Zollickoffer v. Seth

Alvey, J., delivered the opinion of the Court. The questions in this case arise upon a demurrer to the complainant’s bill, and by the demurrer the facts alleged are admitted to be true. If, therefore, the bill discloses a case to entitle the complainant to relief, the decree appealed from must be reversed, and the cause remanded for further proceedings in the Court below. The right of the complainant to recover from the defendants, or any of them, will depend upon the decision of the two following propositions : 1.

Whether, by reason of the death of McIIenry Grafton, and the full administration of his estate by his personal representative, his obligation upon the administra ³⁶⁸ tion bond of Alexander H. Seth and John M. Frazier, in which Coates and Grafton were co-sureties, ceased and became extinguished not only as against his personal representative, but also as against his legatees and distributees, who have received his personal estate upon final administration by the executor. 2. The complainant, as executor of Coates, having paid the legacies under Robert Seth’s will, after the administration and distribution of the personal estate of McHenry Grafton, Whether he, the complainant, is entitled to relief for contribution as against the legatees or distributees of the estate of Grafton, in respect to the distributions made to them under the will of their testator ? 1. The administration bond, upon which Coates and Grafton were co-sureties, was given in 1865. Alexander H. Seth, the surviving administrator, with the will annexed, of Robert Seth, is and has been for a long time past utterly insolvent; and John M. Frazier, the other administrator and principal in the bond, died in 1870, also insolvent, and before the estate of Robert Seth was fully administered.

Grafton, the co-surety with Coates, died ■in April, 1867, leaving considerable estate, and by his will disposed of his property to his mother and brothers and sisters, and appointed John- M. Frazier and Thomas L. Hall his executors. Coates died in September, 1871, leaving a will wherein the complainant was made executor. In October, 1870, Hall the surviving administrator of Grafton, settled in the Orphans’ Court his second and final account, showing that the personal estate of the testator had been fully administered, and thereupon passed over the property to the parties entitled to receive it under the will of the deceased. In October, 1873, Alexander H. Seth, as surviving administrator of Robert Seth, passed an account in the Orphans’ Court, showing certain balances due to the residuary legatees under the will of his testator ; and ³⁶⁹ very soon thereafter suits were instituted on the administration bond, at the instance and for the use of some of such legatees, against the complainant as executor of Coates, and also against Alexander H. Seth, the surviving administrator, and against the executrix of Frazier, and also against Hall, the surviving executor of Grafton.

In these suits recoveries were had as against the complainant, ; hut, as against Seth, the judgments were unavailing, because of his insolvent condition, and as against Frazier’s executrix there were no assets to he hound by judgment, and Hall, as the surviving executor of Grafton, successfully resisted recovery against him, on the ground that he had fully administered the estate of his testator before he was notified of the claims. Consequently, the complainant, as executor of Coates, was required and did pay, in 1874, not only the legacies for which judgments were recovered, but other legacies for which the bond was bound, amounting in the whole to the sum of $4765. Upon the facts, as detailed in the bill, the complainant prays that the legatees or distributees of the estate of Grafton may contribute their respective proportions to reimburse him, as the executor of Coates, to the extent of one-half of the amount which he has been required to pay to the legatees under the will of Robert Seth. This application is resisted upon the ground that the estate of Grafton is entirely and completely exonerated from any and all obligation created by the bond, by reason of the death of Grafton and the full administration of his estate before the existence of the claims was notified to his executor, and that, consequently, there is no right of contribution that can be maintained by the complainant as against the legatees or distributees of the co-surety’s estate.

That the executor of Grafton was exonerated, if he fully administered the estate and paid it over to the legatees or ³⁷⁰ distributees without due notice of the claims, and after giving the notice by advertisement as required by the statute, may readily be conceded. The Code, Article 98, sec. 109, .provides that, “In case all the assets have been paid away, delivered or distributed as herein directed, and a claim shall afterwards be exhibited, of which the administrator hath not notice by the exhibition of the claim legally authenticated, as herein required, he shall not be answerable for the same ; and if he be sued for any claim, and shall make it appear to the Court in which suit is brought that he hath so paid away, delivered or distributed, and the plaintiff cannot prove that the defendant had notice as aforesaid before such payment, delivery or distribution, the Court shall not proceed to give judgment (although the amount of the claim against the deceased may be ascertained,) until the plaintiff shall he able to show further assets coming into the defendant’s hands,” &c. And again, by section 119 of the same Article ot the Code, it is provided, that “ Whenever it shall appear by the first or other account of an executor or administrator, that all the claims against or debts of the decedent, which have been known by or notified to him, have been discharged or allowed for in his account, it shall be his duty to deliver up and distribute the surplus or residue as directed ; provided, that hi,s power and duty with respect to future assets shall not cease ; and after such delivery he shall not be liable for any debt afterwards notified to him ; provided, he shall have advertised as hereinbefore directed,” &c. The succeeding section of the same Article of the Code, prescribes the form of the notice to he given to the creditors of the deceased.

The law is very explicit, as it appears from the sections of the Code recited, in providing for the exoneration of the executor, upon his observing certain precautions; but it is to be noticed and borne in mind that it is the executor or administrator personally that is to .he ex ³⁷¹ onerated and discharged, and not the estate of the decedent. It is no where declared or intimated that there should be no remedy for a creditor who may have failed to authenticate and notify his claim to the executor, before final administration ; or that, if the creditor’s claim be not ascertained or provable before such final settlement and distribution, he should be without remedy, notwithstanding his debtor’s assets may be shewn to be abundant, simply because the executor or administrator may have delivered them over to legatees or distributees. It would be strange, indeed, if such were the provisions of the law. • What would be the predicament of an absent creditor, who might be totally ignorant of either the death of his debtor, or of the administration of his estate ? What would become of parties dependent for their protection and security upon official bonds, guardian bonds, trustees’ bonds, and the like, where the breach has not occurred, or, if occurred has not been ascertained at the time of the final settlement and distribution of a surety’s estate, if the position of the defendants in this case be sustained ?

Surely the law never contemplated the total discharge of the deceased surety’s obligation in all such cases. In this case, the amounts for which the bond was ultimately liable, were not ascertained until October, 1873 — about three years after the final settlement and distribution of Grafton’s estate. Until these amounts were ascertained, and actually paid by the complainant, as the representative of the co-surety Coates, there was no claim provable by him against the estate of Grafton. Uo laches therefore can be imputed to him in not exhibiting the claim for contribution before distribution of Grafton’s estate by his executor.

In England, as is well known, prior to Lord St. Leonard’s Act, 22 and 23 Vict., ch. 35, it was the established practice for administrators and executors to administer their estates under the orders and decrees of the Court of ³⁷² Chancery, and one great object in resorting to that jurisdiction by the executor or administrator was to obtain indemnity and protection against all future liabilities after final settlement. The creditors were required to come in and prove their claims under the decree, just as they are required to come in and prove their claims under the notice given by the executor or administrator by the order of the Orphans' Court, in our practice. Those failing to come in and prove their claims before final settlement and distribution of the estate, lost their remedy against the executor or administrator, but not as against the legatees or distributees. Tbe same exoneration of the executor or administrator afforded in England by the decree in chancery, is provided for with us by statute.

In the case of Waller vs. Barrett, 24 Beav., 413, an administration suit,. Lord Romilly, the Master of the Rolls, in speaking of the effect of the omission of the creditor to come in and prove his claim under the decree, said : “In the first place, I hold this to be,established by the authorities, that if breaches of covenant have been committed at the date of the decree, and tbe covenantee do not come in and prove under the decree, he will be barred of all remedy against the executors, and that'the executors will be perfectly safe. It is the case of an existing debt, which the creditor does not come in and prove under the decree, and the Court having administered the assets protects - the executors against all future claims. The creditor, however, is not left without his remedy, but that remedy is not against the executor.

That principle is so fully established in this Court, that it is unnecessary to cite many authorities on the subject; but this is what Lord Eldoít says in Gillespie vs. Alexander, (3 Russ., 136,) on the subject. ‘If a creditor does not come in till after the executor has paid away the residue, he is not without remedy, though he is barred the benefit of that decree. If he has a inind to sue the legatees to ³⁷³ bring back the fund he may do so; but he cannot affect the legatees except by suit, and he cannot affect the executor at all.’” The authorities are exceedingly numerous upon this subject, all maintaining the same general doctrine, several of which are referred to by the Master of the Rolls, in Waller vs. Barrett, and, among others, ho refers to the case of Knaichbull vs. Fearnhead, 3 Myl. & Cr., 122, in which Lord Cottenham said: “ Where an executor passes his accounts in this Court, he is discharged from further liability, and the creditor is left to his remedy against the legatees ; but if he pays away the residue without passing liis accounts in this Court, he does it at his own risk.” And to refer again to the case of Waller vs. Barrett, the Master of the Rolls, in another part of his opinion, made these observations: "I am at a loss to cónceive on what principle a debt which may arise hereafter, but which is not now existing, is to be treated on a footing different to an existing debt. The creditor, although advertised for, may be abroad at the time; he may be ignorant of the whole proceedings, and yet if he do not come in and claim, his only remedy in this Court is against the legatees.” And in the case of March vs. Russell, 3 Myl. & Cr., 31, referred to in argument, Lord Chancellor Cottexiiam treated the doctrine as one of the oldest and best established of the Court. He there said:.

" That a creditor may follow assets in the hands of the legatees to whom they