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SECTION VI.

Of the right of the executor or administrator to retain a debt due to

him from the testator or intestate.

in

He
any case,

gree.

As an executor or administrator, among creditors of equal degree, may pay one in preference to another, so it is another of his privileges that he has a right to retain for his own debt due to him from the deceased, in preference to all other creditors of equal degree (d). This remedy arises from the mere operation of law, on the ground

that it were absurd and incongruous that he should sue cannot,

retain himself, or that the same hand should at once pay and of a superior de receive the same debt : And, therefore, he may approagainst

priate a sufficient part of the assets in satisfaction of his own demand : otherwise he would be exposed to the greatest hardship ; for since the creditor who first commenced an action was entitled to a preference in payment, and the executor can commence no action, he must, in case of an insolvent estate, necessarily lose his debt, unless he has the right of retaining. Thus, from the legal principle of the priority of such creditor as first commences an action, the doctrine of retainer is a natural deduction (e). But the privilege is accompanied with this limitation, that he *should not retain his own debt as against those of a higher degree : for the law places him merely in the same situation as if he had sued himself as executor, and recovered his debt, which there could be no room to suppose during

the existence of those of a superior order (f). The Right of retainer not abolished by right of retainer by an executor has not been abolished

by Hinde Palmer's Act (32 & 33 Vict. c. 46), nor has it

Act.

&

+ See American note at end of this Section,

(a) Woodward v. Lord Darcy, Plowd. 184. An executor's right to retain a debt due to himself does not make him

secured creditor" within the meaning of sect. 10 of the Jud. Act, 1875, and his right to retain is not affected by that section. Lee 0. Nuttall, 12 C. D. 61. Re May, 45 C. D. 499, 502.

(e) 2 Black. Com. 511.

(f) 3 Black. Com. 18. Com. Dig. Admon. (C. 2). 1 Saund. 333 (note (6), to Hancocke Prowd). Godolph.

Pt. 2, c. 11, s. 3. Toller, 295. However, according to the opinion of other writers, the principle on which the executor's right to retain is founded, is,

In equali jure potior est conditio poesia dentis : " Fonblanq. Treat. Eq. B. 4, Pt. 2, c. 2, s. 2, note (m). Where a mortgagor dies insolvent and the mortgagee then realizes his security, and after paying himself the mortgage debt out of the proceeds has a surplus in his hands, he cannot, although he be executor of the mortgagor, retain that surplus in payment of a simple contract

0.

an

executor

been enlarged so as to enable the executor to retain his debt against a creditor of higher degree than himself (9).

It follows, therefore, that an executor who is only a simple contract creditor of his testator cannot retain his debt as against a specialty creditor (1)

If an executor dies after having claimed a right of retainer without having actually exercised it, leaving another execu

When an executor tor *of the testator surviving, the executors of the of

may retain. deceased executor have the right of retainer for the benefit of his estate (i).

This principle has been subsequently affirmed subject to this restriction, viz., that the executor's right to retainer is limited to so much of the assets of his testator as come into the possession or control of the executor or are paid into court during his lifetime, and, if after asserting in his lifetime a right of retainer he die without exercising it, it is only in respect of these that his representatives may exercise that right for the benefit of his estate (k).

This privilege of the personal representative to retain for his own debt exists, notwithstanding a judgment for an account has been made, in a suit by the other creditors, for the tain out of assets administration of the assets : and notwithstanding the judgment for an assets out of which he seeks to retain his debt came to his hands after the judgment: for the judgment does not affect the legal priorities of creditors : and there is no distinction in this

respect

Execntor may re

debt due to himself from the mortgagor, and so give himself a preference over other creditors of a higher degree, but must hand it over to the mortgagor's legal personal representative as part of his estate : Talbot o. Frere, 9 C. D. 568. And see the statement of the principle of “retainer,” by Jessel, M. R., in this case, p. 570. A balance order under the Companies Act against the personal representative of a deceased contributory does not constitute the liquidator a judgment creditor so as to give him a priority and to prevent the exercise by the executor of his right of retainer ; Re Hubback, 29 C. D. 934.

() Wilson 0. Coxwell, 23 C. D. 764. Crowder o. Stewart, 16 C. D. 368. Re Jones, 31 C. D. 440.

(h) Wilson v. Coxwell, 23 C. D. 764. In this case, where a right of retainer was claimed on behalf of the estate of the executor, the order made was that (1) the costs be paid ; (2) the remaining assets be apportioned among all the creditors on the footing of giving them all an equal dividend ; (3) the dividend be paid in full to the specialty creditor ; (4) the executor to retain his debt out of the residue ; (5) the surplus (if any) to be divided equally among the other simple contract creditors.

(1) Wilson o. Coxwell, 23 C. D. 764.

(k) Re Compton, 30 C. D. 15. In this case Cotton, L. J., held that unless the case of Wilson 0. Coxwell were restricted in this way, that case must be treated as overruled.

a

payment

between assets possessed prior to the judgment, and subsequent to

it (1). And in the administration of a testator's estate, Right to retain unaffected by fact the right of an executor to retain for his own debt is suing on behalf of not affected by the circumstances that he is himself the other creditors. plaintiff suing on behalf of himself and all the other creditors, and that he has submitted to account in the ordinary form of an administration decree (m).

An executor who has acquired by bequest from a creditor a debt which the creditor in his lifetime has proved in a suit for the administration of the testator's estate, has no right of retainer in respect of such debt, as if it had originally been due to himself (n).

The right of retainer is not lost by the circumstance of *the execThe right to re

utor or administrator having paid into court, in a credtain is not lost by itor's suit, the money which has been received on account money into court. of the assets of the deceased (0): And where the fund in court is insufficient to discharge the debt of the executor or administrator, his right of retainer will prevail against the plaintiff's right to have the costs of the suit satisfied (P). And the right of retainer by an executor was held to prevail against the plaintiff's right to the costs of the action, and against the debts of the other creditors, in respect of policy moneys paid into court to the credit of the action by an insurance company, in pursuance of an order made on the application of the plaintiff and in the presence of the executor, on the ground that the payment into court was in substance a payment by the executor (9).

After a receiver is appointed in an administration action, if assets are collected by the receiver, there is no right of retainer by the executor ; but if before the appointment of the receiver the executor has received assets, which he afterward pays over to the receiver, he has a right of retainer, which he does not lose from the simple fact that the money was paid to the receiver (r). The reason for this

(1) Nunn v. Barlow, 1 Sim. & Stu. 588.

(m) Campbell v. Campbell, 16 C. D. 198.

(n) Jones v. Evans, 2 C. D. 420.

(0) Davenport v. Moss, 14 W. R. 453. Re Harrison, 32 C. D. 395.

(p) Chissum 0. Dewes, 5 Russ. 29. Langton v. Higgs, 5 Sim. 228. Tipping v. Power, 1 Hare, 405, 411. Hall v. McDonald, 14 Sim. 1.

(9) Richmond v. White, 12 C. D. 361 (reversing the decision of Hall, V.-C. 10 C. D. 727).

(3) Re Harrison, 32 C. D. 395. Re Jones, 31 C. D. 440. Richmond 1. White, 12 C. D. 361. Generally the appointment of a receiver takes effect by the order of appointment upon his giving security, and is of no effect until the security has been perfected. Edwards o. Edwards, 2 C. D. 291. But

seems to be that when a receiver is once appointed, a debtor to the estate may pay his money direct to the receiver and obtain a good *discharge, so that the appointment of a receiver prevents the money actually or theoretically coming into the executor's hands, and without possession there can be no retainer (8).

It should seem, however, that an executor cannot retain, out of such of the assets as are merely equitable, to pay the whole of a debt due to him from the deceased, but only lowed

equitable assets. proportionable part with the other creditors (t): For in equity all debts are equal; and a court of equity will never assist a retainer (u).

A trustee of an estate, devised or conveyed to him, xor out of estate for the purpose of paying debts, has no right of devised to execuretainer thereout whether he is executor or not (x).

pay debts.

No retainer

out

al. of

tor ae trustee to

in a case where an administrator defendant in an administration action was also solicitor to the plaintiff, it was held that the defendant, between the time of the order of the appointment and the perfecting of the receiver's security, stood in no better position than he would have done after the receiver had perfected his security, and therefore could not exercise his right of retainer over moneys paid to him during that time. Re Birt, 22 C. D. 604.

(2) Re Jones, 31 C. D. 440, 444, per Kay, J.

(1) As to the distinction between equitable and legal assets, see post, Pt. IV. Bk. I. Ch I. Real estate is by the stat. 3 & 4 Will. IV. c. 104, made assets for the payment of debts only in equity and an executor has no right of retainer against it. Walters v. Walters, 18 C. D. 182.

Re Ilidge, 24 C. D. 654, 658.

(u) Anon. 2 Cas. Chanc. 54. Hopton t. Dryden, Prec. Chanc. 181. Bailey v. Ploughman, Mosely, 95. It was stated by Verney, M. R., that “the rule of this Court in cases of retainer is, unless the party can show a legal right to retain, we never give it him : if he can show a legal right, we never take it

away from him:" Chapman v. Turner, Vin. Abr. Exors. (D. 2) pl. 2. Re Baker, 44 C. D. 272.

(x) Bain v. Sadler, L. R. 12 Eq. 570. An heir-at-law or devisee has no right of retainer either out of the proceeds of sale of real estate, or out of rents received by him for a debt due to him on simple contract from the testator or intestate : but semble, an heir-at-law or devisee when the estates are not charged with debts, may, notwithstanding Hinde Palmer's Act (32 & 33 Vict. c. 46, see ante, p. *869), retain a debt to which he is entitled by specialty in which the heirs are bound. Re Ilidge, 27 C. D 478 ; reversing the decision of Chitty, J., 24 C. D. 654, as regards debts to which an heir-at-law is entitled by specialty in which the heirs are bound.

A devisee who was surety for the testator by specialty in which the heirs were bound (who, if he had paid off the debt would have had a right to the benefit of the specialty) not having paid it off, can only be treated as a simple contract creditor and has no right of retainer ; but a devisee, who is a creditor by specialty in which the heirs are bound, is entitled to retain, because, in the latter case, there is a common law

a

The executor may

to him trustee :

*An executor or administrator may retain not only for debts which

he claims beneficially, but also for those to which he is retain for debts entitled as trustee. Thus, in Plumer v. Marchant (y),

A., before his marriage, covenanted with B. and C. to leave them by his will, or that his executors, within six months after his death, should pay them 7001., in trust to pay the interest to his wife for life, and on her death, to divide the principal among his children, and, in default of children, as he should appoint, and bound himself, his heirs, executors, and administrators, in a penalty for performance : On his dying before his wife, without issue and intestate, it was holden that B., in the character of administrator, might retain assets to that amount during the life of the widow, against a bond creditor who sued before the six months were elapsed.

Conversely, the executor or administrator may retain he may retain for debts due to him for debts due to another in trust for him (z). as cestui que trust.

*Where the person entitled to administration is an Retainer by an administrator du- infant, and an administration durante minoritate is rante minoritate :

granted, not only may the administrator retain for his

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right of action against the heir who is allowed the right of retainer as he cannot sue himself ; whereas, in the former case the simple contract creditor could only obtain a judgment as against the real estate for the benefit of himself and all other creditors, Hinde Palmer's Act, although it takes away priority of creditors by specialty, does not take away the common law action against the heir-at-law nor the consequent right of retainer : per Cotton, L. J., in Re Illidge (ubi sup.) at p. 482, referring to and approving the decision of Wickens, V.-C., in Ferguson v. Gibson, L. R. 14 Eq. 379.

The courts of common law recogpized the executor's right of retainer in respect of a debt due to him as cestui que trust : (Roskelley v. Godolphin, T. Raym. 483; Marriot v. Thompson, Willes, 186 ; Loane v. Casey, 2 W. Bl. 965); to the extent of debts which according to the trust were payable to the cestui que trust, and provided that the debt or demand was one of which

account could be taken by a jury : De Tastet v. Shaw, 1 B. & A. 664. How. ever, in courts of equity the right of retainer of an executor was recognized in a creditor's suit in respect of a debt, the amount of which could only be ascertained by a court of equity : Re Morris's Estate, L. R. 10 Ch. 68.

(y) 3 Burr. 1380 (cited 3 A. & E. 858, per Curiam). Sander v. Heathfield, L. R. 19 Eq. 21. Crowder 0. Stewart, 16 C. D. 368. One of several executors is entitled to a right of retainer in respect of a mortgage debt due from the testator to a body of trustees of whom that executor is one. Re Hub back, 29 C. D. 934.

(2) Cockroft v. Black, 2 P. Wms. 298: Franks v. Cooper, 4 Ves. 763 : Loomes v. Stotherd, 1 Sim. & Stu. 461, in which last case Sir J. Leach, V.-C., held that as an executor may retain his own debt or the debt of his trustee, so a devisee of the realty may retain for his own specialty debt or the debt of his trustee. See further on the right of

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