Clement v. . Cozart , 107 N.C. 695 ( 1890 )

The defendants demurred to the complaint: (698)

1. That it does not appear from said complaint that the intestate, J. C. Cozart, was indebted to plaintiff's intestate, or any other person, at the time of the execution of the deed to Lunsford and Cozart, on 21 November, 1871. (699)

2. That it does not appear that the personal estate of the intestate, J. C. Cozart, was insufficient to pay his debts, or that the same has been exhausted in the payment of the same.

The court, being of the opinion that the demurrer was not frivolous, denied the plaintiff's motion for judgment as for want of an answer, but held that the demurrer should be overruled, and allowed the defendant thirty days in which to answer said complaint. It is too well settled to leave room for discussion that a personal representative must allege, in a petition to sell land to make assets, either that the personal property has been exhausted without discharging the indebtedness of the estate, or is insufficient to pay it. It is essential that the exhaustion or the insufficiency of assets arising or that will arise from the sale of personalty (700) should appear either by a direct allegation or by necessary implication from the facts stated in the complaint. Shields v.McDowell, 82 N.C. 137. Where a personal representative wasted or misapplied the fund arising from the sale of personal property, and died without making good the deficit, it was held that license to sell the land would not be granted to the administrator de bonis non until he had proceeded against the estate and bond (if one was filed) of his predecessor, or had made it appear that he could recover nothing, but must simply incur unnecessary costs by instituting and prosecuting such suits.Lilly v. Wooley, 94 N.C. 413; Carlton v. Byers, 70 N.C. 691; Smithv. Brown, 99 N.C. 377.

The provisions of section 1446 of The Code necessarily hinge upon those of section 1436, and, therefore, though it be admitted that it was a sufficient compliance with the requirements of the former section to allege that the conveyance was made with the intent to defraud subsequent creditors alone, still it must appear when the license to sell is asked for — that there is an unsettled indebtedness that cannot be paid out of the assets. The deed executed by James C. Cozart was valid inter partes, and the grantees, even if the conveyance was made with fraudulent intent, had the same right as the heir had to demand that the personal estate should be exhausted before the land should be declared subject to sale for his debt. If the action had been brought by the defendant as administrator, his petition must necessarily have contained precisely the same allegations with regard to the insufficiency of the personalty as though J. C. Cozart had made no conveyance and a proceeding had been instituted against the heirs of Cozart to sell the land for assets, and, in addition, he must have distinctly alleged that the deed was executed with intent to defraud creditors. Instead of the allegation contained in the petition in this case, that his intestate "died possessed of a small amount of personal property, but to what value your petitioner is not informed, nor has he any means of knowing," the defendant administrator must have distinctly stated that there was, at least, according to his best information, a deficiency of (701) personal assets.

But the plaintiff contended that, as a creditor, he had a right to bring and maintain an action in the nature of creditor's bill, under the provisions of The Code, sec. 1448, without even a formal invitation to other creditors or an allegation that there were any other debts except that due to himself. That section is Laws 1871-72, ch. 213, sec. 1 (Bat. Rev., ch. 45, sec. 73), as amended by inserting the words "or civil action" after "special proceeding," as provided by Laws 1876-77, ch. 241, sec. 6, the effect of the amendment being to give a creditor his option to bring his action in the Superior Court, before the clerk or returnable at a regular term. So that, we are confronted with the question whether section 1448 can be construed as authorizing the plaintiff, on 20 June, 1889, to bring and afterwards to maintain this action in the Superior Court, founded upon an unpaid balance of a judgment rendered against defendant's intestate in 1886, when said intestate died in 1887, and letters of administration were granted to defendant on 27 April, 1888.

We think that the section mentioned unquestionably confers upon a single creditor, in behalf of himself (and other creditors, if there be any others), the right to bring a civil action to compel a personal representative to render an account of his administration and to pay to the creditors what may be due to each of them. Haywood v. haywood,79 N.C. 42. But the plaintiff does not rest his claim upon the ground that there were assets in the hands of the defendant (who had qualified as administrator only thirteen months before the summons was issued), and that defendant refused to pay over a sum in his hands properly applicable to the satisfaction of the plaintiff's judgment. He seems deliberately to have omitted any prayer even that an account be taken of the administration, when the law permits him to bring (702) his action for the express purpose of compelling the personal representative "to an account of his administration." If he had asked for an account before the expiration of two years from the time of taking out letters, without the further allegation that the defendant had in his hands funds that must be ultimately applied to the payment of his debt, for reasons set forth in the petition, a grave question would have arisen as to his status in court, when he was merely claiming the right to have his debt satisfied out of such fund.

But the purpose of the plaintiff, as disclosed in his complaint and avowed by counsel on the argument, is first to secure a finding that the deed made by defendant's intestate was fraudulent and void, and then to demand judgment that the defendant sell the land conveyed by his intestate, or so much of it as may be necessary to pay the judgment sued on. We do not think that section 1448 can be construed to empower a creditor or creditors to institute or maintain an action (where objection is raised by demurrer, certainly) to compel the personal representative to sell the lands of a decedent to make assets, unless it is alleged in the complaint that the personal estate is insufficient to discharge the debts, or has been exhausted and is no longer available for their satisfaction. It was not the purpose of the Legislature to enable an executor or administrator, simply because a creditor has instituted an action in the Superior Court (even where there is collusion), to obtain license to sell land belonging to the heir or devisee, or fraudulently conveyed to another by their testator or intestate, when, by taking an account, it may be made to appear that the personal estate is more than sufficient to satisfy all of the indebtedness. The liability of the land to be subjected to the payment of the debts, under the act of (703) 1846, was secondary entirely, and is not incurred till it appears that there is an insufficiency of assets. Wilson v. Bynum,92 N.C. 723.

If the plaintiff insists that he can maintain his action as a creditor's bill, not by virtue of section 1448, but because "The Code has not taken away from the Superior Courts any jurisdiction heretofore exercised by Courts of Equity, except in cases exclusively within the jurisdiction of justices of the peace," and because Courts of Equity formerly took cognizance of such bills, then he encounters the same additional difficulties. In the case of Wilson v. Bynum, supra, Justice Ashe delivering the opinion of the Court, says: "But when there is deficiency of assets, it is nevertheless the duty of the administrator to take the necessary steps prescribed by law to sell the real estate of his intestate for payment of his debts, and when he refuses to do so he may be compelled by the clerk of the Superior Court to perform the duty, or the creditor, as in this case, may bring an action in the nature of a creditor's bill against him and the heirs at law or devisees, as the case may be, for sale of land under the equity jurisdiction of the court. . . . Here the plaintiffs allege that they have a judgment against the estate of Charles McDowell, and the administrator declines to file a petition for the sale of the land; that the assets of the estate have been exhausted by the payment of debts and the emancipation of the slaves, and other casualties of the war, and that the defendants, devisees, have lands in their possession devised by Charles McDowell, testator." The error pointed out by this Court, for which a new trial was awarded, was the refusal of the judge below to submit an issue to the jury involving the question whether the assets had been exhausted by the payment of debts, etc. If it was not material that the deficiency of assets should have been alleged, why did the Court hold that it was error to refuse to allow that question to be passed upon by the jury? It is well settled by a line of decisions in this State that only an administrator de bonis non can maintain an action for an account against the personal representative of the former administrator: Merrill v. Merrill, 92 N.C. 657; Tulbert (704)v. Hollar, 102 N.C. 406; Wilson v. Pearson, 102 N.C. 313. But where the administrator refuses to bring an action upon the bond of a former administrator, or declines, upon request of the creditor, and where there is a deficiency of assets to institute a proceeding against the heirs at law or devisees to sell land for assets, the creditor may maintain a creditor's bill by alleging such exhaustion or deficiency of assets, as well as such refusal to bring suit, and not otherwise, against both the recusant personal representative and the heirs or devisees, as the case may be. Wilson v. Bynum, supra. The objection that there was no allegation of a refusal on the part of the defendant to bring suit was not raised by the demurrer, nor is it one of the grounds upon which the motion to dismiss rests. If the demurrer had specified that ground, it would have given rise to an interesting question growing out of the fact that it appears from the pleadings that W. W. Cozart is a necessary party in his own individual right as a claimant of title to an interest in the land through the alleged fraudulent deed, and must, if he had instituted this suit in his representative capacity, have made himself a party. He could not, as an individual, attack the title under which he held. It is not necessary to pass upon this question here, however. The objection raised by the demurrer that there was no allegation of a deficiency of assets ought to have been sustained by his Honor.

In plaintiff's appeal, therefore, we hold that there was no error in refusing to treat the demurrer as frivolous.

Affirmed.

Cited: S. c., 109 N.C. 181; Guilford v. Georgia Co., 112 N.C. 43;Barcello v. Hapgood, 118 N.C. 726; Yarborough v. Moore, 151 N.C. 119.

(705)