanding debts (italics ours), volunteering to pay legacies, or make distribution, cannot, if the assets prove deficient compel the legatee or distributee to refund. — 2 Redf. Wills, 556 ; 2 Lomax on Ex’rs, 297 ; Alexander v. Fisher, 18 Ala. 374. The ruléis not inflexible; but there must be some fact or circumstance, relieving the executor or administrator from the presumption of negligence and evincing good faith on his part, or it cannot be departed from.” If we look for good faith and good excuse, we have them in the case before us. — Alexander v. Fisher, 18 Ala. 374.

“In case of debts appearing after the executor has paid away the assets in legacies, of which debts he had no previous, notice, and which he is obliged to discharge, then he may by a bill compel the legatees. * * * The legatee takes subject to the liability of being compelled to refund at the suit of a creditor; and when the executor has not been culpable, and is compelled to pay the debt, it seemed * * * he should be substituted to the right of the creditor he has paid.” — 2 Lomax on Executors, pp. 297, 300. The discussion, has proceeded thus far on the theory of the assets being still in the hands of the heirs.

If the fraud of the heirs in conveying these lands to certain parties named, with notice of the fraud, as alleged in section seven of the bill, be true, these conveyances could not stand in the way of subjecting them to the payment of complainants’ debt. In that case, as between complainant and such fraudulent vendees, they would be regarded as still in the possession of the heirs, and the vendees would not he regarded as bona fide purchasers for value without notice.

The chancellor sustained a demurrer to the bill, and dismissed it for want of equity. In this it appears he was in error. His decree will be reversed, and one will be here rendered overruling the demurrer and motion to dismiss.

Reversed, rendered and remanded.

Dowdell, Simpson, Anderson, and Denson, JJ., concur.