Woodyard v. Poisley

Johnson, Judge,

delivered the opinion of the Court:

The general rule is, that when an interlocutory decree is pronounced, settling the principles involved in the issue in the cause, that it should be corrected in the court below upon a petition for a rehearing. Manion v. Fahy, 11 W. Va. 491 , but it may be that more latitude is allowed the court, where there is pending a creditors’ suit and the object of the court is to distribute the funds to the parties entitled to receive the same.

The first question to be determined is, as to the correctness of the decree of June 13, 1876. That decree gave the plaintiff priority over Polsley, and disallowed the claim of J. M. Laidley entirely.

The claims of Slack and Polsley stand precisely on the same footing, as to the amount thereof, that Slack luid paid. , If the claim of the plaintiff was entitled to priority, then so much as Slack had paid of that claim to Woodyard, the receiver, he being bound on the note therefor, he had a right to have paid to him, after Woodyard had received all his money. But did Wood-yard have any priority over the other creditors ? In the first decree entered in the cause upon the commissioner’s report the court decided, that he had not; and the court certainly decided correctly; for Woodyard’s judgment was no lien against the lands of the heirs of the debtor, J. J. Polsley. Ajudgment recovered by a creditor against an Syllabus 1. administrator is not a lion on the realty of the intestate. Laidley v. Kline, 8 W. Va. 218 . The commissioner’s report does not show any lien of any kind against the realty of the intestate, and therefore all the creditors, who are entitled to participate at all, should do so pro rata.

Should the claim of J. M. Laidley have been disallowed? Syllabus 2. The statute of limitations was pleaded against his claim, by the administrator de bonis non, in his answer to the bill. Lid the statute apply to this claim ? In Harvey’s adm’r v. Steptoe’s adm’r et al., 17 Gratt. 289 , it was held, that where, in a bill by a creditor against the *219 trustee and executor of his debtor to have payment of his debt,and charging the deed to be fraudulent, and voluntary in part, the court makes a decree, directing a commissioner among other .things to take an account of the debts of the testator, that the statute of limitations ceased to run against creditors from the date of that "decree. • Joynes, J. said : by that decree the court took upon itself the administration of the assets, and it would have restrained those parties from proceeding afterwards by a separate suit to enforce their claim. . Stephenson v. Tavenner, 9 Gratt. 398 . The statute of limitations therefore ceased to run against them from the date of that decree. Sterndale v. Hankinson, 1 Sim. 393.” Where therefore a suit in equity is brought by a creditor against the personal representative of a decedent, and also against the heirs at law of the intestate, for the purpose of having the personal assets applied to the discharge of his debt, so far as they will go, and to have the real estate of the intestate sold to pay the residue, and the court takes into its own hands the administration of the assets by referring the cause to a commissioner to take an account of.the debts of the intestate, the statute of limitations ceases to run against the creditors, not formal parties .to the bill, from the date of such decree.

It is clear from the record in this cause, that'J. M. Laidley’s claim was not barred by the statute at the date of the first decree of reference, and therefore the court erred in holding that the statute applied thereto.

J. M. Laidley, who was, as we have seen, one of the creditors, excepted to the commissioner’s report, and in that exception relied upon the statute of limitations as a harto the-claim of John Slack, Jr. This exception raises the questions: first, can the statute of limitations be relied upon in this mode? and if so, can a■ creditor take advantage of the statute ?

It was at first ruled, that as the statute prohibited actions from being brought beyond á certain period from the time, when the cause of action accrued, it was to be *220 taken as an absolute bar, and operated by its own force "and without pleading it. Afterwards the judges were 'equally divided in opinion on the question. But as the doctrine, when applied to a case, merely because it appeared on the face of the declaration, that the action was commenced beyond the time prescribed by the statute, was seen to be clearly untenable, as the plaintiff might be within some of the various exceptions mentioned in the statute, it was overruled, and has so continued, and the rule established, that the statute must be pleaded. Angell on Lim. 312, and cases cited.

In Hickman v. Stout, 2 Leigh 6 , it was hold, that “there is no rule better established, than that one cannot, avail himself of the statute of limitations in a suit in equity without pleading it.”

In Hudson v. Hudson’s adm’r et al., 6 Munf. 352 , it was held that in a case where it is necessary to plead the act of limitation, it ought, in order to form a bar, to be specially pleaded or at least insisted on; that is, the term prescribed by the statute should bojjartieidarly, if not formally, pleaded, or relied on, to let in the plaintiff to show in his replication, that within that term an original had been sued out, if the fact were so, and thus to avoid the bar.

In Purcell v. Wilson, 4 Gratt. 16 , it was said, that the Act, 1 Rev. Code, ch. 118, § 1, which authorizes the recovery of damages in writs of right, intends such damages as maybe recovered in actions of trespass for mesne profits. And as from the form of the pleadings the statute of limitations applicable to the mesne profits cannot be pleaded, the tenant may give it in evidence at the trial; and the demandant’s recovery of mesne profits will be for five years next before the bringing the writ of right down to the recovery of the possession. It is a familiar practice- in the trials of ejectment eases, for the defendant to rely upon the statute of limitations under the plea of “not guilty,” because that is the plea prescribed by the statute.

*221 In Trimyer v. Pollard, 5 Gratt. 460 , it was bold, that where a defendant does not file the plea of sct-ofi, but files his account and gives notice of sct-ofi, the plaintiff can not reply the statute of limitations; and he is therefore at liberty to rely upon it in evidence.

In Tazewell v. Whittle, 13 Gratt. 329 , it was hold, that the plaintiff having stated in his bill, that his debt was evidenced by deed, if it appears in the progress of the cause that it was by parol, the executor may set up the defense of the statute by exception to the commissioner’s report.

By our own court in a recent case, Ogle v. Adams, 12 W. Va. 213 , it was held, that when there is a bill filed for partition of lands and for rents and profits thereof by one tenant in common against another, and the statute of limitations of five years is not pleaded as to rents and profits before the court, before or at the time of the order of reference to the commissioner of the court to ascertain the rents and profits, with which the defendant should bo charged, and it does not appear, that the defendant relied upon the statute as to such rents and profits before the commissioner, and that the commissioner failed to recognize the statute or disregarded it, the Appellate Court will consider the statute of limitations out of the case.

If the defendant relies upon said statute of limitations as to rents and profits before the commissioner, and the commissioner includes in his report items of rents and Syllabus profits which accrued more than five years before the commencement of the suit, and with which the defendant should not be charged under the statute of limitations, the defendant may, and should, except to the commissioner’s report for that cause,and in this mode bring the. report of the commissioner, so far as the same is obnoxious to the said statute, before the court below for adjudication by it. This is the course which should be pursued generally, where it does not appear by the record, that said statute of limitations for five years has been pleaded *222 before the court prior to the order of reference. This authority clearly establishes, that the statute of limitation's may be relied on before the commissioner, even where it has not been pleaded before the court prior to the order of reference.

Syllabus 4. If the statute of limitations has not been specially pleaded in the cause, and has not been relied on before the commissioner, and the commissioner failed to recognize the statute or disregarded it, and no exception was endorsed upon the report for that reason, the Appellate Court will consider the statute of limitations out of the case although the report shows upon its face, that some of.the claims allowed by the commissioner were barred by the statute.

When a commissioner under an order oí reference, to Syllubu 5. state an account of the debts of an.intestate, has reported debts, that are prima facie barred by the statute! of limitations, and the report is excepted to for that reason, unless it appear upon the face of the report, or from evidence before the commissioner, that the claim has been in some legal mode taken out of the statute, the exceptions should be sustained by the court below, unless lor good reason shown the court should recommit the report to the commissioner to hear proof of such circumstances as would take the claim out of the statute.

The cases we have been consulting'relate to the defendant debtor, .or other defendant liable to plaintiff, who has been permitted in various modes to rely upon the statute of limitations.

The next enquiry is: Can a creditor of an intestate rely upon the statute of limitations, when the personal Syllabus 0. representative of the decedent fails to do so ? It is indeed the duty of the personal representative to rely upon the statute of limitations in behalf of the legatees and distributees and also to protect creditors. Tunstall et al. v. Pollard’s adm’r, 11 Leigh 1 .

Sec. 5 of chap. 87 of the Code declares, “ if any personal representative, guardian, curator or committee, *223 shall pay any debt, the recovery of which could be prevented by reason of illegality of consideration lapse of time or otherwise, knowing the facts by which the same could be so prevented, no credit shall be given therefor.”

Judge Story in his first vol. of Eq. Jur. §548, speaking of the decree of reference says: “ It directs the master, to take the accounts between the deceased and all his creditors, * * it also directs the master to take an account of all the personal estate of the deceased in the hands of the executor, or administrator, and the same to be applied in payment of the debts and other charges in due course of administration. In allcasds of this sort each creditor is entitled to appear before the master, and there, if he chooses, contest the claim of any other creditor, in the same manner as if it were an adversary suit. ”

In Feamster v. Withrow, 9 W. Va. 296 , it was held, that “ when a bill is filed by a grantor in a deed of trust and one of the cestuis que trust therein against the trustee Syllalms 7. and the other eestui que trust, and a reference is made by the court, to ascertain and report the amount of the trust debts due and unpaid to each of the trust creditors, each trust creditor interested in the subject, and who is a party, should be allowed to appear before the commissioner, and should be permitted there, if lie chooses, to contest the claim of any .other creditors, interested in the trust subject, in whole or in part; and such creditors may except to the report of the commissioner for error therein in reporting the debt of such other creditor, and have the ruling, or judgment, of the court upon such exception, and is entitled to appeal therefrom, where there is error in such ruling or judgment.”

Ilaymond, J., in this case, after citing 1 Story Eq., Jur., and the other authorities, said: “ It would bo strange indeed if the creditors and securities and indor-sers in this case should not be allowed to contest the claims of each other, before the commissioner and the *224 court. A rule to this effect in equity would certainly 'operate great injustice, and tend to sustain and promote fraud.”

It seems clear, that where a reference has been made*, to a commissioner to settle the accounts of an intestate, that the creditors may appear before the commissioner, and contest the claims of each other; but can they rely upon the statute of limitations, which is generally pleaded and relied iipon by the defendant alone ? Clarke v. Hogeman, 13 W. Va. 718 . We do not in this case decide the question, whether the creditors of a living man, when a reference is made to the master to audit his accounts, can before the commissioner rely upon the statute of limitations to defeat the claims of each other. But in the case of a deceased debtor, it is made the duty of the personal representative to plead the statute to any claims against his decedent, which are barred, and if for any reason he should fail to do so, ought creditors, -whose claims are not barred, to be made to suffer by reason of such failure, whether it was caused by collusion or negligence ?

In Shewen v. Vanderhorst, 4 Cond. Eng. Ch. 458, the Lord Chancellor said: “The question hero is, when a decree has been pronounced, taking possession of the estate and vesting it in the court for the purpose of distribution, a decree, by which the accounts are directed to be taken, and the assets are to be administered in the master’s office, and after which the common law must be altogether silent, whether under these circumstances, if the objection that the statute has barred the remedy be raised against a debt, and in whatsoever way, or by whomsoever, being parties in the suit, be they creditors, or executors, or even volunteers the objection be raised, it must not be considered fatal? And without at present saying, how far the master is himself entitled to set up the objection, I can see no reason certainly, why it may not bo competently taken by a creditor, or volunteer, as well as by the personal representative.”

*225 We think, .wo may safely lay down the following proposition as sustained by the foregoing authority and ' reason, that where a suit in equity has been brought by a creditor against the personal representative of an intestate, and also against his heirs at law, to have distribution of the personal assets, as far as they go, and to have the real estate of the intestate sold to pay the residue, and the court orders a reference to a commissioner, to take an account of the debts against the intestate, and to settle the administration accounts, and also to ascertain of what real estate the- intestate died seized, it is competent for the-creditors to appear before the commissioner, and contest the claims of each other, and also contest such claims on the ground that they arc barred by the statute of limitations; and it is the duty of the commissioner to report, whether such claims are barred by the statute.

In such a case if a creditor -did not before the commissioner rely upon the statute, but after the report has Syllabus 9. been made, he finds upon inspection that claims have been allowed, which from the face of the report appear to be barred by the statute, he may except to the report on that ground, and unless it appears upon the face of the report, or from the evidence before the commissioner, that such claims had been in some legal mode taken out of the operation of the statute, it is the duty of the cour to sustain the exception ; unless for good cause shown it re-commits the report to the commissioner with leave to such creditors to show such circumstances, as will take their claims out of the statute.

J. M. I'aidley had therefore the right to make the exception to the report; but it cannot avail him, for the reason that as to the claim of John Slack, Jr., it was not barred, for the reasons heretofore stated; and the exception was properly overruled.

John Slack, Jr., excepted -to the report, because the commissioner had allowed the claim of D. Polsley, claiming that they were voluntary payments, and he had no right therefore to have them allowed. These claims *226 were audited by commissioner Burlew. There wore exceptions to the report, which the record shows were sustained, but it does not appear that there were any exceptions to the accounts of Polsley. It may have appeared by that report, and in the absence of any evidence to the contrary, we presume it did appear, that there was proof of the correctness of those claims; there may have been evidence, that the note was assigned to Polsley, that the check was a loan of money, and that he paid the funeral expenses at the request of the administrator, and not officiously. The report and the evidence accompanying it were lost; and we do not feel authorized now to say, that these accounts wore not properly allowed. All the creditors whose claims are reported, should share in the distribution’of the assets pro rata.

The decree of the circuit court of Kanawha county rendered in this cause on the 13th day oí June, 1876, is therefore reversed with costs in favor of the appellants, against the appellee, John Slack, Jr. ; and this cause is remanded to the circuit court of Kanawha county, with instructions to cause the personal fund belonging to the estate of John J. Polsley, deceased, and the proceeds of the sale of his real estate, to be collected and distributed to the creditors named in commissioner Fontaine’s report according to the principles of this opinion, and further according to the rules governing courts of equity The Other Judges CoNourred.

Decree Reversed and Cause Remanded.