Van Bibber v. Reese

McSherry, J., delivered the opinion of the Court. The hill in this case was filed hy the appellee against the appellant to procure the specific performance of a contract fox the sale of real estate located in the City of Baltimore. The facts, upon which the main and the important question here involved depends, are these : Edwin Reese, the husband of the appellee, died on November the twenty-second, 1887. By his last will and testament, which was admitted to probate hy the Orphans’ Court of Baltimore City shortly after his decease, he bequeathed to his father a legacy of $500, and made his widow his sole residuary devisee and legatee, and appointed her executrix.

Letters testamentary were ⁶¹⁰ issued, to her and she at once gave notice, under Art. 93, sec. 109, of the Code, to the creditors of her deceased husband’s estate, warning them to exhibit their claims, properly authenticated, on or before the thirty-first day of May, 1888. She subsequently made report to the Orphans’ Court that she had given this notice, and her report was ordered to be recorded pursuant to secs. 110-12 of Art. 93 of the Code. On the second of November, 1888, she settled an account in the Orphans’ Court. By this account it appears that she paid all the debts proved against the estate, and many others, and the legacy of $500, and the costs of administration, and that there remained in her hands a balance amounting to $7,704.10.

This balance belonged to her as residuary legatee. In addition to the personal estate included in this account, Mr. Reese owned in fee simple, at the time of his death, a house situated in the City of Baltimore. This house, which is the real estate involved in the pending litigation, the appellee acquired under the will of her husband. On the third of September, 1888, Mrs. Reese sold the house to the appellant, Dr. Van Bibber, for $25,000, and on the twentieth of the same month he took possession of it.

We make no reference to the circumstairces under which possession was taken, because they have no relation to the only question which we deem it necessary to consider and decide. Shortly after the memorandum of sale was signed, it was suggested that possibly Mr. Reese owed debts beyond the amount of the personal estate left by him, and that, therefore, his creditors might follow his real estate, and subject it to the payment of those debts, even though the appellant had purchased it from the devisee, and had paid her for it. in full. This suggestion, after much fruitless negotiation, ultimately led Dr. Yan Bibber to decline complying with the agreement of September the third; .and on January the third, 1889, Mrs. Reese filed ⁶¹¹ the bill now before us, for a specific performance of that contract. The relief prayed was granted by the Circuit Court of Baltimore City, and a decree was signed accordingly.

From that decree Hr. Van Bibber has appealed. Section 188 of Art. 16 of the Code gives rise to the main controversy in the case. That section, which is a codification of the Act. of 1185, ch. 12, sec. 5, and its various amendments, provides that “where any person dies, leaving any real estate in possession, remainder or reversion, and not leaving personal estate sufficient to pay his debts and costs of administration, the Court, on any suit instituted by any of his creditors, may decree that all the real estate of such person, or so much thereof as may be necessary, shall be sold to pay his debts, &c. ’ ’ By the common law, as is well known, the heir of a deceased debtor was only bound for the payment of the specialty debts of his ancestor, because of the express terms of the obligation; and then only in respect and to the extent of the real assets descended.

And if a debtor, instead of suffering his real estate to descend to his heirs devised it to any person; or if the heir aliened the land before an action was brought against him, the creditor was without a remedy. To obviate this injustice the Statute of 3 and 4 W. & M., ch. 14, was enacted, and the heir and devisee were made liable to the extent of the value of the land so acquired and then sold by them, though the land itself, in the hands of a bona fide purchaser from either of them, was declared to be entirely free from the claims of the decedent’s creditors. But the legislation of this State, as embodied in the section quoted from the Code, goes much further, and makes the land devised or descended liable to be sold for the payment of any demand due by the decedent, if the personal estate left by him should be insufficient to discharge all his debts and the costs of ⁶¹² administration. Obviously this liability is not absolute but only conditional.

It depends upon the insufficiency of personal assets. Now, the practical and important question before us is, how long does that liability continue ? Or, in other words, is there .any point of time after which the heir and devisee may sell the land to a. bona fide purchaser without the latter incurring the risk of having the real estate so jrarchased by him sold, afterwards, for the payment of the ancestor’s or the-testator’s debts ? If there he such a point of time, what is it ?

This precise question has never been decided by this Court. Whilst there is not in the Code, as in the Statute of 3 and 4 W. & M., any express saving in favor of a bona fide purchaser, there must, of necessity, be some point of time when land descended or devised may he said to be free from this conditional liability. To hold otherwise would, substantially, convert the section quoted into a prohibition upon the alienation of such land — an effect manifestly never contemplated, or intended by the framers , of that legislation. Such property would he placed extra commercium almost indefinitely; because as long as there remained a possibility that debts might, appear, there would remain a like possibility that ‘the property would he made liable for their payment, no matter in whom the title might chance to he.

It would not he difficult to suggest numerous instances* where liability might arise on a guardian’s or a trustee’s bond many years after its date;- or on other obligations which might mature at very distant periods. These possible-claims would be sufficient to prevent conveyances for years and years, in palpable contravention of the general policy of the law, which disfavors unlimited restraints on alienations. It may fairly be concluded, then, that, there is some point of time after which a bona fide purchaser may safely purchase such devised or descended real estate. Now, when can he do so? ⁶¹³ We have said that the land of a decedent is, under the express language of the Code, only contingently or conditionally liable to be sold for the payment of his debts.

His personal estate is the primary fund to which resort must be had. If that be sufficient, a Court of ■equity has no jurisdiction to decree a sale of his real estate for the payment of his debts. It is, consequently, only when it appears to the Court that the personal assets are not sufficient, that its jurisdiction can be exercised. The law has created a different tribunal for the administration of the personal estate of a decedent.

It has pointed out with exactness and particularity what course is to be pursued, from the grant of letters testamentary ■or of administration, down to the final settlement of the estate in the Orphans’ Court. By sec. 109 of Arl. 93, creditors are to be notified to file their claims within six months. This enables the executor or administrator to ascertain the extent of the indebtedness. Under other sections he is required, within limited periods, to return ■and file in the Orphans’ Court inventories of the whole personal estate, to the end that its value may be known, ;and that it may be applied, if necessary, to the payment of debts.

Under sec. 1, after the notice provided for in ■sec. 109 has been given, the executor or administrator may, within twelve months after the date of his letters, make a settlement of the personal estate; and the manner of his proceeding is carefully and minutely defined in the various sections of that Article. He is then required to make oath or affirmation to his account, that its verity may receive the strongest possible sanction. When all this has been done, in exact conformity with the law, the fact as to whether the personal assets are or are not sufficient to pay the known debts of the decedent and the costs of administration, is clearly and formally, though, of course, not conclusively, established iii a tribunal having jurisdiction over the administra ⁶¹⁴ tion of that personal estate. If the final account, thus settled pursuant to all the provisions, safeguards and requirements of our testamentary system, shows upon its face that the personal estate is sufficient to pay all debts and the costs of administration, the sole condition upon which a Court of equity may decree the sale of the decedent’s real estate, for the payment of debts, does not then exist.

The person entitled to that real estate, either by devise or descent, may undoubtedly then sell and convey it; and the person who then purchases it in good faith from the devisee or heir, without actual knowledge of outstanding and unsettled debts of the decedent, would most assuredly be protected as a bona fide purchaser against any and all creditors of the decedent subsequently presenting or preferring claims. This, result is a necessary one, and we cannot escape it without adopting the other alternative, viz., that, notwithstanding the personal estate is shown to be amply sufficient, the real estate will still continue subject indefinitely, to be called on for the payment of merely possible obligations. We must also treat the settlement in the Orphans’ Court as an'idle and meaningless form, import-, ing and signifying literally nothing. That settlement, it is true, is not conclusive but only prima facie, and .may be stricken down and avoided when appropriate proceedings are taken for that purpose, and properly supported by evidence.

But, whilst it stands unimpeached and unquestioned, it imports verity, and furnishes notice that the decedent’s real estate is not liable to be sold to satisfy the demands of his creditors. We hold, therefore, when the records of the Orphans’ Court, made in conformity with the law, show a final settlement of the personal estate, and when the settlement indicates that all proved debts and the costs of administration have been paid in full, and that there is still a balance in the hands of the