Peckard v. Price

5 Del. Ch. 239

• Court: Court of Chancery of Delaware
• Decided: September 15, 1878
• Status: Published

Opinion

The Chancellor.

It is manifest, from the foregoing statement of facts and allegations of the complainants and defendants, that the material question in dispute between them is whether any loss arising from the sale of the lands by Price and Dunlap to Kirkley shall be borne by the estate of Henry L. Pecka'rd or by Dunlap and Price.

It appears in proof in this cause that the obligations for the purchase money of the farm by Kirkley were taken in the individual names of Dunlap and Price, and were not given by Kirkley to them as executors of Henry L. Pecicard, but to them as individuals, and that Dunlap and Price, in their administration accounts, charged themselves with debts due by Kirkley; and the attempt of the defendants therefore seems to be to rid themselves of the burthen of this charge, and to account only for the amount which they may realize from the securities taken by them from Kirkley.

It is also manifest, from the statements made by counsel in the argument of this cause, that loss must be sustained by -someone on account of the general depreciation in the price and value of land in Hew Castle County, and consequently in the depreciation of the value of this particular farm, by which the value of said securities may be lessened or impaired.

It would not now, it is presumed, sell for the price Kirkley Bargained to give for it; and there will be loss on the securities he gave for the payment of the price. I do not believe that-any fraud was attempted or intended by either Francis D. Dunlap or John E. Price. They and Henry L. Peokard were-intimate personal friends. He reposed great confidence in them as his executors. They doubtless meant to realize for the benefit of his estate the most they could from the sale of' his farm.

It is fair to presume that their reason for selling the land, and taking the securities for the payment of the same to themselves personally, and charging themselves with the amount thereof in their administration accounts, was that as much might be realized for the benefit of the estate as possible, believing thereby no loss would be sustained by themselves. Indeed, there is some proof to this effect in the depositions, taken in this cause. Such was the declaration of Francis D. Dunlap as certified to by one of the witnesses examined.

How, then, stands this case ? To determine this question it is necessary to consider the measure of the powers and duties of the executors, Price and Dunlap, under the will of Henry L. Peckard. That measure is the will itself.

1. The testator directs the payment of his debts, and then disposes of “ the residue of my estate, real and personal,” to-persons other than the executors.

2. He orders the sale, by his executors, “ of all the lots-in Delaware City without houses on them,— the lot in St. George’s, and the farm in Pencader,— on such terms as they might think best.” The effect of this direction was to convert this realty into personalty, and place it in the power and control of his executors, qua executors.

3. There is no other duty imposed upon them by the will,, not falling strictly within their province as executors.

This direction to sell invested them simply with a power. The proceeds of sale went into their hands as executors, and in no other character as trustees. The proceeds as personal estate went to them for the payment of debts, and any residue remaining after such payment passed to the legatees according to the provisions of the will in that behalf.

Disposition of Residue.

1. After certain specific devises and bequests, the testator gives to his wife in lieu of dower, during life or widowhood, “ all the income of my estate' arising from debts, bonds, sales of goods and chattels, lots of land, and farm, together with the money arising from all other sources.”

2. Coupled with this disposition is the direction to his wife, while she lives, “ to apply the surplus of her income, after keeping herself, to the benefit of Edwin H. Peckard and his child or children, and his wife.”

3. Subject to this provision he disposes of the estate falling in at the death or marriage of his wife, thus: (1) if his wife ■survives Edwin, or marries, “ the estate, real and personal, of which she is possessed,” to go to Lamor Curtin, or to her lawful issue; (2) if Edwin survives the wife, “ the said estate, real and personal,” to be equally divided between him and his ■children, share and share about; (3) if Edwin dies without issue, the said estate, real and personal, to be equally divided among Lamor Curtin’s children.

Without entering upon the investigation of the questions arising under these limitations further than necessary to determine the position of the funds in the hands of the executors, it appears: (1) that the testator was disposing of the ■entire residue of his estate, real and personal, remaining after payment of debts; (2) that he gave to his wife all the income and profits arising from all sources, during her life or widowhood ; (3) that in the devise over to the persons designated in remainder, “he blends the real and personal,” and speaks of both as in the possession of his wife, and devises that—and that only—of which “she is possessed(4) it is clear this limitation ■cannot have regard to the “ income: ” (a) because there was no residue or accumulation of income contemplated,—it was to be expended in the maintenance of E. H. Peckard, his wife, and children; (i) if the corpus of the residue of the ■estate of the testator is not disposed of here, it remains undisposed of by the will.

The disposition by the testator (excluding the specific devises and bequests .otherwise given) was of the income and profits of his whole residue, after payment of debts, to his wife-for life, or widowhood,—remainder over.

His devise consisted of both realty and personalty,— the-realty, of improved lots in Delaware Oity; the personalty, of that which was in the proceeds of the sale of the real estate, which, by the direction of the will, had been converted into-personalty.

With the realty unconverted it is clear that, under the-mere devise, it passed directly to the widow; and the executors had nothing whatsoever to do with it, of right. If they received the rents they must of course account for them, but. there was no duty incumbent on them to receive or in any wise-to intermeddle with them.

There was no gift to them, either of real or personaL They were executors only.

1. As to that which was of itself jDersonalty, no question is involved as to the duty of the executors. 2. As to the land ordered to be sold under the power, the executors had the-option to sell for cash or on credit; and, if on credit, the time and mode of security was in their option if exercised in good faith and with due regard to the security of the purchase money. 3. When converted actually by the exercise of the power, the securities passed into their hands as executors, as part of the personal estate, applicable, first, to the payment of debts, and, secondly, to the disposition prescribed by the will.

It will be observed:

(a) That there is no bequest to them as trustees.

(5) There is no express direction for investment. If any duty arose in this regard it was implied from the relation of the legatees for life, and in remainder, for the preservation of the fund.

(c) That this duty, if any, was derived because of their character as executors, and continued no longer than they occupied such relation.

(d) After the debts were paid, it would have been the duty of the executors to have disposed of the residue as directed by the will.

(e) While in the case of a general pecuniary bequest for life, followed by a subsequent limitation, even in the absence-of express direction for investment, it may be doubtful whether it would not be the duty of the executors, and certainly would be the right of the party ultimately entitled, to apply to a court having jurisdiction of the subject, for its aid and direction in the investment of the fund with a view to its-preservation. (Ho such duty or right exists when, by the will, it is contemplated that the fund itself shall pass into the-hands of the legatee for life.)

(f) By the will of H. S. Peckard the bequest and devise over is of “ the real and personal estate of which she is possessed ; ” these words being descriptive of the estate which was bequeathed, and ex m termini indicating that the widow was to be entitled to the possession.

(g) Corroboration of this is the entire absence of any gift to the persons named as executors, or to any others in trust, or any direction for investment, or receipt and disbursement of the income and profits.

(h) But, supj>osing the widow not to have been entitled to the possession of the principal fund remaining after payment of debts, then, as the persons named in the will received and held it as executors only, and not in any other cliaracter as trustees, it would, upon death or removal, pass to the person appointed as administrator de bonis non, who would be entitled to receive it for the purposes of the will; viz., to-pay debts, and then, as such administrator, as to the residue,, for the several persons entitled.

There was in either aspect, therefore, no duty incumbent, on the persons named as executors to make investment as-trustees charged with an active and continuing trust; nor-were they possessed of the funds in any other capacity than as executors.

There is no question as to any other portion of the fund except that portion of the proceeds of the farm sold, and which was secured by the bond and mortgage of the purchaser, being the principal sum of $é,000, with the interest, unpaid thereon.

As to this fund, the defendants contend that they hold the same in specie as trustees, and are liable only to be called upon for an assignment; the complainants, that they are entitled to have the whole sum thereby secured, and that the defendants are to be charged with the sum secured, to be paid in money.

The solution of this question depends upon the true meaning of the several accounts passed before the register, and the legal operation of such accounting.

The Constitution (§ 21) prescribes that “ an executor shall file every account with the register, who shall carefully examine the particulars in the presence of such executors, ■and shall adjust and settle the same,—which account, so settled, shall remain for inspection; ” and further provides for ■exceptions to be heard in the oiqshans’ court.

Eev. Code, chap. 89, § 31, provides that “an executor ■shall render an account in Federal money every year from the date of his letters, until the estate be closed and a final .account is passed.”

It is clear, therefore, that both the Constitution and the ■statute contemplate successive accounts, and that when the •authority is given to the register to “ adjust and settle” every account, it has relation to each account passed, and not to a final account only.

For this purpose the register is clothed with the power of ■examination, adjustment, and settlement, with an appeal to the orphans’ court. The effect of an account thus settled was •considered by the court of errors and appeals in Robinson v. Robinson, 3 Harrington, 433. While deciding that such settlement had not the operation of a decree for the payment of the money, it gives it this effect, that “ it binds the administrator until appealed from,” and “ is evidence of a debt.”— 41 Section 21 of article 6 regards him, the register, as an ■auditor to examine, adjust, and settle administration accounts, and gives an appeal from this settlement to the orphans’ court where alone these accounts can be questioned. * * * Though it ascertains an amount and binds the administrator until appealed from, it is no decree or judgment for the payment of money.”

In this respect there would seem to be no difference between a partial and a final account as to its conclusiveness when adjusted and settled upon all matters embraced in it, upon which the judgment of the register was passed, and with which the accountant charged himself as a debt against himself, or claimed as a credit for a disbursement made by him.

Of course,[if the charge was of articles of property remaining in specie or of credits uncollected, and which were contained in the account as such, and thus shown to be in the hands of the executor unconverted, and only estimated in Federal money as indicating their probable value, then he would not be absolutely chargeable for such estimated value in case of loss or failure to realize, without his default, but would be finally accountable for the sum actually received, and in every subsequent account would be entitled to have an .allowance of the loss as a credit.

In this view the question is resolved into a construction ■of the accounts passed, whether the accountants have charged themselves as with cash received and moneys collected to the extent of the residue of the purchase money previously unpaid, to wit, the sum of §4,000 ; or whether it was included in the account simply as forming a part of the assets of the estate with which they were primarily chargeable, but which still remained in specie, unpaid and-forming a subject of future accounting.

. . In the consideration of this question it is of no consequence whether the original security is capable of being traced or not, or whether the money has in fact been paid or not, so far as necessary to charge the administrators, since they had the right to make themselves absolutely responsible, by their deliberate statement, that they had received the money secured by the obligation and mortgage of the purchaser; and if by the accounts settled and adjusted they have so charged themselves, they will not be permitted to gainsay that which they have deliberately averred, and upon which the judgment of the register has been passed.

The administrators have charged themselves, in their accounts passed before the register of wills, with the amount which Kirldey was to pay for the land, and have stated the amount as received by them from Kirldey; and Kirkley’s obligation for the purchase money, and the mortgage to secure the payment thereof, were given to them personally, and not-as executors.

The accounts of an executor or an administrator can only be excepted to before the orphans’ court for the county, and the time for filing exceptions to an account passed by an executor or administrator before the register is limited by law to three years from the settlement of the account.

Unless excepted to within that period, the account is fixed,, and unalterable before any tribunal.

The orphans’ court of the county alone has jurisdiction for the correction of errors in the accounts of executors and administrators. The jurisdiction for such corrections is not in the court of chancery.

As more than three years have elapsed since the filing of their testamentary accounts by Price and Dunlap on the estate of Henry L.- Peckard, deceased, no exceptions can now be taken or had thereto; and for the same reason none could have been taken or filed thereto at the time this suit was commenced.

Their defense, therefore, as set forth in their answer, in this respect fails. Rhoads's Appeal, 39 Pa. 186; Leslie's Appeal, 63 Pa. 355 ; 44 Miss. 81; Sellew's Appeal, 36 Conn.. 181.

Let a decree be drawn in favor of complainant.