W. & H. Lenoir, vs. Richard Winn, H. Hunter, Administrators of Thomas Baker & Co. securities for each other in the administration

Camden. Heard by Chancellor Jates, and afterwards by Chancellor Desaussure. case Ni W. & H. Lenoir, vs. Richard Winn, H. Hunter, Administrators of Thomas Baker & Co. securities for each other in the administration. JUNE, 1809 An executor or administrator omitting to plead, but allowing judgment by default, this is not such an unqualified admission of assets, as (o make him irrevocably chargeable. This court will give him an opportunity of shewing' the fact, and will decide accordingly. The state taking a particular security, a mortgage, does not lose its general priority in cases to which it is entitled by law. An administrator paying debts out of their legal order or proportion, is liable to creditors : and he is not allowed to retain for debts due to himself more than his proportion. Executors and administrators are not liable for each other’s acts, unless there be connivance or gross negligence — executors and administrators are bound to pay interest on monies of the estate received and not applied in due time to the payment of the debts of the estate. Administrator having neg! ected to pa}' a judgment debt due by bis. intestate, and having paid inferior debts, the surety ui the bond having been obliged to pay it oíb he is entitled to be paid by the administrator out of his own estate, as a judgment creditor ; and in such case,'the surety is not chargeable with laches, because he did not insist on the principal being urged. The court of appeals will grant leave to complainant to amend hi* bill, in order to let in the whole merits of the case: and will send the case down to be re-examined. This case was argued, and the following decree was made thereon, by judge James : This case comes before the court on exceptions to the commissioner’s report, made both by the complainants and the defendant, Richard Winn, and as the report and exceptions are very brief, for a right understanding of them, it will be necessary to make a short statement op the case: The bill sets forth that in August 1783, Thomas Lenoir, the father of complainants, became security to a bond, in which Thomas Baker was principal, wihch was made to John C. Smith, and conditioned for 563k 6s. 6d. That in June, 1789, Thomas Baker died, and the defendants, Richard Winn and Henry Hunter, administered upon his estate j that in January, 1790, they made a sale of his personal property to the amount of 759.1. 3s. and became themselves the principal purchasers ; that afterwards John C. Smith, sued the said administrators upon the bond, and obtained judgment and sued out his execution ; that several tracts of laud were sold linden said execution to the amount of 353Í. ; That John C. Smith assigned the said bond to W. and T. Somersail, and that a judgment has been obtained against the executors of Thomas Lenoir, deceased, upon the same, and execution pressed against his estate. Bill further states that Richard Winn and Henry Hunter have rendered no account of their administration of the estate of Thomas Baker, and have wasted the same, and that Henry Hunter has removed out of the state to the river Mississippi. Complainants pray that the said Richard Winn and Henry Hunter, may he compelled to make a discovery of - what sums belonging to theu estate of Thomas Baker came into their hands to be administered, and that, they inay be directed to pay to them the balance, if any remain, out of the estate of the said Thomas Baker, as far as it will go, and the residue out of their own estate. The defendant, Richard Winn, states in his answer that he believes complainant’s father did enter into the. said bond to John C. Smith, as security, and Thomas Bilker as principal. He admits that he and Henry Hunt-cr administered upon the estate of Thomas Baker, and sold property to the amount of 75Zl. 9s. and that he collected two other debts to the amount of 54Z. 19s. 9d. making in the whole 8071. 8s. 9(1. In his exhibit A. he makes a statement of the bonds and notes taken for the property of Thomas Baker, sold by the administrators, and states that he placed those papers in the hands of an attorney, Mr. Stark, to be sued, but he believes no part of them have been recovered by him. That the bond of Minor and John Winn, conditioned for 100Z. 11s. has been paid him by discount, with Minor Winn as the attorney of Man, Brown and Foltz. He admits that he purchased atthe sale of his intestate’s estate to the amount of 242Z. 2s. but that Thomas Baker was indebted on a bond to Waring^ Winn and Hampton, conditioned for 132Z. 16s. which bond was the sole property of defendant, and that defendant ought to be allowed the whole discount made with Minor Winn on the bond of Man, Brown and Foltz, and be also allowed to retain for the whole of his own debt.. That Thomas Baker was indebted to the loan office by bond and mortgage in the penalty of 500Í. 5 that the lands mortgaged sold for only $745, and defendant states that he is advised, that debts due to private persons, must be postponed to this debt due to the state, and that he is entitled to retain money in his hands to meet the said debt; that the bond of Roach to John C. Smith has been paid ; that Henry Hunter purchased at the sale of Isis intestate’s estate to the amount of 179,1. 14s. and that he has absconded from the state, and that defendant ought not to be made liable for this debt, as not having it in his power to prevent his purchasing at the sale, or to stop him from going away. Defendant admits that John C. Smith sued the administrators upon the said bond of Thomas Baker, and proceeded to execution as stated in the hill, but submits that he has nothing in his hands to satisfy the said debt. Ho admits that he hath not made regular returns to the ordinary, but that lie hath now filed a full account, with his answer, by which it appears he hath not wasted the estate of Thomas Baker, and therefore, that he ought not to be liable for tho deficiencies of the same out of his own estate. Upon the statement of accounts in this case, the commissioner lias charged the defendant with 8071. 8s. 9d. amount of sales of the estate of Thomas Baker, and monies collected by the defendant, and has given him credit for tho full amount of the debt and interest on the debt to tho loan office, and. for the average only on the bond of Thomas Baker to Waring, Winn and Hampton, and to Man, Brown and Foltz. Upon the balance lie has charged defendant with interest from Sept. 1801 to June 1809. To this report the complainants and defendant have filed the following exceptions, which the court will lake up in tho order that they occur: First exception of complainants. — £C Because the commissioner lias not allowed a priority to complainant’s demand.” It appears that this exception is intended to bo extended no further than to a claim of priority against the debts of private persons, for in the third exception the claim of priority as it regards the state is particularly mentioned; and hero it does not appear that the complainants have stated any legal ground in their bill by v, inch they are entitled toa priority, and the court will not travel out of it to search for one. It was indeed staled in argument, that John C. Smith had obtained a judgment on the bond of Thomas Baker in his lifetime, and that he afterwards renewed it by sci. fa. against the administrators,- hut if complainants wished to have tho advantage of this judgment, it ought to have been stated in their bill, and an opportunity afforded the defendant to have pleaded or answered to it; without this, there is no knowing what the answer would have been. As tho mat - ter now stands, it appears that judgment was obtained upon a bond, against the administrators of an intestate, who owed other bonds $ the latter bonds are, therefore, upon an equal footing with the former one, and this exception must be overruled. Second exception.' — “ Because the admission in the answer that judgment was had against the defendant, is an admission of assets to the amount of that judgment.’* The judgment in this case appears to have been obtained in Charleston, against defendant's residing in Fair-field district, after a return of two nihils upon a sci. fa.; and the defendants, from the nature of the case, could have no notice of it till the execution was sued out and levied upon the property of the deceased. "Whether such a proceeding be regular or not, under the laws of this state, the court lias groat doubt; but it will hot hesitate to say, that it would be inequitable to compel a defendant to pay out of his own pocket, for default of pleading in such a case. However, after looking into the books of practice, the bettor opinion seems to be, “that in case an action is brought upon a simple contract, or the like, and there be debts due to others upon bonds and specialties unsatisfied, in this case, the executor or administrator may not pay this debt, nor may he suffer the plaintiff to recover in his action; for if he doth, and he hath not assets besides to satisfy the debts duo upon bonds and specialties, he must satisfy so much out of his own estate.” ■ — See Shepherd’s Touchstone. Now it would appear from this authority, that an executor or administrator, is only bound down to such strictness in pleading where there arc debts of an inferior and superior degree ; but in the present case the debts are all of the same degree by specialty, and from the death of the intestate were to be paid in the same order. The rule, must have been grounded upon the advantage that creditors of an inferior degree would obtain in some cases by having judgment not subject to such a plea, but .here the plea can make no difference, nor the judgment give any advantage further than to bring forward the properly to a sale, and to push the oilier specialties. For these reasons, therefore, let this exception be over-ruled^ Tiiird exception. — « Tliat the debt to the state being secured by mortgage, the state had chosen its own security, and could not resort to the personal estate in preference to the other demands.5* On this exception the court has a strong leaning in favor of it, for the reason therein stated but the act of assembly appears to be imperative: Therefore, without being able to give any other reason for it, the court considers itself as bound to say ita lex scripta est, and'to overrule the exception. Fourth exception. — -This depends upon the same principle with the last, and must be over-ruled. Next, as to defendant’s exceptions. First exception. — “ Because the defendant ought to have been allowed the whole amount of the debt to Man,. Brown and Foltz.” Defendant has discounted this debt with Minor Winn, in the manner stated in the answer ; but if he had ever paid it out of his own pocket, as there were debts of equal degree, all he could have claimed from creditors would have been the average. This exception is therefore overruled. Second exception. — “ Because the commissioner ought to have allowed defendant to have retained his own debt to the whole amount of the bond, and not in average.”' The act of assembly, Pub. Laws, p. 202, relied upon by complainant’s counsel, seems to be very clear upon this point, that the administrator cannot retain the whole of his debt, but only in average and proportion with the other creditors ; therefore, let the second exception of defendant bo over-ruled. Tiiird exception. — “ Because he ought not to have been made liable for the property purchased by Hunter.” While the authority of the cases of Bague to. Black-lock, and Howell and wife vs. administrator of Carpenter, continue to influence this court, it will never decree upon an administration bond which lias been brought only incidentally before it on a bill for a discovery filed against the administrator: on the bond there is a remedy at common law 5 on the discovery the redress is in equity. In equity then, the administrators can only be recognized in their official capacity, and acting as such ; at law, they are obligors and co-securities in a bond, and, no doubt will be both equally liable. But, to make them liable here, there ought to have been shewn some privity between them, or some connivance of the one at the illegal acts of the other. But no privity can exist, otherwise an action would lie against one at the suit of the other, and that is not pretended, nor has any connivance been proved. Each had it in his power to sell 5 to bid at the sale (though perhaps not strictly legal) and to take the property purchased into his possession. There then was no connivance necessary on the part of the one to enable the other to do acts which he had it in his power to do without his assistance. — -2 Bro. 117. Neither has it been attempted to prove that the defendant before the court, connived at the absconding of the other, and his taking away the property. The contrary is sworn to in the answer. For these reasons, and upon the authority of the case of Champneys vs. Brown, (Barnes’ notes of cases, 440) and the authorities there cited, the court is of opinion that the defendant, Richard Winn, should nofrbe made liable for the acts of his co-administrator, Henry Hunter, at least under the present form of action. Therefore, let thé third exception of defendantbe sustained. Fourth exception. — He ought not to be made liable for the interest.” It has been the practice of the court of equity in all such cases as the present to allow interest; and the defendant has not shewn any good reason in his answer why he should be entitled to any extraordinary favor of the court. Therefore let this fourth exception be over-ruled';' and let the defendant be decreed to account with the commissioner upon the principles above stated. W. B. James. From this decree an appeal was made, and at the* sitting of the court of appeals, at Columbia, in Nov. *309, tlip general tenor of the decretal order was approved by the court; but it appearing to tbe court, from the statements of both parties, that there were iinport-ant facts, material to the justice of the case, which were not stated by the bill, nor answered by the defendants, for which reason the judge sitting in the circuit court had not felt himself at liberty to admit proof of such facts, it was therefore ordered, that the cause be sent down to the court below for trial, without prejudice to either party, and thatthe complainant have leave to amend his bill, on payment of the costs of amendment. In pursuance of the leave granted by the court for that purpose, the complainants amended their hill, by stating the material facts, which had been omitted, in the original bill. The amended bill not being answered, an order to take the bill, pi*o e.onfesso, was granted previous to tbe court in February 1810, at which term the defendant, Winn, obtained leave to set aside the said order, on condition that he should answer on or before the sittingof the court in June 1810. Atibe sitting of the court at Camden, the cause came to a hearing before, chancellor Desaussure, on the report of the commissioner and exceptions thereto ; which were as follows: I have examined the accounts in tills case, and find ■tliatthe defendants have received of the personal estate of Thomas Baker, sundry large sums, which, after deducting the debt due the public, and interest, and also the payment made by them on the judgment in favor of John C. Smith, amount with interest thereon to 15th February, 1808, to eleven hundred and twenty-eight pounds, twelve shillings and eleven pence. That on the said 15th February, 1808, this honorable court fixed tbe balance due. on the judgement in favor of J. C. Smith against the defendant’s intestate, including interest; to that day, at one. thousand and seventy-five pounds, thirteen shillings and seven pence.; on the said last mentioned sum of 1075k 13s. 7d. 1 have, calculated interest to this day, and report, the, amount of principal and interest to ho five thousand three hundred and sixtv-threc dollars, seventeen cents. B. BiNEmxr, Com. . To this report tho following exceptions were filed by the defendant’s counsel : First. — Because the commissioner bad not allowed the defendant, Gen. Winn, the payment made to bond creditors j and also, the sum retained on the bond duo to himself. Second. — Because the commissioner made the said •Gen. It. Winn, liable for monies received by his co-administrator, Hunter, which never came into his hands. Third.. — Because the commissioner allowed interest on the sum reported to be due to the complainants. [MAJORITY] The foregoing exceptions were over-ruled by the commissioner; and were brought up for the consideration of the court. After argument, chancellor Desaus-sure pronounced the following decree.: This case came on upon the commissioner’s report, and exceptions thereto. In the argument of this case, the counsel took a much wider range than the questions made by the re,port and exceptions ; and it wras contended, that Gen. Winn, the principal acting administrator, did not know at the time of Baker’s death, that the debt of J. G. Smith, was the proper debt of Baker alone, to Which Mr. Lenoir was only security ,• and that there has been great laches in the Lcnoirs in their not pursuing their claim for redress, during which Gen. Winn had applied the assets of the estate to pay other bond creditors, and especially some bond debts due to himself. And it was further contended, that Lenoir only being security for Baker, his representatives, even if they had paid the debt, could not recover as judgment creditors, on the ground of judgment having been obtained against Baker by the original creditor, but could recover only as simple contract creditors for money laid out and expended. And that tho’ the original creditor might have called Gen. Winn, as administrator of Baker, to account for the misapplication of the funds of Baser, the security could not, at least not to tho same ext nt and with the same effect as the creditor might have done. Before we; consider the. commissioner’s report, and the exceptions to it, it is proper to examine and decide-upon these ques-tioris made by the counsel. On examining- the answer of (¿en- iff inn, it appears that ho does admit that the debt of ^olm C. Smith was the proper debt of Baker alone, it is true he does not state when he came to that knowledge y but l* docs not allege that he had made an appropriation of the assets of Mr. Baker before he came to the knowledge of that fact-, which he certainly would have done, if the fact would have warranted his doing so. But if the fact had been so, it would not have made any difference in this case, for it was a judgment debt which the administrator ivas bound to notice, and lie could not legally or justly apply any,part of the assets of the estate of Baker, to the payment of bond debts, or any other of inferior degree, until this judgment debt was totally paid off 5 nor does there, appear to have been any blamea-blc laches on the part of the representatives of the security, Mr. Lenoir. It is alleged that if they had insisted on the principal pursuing his demand against Baker’s estate more vigorously, the security might have been relieved, if their remonstrances had not been attended to. This is true, but it does not follow that because the security did not seek relief from the debt by insisting on the, creditor’s pursuing the principal debtor with rigor, that the security looses his claim to be protected and rc-im-'bursed, if he should ultimately be made liable to pay the. debt. It would be a very harsh doctrine, and comes with a very ill grace from the principal, whose estate has been favored. But it is insisted that the security is not entitled to take the high ground of the original creditor, who had the bond and judgment, and must come in as a mere simple contract creditor. In many cases, if this doctrine prevailed, the greatest injustice would be done, and securities would be wholly ruined by their kindness to, and confidence in their principal, for whom they had consented to be hound. In this particular case the innocent and helpless children of Mr. Lenoir, the security, would be deeply injured by such a doctrine. It is indeed true, that this is the doctrine at law j the narrow rules and modes of proceeding in that court, prevent the judges there from giving the relief which they wsuld be inclined to do. Hence tlie necessity of the interposition of this court, which being entrusted with larger powers and wider range of authority, is bound to exercise it to prevent so great an injustice as would result from the narrow legal doctrine. And this court has long exercised this power, to promote the purposes of justice, and has gone much further than this case. In Burrowes and Brown ~os. MVWhann, administrator of Carnes, decided in 1794, the court laid down the rule in the broadest extent. Bur-rowes, Brown and Carnes, were securities for Banks in a large bond to Warrington, on which judgment had been obtained against them all. Banks was utterly insolvent ; Burrows and Brown paid large sums on the debt j Carnes . paid nothing and died leaving a good deal of property, but not enough to pay all his debts. MVWhann, to whom Carnes was indebted on bond as security for Banks, administered on Carnes’ estate ; and finding that Bur-rowes and Brown bad paid off almost all the debt to Warrington, be paid off the small balance on the judgment, in order to get satisfaction entered by the creditor on the judgment; then he retained the remaining funds of Carnes, to pay himself the bond debt due him. Bur-rowes and Brown filed their bill to set up the judgment at law, notwithstanding the satisfaction entered on it, mid to compel the administrator of Carnes to pay his proportion of the debt, before he should be allowed to retain what was due to him on his bond, and the court on full consideration gave the relief prayed for. This case is much stronger than the one now before the court, inasmuch as the. relief was given to securities against a co-security, and not merely against a principal; and to give the relief it was necessary to revive a judgment on which satisfaction had been regularly entered, in order to let in the securities to the benefit of that judgment, and secure them a priority under its protecting wing. I feel myself bound then by the principles of equity, and by the decided cases, to give the relief demanded, and to support the claim of the complainants in this case. I must, therefore, confirm the commissioner’s report, and agree with him in overruling the first exception made by the defendant's counsel. Blanding for complainant, Nott for defendant. The second exception is more embarrassing. In many cases the law makes co-administrators liable for the acts of each other as well as for their joint acts; and if I saw any ground to believe that Gen. Winn, the co-administrator of Hunter, had acted improperly in this transaction,'I should make him liable. But there is no proof that he has acted in that manner. The sale was made under the authority of the court. Hunter, the co-administrator, purchased at the sale, and soon after-wards and before the money was due he went off the state and carried off the property with him. There is no evidence to induce the belief that Gen. Winn was privy to this improper conduct of his* co-ad ministrator, and the court will not presume it. The interval between Hunter’s purchase and his going off, seems to have been so short, that it would not be reasonable to impute laches to Gen. Winn in not having collected the money due by Hunter to the estate, especially as Ids co-administrator liad as much right to keep the money in his own hands, for the use of the estate, as Gen. Winn. I feel myself, therefore, bound to support the second exception. We come now to the consideration of the third exception, which relates to the allowance of interest to he paid by Gen. Winn on the assets received by him, and applicable to the purposes of the estate. Upon this question, T have no doubt Gen, Winn should have applied the assets, as soon as possible, to the payment of the debt to the public, and to the debt of J. C. Smith ; not having done so, he had the use of them, and he is bound in conscience to pay interest thereon. The commissioner’s opinion, overruling the third exception, is therefore confirmed. Let it, therefore, he referred back to the commissioner, to state the accounts conformably to the principles of this decree, Henry Wm. Besaussure.