Chestertown Bank v. Perkins

Pattison, J., delivered the opinion of the Court. Clifton S. Jarrell of Kent County, Maryland, died on or about the 10th day of August, 1921, leaving a last will and testament in which he named as his executor his wife, Elizabeth E. S. Jarrell, who duly qualified and assumed the duties of the trust. On the 14th day of September, 1925, upon a bill filed by certain of the creditors of the decedent, in which it was alleged that the estate was insolvent and that it had suffered loss by the wrongful acts and mismanagement of the executrix, and would continue to suffer loss if she was not removed as executrix, Herbert E. Perkins was, by the court, appointed receiver to take over the estate of the decedent, with power and authority to institute proceedings in law and equity requisite to the just and equitable winding up of said estate under the direction of the court. And the executrix was by said order “directed to deliver ,unto the receiver all money, books, papers and effects of the said decedent’s estate, subject nevertheless to the further direction of the court.” Upon qualifying as receiver, he found that, on the 20th day of May, 1924, the executrix had filed her first and final administration account in the orphans’ court of said county, distributing to the several creditors of the estate a fraction over forty per cent, of their respective claims, and, on the 25th day of September, 1926, he filed a bill in the Circuit Court of Kent County, in equity, alleging that the executrix, under the honest belief that the estate was solvent, had on the 11th day of November, 1921, paid to the Chestertown Bank of Maryland, the appellant, first, the sum of $2,028.67 in full payment of a note for $2,000, signed by the testator, Elizabeth E. S. Jarrell, and Emma B. Snitcher, dated the ⁴⁵⁸ 4th day of February, 1921, and payable to the said bank six months after date, with interest; second, the sum of $929.70 in full payment of a note for $900, signed by the same parties, dated the 20th day of July, 1921, and payable to the order of Graham & Thomas Hardware Company six months after date, with interest, and of which the appellant in due course had become the holder; third, the sum of $302.05 in full payment of a note for $300, signed by the testator and his wife, dated the second day of July, 1921, and payable to the order of Graham & Thomas Hardware Company four months after date, with interest, and of which the appellant also became the holder in due course. • The amount paid on the notes was in the aggregate $1,822.08 more than the pro rata distributive share owing' thereon.

It is then alleged that the executrix “mistakenly and erroneously paid the aforesaid promissory notes under the honest belief that the said estate was solvent, and that the insolvency of said estate was not discovered nor had the said executrix any knowledge thereof until the first and final administration account had been filed, * * * on or about the 20th day of May, 1924.” The bill further alleged “that the payment in full of said promissory notes constituted a preference to which the defendants were not entitled,” but “were only entitled to the pro rata distributive share' on said promissory notes as general creditors, and that in equity and g'ood conscience the defendant should be decreed to repay to the complainant the overpayments thus made by said executrix.” Then follows the allegation that the plaintiff was “without any plain, adequate and complete remedy at law,” and, unless the relief sought is granted, the creditors of the estate “will be deprived of their just and equitable share therein.” The bill prays that the “defendant may be required to repay to the complainant the overpayment in excess of their pro rata distributive share, made by the executrix to said defendant erroneously and mistakenly in the honest belief that said estate was solvent, to wit, $1,822.08, with interest at six per cent, from the date of payment of said promissory notes.” ⁴⁵⁹ A demurrer filed to the bill was overruled, and from that action of the court this appeal was taken. It is contended by the appellant that the receiver could not sue for and recover such overpayments from the bank, or, if so, he could only recover in an action at law, not in a suit in equity. By the weight of authority an executor may sue and recover for overpayments made to a creditor under the honest belief that the estate was solvent. 24 C. J. 773; 11 R. C. L. 251; Woodruff v. H. B. Clafin Co., 198 N. Y. 470 ; Wolff v. Beaird, 123 Ill. 585 ; Mansfield v. Lynch, 59 Conn. 320 . The courts, in the cases above cited, as well as this court, in Buchanan v. Pue, 6 G. & J. 112 , have classified suits for the recovery of overpayments made to creditors with those suits brought to recover payments made to legatees under a mistaken belief that there were funds of the estate sufficient to pay them, and they have treated all such cases as being controlled by the same rules or principles of law.

No case in this state has been cited, nor have we found any, where a suit has been brought either by the executor or a receiver for an overpayment to a creditor, but we find a number of cases where suits have been brought by the executor to recover payments made to legatees, and, when the suit was brought in a court of law, this court has consistently held that it was improperly brought therein, and should have been instituted in a court of equity. In Turner, Admr. v. Egerton, 1 G. & J. 430 , the administrator in that