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W. R. (William Randolph) Hill.

Reports of cases in chancery argued and determined in the Court of Appeals of South Carolina online

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the demurrer should have been sustained for the reasons therein stated.

Dunkin, for the appellants, contended that the decree in New York is
against the executrix personally, who became liable by admitting assets
to be in her hands, and the plaintiffs have ample remedy by enforcing



202 SOUTH CAROLINA EQUITY REPORTS. [*259

that decree against her estate. That the property here never was under
her control, and that the defendants, Valk and wife, are in no wise bound
by the New York decree to which they were not parties. That their
property cannot be made liable until the executrix has been pursued to
iTisolvency — and that there is no party now before the Court representing
Ehrich's estate ; for the other defendants, executors in New York, are not
recognized as such here. Cited 6 John. Ch. Rep. 373; 8 Cranch, 9; 8
Wheat. 646, 667, 671; 3 John. Ch. Rep. 58; 1 M'C. Ch. 417.

Petigru, contra.

Harper, J. The causes of demurrer set forth are, that no executor
or administrator of John M. Ehrich is made a party to the bill ; that the
ex( cutrix, Peggy Africana Ehrich, admitted assets of the testator, and
plaintiffs do not show that they have pursued all proper means to obtain
payment of their debt from those personal assets. To so much of the
l>ill as sets forth the decree in New York, the demurrer states that the
defendants were neither parties nor privies to that decree.

By the common law, a bond creditor might bring his action against the
heir at law in respect of real assets descended, and neither was bound to
join nor could join the executor in the action.

And it was immaterial whether the executor had, or had not assets, the
heir could not ])lead that the executor had assets Cora. Dig Tit. Pleader
E. 2, But lands were not liable in the hands of a devisee. By the Stat.
*2601 3 & 4 W. & M. c. 14, (P. L ) 87, called *"the statute of fraudu-
-' lent devises," an action was allowed against the heir and devisee
jointly, on bonds and specialties. This action was of course subject to
the same rules as that against the heir alone. The executor was not to
be joined, and it was immaterial whether the executor had assets. Then
by the Stat. 5 Geo. 2, c. 7, lands were made liable for the satisfaction of
all debts, by simple contract as well as by specialty, "in like manner as
real estates are by the law of England liable to the satisfaction of debts
due by bond or other specialty." If this were an action at law then,
against the heir and devisee, it would be no objection that the executrix
was not joined, or that she had assets, or that no remedy had been pur-
sued against her; but the heir or devisee had au equity, if there were
assets sufficient to satisfy the debt in the hands of the executor, to be
reimbursed out of those assets. When therefore it was necessary for the
creditor to come into Equity, (and suits against the heir or devisee seera
to have been more common in equity than at law,) it was requisite that
the executor should be made a party; not on the principle contended for
in this case, that the executor is the only legal representative of the tes-
tator and the only proper person to defend an action which shall affect
his estate, but on the familiar equity rule of preventing circuity of action
by making all persons interested parties, so that complete justice may be
done at once. Now the Court of Equity in all cases delights to do com-
plete justice, and not by halves, as first to decree the heir to perform this
covenant, and then to put the heir upon another bill against the executor
to reimburse himself out of the personal assets, which, for aught that
appears to the contrary, may be more than sufficient to answer the cove-
nant ; and where the executor and heir are both brought before the Court,



*260] CHARLESTON, MARCH, 1835. 203

complete justice may be clone by decreeing the executor to perform tliis
covenant so far as the personal assets will extend, the rest to he made
good by the heir out of the real assets." Knight v. Knight, 3 P. Wms,
333. The question in that case was, whether the executor could be made
a party. If it were shown by the bill, however, that there were no assets
in the hands of the executor, or that he had been called to account, and
the remedy against him was exhausted, the reason would cease, and it
would be unnecessary to make him a party.

If there were an executor or administrator in this State having assets,
it would be necessary to make him a party, not on the *ground r^^.jn-i
that he is the only legal representative to defend the estate, but '-
on the equity principle mentioned. The bill, however, shows that there
is no executor or administrator, and no personal assets in the State : of
course no such party could be made. It shows that all the personal assets
went into the hands of the executrix, Peggy Africana Ehrich, and her
executors are made parties. If there had never been any proceeding what-
ever against the executrix or her representatives, here are all the parties
that could be made. There is no analogy to our decided cases that have
been relied on, as in Trescott v. Trescott, 1 M'C. Ch. 417, that before a
legacy or distributive share can be pursued by creditors in the hands of
the legatee or distributee, the executor must be sued to insolvency ; such
creditors never had any direct right of action against the legatee or dis-
tributee, and their entire equity as against them is founded on the execu-
tor's insolvency. Notwithstanding our decisions that lands in the hands
of the heir may be sold by an execution upon a judgment against the
executor or administrator, (decisions which, however much we may regret
them, have yet obtained too long, and too many rights have been vested
under them to allow us to interfere with them,) yet I suppose an action
at law might be sustained against the heir alone. There is nothing iu
these decisions to forbid such an action. In such action, the executor
neither would nor could be joined, and it would be immaterial whether
there were an executor or administrator in the State or not. Coming
into equity, the creditor must conform to the rules of equity and make all
necessary parties. This, it appears to me, has been done. It would be
mere mockery that a formal administration should be taken out here
where there are no assets, in order that such formal administrator might
be made a party.

I think the ground of the demurrer is just to that part of the ))ill whieli
states the decree obtained in New York, and prays the enforcement of it.
The heir is not bound by a judgment against the executor or adminis-
trator, and defendants were not parties or privies to that decree. When
the heir is sued he is to defend, and the cause of action must be estab-
lished against him.

The bill however states sufficiently the original cause of action, and in
addition to the prayer for the enforcement of the decree, contains a prayer
for general relief. When a proper case is made, though the specilic
relief prayed for cannot be granted, yet, if there be a prayer for general
relief, the proper relief will be afforded.

*When a bill is against the heir and executor, the decree is, that r*.>/>c>
the executor account for the i)ersonal assets, and that they shall L ^ -^
be applied so far as they will go, and that the heir shall make good the



204 SOUTH CAROLINA EQUITY REPORTS. [*262

deficiency. The executors of the executrix are out of the jurisdiction,
and a decree aG:ainst them would probably be ineffectual. I do not say
that the plaintiffs may not be required to institute further proceedings in
New York, calling those executors to account, before a decree will be
made in their favor against the defendants ; but this has nothing to do
with the questions made on the demurrer, and it would be premature to
consider that matter now.

By the Stat. 3 & 4 W. & M. the action is allowed against the heir and
devisee jointly. The heir at law of John M. Ehrich is not a party to
this bill, and a question may arise whether the bill can be sustained
without making him a party. This, however, is not a ground of de-
murrer, nor is the question made. The demurrer is sustained to that
part of the bill which states the decree obtained in New York, and prays
the enforcement of it. In other words it is overruled, and the Chan-
cellor's decree affirmed.

Johnson, J., and O'Neall, J., concurred.



Bank of South Carolina vs. James Adger.

A surety to a custom house bond having paid it, is not entitled, under the Acts of
Congress of '97 and '99, to be subrogated to the rights of the United States as
against liis co-surety, so as to give his demand for contribution a preference over
other creditors; nor on the general principles of equity can he claim to stand in
the place of the United States as against the co-surety. [*2G6]

Joint judgment against principal and sureties paid by one of the sureties, will not
be set up for contribution against the co-surety. [*267]

On the 12th of September, 1825, Samuel H. Lothrop made a general
assignment to William Price, of all his estate, for the payment of certain
preferred creditors in the first place, and the surplus to his other creditors.
William Price died intestate, and administration of his estate was com-
mitted to the defendant, James Adger. This bill was filed for an account
of the administration of his estate, and an order was made directing Mr.
Gray, the Commissioner, to take an account of the estate of William
Price, and also of the estate of Samuel H. Lothrop, assigned to hira ;
and of the assets that have come to the hands of the defendant; and also
*263l ^^ inquire and take an account of the debts due by *the said
-^ William Price, at the time of his death, in his own right, and as
assignee. The accounts have been taken, and it is found that Price is
insolvent, but has left assets to pay his bond creditors ; and that he is
indebted to the assigned estate of Lothrop, in a large sum on bond.
The preferred creditors of Lothrop claim to be paid according to his
assignment, but a claim is interposed by John C. Miller and James A.
Miller, assignees of Duke Goodman, on the following grounds : —

Duke Goodman and Samuel H. Lothrop were the sureties of Joseph
T. Weyman, on two custom house bonds; one bond dated 2d May, 1825,
payable 2d February, 1826, conditioned for $1332 15, upon which bond
judgment was entered np against Weyman, Lothrop, and Goodman on
22d March, 1826; and another bond dated 29th April, 1825, payable
29lh April, 1826, conditioned for $4534 50, on which last mentioned



*263J CHARLESTON, MARCH, 1835. 205

bond jnrlgment was had against the principal and botli tlic surelios, on
the 6th July, 1826.

In September, 1826, the assignees of Goodman paid the amount of
these bonds to the District Attorney, who assigned to them the judgments
against Weyman, the principal ; and they now claim contribution from
the assets of Lothrop for one moiety. The assets of Weyman are ex-
hausted. On this state of facts, His Honor, Chancellor Joliiistou,
decreed the funds of Lothrop to be paid over to his preferred creditors,
and the assignees of Groodman appeal : —

1. Because the estates of Lothrop and Goodman were equally liouiid
to pay these bonds ; and the United States had a priority to all other
creditors. And the accidental circumstance that payment had been
made by Goodman's assignees before the funds of Lothrop were got
in, should not be allowed to favor one set of creditors, or disappoint
another.

2. Because Goodman's assignees, by paying off the debts, are entitled
to be substituted to the I'ights of the United States, and to set uji the
judgments against Lothrop for the moiety which his estate ought to have
paid.

Petigy-u, for the appellants. LTpon the general principle of marshal-
ing assets, the assignees of Goodman have a right to payment of a moiety
of the debts paid for Weyman.



*By the 5th section of the Act of Congress of 1707, (1 Story's



[*264



Laws U. S. 465,) when any person indebted to the United States
becomes insolvent, or makes a voluntary assignment to pay his debts, the
United States shall have priority in the payment of debts : and the 65th
section of the Act of Congress of 1799 (1 Story's Laws U. S. 630)
declares, that on all bonds for duties, when the estate in the hands of
executors, administrators or assignees, shall be insufficient to pay all the
debts, the debt due the United States shall be first satisfied ; and if the
principal debtor be insolvent, and the sureties pay the bond, " then such
surety or sureties shall have and enjoy the like priority and preference."
By the insolvency and consequent assignment of Lothrop, the United
States, under the Acts of Congress, were entitled to priority over all his
other creditors — a right existing in respect to all the obligors in the
nature of a joint mortgage. By the payment of the judgments, the rights
of Goodman could not be affected — it was what the law would have com-
pelled. Nor can the United States' Attorney, by coercing ]niyment
from Goodman's assets, defeat any of his rights. It has been shown that
the United States had priority of all Lothrop's creditors. On principles
of general equity, Goodman, the surety, having paid the debt, is entitled
to be remitted to all the rights of the creditor, and to be paid from Loth-
rop's estate, as if the United States were now claiming. — Aldrich v.
Cooper, 8 Ves. 382. As to the right of setting up the judgments,
Kobinson v. Wilson, 1 Mad. Rep. 567. Lord Eldon, in Copps v.
Middleton, overruled this last case, allowing, however, that if there
had been a mortgage as a collateral security, the principal would have
been right; and in this case, the judgment may be set upon the same
principle.

Gilchrist and Kiiig, contra. It is not denied that Goodman's assignees



206 SOUTH CAROLINA EQUITY REPORTS. [*264

are entitled to contribution — the rank which they are to occupy is the
tiuestion. Against the principal debtor they may I'ank as the United
States, but as against the co-surety, neither under the Acts of Congress,
nor by the general principles of Equity, can they claim other than as a
simple contract creditor. The preference under the Act of Congress
applies only between the surety and his principal — it has no application
between co-sureties, and it has been so ruled. Pollock v. Pratt & Haney,
2 Wash. C. C. Rep. 490. Nor will the equity doctrine of subroga-
*0APii tion* apply. Noonan v. Gray, 1 Bail. 437 ; Stat. Eq. Rep. 91 ;
^^^^ Coppsu Middleton, 1 T. & Russ. 224; 10 John. Rep. 549.
Aldrich v. Cooper does not apply to this case. This is not a case of a
creditor having two funds from which to be paid, and where he might be
compelled to take one so as not to prejudice other creditors ; this is a
claim to priority.

O'Neall, J. By the 5th section of the Act of Congress of 1197, (1
Story Laws of the U. States, 465,) it is provided, " that where any
revenue ofificei*, or other person, hereafter becoming indebted to the
United States, by bond or otherwise, shall become insolvent, or where
the estate of any deceased debtor, in the hands of executors or adminis-
trators, shall be insufficient to pay all the debts due from the deceased,
the debt due to the United States shall be first satisfied ; and the priority
hereby established shall be deemed to extend, as well to cases in which a
debtor not leaving sufficient property to pay all his debts, shall make a
voluntary assignment thereof, or in which the estate and effects of an
absconding, concealed or absent debtor shall be attached by process of
law, as to cases in which an act of legal bankruptcy shall be committed."

The 65th section of the Act of 1799, (1 Story's Law of the U. S. 630,)
after directing a suit to be brought on any bond for duties which may
not be paid on the day on which it becomes due, directs that " in all
cases of insolvency, or where any estate in the hands of executors, admin-
istrators or assignees, shall be insufficient to pay all the debts due from
the deceased, the debt or debts due to the United States on any such
bond or bonds shall be first satisfied. " The proviso declares, that if the
principal be insolvent, or if he be dead, and his estate be insufficient to
pay all his debts, and the surety or his representatives shall pay the
money due on such bonds to the United States, then that the said surety
or his representatives " shall have and enjoy the title, advantage, priority
or preference for the recovery and receipt of the said moneys out of the
estate and effects of such insolvent or deceased jjrincipal, as are reserved
and secured to the United States.

Under these two acts, the United States were entitled to be preferred
and first satisfied out of the estates and effects of Weyman. Goodman
and Lothrop, under the last act, the security paying the debt, would be
entitled to be preferred and first satisfied out of the estate and eSects of
the insolvent principal.

*266l ^^^^^ it is perfectly clear that it does not give to him the prefer-
ence of the United States to be paid out of the estate of his co-
security. The case of Pollock v. Pratt & Haney, 2 Wash. Cir. Court
Rep. 490, is a direct authority upon the point. Judge Washington
said, " In regard to the advantages reserved to the surety in the custom-



*266] CHARLESTON, MARCH, 1835. 207

house bond, the provisions are confined to the estate and effects of his
insolvent or deceased principal.''^ In that case the claim was by the
surety against the assignees of one of the assignees of an insolvent ])rin-
cipal ill a custom-house bond, who had received a large sum of his
assignor's estate, mingled it with his own, and then became insolvent and
assigned to the defendants. Under such circumstances. Judge Wash-
ington ruled that the plaintiff was not entitled to be preferred, and used
the words which I have quoted. If in such a case the plaintiff was not
entitled to be substituted in the place of the United States, it would
seem to follow pretty clearly, that the claim of the co-surety, Goodman's
assignees, to be substituted iu the place of the United States, against the
administrator of William Price, the assignee of Lothrop, the co-surety,
cannot be allowed to prevail. For here as well as there, it may be said
that the provisions of the act of Congress do not cover the case made.

But it is said, concede this to be true, and still the assignees of Good-
man, on the general principles of Equity, have the right to stand in the
place of the United States, and tne case of Aldrich v. Cooper, 8 Ves.
381, was cited and relied upon in support of that position ; but I think
it does not sustain it. This is not a case of a party having two funds ;
and therefore the equity rule laid down in Aldrich v. Cooper, that in
such a case a party shall not by his election disappoint the party having
only one fund, cannot apply. By the custom-house bond, the United
States had the right to expect ])ayment from any one of the three obli-
gors, Weyman, Goodman or Lothrop. But they could not be forced by
Goodman to accept his part of the bond, and look to Lothrop for the
balance. It was an entire debt due by all or either of the obligors.
Payment of it by one of the co-sureties entitled him to contribution as
for so much money paid, laid out and expended ; and the debt thus due
to him by his co-surety, is a mere simple contract. This was ruled by
Lord Chancellor Eldon, in Copps (;. Middleton, 1 T. & Buss. 224. _ In
that case, the Lord Chancellor stated the conclusion, which is, I think,
directly applicable to this He said, " there has been a case cited, where,
upon the ^general ground that a surety is entitled to the benefit of r^QgY
all securities which the creditor has against the principal, it seems '-
to have been thought that the surety was entitled to be, as it were, a bond
creditor by virtue of the bond. I take it to be exceedingly clear, if at
the time a bond is given a mortgage is also made for securing the debt,
that the surety, if he pays the bond, has a right to stand in the place of
the mortgagee, and as the mortgagor cannot get back his estate again
without a conveyance, that security remains a valid and effectual security,
notwithstanding the bond debt is paid; \mt if there is nothing but the
bond, my motion is, that as the law says that the bond is discharged by
the j^ayment of what was due upon it, the bond is gone and cannot
be set up." The bond to the United States was paid by Godman's
assignees; in the language of Lord Eldon, "it is gone and cannot be set
up." If the bond is gone, it follows that the preference given to the
United States to be first paid and satisfied out of the estates ami effects
of all the obligors is also gone. The surety has none of the rights of
preference of the United States, except as against the ]n'incipal. The
same reasoning applies to the judgment which was a joint debt against
Weyman, Lothrop and Goodman, Satisfaction of it by any one of the



208 SOUTH CAROLINA EQUITY REPORTS. [*267

parties, was a satisfaction of it against tbem all ; the law, without any
further act to be done, ended its legal operation. If there had been
separate judgments against each of the obligors, then it might have been
that the satisfaction of one of the judgments against one of the sureties
liy himself, would not have been necessarily a satisfaction of all the
other judgments, unless it was so intended by the surety making the
payment.

It is ordered and decreed, that Chancellor Johnston's decree be
affirmed, (a)

JoHNSOxX, J., concurred.



Francis Thackum and "Wife, and others, v. Joseph Longwortii.

How far the Court will interfere to prevent the negotiation by an executor or ad-
ministrator, of notes or bonds taken by him on sale of the deceased's effects.
[*274]

An executor being indebted to the defendant the executor of another estate, by
bond secured by mortgage, while solvent, transferred to the defendant in payment
of his own debt, bonds taken on a sale of his testator's estate, and defendant gave
up his bond and mortgage, and paid over his money to the legatees. The ex-
ecutor became insolvent, and on a bill by the legatees of his testator, it was held
that the defendant was not liable for the money received by him on the bonds —
the equities being equal the law must prevail. [*275]

The following brief of the appellant's counsel is the only statement of
the case which the reporter can present : —

The bill states that Thomas Milliken died in the year 1719, having
jcopo-i *previously executed his will, in which he appointed John M'Nish
-' his executor, and by which, after the death or marriage of his
widow, he bequeathed all his estate to the plaintiffs — that N'Nish quali-
fied, and in 1819 sold all the estate of his testator on credit, and took
bonds for the purchase money — among others, one of James Cole for
$900, one of Pearson Hardie for $850, and one of Isaac Hardie for $600.
That the plaintiffs, being young, did not for a long time look after their
rights; and in the mean time the executor, being deeply involved, wasted
the estate and became insolvent. That he entered into a negotiation
with the defendant, Joseph Longworth, who well knew his situation, for
the purchase of a plantation called Stock Farm ; and that Longworth,
knowing the said bonds to be of the assets of the estate of Milliken, sold
plantation to M'Nish, and took the bonds in payment and applied them
to his own use — that M'Nish is totally insolvent, and the plaintifi's have
not received one cent of their father's estate. The bill prays that Joseph
Longworth may account to them for the money so received.

The answer of Joseph Longworth states, that as executor of his
brother, Archibald Longworth, he sold to John M'Nish, in the year
1818, the plantation mentioned in the bill, for $7500, and received in
cash one-third of the purchase money, and took the bonds of M'Nish,
payable in 1819 and 1820, with a mortgage of the premises, for the
residue. That M'Nish afterwards paid $2000, and he considered the

(a) See Perkins v. Kershaw, 1 Hill's Ch. o51.



*268] CHARLESTON, MARCH, 1835. 209

debt amply secured by the raortgap;e. That in 1820, M'Xish offered the
defendant the bonds of Cole and Hardie, in payment of his own, which
he refused. That M'Nisli then requested him to collect them fur him,
which he agreed to do, and M'Xish delivered them to him endorsed in
blank, and the defendant gave him a receipt for them, stating that he,
had received them for collection. That he called on the parties and



Online LibraryW. R. (William Randolph) HillReports of cases in chancery argued and determined in the Court of Appeals of South Carolina → online text (page 78 of 124)