G25 



ASSETS. 



ASSETS. 



62C 



rendering him chargeable for payment of debts. But it seems now to be 

 the better and more just rule, that if such property should be abstracted 

 by any stranger, either before it has been actually possessed by the 

 executor or afterwards, so that it be without any fault 'of the executor, 

 he will only be liable to account for the damages which he may 

 actually recover against such stranger, notwithstanding such damages 

 may be less than the actual value of the goods. And upon the same 

 principle, goods stolen from the possession of the executor, without 

 blame on his part, will not be considered assets, unless indeed he have 

 neglected an opportunity of selling them for a good price. As to all 

 such personal property of the testator as is merely in action, namely, 

 debts and rights of suit, it only in general becomes assets when reduced 

 into possession by the executor ; but if he release any such claims, or 

 take a bond for them to himself personally, they then become assets 

 with which he is chargeable. As nothing but what is of pecuniary 

 value is assets, if the deceased were entitled to the next presentation 

 to a living, and died without presenting, the right in the hands of the 

 executor would not be assets, because not legally saleable. It follows 

 from the very definition of assets, that they do not embrace property 

 which the testator possesses merely as a trustee, without having any 

 personal beneficial interest therein ; and upon the same principle, the 

 executor cannot employ as general personal assets property which is in 

 the testator's hands clothed with a specific trust or appropriation ; for 

 instance, bills or notes remitted to the testator to meet acceptances for 

 any particular purpose ; nor money received by the executor himself 

 under a specific trust to apply it in payment of his testator's debts. 



2. Personal equitable assets are such as can only be made available 

 by the help of a court of equity, and which consequently cannot be 

 given in evidence against an executor on his plene administravit in a 

 court of law. The distinction between the two classes is most 

 important, and consists not merely in the mode of obtaining payment 

 out of them by a creditor, but also in the scheme of their distribution 

 for payment of debts. While.legal assets must be applied in payment of 

 debts, according to certain rules of priority (namely, 1. Funeral 

 charges, &c. 2. Debts to the crown 3. Judgments 4. Recognisances, 

 &c. 5. Kent and specialty debts, as mortgages, bonds, &c. 6. Simple 

 contract debts 7. Legacies), equitable assets are distributable among 

 all creditors equally, the only distinction recognised in courts of equity 

 being that debts are to be preferred to legacies. Equitable assets 

 embrace money produced by sale of the testator's real estate, whether 

 his interest in such estate were legal or equitable, and whether it be 

 expressly devised to be sold for payment of debts or not ; and the 

 equity of redemption of a mortgage is equitable and not legal assets. 

 So also is any fund over which a man has a general power of appoint- 

 ment, which he exercises ; in which case the property will be equitably 

 subject to the claims of his creditors, in preference to those of his 

 legatees or appointees. 



3. Real assets comprise all such lands, tenements, &c., as descend to 

 the heir at law of the deceased, and which at common law rendered 

 him chargeable with specialty debts binding the heir. They embrace 

 many things not strictly of a real nature. Thus an annuity, though a 

 personal thing, is, if granted to a man and his heirs for ever, real assets, 

 which descend to the heir ; and this is also the case with things acces- 

 sory to real estate, such as chimney-pieces, wainscots, doors, and other 

 fixtures ; and even deer in a park, hares and rabbits in a warren, fish 

 in a private pond or fishery, are held to participate in the nature of 

 real estate, and to descend to the heir as real assets. By the statute 

 2'J Car. II. c. 3, estates pur outer vie, limited to the grantee and his 

 heirs, or his heirs, executors, and administrators, during the life of a 

 third party, are declared to be real assets in the hands of the heir. 

 Terms of years being personal chattels, are in general personal assets 

 in the hands of the executor or administrator ; terms created or assigned 

 over to attend the inheritance (according to the mode formerly used by 

 conveyancers of protecting the inheritance from judgments and per- 

 sonal charges of the owner) followed the nature of the inheritance. 



At common law, it was strictly only the real estate descended to the 

 heir which was liable to any of his debts, and this only to debts by 

 bond or specialty, in which the heir was specifically named. If, there- 

 fore, the debtor, after the Statute of Wills, 12 Henry VIII. c. 1, devised 

 away his lands, his creditors were entirely defrauded of their debts. 

 To remedy this evil, the 3rd Will, and Mary, c. 14, s. 2, rendered such 

 devises void as against creditors by bond or specialty in which the heir 

 was bound, and enabled all such creditors to sue the devisee of the 

 land jointly with the heir at law. And this act having been con- 

 strued to apply to the case of creditors on bond only, has been wisely 

 repealed, and the same provisions extended by the 1st Will. IV. c. 47, 

 to creditors, not only on bonds, but on covenants, and all other 

 specialties. But it is not merely all classes of specialty creditors that 

 have now a remedy against the real assets of the debtor : the creditors 

 by simple contract obtained such a remedy by the 47th Qeo. IJI. st. 2, 

 c. 74 (re-enacted by 1 Will. IV. c. 47) ; but this was confined to cases 

 where the debtor, at the time of his death, was a trader ; and none of 

 the above provisions applied to copyhold estates. But now, by the 

 comprehensive enactment of 3 & 4 Will. IV. c. 104, all the real estate 

 of the debtor, whether freehold, customary, or copyhold, which he shall 

 not, by hi last will, have charged with payment of his debts, is ren- 

 dered assets, to be administered in courts of equity for payment of his 

 debts, as well those due on simple contract as on specialty ; provided 



ABTS AND SCI. DIV. VOL. I. 



that in the administration of assets in courts of equity creditors by 

 specialty in which the heir is bound shall be preferred to creditors by 

 simple contract, or by specialty, in which the heirs are not bound. It 

 is to be observed that this important enactment confines the remedy 

 of simple contract creditors against the real estate to a court of equity, 

 and does not enable a simple contract creditor to sue the heir or devisee 

 at law. 



We have hitherto treated of assets merely as regards the rights and 

 claims of the creditor against the executors and administrators, and 

 hem and devisees of the debtor, in respect of assets personal or real 

 come to their respective hands. It remains to notice the doctrine of 

 the exoneration of the real estate, that is, the apportionment of the 

 debtor's liabilities in a court of equity between the two -funds of the 

 deceased, the real and the personal estate, and also the marshalling of 

 assets, in order to produce a full satisfaction of all creditors. Although 

 a creditor by specialty has, where the deceased leaves both personal 

 and real estate, his choice of remedies either against the one or the 

 other, so that if he sue the heir at law he cannot be met by a plea that 

 the deceased has left personal assets, yet it is a settled rule that the 

 personal estate in the hands of the executor or administrator is the 

 primary and natural fund for the payment of the debts of ^he deceased, 

 of whatever description. If the creditor, therefore, proceeds against 

 the real estate, descended or devised, the heir or devisee who has 

 sustained the loss shall be allowed to stand in the place of the specialty 

 creditor, and reimburse himself out of the personal estate in the hands 

 of the executor; provided, of course, that such reimbursement will 

 not prejudice any creditor of the deceased : and where the exoneration 

 of the real estate is in favour of the heir, it must not disappoint the 

 claim of any legatee, except the residuary legatee, nor the wife's claim 

 to paraphernalia. But a devisee stands in a different situation from 

 the hen- ; and if he is compelled to pay a bond debt of the devisor, it 

 seems he is entitled to reimbursement out of the personal assets, to 

 the disappointment of general legacies, and even (as it would appear) 

 of specific legacies. 



To entitle the heir or devisee to this exoneration out of the personal 

 estate, the debt must be the proper debt of the deceased ; for if it was 

 a debt charged on the estate when the deceased purchased it, or a debt 

 incurred for money borrowed to pay off then existing charges (whether 

 debts or legacies), the land is then the proper fund for its discharge, 

 and the heir or devisee must take the land cum onere, and cannot throw 

 the burden on the personal funds. The rule is the same with respect 

 to both debts and legacies, namely, that the personal estate is the 

 primary and natural fund out of which they are to be paid, and that 

 the real estate is only to be resorted to in aid of the personalty ; and 

 even though debts and legacies are, by the will, effectually charged on 

 the real estate, this is only taken for a declaration by the testator that 

 the real estate shall be liable in case of a deficiency of personal assets. 

 But though it requires more than a mere charge of the real estate to 

 exempt the personalty, still a testator is not debarred, if his intention 

 be sufficiently expressed, from effecting such an exemption. As to 

 the mode of expression in a will requisite to operate this effect, the 

 cases have been very numerous and contradictory, and evidence dehors 

 the will has been, in some of them (as it is now held, improperly), 

 resorted to. In earlier cases it was held that express words were 

 requisite ; but it is now settled that the personal assets will be ex- 

 empted, if there appear, from the whole testamentary disposition taken 

 together, sufficient to convince a judicial mind that the testator meant 

 not merely to charge the real estate, but so to charge it as to exempt 

 the personalty. 



Marshalling assets is that operation by a court of equity, by which 

 claimants entitled to claim against both the real and personal estate of 

 the deceased are compelled so to elect as not to defeat the claim of 

 other claimants who have only one of these funds to resort to. It is a 

 general rule of equity that if A. have two funds to resort to for his 

 debt, B., having a claim on only one of these funds, may compel A. to 

 have recourse to the other, provided it be necessary for the satisfaction 

 of both. The doctrine and practice of marshalling assets as between 

 creditors by simple contract and creditors by specialty, seems to be in a 

 great degree superseded by the effect of the statute 3 & 4 Will. IV. 

 c. 104 (before stated), by which the former have acquired a claim 

 against the freehold and copyhold as well as against the personal 

 property of the deceased debtor. But the same rule of equity exists 

 also hi favour of legatees, and therefore if a creditor by bond, in which 

 the heir is named, exhaust the personal estate instead of resorting to 

 the heir, so as to leave nothing for payment of legacies, a legatee shall 

 stand hi the place of such bond creditor against the real assets descended, 

 to the heir. But if the real estate were devised to a stranger, it would 

 be otherwise, for in that case it would not be equitable that a general 

 legatee (nor as it seems a specific legatee) should obtain his legacy by 

 throwing the specialty debts upon the specific dei'isce of the land. The 

 principle of course applies as between a legatee and a simple contract 

 creditor, where the latter has a claim upon the real assets, which the 

 former has not; as where the testator's estate is generally devised 

 charged with debts but not with legacies. [EXECUTORS, LEGACIES 

 WILLS AND TESTAMENTS.] 



(Williams's Treatise on the Law of Executors and Administrators; 

 Bacon's Abridgment (7th ed.), tit. Executors and Administrators, Legacies 

 Marty age.) 



