Ainslie v. Radcliff , 7 Paige Ch. 439 ( 1839 )

The Chancellor.

The only question which arises on this appeal is as to the meaning of the word priority as used in the third subdivision of the twenty-seventh section of the article of the revised statutes relative to the duties of executors, &c., in the payment of debts and legacies, (2 R. S. 87.) That section directs the payment of debts in classes; and the next section provides that no preference shall be given to one debt over any other debt of the same class, except as to the debts specified in the third class. This third class of debts, as to which a preference is allowed to one debt over another debt of the same class, embraces all judgments docketed and decrees enrolled, against the deceased ; which are to be paid according to the priority thereof respectively. The most natural reading of this clause of preference certainly is that which has been given to it by the surrogate; that is to refer the term priority to the time when the judgment was docketed, or the decree was enrolled.

I agree with the counsel for the appellant that, according to the settled law in England, as it existed there at the time of our declaration of independence, one judgment against the decedent had no preference over another judgment in payment out of his personal estate; provided both were docketed at the time of his death. And that the personal representative had the right to retain for a junior judgment due to himself, or to give a preference to one judgment creditor over another, without regard to any priority in point of time of the docketing of their several judgments; unless some proceedings had taken place, subsequent to the death of the decedent, by which one judgment creditor had ob« táined a preference over others of the same class. As early as the 12th of James 1st, it was held by Sir Augustine Nicholles that if A. recovers a judgment against B. and after-wards C. recovers against him, and B. then dies, his executor may pay which of the judgments he pleases; the latter judgment if he will, for they are all one as to him. (1 Rolle’s Abr. 926, Executors R. Judgments in vie testator, 3.) So it is said by Wentworth, that between one judgment and another, had against the testator, precedency or priority in point of time is not material, but he who first sueth execution must be preferred ; and before any execution sued it is at the election of the executor to pay whom he will first— Yea, if each bring a scire facias upon his judgment the executor may yet confess the action of which he will first, notwithstanding the scire facias was brought by the one before the other. (Went. Off. of Ex’r, Am. ed. of 1832, p. 269. See also Com. Dig. Administration, C. 2.) And absolute decrees in chancery against the decedent, for the payment of money, stood upon the same footing as judgment docketed ; and were, therefor, protected in this court, although the payment of a decree in preference to a judgment could not be pleaded at law as a defence to his personal representatives. (2 Will. Law of Executors, 660.) But where the debts were of an equal grade—as if there were several judgments or decrees against the testator or intestate, one of the creditors might get a preference over another by bringing a suit, or scire facias, against the personal representative and obtaining the first judgment or decree against the estate in his hands. And then, upon a suit in this court for the administration of the assets, the creditor who had thus obtained a preference, by judgment or decree against the personal representative, was entitled to retain that preference as against other creditors of the same class. (Joseph v. Mott, Prec. in Chan. 79.) And this is the preference referred to by Sir Joseph Jekyl and Lord Talbot, in the case of Morrice v. The Bank of England, (Ca. Temp. Talbot, 218.)

Whether the late Chancellor Kent overlooked this distinction, between judgments against the decedent and judgmerits against the personal representatives, in the case of Thompson v. Brown, (4 John. Ch. Rep. 619,) or whether he meant to confine the rule of preference, as laid down by him in that case, to judgments and decrees obtained against the personal representative, it is difficult to determine from the report; as it does not appear from the report of that case that any judgments or decrees had been obtained either against the decedent or against his personal representatives. It is evident, however, that my learned predecessor misapprehended the effect of the decision in the case of Morrice v. The Bank of England, if he supposed that the direction in the decree, to pay the creditors, who had not obtained judgments or decrees against the executrix, in the due course of administration, was a direction to pay them without reference to the legal priority which a specialty debt had over a debt by simple contract in the administration of legal assets. A direction to pay debts in a due course of administration, is by the very force of the terms used a direction to give a preference, so far as respects the legal assets, to one class of creditors over another, where the law itself has given such a preference. It is therefore a direction to pay docketed judgments and final decrees against the decedent, in preference to specialty debts; and to pay the latter class of debts in preference to those by simple contract only. The decision of Sir John Leach in Nunn v. Barlow, (1 Sim. & Stu. Rep. 588,) was explicit, that the usual decree in a suit for the administration of the assets of the deceased debtor did not affect the legal priorities of his creditors. He therefore allowed the personal representative to retain assets, which came to his hands subsequent to the decree, in satisfaction of his own debt; although the effect of such retainer was to give such representative a preference over other creditors of the same class. (See also Ram on Assets, 317; 2 Will. Law of Ex. 682.)

But it is evident from the note of the revisers that they considered the case of Thompson v. Brown as settling the law differently from what I have supposed it to have previously been, on both of these questions. They understood the decision in that case to be that judgments and decrees, obtained against the deceased debtor, were entitled to preference in payment, out of the personal estate of the decedent, according to the priority in point of time of recovering the judgment or obtaining the decree; and that in the administration of legal as well as of equitable assets, in this court, specialty creditors were deprived of their common law right of preference over simple contract creditors, as well as being placed upon terms of perfect equality as between all the creditors of the same class. The section of the revised statutes in relation to the order to be observed, in the payment of the debts of the decedent, by his personal representatives, was therefore framed accordingly. And the legislature added the word docketed, after the word judgments, in conformity with the previous statute on that subject. The word enrolled was also added, after decree, for the purpose, 1 presume, of excluding decrees which were not final and perfected at the death of the decedent. That this priority was not intended to have any reference to the supposed lien of the judgment or decree, upon the real estate of the debtor is evident from the fact that a prior decree, if enrolled, although it is not docketed so as to make it a lien upon real estate, is to be paid in preference to a younger judgment which is docketed, and which may therefore be a lien on the decedent’s real estate, if he had any, within the jurisdiction of the court. The preference which the common law gave to judgment debts over debts by specialty, or debts by simple contract, was not founded upon any supposed lien of the judgment upon the real estate of the decedent. For the preference extended to the judgments of all the inferior courts of record in England, and to decrees in chancery, which were not liens upon real estate, (2 Will. Law of Ex. 657.) But the rule, as to preferences in payment, was founded upon the common law principle that a specialty debt was a debt of a higher nature than a debt by simple contract, and that a debt of record was of a higher nature than either.

The decision of the surrogate in ‘this case, that, by the provisions of the revised statutes, judgments docketed and decrees enrolled are entitled to preference in payment, out of the personal estate of the decedent, according to the Pr*ority ™ P°int of time of docketing the judgment, or of enrolling the decree, without reference to any supposed lien of the judgment or decree upon his real estate, was therefore correct. The sentence and decree appealed from must be affirmed with costs ; and the proceedings must be remitted to the surrogate with directions to proceed and ascertain the amounts due upon the several judgments, or upon such of them as are necessary to exhaust the assets which shall be ascertained to be in the hands of the administrator upon a final accounting by him; and to ascertain who are the present owners of such judgments, either by assignment or otherwise, to the end that a decree may be made for a final distribution as soon as practicable ; and that so much of the fund, now in the hands of the administrator, as is not necessary to be retained to abide the result of the litigation in reference thereto, may in the meantime be decreed to be paid to the persons entitled to the same, immediately.