Opinion
11-10-1899
WARWICK v. ELY et al.
Aaron V. Dawes, for complainant. Richard M. J. Smith, for defendants.
Bill by William Warwick against Stephen D. Ely and another as executors. Decree for complainant.
This bill is filed to recover two legacies. Joseph J. Ely left in his will $100 to each of his grandchildren, including Joseph J. Ely, Jr., and Andrew J. Ely. These legatees have assigned their interest in the legacies to William Warwick, the complainant, who now sues the executors to recover the legacies, with interest thereon from a period beginning from one year after testator's death.
Aaron V. Dawes, for complainant.
Richard M. J. Smith, for defendants.
REED, V. C. The defenses interposed to the claim of the complainant are two. It is first insisted that interest began to run upon the legacies at the end of three years from probate, instead of at the end of one year from the date of testator's death. The second defense is that the executors have a setoff against one of the legatees and his assignee. First, then, in respect to the matter of interest. It is admitted by the defendants that, as a rule, interest begins to run upon a general legacy one year from the testator's death. It is insisted, however, that these legacies are aside from the general rule by reason of the following clause in testator's will: "I hereby appoint my two sons, Stephen D. Ely and Joseph Addison Ely, executors of this, my last will, authorizing them at their discretion to employ able law counsel; and I give them three years in which to settle my estate, if they think that time advantageous." It is insisted that, as the legacy was not payable until the end of three years from the time of probate of the will, interest does not begin to run upon them until they become payable. It is, of course, entirely clear that no duty to pay these legacies arose during the period of the three years, because there was imposed upon the executors no duty to settle the estate in less than three years. No payment, therefore, could have been successfully demanded. If, therefore, as an inexorable rule, the right to interest begins only when a right to claim payment accrues, the position taken by the counsel of the defendants would be logically unassailable. But it does not seem to be an invariable rule that the right to interest depends upon the right to claim payment. A conspicuous instance of the last statement is furnished by the decisions of the courts as to the effect upon the general rule that interest shall begin to accrue one year from testator's death of those statutes which make legacies payable one year from the date of the letters testamentary, instead of at the end of one year from testator's death. If interest depends entirely upon the right to claim payment, then the reason of the rule, as Judge Woerner remarks, would make interest payable under these statutes one year from date of letters testamentary. Woerner, Adm'n 2d Ed.) § 458. Indeed, some courts have so held. But the court of appeals of this state, in Davison v. Rake, 45 N. J. Eq. 767, 18 Atl. 752, affirming a decree advised by Vice Chancellor Van Fleet, held otherwise. Mr. Justice Depue, in delivering the opinion of the court of appeals, uses this language: "For the sake of general convenience, the court holds that personal estate should be reduced into possession at the expiration of one year after the testator's death, and upon that ground interest is payable upon general legacies from that time, unless some other period for the payment of the legacies is fixed by the will. Actual payment may, in many instances, be impracticable within that time, yet in legal contemplation the right of payment exists, and carries with it the right to interest, until actual payment is made." The question now propounded was before the supreme court of Rhode Island in the case of In re Spencer, 16 R.I. 25, 12 Atl. 124. The will in that case provided that the executors thereof should have five years to settle the estate; yet it was held that the pecuniary legacies bore interest after one year from the testator's death. The reasoning of Chief Justice Durfee in that case is especially applicable to the facts in this case, and need not be reproduced. He cites with approval the case of Kent v. Dunham, 106 Mass. 586, 591, in which case the court said: "That interest is allowed on the principle that it follows as an accretion to the principal legacy, and does not depend on demand or default. It may be said that it is a rule which reduced to a certainty what might otherwise be the conflicting exercise of discretion by the executors or the court." Nor do I see that the insistence that the testator contemplated a litigation, which he knew would prolong the period of the settlement of his estate for more than a year, can in any way change the doctrine thus announced. Whatever may have been the reason for giving three years for the settlement of the estate—whether it was on account of the several inherent difficulties of the administration, or on account of the prospective contest over the probate—does not matter; for it would be the fact that he gave the three years, rather than the reasons for giving it, that would fix the time for the beginning of interest, if the general rule was changed at all. I am of the opinion that the legatees are entitled to Interest after one year from testator's death.
The second question is whether the executors are entitled to offset an item of rent alleged to be due from Joseph J. Ely, one of the legatees, under the circumstances which the counsel for said executors offers to prove. I say "offers to prove," because it is stipulated between the counsel that, if the court holds that the offer of the defendants' counsel is a defense, then he shall be permitted the opportunity of proving it. The offer is to show that this legatee was in possession of a farm belonging to the testator at the time of, and for one year after, testator's death. It is admittedthat rent was paid by him up to the time of testator's death, but the unpaid rent accruing subsequently to the testator's death amounts to the sum of $300. It is offered to prove that the assignee, at the time he took his assignment of the legacy, knew of the existence of this debt. The land occupied by the legatee was devised to Stephen D. and James A. Ely, who are the executors of the will. Or, to state it more accurately, they, having a power of sale of this and other property, were the beneficiaries of the fund received from the sale. Now, it is apparent that the rent due after the death of testator did not belong to his estate, and could not be recovered by his personal representatives. If the will had been refused probate, the rent would have belonged to the heirs of the intestate. The will being proved, it belongs to the devisees. Whether, during the abeyance of the execution of the power to sell, the rent belonged to the beneficiaries under the will of the testator, or to his heirs, does not matter, for in no aspect can the rent belong to the personal representatives. Tayl. Landl. & Ten. § 309. Now, the executors wish to set up a claim which they hold as residuary devisees, or in which they hold a part interest as one of several heirs, against a claim preferred against them as the personal representatives of the testator. It is perceived that the right in which they claim the rent and the right in which they defend this suit are radically different. They could not sue for this rent as executors. If the claimed offset is permitted, the estate would be entitled to the benefit of the application of the rent, and the executors would be entitled to an allowance for a legacy as paid, and would so hold so much of the assets for their own personal benefit. Neither in equity nor law can a setoff be sustained, unless the claims are mutually held in the same right, unless in the latter court a peculiar equity is created by the circumstances. Black v. Whitall, 9 N. J. Eq. 572, 577; Brewer v. Norcross, 17 N. J. Eq. 219, 226. There is no equity which will permit this set-off, so the rule must control that personal representatives cannot, in an action against them in their representative capacity, set off a debt due to them personally. Stiekney v. Clement, 7 Gray, 170; Bradshaw's Appeal, 3 Grant. Cas. 109. I am constrained to the conclusion that the evidence tendered to prove a set-off is incompetent for that purpose. The complainant is entitled to a decree for the amount of the assigned legacies, with interest from September 13, 1896.