Clarke v. Cotton, 17 N.C. 51, 2 Dev. Eq. 51 (1831)

June 1831 · Supreme Court of North Carolina

17 N.C. 51, 2 Dev. Eq. 51

Mary S. Clarke et al. v. Spencer D. Cotton et al.

An executor is not liable for laches in not enforcing the payment of a debt due the testator, from a c'O-executor who becomes insolvent after the probate of the will.

1'he case of Potter v. Stone f2 Jl whs 30) approved.

The bill, which was originally filed in Edgecomb, ip the yeai* 1829; alleged, that Mary S. Blount' died in the year 1823, possessed of a large personal estate, which she bequeathed, in different proportions, to the plaintiffs, some of whom were infants ; that she appointed S-pencsr 1). Cotton, Benjamin F. Jackson, Moses Monlecai and 'Hutchins G. Burton, her executors, all of whom proved the will — and that Moses Monlecai died •soon after the probate. The surviving executors and the executrix of Monlecai were made defendants ; and the prayer was for an account of the personal estate of the testatrix, and payment to the plaintiffs of ilieir respective legacies.

The defendants Cotton and Jackson, in their joint answer, admitted all the allegations of the bill. They further stated, that they, together with Monlecai, proved the will at the February term, 1823, of Edgecomb County Court — that the defendant Burton, had, from the death of the testatrix, declared his intention to accept the office of executor, but was unable to join in that probate — that he proved the will at the succeeding August term. That, the principal part of the estate of the testatrix came to their hands — that the defendant, Burton, owed the testatrix §2889,50, with interest from the 22(1 May, 1821, secured by a promissory note of that date — that the testatrix 3’esided in Edgecomb, but had a small plantation in Warren County, in the vicinity of Burton’s residence — that personal property on that estate was sold to the amount of §683,21, of which Burton purchased, to the amount of §420,85, and that the notes given’by the purchasers at that sale, including’ his own, were handed to him for collection. They submitted to an account, but insisted their were in no manner liable for the debt due from Burton to the testatrix, in her lifetime, nor with the collections, including his own purchases, made by him since her death.

It is unnecessary to state the answer of the defendant, Burton, as he was examined before the commissioner, and the facts stated in his answer appear. in the report.

By an interlocutory decree, a reference was ordered of the accounts of all the defendants, and the corarais- ■ sioner reported, that the defendants, Cotton and Jackson, had received of the assets of their testatrix, including interest, 020,853 03 — that after the payment of all the debts, there remained in their hands, subject to the payment of legacies, 018,351 91 — that they had paid legacies, including interest upon the payments, to the amount of 08,156 98, and after allowing them commissions on the sum of 041,707 86, the amount of their receipts'and payments, including legacies and interest, at the rate of 5 per cent, there was a balance in their hands of 08,109 54, and that he had rejected a charge made by them of 0473 v,0, for expenses of two journeys to the State of Tennessee, upon the idea that the defendants were not entitled to their expenses, and.also to full commissions. That the defendant* Burton, had received from the defendants, Cotton and Jackson, including interest, 0 930 68, in notes due for purchases made at the residence of the testatrix near his house, and had disbursed for debts due from the testatrix, the sum of 0 852 63 ; and that, after allowing Mm commissions on these disbursements, there was due him a small sum, to be applied to the payment of his note above mentioned. That as to the note of the defendant Burton, due the. the testatrix in her lifetime — Burton was a gentleman of large property at the death of the testatrix — that shortly thereafter, his affairs became embarrassed, and he was forced to make a general assignment of his property, and was now insolvent — that the testatrix had in her will left him all her slaves, thirty in number j that these slaves were upon her estate in Warren; and that the defendants, Cotton and Jackson, assenting to the legacy, Burton had taken them into his possession; that they had been sold at execution sales of Burton’s effects, and that a part of them were purchased by Cotton.

The plaintiffs excepted to the report:

1st, Because the commissions allowed to the defendants, Cotton and Jackson, were too large, and were allowed upon a wrong principle.

2d, Because the commissioner had not charged the defendants, Cottou and Jackson, with the note for §2,889 50, ■ and the interest thereon, due from the defendant, Burton, to the testatrix in her lifetime.

3d, Because the commissioner had not charged the defendants, Cotton and Jackson, with the note of the defendant Burton, for §420 85,, and the notes placed by them in his hands for collection.

The other exceptions of the plaintiffs related to the account of the defendant Burton,

The (iefendants, Cotton and Jackson, excepted to the report, because the commissioner had rejected the charge of §4/3 20, for expenses incurred.

Deverenx, for the plaintiffs,

contended :

1. That the defendants Cotton and Jackson ought to he charged with the debt of Burton, due the testatrix, as if he had been a stranger, and cited Tebbs v. Carpenter '(1 Mad. £90) Raphael v. Boehm (LI Ves, 92) S. C. (IS Ves■ 407) IA. Mont/ord t. Ld- Cadogan(17 Ves. 485) S. C. (2 Mer. 3) Powell v. Evans (5 Ves, 839): Lowson v, Copeland (2 Bro. C. C. 156) Eagleton v. Kingston (8 Ves. 466).

2. To the objection, that Burton had the same right as the other defendants, who could exercise no control over him, he cited Smith v. Aijhcwell (3 Jltk. 566) Ed-munds v. Bird (l Ves. & Bea. 542) Smallpiece v. Anguish (1 Ch. Ca. 75).

3. That although Burton’s appointment ousted the other defendants of their right to redress in a court of law, they had a remedy in equity, and ought to have availed themselves of it. (Lepará v. Vernon 2 Ves'. & Bea. 51 Atkinson v. Hens haw Id, 85 Ball v- Oliver Id. 96 Bone v. Cooke la Price 32x). ,

An executor may retain for pensesf L add"ition to ins com-ateof5per cent upon the re-ttneñtó. dl3"

4. That if the defendants had h’o right to compel pay» merit from Burton, either at law or in equity; they clearly had, in this court, the means of securing the debt upon‘ the negroes bequeathed to him.

Upon the other exceptions, he referred to Potter v. Stone .'2 Hawks 30) and to the argument in the case of McNair v. Ragland, at the last term.

The Attorney- General and Gaston, for the defendants

Cotton and Jackson, gave up the question of commissions, atid argued that Burton had as much right to retain the debt due by him to the testatrix, as the defendants Cotton and Jackson had to demand it — that it was assets in his hands — that had he voluntarily paid it to them, he would have been responsible for its proper application-

In support of the exceptions filed by’the defendants, they contended, that under the act of 1799 (Rev. c. 536) án executor had a right, not only to claim his commissions, but also for expenses necessarily incurred.

Rum?in,-"Judge.

Theonly exception on thepartofthe defendants is.that the commissioner rejected a credit claim-, ed by them, for actual expenses and charges paid. The fact of payment, , and fairness of the payments are not disputed. The commissioner decided on the idea, that the állowance could not be made, because the commissions covered the claim. But he was wrong ;• for the act of ‘1799 (Rev. c. 536) has an express proviso, that the executor may retain for charges, over and above his commissions. The charges of travelling, employing agents, or costs of .suit-might overgo the commissions; which are designed foi* the executor’s risk and labor. Tim ex - ception must be allowed.

The plaintiffs have taken several exceptions. One relates to the commissions allowed Cotton and Jackson. The commissioner has allowed five per cent on the receipts,, and the interest thereon, up to taking the account, and also five per cent upon the disbursements in payment of debts, and on payment to thé legatees, and the balance, row in the hands of the executors. Commissions cannot be given on the payments to the legatees, made or to be made. (Potter v. Stone 2 Hawks 30.) They may, in the discretion of the court, be allowed on the other items; but as actual expenditures are claimed and given here, a commission of five per cent on the principal sums received, namely, $18,711 65,. is an adequate compensa-, tion. This exception is therefore allowed.

Commission? to legatees.

A.H © «C6C11 isnotliableupois the insolvency of for assets which trol,.

Another, and the most important -exception, is that which relates to the debt, due from Burton to the testatrix at her death. He o wed her, upon his own bond the sum of $2889 50, and hath become insolvent. The commissioner has not charged the other executors with that debt-; and this exception is founded on that omission. It is said, .they are liable, because the debt was lost by their culpable negligence; and evidence has been taken to show, that. Burton’s circumstances became doubtful, and then ruinous, after the death of the testatrix ; and that Cotton and Jackson wore aware of it. The circumstances have been commented on. They are not gone over again now, be- . cause the deci'sion-is on a general principle. Tho’ifthe defendants’ liability depended on their knowledge and bona Jules, it might he difficult to charge them here., For according to the evidence, Mr. Burton’s failure was sudden, and caused by unforseen circumstances; and at least, unknown to the world and his co-executors, until he made a general assignment of a very large estate, and converted himself, in an instant, from a man apparently affluent into an insolvent- one. But it is a new position, that one executor is responsible for the acts of another, where the former has done nothing. The rule has been often laid, down, that he is liable, not for standing by, hut for parting with assets once under his control. An executor is not liable for money never in- his ‘ power, upon the insolvency of-a co-executor with the effects in his hands. Suppose a testator appoints an executor insolvent at the time. Can a co-executor say, he shall not prove the will, nor receive the assets, contrary to the appointment in the .will ? By what authority nan he say, the testator had a false confidence ? But it i.s said, if the insolvency take place afterwards, it is-the duty of the other to receive the fund, because he is á trustee; especially where there are infants and others, not sui juris. ■ That the legatees themselves may come ,|nt0 this court to secure their legacies is very true. Upon that is bottomed the argument for the power of the co-executor, and thereupon, his duty. That does not A ' * follow. That an executor. is a trustee, is not denied. for what? is the question. He is trustee for what is in his hands; or what has been in his hands, or within his separate power and control. He is not the curator or. guardian of the legatees, as against the ins°Uency of the other executor. It may be doubted, whether he could- call the other to account. Upon what Principle could he ask the other .to pay him the money in his hands ; and thereby make him liable for his own insolvency, which may happen ? Both, as against each other, derive their power from the same source, and hold an equal measure of it. But there is no necessity for such an obligation on the executor. .For since the legatees may themselves sue, their redress is in their own hands ; and they cannot complain, that an executor did not sue, while they themselves lay by. But if one executor may call the funds out of another’s hands, is he bound to do it ? The very, power of the legatee, and his own laches is an excuse, for the executor. There is no need of a suit by both, and the legatee’s example justifies the executor. But the want of a precedent is decisive upon this question. No case has been cited or found, that looks that way. . Those mentioned are altogether upon different points, Atkinson v. Henshaw (2 Ves. & Bed. 85) and Ball v. Oliver (2 Id. 95) establish only, that pond-ing a litigation for probate in the Ecclesiastical Court, the chancellor, upon a bill by any body interested, will appoint a receiver, as a better security than an administration 'pendente lite. But that does liot establish, that after probate, the executor shall not receive the assets, because he is insolvent, though the testator said he might, and the legatees are willing he should, or at least, do not ask that he shall not. Lepard v. Vernon (1 Ves. & Bea. 51) is a case,' where one executor (not insolvent) asf signed a debt, not negotiable, and the debtor refused to pay, but bi-ought the money into court. Upon the bill of the other executors, it was decreed to them for the general creditors, against the assignee : who had no legal title, and no higher equity than the general creditors. But that is no authority, that the executor, whose assignment passed nothing, could not have received from the debtor himself, if such had been the fact. This being a debt from the executor himself, due to the testatrix in her lifetime, became assets in the executors’ hands upon her death, for the satisfaction of creditors and legatees. If he had paid it to the other executor, it would not have excused him to the creditors and there ought, therefore, to be no means of compelling such a payment. The delivery of the negroes, bequeathed to Burton, did not alter it. He had, as executor, the same right to them that they had : and it was a specific legacy, which does not abate. This exception is therefore overruled. *

Legatees can come mto equi-iy, to secure themselves a-vene * of6 annex' ecutor.0 aU CX

_ , .. followthatan ex-peían insolvent co-executor to seemTthat^he* cwmot.

Executors haw no rig-lit to charg-e a specific legacy be- , fiueatlie<l to a co-executor, with a debt dué to tllB

PerRumir, J annexe cutor purchase* ^géts.íeforeho has proved the eíecmorShldeK-: ver him his own alscT’others'1 for collection, and wa^dsVovesthe will, and be-the co-executors are liable for the purchases and collections:

The other exceptions relate to transactions occurring after the death of the testator. Before Burton qualified as executor, he purchased at a salq made by the others, to the amount of S420 85 ; and the executors also left with him, as an agent, for collection, the bonds of other persons residing in his neighbourhood, which he received. The whole, including his own purchases and the interest* makes the sum of S 930 68. This the commissioner has also charged to Burton alone ; and the report is exce.pt.ed to, because he did not charge it to the three. I am free to say, that if the question stood on these facts alone, the liability of the others is very probable; because they could have sued at law on the bond taken to themselves for g>420 85-; and as to the other, they appointed an agent, who had it in his power, by acting as executor, to put them at defiance. But those difficulties arc removed by other facts, appearing on the report. Those monies he did apply, under the authority of the other'executors, to the payment of debts of the testatrix, except the suin of §78 05. Consequently, nothing was lost by the confidence reposed in him in this respect, except the above small balance. And 1hat is more than covered by the commissions allowed Mm; which makes a balance-of $15 01 due him, and applicable to his large debt. Those exceptions are therefore overruled.

,. But disbursements by the insolvent in payment of debts of the testator, made by directions of his co-executors, shall exonerate them pro ¡taü0»andnot be applied hr a debt which he owe the testator in his lifetime.

JPerHwirnjiKsosr, e. J. where it swy°forSan*Kie* cutor to employ pohrtmentofone who was nomi-cutor/but never proved the will, the^confidence a-eposed in him bv the testator.

The exception as to Mr. Burton’s account, is partly correct, as the commissions allowed' are too heavy; but the difference is so inconsiderable* as not to. induce the court to interfere in such a way, as. to alter the state of the accounts of the other- executors; It is therefore allowed, to the extent of $15 01, so as to leave the balance due from said Burton, of $ 2,889 50, instead of $2,874 4 9,! as reported; and for the residue, it is overruled.

HeNdehsoN, Chief-Justice.

I concur with Judge RtrEFiN in the opinion, that the two solvent executors should not be charged with the bonds delivered by them to Mr. Burton for collection, or for his purchases at the Warren sales ; not only for the reason given.by him, that Mr. Burton has accounted for both in his disbursements for the estate, but because they were not answerable if he had not. ■ Mr. Burton must he viewed, in- the collection of the bonds, either as the agent of Cotton and Jacksony or as their co-executor. If as the first, they can be liable only because the appointment was an improper one, or that they have failed to call him to account in due time. For I presume-it will not be controverted, that executors must sometimes act by agents ; and that this was a proper case for the appointment of an agent (the collection of distant debts). As to the improvidence of the appointment, I will not examine the evidence, to show; that the appointment was not an improvident one; or rather that the plaintiffs cannot allege jt to be so ; for I vi,ew this . as emphatically the case, of Mrs Blount. She,' although in her grave, is the plaintiff. It is for a breach of the confidence repose’d in the defendants by her, that this claim is founded. It is her charities, her benevolences, which it is alleged, have been defeated by it. And therefore there can he no stan-(ja,,{] appealed to with so much propriety, to test the fit-f1 , ■ , . ., , ,. ... ness of an agent to act m the business, as the one which she herself lists left. There is a moral conclusion, by which the plaintiffs are estopped to deny the fitness of the agent. But it is said, that the appointment was improvident, because the per,son selected had the capacity xo assume a character which would render him entirely irresponsible, and that the defendants knew it, and the agent did in fact assume that character ,• that he qualified as one of the executors of the will. It is true that he had that capacity j that the defendants knew it $ and that he has assumed that irresponsible character. But it is equally true, that this capacity was given to him by the real plaintiff, the testatrix, with a view that he might act in this very charge, and in things ofmuch more importance, which he lias done, as her executor, in discharging the trusts of the will. Can this capacity be imputed to the agent, as a disqualification or as rendering ills appointment improvident, and himself unworthy to be entrusted with the collection of a few hundred dollars out of many thousands, which the testatrix contemplated coining into his hands ? Can we impute the capacity which the testatrix gave him of assuming a character, which would invest him with power over the whole estate, as calculated to render him an improper agent io act in a very small paid of it. Much less can one who gave the capacity, or those who claim her charities or bounties, allege it as an act injurious to the estate. The reasoning which would lead to such a conclusion may be systematic, and therefore beautiful. We may admire it, as we are led from one stepping stone, or resting place to another; but in my estimation, it will not stand the test of analysis.

It mokes ni> difference, that the agent may, by proving the will, place it out. of the power of his co-executors to call him to account.

Perflnsnnasox, C.J. Where one executor delivers over assets to Ms coexecutor bonafide, and for a purpose apparently beneficial to the estate, he is not responsible for the cone\-ecutorhlS °°"

The next ground to charge Cotton and Jackson is, that they had the fund in their hands, and permitted it, or rather by their act caused it to pass into the hands of their co-executor; and on that ground they are chargeable ; and a great number of authorities were cited, I will not examine each case, but I think the result of the whole taken together is this: that where one executor lias the fund or evidence of debt in his hands, and he voluntarily and unnecessarily, or without an apparently 11 proper motive, permits it to pass into the hands of a co-osecuto}', lie is responsible. For if no proper motive can be assigned, a bad one must be imputed ; as men seldom act without a motive, and if he who best knows will not show it, the presumption is, that it is not a good one. The most charitable motive, which under such . . . circumstances can be assigned, is a desire to avoid responsibility ; which is a liad, or at least not a good one. *■ * ° But where the apparent good of the estate, and I should iU^’ the reasonable convenience.of the executors required, a fund or evidence of a debt may safely change hands ; here the apparent good of the estate, required, that the evidences of debts should be placed in the hands of him, under whose immediate eyes the debtors resided, as a measure of safety to the estate. By attempting to guard the trust fund by unreasonably rigid rules, a contrary effect from the one designed will ho produced. Honest men will be driven from the office; and their place will he supplied by dishonest ones.

These principles also will protect the two executors from loss in taking Mr. Burton’s acknowledgement of purchases made at the Warren sales. The case comes within the meaning and spirit of these principles.

Pee. Cueiam. — Decebe accoedtncíx.y.