Opinion
September Term, 1865
M. Bidwell and D. Hawley, for the plaintiffs.
B.W. Bonney and S. Sanxay, for the defendants.
This controversy, the determination of which, on the merits, depended upon the application of the plainest legal principles to facts scarcely controverted, has outlived all the original parties to it. The complainants were the children of Walter Evertson, who died in 1811, leaving a will, whereby the residue of his estate (after a bequest of $5,000 to his widow, in lieu of dower) was given to the complainants, and the executors named, among whom was George B. Evertson, the brother of the testator, were appointed their guardians during their minority. George B. Evertson alone took upon himself the office of executor and guardian. The value of the real and personal estate that came to his hands is not distinctly known, as he never accounted, as executor or with his wards, having died insolvent before the latter reached their majority; but from his declarations and other proofs in the case, it must have exceeded the sum of $20,000. In September, 1817, he paid to the testator's widow the legacy of $5,000, and took from her a release of her claim for dower; thus leaving what remained of the estate, the rightful property of the complainants, under the will of their father. In the spring of 1823, he invested $6,000 of moneys belonging to the estate, in certain securities, and it is this investment, and his subsequent course in respect thereto, that gave rise to the protracted litigation. The investment was made under these circumstances: Previous to April, 1822, Evertson, John Givan and James W. Stephens, were jointly concerned as owners and proprietors of the Dutchess Cotton Factory, and carried on the same as copartners. Evertson and Givan, about the time last mentioned, sold out their interest in the factory to Stephens, and retired from the firm. In adjusting their accounts there was found to be a large balance due to each of the retiring partners, and to secure the payment of a part of those balances, Stephens executed a joint bond to them for $11,427 and interest; and further to secure the payment thereof, he executed to them a mortgage upon the machinery in the factory, in which bond and mortgage Givan was interested to the amount of $5,000, and the residue of the debt belonged to Evertson. In the spring of 1823, Stephens sold out his interest in the establishment and machinery to the trustees of the wife of Joshua Dyett. The purchasers were desirous that a great part of the purchase-money should remain on mortgage, but Evertson would not consent to wait for the money due him on the mortgage given by Stephens on the machinery, as he wanted his money to pay off a debt to the Manhattan Bank. He agreed, however, to accommodate the purchasers by substituting $6,000 of the money in his hands, of the estate of Walter Evertson, and let it remain on the mortgage until Henry, the eldest of the complainants, should become of age, about eight years thereafter. Accordingly it was arranged that the purchasers, together with Stephens, should give a new bond to Evertson and Givan, for $11,000, to secure the loan of the moneys belonging to the estate of Walter Evertson, and the $5,000 due to Givan, and that the old bond and mortgage should remain as collateral security for the payment of the money for which the new bond was given. The new bond was accordingly given, and Evertson, instead of receiving from the purchasers the $6,427, and paying back to them the $6,000 belonging to his brother Walter's estate, received only the balance of $427, and substituted the $6,000 belonging to such estate, by retaining that amount of money in his hands and applying it to his own purposes. The old bond and mortgage were accordingly indorsed down to the $11,000, of which $5,000 belonged to Givan and the residue to the estate of the complainants' father, and the purchasers from Stephens, at the same time, added a schedule of some new articles of machinery to the mortgage, as a part thereof, and to increase the security, which security was also indorsed on the mortgage and signed by them. In respect to the particulars of this transaction there was no conflict of evidence. All the obligors in the new bond, and the purchasers of the machinery, understood, at the time, that the $6,000 actually belonged to the estate of the complainants' father and not to George B. Evertson; and Evertson himself, frequently afterwards; by his letters and his parol admissions and declarations, recognized the bonds and mortgage as a security belonging to that estate, and the interest thereon, as the principal means upon which the complainants were dependent for their support.
Three years afterwards the difficulty began, by a breach of trust on the part of the executor and testamentary guardian. George B. Evertson, in April, 1826, being indebted to the estate of his brother, Nicholas Evertson, by a written instrument, assigned the bonds and mortgage to Eliza Evertson, executrix of the estate, by way of collateral security for such indebtedness, and without prejudice to the right of the executrix to proceed against him to compel payment of the debt, notwithstanding the assignment. It is conceded that no consideration was paid at the time of the execution of the instrument, and that it was made to the executrix for the security of a debt before that time due to the estate of Nicholas Evertson, then remaining unpaid. Not even an extension of the time of payment of the original debt of George B. Evertson was stipulated for; but in the assignment itself, the right of the executrix to proceed and collect the debt from Evertson, notwithstanding the assignment, was expressly reserved. Subsequently, in concert with Givan, the executrix took proceedings to collect the money secured by the bonds and mortgage, and before the action was first brought to a hearing, had realized, by reason thereof, for the benefit of Nicholas Evertson's estate, nearly the sum of $2,500. In June, 1830, the complainants brought their action in the late Court of Chancery, against Eliza Evertson, as executrix of such estate, alleging that they were the rightful owners of six-elevenths of such bonds and mortgage, and praying that the executrix account to them for any money received by her upon the same, or by means thereof; that the bonds and mortgage, and all benefit thereof, excepting only the interest of Givan and his assigns in the same, be decreed to the complainants, and that the executrix, in the meanwhile, be restrained from collecting or receiving the moneys due or to grow due thereon. The executrix answered, and claimed the part of the mortgage assigned to her, as belonging to her as such executrix; and the vice-chancellor of the first circuit, on the pleadings and proofs, decided that she, as executrix, had the prior and better equity to the property in question. The chancellor, on appeal, reversed that decision, and ordered and decreed that the complainants (the children of Walter Evertson) were entitled to the moneys secured in the name of George B. Evertson, by the bonds and mortgage, or so much thereof as it should appear was due from Evertson at the time of his death (in 1829), to the complainants, on account of the estate of their father, and directed a reference to ascertain the amount then due, or at least so far as was necessary to determine that an indebtedness existed to the extent of the securities, or the moneys secured thereby, and the interest thereon from the time when the interest was last paid to George B. Evertson, or for the benefit of the complainants; and also to ascertain what had been received by Mrs. Evertson on the mortgage, and how much was then due on it, and reserving further direction, except as to the costs of the appeal.
The decree of the chancellor was made and entered on the 27th June, 1836, and no appeal was taken therefrom by the executrix. It determined that the complainants were the rightful owners of six-elevenths of the bond and mortgage, it being their money, to the extent of $6,000, invested by George B. Evertson in those securities; and that Mrs. Evertson, as the executrix of Nicholas Evertson, or otherwise, acquired no right to it or its proceeds, as against them. As between the complainants and the executrix of Nicholas Evertson's estate, it settled their rights and her liability, and as no appeal was taken from the decision, but the same was acquiesced in by such executrix, I think it became the law of the case. But if the decree was not conclusive, and is now open for review, it was right. The evidence showed clearly that the complainants' money, to the amount of $6,000, was invested by George B. Evertson in the bond and mortgage. They never parted with their interest in the mortgage, and had a right to follow it and its proceeds, into the hands of any one, unless it were a bona fide purchaser for value, and without notice; and the onus probandi was upon the party claiming to have acquired title in that way, and not upon them. Mrs. Evertson, the executrix, acquired no right to it or its proceeds, as against them. She was no purchaser for value. She received it not only on account of an antecedent debt, but as a mere collateral security, without giving time, and without losing or impairing any right or remedy which, as executrix, she had against George B. Evertson. Evertson having assigned it to her as security for his own debt, in violation of his trust, such assignment neither extinguished or impaired at all the complainants' rights. They continued to be, as against her or Nicholas Evertson's estate, the rightful owners of the mortgage, as much as they were before the assignment, and she was accountable to them for it, and for all the proceeds of it which she collected.
The right, then, of the complainants to six-elevenths of the mortgage and its proceeds, and the liability of the executrix of Nicholas Evertson to respond to them for all moneys received by her upon it, or by reason of the security, were fixed as early as June, 1836, and nothing was required, preparatory to a final decree, but for a master to take and state an account of the amount of moneys received by Mrs. Evertson, and what was still due on the mortgage, and to ascertain whether George B. Evertson, at the time of his death, in 1829, was indebted to the complainants, as their testamentary guardian, to the extent of the security. But before this reference could be had, Mrs. Evertson, the executrix and sole defendant, died, and the cause thereby abated. In 1840, the present bill was filed in the nature of a bill of revivor and supplement, and the children and legatees of Nicholas Evertson, and also of his executrix, Eliza Evertson, were made defendants. It recited the former bill, and its allegations, and the proceedings under it, down to the decree of the chancellor, and further stated the death of Mrs. Evertson, in April, 1837; that the defendants were her children and the children of her husband, Nicholas Evertson, and his legatees and next of kin; that all the assets of the estate of Nicholas Evertson had been paid over and distributed by her, as acting executrix of such estate, in her lifetime, among his children and legatees; that the moneys received by her upon and by means of the bond and mortgage, were distributed as part of those assets, and that Mrs. Evertson, by her arrangements and dealings with other persons in relation to such bond and mortgage, had made herself personally liable for the amount of the complainants' interest therein, and prayed that the decree of the chancellor might be carried into full effect, and for further relief. All the defendants answered separately, admitting the prior proceedings in the suit, as alleged, and also that they were the children and legatees, c., of Nicholas Evertson; but one of the adult defendants, and the infants, by their general answer, put in issue the allegations that all the assets of such estate which had come to the hands of his executrix in her lifetime, were by her paid over and distributed to or among his heirs and legatees, or those standing in the right of such heirs or legatees; and this question, and the further one of the proper rate of contribution by the defendants, in satisfaction of the complainants' demand, has lengthened the controversy more than a quarter of a century, and added, from time to time, new parties defendants to it, as the original defendants either died or attained their majority, or intermarried with other persons. In March, 1843, the cause was brought to a hearing before the assistant vice-chancellor of the first circuit, upon the original and supplemental pleadings, and the proofs therein before the abatement, but without new proofs as to whether the defendants were the proper accounting parties, when an order was made declaring the rights of the complainants substantially as settled by the chancellor, and referring the cause to a master, for the proper accounts, with certain directions. From this order, establishing no new principle affecting the rights of the original parties to the cause, the defendants appealed to the chancellor, and upon this appeal the case was hung up until after the abolition of the Court of Chancery, and the suit and proceedings, under the judiciary act of 1847, had passed into the Supreme Court. In February, 1850, the appeal was heard at a General Term of the Supreme Court, which court decided, after argument, that the matter of the inquiries as to who had received the assets of Nicholas Evertson's estate, must be investigated by proofs in chief in the cause, before a reference could properly be ordered, and on this ground alone the court reversed the vice-chancellor's order, referring the cause specially for the required proofs. The defendants' counsel now make the point that the General Term had no power to modify the order of the vice-chancellor, in the respect mentioned, and that that error should now be corrected by this court, by reversing the judgment against the defendants and dismissing the bill. I entertain no doubt that the court possessed the power exercised; besides, the defendants fully acquiesced in the disposition made of the appeal. In March, 1854 (the required proofs having been taken), the cause came on again at a Special Term of the Supreme Court, when a reference was ordered to take and state an account of principal and interest, of six-elevenths of the bond and mortgage, from their date to the date of the referee's report, and also an account of all moneys received by the executrix of Nicholas Evertson, in her lifetime, or which she might, with care and diligence, have collected, upon or by means of the bond and mortgage; and also to inquire and report which of the defendants (if any), or of those whom the defendants represent, received any portion of the moneys collected by Mrs. Evertson by reason of the bond and mortgage, and how much, and how the same was received, whether directly, as part of the money derived from the bond and mortgage, or as part of the assets of Nicholas Evertson's estate, or of Eliza Evertson's estate, or how otherwise, c. In 1857, the referee made his report, with the evidence taken before him, and in June, 1858, final judgment was rendered against the defendants (apportioning the recovery amongst them) for the whole amount of six-elevenths of the bond and mortgage ($6,000), and interest thereon, which judgment, on appeal, was modified by reducing the recovery to the amount of the moneys, and interest thereon, actually received by Mrs. Evertson, as executrix, upon or by means of the mortgage.
The judgment, as modified, seems to me right. It appears by the admissions in the pleadings, and proofs in the cause, that the executrix received, as proceeds of the bond and mortgage, some $4,300, which she mingled indiscriminately with the proper assets of her husband's estate, all of which money, with the exception of $800, were collected by her subsequently to the filing of the original bill, by which she had notice that the trust money thus collected belonged to the plaintiffs. Neither the estate of Nicholas Evertson or his executrix, had any right to the mortgage or to its proceeds. As executrix, or otherwise, she gave no value therefor. She took the mortgage, not even in discharge of an antecedent debt due her testator's estate, but by way, merely, of collateral security for such debt, without relinquishing any right or security which she before had or held against the debtor. Had the case been determined in the lifetime of the executrix, the estate of Nicholas Evertson would unquestionably have been bound to respond to the plaintiffs, if not for their whole interest in the mortgage, at least for so much of such interest as had been actually received and appropriated by the executrix for the benefit of the estate. Mrs. Evertson did not die until 1837 (some seven years after the filing of the original bill), and before her death she had fully administered her husband's estate, and distributed all its assets, the moneys collected on the bond and mortgage being included in the distribution. The facts that there had been a full administration of such estate by the executrix, in her lifetime, and that its assets had been paid over, to an amount greatly exceeding the moneys collected upon the mortgage, or even the whole interest of the plaintiffs therein, in equal third parts, to his three children, viz., Mary Ann Givan, Margaret S. Richards and Edgar Evertson, respectively, or to the persons representing their shares, clearly appeared by the proofs in the case. The moneys, then, actually realized by the executrix, by means of the bond and mortgage, and to which she never had any right, were received by the defendants as assets of their ancestor's estate. These moneys belonged to the plaintiffs. They constituted a debt against the estate, and the defendants, as legatees or next of kin, having received of its assets an amount largely in excess, are equitably bound to refund. But they are liable to the plaintiffs on a further ground. The money which Mrs. Evertson received, and for which she never gave any value, came into their hands without their giving any value or consideration for it. The plaintiffs have the same right to the proceeds of the mortgage as they would have had to the mortgage itself if the defendants had received it instead of the proceeds. Their rights cannot be altered by the fact that the defendants received, at the same time, other money. If they got the plaintiffs' money, without giving value for it, although it was mixed with other moneys, they are answerable for it. They have no legal or equitable right to keep it. Their position in respect to the plaintiffs' claim, is simply this: The executrix of Nicholas Evertson's estate received moneys belonging to the plaintiffs, and for which she never gave value. These moneys were treated as assets of her testator, and as such paid over to the defendants, who were his next of kin and legatees, in the administration of his estate. They never gave any value for them. It was the plaintiffs' money when Mrs. Evertson received it, and has never ceased to be their money. It is still their money, and they are entitled to recover it from the defendants, who have no right to keep it. It is unimportant whether Mrs. Evertson did or did not know, when she collected the money secured by the mortgage, that it belonged to the plaintiffs. She had notice by the filing of the bill that it was theirs, and if she afterwards retained it, and gave it to others, or refused to deliver it to the plaintiffs, she and those who received it or its proceeds, without giving value for it, are accountable to the plaintiffs.
A single further question is to be noticed. Two answers were put in by the original defendant, Mrs. Evertson, to the bill of complaint; in the first, she admitted having collected, as executrix, $800 on the mortgage, and in the second, that subsequently to putting in the first answer, she had received thereon nearly $1,700 more. In taking and stating the account of moneys actually received by her upon or by means of the security, the referee, under objection, allowed the answers to be read in evidence. It is claimed that they were incompetent evidence against the defendants. I do not regard the objection as tenable. These answers constituted a part of the pleadings in the suit, and were on that ground, if upon no other, properly admitted on the reference. The bill filed in 1840 was but a continuation of the suit commenced against the executrix of Nicholas Evertson in 1830. That suit was suspended, not terminated, by her death. In courts of equity, an abatement of a suit by the death of a party, amounts to a mere suspension, and not to a determination of the suit. It may again be put in motion by a bill of revivor, and the proceedings being revived, the cause proceeds to its regular determination as an original bill. The bill of revivor is not the commencement of a new suit, but the mere continuation of the old suit. "A bill of revivor and supplement," says Chancellor KENT, "not only continues the suit upon abatement, but it supplies defects arising from some event subsequent to the institution of the suit. It is a compound of a supplemental bill and a bill of revivor, and in that character it states the original bill and proceedings thereon, and the subsequent writ; and it states also the consequent alteration and acquisition of interest with respect to the parties." ( Westcott v. Cady, 5 Johns. Ch., 354.) The plaintiffs were entitled to the benefit of all the proceedings in the cause prior to the suspension. They were not to try over questions that had been settled, but to proceed with the case at the point at which it was suspended by the death of Mrs. Evertson; the new bill being merely a continuation of the suit. Of course, being the same cause, the evidence taken before the abatement is evidence in all its stages; and so far as the merits are concerned, the cause can only rightfully be heard upon those proofs, together with the pleadings. The defendants have appealed from the decree of the chancellor, thus conceding the proceedings subsequent to the filing of the bill, in 1840, to be but a continuation of the suit, for if that decree is reviewable here, the proofs and the pleadings upon which it is founded must be before the court, else it would be impossible to determine whether it is or is not erroneous. But again. The answers of Mrs. Evertson were admissible evidence against the defendants on other grounds. Executors and administrators represent the testator or intestate as to personal estate, having the same power as he had, not only for receiving money, but also for admitting the receipt of it, so as to charge the estate therewith, and thereby to bind the next of kin and legatees in the same manner that admissions by the testator or intestate would have done. If the executrix had delivered to the plaintiffs the mortgage, or its proceeds, the defendants could not have recovered them. They were assets in her hands, and her acts would have bound the defendants, unless collusion or fraud could have been shown. This proves that, in her character of executrix, and quoad these assets, her admissions are binding on them. Holding the defendants only liable to the amount of the assets they actually received from Nicholas Evertson's estate, the admissions of the executrix bound these assets in their hands. It is not analogous to the admissions of a former owner of personal property in cases of purchase for value, but is analogous to such admissions in cases of representation; and in cases of representation, admissions by prior owners are admissible evidence. Besides, the transfer to the defendants by their trustee was not for a valuable consideration, so that they are not even within the rule as to admissions by former owners of personal property. ( Brisbane v. Pratt, 4 Denio, 63.) I think the judgment of the Supreme Court should be affirmed.
Judgment affirmed.