In the distribution of the estate of a deceased person, an
assignment to one of the distributees of a mortgage which is for a
greater sum than his distributive share does not make him
responsible to the executors for the difference between his share
and the nominal amount of the mortgage, in case the mortgaged
premises sell for less than the amount of his share, where the
distributee has, with proper diligence and in good faith, subjected
the mortgaged property to sale, and has not bound himself
absolutely for the nominal sum secured by the mortgage.
Page 42 U. S. 15
The facts in the case were these.
General Washington, by his will, executed in 1799, devised all
the rest and residue of his estate, real and personal, not before
disposed of by said will to be sold by his executors at such time,
in such manner, and on such credits (if an equal, valid, and
satisfactory distribution of the specific property could not be
made without) as in their judgment should be most conducive to the
interest of the parties concerned, and the moneys arising therefrom
to be divided into twenty-three equal parts.
On 19 July, 1802, the executors assembled the legatees with a
view to consult them upon certain questions arising under the will,
and it was agreed that a certain portion of the personal estate
should be sold, another portion divided, a certain portion of the
lands divided, and the residue sold by the executors.
On 6 June, 1803, a meeting of the devisees was held at which it
was agreed that certain lands, lying on the eastern waters, should
be sold, and if purchased by the devisees, such purchaser should
pay at three equal annual installments with six percent interest
from the day of sale, but to be credited with his proportion of the
sales which had there been made, and which were to be divided among
the said devisees.
On 7 June, 1803, Burdett Ashton, who was entitled, in his own
right, and that of his sister, to two-thirds of a distributive
share, purchased from the executors property belonging to the
estate, for the sum of $9,410.20, payable one-third on demand,
one-third on 7 June, 1805, and one-third on 7 June, 1806.
On 12 March, 1805, Ashton mortgaged to the executors three
tracts of land in Jefferson County, Virginia, amounting in the
whole to one thousand and seventy-six acres, to secure the payment
of the purchase which he had made, as above stated.
On 11 March, 1806, the executors assigned the mortgage to Thomas
Hammond, who was entitled to a full distributive share in right of
his wife, and attached to the assignment the following
memorandum.
"The executors are not to be made personally liable in any
respect or on any pretense
Page 42 U. S. 16
wherein, for, or by reason of the above assignment, and further,
the within named Burdett Ashton, Jr., his heirs, executors and
administrators, is to have credit for his proportion of $5,179.05,
being the share of each legatee of said George Washington of
certain sales of real and personal estate made by the said
executors, as well as for the proportion of the sister of the said
Burdett, as her attorney in fact."
As it was thought that the distributive shares of the said
Ashton and Hammond, when added together, would not quite exhaust
the debt due from Ashton to the executors, the latter took from
Hammond, on the same day on which they made the assignment, a deed
by way of mortgage in which it was stipulated that Hammond should
indemnify the executors and also should pay to the executors
whatever surplus might remain after deducting Hammond's and
Ashton's distributive shares from the amount of Ashton's debt to
the executors.
On 2 April, 1806, Hammond, being indebted to Smith, Calhoun
& Co., of the City of Baltimore, in the sum of $5,604,64,
assigned to them all his right to so much of the mortgaged premises
as would be sufficient to satisfy the sum aforesaid. As speedily as
possible, Smith, Calhoun & Co. obtained a decree in the High
Court of Chancery in Virginia to foreclose Ashton's mortgage, who,
at the time of such foreclosure, was insolvent, and died so. The
result of such sale is thus stated in the opinion of the circuit
court, delivered in a subsequent stage of the cause.
The property mortgaged by Ashton, sold under decree for (net
proceeds) $3,908.46.
The debt of Ashton was . . . . . . . . . . . . . . $9,410.20
He had a right to retain . . . . . . . . . . . . . 3,452.70
---------
The real amount of Ashton's debt was . . . . . . . $5,957.50
Hammond's claim was. . . . . . . . . . . . . . . . 5,179.05
---------
Amount rec'd by Hammond's mort. to executors . . . $ 778.45
At some period between 1819 and 1823, the executors addressed a
circular letter to each of the legatees, who had by this time
become very numerous, expressing a desire to close their
executorial duties and stating that a difficulty existed in the
mode of calculating interest. They say
"there are but two
Page 42 U. S. 17
modes by which our objects can be attained -- a reference of the
accounts to arbitration, or a suit; the former we should prefer as
most consonant with the injunction of our testator, if it were not
attended by insuperable difficulties, on account of the dispersed
situation of the legatees, who consequently could scarcely be
expected to agree upon the arbitrators; we therefore propose that
the legatees should concur in instituting an amicable suit in
chancery against us, to which we will immediately file an answer,
and obtain an order of reference to the master, to adjust and
report the precise sum to which each legatee is entitled; which
being done, we can proceed with safety to pay such sums as fast as
the money comes to our hands."
In 1823, the legatees, in conformity with the above suggestion,
filed a bill in the Circuit Court for the District of Columbia,
which the executors immediately answered, admitting the existence
of a balance to be distributed, and submitting to any decree which
the court might think proper to pass. A special auditor was
appointed to state the accounts of the parties.
In 1825, the executors filed a cross-bill, alleging that all the
parties were not in court, and praying that they might all be
brought in. The proper proceedings were accordingly had as to the
absentees, and in 1826 the circuit court passed a decree directing
the sums to be paid to the several legatees, with the exception of
the administratrix of Thomas Hammond and of Burdett Ashton. The
auditor stated the account of Hammond upon two different
principles; in one, giving him credit for $5,178.68, a distributive
share, and charging him with $4,006.24, the gross amount of the
proceeds of the mortgage sale; and bringing the executors in debt
to Hammond upwards of $4,000; in the other, giving him credit for
the same sum, but charging him with the balance of the debt due by
Ashton, bringing him in debt to the executors upwards of $2,000.
The circuit court adopted the latter, and decreed that the
administratrix of Hammond should pay to the executors the sum of
$2,158.56, with interest on $1,127.27, the principal sum due, from
1 June, 1824.
From which decree, the administratrix appealed to this
Court.
Page 42 U. S. 18
MR. JUSTICE DANIEL delivered the opinion of the Court.
This suit was originally of an amicable character, and was
instituted at the request of the executors of General George
Washington by the legatees under his will with a view to a
definitive settlement of the accounts of the executors and a
distribution of the estate. Subsequently to its institution, a
cross-bill was filed by the executors for the purpose of covering
some of the legatees, who had been omitted in the prior
proceedings, and the two causes were prosecuted and decreed upon as
one suit. The facts out of which the questions now presented for
consideration have arisen are substantially the following.
General Washington, after having disposed of a portion of his
estate, devised all the residue of his real and personal property
to be sold by his executors if it could not be equally and
satisfactorily divided, and directed the proceeds to be divided
into twenty-three equal shares, and distributed by shares and parts
of shares, amongst twenty-nine persons named, and others not named
but designated by a collective description. Amongst those having an
interest in the estate was Mildred Hammond, the wife of Thomas
Hammond, in whose right the appellant claims one share of the
twenty-third part of the residue. After a previous distribution by
the executors of $7,000, the amount arising from further sales and
remaining for distribution at the commencement of this suit was
near $120,000.
Several of the residuary legatees became purchasers at the sales
made by the executors, some for more, others for less than their
shares or parts of shares to which they were entitled. They gave
securities for the amount of their purchases, as other purchasers
would have been required to do, with an understanding that their
several shares of the estate, when ascertained, should be credited
against the sales respectively made to them.
Among those legatees who purchased to an amount exceeding their
shares was Burdett Ashton, who was entitled to one-third of one
share in his own right and to one other third of a share in right
of a sister, together equal to two-thirds of one-twenty-third or
full share of the residuum subject to distribution. This interest
of Ashton was subsequently ascertained to $3,425.20.
Page 42 U. S. 19
He purchased property in June, 1803, to the amount of $9,410.20,
payable in three annual installments, and for securing this debt,
with interest from the date, executed to the executors a mortgage
on 12 March, 1805.
Thomas Hammond (the husband of the legatee, Mildred Hammond)
obtained from the executors an assignment of the mortgage from
Ashton for the $9,410.20, and executed to them an obligation to
account for any surplus which he might receive from Ashton's
mortgage, beyond the share of Mildred Hammond, amounting to
$5,179.50 after crediting Ashton with two-thirds of a share to
which he was entitled. The consideration for the assignment to
Hammond is stated to be "one dollar in hand paid, but principally
on account" of the share of his wife in the residue of General
Washington's estate, and they bargain, sell, and assign to the said
Hammond, his heirs &c., all the right, title, interest, estate,
claim, and demand of the executors to the within-mentioned land and
premises, and to the deed within mentioned. At the foot of the
assignment is a memorandum "that the executors are not to be
personally liable in any respect, or on any pretense, for or by
reason of the above assignment," and further "that the within named
Burdett Ashton, his heirs &c., shall have credit for his
proportion, and for the proportion of his sister," in one share of
the residuum of the estate &c.
Within less than a month after receiving an assignment from the
executors, Hammond assigned Ashton's mortgage to Smith, Buchanan,
and Calhoun in consideration of a debt due from him to them. These
last assignees filed their bill in the Supreme Court of Chancery in
Virginia to foreclose Ashton's mortgage, and to this bill the
executors of Washington were made parties defendants. In their
answer, these executors admit the interests of Hammond and Ashton
in the estate of their testator, the assignment by them to Hammond
of Ashton's mortgage, and they ask nothing on their own account
except this that as certain funds of the estate upon the basis of
which Ashton's proportion had in part been calculated, might turn
out to be unavailable, he, Ashton, might be required to indemnify
the executors against such a contingency.
The settlement of Ashton's account having been by the court of
chancery referred to the master, a large balance was reported
Page 42 U. S. 20
as due from Ashton on the mortgage, after allowing him a credit
for his own and his sister's shares of a legatee's proportion. The
court decreed a foreclosure of the mortgage and a sale of the
mortgaged premises to raise the balance due from Ashton. The sale
made under the decree produced a sum considerably less than the
amount of the debt from Ashton to the executors of Washington.
In the record in this cause are found accounts stated under
orders of the circuit court between the executors of Washington and
the distributees, under the will of their testator. In the account
of Burdett Ashton, after crediting him with the proceeds of the
mortgage sale, a balance is struck against him of $6,197.70. The
account with Hammond is stated under two aspects; under the first,
in which he is charged with the net proceeds only, of Ashton's
mortgage, he is a creditor, by the sum of $4,084.30; under the
second, in which Hammond is charged with the entire balance due
from Ashton, without regard to the actual proceeds of the mortgage,
he is made a debtor. The circuit court, upon the hearing of this
cause, being of the opinion that Hammond was absolutely bound to
the executors of General Washington for whatever amount the
mortgage debt of Ashton exceeded the share of Mrs. Hammond as a
legatee, notwithstanding the failure of the mortgaged premises to
produce the amount of the debt for which they were pledged;
decreed, in conformity with the second statement of the master of
Hammond's account (No. 11) that the administratrix of Hammond, out
of the assets in her hands to be administered, should pay to the
executors of George Washington the sum of $2158.56, the balance
appearing to be due to them by statement No. 11, with interest on
$1,027.27, the principal sum due from 1 June, 1824.
The basis of the above decree of the circuit court, and it is
the foundation on which the argument for the appellees has been
conducted, is the assumption that Hammond, in taking an assignment
of Ashton's mortgage from the executors of Washington, undertook to
guarantee the sufficiency of the mortgage subject to extinguish the
amount for which that subject was pledged, and bound himself
absolutely to be accountable for that entire sum.
It is difficult to reconcile such a course on the part of
Hammmond
Page 42 U. S. 21
with rules of common prudence or probability, nor can a claim to
power in the executors to make such an exaction upon Hammond be
viewed as consistent with fairness, or as called for by any
obligation incumbent upon these executors. Hammond knew, when he
took the assignment of Ashton's mortgage, that he was entitled to
$5,179.50, admitted by the executors to be in their hands or within
their control. This is apparent, and is expressed both in the
memorandum required by the executors to be appended to their
assignment of Ashton's mortgage and in the separate instrument of
indemnity executed to the executors by Hammond upon his receiving
that assignment. Under such circumstances, what rational inducement
could exist on the part of Hammond for binding himself for the
solvency of Ashton or for substituting himself with the executors
as a debtor in Ashton's place? The court can perceive no such
inducement, nor can recognize any right in the executors to require
anything of this kind, with a full knowledge on their part of
Hammond's interest in the estate and with an admitted fund in their
hands for its satisfaction. They had no power to impair in any
degree his claim upon them, nor to impose a mean for its payment,
less certain and safe than the assets acknowledged by them to be
adequate.
It is laid down by the circuit court, and insisted on in the
argument here, that the terms of the assignment to Hammond, as well
as those of the instrument of indemnity given to the executors upon
receiving that assignment, constitute an agreement that Hammond
should be unconditionally bound for Ashton's debt. We have shown
that this conclusion is in accordance neither with prudence nor
probability in the transactions of life -- that it was not
sustained by any duty, or even by fairness on the part of the
executors; let us see how far it is warranted by the language of
the instruments referred to as amounting to express and positive
contract. In the written assignment to Hammond, this is the
language used: "Have bargained, sold, assigned &c., all the
right, title &c., in and to the within-mentioned land and
premises, and the deed within mentioned," &c. Such terms were
indispensable in that assignment, in order to give to Hammond
control of the mortgage either for its enforcement in his own
behalf or for its transfer to others; nothing is said in terms in
this assignment about the debt intended
Page 42 U. S. 22
to be secured by the mortgage, neither in relation to any full
equivalent for it, received by Hammond, which should bind him for
it
in toto, nor in relation to any entire and absolute
transfer of it by the executors; and this surely was the place in
which such terms, or conditions, if they really belonged to the
contract, should have been expressed.
The view here presented is fortified by the instrument of
indemnity executed by Hammond to the executors contemporaneously
with the assignment by the latter to him of Ashton's mortgage. This
instrument of indemnity, after reciting that the executors had
assigned, &c., a deed due them from Ashton, specifying no sum,
no debt
in numeris; after reciting too that Ashton was
entitled to a portion of the assets, proceeds thus:
"And whereas it is supposed that the amount of the said debt due
from Burdett Ashton, after making the discounts aforesaid, to which
he may be entitled, will exceed the said sum of $5,179.50, due to
the said Thomas Hammond, as agreed, for which excess the said
Thomas Hammond is willing to give security; now if the said Thomas
Hammond shall well and truly pay &c., such sum as the debt due
from the said Burdett Ashton, shall exceed,"
&c. This portion of the instrument, beginning, "whereas it
is supposed that the amount of the debt due from Ashton, after
making the discounts to which he is entitled," &c., forcibly
elucidates the meaning and objects of the parties to that contract.
The amount of Hammond's interest in the estate, the amount too of
Ashton's debt to the executors, and of the portion claimed in his
own right, and in right of his sister, were all known. With regard
to these, then, there was no uncertainty. The supposition,
therefore, expressed in this instrument could have no applicability
to matters thus ascertained; that supposition could have been
designed to apply only to the contingency of the mortgage subject
producing a sum greater than the distributive share of Hammond in
the estate, in which event he was to be responsible for the excess,
and for nothing beyond it. This provision cannot be correctly
interpreted as binding Hammond, however inadequate the mortgage
subject might prove to meet his share of the assets, to carry into
the estate and pay to the executors a sum he never had received,
and which, from the nature of things, he could not possibly
receive; in other words, to pay to these executors his own
Page 42 U. S. 23
money. Upon taking an assignment of Ashton's mortgage, Hammond
was bound for good faith and ordinary diligence in prosecuting it.
These obligations appear to have been fulfilled, for the executors
who were made parties to the suit for foreclosure take no exception
to anything that had been done or omitted in reference to the
security they had transferred.
This Court, therefore, while it will not decree against the
executors the difference between the proceeds of Ashton's mortgage
and the distributive share of Hammond, as stated in the report of
the master, is very clear that Hammond can upon no correct
principle be held responsible to the executors for the difference
between those same proceeds and the amount of the debt due from
Ashton, which the mortgage was designed to secure, and that in
decreeing against the administratrix of Hammond for that
difference, the circuit court has committed an error for which its
decree should be reversed.
This Court doth accordingly
Reverse the decree of the circuit court with costs and
remand this cause thereto to be proceeded in conformably to the
principles of this decision.
Order
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
Columbia, holden in and for the County of Alexandria and was argued
by counsel. On consideration whereof it is now here 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 with
costs, and that this cause be and the same is hereby remanded to
the said circuit court with directions to proceed therein
conformably to the opinion of this Court.
