Ruffin v. Harrison

• Decision Date: 30 June 1879
• Citation: 81 N.C. 208
• Court: North Carolina Supreme Court
• Parties: SAMUEL RUFFIN and others v. C. B. HARRISON and others.

81 N.C. 208

SAMUEL RUFFIN and others

v.C. B. HARRISON and others.

Supreme Court of North Carolina.

June Term, 1879.

CIVIL ACTION heard upon exceptions to the report of a Referee at Fall Term, 1878, of FRANKLIN Superior Court, before Kerr, J.

This was an action brought by the sureties upon the bond of C. B. Harrison, guardian of Lee A. Jeffreys, (now Brown), against Harrison and the sureties upon his bond as administrator of McKnight, and also against Mrs. Harrison and other purchasers of the land of McKnight, sold by Harrison, as administrator, to make assets. Pending the action Harrison died and his administrator was made a party.

The sureties upon the guardian bond having been declared by the court in State ex rel. Harris v. Harrison and others, 78 N. C., 202, primarily liable to the ward for the amount which ought to have come into the hands of her guardian (for the most part from McKnight's estate,) prosecuted this action to indemnify themselves by charging the administration bond with certain proceeds of the lands of McKnight sold by Harrison to make assets, alleging that he wasted the same while they were in his hands as administrator, and before he received them as guardian. They sought also to charge certain lands purchased by Mrs. Harrison with the debt due by McKnight's estate to Lee A. Jeffreys, alleging that the said debt had never been paid, and that Mrs. Harrison had not paid for the lands conveyed to her.

The case was referred to R. H. Battle, Jr., and was heard upon exceptions to his report. The facts necessary to an understanding of the case will be found in the opinion and in the case of Harris v. Harrison, 78 N. C., 202.

The exceptions to the report were overruled, and both sides appealed.

Messrs. E. G. Haywood and Reade, Busbee & Busbee, for the plaintiffs .

Messrs. D. G. Fowle, Davis & Cooke, Lewis & Strong and W. F. Green, for the defendants .

SMITH, C. J.

By a decree of the court of equity of Franklin county, rendered at spring term, 1868, Lee A. Jeffreys, an infant, was adjudged the sum of $5,997.86 and interest on $5,895.65 principal money thereof, from the 6th day of April of the same year, due from her deceased guardian, Alexander McKnight, and recovered the same against Carter B. Harrison, his administrator with the will annexed. The personal estate of the testator being insufficient to discharge his indebtedness, the administrator filed a petition in the superior court of Franklin against the devisees under the will, and the said Lee A Jeffreys and other creditors to have the debts ascertained and determined, and for license to sell and convert the devised lands into assets for the payment thereof. There was an order of reference and report made and a decree ordered confirming the same at fall term, 1872. The decree declared the testator to be indebted to:--

1. Lee A. Jeffreys in the sum and with the interest specified in the said decree of the court of equity.

2. Mary L., wife of O. L. Ellis, in the sum of $1,822.19 and interest on $1,013.65 from Sept. 11, 1871.

3. The said Mary L. and Penelope J. Egerton in thejoint sum of $3,762.78 and interest on $2,678.14 from same date, the former being entitled to one-third and the latter to two-thirds thereof, and

4. Margaret F. Harrison in the aggregate amount of $2,363.73 and interest on $1,932.50 as above. The said indebtedness being incurred in the management of several trusts committed to the testator, and that there was in the administrator's hands $1,773.01 of the unadministered personal estate applicable to the debts.

The court thereupon granted license to sell the lands and directed “that the debt due to the defendant, Lee A. Jeffreys, be first paid in preference to all other debts herein declared,” and the other creditors to be paid pari passu out of the residue.

On the 28th day of October, 1871, the administrator made sale of a large part of the testator's lands, on a credit as to most of the purchase money, and applied what was received in cash to the costs and charges attending the proceedings. Under a subsequent decretal order he sold the remaining lands, except the dower estate allotted to the widow, and appropriated the proceeds to the other unpreferred debts recited in the decree.

On the 7th day of November, 1871, the said C. B. Harrison was appointed guardian to the infant Lee A. Jeffreys, and gave bond in the usual form with the plaintiffs as his sureties. He continued to act as such until his removal by the probate judge for default in not renewing his bond. During the interval between his appointment and removal, divers large sums of money came into his hands from the sale of the land, which with the balance due upon the administration of the personal estate, were more than enough, if so applied as directed by the decree, to discharge the entire debt due his ward.

The guardian charges himself as such with the moneys collected by him as administrator in the successive returns made next thereafter, as well as with certain other sums, in exoneration of his administration bond. The referee allows a credit for $1,773.01 upon the ground that he had more than this sum on deposit in bank, both when the decree was made and when he elected to hold the same as guardian in his first official return. But he refuses to give this effect to moneys afterwards received from sales of the land and so charged in subsequent returns, because he had not then the funds to make the attempted transfer valid and operative.

If the legal consequences of receiving assets of the testator, as his administrator, applicable and by the decree ordered to be applied to the debt due the infant of which the right and duty of collection devolved upon the same person, as guardian, is ipso facto a payment of the debt, the liability for subsequent mismanagement and waste is shifted from the administration to the guardian bond, and the sureties to the former are discharged. The refusal of the referee so to hold furnishes the principal exception to the report, the decision of which may dispose of all others, since if the loss primarily falls upon the sureties to the guardianship, an examination into the equities subsisting among the other parties becomes wholly unnecessary. The question is one strictly of law, and we proceed to consider it.

The decree, ascertaining what was due the infant from the testator, closes the trusts of the prior guardianship and definitely fixes the sum due from the testator to his ward. The subsequent suit to make the real estate assets reaffirms the indebtedness and requires it to be paid out of the first moneys coming into the administrator's possession. When Harrison became guardian, the debt was payable to him, as representing his ward. Thus the obligation to pay and the right to receive were united in one and the same person, and in such cases the law makes an appropriation of the funds when received to the discharge of the debt and the enlargement of the creditor's estate.

The rule is well established in its application to the relation of debtor and creditor, as we think an examination of the authorities referred to in the able and exhaustive argument of counsel will abundantly show. We propose to examine the cases somewhat in detail as most conducive to a satisfactory solution of the question involved.

In Muse v. Sawyer, Term Rep., 204, the material facts were these: One Horniblow became indebted to Ramsay by bond executed on the 15th day of June, 1798; Ramsay died in September, 1799, before any payment on the debt, leaving a will, wherein he appointed the plaintiff and Alexander Millen bis executors. Horniblow died in October following intestate, and administration on his estate was granted to said Millen and one Blount. Blount died soon after, and Millen, the survivor, received assets from Horniblow's estate. In June, 1802, he endorsed one, and in January following another credit on the bond. Millen died in 1807, leaving assets of his intestate applicable and sufficient in amount to pay the residue of the bond, and his executors delivered the bond to the plaintiff, the surviving executor of Ramsay, and paid the assets of Horniblow to the defendant, his administrator de bonis non. RUFFIN, J., after noticing the distinction in cases where the creditor appoints his debtor his executor, and where he becomes administrator by the action of the court, and the different legal consequences resulting therefrom, proceeds to say: “Upon the second question, I am of opinion with the defendant upon the ground that sufficient assets of Horniblow's estate came to the hands of Millen to discharge the debt, and that it was entitled to have them applied in due course of administration. It is not necessary that Millen should actually, by endorsement on the bond, or other similar act, have applied Horniblow's assets in discharge of this debt, in order to its extinguishment. As soon as the assets came to his hands, the law made the application of them and the debt became extinct instanter.”

Thus it was decided that the debt was satisfied and the plaintiff could not recover, notwithstanding the funds, which should have been used in payment, were not thus disposed of, and had been delivered over to the administrator de bonis non of the debtor.

This case was followed by Chaffin v. Hames, 4 Dev., 103, the facts of which were not dissimilar. The plaintiff held a bond executed by W. W. Chaffin as principal and the defendants as sureties. Chaffin died intestate, and the plaintiff became his administrator and collected assets of his intestate's estate adequate to pay this and all other bond debts due the plaintiff. It was held in the court below that the debt was discharged, and evidence, offered to prove the existence of other bond debts of the intestate to which the plaintiff was his surety and that the assets had been used in paying them, was refused. This court sustained the ruling, approved the decision in Muse v. Sawyer, and...