A tract of land in the State of Georgia was purchased by A.
McLearn, on which he established a rice plantation, put slaves upon
it, paid part of the purchase money, gave a judgment for the
balance, and died, leaving a son, James H. McLearn, his devisee,
who, to obtain possession of the estate, mortgaged the land and
slaves for the balance of the judgment. A judgment under the laws
of Georgia binds personal as well as real property. The son died,
part of the debt being unsatisfied, leaving as his nearest of kin
aliens and also more remote kindred who were citizens of the United
States. The real estate was sold to satisfy and did satisfy the
mortgage. The personal estate was sold by the executor. The aliens,
who were nearest of kin, claimed the proceeds of the personal
estate. The kindred of the deceased, who were more remote but who
were citizens of the United States, claimed that the personal
estate should have been appropriated to pay the mortgage, and that,
not having been so appropriated, they were entitled to the money
arising from its sale to reimburse them for the value of the real
estate taken by the mortgagor, the aliens nearest of kin not being
entitled by the law of Georgia to take real estate by descent. The
court held that as both the real and personal estate had been
charged with the mortgage debt, both funds must be applied, in
proportion to their respective amounts, to its payment, any debt
not covered by the mortgage to be paid out of the personal estate,
the nearest of kin to take the residue of the proceeds of the
personal estate and the remoter kin, citizens of the United States,
to take the residue of the proceeds of the real estate and the real
estate unsold.
Page 35 U. S. 626
Archibald McLearn, a native of Scotland and afterwards a citizen
of the United States, purchased a tract of land called Gowrie and a
small island in Chatham County in the State of Georgia, on which he
established a rice plantation, and having paid part of the purchase
money, a judgment was obtained against him for the balance. He
died, having devised the whole of his estate, real and personal, to
his son, James H. McLearn. The property of the testator consisted
chiefly of the plantation in Chatham County and the negroes by
which it was cultivated. By the laws of Georgia, all the property
of the testator, both real and personal, was bound by the judgment
against Archibald McLearn.
James H. McLearn, holding under the will of his father,
Archibald McLearn, the whole of his estate, thus encumbered by the
judgment for the balance of the purchase money due for the land in
order to obtain possession from the executors of the will, who
insisted on keeping possession until the debts due by the testator
were paid, gave to the creditor of his father his bond for the
unpaid balance of the purchase money, and executed a mortgage to
secure the payment of the bond on the land and on the negroes
belonging to the estate. He paid a part of the debt and died
without issue and intestate, leaving a balance of the original debt
for the purchase money unpaid and secured by the bond and
mortgage.
The mortgagee foreclosed the mortgage and sold the land for
$19,739.13, thus satisfying the whole of the claims of the
creditors of Archibald McLearn and James H. McLearn for the
original purchase money of the real estate and for the interest on
the same.
James Wallace administered to the estate of James H. McLearn,
sold all the personal property, and after paying all the remaining
debts of his intestate, there was a balance in his hands, in 1833,
exceeding $21,000, which he invested, by agreement of all
interested, for the benefit of whoever might be entitled to the
same.
The nearest of kin to James H. McLearn were John McLearn and
others, who were aliens, residing at the time of the decease of the
said James H. McLearn in Great Britain, and were subjects of the
king of that kingdom.
The wife of Archibald McLellan was more remotely related in
blood to the intestate, and she and her husband were citizens of
the State of South Carolina at the time of his decease, and she was
the nearest of kin to him capable of inheriting his real estate
according
Page 35 U. S. 627
to the laws of Georgia, which do not allow aliens to inherit
land. As the next of kin capable of inheriting, they claimed the
real estate of James H. McLearn.
John McLearn and wife, and the aliens nearest of kin to the
intestate, filed a bill in the Circuit Court of the United States
for the District of Georgia, against James Wallace, administrator
of James H. McLearn, and against Archibald McLellan and wife, the
remoter kindred of the intestate, citizens of South Carolina. The
bill prayed that the complainants should be declared entitled to
the estate, real and personal, of James Hendley McLearn; that the
same should be delivered to them and the cash in the hands of the
administrator should be paid to them. The bill also prayed that
Archibald McLellan and wife should be decreed to have no interest
in the real estate, and for other and farther relief.
Archibald McLellan and wife filed a bill in the same court
against John McLearn and others, the alien kindred of the
intestate, and against James Wallace, his administrator. The bill
prayed that the complainants may be declared entitled to so much of
the real estate of James H. McLearn, as remained unsold, that the
alien kindred of the said James should be decreed to have no
interest in the lands, and that the administrator should be decreed
to account to them for the whole of the personal estate remaining
after the payment of the debts of his intestate, and to account to
them for the amount of the sales of the land, and to pay to them
the value of the said land sold, out of the proceeds of the
personal estate remaining unadministered, and for other and further
relief, &c.
James Wallace, the administrator of James H. McLearn, filed his
bill of interpleader claiming the protection of the court,
exhibiting an account, and offering to deliver the unadministered
part of the estate to such party as the court may adjudge to be
entitled to receive it.
The circuit court decreed that Archibald McLellan and wife, as
the nearest of kin to James H. McLearn capable under the laws of
the State of Georgia of inheriting real estate, they being citizens
of the United States at the time of his decease, were entitled to
the whole of the real estate of which James H. McLearn died seized
and possessed, but the same having been sold, the court allowed
them the money for the part sold and all the real estate unsold,
and to John McLearn and the aliens the court allowed the remaining
part of the estate, after the payment to Archibald McLellan and
wife of the sum of $19,739.13, the amount the plantation sold for,
less
Page 35 U. S. 628
the costs of suit, &c. The sum decreed to be paid to John
McLearn and wife amounted to $1,557.35. The administrator, James
Wallace, was decreed to pay those sums to the parties respectively
and to deliver the title deeds, &c.
From these decrees, John McLearn and others, aliens, appealed to
this Court.
Page 35 U. S. 636
MR. JUSTICE McLEAN delivered the opinion of the Court.
From the evidence in the case it appears that Archibald McLearn
purchased a tract of land in the State of Georgia, on which he
established a rice plantation, paid a part of the purchase money,
and suffered a judgment to be obtained against him for the balance;
that he afterwards died, leaving James H. McLearn, his only son and
devisee; that the property of the deceased consisted chiefly of
the
Page 35 U. S. 637
rice plantation and the slaves by which it was cultivated; and
that under the laws of Georgia, personal as well as real property
is bound by a judgment. That the devisee, to obtain possession of
the property, gave his own bond, secured by a mortgage on the land
and slaves, for the balance of the judgment; he afterwards died,
leaving a part of this debt unsatisfied, and that afterwards the
mortgage was foreclosed and paid by a sale of the land.
The complainants are aliens, and being nearest of kin to the
deceased, claim as heirs under the law of Georgia the personal
property, and also the proceeds of the real estate, after the
mortgage shall have been paid.
The defendants, McLellan and wife, who are more remotely
connected with the deceased, being citizens, claim the real estate
as heirs and contend that the debts should have been paid by a sale
of the personal property and that, as the real estate has been sold
for this purpose, they insist that the proceeds of this sale should
be paid to them out of the personal property.
It appears that after the sale of the land, on application of
James Wallace, the administrator, the personal property was sold
and the moneys arising from this sale, as also a surplus, after
paying the mortgage, from the sale of the real estate, remain in
his hands, and which he is ready to pay over as the court shall
direct. The relationship of the respective parties to the deceased,
as set forth in their pleadings, is not disputed.
On the part of the complainants it is contended that, being next
of kin to the deceased, under the laws of Georgia they inherit the
personal property and are entitled to the proceeds on the sale of
the lands. That the personal property goes to them notwithstanding
their alienage is not controverted by the defendants, but they
insist that the complainants are not entitled to the proceeds of
the real estate.
By an Act of the Legislature of Georgia entitled an act to
explain and amend the escheat laws, passed 15 December, 1810, it is
provided
"That in all cases where a citizen of this state or of the
United States shall die or may have died possessed of or entitled
to any real estate and shall leave no heir who can inherit the same
because of him or her being alien, that in such case the said real
estate shall not be held or considered subject to escheat, but the
executor or administrator of such deceased citizen shall and may
proceed in the manner pointed out by law to make sale of such
real
Page 35 U. S. 638
estate, and pay over the proceeds of such sale to the devisee or
devisees named in the will of such deceased citizen. . . ."
The preamble of this act refers only to the estates of citizens
of Georgia who bequeath their property to persons residing in
foreign parts, but the first section seems to refer as well to
cases of intestacy, as where wills have been made.
The complainants contend that the words in this statute "shall
leave no heir who can inherit" should be construed to mean shall
leave no heir next of kin, or devisee, who can inherit by reason of
alienage, that then the real property shall be sold and the
proceeds paid over as by the act is required. And that this
construction will give effect to the intention of the legislature,
which was to remove the disability of alienage from the next of kin
or devisee of a deceased citizen.
It does not appear that a construction of this statute has been
given by the Supreme Court of Georgia, and we think the
construction contended for is not authorized by the words of the
statute. Where a citizen shall die leaving no heir must mean not
the next of kin, but an heir that may inherit the real estate under
the laws of Georgia.
In the present case, the wife of McLellan, though remotely
connected with the deceased, is within that degree of consanguinity
which may claim the inheritance under the law of descents, and of
course the land in question descended to her, and consequently it
cannot be sold under the law of escheats for the benefit of the
foreign heir.
This construction is not shaken by the act of 23 December, 1789,
which provides that
"Should any case arise which is not expressly provided for by
this act, respecting intestates' estates, the same shall be
referred to and determined by the common law of this land, as it
hath stood since the first settlement of this state, except only
that real and personal estate shall always be considered in respect
to such distribution, as being precisely on the same footing."
The case under consideration is not unprovided for by the laws
of the state, as the personal property goes to the next of kin,
though they are foreigners, and the land descends to the domestic
heir.
In the able printed argument of the complainants' counsel it is
contended that the real estate, equally with the personal,
constitutes assets in the hands of the executor or administrator,
and a great number of statutes are referred to in order to sustain
this position.
Page 35 U. S. 639
The administrator, it is said, may sell the land, and convey it
under the sanction of the court, and that in many cases it is sold
for the payment of debts in preference to a disposition of the
personal property. And it is stated that in Georgia there is no
marshaling of assets, as in some other states. That the creditor
may, in satisfaction of his demand, direct the personal or real
estate to be sold at his option, and that the same option may be
exercised by the defendant in execution.
It is unnecessary to refer to the various statutes of the state
which have been noticed by the counsel for the complainants. They
are similar to the statutes of other states which make the real
estate of deceased persons subject to sale for the payment of
debts, and under the sanction of the court, on the application of
the administrators, authorize the sale of such estate. But this
does not show that in the ordinary course of administration, the
personal property is not the primary fund for the payment of debts.
Indeed, from the oath of the executor or administrator and his
prescribed duty, as well as various provisions in regard to the
sale of land for the payment of debts, it would seem that the
personal property in the State of Georgia, as in perhaps every
other state of the union, should be exhausted, except under
peculiar circumstances, before the land can be sold.
The general management of the real estate, it seems, in Georgia,
during the minority of the heirs, devolves upon the executor or
administrator, and from the representations of certain gentlemen in
the state who have held high judicial stations it appears that the
executor or administrator does exercise a very great if not
unlimited control over the management of the real estate of the
deceased. It is insisted that the real estate descends to the
administrator as assets, and that he may bring an action of
ejectment in his own name to recover the possession of it.
As there are no regular reports of judicial decisions in
Georgia, we can derive but little aid from the adjudication of its
courts on questions which arise under the local law. But in the
view which we have taken of this case, it is of no importance to
ascertain the respective liabilities of the personal and real
estate of deceased persons for the payment of debts, nor indeed
what may be the duties of an executor or an administrator in the
settlement of an estate. These would be important in a controversy
between the representatives of the estate and its creditors. The
case under consideration
Page 35 U. S. 640
does not arise from the claim of creditors, but it involves the
rights of distributees. And these rights are not affected by the
ordinary course of administration, but depend upon the peculiar
facts of the case.
Had the debt for the payment of which the land was sold been an
ordinary debt existing against the estate, and the payment of which
was expected to be made by the common course of administration,
there could be little or no difficulty in deciding that it should
have been paid out of the personal assets, and as it had not been
so paid, to direct, as prayed for by McLellan and wife, that the
payment from the real estate should be reimbursed by a sale of the
personal.
At the decease of James H. McLearn, his estate, both real and
personal, was encumbered by a mortgage, for the payment of which
the land was sold. And this mortgage was given in discharge of a
judgment which was obtained against his father, Archibald McLearn,
in his lifetime and which bound the real and personal property
covered by the mortgage. A considerable part of this debt was
incurred, it seems, by the purchase of this plantation. But the
argument that the vendor and his assignee have an equitable lien on
the land for the purchase money seems not to be well founded.
That this equitable lien exists equally in the hands of the
vendor or his assignee is a well settled principle, but the lien
was discharged by the mortgage, which added a large amount of
personal property to the real estate to secure the payment of the
purchase money.
To learn the nature of the encumbrance on the estate, we must
look to the mortgage and the judgment, both of which created a lien
upon the whole property, and also to the debt of the vendor, for
which the judgment was obtained. The lien under the mortgage was
more favorable to the estate than the lien under the judgment for
which it was substituted, as it gave time to the devisee and placed
the estate in his possession and under his control.
With this encumbrance, created in the manner and under the
circumstances stated, did this estate, both real and personal, on
the decease of James H. McLearn, descend to his heirs. The personal
estate goes to the foreign heirs, and the real estate to the
domestic, and this gives rise to any difficulty which exists in
determining this controversy.
If the whole estate descended either to the foreign or
domestic
Page 35 U. S. 641
heirs, it would be an ordinary case of distribution, and it
could be a matter of little importance whether the mortgage were
paid by a sale of the real or personal property. But under the
circumstances of the case, it becomes a matter of great importance
to the respective claimants out of which fund this mortgage debt
shall be paid. This payment of it out of the real or personal
property will leave but a small balance to the heirs of that
fund.
The principles of this case are not changed by the sale of the
property. The funds realized from the sale in equity partake of the
same character and are subject to the same rule as the property
which they represent. It is therefore a matter of no importance
whether the debt has been paid out of the personal or real fund, or
indeed whether it has been paid at all. The court must consider the
case as though the real estate was still vested in the South
Carolina heirs and the personal property in the heirs who live in
Scotland. In the final decree, it will be necessary to act upon the
funds as they now exist in the hands of the administrator.
The important question must now be considered, how this mortgage
debt shall be discharged. Shall it be paid out of the real estate,
or out of the personal, or out of both?
That the land should not be wholly exempt from this encumbrance,
is clear by every rule of equity which applies to cases of this
description. In addition to the consideration that the mortgage
binds the land, the fact that a considerable part of the debt was
incurred for its purchase, cannot be wholly disregarded. Nor would
it comport with the principles of equity to make the whole debt a
charge upon the land, to the exemption of the personal property; as
the lien of the mortgage covers the personal as well as the real
property, and as at least a part of the debt was contracted on
other accounts than the purchase of the land.
The rights of the foreign heirs, under the laws of Georgia, are
to be regarded equally as those of the domestic heirs. Each have
interests in the property of the deceased which are alike entitled
to the consideration and protection of a court of chancery.
Suppose James H. McLearn had died leaving a will by which he
devised different tracts of land to different persons capable of
taking by devise, and the entire real estate was encumbered by a
mortgage or other lien which, after the will took effect, had been
paid by sale of one of the tracts of land. Could a court of
chancery hesitate in such a case to require a contribution from the
devisees, not affected
Page 35 U. S. 642
by the sale, so as to make the lien a charge upon all the land?
The plainest dictates of justice would require this whether regard
be had to the rights of the devisees or to the intention of the
testator. And is not the case put analogous to the one under
consideration?
By the act of the elder McLearn, his property, both real and
personal, was encumbered.
The heirs, both foreign and domestic, of the younger McLearn,
who take this property take it charged with the continued
encumbrance. That James McLearn had a right and was bound to
continue this charge upon his property no one will dispute. He
might have left the debt with the consent of the creditor if there
had been no prior lien to be discharged out of his estate as the
law authorized, and in such case it would have been payable out of
the personal estate. Or he might have made the debt a specific
charge on his personal property, or on his real, but he did
neither. He charged its payment, in pursuance of the judgment lien,
on his property both personal and real.
This lien, as between the distributees, fixes the rule by which
their rights must be decided. The domestic heirs cannot claim to
receive the land free from the lien of the mortgage, nor can the
foreign heirs claim the personal property exempt from it. In equity
it would seem that each description of heirs should contribute to
the payment of the mortgage debt in proportion to the fund
received. This rule, while it would do justice to the parties,
would give effect to the intention of the ancestor. That intention
is clearly shown by the lien created on the property and by the
rules of equity; such intention must be regarded.
The decision of this case must rest upon familiar and well
established principles in equity, and these principles will be
shown by a reference to adjudicated cases. In the case of
Pollexfen v. Moore, 3 Atk. 272, it appears Moore in his
lifetime agreed to purchase an estate from the plaintiff for
�1,200, but died before he had paid the whole purchase money. Moore
by will, after giving a legacy of �800 to the defendant his sister,
devises the estate purchased and all his personal estate to John
Kemp and makes him his executor. The executor commits a
devastavit on the personal estate and dies, and the estate
descends upon his son and heir at law. Pollexfen brought his bill
against the representative of the real and personal estate of Moore
and Kemp to be paid the remainder of the purchase money. Mrs.
Moore, the sister and legatee of Thomas Moore, brings her
Page 35 U. S. 643
cross-bill and prays, if the remainder of the purchase money
should be paid to Pollexfen out of the personal estate of Moore and
Kemp, that she may stand in his place and be considered as having a
lien upon the purchased estate for her legacy of �800. And the lord
chancellor said
"That the estate which has descended from John Kemp, the
executor of Moore upon Bayle Kemp, comes to him liable to the same
equity as it would have been against the father who has misapplied
the personal estate, and in order to relieve Mrs. Moore, I will
direct Pollexfen to take his satisfaction upon the purchased
estate, because he has an equitable lien both upon the real and
personal estate, and will leave this last fund open, that Mrs.
Moore who can at most be considered only as a simple contract
creditor, may have a chance of being paid out of the personal
assets."
This case shows that in England, the rule which requires the
personal property to be first applied in the payment of debts is
deviated from where the justice of the case and the rights of
parties interested require it.
Had the debt due to Pollexfen been directed to be paid out of
the personal property, it would have left no part of that fund to
pay the legacy of Mrs. Moore, and for this reason the debt was
decreed to be paid out of the land. Now if the mortgage debt in the
present case shall be directed to be paid out of he personal fund,
it would defeat the foreign heirs, whose claim to this property
under the law of Georgia cannot be less strong than a bequest.
In 3 Johns.Ch. 252, it is laid down, as between the
representatives of the real and personal estate, that the land is
the primary fund to pay off a mortgage. And in 2 Bro. 57, lord
Kenyon, as Master of the Rolls, laid down the same rule: that where
an estate descends, or comes to one subject to a mortgage, although
the mortgage be afterwards assigned and the party enter into a
covenant to pay the money borrowed, yet that shall not bind his
personal estate.
There is no doctrine better established than that the purchase
of land subject to a mortgage debt does not make the debt personal,
and on the question's being raised, such debt has been uniformly
charged on the land. And this principle is not changed where
additional security has been given.
In the case of
Evelyn v. Evelyn, 2 P.Wms. 659; where A
mortgaged the land for �1,500 pounds, and his son B covenanted with
the assignee of the mortgage to pay the money. He succeeded to
Page 35 U. S. 644
the premises after the death of his father and died intestate.
The question was whether his personal estate, under the covenant,
should be applied in payment of the mortgage, and it was decided
that the land should be charged, and the covenant was only
considered as additional security.
In the case of
Waring v. Ward, 7 Ves. 334, Lord Eldon
says:
"The principle upon which the personal estate is first liable in
general cases is that the contract primarily is a personal
contract, the personal estate receiving the benefit, and, being
primarily a personal contract, the land is bound only in aid of the
personal obligation to fulfill that personal contract."
It has long been settled, therefore, that upon a loan of money,
the party meaning to mortgage, in aid of the bond, covenant, or
simple contract debt, if there is neither bond nor covenant, his
personal estate, if he dies, must pay the debt for the benefit of
the heir. But suppose a second descent cast, and the question
arises, the personal estate of the son and his real estate
descended to the grandson; then the personal estate of the son
shall not pay it, as it never was the personal contract of the
son.
And this is the well established rule on this subject. If the
contract be personal, although a mortgage be given, the mortgage is
considered in aid of the personal contract, and on the decease of
the mortgagor his personal estate will be considered the primary
fund, because the contract was personal; but if the estate descend
to the grandson of the mortgagor, then the charge would be upon the
land, as the debt was not the personal debt of the immediate
ancestor.
And so if the contract was in regard to the realty, the debt is
a charge on the land. It is in this way that a court of chancery,
by looking at the origin of the debt, is enabled to fix the rule
between distributees.
In the case under consideration, the mortgage was given by James
H. McLearn, but it was not given to secure a debt created by him.
The mortgage merely changed the security, but did not affect the
extent of the judgment lien. And this judgment was obtained chiefly
for the purchase money of the estate. In effect, the debt for which
the judgment was obtained against Archibald McLearn, and for which
the mortgage was given, constituted an equitable lien on the land,
and had the mortgage covered only the land, it must have been
considered the primary fund. The debt for which the mortgage was
given was not the personal contract of James H. McLearn, but the
contract of his ancestor in the purchase of the estate. But
Page 35 U. S. 645
if the contract was personal, and might have been a charge on
the personal estate devised to James H. McLearn, yet the character
of the debt in this respect is changed in the hands of the present
heirs. In the language of Lord Eldon, this debt cannot be a charge
on the personalty, because it was not created by the personal
contract of James H. McLearn.
This, under the authorities cited, would be the rule for the
payment of the mortgage debt if James H. McLearn had not executed a
mortgage on the personal as well as the real property, which, as
devisee, he received from his father.
This mortgage on the personal property cannot be considered in
the light of additional surety to the lien which before existed. If
it could be considered in this light, the land would still be the
primary fund, and the personal mortgage as surety or auxiliary to
the land. But this mortgage can in no respect be considered as
additional surety. It might have been so considered in reference to
the equitable lien of the vendor for the purchase money, as such
lien was limited to the land; but the lien of the judgment obtained
against the ancestor of James H. McLearn, and for which the
mortgage was substituted, extended, as before remarked, to the
personal as well as real estate of the defendant.
The debt, then, for which the mortgage was given did not arise
from the personal contract of James H. McLearn, but by the contract
of his ancestor, and the mortgage was given in discharge of the
judgment. This created no new lien upon the personal property. It
come to James H. McLearn under the will of his father, subject to
the lien of the judgment. The mortgage then did not and was not
intended to create any new charge upon the personalty, but to
continue, in a different form, that which already existed.
In this view the charge on the personal estate can no more be
disregarded than the charge upon the real, and in this respect this
case differs from the cases referred to. The charge on both funds,
under the mortgage, may be compared to a will devising the funds to
the respective heirs now before the Court, as the statute provides,
and leaving the debt as a charge upon his real and personal
property. Can any doubt that such a bequest would be considered by
a court of chancery as a charge upon both funds? Now although James
H. McLearn has made no will, as in the supposed case, yet he gave a
mortgage to continue the charge on the personal property which
existed under the judgment, and the law of Georgia fixes the
rule
Page 35 U. S. 646
of descent. This act of the ancestor, connected with the Georgia
law of descent, gives as decided and clear a direction to the
property, both real and personal under the mortgage, as if in his
last will James H. McLearn had so devised it. Both funds being
charged with the mortgage debt must be applied to its payment, in
proportion to their respective amounts. And as the property, both
real and personal, has been converted into money, the proportionate
part of each can be applied to this payment without difficulty.
And any debts of the estate not covered by the mortgage must be
paid out of the personal fund.
As the decree of the circuit court was not made in conformity to
this view of the case, that decree must be
Reversed and the cause remanded to that court with
instruction to enter a decree in conformity to this
opinion.
This cause came on to be heard on the transcript of the record
from the Circuit Court of the United States for the District of
Georgia and was argued by counsel, on consideration whereof it is
the opinion of this Court that the mortgage debt should be paid out
of the real and personal property embraced by the mortgage
pro
rata, whereupon it is ordered, adjudged, and decreed by this
Court that the decree of the said circuit court in this cause be
and the same is hereby reversed, and that this cause be and the
same is hereby remanded to the said circuit court for further
proceedings.