Trimble v. Fariss

78 Ala. 260

• Court: Supreme Court of Alabama
• Decided: December 15, 1884
• Status: Published

Opinion

CLOPTON, J.

There can be no question that, when a proceeding is instituted by the personal representative, or by a creditor of the decedent, to sell descended or devised lands for the payment of debts, the heir or devisee may interpose any defense which would have availed the intestate or testator, if living and sued on the debt, or which the personal representative could have interposed if sued at law. If the claim is barred by the statute of limitations at the time the proceeding is commenced, the defense is available to the heir or devisee, notwithstanding any intervenient act, admission, or omission of the personal representative. When- suit is brought against the executor or administrator, on a debt owing by the decedent, before the statute has perfected a bar, the demand is merged in the judgment, if any is rendered, and it becomes a valid subsisting claim until barred. But a judgment, founded on a claim that was barred by the statute of limitations at the time of the suit against the personal representative, does not preclude the heir or devisee from successfully ' interposing a plea of the statute.- — Steele v. Steele, 64 Ala. 438 ; Scott v. Ware, 64 Ala. 174 ; Bond v. Smith, 2 Ala. 600.

The general rule is not controverted ; but it is insisted that it has no application in a case where the personal representative is a creditor of the decedent at the time of his death — that in such case the debt due to the executor or administrator is merged by his appointment and qualification, and since he is ■the same person to pay and receive, and can maintain no action for the recovery of his debt, the statute of limitations does not run, and his only remedy is his right of retainer on a settlement of his accounts.

The common-law right of retainer by a creditor, who becomes the personal representative of the estate of his debtor, though not abrogated, has been materially modified by the operation of our' statutes, restricting the rights and powers of an executor or administrator, and governing the administration and settlement of estates. At common law, an executor or administrator has a right to retain out of legal assets for a debt due to him from the deceased, in preference to all other cred- " itors of equal degree. The remedy is created by the operation of law, and rests on the principles, that the creditor who first commences suit is entitled to preference in payment, and as the executor or administrator can not sue himself, unless he has the right to retain, he would be subjected to the loss of his own debt, where the estate is insolvent. In 2 ¥ms. on Ex’rs, § 1040, it is said: “ Thus, from the legal principle of the priority of such creditor as first commences an action, the doctrine of retainer is a natural deduction.” Under our statutes, an executor or administrator has no right to pay one creditor in preference to other creditors, there being no prior existing lien in his favor; and the legal principle of priority, which existed at the common law, does not prevail. The' policy of our law is equality between creditors; and a carefully organized system for the settlement of insolvent estates has been provided by statutes, by which the creditors of the deceased share, pari passu, in his assets, real and personal. An administrator of an insolvent estate, having a claim which originated in the life-time of the deceased, is required, as other creditors, to file such claim in the mode, and within the time prescribed by statute, or it is barred. When his claim is filed as provided by statute, it is open to contest by the other credr stors, or by the heirs of distributees; and if allowed, he is entitled to receive only his ratable proportion of the moneys of the estate applicable to the payment of the general debts; which he may retain, because a judgment in his own favor can not be rendered against him; but he does not retain by his own volition, or as the mere act of the law. The amount to which he is entitled is judicially ascertained, and he is allowed to retain it by the order or decree of the court. In cases of insolvent.estates, the common-law right of retainer is incompatible with the provisions of the statutes.

At common'law, the personal representative was vested, not only with the legal title to the personal assets of the deceased, but also with the absolute power to alien or dispose of them. Neither creditors nor distributees could pursue them in the hands of his alienee, in the absence of collusion or bad faith. He was authorized, without any license or order of court, to make absolute sale, and pass the absolute title. Having the power of alienation or disposition, and having the privilege of paying his owm debt in preference to other creditors of equal degree, whether the estate w^as solvent or insolvent, when personal-assets came into his possession sufficient to pay his debt, which could be legally applied to its payment, the law, eo instanti, made the application, and the debt was thereafter regarded as extinguished. “Because,” as is said in Woodward v. Darcy, Plow. 185, “in judgment of law, he is satisfied before ; for, if the executor has as much goods as his own debt amounts to, the property of these goods is altered, and vested in himself — that is, he has them as his own proper goods, in satisfaction of his debt, and not as executor;- so that there is a transmutation of property by operation of law.” While the personal representative is vested with the legal title to all the personal assets of the decedent, and has the same power of disposition and transfer of the c/ioses in action which he possessed at common law, no transmutation of property, as to the tangible, visible, personal property, the proper subject of sale, can occur by operation of law, under our statutes. The statutes prohibit an executor or administrator from selling or disposing of such property, otherwise than by sale under an order of the Probate Court. While all the personal assets, not exempt from the payment of debts, may be legally applied to their payment, the personal representative has no power to thus apply the tangible, visible property, without first converting it into money by authority of the court. The right of retainer extends only to the assets which are in such form and condition that he can legally apply them directly to the payment of debts, and pass the title and ownership.

On the death of a person, the legal title to his lands immediately descends to his heir, or passes to the devisee, as the-case may be. No privity of relation, in respect to the real estate, exists between the heir or devisee and the personal representative. He is, by statute, clothed with powers and charged with duties in reference to the lands, but takes no title or estate. These powers "he must exercise in the mode, and for the purposes prescribed by the statutes. The heir or devisee’s right of possession, use, and alienation is subject to these powers, but is not intercepted, until the personal representative exercises, or takes steps to exercise, his statutory power to rent or sell. The executor or administrator has no authority, other than as conferred by statute, to interrupt the rights, or divest the title of the heir or devisee. By statute, the lands of a decedent are charged with the payment of his debts, when the personal property is insufficient, and constitute legal assets; but they do • not come into the possession, or under the control of the personal representative, except by and until the exercise of his statutory powers. If he rents them, the rent, and if he sells under an order of the court the proceeds of sale, are assets. To the moneys arising from the rent, or a valid sale of lands, the right of retainer may extend, but not to the lands as such.

As the doctrine of retainer relates to such assets only as the executor or administrator may legally apply to the payment of debts, without change of their shape or condition, and which may, by operation of law, become his own property on such application being made to his own debt, it logically follows, that he is not entitled, on the final settlement of his accounts in the Court of Probate, 'to the remedy of retainer for a debt due him, out of personal property remaining in specie, which can be sold only under an order of court, or out of lands unsold. On such settlement, he may charge the estate with the amount of his debt as paid by him; and on the ascertainment of a balance due him, a decree may, under the statute, be rendered in his favor against the administrator de bcmis non, if any, to be collected as like judgments in favor of other creditors ; and if he makes final settlement and distribution, without having first converted a sufficiency of the property into money to pay his debt, he is without remedy by his own laches. — Code of 1876, § 2539; Moore v. Lesueur, 33 Ala. 237.

In Knight v. Godbolt, 7 Ala. 304, it was held, that an administrator is entitled, on final settlement, to show a retainer of assets for a debt due himself, though within the bar of the statute of limitations, but without the period of time when the presumption of payment arises; and such is the general rule. The principle' on which the rule rests is, that an administrator is under no legal duty to plead the statute of limitations, and a failure to interpose the defense will not operate to deprive him of a credit for the amount of a judgment recovered against, and paid by him, though the demand on which the judgment is founded was barred when the suit was commenced, unless there is collusion or bad faith in suffering the judgment; and that it is unreasonable that an administrator should have the power to charge the estate with a debt due to another, though within the bar of the statute, and yet be remediless as to his own., The rule applies only when the administrator is accounting for personal assets, which he may charge by omitting to plead the statute, or by reviving the demand by an express promise in writing. It has no . application to the real estate, on which the administrator can create on such charge. In Teague v. Corbitt, 57 Ala. 529, where the administrator claimed a credit for the amount of a judgment recovered against him, which was founded on a demand within the bar of the statute, and to reimburse him the payments made by him on the judgment it was necessary that he be allowed to retain from the assets in his hands arising from the sales of descended lands, made under decrees of the Probate Court, it was held that “the-money for which the lands were sold, as to the heirs, and as to all questions of charge or liability, or of descent or succession, must be regarded as a substitute for the lands; ” and that the heir could protect himself against the claim of the administrator to retain from the real assets, by showing that the demand on which the judgment is founded was, at the time of the commencement of the suit, barred by the statute of limitations. It may be conceded, that an executor or administrator will be allowed to retain, on the final settlement of his accounts, for a debt due him, out of any property to which he has title, and which may be legally appropriated to its payment, though other legal remedies for its collection are barred, on the same principle that the court will not deprive a person of property held by him in trust, without reimbursing him for any expenditures made on account of the trust estate. Rut the personal representative has no estate in, or title to lands descended or devised, and no trust attaches to them, at least until he assumes possession and disposition by his statutory authority. The reason on which is rested the necessity of protecting an executor or administrator, by allowing him to retain for a debt due him from the personal assets, does not apply when he seeks payment from the real assets.

As counsel have pressed on our attention with ability the right of retainer, as supporting the proposition, that a debt to the executor can not be barred until an action to compel a settlement of his administration is barred, we have considered the doctrine in relation to the estates of decedents under our statutes, for the purpose of showing its inapplicability to the case made by the present bill. We do not understand, however, that the complainant’s title to relief is founded by the bill on the right to retain from the lands for the debt due to his testator. It alleges, substantially, that Francis Bugbee, the testator of complainant, was one of two executors of the estate of William B. Fariss, who were appointed and qualified in 1866. Bugbee continued to act as such executor until April, 1877, when-he died. Fariss, at the time of his death, was indebted to Bugbee, by a note payable April 1, 1862. During the period Bugbee was executor, he and his co-executor made two annual or partial settlements, without retaining for his own debt, in which settlements they accounted for all the assets which had come into their hands; and no final settlement has’ ever been made. The bill was filed October 22,1883, by complainant as administrator with the will annexed of Bugbee, against the surviving executor and devisees of Fariss, to subject the devised lands to the payment of the debt due by Fariss to Bugbee. At the time of Bugbee’s death, his term as executor ceased. ITis executrix was appointed and qualified in May, 1877; and more than six years expired after her appointment before the bill was filed. In neither of the annual settlements made during his life did he claim the right to retain for his debt, and no final settlement has been made, whereby the remedy by retainer could be resorted to. The bill is filed by complainant, not for a fina] settlement of his administration, but as a creditor, claiming and seeking to subject the lands to the payment of the debt. Where the executor has in his hands assets to which he has title, and which may be legally applied to the payment of liis debt, the law makes the application, and his debt is extinguished. He can not claim his debt, in his capacity of creditor, as a subsisting demand. The complainant, therefore, may be regarded as having waived the right of retainer, if there was any, and as having elected to proceed on his rights as creditor, and not in the character of executor. The question raised is, can the devisees, under these circumstances, protect themselves against the claim, on the ground that it is barred by the statute of limitations? Another question arises, as to whether the devisees are concluded by a decree in another suit, which will be considered hereafter.

Conceding that the executor, on account of its incongruity, could not sue himself, nor his co-executor, and obtain a personal judgment, and that for this reason the running of the statute of limitations must be regarded as suspended, so far as it affects the charge on property subject to levy and sale under execution on such judgment, if it were in favor of another creditor; the suspension does not extend beyond the scope of the necessity. Ilis relation to the lands and.devisees as executor presented no legal obstacle to the institution of the statutory proceeding to sell the lands for the payment of the debts, which, there being no power in the will to sell for the purpose, he was expressly authorized to institute, and which it was his duty to institute if the personal property was insufficient. Such proceeding is a suit by the executor, to which the devisees are the adversary parties. In Steele v. Steele, supra, speaking of the power of the personal representative to divest or incumber the title to the realty, it is said : “Until he takes possession, sells under a power conferred by the will, or begins the exercise of some one of the statutory powers, under which he may obtain ’an order of sale, he has done nothing to which the heir or devisee is a party, or by which they can be concluded. He may revive a debt by partial payment, or promise; he may submit to a recovery of judgment. 'These are not the acts of the heir, for in these respects he is not their representative. They do not derive their title through him. All he may do or suffer, as affecting their landed estates, is res inter alios aeta; and when an effort is made by the personal representative, or another, to intercept the descent, and appropriate the lands to the payment of the alleged debts of the ancestor, the heirs or devisees for the first time become parties to the record; and they then come into court with all their rights of defense unimpaired. They bring with them the same rights to plead, call for proof, and make defense, as if no litigation had preceded.” The statute of limitations is not suspended against the devisees, because of the creditor being the executor, as to a proceeding to subject the lands to the payment of his debt. The realty of a decedent is not subject to sale under an execution on a judgment against the personal representative. A separate and distinct proceeding is requisite to sell the lands. As the personal representative can not extend the period of the statute by partial payment, or promise in writing, or suffering judgment — by no positive act — so as to charge the real assets; a fortiori, he can not keep alive and continue in force his debt, so as to charge the realty by laches, or negligence — by mere passiveness — in commencing the proper proceeding for the purpose. — Miller v. Irby, 63 Ala. 477. The complainant is not seeking to collect the debt out of the estate, the title to which is vested in his testator for the payment of debts, or out of which he is entitled to retain the amount; but he comes into a court of equity, like any other creditor, to collect the debt out of an estate to which his testator had no right or title as executor. When the executor has failed, or is unable to satisfy his debt out of the personal estate, and out of which he might have retained it, and then comes into a court of equity to subject the ' lands, which have passed to the devisees, no sufficient reason exists why they may not set up the defense of the statute of limitations, the same as if the claim was due to some person other than the executor. The fundamental difference is, that the title to the personal estate is in the executor or administrator for the payment of debts and distribution, and the title to the real estate is in the heir or devisee, and it can be subjected to the payment of debts only by some distinct mode authorized by law. In such cases, the devisees may successfully interpose any defense, which their testator could have interposed, if living, or which they could have interposed, if the bill had been brought by any other creditor, the executor having no greater or other rights.

It is further insisted, that the decree in the former suit of Blanton against Warren and others is conclusive on the rights of the devisees, and fixes their liability to complainant. The general rule, invoked by appellant, can not be questioned. A judgment or decree, rendered by a court of competent jurisdiction on the merits, is conclusive, either as a bar, or as matter of evidence, not only of the questions actually litigated, but of all questions within the issues, that could have been properly litigated and determined. “ The court requires the parties to that litigation to bring forward their whole case, and will not (except under special circumstances) permit the same parties to open the same subject of litigation in respect of matter which might have been brought forward, only because they have, from negligence, inadvertence, or even accident, omitted part of tlieir case.” — Henderson v. Henderson, 3 Hare, 100. Where the record is relied on, it must appear, not as matter of inference, but with reasonable certainty, that the questions involved in the subsequent snit were litigated and decided in the former suit, either by having been actually presented and litigated, though not necessarily within the issues, or so included within the issues, that their determination was necessary to the judgment or decree. — Strauss v. Meerteif, 64 Ala. 299.

The bill in the former suit was brought by Mrs. Blanton for a two-fold purpose: first, to enforce the trusts created by an assignment made in 1870 by Phillips and Robert C.'Fariss, for the benefit of the partnership creditors of Phillips & Fariss, and Phillips,-Fariss & Co., and of the separate creditors of Phillips; and as auxiliary thereto, to subject to the payment of her claim the undivided interest of William B. Fariss in the real estate which had passed to the devisees; and, second, to subject to the partnership debts the undivided interest in certain real estate, as partnership property, which Phillips had assigned for the payment of his individual debts. — Hatchett v. Blanton, 72 Ala. 423. William B. Fariss was a member of both firms. Bugbee, the devisees of William B. Fariss, Robert O. Fariss, and the other creditors provided for by the assignment. were made defendants, but neither of the executors of William B. Fariss was made a party in his representative capacity.

Conceding that the frame, purpose, and issues of the original bill were broad enough to require the devisees of Fariss to bring forward any and all defenses they might have to the claim of Mrs. Blanton, and that a decree in her favor subjecting to the partnership debts of Phillips, Fariss & Co. their entire interest in the real estate, which was their partnership property, is conclusive on the devisees; it is clear that, on the original bill and the mere answer of Bugbee, no decree could have been rendered in his favor subjecting the devised lands to his debt. One defendant can not set up an interest adverse to another, without becoming an actor. Bugbee could have obtained no active relief against the devisees of Fariss, except by a bill of his own. — Cullum v. Erwin, 4 Ala. 452. No issue in respect to the debt due Bugbee by Phillips & Fariss, as a subsisting demand against the estate of F'ariss, was presented by the original bill, which called on the devisees to plead or answer to the same. It is true there is an agreement in the record, that the answers of some of the defendants, including Bugbee, should be taken as cross-bills, and that they should be severally entitled to the same relief against the complainant and the defendants who signed the agreement, as upon cross-bills setting up their respective interests; but the devisees of Eariss were not parties to the agreement. ■ The amount due Bugbee by Phillips & Eariss was a fact, the ascertainment of which was necessary and preliminary to the proper distribution of the proceeds arising from the sale of the assigned property. Its ascertainment by the register under the decree of reference on the original bill, and the confirmation of his report by the court, can not be regarded as an adjudication that it is a valid subsisting claim against the estate of the deceased partner, but as the amount which Bugbee was entitled to be paid under the assignment, out of the proceeds of the assigned undivided'interest of Phillips in the partnership property.

If it were conceded, that the confirmation of the report by the register is a judicial determination of the amount due by Phillips and the estate of Eariss, it has not the force of a personal judgment against the devisees, and was not accompanied with an adjudication that the devised lands arc snbject to its payment: otherwise the present bill would have been unnecessary. If the question now involved were within the issues in the former suit, the rendition of a decree for the sale of the undivided interest of Phillips in the real estate, coupled with a failure to decree that the lands which passed to the devisees are subject to the payment of the debt, and directing their sale, may be regarded as an adjudication of their non-liability. If not within the issues, when a subsequent suit is brought to subject the lands, the devisees may protect themselves by interposing the defense of the bar of the statute of limitations. The record of a former judgment or decree is not conclusive, as evidence or bar, in respect to any matter which is to be inferred by argument from the record. — McCravey v. Remson, 19 Ala. 430.

Affirmed, and cause remanded, for such further proceedings as complainant may be advised.