35 U.S. 419 (____)
10 Pet. 419
*GEORGE PETER, EXECUTOR OF DAVID PETER, DECEASED, THE BANK OF COLUMBIA, AND THE BANK OF THE UNITED STATES, APPELLANTS,
v.
JAMES B. BEVERLY AND WIFE, AND WILLIAM RAMSAY AND WIFE, AND OTHERS; HEIRS OF DAVID PETER, DECEASED.
Supreme Court of United States.
The case was argued by Mr. Key, and Mr. Sergeant, for the appellants, George Peter, executor, and others; and by Coxe and Mr. Marbury, for James B. Beverly, and others.
Mr. Justice THOMPSON delivered the opinion of the court.
This case comes up on appeal from the circuit court of the district of Columbia for the county of Washington. The bill was filed by the appellees in the court below, to enjoin the appellants from proceeding to sell certain lots of land in the city of Washington, belonging to the estate of David Peter, for the payment of debts alleged to be due to the Bank of Columbia, and the Bank of the United States. David Peter made his will bearing date the 30th of November, 1812, and shortly thereafter departed this life; and by his will be declares and directs as follows:
"It is my intention that the proceeds of all my estate shall be vested in my dear wife, Sarah Peter, for the maintenance and education of my children.
"I wish all my debts to be as speedily paid as possible; for which purpose I desire that the tract of land on which Dulin lives, together with all personal property thereon, may be sold and applied to that purpose; and in aid of that, as soon as sales can be effected, so much of my city property as may be necessary to effect that object.
"I desire that no appraisement or valuation shall be had of any part of the property attached to my dwelling-house.
"I desire that my sons shall receive as good educations as the country will afford, and my daughters the best the place can furnish."
*559] And he appointed his wife, Sarah Peter, his brother, George *Peter, and his brother-in-law, Leonard H. Johns, the executrix and executors of his will; of whom George Peter is the only survivor.
The bill charges that George Peter, the surviving executor, under colour of the directions in the will, was about to sell that part of the real estate of David Peter which lies in the city of Washington, and has actually offered the same for sale at public auction. The bill further charges, that there came to the hands of the executors personal estate of the said David Peter to the amount of more than 25,000 dollars. That they had sold the Dulin farm for 20,688 dollars 90 cents to George Magruder, in the year 1813, and received one-third of the purchase money, and took for the balance, divided in equal sums, two promissory notes, one payable the 1st of January, 1815, and the other the 1st of January, 1816; one endorsed by Patrick Magruder and the other by Lloyd Magruder. That the purchaser, George Magruder, was put into possession of the farm, and still holds it; and that the notes given for the balance of the purchase money have been lost by the negligence of the executors. The complainants deny the existence of any debt, due from the estate of David Peter to the said banks, or either of them; or any other debt whatsoever, for the payment of which it is either necessary, proper, or lawful for the said George Peter to sell the said city lots. And the bill prays that the executor may fully account for the real and personal estate of the said David Peter, and show how the same has been disposed of; and that the banks may be required to produce the notes or other evidence of their pretended debt, and prove the same; and praying an injunction to restrain the said George Peter, and his agents, from selling or in any way disposing of, or encumbering the real estate of the said David Peter in the district of Columbia: concluding with a prayer for general relief.
The injunction was granted: and, on the coming in of the answer, was ordered to be continued until the final hearing of the cause.
The answer of George Peter, the surviving executor, alleges that the principal management of the business of the estate was assumed by his co-executors; that believing Johns fully competent, and that he would attend to the business in a way best calculated to promote the interest of his sister and her children, he left it to them to settle the estate, and to collect and dispose of the proceeds thereof, and provide for the support and education of the children, as they might think best; and that all this was well known to the complainant, Beverly, who married the eldest daughter of the testator in the year *1819. That he and his wife lived with her mother until [*560 within a year or two of her death.
That the debts due to the banks had been continued by renewed notes, from time to time, drawn and endorsed by the executors, in compliance with the rules of the banks; and with the understanding that such arrangement was to continue as long as the banks were willing to indulge the estate, or until the executors should be able to make sales for the payment of those debts: that this arrangement was well understood by Beverly, and all the children who were old enough to understand any thing of their affairs; and was often talked of by Beverly and Ramsay, who always spoke of the estate as liable to the banks for these debts. The surviving executor, to the charge of neglect, in relation to the balance of the purchase money for the Dulin farm; alleges that Magruder, the purchaser, was sued upon the notes given for the balance, and became insolvent. That an ejectment was brought to recover possession of the land that it might be re-sold, no title having been given for the land, but only a bond for a deed according to the terms of the sale. That the ejectment was removed to the court of appeals in Maryland, where he believes it is still pending. That if there was any neglect or delay in recovering this land, it was the fault of the complainant Beverly; who undertook to attend to it, being then agent for the estate.
The answer of the banks refers to the answer of the surviving executor for the facts stated, in relation to the arrangement between the executors and the banks; which it is averred was entered into to save the estate of the testator from a sacrifice, and to continue the accommodation. That the executors and the banks, and the agents of the banks, one of whom was the complainant, Beverly, always so understood it, and looked to the trust estate as still liable to the banks. They exhibit statements showing the situation of the debts at the death of the testator, and the various renewals by the executors afterwards, in their private capacity, with the various payments which had been made, and showing the balance now due.
An amended bill was afterwards filed, calling for an account of other moneys alleged to have been received by the executors; and charging more particularly negligence in the executors in not having sued the endorsers of the notes of Magruder for the balance of the purchase money of the Dulin farm, and the loss thereof by reason of such neglect.
To this amended bill the surviving executor answers, stating his *knowledge and belief respecting the moneys for which he is *561] called upon to account, denies the negligence imputed to him, and avers that if there was any negligence it was that of the complainant, Beverly, who, being interested in the estate and being a lawyer, undertook to attend to the recovery of the balance of the purchase money. That the endorsers were in very doubtful circumstances; that the land was considered by all parties interested as sufficient security for the balance of the purchase money; and that the counsel of the executors advised the resort to a re-sale of the land as the best remedy for the recovery of such balance; and for that purpose an ejectment was brought to recover the possession, and a bill in chancery filed in Maryland under the direction and superintendence of Beverly; and that if any negligence occurred in the prosecution of these suits it was attributable to him.
The cause was referred to the auditor to take and report an account of all sums of money received by the executors from the real and personal estate respectively, and of the sums paid by them in the due course of administration; and of any other sums paid by them for the maintenance of the family and the education of the children; stating them separately. The auditor reports a large balance due the executors, allowing them for the maintenance of the family and the debts paid by them. To this report the complainants excepted, and the exceptions were overruled: and at the March term of the circuit court, in 1835, a final decree was entered confirming the report of the auditor, and decreeing a perpetual injunction. From this decree of a perpetual injunction, the defendants in the court below appealed; and from so much of the decree as confirmed the report of the auditor, the complainants appealed; and upon these cross appeals the cause comes here for review.
In examining the various questions which have been made in this case, the most natural order seems to be to consider, in the first place, the will of David Peter. Upon this depends, in a great measure, the rights of the banks as creditors of the estate, and the rights, duties, and responsibilities of the executors; and particularly those which devolve upon George Peter, the surviving executor.
David Peter died in the year 1813, shortly after making his will, leaving his widow with a family of five children, two daughters and three sons, the eldest about thirteen years of age, living in ease and supposed affluence, as appears not only from the pleadings and proofs in the case, but as fairly to be inferred from the provisions made for *them by his will, and the disposition made of his property. [*562 His primary object seemed to be that his family should remain together, and live as they had been accustomed to live. And he accordingly, in the first place, directs that the proceeds of all his estate should be vested in his wife, Sarah Peter, (who is made one of his executors), for the maintenance and education of his children. He directs, that no appraisement or valuation should be had of any part of his property attached to his dwelling-house, and that his sons should receive as good educations as the country would afford, and his daughters the best the place could furnish. The family accordingly remained together, except Mrs. Beverly, and were maintained and educated according to the directions of the will, until the death of the said Sarah Peter, in the year 1825. The testator directed his debts to be paid as speedily as possible; and for that purpose declared, that the tract of land on which Dulin lived, together with all the personal property thereon, should be sold, and applied to the payment of his debts; and in aid of that, as soon as sales could be effected, so much of his city property as should be necessary for the payment of his debts.
The testator had a right unquestionably, so far as respected his children, to charge the payment of his debts upon any part of his estate, real or personal, as he might think proper, and most advantageous to his family. And if the creditors were willing to look to the fund so appropriated to that object, no one would have a right to counteract and control his will in that respect. And he having thought proper to constitute his widow the trustee of the proceeds of all his estate, for the maintenance and education of his children, thereby vesting in her an unlimited discretion in this respect, so far as the proceeds of his estate would go; the surviving executor is not accountable for any thing applied by her for that purpose, not even if she would be chargeable with a devastavit. For it is a well settled rule, that one executor is not responsible for the devastavit of his co-executor, any farther than he is shown to have been knowing and assenting at the time to such devastavit or misapplication of the assets: and merely permitting his co-executor to possess the assets without going farther, and concurring in the application of them does not render him answerable for the receipts of his co-executor. Each executor is liable only for his own acts, and what he receives and applies, unless he joins in the direction and misapplication of the assets. Cro. Eliz. 348; 4 Ves. 596; 4 Johns. Ch. 23; 19 Johns. Rep. 427.
*It is not intended to intimate that there was any devastavit *563] or waste of the estate by Mrs. Peter. There is, indeed, no pretence in the bill of any misapplication of the estate, by her or any other of the executors: and for the very purpose for which the proceeds of the estate were vested in her, to maintain and educate a family of young children, it was necessary to clothe her with a large discretion; and for this reason the testator directs, that there should be no appraisement or valuation of any part of his property attached to his dwelling-house. The proceeds of all his estate being vested in his widow, would render it necessary, independent of any express direction in the will, that recourse should be had to the real estate for the payment of his debts.
And this leads, in the next place, to the inquiry, whether George Peter, the surviving executor, has authority to sell the lots in the city of Washington.
With respect to the Dulin farm, no doubt can exist. The testator gives positive directions for that farm to be sold, and the proceeds applied to the payment of his debts. The executors in the sale to Magruder only gave a bond for a deed: the title was not to be given until the purchase money was all paid; and that not having yet been done, no title has been conveyed, and it yet remains subject to be applied to the payment of debts; and a re-sale is necessary in order fully to carry into effect the will of the testator. It is a well-settled rule in chancery, in the construction of wills as well as other instruments, that when land is directed to be sold, and turned into money, or money is directed to be employed in the purchase of land, courts of equity, in dealing with the subject, will consider it that species of property into which it is directed to be converted. This is the doctrine of this court in the case of Craig v. Leslie, 3 Wheat. 577; and is founded upon the principle, that courts of equity, regarding the substance, and not the mere form of contracts and other instruments, consider things directed, or agreed to be done, as having been actually performed. But this principle may not perhaps apply in its full force and extent to the city lots. They are not positively directed by the will to be converted into money; but the sale of them was contingent, and only in aid of the proceeds of the Dulin farm, if a sale of them should become necessary for the payment of debts. But independent of this principle, there is ample power in the surviving executor to sell. We find, in the cases decided in the English courts, and in the elementary treatises on this subject, no little confusion, and many nice distinctions.
*The general principle of the common law, as laid down by Lord Coke, (Co. Lit. 112, b) and sanctioned by many judicial [*564 decisions, is, that when the power given to several persons, is a mere naked power to sell, not coupled with an interest, it must be executed by all, and does not survive. But when the power is coupled with an interest, it may be executed by the survivor. 14 Johns. Rep. 553; 2 Johns. Ch. 19.
But the difficulty arises in the application of the rule to particular cases. It may, perhaps, be considered as the better conclusion to be drawn from the English cases on this question, that a mere direction, in a will, to the executors to sell land, without any words vesting in them an interest in the land, or creating a trust, will be only a naked power, which does not survive. In such case, there is no one who has a right to enforce an execution of the power. But when any thing is directed to be done, in which third persons are interested, and who have a right to call on the executors to execute the power, such power survives. This becomes necessary for the purpose of effecting the object of the power. It is not a power coupled with an interest in executors, because they may derive a personal benefit from the devise. For a trust will survive though no way beneficial to the trustee. It is the possession of the legal estate, or a right in the subject over which the power is to be exercised, that makes the interest in question. And when an executor, guardian, or other trustee, is invested with the rents and profits of land, for the sale or use of another; it is still an authority coupled with an interest, and survives. 1 Caines's Ca. in Er. 16; 2 Peere Wms.
In the American cases, there seems to be less confusion and nicety on this point; and the courts have generally applied to the construction of such powers, the great and leading principle which applies to the construction of other parts of the will, to ascertain and carry into execution the intention of the testator. When the power is given to executors, to be executed in their official capacity of executors, and there are no words in the will warranting the conclusion, that the testator intended, for safety or some other object, a joint execution of the power; as the office survives, the power ought also to be construed as surviving. And courts of equity will lend their aid to uphold the power, for the purpose of carrying into execution the intention of the testator, and preventing, the consequences that might result from an extinction of the power; and where there is a trust, charged upon the executors in the *direction given to them in the disposition of the proceeds, it is the settled doctrine of [*565 courts of chancery, that the trust does not become extinct by the death of one of the trustees. It will be continued in the survivors, and not be permitted, in any event, to fail for want of a trustee. This is the doctrine of Chancellor Kent, in the case of Franklin v. Osgood, 2 Johns. Ch. 19, and cases there cited; and is in accordance with numerous decisions in the English courts. 3 Atk. 714; 2 Peere Wms. 102. And is adopted and sanctioned by the court of errors in New York, on appeal, in the case of Franklin v. Osgood. And Mr. Justice Platt, in that case, refers to a class of cases in the English courts, where it is held, that although, from the terms made use of in creating the power, detached from other parts of the will, it might be considered a mere naked power to sell; yet, if, from its connexion with other provisions in the will, it clearly appears to have been the intention of the testator, that the land should be sold to execute the trusts in the will, and such sale is necessary for the purpose of executing such trusts, it will be construed as creating a power coupled with an interest, and will survive. This doctrine is fully recognized by the supreme Court of Pennsylvania, in the case of the Lessee of Zebach v. Smith, 3 Binney, 69. The court there considered it as a settled point, that if the authority to sell is given to executors, virtute officii a surviving executor may sell: and that the authority given by the will, in that case, to the executors to sell, was to them in their character of executors, and for the purpose of paying debts, an object which is highly favoured in the law.
Although the clause in the will now under consideration, does not name the executors as the persons who are to sell the land, yet it is a power vested in them by necessary implication. The land is to be sold for the purpose of paying the debts, which is a duty devolving upon the executors; and it follows, as a matter of course, that the testator intended his executors should make the sale, to enable them to discharge the duty and trust of paying the debts. Mr. Sugden, in his Treatise on Powers, page 167, on the authority of a case cited from the year books, lays it down as a general rule, that when a testator directs his land to be sold for certain purposes, without declaring by whom the sale shall be made, if the fund is to be distributed by the executors, they shall have, by implication, the power to sell. And this is the doctrine of Chancellor Kent, in the case of Davoux v. Fanning, 2 Johns. Ch. 254. The will, in that case, as in this, *566] directed the real estate to be sold for certain purposes therein *specified, but did not direct expressly by whom the sale should be made; and he held, as Lord Hardwicke did in a case somewhat similar, 1 Atk. 420, that it was a reasonable construction, that the power was given to the executors; that it was almost impossible to mistake the testator's meaning on that point. So, in the present case, it is impossible to draw any other conclusion, than that it was the testator's intention, that the sale should be made by his executors. Jackson v. Hewitt, 15 Johns. 349, is a case very much in point, on both questions. That the power in this case, is coupled with an interest, and survives, and that by implication, it is to be executed by the surviving executor. The testator, say the court, in that case, directed that in case of a deficiency of his personal estate to pay his debts, some of his real estate should be sold, without naming by whom; and one of the executors only undertook the execution of the will, and sold the land; and the court held, that this was a power coupled with an interest, and might be executed by one of the executors, it being a power to sell for the payment of debts.
It has been thought proper to dwell a little more at large upon the construction of this will, and the power given to the executors to sell, than would have been deemed necessary, had it not been supposed and urged at the bar, that the court of appeals in Maryland had given a different construction to the will than the one we have adopted. This will was brought under the consideration of that court, in the ejectment suit for the recovery of the Dulin farm already referred to (4 Gill and Johnson, 323) and it is true, the court does say that the power given in the will to sell is a mere naked power. But this was not the main point before the court. The question seemed to turn upon the demises in the declaration, and whether the legal estate in the land was in Mrs. Peter and her children, so as to enable them to maintain an action of ejectment. As the clause in the will directing a sale of the land, did not direct it to be made by the executors, it became a question whether the executors had that power by implication; or whether it was a case coming within the Maryland law of 1785, which provides, that if a person shall die leaving real or personal estate to be sold for the payment of debts, or other purposes, and shall not appoint a person to sell and convey the property, the chancellor shall have the power to appoint a trustee for that purpose. And the court seemed to think, the will now in question came within that provision. But this case, however respectable the authority may be, cannot be admitted to control the decision in *the case now before the court, where the lands in question lie in the city of Washington: and we [*567 entertain a very decided opinion, that the power to sell given by this will, is a power coupled with an interest which survives, and may be executed by the surviving executor.
The next inquiry is, whether there is any subsisting debt due from the estate of David Peter to the banks. It is contended on the part of the complainants in the court below, that this debt has been extinguished, by the notes given by the executors; and no longer remains a debt due from the estate. There is no pretence that these debts have, in point of fact, been paid: and if not, the trust has not been executed, and the land still remains charged with it. If the executors have paid the debt to the banks, or the banks have accepted their notes in payment in place of the notes of the testator, so that the executors become the debtors, and personally responsible to the banks; the only effect of this is, that the executors became the creditors of the estate instead of the banks, and may resort to the trust fund to satisfy the debt. 2 Peere Wms. 664, note; 7 Har. and John. 134; 4 Gill and Johns. 303; 2 Pick. 567.
But there is no ground for considering the debt of the banks extinguished. David Peter, at the time of his death, was largely indebted to these banks upon endorsed notes discounted by them: and to prevent these notes from lying under protest, an arrangement was made between the banks and the executors to substitute notes drawn by Sarah Peter, and endorsed by Leonard H. Johns and George Peter; and the notes of David Peter were retired by this substitution, and passed as credits to the executors in the orphans' court as paid, when in truth and in fact they were not paid. The substitution of the notes of the executors was only by way of renewal, and to comply with the rules of the banks; and thus to continue the debts by the indulgence of the banks, until the executors should be able to make sales for the payment of them, without any intention or understanding by any of the parties, that the substituted notes were offered or received as payment of the debts. That such was the arrangement made respecting these debts, and so understood by Beverly at least, is established by the most clear and satisfactory evidence; and there is good reason to believe, that this was well understood in the family by all the children who were of an age sufficient to understand the business and concerns of the estate. This arrangement under such circumstances, cannot, in any manner, be considered an extinguishment of the debt. *568] The law on this subject is well settled, and the *principle well and succinctly laid down in the case of James v. Hackly, 16 Johns. 277. It is, say the court, a settled doctrine, that the acceptance of a negotiable note for an antecedent debt, will not extinguish such debt, unless it is expressly agreed that it is received as payment. It is unnecessary in the present case to carry the principle so far as to say there must be an express agreement for that purpose, in order to operate as payment: but the evidence must certainly be so clear and satisfactory, as to leave no reasonable doubt that such was the intention of the parties. And the rule to this extent is settled by the most unquestioned authority. 11 Johns. 513; 14 John. 404; 2 Gill and John. 493; 7 Har. and John. 92.
In the original bill, the complaint against the executors for not having collected the balance of the purchase money, can hardly be considered a charge of negligence; and much less of that gross negligence which ought to make the executor personally responsible. It barely alleges, that this balance ought to have been received if the executors had only used reasonable diligence in regard to the collection. But after the answer and explanation of the executor to this charge came in, an amended bill was filed, charging the executor with gross negligence in this respect. This seemed to be an afterthought, and rather a stale allegation. But the answer and explanation of the executor, uncontradicted in any manner, fully exonerates the executors from all culpable negligence. Magruder was prosecuted for the balance of the purchase money: he became insolvent, and no further payment could be obtained from him. An ejectment was brought to recover possession of the land, that it might be again sold: the cause was tried in the county court, and removed to the court of appeals, where the judgment was reversed, and a procedendo awarded. This business was principally under the care and direction of the complainant, Beverly: and if there was any want of due diligence in prosecuting the suit, it is chargeable to him, and not to the executor. And besides, the executor in the whole of this business acted under the advice of counsel, which shows satisfactorily that he acted in entire good faith, and would go very far to exonerate him from the charge of negligence, even if there were circumstances leading to a contrary conclusion. 2 John. Ca. 376.
From this view of the case, we are satisfied that the direction in the will of David Peter to sell a portion of his real estate for payment of his debts, created a power coupled with an interest that survives. That the surviving executor is, by necessary implication, the person *authorized to execute that power and fulfil that trust. That the debt due the banks has not been extinguished, by the [*569 notes substituted by the executors as renewals in the bank, or the estate of the testator in any way discharged from the payment of the debt. That the executors are not chargeable with negligence or misapplication of the personal estate, that ought to render them personally responsible for these debts: and that no reason has been shown why satisfaction of these debts should not be had out of the lands appropriated by the testator for that purpose.
It remains only very briefly to notice the exceptions which were filed to the report of the auditor; and most of these have been disposed of by the principles laid down in the foregoing opinion. It is proper here to observe, that from the report of the auditor upon the accounts exhibited by the executors and allowed by him, there has at all times been and now is a considerable balance in favour of the executors against the estate.
With respect to the first and second exceptions, it is true that the auditor has not charged the executors with the inventories; and he ought not, according to the principles upon which he makes his statement: the object of the reference to him being to ascertain, whether the executors were indebted to the estate, or the estate to them; and for this purpose he examined the several statements made by the executors with the orphans' court, and extracted from them the several sums received and paid by them. In the account with the orphans' court, the executors are charged with the amount of the inventory of the personal estate, both in the district of Columbia and in Maryland; and as far as any proceeds of the personal estate came into the hands of the executors, they are charged in the statement of the auditor; but they are not charged with what the widow and heirs retained in their hands, and for their own use; and this was correct, according to the provisions in the will, for the maintenance of the family and the education of the children.
The 4552 dollars, mentioned in the third exception, were properly omitted in the statement of the account against the executor. It was a portion of that part of the estate which was put into the hands of the widow, attached to the dwelling-house, and with respect to which the testator directed that no appraisement or valuation should be made.
The fourth and fifth exceptions relate to the notes taken from Magruder for the balance of the purchase money of the Dulin farm. *The executors, as has been already shown, are not chargeable [*570 with those notes. No negligence is imputable to them, which ought to make them personally responsible. No title has been given for the farm, and it may yet be resorted to for payment of this balance of the purchase money.
The auditor has properly given credit to the executors for the taxes on the real estate. There is no suggestion that the taxes were not due, and paid by somebody. The amount appears to have been paid according to the account of the register; and it is fairly to be presumed that they were paid by the executors, although no regular vouchers are produced for such payment. This may be accounted for, in some measure at least, by the circumstances stated in the answer of George Peter, of the destruction by fire of the books and accounts of his co-executor, Leonard H. Johns, who had the principal management of the estate.
The allowance of 6000 dollars for the expenses of the family for twelve years, must certainly be a very moderate charge. It was a proper subject of inquiry for the auditor, and there are no grounds upon which this court can say the allowance is exceptionable. From the nature of the expenditure for the daily expenses of the family, it could hardly be expected that a regular account would be kept; and especially under the large discretion given by the testator in his will in relation to the maintenance of his family.
The amount paid by the executors for the curtails and discounts on the notes running in the banks, were properly allowed to their credit. These were debts due from the estate; and whatever payments were made were for, and on account of, the estate.
These are all the exceptions taken to the report of the auditor, and we think they were all properly overruled by the court below. But the court erred in decreeing a perpetual injunction.
The decree of the circuit court must accordingly be reversed, the injunction dissolved, and the bill of the complainants dismissed.
This cause came on to be heard on the transcript of the record from the circuit court of the United States for the district of Columbia, holden in and for the county of Washington, and was argued by counsel; on consideration whereof, it is ordered, adjudged, and decreed by this court, that the decree of the said circuit court in this cause be, and the same is hereby reversed and annulled. And *this court, proceeding to render such decree as the said circuit *571] court ought to have rendered in the premises, doth order, adjudge, and decree, that the injunction in this cause be, and the same is hereby dissolved; and that the bill of the complainants be, and the same is hereby dismissed; and that this cause be, and the same is hereby remanded to the said circuit court, with directions to said court to carry this decree into effect.