Chase v. Lockerman

Stephen, J.,

delivered the opinion of this court.

The personal estate of the testator not being sufficient to pay his debts, and the specific legacies bequeathed by his will, the question arises, in what manner the deficiency is to be supplied, or upon what principles, contribution is to be made by th^se who have been the objects of his bounty in the disposition or his property. By his will, he has given several specific legacies, and devised to several of his children a considerable real estate, and the question which it becomes necessary to decide, is whether the devisees of real estate, are to contribute equally and proportionally with the specific legatees of the personalty, or the burthen of making up the deficiency, is to fall solely, and exclusively, upon those, to whom he has specifically bequeathed a part of his personal estate.

The principle seems to be well settled in England, that as to debts by specialty, since the statute of fraudulent devises, making real estate in the hands of devisees, liable to the payment of such debts, specific devisees of free hold, and lease hold estate, are on the same footing; and liable to contribute in equal proportions to the satisfaction of those debts. It was so decided in the case of Short vs. Long, 2 Vernon, 756. In that case the assets falling short to pay debts, the question was, whether the deficiency was to be charged upon the real or upon the lease hold estate. The Lord Chancellor decreed the deficiency to be borne equally, in proportion to value of each estate. The debts being due by specialty, and both de *201 scriptions of property liable for the payment of them; and the devisees and legatees being both equally objects of the testator’s bounty, he determined that the contribution ought to be equal.

The same case is to be found reported 1 st P. Will. 403, 404, Lord Chancellor Cowper, that great master of equity, as he has been emphatically styled, there decided, that to prevent the disappointment of the testator’s intention, both estates being liable, the contribution ought to he equal.

The counsel for the appellant in the course of his argument, seemed to think, that this decision had been overruled in the case of Hazlewood vs. Pope, 2 P. Wms. 322. In 1st Roper on Leg. 638, it is said, the fifth resolution in Hazlewood vs. Pope, may probably at first sight, be considered at variance with the case last cited. That resolution was in these words, “where a man dies indebted by bond, and leaves a personal estate, and devises lands to J. S. in fee, and gives specific legacies, and the creditor by bond, comes on the personal estate to be paid his bond, the specific legatees shall not stand in the place of the bond creditor, to charge the land devised; because the devisee of the land, is as much a specific devisee, as the legatee of the specific legacy.” It is presumed, says Roper, that Lord Talbot, in the expression, “the specific legatees shall not stand in the place of the bond creditors, to charge the land devised,” must have intended, not that the devisee should not contribute, but that the specific legatee had no right to have the assets marshalled against the specific; devisee, so as to throw the bond debt exclusively upon the real estate devised, to the exoneration of the personalty, specifically bequeathed. In this qualified sense, the resolution in question, and the case of Long vs. Short, probably may be reconciled; hut the point cannot be considered free from doubt. The reason assigned by Lord Talbot, would seem to indicate, that the construction given by Roper to his opinion was well founded, and that he did not intend to repudiate the principle of contribution, hut only designed to exclude the doctrine of an exclusive liability, under the circumstances attaching to the *202 devisee of the real estate. It was manifestly the opinion of Roper, that the principle of contribution was sustainable, because in the preceding page, he says, “ther.e appears to be a distinction, in the application of the preceding rule, as to marshalling in favor of specific legatees, for in that case it seems,, that the real and personal assets specifically devised and bequeathed, will upon failure of the general personal estate, be so far marshalled, (if indeed that term can in strictness be applicable,) that the specific devisee and legatee, shall each, in proportion to the value of their respective gifts, contribute to the payment of the specialty debt. But with respect to a simple contract creditor, the exception is not admitted; for he must resort alone to the personal estate specifically bequeathed, as that is the only fund liable to his debt.”

The principle established by, Lord Chancellor Cowper, in the case of Long vs. Short, is sanctioned in a note, to be found in 3 Woodeson’s Lect. 534, where it is said, “as to debts by specialty, specific devisees of freehold, and leasehold estates, seem to be on the same footing, since the statute of fraudulent devises, 3 W. and M. ch. 14, and liable to contribute in equal proportions to the satisfaction of those debts.” So also in 2 Wms. on Exrs. 1043, in a note, it is said, “according to the decision of Ld. Cowper, in Long vs. Short, 1st P. Wms. 403, the devisee would be entitled to compel the specific legatees to contribute to the payment of the debt, but not wholly to exonerate the land.” Again, at page 1056, of the same book, in a note, it is said, “with respect indeed to specific legacies, the assets, according to Ld. Cowper's decision in case of Long vs. Short, shall be so far marshalled upon failure of the general personal estate, that the devisee, and specific legatee, shall each in proportion to the value of their respective gifts, contribute to the payment of the specialty debt.” In 3 John C. Rep. 158, speaking upon the subject of contribution between two specific devisees of land, Chan. Kent says, “the same rule was declared in Long vs. Short, 1 P. Wms. 403, in the case of two specific devisees of land. The Lord Chancellor said it would equally disappoint the intention of the testator, to de *203 feat either devise, by subjecting it to the testator’s debts; and therefore he held, that on a deficiency of assets, both estates must contribute in proportion to the value of their respective premises.”

In England as in this State, the personal estate is the natural or primary fund for the payment of debts, as between the real and personal representatives of the deceased, and must be resorted to in the first instance for that purpose. And in order to inforce such primary liability, it is an established rule in equity, that as between the representatives of the deceased debtor, if the creditor proceeds against the real estate, descended or devised, the heir or devisee, who has sustained the loss, shall be allowed to stand in the place of the specialty creditor, to re-imburse himself, out of the personal estate, in the hands of the executors, provided such re-imbursement will not prejudice any of the creditors, or any other party having a more favored claim, than the heir or devisee respectively. Wms. on Exrs. 1041.

If the obligee recovers against the heir, he may re-imburse himself out of the assets in the hands of the executor, hut not to the prejudice of either a specific or general legatee; such an equity exists only in favor of the heir, against a residuary legatee, hut in favor of a devisee, it exists against a general legatee, though not as it would seem against specific legatees, for the reason heretofore given. 2 Wms. on Exrs. 1043.

According to the principles of the English law, equity will marshall the real assets descended to the heir, in favor of, or for the relief of specific legatees; hut it will not for such purpose interfere with the lands devised, unless they were devised subject to the payment of debts. 3 John. C. Rep. 153. That is to say, the lauds devised, will not he made to release or exonerate the specific legatee, but they will be held to contribute. The general rule of marshalling assets, is to apply, first the personal estate; then lands devised to be sold for the payment of debts; then lands descended; and lastly, estates specifically devised, even though they are generally charged with the payment of debts. The testator in this case, having made *204 provision in his will for the payment of his debts and legacies, if the fund provided by him for that purpose has proved to be inadequate, the rule of contribution, as established by law, must be resorted to, and ought to prevail.

We therefore think, that if in course of the administration of the assets by the executors, the specific legacies bequeathed by the will of the testator, have been applied to the payment of specialty debts, the specific legatees are entitled to contribution against the devisees of the real estate; but that so far as such legacies may have been applied to extinguishment of the claims of simple contract creditors, no such right of contribution exists, as against the devisees of the realty; the personal fund alone being responsible for the payment of debts of that description. We think moreover, that if the general personal estate has been applied to the payment of the specialty debts, whereby the simple contract creditors, have been .thrown upon the specific bequests, the specific legatees have a right to resort to the devisees of the real estate for contribution ; such right of contribution being essential to carry into effect the intention of the testator, which was to make them both equally the objects of his bounty. The property given by him in his life time to his children by way of advancement, was no part of his estate at the time of his death, and cannot be made to contribute by his representatives to the payment of his debts.

We are of opinion, that the money receivable under the decree in Chancery in the case of Sterett vs. Moale, ought tobe equally divided amongst all the children of the testator, and not exclusively given to those having children. The will of the testator affords pregnant evidence, that all his children were equally the objects of his bounty and affection; and in disposing of the fund in question, the language he has used is strong to shew, that an equal participation by them in the benefits of that fund, was his object. It is true, that at the time his will was made, and at the period of his death, there were two of his children who had no issue; but in the course of nature, it was not improbable that, that state of things *205 might cease to exist; and in the event of their having children, the same motive and feeling of parental affection, would have operated in their behalf, and would have made them equally the objects of his bounty and benevolence. The language of his will in reference to the subject is as follows: “the residue of the money annually received by my executors under the said decree, to be equally divided by them, amongst my children, share and share alike, and paid to each of them for the use of their respective children, and by each of them so applied.”

From the terms of this bequest it is, we think, most apparent, that equality to each of his children, was the governing motive of the testator, and such ought to be the construction given to his will, if it can be made compatible with the import of the language he has used. Where the testator stands in the relation of parent, a bequest to children generally will be presumed, in legal construction, to embrace ail who answered that description at the period of his death. A court of equity is always solicitous to adopt and enforce such a construction, because it is conformable to the dictates of nature, and in accordance with the best affections of the heart. In 2 Wms. on Exrs. 716, speaking of bequests to children in a class, the author says, “generally speaking, every person who at the time of the testator’s death falls within the described class of children, will be entitled. But where it appears from express declaration or clear inference upon the will, that the testator intended to confine his bequest to those only who answered the description at the date of the instrument, such intention must be carried into effect. A court of equity however, is always anxious to include all children in existence at the time of the death of the testator, and particularly, wdien he stands in the relation of parent to the legatees; the court presuming, that he intended to do his duty, in providing for all his children at his death, will lay hold of any general expression, to give effect to this presumed intention, and will not permit such general expression to be narrowed by the context.” The language of the will, in making the bequest in this case, is very *206 broad and general. The legacy was to be divided by the executors amongst his children, share and share alike; and paid to each of them, for the use of their respective children, and by each of them so applied. It is a well established rule in the construction of wills, that where there is a general and particular intent, apparent upon the face, the general intent, although first expressed, shall control and overrule the particular. Thus in 2 Wms. on Exrs. 714, it is said, “it must not however be understood, that because the testator uses in one part of his will, words having a clear meaning in law, and in another part, words inconsistent with the former, that the first words are to be cancelled or overthrown. A contrary principle is now fully established, in the doctrine already considered, that the general intent although first expressed, shall overrule the particular.” It appears in this case most clearly from his own explicit declarations, that it was his great and leading object to make an equal distribution of his property amongst all his children, being governed in this last solemn act of his life, in providing for his family, and disposing of his estateby an equal and similar affection for each, and everyone of them. If then equality of bounty to all his children, was his great leading and cardinal motive; in the language of the books, if such was his general intent, and he has used language sufficiently strong to carry that intent into effect, upon principle, it appears to be settled, that such general intent is not to be frustrated, by any inconsistent particular intent, but must be supported, and ultimately prevail. In the decision of this question, it is moreover a circumstance entitled to great and weighty consideration, that the fund in controversy is of considerable value, and amounts in magnitude to nearly a third of his personal estate; and if allotted exclusively to such of the children of the testator as had children, will necessarily lead to an infringement of that well established rule of construction, that the particular must yield to the general intent, in case there should exist a conflict between them. Although a provision for his grand-children might have been an object, about which he was solicitous, it is fully apparent that he was equally *207 anxious, that all his children should be equally benefitted by his bounty; and that no distinction or disparity should exist between them, as the objects of his munificence.

The true construction of his will is, that the fund to be received by his executors, under the decree in Chancery, was to be paid to each of his children in equal proportions, to be applied by those then having issue, to the use of their children, and by those not then having children, to the use of their children, whenever they should have children. By no other appropriation of that fund, can the general intent of the testator, as plainly indicated upon the face of his will, be carried fully into effect. A contrary construction would defeat entirely that equality of bounty amongst his children, which appears to have been the great and paramount object of the testator in the disposition of his property, and ought not to be adopted, unless the language of his will is so explicitly imperative, as necessarily to demand it. We do not think that the executors are properly chargeable with interest upon the several balances from time to time found to be in their hands, in the course of their administration. They do not appear to have used the assets in any instance for their own emolument, nor was there that degree of unwarrantable negligence in the appropriation of them, to the payment of debts, which would render them upon principle so chargeable. Their settlements appear to have been annually made with the orphans’ court, except in one instance, where there appears to have been an excess of a few months only; and the rule as settled by this court, appears to be, to look with a favorable eye upon the conduct of executors, and other trustees, and to treat them with a reasonable indulgence, when they have acted with good faith in the execution of the trust confided to them; and not to hold them liable upon slight grounds. In 4 Gill & John. Rep. 460, this court lay down the general principle to be, that whenever an administrator manifestly intends fairly to do his duty, the rule should be, not to hold him liable upon slight grounds. It is moreover to be remembered, that until the settlement of their fourth account with the orphans’ court, the balances against *208 them to more than one-third of their amount, were composed in part of Bank of Columbia stock, for which in that account, they obtained a credit, as being worth nothing. In the book last referred to, it is true, this court say, an administrator may be compelled to pay interest on money kept in his hands, without apparent reason, from the end of thirteen months after the the date of his letters, but they say at the same time, that he is only to be charged with interest, where in so doing, it also appears that he is guilty of a culpable inattention to his duty. In this case, so far from being guilty of negligence, or a culpable inattention to duty, the executors appear in one instance, to have used extraordinary diligence and dispatch; for their third and fourth accounts, from the dates of the probates attached to them, appear to have been settled with the orphans’ court on the same day.

In treating upon the subject of charging executors or administrators with interest, in the settlement of their accounts, Wms. on Exrs. 1132, says, “There are two grounds on which an executor or administrator may be charged with interest: 1st. That he has been guilty of negligence in omitting to lay out the money for the benefit of the estate. 2nd. That he himself has made use of the money to his own profit and advantage, or has committed some other misfeasance. With respect to neglect on the part of the executors, in not laying out balances, it must be observed, that it frequently may be necessary and justifiable, for an executor to keep large sums in his hands, to answer the exigency of the testator’s affairs, especially in the course of the first year after the decease of the testator, in which case such necessity is so fully acknowledged, that according to the ordinary course of the court, the fund is not considered distributable until after that time. But if the court observes, that an executor keeps money dead in his hands, without any apparent reason or necessity, then it becomes negligence, and a breach of trust, and the court will charge the executors with interest.” So in 3 Gill and John. 341, this court say, where trustees act bona fide and with due diligence, they have always received the favour and protection of courts *209 of equity; their acts have been regarded with the most indulgent consideration. Under the circumstances of this case, we do not therefore think, that there has been such negligence and culpable inattention to duty, as to require, that the executors should be charged with interest on the balances, from time to time, found to be in their hands. It does not appear, that the assets have been used for their own benefit, or that any unreasonable or avoidable delay, has occurred in bringing their trust to a final settlement.

We think, that the bequest to his children of the money to be received under the decree in Chancery, was a specific legacy, and not liable to abate with the general legacies. The money to be received under that particular decree, was given to the legatees; and they had a right to demand it, as such from the executors. The intent was clear, to give that identical money, and not a sum of the like amount generally. When received by the executors, it became specifically the right and property of the legatees, and they had a right to demand it of the executors as such. In 2 Wms. on Exrs. 745, it is said, “where the bequest was to my grand-daughter, the sum of forty pounds, being part of a debt due to me, from A, for rent, she allowing what charges shall be expended in getting the same. Item — I bequeath to my grand-sons C. and D., the rest and residue of what is due to me from the said A, w'hich is about forty-pounds more, in equal shares, and they allowing charges as aforesaid, these were held specific legacies.” Again, at page 739, the same author says, “a legacy is general, when it is so given as not to amount to a bequest of a particular thing, or money of testator, distinguished from all others of the same kind. A legacy is specific when it is a bequest of a specific part of the testator’s personal estate, which is so distinguished.” A debt due to the testator, may be specifically bequeathed; as where there is a bequest of the money now owing to me from A, or the money due to me on the bond of A. That the legacies were specific, will further appear from the consideration, that if the fund had failed out of which they were payable, the legatees would not have *210 been entitled to any recompense or satisfaction out of the general personal estate, which is one of the features distinguishing a general from a specific legacy.

As to the character of the mortgage from Richard Locker-man to the testator, and whether the same is to be considered as real or personal estate, we are of opinion, that it must be considered as belonging to the class of real, and not personal assets. There is no doubt of the general rule, that a mortgage interest before foreclosure, is considered in equity, as a chattel interest, and personal assets, and belongs to the executors; and though the technical fee may descend to the heir, he takes it in trust for the personal representatives. 3 John. C. Rep. 145, and cases there cited. The principle is well settled, that a mortgage on lands is nothing more than a security for the debt, and any thing which transfers or extinguishes the debt, transfers or discharges the mortgage as an incident to the debt. This no doubt is the general aspect under which it is viewed in a court of equity; but it is equally well settled, that the mortgagee, may as between his real and personal representative, by a manifest declaration of his intent, convert the mortgage, as well as any other part of his personal estate, into land; and make it pass accordingly. 1 Wms. on Exrs. 432. 2 Vernon, 581.

In the case referred to in Vernon, the following facts are stated: “the testator having several mortgages, and amongst the rest, a mortgage in fee of lands in Fenlalce, he devises his mortgages to his two daughters, and their executors and administrators; and devises his lands in Fenlalce, upon which he had entered, upon forfeiture of the mortgage, to his two daughters and their heirs; Mary, one of the daughters, dying without issue, Higgs the husband and administrator, claims a moiety of the lands in Fenlalce, as part of his wife’s personal estate, it being a mortgage not foreclosed, nor the equity of redemption released.” Upon this state of facts, the court say, “although it is a mortgage, as between the mortgagor and mortgagee, yet the testator’s intent was, it should pass to his daughters as real estate, to them and their heirs, and not as *211 part of his personal estate; and Mary the wife of Higgs, being dead without issue, it descends, and goes to her sister, as her heir at law, and Higgs, as administrator tolhis wife, ought not to have any part thereof as personal estate.” It is manifest, that the ground of the decision in this case was, that the mortgaged estate in question, was devised to his daughters, and their heirs; and not as in the case of the other mortgages, to his daughters and their executors and administrators; it being therefore the clear intent of the testator to treat it as real estate, descendible to the heirs, and not as personally, which should pass to the executors or administrators, the court, in. order to effectuate that intent, treated it as land, and not as personal estate. In the case before this court, the intent of the testator was we think equallv apparent, to treat the mortgage as real estate, and not as personal property. The language of the will is as follows: “I will and devise unto my son Richard M. Chase, his heirs, executors and administrators and assigns, all the lands mortgaged me by my son-in-law Richard Lockerman, in trust, to receive the interest on said mortgages, which has or may become due, and to pay the same over to my daughter Frances Townley Lockerman, during her life, to her sole and exclusive use and benefit; and her receipt for the same, shall be good and sufficient in law, and equity; and in case my son-in-law, Richard Lockerman, should survive my said daughter Frances Townley, I do hereby grant permission to my said son-in-law to occupy and use the said lands mortgaged by him, during his natural life, free from rent and interest. I give and devise the lands mortgaged to me by my son Richard Lockerman, after his death, and the death of his said wife, unto their children, and their heirs, to be equally divided amongst them.” The lands mortgaged in this case are devised to the trustee and his heirs, and after the death of the cestui que trust, and her husband, (who in case of his surviving his wife, is to have permission to occupy them free from rent and interest,) they are devised to their children and their heirs, to be equally divided between them. The intention of the testator, therefore, to treat the mortgage as real estate, is, we think, *212 most clear and indisputable. Upon the subject of costs, we think, that the executors ought not to be personally charged with the payment of them, either in this court, or in the court below; but that they ought to be paid out of the assets of the estate. The difficulties attending the execution of their trust, rendered it proper, that they should act under the direction and indemnity of a court of equity; and in such cases the practice seems to be to charge the cost of the. suit, upon the fund. 1st John. C. Rep. 45, 473, 153. In the last case referred to, the Chancellor says, as the defendant is not in default, and has only sought the direction of this court, in a ease proper for it, he ought to receive cost out of the fund, and this is the course of the court in such cases. The decree of the Chancellor is reversed, and the cause remanded to the Court of Chancery for further proceedings, conformably to the principles herein contained.

decree reversed and cause remanded.