STATE OF MISSOURI, etc.,
(Circuit Oourt, E. D. Missouri.
BUILDING CONTRAOT-PUBLIC BUILDINGS NOT SUBJEOT TO MEOHANIO'S LIENS -R8M:OVAL OF CAUSE-SURETY NO'r BOUND BY JUDGMENT AGAINST PRINCIPAL AFTER REMOVAL.
Where the contract of the surety was that his principal should furnish the material and build a public school-house for $15,000, and suits were brought on claims for mechanics' liens on the bliilding, in which judgments were rendered against the school board and the principal, aud the amounts paid upon these were in excess of the $15,000, held, the records of these judgments are ina,dmissible as evidence, for unqer the law of Missouri there can be no valid mechanics' lien upon a public school building; and the surety was not bound by the adjudications in which the judgments were obtained, because rendered in a state court after he had removed so much of the controversy as was between himself and the plaintiff to the circuit court of the United States under the provisions of the removal act of July 27,1866, (14 8t. at Large, 306.)
MCCRARY, C. J. On the question argued and submitted yesterday I am prepared to announce the conclusion reached by the court. The liability of this defendant is that of surety only. The contracts of sureties, as we all very well understand, are to be construed strictly in favor of the surety. The contract of this party was, in substance, that his principal should carry out, in good faith, the provisions of the contract for the building of a public school-house. Briefly stated, that contract was that he would furnish the material aIJ.d build the school-house for $15,000 within a certain specified time. The present question is whether the surety can be charged as liable, upon his contract of suretyship, for certain claims of mechanics' liens against the public school building, upon which suits were brought, and in which suits judgments were rendered against the school board and against the principal establishing the mechanics' liens. The plaintiff presents here the records of these judgments and offers them in evidence. The amounts paid upon these mechanics' liens was in excess of the $15,000 for which the building was to have been constructed and completed. '1'he supreme court of Missouri, in the other branch of this case, held that the principal was liable on this account to refund the amount which was paid out by the board to settle these claims which are spoken of here as mechanics' liens. It does not, however, follow that the surety is liable for that to the same extent. The supreme court may have held that, as against the principal, the mechanics' liens were established by an adjudication, and that neither the board of education nor Mr. Diedrich Tiedermann, the principal
STATE V. TIEDERMANN.
on this bond, could question the validity of those judgments; or it may haTe been of opinion that this was money advanced for the use and benefit of the contractor, the principal, by the school board, and that he ought to be held to refund it. However that may be, the surety was not in court at that time, he was not a party to this proceeding by which the mechanics' liens were established, he was not the contractor, he had not made this indebtedness, and he can only be held upon the ground that it was an indebtedness created in violation of his obligation of suretyship. This can be only held on the ground that it was a valid mechanics'lien established upon the property, because the contractor failed to keep his contract and pay for the material that he used in the construction of the building. The law of Missouri, as established by repeated decisions, is that there can be no such thing as a mechanics' lien upon a public school building. That is the construction of the statute of this state repeatedly adopted by the supreme court of the state, and it is binding upon this court, and iUs, in our judgment, perfectly sound, independent of any adjudication. The surety here has a right to raise this question"now, for it has never been raised where he was a party; he has a right to say and insist that the school board was.not bound, as against him, to pay these claims for mechanics' liens, and that if they did so, so far as he is concerned, it was a voluntary payment of a claim for which he was not liable. Of course, it will not be insisted that the surety upon the bond is liable for an overpayment to the principal. The surety can only be held upon the ground, as I have already said, that this was a valid mechanics' lien upon the school building, which the board was bound to pay for the purpose of protecting their property. As the present defendant has a right now, for the first time, to mise the question whether this was a valid mechanics' lien and an encumbrance upon the school building, and as he has raised it, we feel bound to hold that it was not; that the payment, so far as the surety is concerned, was a voluntary payment. The objection to this evidence must, therefore, be sustained. Upon reflection I am very clearly of the opinion that this defendant, as surety on the bond, has a riglit to a settlement of his liability upon his bond under the contract, and is entitled to whatever right he would have had if he had been present at a aettll3ment under the contract at the time that the building was delivered over, or at any other time. The rights that his principal had against this plaintiff under the contract he has a right to avail himself of as a defence in this case, the same as if he had been present and had insisted upon
. FEDERAL REPORTER.
all his rights at such it settlement. The ruling, therefore, that has already been made in the case is conclusive of this question. The payment of the mechanics' lien claims was outside of and beyond the contract. Perhaps, as between the plaintiff here and the principal on the bond, the plaintiff could pay those' claims and charge them to the principal in their settlement with him. At all events, after there was a judgment upon them that concluded them' both, they had '8 right to act upon the hypothesis that they were valid, and that the board was bound to pay them; but we have found, upon investigation, that they were not valid claims,and that their payment did not bind this defendant as surety. I think, therefore, that the objection to the evidence now offered must be sllstained. It will be unnecessary to go into a discussion of the long line of cases: Upon the general subject of res adjudicata, as to how far parties and privies are bound by the judgments of courts of general jurisdiction,because this case is one of a class of its own and stands by itself. The act of congress proTides, or did provide-for I think that act is now repealed by the latter act 'on the subject, and I am very glad that it is-for splitting a case in the state court, and l:ringing so much of it as constitutes a controver.sy between citizens of different states in the federal courts. Under that act so much of this controversy as is between the plaintiff and the surety upon the bond has been brought here, while so much of it as is between the plaintiff and the principal upon the bond remained in the stll.te court, and has been tried there. The fundamental principle of this subject isthata party is bound by an adjudication only where he is so far, at least, within the jurisdiction of the court as to be heard in the course of the litigation; he must be a party to the suit or proceeding in such sense as to have a right to appear there, to make motions to the court, to introduce testimony, 'to cross-examine witnesses, and to take an appeal. Those are the rights which, generally, a party must have in order to be bound by an adjudication. Now, we must assume that this case was properly removed, as I have before said in considering some preliminary questions, and, assuming that, we are bound to say that after rep:lOval, the moment the order of removal was made, this defendant passed from the jurisdiction of the state court. He had no right to appear there any further; he,had no power to introduce testimony, to make motions, to be heard, or to take an appeal. Besides, as counsel have suggested, the whole purpose of the removal act of 1866 would be defeated by the construction which is contended for by the counsel fOl' the plaintiff.· If the party who brings a part or a case
fl!L.LIAM .V. fULLIAM,
into this court, for the purpose of litigating it hete, is bound, nevertheless, by the litigation in the state court, from. which he removed it, against some other party, and we are by the' judgment there, then it follows, of course, that there is no litigation here, :and the party who removes the case here does not have any benefit of the removal. It is one of the difficulties which grows out oftha.t ·very anomalous statute providing for splitting up cases. The best we can do, I think, is to say that the party, having a. right to come here; has aright to be heard here upon the merits of his controversy. ',The ,adjudication of the state court, I think, is admissible for one purpose, and that is to show the amount of the recovery, in orner that the surety may not, in any eve,nt, be held for more than the principal; but for, the purpose of concluding the defendant upon any other issue, we think it is not admissible.
! Oircuit Oourt,
Z'en'M88Ce. April 26. 1879.)
J. ExECUTOR-AccOUNT AGAINST,
An account against an executor in behalf of a legatee is a matter of course in a court of equity.
SAME-STATl1TE OF LunTATIONS'No'l' A BAR TO REMEDy-RIGHTS NOT BARRED BY LAPSE OF TruE. .
The executor being an express trustee, the statutes of lltnitat:ions do not bar the remedy. Lapse of time, under certain circumstances, does bar the remedy. But where an executor qualified December 6, 1865, and made no settlement until July 19 ,1872, because the assets were IIOt collected'and the estate not ready for settlement before that time, a bill filed July 7, 1876,waswiihin the strictest rule as to lapse of time, considering the rights of the plaintift under the will.
:iJ. EQ.UITY JURISDICTION OF FEDERAL COURTS-NoT AFFECTED
IN STATE COURTS.
A state statute enacting that settlements made in the county court "s1J.a1l be primajacie evidence in favor of the accounting party," cannot operate 'to restrict the plenary jurisdiction of the federal courts of 'equity to enforce the trusts of a will at the suit of a legate'e. 'Those courts will not assume the general administration of the estate, but will require the eX,eputor to .account 46 MI10 for the purpose of ascertaining the share due the legatee.. 4.
POWER OF COURT OVER SliTTLED ACCOUNTS-EFFECT OF WANT OF NOTICE OF SETTLEMENTS.
If such a settlement be pleaded as a settled accouut, the court may; irrespective of any statute, order it to beao taken and to stand before the master as primajame evidence. But this is uever done unless it appears that the legatee had notice of the making of the settlement;.
HULJIl 79. 'l'he old mode of proving the account, item by item, has been abolished by equity rule No. 79. If the executor sets up a settlement in the county courts by his answer, and proves it by his deposition, the court will order the master to treat it as presented under that rule.
PRODUCTION AND PROOF OF ACCOUNTS IN FEDERAL COURTS-EQUITY
REQUEST FOR DELAY TO SAVE THE BAR OF THE STATUTES }IUST BE SPECIFIC AND TO A PERIOD CERTAIN-WHEN INSUFFICIENT.
A request by the executor for delay, to save the bar of the statute of limitations of two years and six months in favor of dead men's estates, must be for 8 definite length of time, agreed on by the parties, or fixed by reference to some designated event which may occur, and thereby render the period certain. A request in writing, made in the following words; "I request that you do not enforce your claims of all descriptions against the estate of .John N. Pulliam, by' suit or legal proceedings, as the assets of the estate are not yct coilected by me sufficient to pay the debts due and owing by John N. Pulliam. By your delaying to sue it shall not prejudice your claims, as I will not avail myself of the statute of limitations applicable to executors, administrators," etc. ,-held to be insufficient.
WILL-RIGHTS OF CREDITORS.
A testator cannot, by directing the order of appropriation of the assets, defeat the rights of creditors.
IS. SAME-EXONERATION OF LEGAcy-ExECUTOR AS TRUSTEE-WHEN CHARGED PERSONALLY.
But a testator may exonerate a legacy by charging the debts upon other property in a way that will make the executor a trustee to execute the will, and charge him personally, if he so disregards the directions of the will as to injure the legatee. 9.
SAME-DUTY OF EXECUTOR AS TRUSTEE-As '1'0 PUOPERTY IN OTHER STATETITLE TO TRUST PROPERTy-LIABILITY 'fO LEGATEE FOR VALUE OF PROPERTY NOT ADMINISTERED.
Where a testator directed his debts to be paid out of lJis other property, real and personal, in exoneration of a legacy to his wife, granting the necessary powers of sale to his executor, he must execute the trust fully; and if real property be situated in another state, he must execute the will there by doing whatever is necessary for that purpose, if he qualifies in the state of the domicile ofthe testator. An executor so qualifying has the title of the trust property wherever situated, and he cannot separate the trusts and examine the will in one state, leaving out the others. He becomes personally liable to the legatee if he so executes the trust as to injure her by taking her legacy to pay debts that might have been otherwise paid if he had carried out the will in all Its parts. He will be charged in this account with the value of the property not administel'ed as if he had sold it and realized the money. 10.
sAME--LIABILITY OF EXECUTOR IN STATE OF TESTATOR'S D01>fICILE-FEDERAL RULE OF EQUITY DECISION AS TO PROPERTY IN OTHER JURISDICTION -UNAFFECTED BY LOCAL STATUTES AND DECISIONS.
The principle that an executor in the state of testator's domicile becomes, nnder a will making him testamentary trustee, charged with the trusts of the will, is one of general equity decision, and is wholly unaffected by state statutes and decisions, limiting his liability as executor in the state courts in relation to property in another jurisdiction. These local laws may restrict his
PULLIAM V. PULLIAM·.
P()WN;; anlllimit his liahility qua executor in that state, hut do not. affect thfl equity powers of the federal courts over him as a trustee. The rule is the same in the equity courts of the state of Tennessee.
SAME-ExTENT OF LIABILITY OF EXECUTOR AS TRUSTEE.
But an executor neglecting to execute the trusts of a will is not absolutely liable for the legacy to the injured legatee, but only to the extent of what he actually receives, and this will be reached by charging him as if he had sold the property at proper time and received its value, unless there has been supine negligence to charge him further.
DEED OF GIFT-DELIVERY, How PROVED-HANDWRITING OF DECEASED SUBSCRIBING WITNESS, How PROVED.
If a subscribing witness be dead, his handwriting cannot be proved by another subscribing witness, seven years after death of grantor, to establish delif!IJTy of the deed so as to set it up against a will charging the land with the debts.
EvIDENCE-DECLARATIONS OF HUSBAND NOT TO CHARGE WIFE-AcQumsCENCE BY DURESS.
The declarations of a husband that he had buried a large quantity of gola coin in a place known only to his wife and her brother, do not prove that she appropriated the coin to her own use. The relation of husband and wife will often ser,ure, by duress, acquiescence in the false statements of each other. A cross- hill after his death, by his heirs, will not be sustained on such declarations to chal'ge her with the treasure.
In Equity. Wright Ii: Folkes, for complainant. Vance cf: Anderson, Harris, McKissick J: Turley, H. O. Moorman, and Oalvin C. TIarris, for defendants. HAM:'rIOND, D. J. This is a bill by the widow of John N. Pulliam, against the executor and the legatees and devisees, for a general account.of the administration of the estate, to recover certain legacies and devises made to her, and to charge the executor with certain allegerl breaches of his trust. J. N. Pulliam died in Fayette county, Tennessee, October 20, 1865, leaving a will, in which he gave his wife one section of his lands in Arkansas, "she making her own selection," all the money he might have on hand in her possession at the time of his death, she not being required to give his executors any account of the same, certain specified articles of personal property of which she was to be put into possession at the time of his death, together with all the notes he received of her at her marriage. The will also provided, among other things, that the executors should, after payment of these legacies, pay all the testator's just debts out of the remainder of his estate, the balance of the estate to be equally divided among all his children; and his sons Joel L., John J., and Alfred B. Pulliam were named as executors. The will is dated February 23, 1863. The defendant J. J. alone qualified as executor, and only in Tennessee, the othei
sons having declined. He took the oath requited by the statute, and received letters testamentary on the :;;ixth of December, 1865, filed· his inventory on the nineteenth of January, 18.66, and his first and. final settlement on the nineteenth day of July, 1872. A, an account isa matter of course, and upon the single charge :thlJ,t an executor has proved the will may be founded every inquiry necessary to ascertain the amount of the estate, its value and the disposition made of it, the situation of any part remaining unof, the debts of the testator, and any other circumstances leading .to the account Desty, Fed. Proced. Eq. rule 73 and note, p. 303; Williams, Ex'rs, 1732; 2 Daniell, Ch. Pro (4th Ed.) 857; Gresley; Eq.Ev. 168; Law V. Hunter, 1 Russ. 100; Walke?' v.' Wood.wat·d, Id. 110.. And these authorities show that, as to the deta:ils of. the account, it is improper to introduce proof, except such as ma'ine necessary to settle the principles which are to govern the master,:tiptil the cause is before him for that purpose. In thus proceeding against an executor a court of equity treats him as a trustee for the legatees and devisees to execute the trusts of the will. Williams, Ex'rs, 1717. lIe is an express trustee, and the statutes of limitation do not bar the remedy. LaffertiJ v. Turley, 3 Sneed, 151;,'Oarr v; Lowe,7 Helsk.'85; Decouche V. Savetier, 3 Johns. Ch. 190, 215,222; Wallis v. Cowell, 3 Ired. L. 323; Taylor v. Benham, 5 How. 233, 276. Lapse of time, however, as in all other cases in equity, will, under certain circumstances, operate as a bar. Lupton v. Janney, 13 Pet. 381; Burton V. Dickinson, 3 Yerg. 112; Piatt V. Vattier, 9 Pet; 416; McKnight v. Taylor, 1 How. Hil; Maxwell V. Kennedy, 8 How. 210; Boone v. Chiles, 10 Pet. 177. The common-law presumption of payment after 20 years furnishes the analogy most frequently applied: this has been reduced to 16 v. years in Tennessee. Blackburn v. Sqtlib, Peck, 60; Thompson, 2 Head; 404. But in Lafferty V. 'Turley, supra, 27 years was held not to defeat the right to an account in a case like this. In Burton v. Dickinson, supra, at the stating of the account between the parties those interested were present, received their shares of the property, and executed receipts; and 12 years were, therefore, held to be a bar. So, in Lupton V. Janney, supra, there being no charge in the bill of any fraud against the executor, it was dismissed, not having been filed until 12 years after the final settlement in the orphan's court. Here the executor made his first and only settlement on July 19, 1872, and this bill was filed July 7, 1876, less than four years after; so that, if we adopt Mr. Justice Story's dictum as
PULLIAM V. PULLIAM.
in Lupton v. Janney, that the bill must he filed, at furthest, within the period prescribed by the statute of limitations for actions at law upon matters of account, (though I do not see. why this is not an abrogation of the rule that the statute of limitations does not apply to express trustees,) this bill comes within our statute of six years, and is filed in time. It is true, the plaintiff could have filed this bill at any time ::tHer the expiration of the two years allowed the executor by law to settle the estate, (Tenn. Code, § 2311,) and she might possibly have maintained a bill for an account at any time after the six months allowed to ascertain the condition of the estate, (Code, § 2274;) but, considering her rights under this will, she might well delay any demand for an account until the executor had collected the assets and paid the debts, presuming that he would do his duty; and certainly he had no right to require that she should ask for a settlement in a coqrt of equity before he himself considered the estate ready for settlement in a. court where, by law, he was bound to settle. There can be no doubt, therefore, that the plaintiff here is entltled to an account; and our only duty now is to determine, so far as we can, the extent to which it shall go, and the principles that shall guide the master in stating it. Field v. Holland, 6 Cranch, 8; Dubourg v. U. S. 7 Pet. 625. And, first, what effect is to be given to the settlement made by the executor with the county court of Fayette county on July 19, 1872, and which was examined and approved by that court at its October term, 1872? It does not appear whether the notice required by section 2298 of the Tennessee Code of the making of this settlement was ever given. The settlement of accounts by executors and administrators is regulated in detail by statute, including a requirement for notice to the parties interested; and section 2305 provides that a settlement, when so made and recorded, shall be prima facie evidence in favor of the accounting party. Code, §§ 2295,2305, and note. The defendant insists that the plaintifl" must successfully attack the account by showing errors in it, and only to the extent that she surcharges and falsifies it by such errors can he be required to account again; that this settlement has the verity of a judicial record, and must be here so considered. There is no question but that it has this effect in the state courts wherever the settlement is called in question. This statute is not a mere rule of evidence, but a declaration of the force and effect of the judicial decree in the county court approving the settlement. SnodJTaS8 v. SnodJl'ass, 1 Bax. 161; Milly
v. Ha1'l'LSOn, 'I Cold. 213; Curd v. Bonner, 4 Cold. 632; Elrod v. Danca,ster,2 Head, 571; Turney v. Williams, 'I Yerg. 172: Bl(,rton v. Dickinson, 3 Yerg. 112. Has the general rule of equity jurisprudence, that a legatee or devisee is entitled as a matter of course to an account against an executor on a bill filed for that purpose, been changed by the statute? The jurisdiction does not depend upon the right of a court of equity to surcharge and falsify accounts between individuals for fraud or mistake, or to open settled and stated accounts on like grounds of equitable relief, but attaches from other sources; that is to say, it has been acquired by the assumption on the part of courts of equity of jnrisdiction over the assets of deceased persons, and the accounts when taken are mere incidents to the relief. Beyond this it has plenary jurisdiction over these matters which no other court has to administer the trusts of the will. Story, Eq. JUl'. § 530 et seq; Tollel;. EX:'rs, 479, § 4. The jurisdiction of the ordinary to take an account, under the English statutes in force at the time our federal courts were organized, was very much restricted, and out of these restrictions has grown the necessity for equitable relief. Toller, Ex'rs, 489, § 5. I cannot find that in administering this relief courts of equity paid any attention to settlements made in the ecclesiastical court, as such; indeed, I doubt if such settlements as are made in our probate courts under statutes conferring upon them more or less extended jurisdiction, were known to any court at that time other than a court of equity. In case a legatee elected to go into the spiritual court the executor was obliged to exhibit an inventory and bring in an account. All legatees and parties interested were cited to appear at the making of the account, for it was not conclusive on such as were absent and had not been cited. Id. 491, 495. After the ordinary had investigated the account, if true and perfect, he pronounced for its validity, and in case all parties interested had been cited such sentence was final, and the executor was subject to no further suit. Id. 495. But the jurisdiction of the ordinary was very limited, and the conclusive nature of the account so made before him applied only to matters within that jurisdiction. Can this principle be applied to settlements made in our probate courts, so widely differing in their powers and jurisdiction in the several states, to limit and confine the remedial powers of a federal court of equity? It seems to be settled by the 'rennessee cases, above cited, that this statute was passed for the very purpose of imposing such a limitation on the state courts. But the jurisdiction of the