Kittera's Estate , 17 Pa. 416 ( 1851 )

The opinion of the court was delivered by

Lewis, J.

By the Act of 29th March, 1832, the Orphans’ Court is made a court of record, with all the incidents of a court of record at common law, and its jurisdiction is declared to extend, inter alia, “ to the. removal and discharge of executors and administrators, the settlement of their accounts, and the distribution of the assets or surplusage of the estates of decedents, after such settlement, among creditors or others interested.” By the 19th section of the same act, auditors are required to be appointed to “ adjust the rates and proportions among the respective creditors, where there shall not be sufficient assets to pay all the debts.” By the Act of 13th April, 1840, it is made the duty of the Orphans’ Court, te appoint auditors for the purposes of distribution “on the application of any creditor,” as they were before “ authorized to do on the application of the executor or administrator.” And on the application of any legatee, heir, or other person interested in the distribution of the ‘estate of any decedent, the court is directed “ to appoint one or more auditors to make distribution of such estate in the hands of any executors or administrators to and among the persons entitled to the same.”

It is clear, from those statutory provisions, that the Orphans’ Court is clothed with authority to distribute estates of decedents in the hands of executors or administrators, “ among the persons entitled to the same,” and that by these general terms, as well as by express words, the legislature embraces “creditors” as well as “heirs,” next of kin and “legatees.” The right of each to be heard in support of his claim, and in opposition to every claimant who interferes with it, is necessarily involved in the right to demand payment out of the fund. Each creditor or claimant has a right to appear and to be heard, so far as may be necessary for the protection of his own interest; and of this proceeding the administrator has not the control, nor is he responsible for errors in the distribution so decreed. At a time when the statute of limitations was viewed with disfavor, it was held that an executor or administrator was not bound to plead it. This rule was only appliable to actions in which the' personal representative of the decedent was intrusted with the management of the defence, and in which the pleading was necessarily regulated by.his own discretion. It has no place in a proceeding before the Orphans’ Court, where the parties beneficially entitled to the fund are recognised as having a standing in court, and must, as a consequence of that condition, be permitted to protect their respective interests in their own way. It follows that where the fund is not sufficient to pay all, each creditor has a right to oppose any other claimant, hy showing payment of the debt; that it is barred by the statute of limitations ; that the lien has expired (if the claim be upon a fund arising from the sale of real estate); or that any other defence exists against it; and these rights do not depend upon the will of the personal representative of the decedent. The power to decide all questions necessary to a proper distribution of the fund follows the power of distribution, and rests in the Orphans’ Court, as a necessary incident to the jurisdiction. That court is as competent as the Common Pleas to determine all questions of law, as the judges of both courts are the same; and the Orphans’ Court has ample authority “to send an issue to the Common Pleas for the trial of facts by a jury.” (Section 45, Act 29th March, 1832.) In exercising this jurisdiction, the Orphans’ Court adopts generally the principles and practice which regulate the Court of Chancery in its jurisdiction over the same subject: 2 Hare R. 310 ; 1 Story’s Eq. s. 547; 1 Cr. & Phill. 48.

The fund for distribution in this case arises from the judicial sale of real estate, and is to be distributed among creditors having liens upon it at the time of the sale. The debts of record having been discharged, we have before us only that class of creditors whose liens originated with the death of Thomas Kittera. By Act of Assembly these liens are limited to five years from the death of the person indebted, unless the lien be continued by suit or other proceeding prescribed by the statute. The lien of the debt claimed by the executor of Anthony Hearn, deceased, has been preserved by a suit, in the manner and within the time required by the Act. The same may be said of the debt claimed by Alfred Laussat’s executors. This last-mentioned suit was brought against the executor of Thomas Kittera, deceased, without making the heirs or devisees parties thereto. But it seems to have been fully settled, that the lien of a debt may be continued against the estate of a decedent “ by the commencement and due prosecution of a suit either against the heirs, or the executors, or the administrators, as the case may be, within the period of five years after the decease of the debtor:” Murphy’s Appeal, 8 W. & Ser. 170.

These are the only two creditors whose liens have been continued. All the others permitted their liens to expire, by neglecting to comply with the provisions required by law; and there is nothing in the nature of their claims to take their cases out of the statute which limits their liens respectively to the period of five years.

But it is objected to the claim of George Strobel, executor of Anthony Hearn, deceased, that he holds as collateral security certain shares in the Woodlands Cemetery, alleged to be of greater value than his debt against the decedent, and that he “ refuses to surrender them.” It was said by the auditor that he “ holds them contrary to equity,” and by the court below that “he could not demand payment out of the present fund without re-assigning all the property which he held as collateral security for his claim.” The auditor states this creditor’s claim to be $21,358.62. The judge who made the decree below states it at $18,673. But the whole fund in court for distribution is only $8067.80. So that a re-assignment of his collaterals, as a preliminary to making claim upon this fund, would be a release of his securities upon payment of less than one-half of his debt. There is no equity in any such demand upon him. A re-assignment of securities, rightfully placed in his hands, can only be demanded upon payment, or a tender of payment, of the whole debt and interest which they were deposited and assigned to secure. It is not pretended that any such tender has been made. This claim is a fair debt against the estate of Thomas Kittera, deceased, and the collaterals are assets of that estate, assigned to secure the payment of it, without any evidence of insolvency at the time of the assignment. It was not an application of the assets of the testator to pay or receive the individual debt of the executor, but security provided out of the assets bound for the payment of the debt. The receipt of 19th May, 1848, given for the certificates, is in accordance with the provisions contained in the assignment of these securities to the creditor, and is not a conversion of them to his own use. No fact is reported by the auditor tending to show that this creditor’s original right to these collaterals was invalid, or that he has since sold or converted them to his own use. This refusal to surrender them, on receiving less than one-half of his just claim, is certainly no evidence of a conversion. Nor can his refusal to produce them, in a proceeding where his claim is founded altogether upon the original debt, and not upon the collaterals, be construed to have this effect, unless the demand be accompanied with an offer to do equity on the part of the debtor. But if it be alleged that the creditor has realized his debt, by the sale of the collaterals since the decree in the court below, this court, on a proper application for the purpose, will appoint auditors to take testimony and report the facts in order that “ right and justice” may be done. And although the inquiry here, upon an appeal, is properly confined to a review of the decision of the court below upon the facts there presented, and upon the exceptions brought to the notice of that court, there is nevertheless a discretionary power, conferred by the 4th section of the Act of 14th April, 1835, to refer the case to auditors de novo, when, in the opinion of this court, the justice of the case requires such a reference. This discretion is not an arbitrary discretion, but should be regulated by the rules which govern courts of common law in granting new trials upon newly discovered evidence.

It is ordered that the decree of .the court below be reversed, and that the fund in the hands of Harry Conrad, administrator de bonis non, &c., of Thomas Kittera, deceased, be paid pro rata upon the respective claims of George Strobel, executor of Anthony Hearn, deceased, and Charles Ingersoll and Joseph A. Clay, executors of Alfred Laussat, deceased.

The prothonotary is directed to make the necessary calculations, and to report the same to this court for a final decree in the premises.