Duehay v. Acacia Mut. Life Ins. Co., No. 7183.

• Court: United States Courts of Appeals. United States Court of Appeals (District of Columbia)
• Writing for the Court: GRONER, and MILLER and VINSON, Associate Justices
• Citation: 105 F.2d 768,70 App. DC 245
• Parties: DUEHAY et al. v. ACACIA MUT. LIFE INS. CO. et al.
• Decision Date: 29 May 1939
• Docket Number: No. 7183.

70 App. DC 245, 105 F.2d 768 (1939)

DUEHAY et al.
v.
ACACIA MUT. LIFE INS. CO. et al.

No. 7183.

United States Court of Appeals for the District of Columbia.

Decided May 29, 1939.

105 F.2d 769

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John E. Laskey, of Washington, D. C., for appellant Duehay

P. J. J. Nicolaides, of Washington, D. C., for appellant Franklin Liquidating Trust.

Roger J. Whiteford and P. H. Marshall, both of Washington, D. C., for appellee Acacia Mut. Life Ins. Co.

Swagar Sherley, Charles F. Wilson, and H. B. Weaver, Jr., all of Washington, D. C., for appellee Hardee.

Tracy L. Jeffords, of Washington, D. C., for appellee Watkins-Whitney Co.

Milton W. King and Bernard I. Nordlinger, both of Washington, D. C., for appellee Randall H. Hagner & Co., Inc.

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William J. Rowan, of Washington, D. C., for appellee McIntosh.

Frederic N. Towers, of Washington, D. C., for appellee Liberty Nat. Bank.

Leon Tobriner, Selig C. Brez, and Walter N. Tobriner, all of Washington, D. C., for appellee Griffith-Consumers Co.

Before GRONER, Chief Justice and MILLER and VINSON, Associate Justices.

MILLER, Associate Justice.

On May 17, 1934, Francis H. Duehay, a resident of Fairfax County, Virginia, died intestate. His widow, Edith G. Duehay, appellant herein, was appointed, in Fairfax County, administratrix of decedent's estate and, thereafter, on August 9, 1934, was appointed ancillary administratrix of the estate in the District of Columbia. The estate was insolvent, the only material asset being the sum of $13,333.34, compensation for services rendered by decedent as one of the receivers of The Shoreham Hotel Corporation. This sum was paid over to appellant in the District as ancillary administratrix.

Claims of creditors residing or doing business in the District of Columbia, in the amount of over $300,000, were probated in the ancillary administration. Claims of Virginia creditors, amounting to over $14,000, were presented to the administratrix in the Virginia court. Of the claims probated in the District, over $129,000 were based upon judgments obtained against the decedent in the courts of the District prior to his death. Priority in payment was demanded by these judgment creditors under the law of the District of Columbia, which provides:

"Priorities. — In paying the debts of a decedent, after the payment of funeral expenses according to the condition and circumstances of the deceased, not exceeding six hundred dollars, an executor or administrator shall observe the following rules: Claims for rent in arrear against deceased persons, for which an attachment might be levied by law, shall have preference. Judgments and decrees of courts in the District of Columbia shall next be wholly discharged. * * *"¹

Appellant, as ancillary administratrix, commenced the present suit against the judgment creditors and others in the court below to determine the law under which the estate should be administered and the assets paid over to creditors. She alleged in her bill that the applicable law was that of Virginia, the decedent's domicil, and that since judgment creditors were not preferred thereunder, the claims of priority of such creditors in the ancillary proceedings in the District were not well founded. The lower court, to the contrary, found that the law of the District of Columbia controls payment of debts of a decedent out of local assets and, therefore, that judgment creditors were entitled to priority. 66 Wash.L.Rep. 162. From the decree entered against the administratrix, this appeal was taken by her and by the Franklin Liquidating Trust, assignee of The Franklin National Bank. The latter neither filed a brief in this court nor participated in the argument, and the former, alone, is referred to herein as appellant.

The decision of the lower court was correct. One of the principal objects of an ancillary administration is the collection and preservation of local assets for the benefit of local creditors.² No state need allow property of a decedent to be taken from within its borders until debts due such creditors have been satisfied. Baker v. Baker, Eccles & Co., 242 U.S. 394, 401, 37 S.Ct. 152, 61 L.Ed. 386. The long established rule is that "in regard to creditors the administration of assets of deceased persons is to be governed altogether by the law of the country where the executor or administrator acts, and from which he derives his authority to collect them, and not by that of the domicil of the deceased."³ Hence, the method

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of proving claims, the priority and payment of debts, the marshalling of assets, are all matters regulated by the law of the place of appointment.⁴ This was early settled in this jurisdiction by the case of Smith v. Union Bank, 5 Pet. 518, at page 524, 8 L.Ed. 212, where the Court adopted, for purposes of decision, the following language from Harrison v. Sterry:⁵ "In the familiar case of the administration of the estate of a deceased person, the assets are always distributed according to the dignity of the debt, as regulated by the law of the country where the representative of the deceased acts, and from which he derives his power * * *." Italics supplied Appellant contends, however, that the Union Bank case was overruled by Harrison v. Nixon, 9 Pet. 483, 9 L.Ed. 201. But the two cases are easily distinguishable. The latter case did not decide, nor did it discuss, the question settled by the earlier decision. Appellant relies particularly upon the following language in Harrison v. Nixon, 9 Pet. at page 504, 9 L.Ed. 201: "In regard to personalty in an especial manner, the law of the place of the testator's domicile governs in the distribution thereof, and will govern in the interpretation of wills thereof * * *." In using this language, however, the Court referred to distribution to next of kin and legatees, not to payment of debts to creditors. The distinction is clearly recognized in the cases and in the texts.⁶

Further to support her contention that the law of the domicil governs the present case, appellant refers to the provision of the District Code which permits persons who have been granted letters testamentary or of administration in foreign jurisdictions to maintain suits and recover claims in the District "in the same manner as if the letters testamentary or of administration had been granted * * * in the said District * * *." D.C.Code, 1929, tit. 29, § 255. However, nothing contained therein reveals an intention on the part of Congress to abandon the well established principle of law which governs ancillary administrations. Nor do the authorities relied upon by appellant support such a result.⁷ Here again the cases recognize the rule that distribution to heirs, devisees and legatees is governed by the law of the domicil, but they do not even suggest that the same rule applies to payment of debts. The privilege afforded non-resident administrators and executors to sue in the courts of the District is merely a qualification of the established rule restricting the authority of the administrator to the state of appointment. The granting of such a privilege is a "matter of comity, which every nation is at liberty to yield or to withhold, according to its own policy and pleasure, with reference to its own institutions and the interests of its own citizens." Vaughan v. Northup, 15 Pet. 1, 5, 10 L.Ed. 639. Congress limited the privilege under circumstances such as exist in the present case by the further language of Section 255: "* * * Provided, nevertheless, That the probate court of the District shall have the power, upon the petition of anyone interested, to require from such * * * foreign administrator or executor the security required by law in like cases from a resident administrator or executor, or the said court may grant auxiliary or ancillary letters, as the case may require, to the same or other persons." Italics supplied in part⁸ Manifestly, the very purpose and function of the proviso was to protect local creditors, if there were any,

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by requiring the administrator to retain the assets within the jurisdiction and to administer them according to local law. Otherwise, the opportunity of those creditors to enforce their claims against local assets would be destroyed. This is particularly true where, as here, the estate is insolvent. The fact that the ancillary administrator is appointed in the District at the instance of the domiciliary administrator rather than upon petition of another interested person is immaterial. Consequently, whatever rights and privileges the administratrix might have acquired in the present case, under the statute giving permission to the domiciliary representative to sue in the courts of the District, it is clear that they would have been subordinate to her powers and duties as an ancillary administratrix, because in the latter capacity she is paramount to and independent of the former — so far as concerns assets of the estate within the District —⁹ even though the two chance to be combined, in fact, in one person.¹⁰

Appellant next contends that, in any event, the judgment creditors are not entitled to priority of payment under Section 210 of Title 29 of the Code because that section is applicable only to domiciliary administrations. Her argument proceeds upon the theory that the law applicable to the administration of estates in the District is designed primarily for estates of decedents domiciled in the District and that, consequently, many of its provisions — including Section 210 — must be limited accordingly. With this we cannot agree. While a proceeding such as the present is denominated ancillary, the administrator is appointed therein in the usual manner and his position in most respects is the same as if he were in fact a domiciliary administrator. In our opinion, the statutes are equally applicable, at least so far as they are pertinent, to the administration of all estates in the...