Hall v. Bolster , 255 Mass. 262 ( 1926 )

Rugg, C.J.

The petitioners seek under G. L. c. 197, § 13, to have the defendant as executor ordered to retain in his hands assets of the estate of his testator, James G. Knowles, to satisfy an alleged claim in their favor not accruing within one year after the giving of this bond. The defendant’s testator guaranteed the performance of all covenants and agreements in a lease of real estate which extends to March 1, 1944, made by the petitioners to a third person. Subsequently the petitioners, the lessee and the testator covenanted that the “said James G. Knowles or his executor . . . may deposit with a bank duly established in Boston securities ... to the then market value of twenty thousand dollars . . . which value is to be maintained at all times. The securities held by said bank as a guaranty fund shall take the place of the liability of said James G. Knowles as guarantor under all the conditions of said lease. . . . upon the giving of the . . . deposit . . . the personal liability of the said James G. Knowles as guarantor of said lease shall thereupon cease and determine . . . . ” Said Knowles did not make such deposit during his life and no express provision therefor is in his will. In June, 1924, the executor of his will deposited $22,000 face value unregistered Fourth Liberty Loan bonds of the United States with a Boston bank.

The legal force and effect of the covenant were that all parties in interest provided a method of terminating the liability of James G. Knowles as guarantor of the lease. Either the guarantor in his lifetime or his executor after his decease might avail himself of that method. The obligation of the testator as guarantor of the lease subsisted after his death, constituted a liability of his estate, and might be discharged by his executor without express testamentary authority to that end. The fulfilment of the terms of the covenant by the executor took the place of the liability of the testator as guarantor. All liability of the testator or his estate has ceased by the express terms of the covenant because of the deposit of securities. That deposit is simply the fulfilment of an agreement. It was not a testamentary disposition of property nor the exercise of an option to invest assets of the estate. By the terms of the covenant the petitioners were bound to accept the substitution of securities for the guaranty.

The bringing of this petition is not an expense incurred in carrying out the terms of the covenant which within its meaning were to be borne by Knowles.

Decree dismissing petition affirmed.