Am. Univ. v. Forbes

• Decision Date: 03 March 1936
• Citation: 183 A. 860
• Parties: AMERICAN UNIVERSITY v. FORBES et al.
• Court: New Hampshire Supreme Court

183 A. 860

AMERICAN UNIVERSITY

v. FORBES et al.

Supreme Court of New Hampshire. Hillsborough.

March 3, 1936.

Transferred from Superior Court, Hillsborough County; Burque, Judge.

Bill by the American University against Irving E. Forbes, executor, and another. Bill dismissed as to the executor. Decree for plaintiff against the trustee of a testamentary trust. Case transferred.

Judgment for defendant.

Bill in equity, seeking payment of a pledge given by a decedent and by its terms payable within a year after her death as a debt of her estate. Through no fault on its part, the plaintiff did not exhibit the claim to the executor of the decedent's will within a year after his appointment or before he rendered his account to the probate court and turned over the residue of the estate, left by the will in trust, to the trustee thereof.

The bill was dismissed as to the executor. To a decree for the plaintiff against the trustee of the residuary estate, exception was taken.

Frank B. Clancy, of Nashua, for plaintiff.

Irving E. Forbes and Wyman, Starr, Booth, Wadleigh & Langdell, all of Manchester (Ralph E. Langdell, of Manchester, orally), for trustee.

ALLEN, Chief Justice.

There would be no question of the plaintiff's right to recover had it brought its claim to the executor's notice while estate remained in the latter's hands. The claim was a provable debt. Although it was not payable during the decedent's lifetime, it became due upon her death. It was thus subject to the legislation (P.L. c. 302, §§ 1-5) relating to notice and suit. And the right to a judgment against the executor, under the statute (P.L. c. 302, § 28) enacting that the time for notice be extended under certain stated conditions, would be clear but for the provision in the statute that no payments or compromises made before the proceeding is begun shall be affected.

The plaintiff's claim that the residuary estate has not been distributed, for the reason that it is in the hands of a judicially appointed trustee, is not tenable. The trustee is as much a legatee as one to whom a legacy is given in his individual capacity. If the residuary estate had been left in shares, some to individuals outright and others to trustees, the requirement of common treatment for all the shares in respect to payments made would be manifest. There is no contemplation of the statute (P.L. c. 309) that a trust fund created by a will shall be charged with the debts of the estate when an outright legacy is not. The inequality of such a distinction makes it inequitable as a self-evident proposition. The fact that it here happens that all the residuary estate is held in trust does not furnish an exceptional situation. Fundamentally, the trustee holds, not as an executor for all parties interested in the settlement of the estate, but only for the beneficiaries of the trust. And as legatees of equitable interests they are entitled to the same standing as legatees of legal interests, so far as claims of creditors of the estate are concerned.

The sole question presented, therefore is whether a creditor who without fault has lost his right to recover from the estate may proceed against a legatee who has received his legacy.

By the early common law an heir was liable for his ancestor's debts if two conditions existed; the debts must have been of a specialty nature and they were recoverable only to the value of real estate inherited by the heir from the ancestor. Legatees were under no liability. Woerner, Am.Law Admn. (3d Ed.) § 574. This law has here undergone material change. As a broadening rule, heirs receiving personal estate by virtue of their inheritance and those receiving either real or personal estate under a will are subject to some liability. Hall v. Martin, 46 N.H. 337; Russ v. Perry, 49 N.H. 547. As a narrowing rule, the liability must be upon a claim not provable against the representative of the estate. Hall v. Martin, supra; Russ v. Perrv, supra; Sawyer v. Jefts, 70 N.H. 393, 47 A. 416; Ticknor v. Harris, 14 N.H. 272, 284, 40 Am.Dec. 186. The liability in such cases arises by reason of an undertaking of the decedent, the nonfulfillment of which is subsequent to his death. The claim is contingent until the event of nonfulfillment. A common example is that of a surety on a bond, the conditions of which are broken by the principal, but not until the surety has died and his estate has been settled and distributed.

The Legislature, having such claims in mind and at the same time seeking to secure the expeditious settlement of estates (Thyng v. Moses, 65 N.H. 106, 107, 18 A. 197), has provided for them in two methods of treatment. One is that a creditor whose claim cannot be allowed against the estate because it depends upon an unhappened contingency shall not lose his remedy against the heirs or devisees. P.L. c. 304, § 20. This provision is by its terms confined to estates settled in the insolvent course. Another statute (P.L. c. 302, § 6) empowers the court to...