c. 104.

Where A. mortgaged in fee and died intestate and without heirs, it was 3 & 4 Will. 4, held that the equity of redemption did not escheat to the crown, but belonged to the mortgagee, subject to the intestate's debts. (Beale v. Symonds, 16 Beav. 406.)

It seems that real estate which can be reached only by this act is equitable assets, subject only to the proviso preserving the priority of specialty creditors where the heirs are named over those where the heirs are not named and over simple contract creditors. (Haddan's Administrative Jurisdiction, 78.) Thus, in the administration of assets under this act, it has been held that creditors by specialty, in which the heirs are not bound, are not entitled to any priority over simple contract creditors. (Cummins v. Cummins, 3 J. & Lat. 64.) And creditors by bond, in which the heirs are named, take priority over creditors by specialty in which the heirs are not named. (Richardson v. Jenkins, 1 Drew. 477.)

Lands are equitable assets under this act subject only to the final proviso.

In the case of an equity of redemption of freeholds, it was held that cre- Equity of redempditors by specialty in which the heirs were bound, were entitled, under the tion. proviso, to be paid the full amount of their debts, before any part of the property was applied in payment of simple contract creditors. (Foster v. Handley, 1 Sim., N. S. 200; better reported, 15 Jur. 73.) And the same has been held in the case of an equity of redemption of copyholds. (Burrell V. Smith, L. R., 9 Eq. 443.) It was said by Wickens, V.-C., "The rule laid down by the statute 3 & 4 Will. 4, c. 104, is anomalous. I believe that it cannot be reconciled with the principles of equity, but that it must be rested entirely upon decisions and upon the words of the statute." (Bain v. Sadler, L. R., 12 Eq. 573.)

In the case of debtors dying on or after the 1st January, 1870, specialty and simple contract creditors are to be treated as standing in equal degree and paid accordingly. (32 & 33 Vict. c. 46, post.)

Since this act a mortgagee of freeholds or copyholds may tack his simple Tacking. contract debt as against the heir. (Rolfe v. Chester, 20 Beav. 610; Thomas v. Thomas, 22 Beav. 341.)

This act charges the real estates of any person dying seised of such estates, not only with the debts of every description actually due at his death, but also with all liabilities, which may result out of obligations entered into during his life. (Hamer's Devisees' case, 2 De G., M. & G. 366.) Testator devised estate A. to the plaintiff charged with the payment of debts, and estate B. not so charged, to the defendant. The debts exhausted estate A., and the plaintiff was proceeding under this act to sell estate B., and pay a debt due to himself, part of which was barred by this statute: held, that this act did not give an executor power to pay out of assets obtained by virtue of this act a debt due to himself or a stranger, which was so barred. (Dring v. Greetham, 23 L. J., Ch. 156; 1 Eq. R. 442.) This act has not affected a widow's right to dower or freebench, which still has priority over mere creditors of the deceased. (Spyer v. Hyatt, 20 Beav. 621.)

Debts payable under this act.

The rights of simple contract creditors of an ancestor, as against the Judgments descended estates, are not defeated by judgments entered up against the against the heir. heir for his personal debts before suit. (Kinderley v. Jervis, 22 Beav. 1;

2 Jur., N. S. 602; 25 L. J., Chanc. 538.)

from heir or de

visee not bound to see to application

of purchase

Although an heir-at-law is bound by specialty debts in respect of freehold Purchaser of lands lands descended, yet a purchaser of such lands, without notice of any debts, was never held to be subject to them. The Statute of Fraudulent Devises was always considered as placing a devisee on exactly the same footing as an heir-at-law, although the contrary had been ineffectually attempted to money. be established. (Matthews v. Jones, 2 Anstr. 506.) Equity will, however, on behalf of creditors, grant an injunction against a purchaser to restrain payment of the purchase-money to the heir. (Green v. Lowes, 3 Br. C. C. 217.) And as simple contract creditors under the 47 Geo. 3, sess. 2, c. 74, were held to stand in this respect in the same situation as specialty creditors under the Statute of Fraudulent Devises (Woodgate v. Woodgate, Sugd. V. & P. 834, 835, 11th ed.), so, it is conceived, they will under this act, and that a purchaser of lands from an heir or devisee will not be liable to the payment of the simple contract debts of the intestate or testator. It has

3 & 4 Will. 4, since been decided that it was not the object, nor is it the operation, of the c. 104. 3 & 4 Will. 4, c. 104, to make the simple contract debts of a deceased person in the nature of mortgages or specific charges on his real estate; but, as the statute makes the land assets for the payment of his debts, these debts constitute a general charge upon them, but not so that a bona fide purchaser of the lands from the heir or devisee is bound to see to the application of the purchase-money, as he would be in the case of a particular mortgage on any portion of the lands themselves. (Kinderley v. Jervis, 22 Beav. 1; see as to personalty, Dilkes v. Broadmead, 2 De G., F. & J. 566.) Where real estate under this statute is assets for the payment of a simple contract debt, a purchaser of the estate with notice of such debt is not bound to see his purchasemoney applied in discharge thereof. (Jones v. Noyes, 4 Jur., N. S. 1033; 7 W. R. 21.)

Suits for the administration of real assets.

Marshalling assets

It was held, under 47 Geo. 3, sess. 2, c. 74, that persons having prior incumbrances on freehold and copyhold estates, of which a trader, who died intestate, was seised at the time of his death, ought not to be made parties to a bill for payment of his debts out of his real estates. (Parker v. Fuller, 1 Russ. & Mylne, 656.)

To a suit for administering the real assets of a testator, under 3 & 4 Will. 4, c. 104, the heir-at-law is not a necessary party, as well as the devisee. (Bridges v. Hinaman, 16 Sim. 71, overruling Brown v. Weatherby, 10 Sim. 125. See Weeks v. Evans, 7 Sim. 546.) Nor is the heir a necessary party in respect of Indian realty. (Story v. Fry, 1 Y. & C. C. 603.) And it is not necessary to establish the will against the testator's heir. (Goodchild v. Terrett, 5 Beav. 398.) In a creditor's suit, seeking the application of real estate in payment of debts, both the heir-at-law and devisees of the debtors being parties, and the will not being admitted by the heir, the court would neither dismiss the bill against the heir, nor direct an issue devisarit vel non at his request, as the creditors had a title paramount to that of the heir or devisees, and the question of the validity of the will as between them could not affect the rights of the creditors. (Spickernell v. Hotham, 9 Hare, 73.)

In order to obtain a decree for the sale of a testator's real estate, for payment of his debts under this statute, it is not necessary that the bill should be filed by a creditor. (Dinning v. Henderson, 2 Coll. C. C. 330.) The court has jurisdiction to order the real estates of a deceased debtor to be sold for payment of his debts in a suit for the administration of his estates, though it be instituted not by a creditor, but by the heir and the next of kin of the deceased (Price v. Price, 15 Sim. 484; Rodney v. Rodney, 16 Sim. 307); but a legal personal representative cannot alone institute a suit to administer the real estate of an intestate, for the purpose of having it applied towards the payment of his debts under this act. (Catley v. Sampson, 33 Beav. 551.)

A creditor cannot have a decree for the administration of real estate unless he sues on behalf of all creditors. (Ponsford v. Hartley, 2 Johns. & H. 736.)

See further as to suits for the administration of real assets, Seton, 224 et seq.

Where a testator made a general devise and bequest of all his real and personal estate to A. for life, and on her death devised certain copyholds to B., and directed that on B.'s death the copyholds should be sold, and the proceeds distributed among certain classes who should be living at B.'s death, and a suit was instituted on B.'s death for the sale of the copyholds, It was held, that the executors were not necessary parties on the mere ground that the copyholds were by this act made assets to be administered in equity for payment of debts. (Curtis v. Fulbrook, 8 Hare, 25.)

Before this act freehold estates were not assets for the payment of simple between creditors. contract creditors, (8 Ves. 384,) although in some cases they acquired a right against the real estate by marshalling. (12 Ves. 154.) The principle of marshalling was, that a person who had two funds to which he might resort for the payment of a debt, should not by his choice disappoint another who had only one, but the latter should stand in the place of the former. (Trimmer v. Bayne, 9 Ves. 209.) This rule was applied where a person had a double

fund to resort to, and another person had a demand upon one fund only, in which case the court turned the person having the double fund upon that which was not liable to the other person's demand, in order to leave that fund open to the latter. (Attorney-General v. Tyndall, Ambl. 615.) And therefore, if a mortgagee exhausted the whole personal estate in payment of his debt, the simple contract creditors of the mortgagor were entitled to stand in the place of the mortgagee against the freehold estate, for the proportion of the mortgage which had been paid out of the personal estate. (Aldrich v. Cooper, 8 Ves. 391.) And where it is necessary for the payment of creditors, that the mortgagee of freeholds and copy holds should be compelled to take his satisfaction out of the latter, and he takes it out of the former, those creditors who are thereby disappointed may stand in his place as to the copyhold estate, (Aldrich v. Cooper, 8 Ves. 382,) although the mortgage of the copyhold was distinct from, and subsequent to, the mortgage of the freeholds. (Gwynne v. Edwards, 2 Russ. 289.) And where, before this act, creditors holding specialties binding the heir exhausted the personal estate, equity allowed simple contract creditors to stand in their place as against the real estate. (Cradock v. Piper, 15 Sim. 301.) It was held, that the court would not marshal assets for the payment of a simple contract debt out of real estate, where the bill had not been filed on behalf of all the creditors of the deceased. (Connolly v. M'Dermott, 3 J. & Lat. 260.) This act, however, which renders freeholds and copyholds liable to simple contract debts has obviated the necessity of the court resorting to the doctrine of marshalling for enforcing their payment. (2 White & Tudor, L. C., Eq. 81.)

There does not appear to be any authority for holding that the right to marshal assets will be exercised in favour of a simple contract creditor, whose immediate right against the real estate is barred by the Statute of Limitations. Turner, V.-C., observed, "Simple contract creditors have now a direct right against the real estate, in case of a deficiency of the personal. They do not require the aid of this court to marshal the assets, in order to give them a remedy against the estate; and for whatever purpose the doctrine of marshalling may be necessary to be kept on foot, I do not think that it ought to be kept alive for the purpose of giving indirectly a right which could not be asserted directly. The consequence would be, that in all cases where there are any specialty debts, the simple contract creditors would be entitled to sue the real estate at any time within which the specialty creditor could have sued in effect, to create in equity the same limitation as to simple contract debts as the statute has prescribed as to specialties." (Fordham v. Wallis, 10 Hare, 230. See Busby v. Seymour, 1 Jones & L. 527.)

Assets are applicable in the following order to the payment of debts: (1) the personal estate not disposed of in the way of general legacies or specific bequests, unless it be exempted from its primary liability by express words or necessary implication. (Duke of Ancaster v. Mayer, 1 White & Tudor, L. C., Eq. 564.) (2) Real estate devised or ordered to be sold for payment of debts, not merely charged. (Harmood v. Oglander, 8 Ves. 124; Philips v. Parry, 22 Beav. 279.) (3) Real estate descended. (Milnes v. Slater, 8 Ves. 295, and see Row v. Row, L. R., 7 Eq. 414; Ryres v. Ryves, L. R., 11 Eq. 539; Stead v. Hardaker, L. R., 15 Eq. 175. (4) Real estate simply charged with debts. (Irvin v. Ironmonger, 2 Russ. & Myl. 531.) (5) General pecuniary legacies. (Clifton v. Burt, 1 P. W. 680.) (6) Real estate specifically devised, or comprised in a residuary devise, and personal estate specifically bequeathed, each contributing rateably. (Eddels v. Johnson, 1 Giff. 22; Hensman v. Fryer, L. R., 3 Ch. 420.) (7) Real or personal estate appointed under a general power vested in the testator. (Fleming v. Buchanan, 3 De G., M. & G. 976.) See, further, 2 White & Tudor, L. C., Eq. 120; 2 Jarm. Wills, 588; 1 Seton, 317, 3rd ed. As to mortgage debts which are now primarily payable out of the mortgaged lands, unless a contrary intention appears by will or deed, sce 17 & 18 Vict. c. 113, post.

If the above order has been disturbed by any creditor, equity will marshal the assets so as to set right the disturbance. Thus, if land de

& 4 Will. 4,

c. 104.

Order in which

assets are applied in payment of debts.

Marshalling assets between creditors

and legatees.

3 & 4 Will. 4, vised for payment of debts should be so applied before the general perc. 104. sonal estate has been exhausted, the persons entitled to such land will have a right to be recouped out of the general personal estate. And if the heir to whom lands have descended should pay debts before both the general personal estate and lands devised for payment of debts have been exhausted, the heir will have a right to be repaid, first out of the general personal estate, and secondly, out of the lands devised for payment of debts. (Wms. Real Assets, 110.) So if the devisee of lands charged with payment of debts should pay debts while any of the previously liable property remains unexhausted, he will have a right to stand in the place of the creditor, so far as regards, first, the general personal estate; secondly, lands devised for payment of debts; and thirdly, lands descended. (Wms. Real Assets, 111.)

Order in which debts are paid.

32 & 33 Vict. c. 46.

Again, if the general personal estate out of which pecuniary legacies are to be paid has been exhausted by any creditor, the legatee will be entitled to be repaid out of lands devised for payment of debts, out of lands descended, and out of lands charged with debts. (Wms. Real Assets, 112; Rickard v. Barrett, 3 K. & J. 289. See Foster v. Cook, 3 Br. C. C. 347.) But (inasmuch as a residuary devise remains specific notwithstanding the Wills Act, Hensman v. Fryer, L. R., 3 Ch. 420), a pecuniary legatee cannot call upon a residuary devisee to contribute to the payment of debts. (Collins v. Lewis, L. R., 8 Eq. 708; Dugdale v. Dugdale, L. R., 14 Eq. 234.) If a testator agree to purchase land and devise it, and after his death the purchase-money is paid out of his general personal estate, a pecuniary legatee is entitled to stand in the place of the vendor against the land. (Lilford v. Powys Keck, L. R., 1 Eq. 347.)

If specific or residuary devisees or specific legatees are called on to pay debts, they have a right to have the whole of the testator's other property marshalled in their favour, so as to throw the debts as far as possible on the other assets which are primarily liable. And on failure of the other assets, any one of such devisees or legatees who may have paid the whole of the debts, will have a right to contribution from the others. (Wms. Real Assets, 113; Hensman v. Fryer, L. R., 3 Ch. 430; followed on the question of the specific character of a residuary devise, in Gibbins v. Eyden, L. R., 7 Eq. 371; but not followed on the question of the right of pecuniary legatees to contribution. Dugdale v. Dugdale, L. R., 14 Eq. 234.) See, further, as to the marshalling of assets, Aldrich v. Cooper, 2 White & Tudor, L. C., Eq. 66; 2 Jarm. Wills, 640 et seq.

All creditors are paid pari passu out of equitable assets without any regard to legal priority (2 Wms. Exors. 1552, 6th ed.; 2 L. C., Eq. 118, 137, 4th ed.); and in the case of a debt contracted by an Englishman in a foreign country, the lex loci contractus does not avail to entitle the creditor to payment out of equitable assets administered in this country in priority to other creditors. (Pardo v. Bingham, L. R., 6 Eq. 485.) It seems that in the administration of the separate estate of a married woman dying before the 1st Jan. 1870, debts are to be paid in order of priority, and not pari passu. (Shattock v. Shattock, L. R., 2 Eq. 182.)

In the case of persons dying before the 1st Jan. 1870, debts are paid in the following order out of legal assets: (1) Debts due to the crown on record or specialty. (2) Debts to which particular statutes give priority, such as debts for poor-rates due from overseers (17 Geo. 2, c. 38, s. 3), debts due to friendly societies from their officers (18 & 19 Vict. c. 68, s. 23), certain debts from officers or soldiers dying on service (26 & 27 Vict. c. 57, s. 4), and debts from a treasurer or collector to paving commissioners (57 Geo. 3, c. 29, s. 51). (3) Judgments in Courts of Record, and decrees of Courts of Equity. (4) Recognizances and statutes. (5) Debts by specialty. (6) Debts by simple contract. (7) Debts due from an incumbent's estate for dilapidation. (8) Voluntary bonds. [See the cases quoted 2 Wms. Exors. 925 et seq.; 2 White & Tudor, L. C., Eq. 121, 4th ed.]

In the case of persons dying on or after the 1st Jan. 1870, it is now enacted, that no debt or liability of such person shall be entitled to any priority or preference by reason merely that the same is secured by or arises under a bond, deed, or other instrument under seal, or is other

c. 104.

wise made or constituted a specialty debt; but all the creditors of such 3 & 4 Will. 4, person, as well specialty as simple contract, shall be treated as standing in equal degree, and be paid accordingly out of the assets of such deceased person, whether such assets are legal or equitable, any statute or other law to the contrary notwithstanding. But this provision is not to prejudice or affect any lien, charge or other security which any creditor may hold or be entitled to for the payment of his debt. (32 & 33 Vict. c. 46, s. 1.)

Before this act, it was held that, in the administration of legal assets, an unregistered judgment recovered against an administratrix had priority over simple contract creditors of the intestate (Jennings v. Rigby, 33 Beav. 198), and this has not been altered by the act. (Re Williams, L. R., 15 Eq. 270.)

Before 3 & 4 Will. 4, c. 104, lands were not liable to the payment of Simple contract simple contract debts, except those of traders by stat. 47 Geo. 3, sess. 2, c. 74, debts. and 11 Geo. 4 & 1 Will. 4, c. 47. (Ante, p. 470.) Debts by simple contract are such, where the contract upon which the obligation arises is neither ascertained by matter of record, nor yet by deed or special instrument, but by oral evidence, the most simple of any; or by notes unsealed, which are capable of a more easy proof, and (therefore only) better than a verbal promise. It is easy to see in what a vast variety of obligations this last class may be branched out, through the numerous contracts for money, which are not only expressed by the parties, but virtually implied in law. (2 Bl. Comm. 465.) A foreign judgment constitutes but a simple contract debt. (Wilson v. Lady Dunsany, 18 Beav. 293.)

A person who was a lunatic, but had not been found to be so by inquisi- Payments on betion, died seised of a small freehold estate, but not possessed of any personal half of lunatics. property. His step-father had received the rents of the estate, and had expended more than the amount of them in maintaining the lunatic; he also paid the lunatic's funeral expenses: it was held, that he was not entitled, under this act, to be paid either the surplus expenditure, or the amount of the funeral expenses, out of the lunatic's freehold estate. (Carter v. Beard, 10 Sim. 7. See Rogers v. Price, 3 Y. & Jerv. 28, where it was held that an executor, who has assets sufficient for the purpose, is liable, upon an implied promise, to pay for a funeral suitable to the degree of his testator, furnished by the directions of a third person.) In Wentworth v. Tubb (1 Y. & Coll. N. C. 171), it was decided that, in the case of necessaries supplied to a lunatic, the law raises a contract by implication on the part of the lunatic, under which the amount of such necessaries may become payable as a debt out of his real or personal assets, on a bill filed for the administration of those assets. (See Manby v. Scott, 1 Sid. 112; Baxter v. Earl Portsmouth, 7 D. & R. 614; 5 B. & C. 170; Brown v. Joddrell, 3 Carr. & P. 30; Mood. & M. 105; Dane v. Lady Kirkwall, 8 Carr. & P. 679. See Shelford on Lunatics, 462-465, 2nd ed.)

The law will raise an implied contract or debt against the lunatic or his estate, for the monies expended for the necessary protection of his person and estate. (Williams v. Wentworth, 5 Beav. 325.) If a trustee be sued in chancery for an account, and it appears that he has properly expended sums of money for the protection and safety, or for the maintenance and support, of his cestui que trust, at a time when he, though adult, was incapable of taking care of himself, the court will allow him credit in account for such sums of money. (Nelson v. Duncombe, 9 Beav. 211.)

Costs, charges and expenses incurred by the solicitors employed in prosecuting a commission in lunacy, and subsequently as the solicitors of the committees, were considered as a simple contract debt due by the lunatic for necessaries. (Stedman v. Hart, Kay, 607.) The claim of the committee of a lunatic for costs paid by him in respect of proceedings in the lunacy, is of the nature of a simple contract debt against the lunatic's estate. (Jones v. Noyes, 7 W. R. 21.)

A trustee, who has committed a breach of trust by misapplying the trust fund, is considered only as a simple contract debtor to his cestui que trust, (Vernon v. Vandry, 2 Atk. 119; Cox v. Bateman, 2 Ves. sen. 19; see Perry v. Phelips, 4 Ves. 116.) But an acknowledgment by a trustee under

Nature of debt created by breach

of trust.