James M. Soverhill v. Hiram L. Suydam et al.

James M. Soverhill v. Hiram L. Suydam et al. (Argued November 17, 1874 ; decided November 24, 1874.) The provision of the Revised Statutes (2 R. S., 84, § 18), providing that where a debtor is appointed executor by his creditor, the debt shall be included in the credits and effects of the estate, and the executor, when it becomes due, shall be liable therefor as for so much money, etc., does . not discharge a lien upon real estate by which the debt is secured, or so ■ affect it as to give subsequent incumbrancers priority of lien: it merely adds to the original obligation a liability to account as executor for the debt; and until the executor, in the performance of his trust, has, paid the amount of the debt and thus discharged it, all liens by which it is secured remain in force. Appeal by Jesse P. Hatch and others, judgment creditors -of defendant Hiram L. Suydam, from an order of the General Term of the fourth judicial department, reversing so much of an order of Special Term as gave to said Hatch and others priority of claim to certain surplus moneys. (Reported below, 2 N. Y. S. C. [T. & C.], 460.) This was an action for the foreclosure of a mortgage made by said Hiram L. Suydam. Judgment of foreclosure and sale was perfected and a surplus was realized upon the sale of $9,609.39. Various claims were made to the surplus. As far as the jiarties interested in this appeal are concerned, the facts are these: On the 11th day of February, 1867, Ann Suydam perfected a judgment against said Hiram L. Suydam, in the Supreme Court, for $5,607.10. On the 18th February, 1867, the claimant Jesse P. Hatch and others, perfected judgment against said Suydam for $228.11, and on the 3d June, 1868,-the claimant William H., Christie perfected judgment against him for $114.99. Said Ann Suydam died March 29, 1867, leaving a last will and testament, in and by which she appointed said Hiram L. Suydam her executor. The will was duly admitted to probate, letters testamentary issued to the executor named, who accepted and entered upon his duties. The referee to whom the matter was referred, reported as his conclusions of law, that by the appointment and the acceptance thereof, the judgment first, described became extinguished and ceased to exist as a lien on the land of the executor, and that the other claimants were entitled to a priority in the distribution of the surplus. The beneficiaries under the will, and Suydam, as executor, excepted to this portion of the report. The exceptions were overruled by the Special Term, the report confirmed and order entered accordingly. H. R. Selden for the appellants. The appointment of H. L. Suydam as executor of his creditor, Ann Suydam, operated as an extinguishment of the debt as his private debt and converted it into assets, as cash in his hands as executor. (2 R. S., p. 84, §§ 13,14; Marvin v. Stone, 2 Cow., 807-810; Revisers’ notes, 5 N. Y. Stat. at L., 378, 379; 2 Wins. on Exrs. [3d Am. from 4th Lond. ed.], 1124-1128, part 3, bk. 3, chap. 2, § 9, sub. 2; 2 Bl. Com., 512; Gardner v. Miller, 19 J., R., 190; Soverhill v. Suydam, 2 N. Y. S. C., 464; Wankford v. Wankford, 1 Salk., 300; Cary v. Goodwyn, 3 Br., 110 ; Bac. Abr., Exrs. and Admrs., A. 10 ; Berry v. Usher, 11 Ves. [1st Am. ed.], 9, and note a; Winship v. Bass, 12 Mass., 201, 202; Williamson v. Brown, 15 N. Y., 359; Rolle’s Abr., 920, pl. 11; 11 Mass., 266; Freakley v. Fox, 9 B. & C. [17 E. C. L.], 130 ; Cheetham v. Ward, 1 P. & B., 630; Pyne v. Earle, 7 D. & E., 407; Marvin v. Stone, 2 Cow., 307-310. Angus McDonald for the respondents. Even before section 13, of chapter 6, title 3, part 2 of Eevised Statutes was enacted, under the rules of law then in force this judgment would remain a valid lien, although the judgment debtor had qualified as executor of the judgment creditor. (Marvin v. Stone, 2 Cow., 781; Gardiner v. Miller, 19 J. R., 188; 2 Wms. Exrs., 1128, 1182; 1 Bac. Abr., tit. “Exrs.,” etc., 379 a. 10; Bailey’s Case, 2 Mod., 315 ; 2 Story’s Eq. Jur., 624, § 1209 ; Tiff. on Trustees, 105.) The debt of an executor is. the same as that of any other person. (Smith v. Lawrence., 11 Paige, 207; Wurts v. Jenkins, 11 Barb., 546.) [MAJORITY — Rapallo, J.] Rapallo, J. At common law, as a general rule, if a creditor appointed his debtor executor of his will, it operated as a release of bequest of the debt, unless the debtor renounced the executorship. The statute (2 R. S., 84, § 13) was intended to and did in terms abolish that rule. In order to obviate the incongruity of requiring the executor to proceed against himself for the collection of the debt, the statute provides that it shall be included in the inventory among the credits and effects of the deceased, and that the executor shall be liable for the same as so much money in his hands at the time the debt becomes due, and shall apply and distribute the same in payment of debts and legacies, and among the next of kin, as part of the personal estate of the deceased. When an executor has, in the performance of his trust, paid out for these purposes the amount due frorú him to the estate, his debt and -all liens on his individual property by which the debt may have been secured will of course be discharged. But before this is done, it was not in our judgment the intention of the legislature, while preserving the debt, to discharge liens by which it might be secured. Subjecting the executor, as between him and those interested in the estate, to liability for his debt as for so much money in his hands, does not necessarily discharge a lien on real estate by which the debt may be secured. That provision merely superadds to his original obligation, a liability to account as executor for the amount of the debt, and was intended to facilitate the administration, and for the benefit of the estate, and nob for that of the executor or-of his individual creditors who may have subsequent liens upon his property. It certainly should not be so treated in a proceeding of an equitable nature, like the present. That the debt and lien may, under the very terms of the act, exist in their original form after the debtor has entered upon the duties of his office, is apparent. The statute declared that the debt shall not be deemed released, but that at the time it becomes due, the executor shall be liable as for so much money in his hands. If payable at a future time, this form of liability does not arise, but he remains liable on the original debt until maturity, and it could not be pretended that a lien therefor on his land would be affected in the mean time so as to allow subsequent incumbrancers to acquire a priority over it. But, according to the construction claimed, the lien would, on the debt maturing, be at once discharged, and subsequent incumbrancers let in, although the executor might not have applied any part of the debt to the purposes of his trust and might be insolvent. We do not think that any such result was intended, or that the provision for subjecting the executor to accountability as executor for debts due by him to the estate was intended to affect liens on land securing such debts, or to operate as between the estate and subsequent incumbrancers, or individual creditors of the executor. The order should be affirmed with costs payable out of the fund. All concur, except Folgeb, J., not sitting. Order affirmed.