Hawkins against Day.

HIGH COURT OF CHANCERY

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Original Citation: (1753) Amb 160

English Reports Citation: 27 E.R. 107

1753.

Case 79.--Hawkins against Day. [1753.]

Payment by executor of simple contract debt, before breach of condition of bond, is good, and no devastavit in case of deficiency of assets, but payment of legacies is not.-Jan. 1753, at Lincoln's Inn Hall, before Lord Hardwicke, Chancellor. [Lib. -Reg. 1752, A. fo. 72 a. S. C. 1 Dick, 151.]

On exception to the Master's report, the case was, Benjamin Lane being appointed clerk to the plaintiffs, who were co-partners in a sugar house, he entered into articles, and together with John Lane and William French, as his sureties, became bound in a bond of 5000 penalty for observing the covenants, &c., in those articles. Ben¡jamin Lane having converted to his own use several sums of the partnership money, absconded and went abroad, and a commission of bankruptcy issued against him, but he did not conform ; William French being dead, and John Lane being a bankrupt, bill was brought (inter alia] for a satisfaction against the assignee of Benjamin Lane, and the assignees of John Lane, and against Day acting executor of William French ; who was required to admit assets, or set out an account of the personal estate of French.

The executor of French, in his answer, insisted he was a stranger to the bond, and the obligees never informed him of it; and that he had paid away French's assets in discharge of his simple contract debts ; that if he had been informed of the bond he should have made a provision out of French's assets, if by law he might, as a guard against the said bond, in case of any future breach in the condition thereof and not have exhausted them in paying simple contract debts.

An account was decreed of the partnership estate and transactions, and of what was due from Benjamin Lane. [161] and if his effects under the commission should not be sufficient to satisfy them, then the effects of John Lane, and the assets of William French, were to be answerable, the latter in a course of administration.

The master reported a large sum due from Benjamin Lane, and deficiency of his estate, and that plaintiffs were to be considered creditors on the assets of French and effects of John Lane, the sureties ; and as the executor of French did not admit assets, he had taken an account, which he states ; and also that his executor had paid 3621, 15s. 9d. in discharge of legacies and simple contract debts, which not being of equal degree with the debt to plaintiff he had not allowed the same.

To which exceptions were taken by the defendant (inter alia), because the master had disallowed payment of 3120, 19s. on account of their being debts of an inferior degree to plaintiff's demands, though most of the payments were made, bona fide, by Day the executor, many years before breach of the security bond, which were there¡fore good payments.

After argument at bar,

Lord Hardwicke, C.

The questions are, 1st, Whether payment of assets in this case, before there was any breach of the condition, which is for performance of covenants, ought to be allowed as a good administration of the effects 1 .

2d, Whether payment of the simple contract debts and the legacies be good against; the demand on this bond, they being paid by Day the executor, before he had notice, of the bond. Query, If good at law 1

As to the 1st. Of opinion such payments are good, because the condition may never be broke, and consequently there may be no debt.

This case only extends to debts, not to legacies : the rule of this Court to grant prohibitions in case legatees sue in [162] the spiritual Court, and refuse to give security, is out of use now ; but this Court will decree a legatee to refund. I think all payments

108 LEMAN V. ALIE AMB. 163.

of simple contract debts, made before breach of the condition in a bond, are good; but not of legacies.

2nd Question. The payment of debts by simple contract, by an executor, before he has notice of a debt by specialty, is a good payment in point of law ; and so it was held by all the Judges in Davis v. Monkhouse, in Fitzg. Reports; and also in 3 Lev. 115, by three Judges against Levinz.

Objection. If an executor has no notice of a specialty debt, and an action is brought against him by a simple contract creditor, if then a judgment is recovered against him, that such judgment is good against the specialty creditor, but a voluntary judg¡ment would not be so. I think that is an unsound opinion and distinction, for that would make it necessary in every case of a simple contract, to have a judgment in an action at law, before the executor could safely pay those debts.

The governor and company of the New River v. Brownjohn, is another case as to this point.

Objection, That two of the executors had notice ; but that is not sufficient to affect Day with notice, because they concealed it from him.

First, I think if the other two executors had been strangers to the debt, notice to one would not have been notice to both.

Executors are not affected by each other's acts (see Amb. 219). Suppose the two executors had been strangers to the transactions, as the third was, notice to them might affect the third because it might be presumed they acquainted him with it; but give no opinion on that.

Upon the whole, the payment to simple contract creditors before notice of specialties is good. In this case there was a gross neglect in the partners, not to call on the clerk to account regularly. Exception allowed.(l) (See a full note of this case in the Appendix to this Edition (E).)

(1) Lib. Reg. See the order on hearing the exceptions in this case, and the Master's report at length from Lib. Reg. in 3 Mer. p. 555. The exception was allowed as to all the sums in the schedule (which contained the sums mentioned in the text to amount to 3120, 19s.) except as to the two legacies of 15 and 100, and except as to certain other items the particulars of which there appear.-See the observations of Sir W. Grant on this case, in Simmons v. Bolland, 3 Mer. 554, in which case, where a testator had entered into a covenant for payment of rent and repairs, but there was no existing breach of the covenant on rent in arrear. The executors were directed to pay over the residue to the legatee upon due indemnity from him to be settled by the master.