Opinion
January 25, 1934.
March 19, 1934.
Orphans' court — Practice — Adjudication — Petition to open — Right or equity of creditor — Final distribution not yet made — Matters occurring after adjudication.
Where a creditor takes no steps to press a claim against a decedent's estate, and allows his debtor's estate to be actually adjudicated, the fact that there has been no actual distribution does not give such creditor an equity and a second chance to present his claim, where matters arising subsequent to the audit make it advantageous for him so to do.
Before FRAZER, C. J., SIMPSON, KEPHART, SCHAFFER, MAXEY, DREW and LINN, JJ.
Appeals, Nos. 381-3, Jan. T., 1933, by petitioners, from decree of O. C. Phila. Co., Oct. T., 1930, No. 3804, in estate of Charles Carter Walbridge, deceased. Decrees affirmed.
Petition for bill of review of adjudication.
The facts are stated in the opinion, STEARNE, J., of the lower court, LAMORELLE, P. J., GEST, HENDERSON, VAN DUSEN, STEARNE and SINKLER, JJ., which was as follows:
Four creditors of this estate who failed to give written notice of their claims to the executors, as directed by section 46 (e) of the Fiduciaries Act of June 7, 1917, P. L. 447, have filed petitions to open the adjudication, which has become confirmed absolutely in due course. They allege, in effect, that despite their failure to comply with the act of assembly, nevertheless, as distribution has not actually taken place, and there is no harm done, the opening of the adjudication for their benefit is a matter of right, or at least of grace in the discretion of this court. The master recommends the dismissal of all petitions. The court is unanimously of opinion that the adjudication should not be reopened, as concerns the petitions of the Girard Trust Company and Chamberlin, the first and second mortgagees. The minority are of opinion that the petitions of Evans and Montgomery, the petitioners with contingent liabilities, should be granted.
This decedent was a partner in a stock brokers' firm. The firm purchased a valuable piece of real estate and decedent, as a partner, joined in two bonds given as additional collateral to two of the petitioners, Girard Trust Company and Chamberlin, who are the first and second mortgagees. The other two petitioners, Evans and Montgomery, partners in the firm, retired from the partnership and took from the decedent and the continuing partners an agreement of indemnity concerning the bonds accompanying the mortgages. It appears that these two petitioners were subsequently released from liability by both obligees who now repudiate their releases. It also appears that one of the mortgages was extended, and was not due at the time of the audit. The first two petitioners demand payment while the latter two desire a fund set aside to insure against possible future liability.
According to the testimony, what really happened is that two of the claimants relied upon the security of their mortgages and accompanying bonds, and the other two upon their releases. None of them paid the slightest attention to the actual or possible liability of the decedent. They gave no written notice of their claims to the executors, and consequently received no actual notice of the filing of the account. After the account was adjudicated and confirmed absolutely, the brokerage firm and three coobligees upon the bond became insolvent and went into bankruptcy. The respective rights of all parties concerned immediately underwent tremendous change. The petitioners herein then, and then only, became vigilant to protect their respective rights and presented these applications.
As the majority of the court view it, the question of law involved is whether, under such circumstances, the petitioners possess the right or the equity to obtain the relief which they now seek? The master's report and the dissenting opinion recite the facts in detail, and give a full discussion of all the cases. We do not deem it necessary to enlarge upon the discussion of either fact or law.
We decide that petitioners were not entitled to receive actual notice from the executors of the filing of the account, because none of them gave written notice of their claims to the executors, as required by section 46 (c) of the Fiduciaries Act of 1917: Downing v. Felheim, 309 Pa. 566. There is no mistake of law or fact apparent upon the record, and the court is unanimous that the review herein sought is not a matter of right.
It is strenuously urged however that, if not a matter of right, nevertheless, as a matter of grace, the court ought to exercise its discretion in favor of the petitioners because, despite their default, there has been no actual distribution, and no harm done the estate. The minority opinion concedes that as to the two petitioner mortgagees, it would be unjust to open the adjudication because in the meantime there has occurred a change in position of the rights of the estate which, if the claim is allowed, will result in substantial harm to the estate. With this we agree. But the minority would allow the other two petitioners who possess a possible claim against the estate, in the event it is judicially determined their releases are invalid, to have the adjudication opened as to them, and have a sum set aside to await any such possible liability. With this a majority of the court does not agree. Even a vigilant creditor with real equity may be denied relief where the rights of others are affected. Even a supine creditor, where there has been fraud, accident or mistake, may, in exceptional cases, be granted relief if there are no intervening equities. But in the present circumstances the majority of the court deems it most unjust and inequitable to grant relief to creditors who, entirely content and satisfied with their respective collateral and situation, and having no thought or intent to present any claim against the estate, sit idly by and allow the estate to be lawfully adjudicated. When a bankruptcy occurs four months after the adjudication becomes absolute, and nearly two years after decedent's death, they for the first time decide to press their claims against the decedent's estate. They depend upon what they consider the fortuitous circumstance that the estate has not been actually distributed. What the contention merely amounts to is this: Where a creditor takes no steps to press a claim against a decedent's estate, and allows his debtor's estate to be actually adjudicated, does the fact that there has been no actual distribution give such a creditor an equity and a second chance to present his claim, where matters arising subsequent to the audit make it highly advantageous to him so to do? Surely, judicial adjudication must have some finality. There is no case cited, or of which we are aware, that even suggests relief should be granted under such circumstances.
This result is not to be regarded as doing a possible injustice when we consider that the mortgagee creditors, as in Downing v. Felheim, supra, still have the security of the real estate on which their mortgages are charged. The other two petitioners have releases from liability from their obligees, which, even though threatened with repudiation, are still prima facie a complete protection against any possible liability. If petitioners have neglected to secure binding releases they must bear the burden of their own default.
All exceptions are dismissed and the decrees dismissing the petition recommended by the master are approved and directed to be submitted to the court for execution.
HENDERSON and VAN DUSEN, JJ., dissented in part.
Petitioners appealed.
Error assigned, inter alia, was decree, quoting record.
Philip Price, with him Charles Myers, of Barnes, Biddle Myers, for appellant, No. 381.
Thomas Stokes, for appellant, No. 382.
John Russell, Jr., with him Clement B. Wood, for appellant, No. 383.
W. Logan MacCoy, of MacCoy, Evans, Hutchinson Lewis, for appellees.
Argued January 25, 1934.
The decrees of the court below are affirmed on the opinion of Judge STEARNE.