The laws of Mississippi direct that where the insolvency of the
estate of a deceased person shall be reported to the orphans'
court, that court shall order a sale of the property, and
distribute the proceeds thereof amongst the creditors
pro
rata, and that in the meantime no execution shall issue upon a
judgment obtained against such insolvent estate.
A judgment obtained against the administrator before the
declaration by the orphans' court of the insolvency of the estate
is not upon that account entitled to a preference, but must share
in the general distribution.
But this Court expresses no opinion as to the right of state
legislation to compel foreign creditors in all cases to seek their
remedy against the estates of decedents in the state courts alone,
to the exclusion of the jurisdiction of the courts of the United
States.
The appellant, Thomas Williams, was complainant below in a bill
setting forth that letters of administration on the estate of
Benjamin J. Baldwin, deceased, were granted to him in October,
1838. That at the time he entered upon said administration and made
an inventory of the estate, he confidently believed that his
intestate's estate would be amply sufficient to satisfy all his
creditors. That at November term, 1839, the respondents obtained a
judgment against him in the district court of the United States for
a debt due to them by the intestate. That the complainant, having
then discovered that the estate would not be sufficient to pay the
debts of the deceased, suggested its insolvency to the probate
court on the first Monday of December following, whereupon the
court adjudged
Page 49 U. S. 108
the estate insolvent, and appointed commissioners to receive and
audit the claims. That, to the great wrong of the intestate's other
creditors, an execution has been since issued on the judgment of
Benedict & Benedict and levied by the marshal on a large
portion of the most valuable property of the intestate, thereby
preventing the sale of it by the administrator under the order of
the Probate court. Wherefore he prays the court to grant him a writ
of
audita querela, and to order a writ of supersedeas to
issue to the marshal, to stay the execution, and for further
relief.
On this bill, the judge ordered an injunction to issue. The
respondents afterwards appeared and demurred to the bill for want
of equity, and afterwards, at June term, 1845, upon hearing, the
court decreed that defendants' demurrer to plaintiff's bill of
complaint be sustained, and the bill dismissed. At the same term,
it was ordered that the final decree be enrolled, and an appeal
allowed to this Court. A writ of error was also issued.
The 80th section of the statute of Mississippi concerning the
estates of decedents (Howard & Hutchinson 409) provides
that
"When the estate both real and personal of any person deceased
shall be insolvent, or insufficient to pay all the just debts which
the deceased owed, the said estate, both real and personal, shall
be distributed to and among the creditors, in proportion to the
sums to them respectively due and owing, and the executor or
administrator shall exhibit to the orphans' court an account and
statement &c. And if it appear to the said orphans' court that
such estate is insolvent, then, after ordering the lands, tenements
&c., of the testator or intestate to be sold, they shall
appoint two or more persons to be commissioners, with full power to
receive and examine all claims of the several creditors of such
estate,"
&c. And the court are afterwards required to make
distribution
pro rata among the creditors, after paying
the funeral expenses &c.
The 98th section provides that no execution shall issue on any
judgment obtained against any such insolvent estate, but it shall
and may be filed as a claim against it, &c.
Page 49 U. S. 111
MR. JUSTICE GRIER delivered the opinion of the Court.
The only question raised in this case depends on the
construction of the peculiar statutes of Mississippi. It is whether
a plaintiff who has obtained a judgment against the administrator
of an intestate's estate, before it has been declared insolvent,
has such a prior lien on the same as will entitle him to issue an
execution and satisfy his judgment out of the assets, after the
estate has been declared insolvent by the orphans' or probate
court, and commissioners appointed for the purpose of distributing
the assets equally among all the creditors.
The process, both mesne and final, in the district and circuit
courts of the United States, being conformed to those of the
different states in which they have jurisdiction, the lien of
judgments on property within the limits of that jurisdiction
depends, also, upon the state law, where Congress has not
legislated on the subject. In some of the states, a judgment is not
a lien on lands; in others, there is a lien coextensive with the
jurisdiction of the court. In Mississippi, a judgment obtained in
his lifetime is a lien, from the time of its rendition, on all the
defendant's property; and the property of a decedent becomes liable
for his debts from the time of his death.
See Dye v.
Bartlett, 7 How. (Miss) 224. Consequently, the lien of a
judgment obtained before defendant's death cannot be affected by a
declaration of insolvency subsequently made by his administrator.
But if, at the time of the death, the fund from which each of the
creditors has an equal right to claim satisfaction is insufficient
to pay all, equity requires that one should not be permitted, by a
mere race of diligence, to seize satisfaction of his whole debt, at
the expense of another. Hence, a declaration of insolvency must
relate back to the death, in order that this equitable principle
may have its effect. Such appears to be the policy of the
legislation of Mississippi on this subject, apparent in her
statutes and the decisions of her courts.
The case of
Parker v. Whiting, 6 How. (Miss) 352,
decided in the high court of errors and appeals of that state,
presented the same point in a case parallel with the present.
In that case, as in this, it was contended that an administrator
cannot report an estate insolvent after nine months, that
Page 49 U. S. 112
being the period within which he cannot be sued, and that a
judgment obtained after that time became a lien on all the property
of the deceased, which cannot be destroyed, raised, or superseded
by the subsequent report of insolvency, especially when it appeared
that this insolvency might have been caused by the
maladministration of the defendant.
But that court decided that the estate of a deceased person may
be reported insolvent after the expiration of nine months from the
grant of letters of administration, and that, when an estate is so
reported, the lien of a judgment previously obtained against the
administrator is held in abeyance, and must give way to the general
and equal lien of all the creditors which existed at the time of
the death, and to which the declaration of insolvency must relate.
Also that the action of the probate court on a report of insolvency
cannot be collaterally impeached, and if the insolvency has been
caused by maladministration, the remedy is by action for a
devastavit, or on the administration bond.
In this exposition of the statutes of Mississippi as given by
her courts we fully concur, and it is conclusive of the question
now under consideration.
As, therefore, the judgment obtained by the plaintiffs in the
court below did not entitle them to a prior lien, or a right of
satisfaction in preference to the other creditors of the insolvent
estate, they have no right to take in execution the property of the
deceased which the probate court has ordered to be sold for the
purpose of an equal distribution among all the creditors. The
jurisdiction of that court has attached to the assets; they are
in gremio legis. And if the marshal were permitted to
seize them under an execution, it would not only cause manifest
injustice to be done to the rights of others, but be the occasion
of an unpleasant conflict between courts of separate and
independent jurisdiction. But we wish it to be understood, that we
do not intend to express any opinion as to the right of state
legislation to compel foreign creditors, in all cases, to seek
their remedy against the estates of decedent in the state courts
alone, to the exclusion of the jurisdiction of the courts of the
United States. That will present an entirely different question
from the present.
The decree of the court below dismissing the bill must be
Reversed and a decree entered in favor of complainant
continuing the injunction.
Order
This cause came on to be heard on the transcript of the
record
Page 49 U. S. 113
from the District Court of the United States for the Northern
District of Mississippi, and was argued by counsel. On
consideration whereof, it is now here ordered and decreed by this
Court that the decree of the said district 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 district court with
directions to enter a decree in favor of the complainant continuing
the injunction in this cause, and for such further proceedings in
conformity to the opinion of this Court as to law and justice may
appertain.
