Armstrong v. McKelvey — 5 N.Y. St. Rep. 611

Majority

p. 611

Susan Armstrong, et al, Executors of Francis Armstrong, deceased, Resp’t, v. Esther McKelvey, et al, Appl’ts.^[1]

(Court of Appeals,

Filed January 18, 1887.)

Headnote

1. Will — Election by Legatees to take land.

The testator by his will directed his executor to sell all his property and divide the proceeds among certain specified legatees. The sale of the real property by the executor was set aside in an action brought by the legatees. The judgment in that suit, deciding that the legatees were entitled to the possession of the premises as the rightful owners thereof, discharged and released from the said trust. Held, that it must be assumed that the provisions referred to were inserted in the judgment at the request of the legatees, and, established their choice and election to avoid a sale and take their legacies in the land itself, when they took possession of the property as their own and in accordance with the terms of the judgment. That the effect of the legatees’ election, (this not being identical with the heirs at law) was to vest in them the equitable ownership of and the entire beneficial interest in the land, and enable them at any moment to require and compel from the holders of the formal title its complete transfer.

Same — Liability eob testatob’s debts — Code Civ. Pbo., § 1843.

Held, there was such an effectual devise to the legatees of the entire beneficial interest in the land, if they chose to accept it as to render them liable for the debts of their testator under Code Civ. Pro., § 1843. That the provision of said section does not require as a condition that the legal title shall have passed.

3. Same — Appobtionment op liabilities — Equities.

In the apportionment of the debt among the devisees there was added to two of them the proportionate part of legacies given to them in excess of their co-tenants. Held, that having chosen to take their entire legacies in land, they became liable, under the statute to the extent awarded so far as creditors were concerned, whatever may be their equities as against their co-tenants upon a partition.

4. Equitable set opp — When allowed.

It was claimed that certain items which could not be allowed as a legal offset or counter-claim should be used by the court in reduction of the plaintiff’s demand. Held, that that power should be very cautiously exerted and only in a case where the equity involved is entirely clear and certain.

Appeal from a judgment of the supreme court, general term, fifth department, affirming a judgment of the Livingston county special term, in favor of the plaintiff entered on the report of a referee.

The action was brought by the plaintiffs’ testator to charge the defendants with the payment of a debt due from Robert Smith, who died leaving a will by which the defendants took an interest in his estate.

By his will, which was admitted to probate and recorded, Smith bequeathed to the defendant, Jenny MeKelvey, $200, and to the defendant Esther MeKelvey $200 and his bureau. He directed the executor to provide a headstone for his grave at a cost not exceeding $100. Then comes the third clause as follows :

“ I hereby order my executor to sell all my real and personal

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property at public or private sale, as be may think best to do, within eighteen months after my death; and the proceeds and avails arising from the sale of my real and personal property,, after the legacies above mentioned are paid and my just debts, funeral expenses and gravestone are paid, to divide the balance equally between the following persons, namely: Jennie McKelvey, Nancy McKelvey, Esther McKelvey, Elizabeth Olp, James G. Smith, of Tennessee, Alexander Smith and Jennie Wallace Smith.”

He named Isaac Barber as executor, to whom letters testamentary were issued. The testator, Smith, died seized of real, estate of the value of upwards of $9,000, which the executor within the eighteen months sold and conveyed to one Hartman.. In an action, brought by the defendants in this action, against, the executor and Hartman for that purpose, the sale and conveyance to Hartman were set aside ; and the referee before-whom that action was tried, among other things found and determined, and it was by the judgment therein declared, that the-attempted sale was illegal; that the land descended to the devisees, the defendants in this action, subject to the execution of the power; that the period in which the executor was empowered to sell having since expired, he, as such or as trustee, could not execute the power so as to give title to a purchaser, and that the plaintiffs in that action were entitled to the possession of the premises as the rightful owners thereof, discharged and released from the said trust.

The testator, Smith, having become indebted to one Pridmore, the latter, in an action against the executor, recovered a judgment thereon. In proceedings had before the surrogate, to obtain settlement and application of the personal property of the estate, it appeared that there was none to apply upon his claim. Pie afterwards assigned the judgment and the debt for which it was recovered to the plaintiffs’ testator, who brought this action to recover of the defendants, on the assumption that this land had come to them by the force of the will before mentioned. He died and the plaintiffs were substituted during thependency of the action.

The referee found that they were liable and directed judgment distributing the liability between them and specifying the-amount with which each was charged.

James Hood, for appl’t; J. B. Adams, for resp’t.

The opinion of the general term upon an appeal to that tribunal is an adequate and accurate solution of the questions involved, and leaves for us only the duty of testing the criticism with which it is assailed. The argument against it in the end comes down to a single point which challenges the proof relied upon to establish a reconversion of the personal es

p. 613

tate into land. It begins with the proposition that the will of -the testator gave to the defendants the price or proceeds of the real estate, effecting an equitable conversion, and the legal title to the land descended meanwhile to the heirs at law who are not identical with the legatees ; and that the sale by the executor when set aside by the court simply restored the statu quo, and the judgment rendered, so far as it went beyond that relief, was outside of the issue and bound nobody as a record, or by way of estoppel.

The argument then, assuming that the legal title remains yet in the heirs at law, .denies that the legatees have received either the price of the land or the land itself, and so insists that the necessary facts were not proven to establish a liability to the creditor. It is at this point that collision with the opinion of the general term for the first time begins, since that opinion distinctly concedes the descent of the legal title to the heirs at law, and does not hold that the judgment, in so far as it decrees a reconversion into land and a title to that land in the defendants, is binding upon them to its full extent, either by its direct force, or by way of estoppel. It uses it in another manner and for a different purpose. It assumes, with entire accuracy, that the provisions referred to were inserted in the judgment at the request and by the procurement and with the full assent of the defendants, and established their choice and election to avoid a sale and take their legacies in the land itself instead of the proceeds when they took possession of the property as their own .and in accordance with the terms of the judgment. This they were at liberty to do, no other rights intervening or being prejudiced by the act. Hetzel v. Barber, 69 N. Y., 11 ; Prentice v. Jansen, 79 id. 480. It may very well be that while this reconversion changed the defendants from legatees of money to devisees of land, the change did not divest the heirs at law of their legal title, and ipso facto transfer that title to the defendants, as might easily be held where the devisees and heirs at law were absolutely identical. But that inquiry need not be pursued. The legal title which descended was purely formal, utterly barren and naked, and the effect of defendants’ election was, at least, to vest in them the equitable ownership of and the entire beneficial interest in the land, and enable them at any moment to require and compel from the holders of the formal title its complete transfer. The provisions of the Code under which the liability of devisees arises (section 1843) do not require as a condition that the legal title shall have passed. Such devisees are made liable “ to the extent of the estate, interest and right in the real property which descended to them from, or was effectually devised to them by, the decedent.” There was such effectual devise to them of the entire beneficial interest in the land if they chose so to accept it. The donor must be under

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stood to have given them that option (Hetzel v. Barber, supra) and they were at liberty to take and conld do so effectually in the character of devisees.

The real assault, therefore, -upon the general term opinion, respects the proof of that election, and is in the main concentrated upon the assertion that the defendants had not taken possession of the land after the judgment, and as the owners, which that judgment declared them to be, and that the finding of the referee to that effect was entirely without evidence to support it. But the fact was admitted by the pleadings, and was not a controverted issue. The complaint alleged “ that, after the entry of said judgment as aforesaid, the defendants in this action entered into possession of the aforesaid real estate, by themselves, their agents or lessees,' and have ever since continued in such possession, and that they are still the owners of such real estate, as such devisees thereof, as aforesaid.” The answer discloses no denial of the allegation. It asserts only that, when the action was commenced, “ one Andrew McKelvey was in the possession and occupancy of the said real estate •* * * under and by virtue of alease made and executed to him by the said Robert Smith in his life-time; that the term created by said lease expired on the first day of April, 1875; that, since the expiration of said lease, the defendants Jennie McKelvey and Esther McKelvey have lived on the said premises.” The answer further “ admits the allegations in said complaint contained which are consistent with the allegations herein contained in the first and second subdivisions of this, answer.” And so the averment of the complaint stands, not only without denial, but affirmatively admitted: for the alleged lease of McKelvey is said to have ended in April, 1875, and the judgment and entry of defendants did not occur until the next year. On the main question in the case, therefore, we are unable to see that the general term opinion has been in any respect justly criticised.

Objection is made to the apportionment among the devisees, which added to the share of two of them the proportionate-part of legacies given to them in excess of their co-tenants. The-consequent difference, is so small as to be almost trifling; but it seems to us a sufficient answer that, having chosen to take-their entire legacies in land, they became liable, under the statute, to the extent awarded, so far as creditors were concerned, whatever may be their equities as against their co-tenants upon a partition.

A final claim is made that the courts below erred in not allowing an equitable offset, founded upon the proof as to the delivery to Pridmore for safe-keeping of his own notes payable to the testator, and of certain amounts of money belonging to. him. It is not claimed that these items could be allowed as a

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legal offset or counter-claim, but that the court, upon principles of natural equity, may use them in reduction of plaintiff’s demand. That power should be very cautiously exerted, and only in a case where the equity invoked is entirely clear and certain. It is never justified save where other remedies are impossible, and where the demand allowed is put beyond reasonable doubt. In the present case we do not even know that the plaintiff’s notes were due and payable, or drew interest. If not, there is no equity in lessening his term of credit, and compelling him to pay in advance of his contract. Lindsay v. Jack son, 2 Paige, 585. It does not appear that the money deposited has ever been demanded, or that Pridmore is insolvent, or that his debt, if it be one, may not be recovered. The facts shown raise rather a reasonable suspicion of a right than clear and controlling proof of its existence. Itis not to such a case that the doctrine of natural equity should be applied.

The judgment should be affirmed, with costs.

All concur.