Where a statute of a state places the whole estate, real and
personal, of a decedent within the custody of the probate court of
the county so that the assets may be fairly and equally distributed
among creditors, without distinction us to whether resident or
nonresident, a nonresident creditor may get a judgment in a federal
court against the resident executor or administrator and come in on
the estate according to the law of the state for such payment as
that law, marshaling the rights of creditors, awards to debtors of
his class. But he cannot, because he has obtained a judgment in the
federal court, issue execution and take precedence of other
creditors who have no right to sue in the federal courts, and if he
do issue execution and sell lands, the sale is void.
By the Constitution and laws of Arkansas, the probate of wills
and the grant of letters testamentary and of administration are
matters wholly within the jurisdiction of the probate court. One
statute thus enacts:
"All actions commenced against any executor or administrator
after the death of the testator or intestate shall be considered
demands legally exhibited against such estate from the time of
serving the original process on the executor or administrator, and
shall be classed accordingly. [
Footnote 1]"
"All demands against any estate shall be paid by the executor or
administrator in the order in which they are classed, and no demand
of one class shall be paid until the claims of all previous classes
are satisfied; and if there be not sufficient to pay the whole of
any one class, such demands shall be paid in proportion to their
amounts, which
apportionment shall be made by the court of
probate."
Under this statute, the courts of Arkansas have decided
[
Footnote 2] that the legal
effect of granting letters testamentary or of administration is to
place the whole estate, real and personal, within the custody of
the law and leave it there
Page 88 U. S. 277
until the administration has been completed; that in this way
the assets are preserved, so that there may be a fair and equal
division of them among the several creditors according to a scale
of priority fixed by law, there being no distinction between
resident and nonresident creditors; that all demands against
deceased persons which are not liens upon specific property before
the death of the debtor can only be collected by being brought
under the administration of the probate court, and that while it is
true that the debtor is not compelled to resort to the probate
court to settle the existence of his debt, but may, by suit in any
court of competent jurisdiction, obtain judgment on it, the effect
of this judgment is to establish the demand against the estate and
to remit it to the probate court for classification by the
administrator and payment under the order of the court, either in
whole or in part, according to the rule under which the rights of
creditors are marshaled; that it cannot be enforced in the ordinary
mode, by execution, as if rendered against a living person.
"If it could be [say the courts of Arkansas] the statutory
provision relating to all estates, whether solvent or insolvent,
'that all demands against estates shall be paid by the executor or
administrator in the order in which they are classed,' and 'that no
demand of any class shall be paid until the claims of all previous
classes are satisfied,' would be rendered of no effect, and the
whole policy of the law on the subject defeated."
Such being the law of the state in respect to judgments obtained
against the estates of deceased persons in the courts of the state,
the inquiry in the present case was whether a different rule was to
be applied to judgments of the federal courts. This present case
was thus:
One Du Bose, having lands in the County of Arkansas in the state
of that name, died in October, 1869, and a certain Halleburton was
appointed the administrator of his estate. Halleburton did nothing
in the way of discharging his duty. He took no account of debts and
assets, did not convert the property into money, and at the end of
three years, the term which a statute in Arkansas, governing the
subject prescribes
Page 88 U. S. 278
as that when the administrator ought to have his estate settled,
things remained as he had found them. Hereupon, a certain Lavender
was appointed administrator
de bonis non in his place.
In this state of things, Auguste Gautier, a citizen of
Louisiana, brought suit in the Circuit Court of the United States
for the Eastern District of Arkansas against Lavender as
administrator, obtained judgment against him, and, at a sale under
an execution issued on this judgment, one Yonley, who seems to have
been the attorney of record, bought certain lands belonging to the
estate of Du Bose situate in Arkansas County in the state of the
same name. These proceedings took place several years after the
administration of Du Bose's estate had commenced, and while it was
being carried on in Arkansas County under the administration laws
of the state. Shortly after Yonley purchased the land, he brought
an action of ejectment in the proper state court to dispossess the
administrator, which resulted adversely to him, and the supreme
court of the state, on appeal, affirmed the judgment of the lower
court. It was to revise this judgment that the present writ of
error was brought.
Page 88 U. S. 279
MR. JUSTICE DAVIS delivered the opinion of the Court.
The several states of the Union necessarily have full control
over the estate of deceased persons within their respective limits,
and we see no ground on which the validity of the sale in question
can be sustained. To sustain it would be in effect to nullify the
administration laws of the state by giving to creditors out of the
state greater privileges in the distribution of estates than
creditors in the state enjoy. It is easy to see, if the nonresident
creditor, by suing in the federal courts of Arkansas, acquires a
right to subject the assets of the estate to seizure and sale for
the satisfaction of his debt, which he could not do by suing in the
state court, that the whole estate, in case there were foreign
creditors, might be swept away. Such a result would place the
judgments of the federal court on a higher grade than the judgments
of the state court, necessarily produce conflict, and render the
state powerless in a matter over which she has confessedly full
control. Besides this it would give to the contract of a foreign
creditor made in Arkansas a wider scope than a similar contract
made in the same state by the same debtor with a home creditor. The
home creditor would have to await the due course of administration
for the payment of his debt, while the foreign creditor could, as
soon as he got his judgment, seize and sell the estate of his
debtor to satisfy it, and this too when the laws of the state in
force when both contracts were made provided another mode for the
compulsory payment of the debt. Such a difference is manifestly
unjust, and cannot be supported. There is no question here about
the regulation of process by the state to the injury of the party
suing in the federal court.
Page 88 U. S. 280
The question is whether the United States courts can execute
judgment against the estates of deceased persons in the course of
administration in the states, contrary to the declared law of the
state on the subject. If they can, the rights of those interested
in the estate who are citizens of the state where the
administration is conducted are materially changed, and the
limitation which governs them does not apply to the fortunate
creditor who happens to be a citizen of another state. This cannot
be so. The administration laws of Arkansas are not merely rules of
practice for the courts, but laws limiting the rights of parties,
and will be observed by the federal courts in the enforcement of
individual rights. These laws, on the death of Du Bose and the
appointment of his administrator, withdrew the estate from the
operation of the execution laws of the state and placed it in the
hands of a trustee for the benefit of creditors and distributees.
It was thereafter in contemplation of law in the custody of the
probate court, of which the administrator was an officer, and
during the progress of administration was not subject to seizure
and sale by anyone. The recovery of judgment gave no prior lien on
the property, but simply fixed the status of the party and
compelled the administrator to recognize it in the payment of
debts. It would be out of his power to perform the duties with
which he was charged by law if the property entrusted to him by a
court of competent jurisdiction could be taken from him and
appropriated to the payment of a single creditor to the injury of
all others. How can he account for the assets of the estate to the
court from which he derived his authority if another court can
interfere and take them out of his hands? The lands in controversy
were assets in the administrator's hands to pay all the debts of
the estate, and the law prescribed the manner of their sale and the
distribution of the proceeds. He held them for no other purpose,
and it would be strange indeed if state power was not competent to
regulate the mode in which the assets of a deceased person should
be sold and distributed.
This case falls within the principle decided by this Court
in
Page 88 U. S. 281
Williams v. Benedict. [
Footnote 3] In Mississippi, the Orphans' Court has
jurisdiction only over the estate of a deceased person in case it
turns out to be insolvent, when it audits the claims against the
estate, directs the sale of the property, and distributes the
proceeds equally among all the creditors. Before the adjudication
of insolvency by the Orphans' Court, Benedict had obtained a
judgment against Williams, the administrator of one Baldwin, in the
District Court for the Northern District of Mississippi and levied
an execution on property upon which the judgment would have been a
lien if the estate had not been insolvent. On a bill filed by the
administrator to enjoin the execution, it was insisted among other
things that the proceedings in the Orphans' Court were no bar to
the proceedings in the United States court, and so the district
judge thought, but this Court held otherwise, and decided
"that the jurisdiction of the Orphans' Court had attached to the
assets; that they were in
gremio legis, and could not be
seized by process from another court."
And the Court said that
"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."
If the Orphans' Court of Mississippi, whose jurisdiction
attaches on the ascertained insolvency of an estate, is saved from
the interference of another court, surely the probate court of
Arkansas, vested with jurisdiction on the death of the testator or
intestate, whether the estate be solvent or insolvent, is entitled
to equal protection.
It is true that the Court in
Williams v. Benedict
expressly reserved the question whether state legislatures can in
all cases compel foreign creditors to seek their remedy against the
estates of deceased persons in the state courts, to the exclusion
of the jurisdiction of the federal courts, but these remarks were
made not to express a doubt of the correctness of the decision in
the case before the court, but to
Page 88 U. S. 282
guard the rights of suitors in the courts of the United States
if a case should arise where state legislation had discriminated
against them. It is possible, though not probable, that state
legislation on the subject of the estates of decedents might be
purposely framed so as to discriminate injuriously against the
creditor living outside of the state; but if this should
unfortunately ever happen, the courts of the United States would
find a way, in a proper case, to arrest the discrimination and to
enforce equality of privileges among all classes of claimants, even
if the estate were seized by operation of law and entrusted to a
particular jurisdiction. The legislation of Arkansas on this
subject, instead of being unfriendly, is wise and just. All
creditors are placed upon an equitable foundation, and judgments
obtained in the courts of the United States have the same effect as
judgments obtained in the courts of the state. The law simply
places the assets beyond the reach of ordinary process, for the
equal benefit of all persons interested in them, and all that is
asked is that the construction of this law adopted by the state
tribunals shall be the rule of decision in the federal courts. The
federal court in Arkansas, in entertaining the suit of Gautier,
recognized the power of the state to appoint an administrator and
hold him responsible for the proper administration of the estate.
If so, how can it reject the authority of the state to distribute
the estate in accordance with a scale applicable to all creditors
alike?
There is no difference in principle on the point we are
considering between the administration and the insolvent laws of a
state. In the case of
Bank of Tennessee v. Horn, [
Footnote 4] this Court held that by the
law of Louisiana the estate of the insolvent vested in the
creditors, to be administered by the syndic, as their trustee, and
that an execution issued on a judgment obtained in the Circuit
Court of the United States for the Eastern District of Louisiana,
after the cession had been accepted and the syndic appointed by
the
Page 88 U. S. 283
creditors, could not be levied on the property of the insolvent,
although the suit was pending when the proceedings in insolvency
were begun. The property had been seized by the operation of the
law of the state, and was being administered for the benefit of
creditors, and when the bank obtained a judgment, the insolvent had
no interest in the property subject to levy and sale. So in this
case, the law vested the assets of Du Bose's estate in a trustee,
to be administered and sold for the benefit of creditors and
distributees, and when the judgment was rendered against the
administrator, the assets being held by him solely in his character
as trustee, were no more subject to seizure and sale than they were
when held by the trustee of an insolvent estate.
The point decided in
Payne v. Hook, relied upon by the
plaintiff in error, does not touch the question at issue. The
Circuit Court of the United States for the District of Missouri,
sitting as a court of chancery, as an incident to its power to
enforce trusts, took jurisdiction of a bill filed by Mrs. Payne to
compel the administrator of her brother's estate to account and
distribute the assets in his hands.
It was contended, as the complainant, were she a citizen of
Missouri, could only obtain relief through the local court of
probate, that she had no better right because of her citizenship in
Virginia, but this Court held that the equity jurisdiction
conferred on the federal courts is the same that the High Court of
Chancery in England possesses, is subject to neither limitation nor
restraint by state legislation, and that a bill stating a case for
equitable relief, according to the received principles of equity,
would be sustained, although the court of the state, having general
chancery powers, would not entertain it. The bill charged gross
misconduct on the part of the administrator, and one of its main
objects was to obtain relief against these fraudulent proceedings.
This relief was granted, and the administrator compelled faithfully
to carry out the trust reposed in him and to pay to the complainant
the distributive share of the estate of her brother, according to
the laws of Missouri.
Page 88 U. S. 284
No greater rights in the estate were adjudged to her than were
secured by the law of the state, and if she had been a creditor,
instead of a distributee, and sought to obtain a preference over a
local creditor, we think it safe to say her bill would have been
dismissed. The powers of courts of equity are not in issue in the
present suit, nor is there any question presented about restraining
or limiting them.
The laws of Arkansas required an administrator to make final
settlement of his administration within three years from the date
of his letters. The administrator of Du Bose not only failed to
discharge this duty, but neglected even to convert the assets of
the estate into money in order to pay debts. Gautier was not
compelled to resort to the local probate court to secure the
performance of these obligations, but could, had he chosen, have
invoked the equity powers of the circuit court for the District of
Arkansas to obtain a suitable measure of redress. This he could
have obtained in less time than it has taken to conduct this
litigation; but this measure of redress would only have placed him
on an equality with other creditors, as prescribed by the laws of
Arkansas. It would in no event have diverted the assets, so that
his debt should have been satisfied to the exclusion of other
creditors equally meritorious.
Judgment affirmed.
[
Footnote 1]
Gould's Digest, chapter 4, ยงยง 101, 120.
[
Footnote 2]
Hornor v. Hanks, 22 Ark. 572;
Yonley v.
Lavender, 27
id. 252.
[
Footnote 3]
49 U. S. 8 How.
107.
[
Footnote 4]
58 U. S. 17
How. 160.
