text:
    Charles Hall Adams v. John George Schmitt et al.
    [Decided February 2d, 1905.]
    1. A contract to establish the title of a married woman to real estate for a reasonable compensation, to secure which an assignment of an interest in the recovery is provided, though not executed by her husband, and not executed by her separate and apart from him, has the effect, in connection with the establishment of the title, to invest the beneficiary with an equity, by reason of which equity will create a lien in' his favor.
    2. The rule applying to dealings between principal and agent, attorney and client and trustee and cestui que trust, does not apply in the making of a contract to recover an estate by one whose business it is to find estates having no notorious claimant, to hunt up the heirs and recover the estates for them.
    3. Complainant, having put defendants in possession of property as heirs under a power of attorney to recover an estate for them as heirs, is entitled to a lien thereon for his compensation, though strict proof of their heirship may not have been made, and the strength of their title rests on the fact that no one else can find a better one.
    4. Defendants are estoxiped to assert that when they contracted with complainant to recover an estate for them he made no disclosure as to its extent and nature, where, after they are fully informed, they acquiesce in his further work and expenditure for them in the matter.
    5. A power of attorney to comxjlainant to collect all moneys, legacies, bequests, inheritance and distributive share of defendants in a certain estate, and for his taking possession of and attending to all landed property which they may be entitled to as heirs of deceased, and assigning to complainant such an interest in the property, estate or inheritance to which they are entitled as heirs or next of kin as will secure to complainant his fees for services, not to exceed fifty per cent, of “our distributive share of said decedent’s estate as such heirs or next of kin,” does not, by the words “distributive share,” in view of the word “heirs,” limit the assignment to personal property.
    On final hearing on bill, answer and proofs.

      Mr. Charles L. Canicie, for the complainant.

      Mr. Henry V. Condit and Mr. Richard Boardman, for the defendants.
   Pitney, V. C.

The complainant, Charles H. Adams, filed his bill against (John) George Schmitt and wife, John Schmitt and wife, Henry Schmitt and wife, Rosa Helfrich and her husband, William Drennan and Eugene D. Knox, to establish and enforce an equitable lien upon a house and lot situate in Hudson county, and in aid thereof to set aside a conveyance made by the defendants the three Schmitts and Rosa Helfrich to Drennan, •dated February 37th, 1903. The defendant Knox is made a party because he has been in the possession of the rents and profits.

The basis of the lien is a power of attorney — or, rather, two powers of attorney — •substantially the same in verbiage, one executed by Henry and John Schmitt and Rosa Helfrich, on July 9th, 1902, and one by (John) George Schmitt, on July 11th, 1902, both to the complainant, and both coupled with an interest in land. I shall give the contents more particularly hereafter.

All the defendants, except Knox, have answered.

The allegations of the bill as to the lack of consideration of the deed from the parties named to Drennan are admitted, and a substantial defence to complainant’s case thereon is attempted to be set up and proven by the four grantors of that deed, the three Schmitts — (John) George, John and Henry — and Mrs. Helfrich.

The execution of the powers of attorney are not seriously disputed, but it is alleged (1) that certain additions have been made thereto since their execution, and (2) that they were procured by what amounts to fraud, in that certain facts which were material for the parties executing them to know before executing them, and which were within the knowledge of the complainant, were concealed from them until after the execution.

At the close of Hie evidence on the part of the defence, and before the complainant had commenced his rebuttal, if any he had, the case on the part of the complainant seemed to me to be so clear that I suggested a settlement between the parties based on a right of recovery. That suggestion seemed to be cheerfully acquiesced in, and a stipulation, as afterwards stated by counsel, was entered into, which, however, seems to have broken down in the attempt to carry it out, and a motion was made by the complainant for a receiver. This was vigorously opposed and I suggested an argument on the merits. This has been had in writing, and I have now to state the result of my more elaborate examination of the case.

Mr. Adams is a lawyer, residing in Massachusetts, whose business is the acting as commissioner for all the states of the United States, und, also, he devotes his attention to the hunting up of the heirs and next of kin of vacant estates — that is, of estates for which there is no immediate and notorious claimant. For this purpose he has maintained a frilly equipped office.

At the time covered by the matters involved herein he had a friend and correspondent, a Mr. George A. Smythe, a Massachusetts lawyer, who was living in New York City and who was engaged in the same business, but had no office equipped for that purpose, and had an arrangement with Mr. Adams, the complainant, to do business for and with him in his name.

In November, 1901, there were living in New York City two unmarried brothers, named Gotlieb and Adolph Buehinger, but who assumed and went by the names of William and Adolph Burnett. William (or Gotlieb) was economical and thrifty, and acquired a small fortune; his brother, Adolph, had none of those qualities and little mental capacity. On the 18th of November, 1901, Gotlieb (or William) was instantly killed by an accident as he was passing an opening in the subway excavation in New York City. He died intestate, seized of the house and lot here in question and of upwards of $2,000 in money, deposited in a savings bank or banks iir New York City. Letters of administration were granted by the surrogate of New York county oh his estate to his brother, Adolph, and one William Dawson. The latter, who clearly appears to have been a designing and dishonest man, took possession of the personal estate and induced the several tenants of the house and lot here in question toattorn to him.

Adolph, the surviving brother, died April 14th, 1902, without any known heirs or next of kin. The proceedings had all been in the name of Burnett.

Dawson, the surviving administrator, failed to pay some small debt of either William or Adolph (some of the evidence says that it was for the funeral expenses of Adolph), and this creditor made inquiry at the surrogate’s office, which appears to have excited the attention of someone there and to have come to the knowledge of Mr. Smythe.

That gentleman immediately took up the matter, called at the late residence, on Ninth avenue, of Gotlieb (or William) and made inquiries, and finally encountered an old German, who informed him that the real name of the two brothers was Buchinger and that they had had' a sister, who had married a German named Era-nkenhauser, who lived in Guttenberg, in Hudson county. Mr. Smythe found this gentleman, who informed him that the only relatives which he knew of the deceased was a family of Schmitts, who lived in Brooklyn.

The name is numerous in Brooklyn, but Smythe finally found a John Schmitt, the brother of Rosa Helfrich, who believed that he was a cousin of the Buchingers, and from him heard of his sister and of his two cousins, (John) George Schmitt and Henry Schmitt, and was referred by him for further information to (John) George Schmitt.

While hunting for these persons, as he swears, he found that a cousin, supposed to be their first cousin, named Reinfeld, had died some ten or more years previously, insane, in or near Brooklyn, and had left some money in a savings bank, and Smythe found that the defendants above named knew of this money and had made faint efforts to get it, but without success.

He swears that .he told the defendants at the start that their cousins in New York, the two Buchingers, were dead, without children, leaving property, and that they (the Schmitts) were probably entitled to it, or to some share in it, but he did not state to them what the property was, and did not mention the house and lot here in question.

He further stated to them, as he swears, that it would be necessary to trace their kinship by evidence from Germany, whence they all came, and would be attended with a great deal of labor and expense, and proposed to undertake to procure it on shares.

On July Stir, 1902, with the aid of information obtained from Frankenhauser and from (John) George Schmitt, principally the latter, he made up a “family tree,” showing that the four persons named’ were the sole heirs and next of kin of the Schmitt blood of Adolph Burnett. This “tree” was offered in evidence and marked Exhibit G S for complainant. It showed seven brothers and sisters in the Schmitt family, of which Adolph Buchinger’s mother, Caroline Buchinger, was one, all the offspring of a second marriage of her father, Martin Schmitt.

It is alleged that it was afterwards developed, by further examination in Germany, that the father of (John) George and Henry was brother of the whole blood of Caroline Buchinger, but that the father of John Schmitt and Rosa Helfrieh was the half-brother only of Caroline Buchinger.

Hence it is alleged by complainant that the two defendants last named, under the doctrine of Stretch v. Stretch, 4. N. J. Law (1 South.) 182, cannot inherit. I do not find it necessary to determine this question at this time.

Mr. Smythe negotiated with (John) George Schmitt as representing the others, and it was agreed between them that Smythe should undertake the job upon shares.

On the afternoon of the 9th of July, 1902, the day after the last interview with (John) George, Smythe employed a Mr. Campbell, a notary public, employed as a clerk in the United States district attorney’s office in the post-office in New York City, to go with him to Brooklyn to take the acknowledgments of the different parties to the powers of attorney. He took ill his pocket a blank power of attorney, a rough, unfinished “family tree,” written in pencil on a yellow sheet of manila paper, made up from Mr. Eraaxkenhauser’s information and what he had gained from time to time (which is marked as Exhibit C 9 for complainant), and a more shapely one, previously mentioned, made up on Jufy 8th (marked Exhibit C 3 for complainant) .

The two visited Brooklyn and called, first, at the house of (John) George Schmitt, and found that he was absent from home. They went next to the house of his cousin John, whom they found, and induced him to go with them to the house of Henry Schmitt, brother of (John) George, and induced him to go with them and John to a beer saloon near by, where there was a light and a pen and ink, and there tire-two cousins, John and Henry, signed the power of attornejc

It is quite plain, from the evidence of these persons, that they had been prepared by (John) George for this visit.

Both Mr. Campbell and Mr. Smythe swear that the blanks in the power of attorney were filled up there by Mr. Smythe, in the presence of the parties, before signature. Those blanks are the names of the parties who were to sign, the name of Adolph Buchinger, the decedent, and the name of William M. Hoes, public administrator of the city of New York, his successoi’, &c.

The defendants, or some of them, swear that those names were not inserted at the time the paper was signed, and as I understand the evidence they state that the name, of Charles Hall Adams, which is clearly-typewritten in with large capitals, was not there.

If this question is at all important, and there is tire least reason to doubt the accuracy of the memory of Mr. Smythe and Mr. Campbell, quite conclusive proof is at hand. In the pencil memorandum of the “family tree” marked Exhibit C :9 for complainant, before mentioned, the name of Mrs. Helfrich is written “Hilprict.” It was also so written in the ink-written “tree” marked Exhibit G3 for complainant, which Mr. Smythe had before him. In inserting the names of the persons to execute the paper he wrote the name of Mrs. Helfrich H-i-l-f-r-i-c-t, and when afterwards, on the same evening, he came io procure her signature, he discovered his mistake and erased the word “Hilprict” and wrote over it the word “Helfrich,” which alteration is noted by the witness and notary. He also changed the name in the “family tree,” Exhibit C 3.

Now, it is manifest that if those names had been written in after the execution of the paper by Mrs. Helfrich the mistake would not have been made.

The evidence of Mr. Smythe and Mr. Campbell is that the instrument was read over by Mr. Campbell to the two cousins, John and Henry, and its force and meaning explained by Mr. Smythe as it was being read, and that they executed it intelligently.

An argument was attempted to be made from the character of the ink in the signatures of Henry and John. A part of those signatures seems to be much fainter in tint than the writing in the body of the instrument. The argument was made that they could not have been made with the same pen and ink with which the writing was made in the body of the instrument.. I think it entirely immaterial whether Mr. Smythe is accurate in his recollection that the instrument was filled up that evening in the beer saloon or whether it had been already filled out, since I am satisfied it was filled up before or at the time it was executed, and is, in effect, substantially the instrument which tire parties supposed they were signing.

Mr. Smythe suggests that the signers, by accident, dipped their pens in some beer lying on the table. I think this is a probable solution.

The ink of Henry’s signature is quite different from that of John, and the ink in “John” and “Schmitt” does not seem to be the same.

The signatures of the last two named being obtained, the parties proceeded at once to the house of Mr. and Mrs. Helfrich and procured her signature. Before she signed her husband read and examined the paper to his satisfaction.

It was not executed by him, nor was it executed by her separate and apart from him, hence, it is contended by the defendants, it can have no force and effect as to real estate.

I am unable to-accede to that contention. The contract was made distinctly with regard to Mrs. Helfrich’s separate estate and directly for the benefit of that estate, nameljq to establish her title thereto. It therefore came directly within the principle upon which the cases of Wilson v. Brown, 13 N. J. Eq. (2 Beas.) 277; Harrison v. Stewart, 18 N. J. Eq. (3 C. E. Gr.) 451, and Armstrong v. Ross, 20 N. J. Eq. (5 C. E. Gr.) 109, were decided. See, also, Perkins v. Elliott, 23 N. J. Eq. (8 C. E. Gr.) 526. In these and other cases in this state in the same line, this court has established liens on the separate estate of married women based on a defective instrument.

The theory upon which it is done is this: The instrument defectively executed or acknowledged is absolutely impotent of itself to create any lien, but it has the effect, taken in connection with its consideration, to invest the beneficiary named therein, be he grantee, mortgagee or what not, with an equity, to come into a court of equity and ask that court to create a lien in his favor.

The lien is created by this court and not by the instrument. - Two days later, July 11th, (John) George Schmitt came to the Hnited States district attorney’s office, in New York, and executed a power of attorney made out for him alone, but in almost precisely the same verbiage as that executed by the others, and quite so in tenor and effect. This, also, was executed before Mr. Campbell as a witness and notary.

Each of these instruments occupies the whole of one and a part of another sheet of paper. (John) George’s evidence as to the execution of his is remarkable. He admits the signature, but swears that it was made on a single sheet of paper, at liis house in Brooklyn; that Mr. Smythe and Mr. Campbell attended there; that he read the paper carefully from beginning to end; and that he had taken special notice of that part which treats of the collecting of rents of lands, and he asked Mr. Smythe what that meant, and that he (Smythe) answered “that it was only a matter of form.”.

This proves conclusively that (John) George Schmitt knew that the power of attorney dealt with lands as well as personal property. This witness denies, however, that Smythe told him about the death of his cousin until after the papers were signed. He swears that Smythe confined tire conversation entirety to the Eeinfeld money, in a Brooklyn savings bank.

. Now, the first one of the Schmitts that Smythe saw was John Schmitt, the brother of Mrs. Helfrich, and he swears distinctly that at the very start Mr. Smythe told him that his two cousins, the Buchingers, in New York, were dead, and that there was money coming to him, and that he referred Mr. Smythe to (John) George Schmitt as knowing all about the thing. Then Henry Schmitt, a brother of (John) George, swears that when the party came to see him to procure his- signature, with the others, to the instrument, he was informed that his two cousins, the Buchingers, in New York, were dead, and that there was money coming to them. Taking (John) George’s evidence altogether, I can place no confidence in it where it conflicts with that of the other witnesses.

The principal strength of the defendants’ argument was based on the fact that Smythe did not inform them, at or before the execution of the paper, of the extent of the personal property left by Adolph, and did not inform them at all of the existence of the real estate here in question.

Counsel for defendants takes the ground that the rule applying to dealings between principal and agent, attorney and client and trustee and cestui que trust, applies. But I think it does not apply.

These persons were undoubtedly ignorant and very illiterate — (John) George Schmitt was the most intelligent — and the court should he careful to see that no advantage was taken of them, that no false representation was made to them, no information that was asked refused to them and that no hard bargain was procured from them.

In all these matters the complainant stands absolved. He was guilty of no active concealment. The moment the contracts were produced at the hearing and read, and their contents understood, counsel for defendants admitted that they were fair contracts. In fact, they provide simply for repayment of necessary expenses and reasonable compensations for services rendered, and not to exceed one-half the value of the property recovered, and the defendants came under no responsibility whatever. It was also admitted that complainant had rendered valuable services under them and had expended large sums of money.

Let us now look at the relations of the parties at the time these contracts were entered into. The defendants had not heard of the death of their cousins, the Buchingers, and I am not sure, from the evidence, that they had heard that they had assumed the name of Burnett.

The complainant’s agent (Smythe) had, at his own risk, taken up the matter of finding the next of kin and heirs of Adolph* Buehinger. He had by memoranda before taken traced the kinship through Caroline Buehinger to her nephews and nieces, the Schmitts, of Brooklyn. The complainant had already opened correspondence with his European connections to trace out the genealogies there and get trace of the Buchingers, as well as the Schmitts. For, it must be remembered, that there might be found living a brother of Gotfried Buehinger, the father of Gotlieb and Adolph, who would take the whole against the Schmitts, or that there might be found nephews and nieces of Gotfried Buehinger, who would come in and divide the inheritance with the Schmitts. All this, bye the-bye, was explained to the Schmitts by Smythe.

Now, this information obtained by Srnyhhe was his and complainant’s' own property, and he was under no obligations, either legal or equitable, to transmit it to any person. He had the right to make the best contract for himself that he could, within reasonable bounds and without fraud, for its sale, and for the sale of his future services in establishing the title of the persons entitled thereto. In my opinion, in dealing with those persons, he so dealt entirety at arms’-length. At the moment of dealing with those persons for the use by them of such information and for his services, the relation of attorney and client, principal and agent or trustee and cestui que trust, or either of them, did not exist.

It did not come into being until after the contracts were executed. As well might you say that a lawyer could not bargain in advance for the amount of his compensation, or an agent for the amount' of his salary, as that the complainant should not bargain in advance for his compensation, without disclosing the extent of the property which he expected to recover.

The defendants insist upon the idea that they were bargaining upon the basis, in their own mind, of the amount, less than $1,000, of tire Reinfeld money, and that they were willing to give one-half of that. But surety they ought not to complain if a great deal more than that was to be recovered, so long as they are not called upon and cannot be compelled to pay more than the actual disbursements and what,the services are reasonably worth. Besides, I am satisfied that the idea now advanced that the only fund which the parties had in mind was the Reinfeld money is an afterthought, for the simple reason that they could not and did not suppose that their right to the Reinfeld money, if any they had, came through their kinship to the Buchingers. Reinfeld was of the Schmitt blood and the Buchingers were entitled to his money, if at all, precisely in the same way that the defendants were so entitled. The fact that the contract was preliminary to the creation of the confidential relation differentiates the present case from those relied rrpon by counsel, namely, Condit v. Blackwell, 22 N. J. Eq. (7 C. E. Gr.) 481; Porter v. Woodruf, 36 N. J. Eq. (9 Stew.) 174, and Lynde v. Lynde, 64 N. J. Eq. (19 Dick.) 736.

In Lynda v. Lynda the contract was for a fixed percentage, which the court refused to approve, on the distinct ground, however, that the subject-matter (alimony) was beyond the reach of such a contract; but, nevertheless, the court allowed the solicitor and counsel reasonable compensation.

In this case I find Hiere was no relation of trust and confidence between Hie parties at the time the contract was entered into, and I find, further, that whatever .of confidence can be imagined to have existed was not abused, and the contract obtained was a reasonable and fair one.

But Hie case does not stop' here. The complainant -and his co-worker (SrnyHie) immediately set about performing the duties undertaken by them by the instruments in question. Complainant continued his correspondence and spent several hundred dollars in procuring official information of the genealogies of the Schmitt and Buchinger family from the official records in Germany. All of which is admitted to be valuable.

Mr. Srnythe employed Mr. Lloyd, of the New York bar, and, after him, Mr. Halpine, to bring Mr. Dawson to account.

In doing this copies of the powers of attorney were filed in the public administrator’s office. Letters of administration were taken out by the public administrator upon the estate of Adolph Buchinger, and Dawson was called upon to account by Mr. Lloyd.

Dawson learned, undoubtedly from the public administrator’s office, the names of the defendants, and applied to them for an interview in the hope of settling with them, behind the back of complainant and his counsel.

(John) George Schmitt and his cousin John Schmitt crossed to New York on a Sunday morning to meet an appointment with Dawson, and called on Srnythe and took him with them to see Dawson.

At this interview that gentleman’s character was fully developed. He claimed that he had loaned Gótlieb Buchinger, alias' William Burnett, the $7,200 which he had paid for the property here in question and had his note for it. Mr. Srnythe cross-examined him with great skill, and immediately took most efficient means, not necessary here to be repeated, to destroy absolutely all foundation for such a claim. This was on July 27th, 1902.

He also took prompt, efficient and successful measures to satisfy the tenants of the premises — the rent roll amounted to over $60 per month — that they ought not to pay the rent to Dawson, as they had been doing, but ought to pay the same to an agent of tire defendants, and for that purpose appointed Mr. Knox, the defendant herein, who has since that time collected the rents.

This proceeding was of the .utmost importance to the defendants, for it placed them in the legal possession of the premises. Its importance appears from a consideration of the circumstances of the great difficulty which tire case discloses of making proof in a court of justice that the defendants are the heirs-at-law, either in whole or in part, of Adolph Buchinger. As I understand the evidence, it is highly probable that the making of strict proof would require resort to the official records in Germany, and perhaps of taking depositions thereon.

At any rate, their title, like all titles by descent, rests in pcds —that is, rests on the existence of facts which from their very nature cannot become matters of record.

And this answers one of the complaints of the defendants, namely, that the complainant has not established the title of the defendants to the land in question in sueh.manner that they can deal with it.

To which complainant answers: I have put you in possession, as heirs-at-law, and you have the same title that any other heir-at-law could have, namely, one that, being in possession, you must defend as best you can; the strength of your title rests on the fact that nobody else can find a better one.

Further, Hie defendants either have title or they have not. If they have title, they cannot complain that the complainant asks the lien upon it which they have given him; if they have not title, they cannot complain of the complainant for seeking to get a lien on that which they have not. Their position, in this respect, is palpably inconsistent with reason and justice.

Now, going back to July 27th, 1902. At the interview with Dawson other facts were developed, namely, that Dawson was about to receive $1,500 as the proceeds of a suit against the subway contractor who had caused Gotlieb’s death; and, further, they obtained information, as I interpret the evidence, of the precise amount of actual cash realized by Dawson from the savings bank books.

The claim against Dawson was prosecuted with vigor. He abandoned his claim for $7,200, but set up another for more than enough absolutely to swamp' the estate; was defeated in that, and was finally made to disgorge. Now, all the information that complainant or Smythe ever had as to the quantum of the estate was disclosed on that 27th day of July to (John) George and John Schmitt, and, presumably, through them to their brothers and sisters.

With that information they permitted the complainant and his agent (Smythe) to proceed with their work of establishing the defendants’ title and rescuing the estate from Dawson and putting the defendants in possession of the land here involved, and never disputed the validity of their powers of attorney until the next January.

Now, the conduct of the defendants in acquiescing in the further proceedings by complainant and his agent to work and spend money for them, in my judgment, estops them from setting up the non-disclosure of the estate at the execution'of the contracts.

It seems to me that this is too plain for argument. They cannot approbate and reprobate. They cannot take to themselves the benefits of complainant’s labors and expenditures in their behalf and at the same time repudiate the perfectly fair contracts under which those expenditures were made and that labor performed.

I shall here recite, briefty, the language of the powers which fixes the compensation.

The instrument appoints Charles Hall Adams, of Boston, attorney irrevocable, &c., to collect and receive all moneys, legacies, bequests, inheritance, distributive share of the constituents which the constituents might become entitled to as next of kin of Adolph Buchinger. It then provides for receipts and releases to the public administrator of New York and for a consent of the settlement of the estate. It then provides for taking possession by the attorney of all landed property which they may become entitled to as heirs-at-law nf Adolph, and gives extensive and comprehensive power of dealing with that land, of selling, renting, dealing and compromising actions, &c. Then follows this language:

“The power is coupled with an assignment and interest, to wit, such an interest and assignment of the property, estate, claim, demand, legacy, bequest or inheritance to which we are or may become entitled as such heirs or next of kin as will be sufficient to secure him, the said constituent, for his reasonable fees for any services rendered or to be rendered by him, or his substitute, as well as for any necessary disbursements he has made or may hereafter make for or on our account, but not to exceed fifty per cent, of our distributive share of said decedent’s estate as such •heirs or next of kin.”

This language is criticised by counsel for the defendants in that it is limited to fifty 'per cent, of “our distributive share” of said decedent’s estate as such heir or next of kin. It is argued that tire words “distributive share” extend only to personal property, and that complainant cannot resort to land as a measure of the value of his services. But I am unable to adopt that view. It is not consonant either with the whole scope of tire instrument or with the immediate context. It must be construed in connection with the word “heirs,” which refers naturally to lands, and the word Nreirs” and “distributive share of land” is intelligible only on that view.

For these reasons I am of the 'opinion that the complainant is entitled to succeed in this suit; that the conveyance to Drennan must be set aside, and that complainant must be decreed to be entitled to a lien on the interest of the defendants (John) George, Henry and John Schmitt and Mrs. Helfrich for what the court may hereafter determine to be a proper amount under all the circumstances of the case.

For this purpose there must be a reference to a master, and it will probably be necessary to take into account the amount received from tire administrator in New York, and possibly to apportion the services and expenses between the sum recovered in New York and the property here in question.

I shall hear counsel as to the details of the order of reference.

On the hearing of the motion for a receiver, counsel for defendants set up a receipt by.Mr. Iialpine in full for his services in that matter, and it was commented upon in, the arguments of counsel on both sides in this cause. I can take no judicial notice of it at present and I can see no effect that it can have except possibly before the master.

The complainant is entitled to a receiver.


source: Caselaw Access Project

author: Emery, V. C.

license: Public Domain

text:
    Elwood C. Harris et al., receivers of National Building Loan and Provident Association, v. Patrick J. Nevins et al.
    [Filed October 19th, 1904.]
    1. Where a mortgage is given by a member to a building association, the insolvency of the association works a rescission of the contract, and the sum borrowed becomes immediately due and payable, regardless of the terms for payment fixed by the contract.
    2. On the foreclosure of a mortgage given by a member to a building-association because of the latter’s insolvency, the mortgagor is entitled to have the amount of premiums paid by him deducted from the amount due on the mortgage. Weir v. Granite State Provident Association, 56 B. J. Bq. (11 Dick.) SSI/, followed.
    On bill to foreclose. Heard on bill, answer, replication and proofs.

      Mr. Frederick F. Guild, for the complainants.

      Mr. William H. Osborne, for the defendants.
   Emery, V. C.

Complainants, as receivers in liquidation of a building and loan association, file this bill to foreclose a mortgage given by members of the association on procuring a loan from the association. The defendant Patrick J. Nevins became a member, taking out twenty-seven and one-half shares, on which one dollar per share was payable for one hundred months, which payments were, under the by-laws, to be withdrawn and the shares canceled when the net investment, together with an equitable share of the profits, amounted to $200. A loan of $5,500 was. applied for by Nevins and his wife upon property belonging to both, and was granted, and the bond and mortgage now in question were executed and the shares of stock were assigned to the association as collateral security for the loan. A premium of $22 per month was bid for the loan, and the bond which was given in the penal sum of $11,000 was conditioned for the payment for one hundred months of $27.50 per month (the monthly dues), $27.50 per month as interest on $5,500 at six per cent., and $22 per month as monthly premium — in all $77 per month — and after the one hundred months the payments of interest were to be continued until the maturity of the shares. No express provision for the payment of the principal sum is contained in the bond and mortgage, except in case of default in payments on the part of the mortgagors, a condition which is not involved in this case. The defendants, upon receiving the principal of the loan (which is admitted to have been $5,000 instead of $5,500), made the monthly payments of $77 until the association went into liquidation. The whole amount of the monthly payments made on account of the premium is $682. In reference to bonds and mortgages of _ this character, given by borrowing members of such associations, which afterwards become insolvent, it may be considered as settled law that the insolvency works a rescission of the contract, and that the sums borrowed become immediately due and payable, regardless of the terms of payment fixed by the contract. Weir v. Granite State Association, 56 N. J. Eq. (11 Dick.) 234, and eases cited at p. 238 (Reed, Vice-Chancellor, 1897); Endl. Build. Assoc. § 523; Lewis v. Clark, 129 Fed. Rep. 570, 574 (C. C. A. 1904).

The liability^ for the immediate pajunent of the principal sum equitably due is not disputed in this case, and the substantial question is whether, in computing the principal sum due, the amounts which have been paid for premiums on the loan are to be deducted. The decision of the question practically involves a settlement of the relative rights of the borrowing and non-borrowing shareholders on the liquidation of such association, and an equitable solution is attended with difficulty. The subject has been before many courts, and a diversity of opinion has arisen. As to the right to credit for the premium, three different views have been taken. These are well summarized in Sullivan v. Stucky, 86 Fed. Rep. 491 (Baker, District Judge, 1898), with a reference to the authorities. The first view is that upon such a termination of tire contract the rights of the association and the borrowing shareholders in reference to the loan are to be adjusted solely on the basis of an ordinary debtor and creditor on a loan of money. The borrower, on this view, is charged with the amount of money actually received, with legal interest, and is credited with all payments made, whether by way of dues, interest or premium, according to the rule governing partial payments. This view evidently throws all the loss resulting from the payment of dues on stock on the non-borrowing shareholders. The second view is that the borrowing shareholder is entitled to credit upon his loan for the amount of interest and premium paid, but is not entitled to have the amount of dues paid on stock credited on the loan. This is the view supported by the weight of authority and was the rule followed by Vice-Chancellor Reed in Weir v. Granite State Association, 56 N. J. Eq. (11 Dick.) 234 (1897). The basis of it is that the premiums were paid by the borrowers in consideration of the complete execution of the contract of loan, which would allow the debt to be paid by the application of the matured shares, and that the consideration for the premium fails. The dues, however, are not considered as paid in consideration of the loan, but as paid by the borrowers as shareholders merely and, therefore, are not to be credited on the mortgage. The third view, as to the premiums, is one first declared by Judge Grosscup, in Towle v. Society, 61 Fed. Rep. 446 (1894). He considered that the termination of ail association of this character by insolvency, a contingency not contemplated or provided for by the association or any of its members, either the borrowers or non-borrowers, was a condition for which all of the shareholders— borrowers and non-borrowers — through their agents, the officers, were alike responsible, and that the adjustment in relation to the premiums should not be made upon a consideration solely of the legal principles controlling the relations of borrower and lender, but upon considerations of equity and fair dealing on the entire relations between' the members, free from legal or contract technicalities relating to the form of loan. Each member being thus equally responsible for the termination of the contract of loan, he considered that the adjustment to be made upon this failure should be made as nearly as possible upon the lines of what would have taken place if the association had matured. Taking the estimated'period of maturity of the loan, he treated the gross premium which had been paid as earned for a proportionate period and allowed a credit only for the unearned portion. This rule has since been followed in several federal decisions (MacMurray v. Gosney, 106 Fed. Rep. 11 (Acheson, Circuit Judge, 1901) and others, and was commented on by Vice-Chancellor Reed in the Weir Case as having much to recommend it. He concluded, however, after a careful and thorough consideration, that the rule, allowing the reduction of the whole gross premium, was sustained by the 'weight of authority and upon the whole was the more equitable rule, 'the decision of Vice-Chancellor Reed was followed by Vice-Chancellor Grey, in Hoagland v. Saul, 53 Atl. Rep. 704 (1902), and I regard it as controlling my decision in this case. The decision was not either questioned or overruled by Vice-Chancellor Pitney, in Whitehead v. Commercial Building and Loan Association, 64 N. J. Eq. (19 Dick.) 24 (1902). In the latter case, on an application of the receiver for directions, the final decision of the question as to the credit to be allowed to the borrower on the mortgage for either premiums or dues was held open for future decision on the distribution of the assets. If the question were an open one, I should be much inclined to adopt the rule that gross premiums paid or reserved at the time of the loan should be apportioned, and that the proportionate amount, which could be considered fairly as earned at the time of the cessation of the business, should not be deducted, and that, if paid in installments, as in the present case, the premiums paid before the liquidation should be considered as earned and belonging to the association for the equal benefit of all the shareholders. I think it is taking somewhat too limited a view of the ' circumstances of the loan to consider that the payment of the debt by the application of matured shares, payable in installments, is to be treated as if it were the sole consideration for the payment of the premium on the loan, and that this method having failed the consideration for the premium has therefore entirely failed. The whole scheme of the association relating to the loans and premiums thereon should be taken into account, I think, as entering into and making part of the consideration of the agreement to pajr premium. This would include, as part of this consideration, the amounts usually loaned to members on their shares of property. Under our general laws, loans on mortgages on the property of members may be made up to eighty per cent, of its value, while on that of non-members it is restricted to fifty per cent, on the shares; loans up to ninety per cent, may be made to members. P. L. of 1903 p. 1?65.

Under the general management of these associations the premiums paid by installments are usually considered as earned when paid, and are treated as part of its funds on hand as assets belonging to the association, out of which provision may be made for dividends and for the payment of shares on withdrawal. This method of treating the premiums paid in installments as earned is recognized, I think, as a lawful method by the general law (P. L. of 1903 p. 476 § 51), which provides that the gross premiums on loans received by the association are not to be treated as profits wholly earned, but are to be apportioned over a period fairly estimated for the maturity of the shares, and for that period, in decreasing proportion, are to be carried on as an unearned profit. If the premiums are considered as wholly subject to the contingency of the ultimate regular maturity of the shares, then it would seem to be clear that until maturity the entire premium account must be carried as a liability and cannot be treated to any extent as an asset or profit of the eom-pany subject to disposal. This would practically prevent the payment of shares on withdrawal under the provisions of the by-laws generally in force, or under tire general law. P. L. of 1903 p. 471 § 38. In the present case the by-laws provided, article 12, for two accounts, into which all the receipts should be divided. The first was a general account, which consisted of the dues paid in for stock and payments for stock, which amount was available for loans, and the second, called the profit account, embraced all other receipts. This profit account included the amounts received from interest and premiums, and from this account were paid the expenses of the association and also the ¿mounts due members on withdrawal under the provisions of the by-laws. These withdrawal payments, in the present case, amounted to about $12,000 up to the time of liquidation. In considering the matter of the deduction or credit of the installments of the premium already paid, the status or treatment of the premiums under the whole scheme of the association as a going concern up to the time of the failure seems to me to be of importance on the question of the eqiritable adjustment of the rights of shareholders on a failure of the enterprise, which must be attributed equally to all shareholders, whether borrowers or non-borrowers. These considerations — some of them based on the act of 1903 — passed after the decision in the Weir Case, would incline me, if the question were an open one, to the view that the premiums are to be apportioned, and that, when paid by installments, as in this case, they are to be treated as earned and are not to be deducted. But the question is admittedly one difficult of satisfactory solution. The rule adopted in the Wevr Case has been approved by the weight of authority, and I consider it binding and conclusive, and will therefore advise that, in settling the amount due on the mortgage, the premiums be deducted, as claimed by the defendant.


text:
    James M. Seymour, Jr., v. Rebecca Goodwin, executrix, &c., et al.
    [Filed November 2d, 1904.]
    1. Until a claim, on which, suit at law is pending and which is disputed, is established against an estate, a court of equity will not enforce the claim against a fund alleged to be held by the executrix in trust for the payment of debts.
    2. A decree of a surrogate barring claims against a decedent’s estate cannot be attacked collaterally.
    3. A decree of a surrogate barring claims against decedent’s estate having been pleaded in defence of an action at law on a claim against the estate, the creditor may maintain a suit in equity to restrain setting up or proving such defence by showing that the claim had been presented and the verification waived before the decree was made.
    On demurrer to bill.

      Mr. Cortlandt Parker, for the defendants.

      Mr. Louis A. Ziegler and Mr. Howard Hayes, for the complainant.
   Emery, V. C.

Complainant has brought suit at law against the defendant Rebecca Goodwin, as executrix of her husband, Hannibal Goodwin, deceased, upon a claim of $2,463 for goods sold and delivered to the testator in his lifetime. In this suit, the defendant, besides the general issue and plena admmistramt, has pleaded two special pleas, one of which is that the claim'of the plaintiff was not exhibited under oath, as required by the order taken to limit creditors, which was duly published, and that by a final decree, made by the surrogate, October 17th, 1901, all claims not brought in within the time limited by the order (nine months from its date, January 17th, 1901) were barred from any action thereon against the executrix. The complainant, replying issuably to all of the pleas except the special plea of bar by the decree of the surrogate, thereupon filed this bill to enjoin the defendant interposing this decree as a bar to the suit, claiming that by reason of the facts alleged in the bill, relating to the presentation of the claim, the defendant is in equity estopped from setting up the decree. The transactions and communications between complainant and his attorney and Mr. Cortlandt Parker, the counsel and legal adviser of the executrix, are mainly relied on as creating the alleged estoppel, and Mr. Parker is made a co-defendant to the bill. The bill also alleges that the only assets of the estate of the testator were the capital stock of a corporation called the Goodwin Film and Camera Company, issued by the company to the testator for valuable patent rights owned by him; that he bequeathed and devised all his estate to his widow, whom he appointed executrix, and that she placed in the hands of Mr. Parker a large amount of this stock in trust for herself and for the purpose of paying the creditors of her husband; that a portion of this stock has been assigned by Mr. Parker to Mrs. Goodwin to use the same in making settlement with the creditors of the testator. It is further alleged that tírese shares are now held in trust by the two defendants for the benefit of the complainant and other creditors of the testator, but that they both now deny the trust and claim that the stock is no't held in trust to pay complainant and the other creditors of Hannibal Goodwin. The bill is filed by the complainant for the benefit of himself and all other creditors of the testator and against Mrs. Goodwin, both individually and as executrix, and against Mr. Parker. It prays answer from both, discovery of the assets of the estate, and the trusts upon which they are held, a declaration that the stock is held in trust by the defendants, or one of them, /for complain-. ant; that it may be sold under the decree of this court, and the claim of complainant established by this court, and decreed to be paid, and that the estate of the decedent may be administered under the direction of this court.

The defendants demur jointly to the whole bill, assigning several causes of demurrer, two of them- — the fourth and fifth — • denying the right under the facts set up in the bill to an injunction against setting up the bar .of the decree, the others denying either the jurisdiction of the court .for any purpose or the right of the complainant to any part of the other relief specially prayed by the bill.

The complainant’s debt is not established by judgment or admitted by 'the executrix, and a suit at law is now pending to establish it. No circumstances are shown in the bill to justify the removal of the settlement of this dispute to this court, or to warrant this court in interfering with the settlement of the estate in the ordinary manner. Frey v. Demarest, 16 N. J. Eq. (1 C. E. Gr.) 236, 239 (Chancellor Green, 1863); Rutherford v. Alya, 54 N. J. Eq. (9 Dick.) 411 (Court of Errors and Appeals, 1896); Loehnberg v. Loehnberg, 88 N. J. Eq. (18 Dick.) 496, and cases cited (at p. 498).

Until the complainant’s debt or claim is established against the executrix in the forum which complainant has chosen for that purpose, this court cannot make any declaration or decree against the defendant as executrix, and until the complainant has exhausted his remedy against the estate in the hands of the executrix no relief can be given against the defendant as legatee or under the alleged trust agreement. The only equitable jurisdiction exercisable under this bill, therefore, is that jurisdiction invoked in connection with the suit at law, and for the purpose of preventing the defendant from setting up the decree barring claims as a defence. Under the statute (Orphans Court Revision, P. L. of 1898 p. 740 § 70) this decree is made solely upon proof of the setting up and advertising of the notices to creditors, as directed by the rule to bar, the surrogate or court apparently considering no other question and making the decree on the ex parte application of the executor or administrator without notice to any creditor. The decree once made, becomes by the statute a bar against any creditor who peglected to bring in his claim within the time limited, and the decree is conclusive and cannot be attacked collaterally. Ryan v. Flanagm, Administratrix, 38 N. J. Law (9 Vr.) 161, 164 (Supreme Court, 1875). In a court of law, defendant could not, therefore, be estopped from setting up tlie decree, or be held to have waived the presentation of the claim under oath.

The provision of the statute, requiring the claims to be presented under oath, was intended primarily for the protection of the executor or administrator, and where tire estate was solvent the executor could, if he chose, waive this provision and recognize or pay any claim which he knew, or became satisfied was just, without requiring the oath of the creditor. Kinnan v. Wight, 39 N. J. Eq. (12 Stew.) 501, 504 (Chancellor Runyon, 1835). This right is now expressly recognized by the statutes, which allow the executors or administrators to. be allowed for payments of claims not presented under oath, if proved to be just claims. Orphans Court Revision, P. L. of 1898 p. 739 § 68; First National Bank v. Thompson, 61 N. J. Eq. (16 Dick.) 188, 206 (Vice-Chancellor Stevens, 1900). Statutory provisions, for the benefit of private or personal rights and not affecting public rights or policy, may in general be waived, and this is specially true as to statutory provisions relating to formal procedure. Endl. Stat. § 445. The waiver of the oath to the claim by the executrix, who was also' the sole legatee, and her acceptance of the claim as if sworn to, did not affect, and it is not claimed to affect, the right to have the claim established by suit, and the substantial question in the case is whether, by the failure to present the claim under oath, the complainant is barred by the decree from establishing his claim by proving the same in the action against the executor. It seems clear to me that if, in this case, the oath to the claim has been waived by the executrix, or she is equitably estopped from setting up that the oath was not made, she should be enjoined from interposing the decree as a bar to a suit upon the claim. The facts disclosed in the bill, from which this waiver or estoppel is alleged to arise, are substantially the following: Complainant furnished and supplied to testator, before his death and from May to September, 1900, work, labor and materials to the amount of $2,463, to be paid for in cash. Testator died in December, 1900, having devised and bequeathed all his estate, real and personal, to his widow, the defendant Rebecca Goodwin, who was appointed sole executrix and qualified as such, and who. assumed the administration of the estate; the defendant Mr. Parker had been Mr. Goodwin’s counsel and business adviser during his lifetime, “and after his death became the attorney and counsel for the executrix, and also acted as her business agent, taking charge of the administration of the estate of the deceased,” being also a creditor of Mr. Goodwin for about $6,000; in February, 1901, complainant saw the executrix and asked her if his bill would be paid, and the executrix then stated to complainant that she had nothing to say in regard to it, as everything .was in the hands of Mr. Parker; complainant then called upon Mr. Parker and asked him to pay the bill, and he then said to complainant that he would not pay the bill, and complainant must get it from the estate. Complainant then employed his attorney, Mr. Ziegler, to collect the claim. Mr. Ziegler, in the spring of 1901, called on Mr. Parker, as Mrs. Goodwin’s attorney, to arrange for a settlement of the claim, and Mr. Parker then stated to Mr. Ziegler that he and Mrs. Goodwin knew all about complainant’s claim; that it was all right and would be protected; and that nothing could be done, as there was no money in the estate; but that steps were being taken to realize on the patents of the deceased. Complainant afterwards gave to Mr. Ziegler an itemized statement of his claim with instructions to present it to the executrix. Mr. Ziegler prepared an affidavit, verifying the claim, as required by law, which complainant swore to, and left with the claim in Mr. Ziegler’s hands. Mr. Ziegler afterwards, and before October, 1901, presented the itemized claim to Mr. Parker, who then said to him that the claim was all right and would be paid, but that there was no money in the estate and the complainant must be patient, awaiting the disposal of the patents; that complainant would be taken care of, but that nothing could be done. The bill states in one place that Mr. Ziegler may have neglected to deliver the affidavit with the claim, and may not have presented any affidavit verifying the claim, and that this neglect and lack of care by Mr. Ziegler, if it occurred, arose from his relying on the assertion of Mr. Parker that the claim was all right and would be taken care of. In another part of the bill referring to the suit at law, complainant says, however, that he cannot with safety plead that he has duly exhibited his claim within the time required by law, because the claim was not (on aeéount of the assurances of Mr. Parker) duly verified by complainant’s affidavit. In reference to the presentation of complainant’s claim to Mr. Parker, the bill further discloses that in September, 1901, complainant himself spoke to a Mr. Bolmer, who was connected with the Goodwin company, and told him thatohe expected to bring suit for his claim if it was not paid, and that after this interview complainant received the following letter from Mr. Parker, written more than a month before the expiration of the time to prove claims: '

“September 12th, 1901.
“James M. Seymour, Jr., Esq.:
“Dear Sir — Mr. Bolmer tells me that he met you the other day, and that you broached the subject of the bill you have presented to me for work' and materials furnished the late Mr. Goodwin, with apparently some anxiety about it.
“I don’t know whether he told you that an arrangement has been made with parties in New Tork, long engaged successfully in photographic business, who have the management now of the Goodwin Co. and Goodwin patent, and that it is thought by us all that the very best thing for the doing well by the patent has been done.
“A part of the arrangement is that the agreement between you and Mr. Goodwin should be carried out — which I understand to be that the stock in the Goodwin Pilm and Camera Co., to the amount of your bill, will be given to you and taken in satisfaction thereof, the same arrangement made for and by myself for the like service. Absence on vacation of myself and other parties concerned has delayed making out certificates of stock, &c. In a few days one, as above, will be ready for you.
“Very truly yours,
“CORTLAXDT PARKER.”

To this letter the complainant replied under the same date, acknowledging' receipt of Mr. Parker’s letter, ajad stating that he was not aware of any arrangement to receive either cash or stock for the materials furnished, but that he and not Mr. Goodwin had the option as to receiving stock, and that he needed money and did not want stock, and also informing Mr. Parker that he had sent Mr. Parker’s letter and a copy of his own letter in reply to Mr. Ziegler, who would call on Mr. Parker. Subsequently, and on October 17th, 1901, the decree barring creditors was taken, apparently without further interviews or communications.

Subsequent to the entry of the decree, and before the commencement of the suit, interviews and communications took place between Mr. Ziegler and Mr. Parker in reference to settling the claim, and in one of the letters, dated May 23d, 1902, Schedule E, Mr. Parker tendered'Mr. Ziegler, as representing complainant, stock of the company of the par value of $5,000 in discharge of the claim made by the complainant through Mr. Ziegler against Mrs. Goodwin, executrix, and then stated Mrs. Goodwin’s understanding that the work and materials were furnished to the corporation and were to be paid for by fifty shares of stock and not by money. The facts disclosed in reference to the interview between Mr. Ziegler and Mr. Parker ’at the time of the presentation of the claim, do not, in my judgment, raise any estoppel against the assertion of the executrix that the claim was not verified. These were merely, according to the bill, assurances that the bill was all right, but general assertions of this character, without special reference to the qrrestion of whether the claim was verified or not, have not been held sufficient to dispense with the necessity of verification or to prevent the executor from setting up the want of the oath (Lewis v. Champion, 40 N. J. Eq. (13 Stew.) 59, 62, Chancellor Runyon), and it appears besides that neither complainant nor his attorney had up to the time of that interview relied on the assurances of this character as relieving them from the necessity of verifying the claim. In the spring of 1901 Mr. Parker had, according to the bill, told Mr. Ziegler that he and Mrs. Goodwin knew all about complainant’s claim and that' it was all right and would be protected, but subsequent to this conversation the itemized bill, and the affidavit verifying it, were made out for presentation.

The question in the case, in my judgment, is whether the letter written by Mr. Parker to the complainant himself in reference to the claim on September 12th, 1901, more than a month before the taking of the decree, and while there was still abundant time to remedy the defect of verification if it was insisted on, must not be taken as a waiver of this verification. Complainant had, according to the bill, duty verified his claim and delivered the claim with the verification to his attorney for presentation to tire executrix. The attorney had delivered the claim (without verification) to Mr. Parker. Mr. Parker wrote complainant direct on September 12th in reference to the claim, calling it “the bill you have presented to me for work and materials furnished the late Mr. Goodwin.” He then refers to the agreement between complainant and Mr. Goodwin, as he understood it, that stock in the company to the amount of complainant's bill would be given to him in satisfaction, and says that in a few days the certificate of stock would be ready for complainant. This letter expressly recognized the receipt of the bill as “presented” and the correctness of the amount of the bill, and while the executrix is not es-topped from subsequently contesting the correctness of the bill, it did amount, under the circumstances shown, to a waiver of the verification. On receipt of the claim not verified, the attorney acting for the executrix was perhaps not then bound to say anything about the verification, or to say anything after-wards at all to complainant or his attorney upon the subject of the claim or its presentation, and mere silence would not subsequently have given rise to any waiver of the defect.. But Mr. Parker undertook afterwards, and before the expiration of the time for duty presenting claims, to write the complainant in reference to the presentation of the claim and to offer a settlement of the claim on the basis of the amount presented. This letter recognized the claim as presented, that is, I take it, as “duty presented,” and offered a settlement in stock for about twice the amount of the claim. The letter notified -complainant that the claim was not to be settled in cash, but did not object to the lack of verification or to the amount of the claim. I think that if this formal objection of lack of verification was intended to be insisted on, it should have been given distinctly by this letter, and while there was still time to remedy it, and that not having been then given, it must be considered waived. Complainant himself having verified his claim and delivered it to his attorney, had no reason to suppose that the verification had not been delivered with the claim, and in his .reply to Mr. Parker he states that he has sent Mr. Parker’s letter and his own to his attorney. The waiver relied on in this ease was not made by the executrix personally, but was made by Mr. Parker on her behalf and as acting for her, and the question as to his ■authority in this behalf is raised by the demurrer. As bearing upon this point the bill alleges that Mr. Parker acted as attorney and counsel 'of the executrix and also as her business agent, taking charge of the administration of the estate. The letter of September 12th recognizes the presentation of the bill and offers on behalf of the executrix .herself a settlement, based on the amount of the claim as presented to Mr. Parker. I think these allegations sufficiently show Mr. Parker’s authority to accept on Mrs. Goodwin’s behalf the claim as presented to him, without verification, and to make on her behalf the waiver of verification arising from the writing of this letter.

The statutes providing short limitations for actions on re^ jected claims and for barring actions on claims not duly presented are, generally, if not universally, considered penal in character, and cannot be invoked on behalf of the personal representative to bar suit on the claim where his action toward the creditors in relation to the rejection or presentation of the claim has been ambiguous or equivocal. 2 Woer. Admn. *812, citing, inter alia, Hoyt v. Bonnett, 50 N. Y. 538, 542.

In the absence of the statute providing that the decree should bar creditors, there would seem to be no reason why the waiver could not be set up and enforced in the action at law, as in actions on insurance policies, where formal provisions as to1 proofs of loss have been waived, but the statute having provided for the decree barring creditors and declared its effect, the only method of enforcing waiver of formal proofs in cases like the present is by holding the representative estopped from setting up or having the benefit of the decree. The decree barring creditors having been in fact set up by the plea, the defendant should be enjoined from proving the decree in the suit at law. I will advise an order over ruling, the demurrer.