if the bond should hereafter be forfeited. All that I can do, is to order the funds to be made over on the plaintiff giving a sufficient indemnity; and it must be referred to the master to settle the terms of such security.

In re KING.

MELLOR v. SMITH AUSTRALIAN LAND MORTGAGE & AGENCY CO.

(Supreme Court of Judicature, Chancery Division.

[1907] 1 Ch. 72.)

NEVILLE, J.20 In this case the executors seek the direction of the court to distribute the estate among the residuary legatees notwithstanding the claim of a limited company in respect of unpaid shares, no calls having been made. It appears to be the practice to direct such distribution notwithstanding the existence of contingent claims, and, as the law stands, I think it is clear that the order of the court in such a case exonerates the executors from ultimate liability to the creditor. The practice appears to have grown up gradually and in a manner which is not to my mind altogether satisfactory. One cannot help seeing that the rights of absent parties of whose claim the court has notice may be prejudicially affected by the order. Nor are the authorities themselves in a very satisfactory state, but I think the outcome is reasonably clear.

The first case I have been referred to is Fletcher v. Stevenson, 3 Hare, 360, before Wigram, V. C. In that case the Vice Chancellor directed that the whole of the residuary estate of the testator and the income should be retained for the purpose of providing a fund to satisfy, if necessary, future claims for rent. The Vice Chancellor says this (3 Hare, 370): "The widow's claim is opposed by two parties: First, by the executor; and, secondly, by the legatees in remainder. So far as the executor is personally concerned, he would, I apprehend, be safe in acting under the direction of the court; but in considering what degree of protection is due to the absent covenantee, I am bound to consider whether the court, taking the fund out of the hands of the executor, can do less than it would expect the executor to do if the fund remained in his hands." That is the ground on which the Vice Chancellor refused to part with the fund, and I must say that what the Vice Chancellor says seems to me of very great force.

The next case cited in which the matter came before the court is Dean v. Allen, 20 Beav. 1. The side note is: "Where an estate is administered and the residue is paid over under an order of the court, the executor will be protected, and a creditor will not afterwards be allowed to sue him at law. The executors of a lessee held entitled to

20 The statement of facts is omitted, and the opinion on the merits only is given.

no further indemnity against the covenants than the personal indemnity of the residuary legatees." That case is a clear authority upon the point that the direction of the court exonerates the executors from liability to the creditor, but it is not very satisfactory because it provides for indemnity to the trustees, and does not point out or apparently recognize any inconsistency between the doctrine that the executors are entirely exonerated from liability and the provision of indemnity for them.

The point again came before Sir John Romilly in Waller v. Barrett, 24 Beav. 413, and there the Master of the Rolls gives reasons for what he states to be the practice which are at all events intelligible. He reiterates the doctrine of exoneration. [His Lordship read the headnote to that case, and continued:] The Master of the Rolls says (24 Beav. 418): "I am at a loss to conceive on what principle a debt which may arise hereafter, but which is not now existing, is to be treated on a footing different to an existing debt. The creditor, although advertised for, may be abroad at the time, he may be ignorant of the whole proceedings, and yet, if he do not come in and claim, his only remedy in this court is against the legatees. In the case of March v. Russell (1837) 3 My. & Cr. 31, 41, Lord Cottenham made this observation: 'Formerly, when legacies were paid, it seems to have been the practice to oblige the legatee to give security to refund, in case any other debts were discovered. That practice has been discontinued, but the legatee's liability to refund remains. The creditor has not the same security for the refunding as when the legatee was obliged to give security for that purpose, but he has the personal liability of the legatee.' I hold that this, in fact, is the principle which governs these cases, that it is for the purpose of giving a greater degree of security to the executor (in case a creditor should arise thereafter), that the court requires what is called 'an indemnity to the executor' to be given; but if he has stated the facts to the court, and has acted under its direction, I apprehend that his indemnity is complete and perfect, so far as he is concerned."

That is an intelligible account of the origin of the practice. I am surprised that Lord Romilly should have professed himself to be at a loss to conceive on what principle a contingent debt can be differentiated from an existing debt; but he does class the two together and declare that the order of the court exonerates the executor on distribution of the assets. Further, one cannot help feeling that the reason given for the provision of the indemnity is unsatisfactory, because it is curious that an indemnity of this kind should be held to give a greater degree of security to the executor than the order of the court, which exonerates him altogether. However, there it is, and that is something upon which one can proceed, whether the grounds upon. which it is founded, as stated by the learned judge, commend themselves to one's ideas of the general practice of the court or not.

The next two cases to which I was referred are both before Kindersley, V. C. In the first, Smith v. Smith, 1 Dr. & Sm. 384, the doctrine of exoneration was referred to, and it was held the executors were not in that case entitled to an indemnity, and the Vice Chancellor says (1 Dr. & Sm. 387): "Supposing there has been no dealing with the leaseholds by the executors, would they have been now entitled to any indemnity? In following the previous decisions, I have held that executors have such right; but I concur with the Master of the Rolls in thinking that where an executor fairly represents everything to the court the decree, directing him to deal with and distribute the property, must operate as a complete indemnity to him; and that therefore an executor cannot need any other indemnity. It has, however, been suggested, that there ought to be a fund set apart by way of indemnity, not for the benefit of the executor, but for the benefit of the lessor, in case of there being at any future time a breach of covenant. Now if the lessor is entitled to any such equity as this, it would seem to follow that he might come to this court to assert such equity, and to ask the court to set apart a sum of money out of the testator's assets, to provide for the event of a future breach of covenant; for which he might be entitled to recover damages. But it has been held that a lessor cannot be heard in this court to maintain any such right. In truth the whole doctrine on the subject is in a very unsatisfactory state; and does not seem to be founded on sound principles."

The case came again before the same Vice Chancellor in Dodson v. Sammell, 1 Dr. & Sm. 575. In that case a fund which had been set apart to indemnify executors was ordered to be paid out to the residuary legatee, such indemnity since the passing of Lord St. Leonards' Act (22 & 23 Vict. c. 35) being no longer necessary as a protection to the executor The Vice Chancellor said (1 Dr. & Sm. 578): "With respect to the other ground, that it is required for the benefit of the lessor, it is true that in Fletcher v. Stevenson, 3 Hare, 360, Wigram, V. C., thought that, although the decree of the court would be a sufficient indemnity to the executor, it was right to set apart a sufficient part of the assets for the protection of the covenantee; meaning, of course, that the covenantee had that equity. Now, if the covenantee had such an equity, it would necessarily follow that he could file a bill to enforce it. But in King v. Malcott, 9 Hare, 692, Turner, V. C., decided that there was no such equity." With great respect, I venture to think that the inference which the learned Vice Chancellor draws in that case is not a necessary inference, and that the reason given by Wigram, V. C., for retaining a security for the contingent creditor was an intelligible reason which was not open to the observation made by Kindersley, V. C., in that case. However, from that time on it seems to have been the practice not to retain any part of the assets.

Then after a considerable number of years-I have not been referred to any case decided between 1861 and 1904-the case came before the late Byrne, J., in In re Nixon (1904) 1 Ch. 638. The headnote in that case is: "On making an order for the distribution of the estate of a testator amongst his residuary legatees, the court will not set aside any part of his assets to indemnify his executors against possible liabilities which may arise in respect of leases formerly held by him, unless there is privity of estate between the executors and the lessors." That I understand to apply to all cases where there is not a personal liability on the part of the executors to pay out of their own moneys the claim of the creditor. The learned judge went through the cases and came to the conclusion stated in the headnote, and I think that, having regard to the authorities, it is necessary for me to proceed on the same footing.

It is pointed out in one of the cases that the exoneration must, or at all events may, only operate in the case of an administration action. There may be a distinction in the protection afforded by a direction of the court taken under Order LV, R. 3, without administration. It is obvious that the court cannot direct distribution of the estate so long as it is not satisfied that there are no longer any immediate claims outstanding. I think, therefore, there should be an inquiry as to debts.

NORMAN v. BALDRY.

(High Court of Chancery, 1834. 6 Sim. 621.)

On the marriage of William Baldry with Ann Freston, he, together with Simon Baldry, executed a joint and several bond, dated the 7th of October, 1802, to W. Lewis, conditioned for the payment, by the heirs, executors or administrators of William Baldry, within three months after his decease, of £490 to Ann Freston, in case she should survive him; but, in case she should die in his lifetime, then for the payment by him, of £200 within six months after the death of Ann Freston, to the persons therein named.

Simon Baldry died in March, 1820. Ann Baldry died in April, 1831, leaving her husband her surviving.

William Baldry having become insolvent, the persons entitled to the £200 under the bond, filed, in 1832, a creditor's bill against the executors of Simon Baldry.

The executors, in their answer, said that they had applied the whole of Simon Baldry's personal estate in payment of his debts and legacies, and that they never heard of the bond until October, 1831.

THE VICE CHANCELLOR [SIR LANCELOT SHADWELL] said that he had always understood the law to be that an executor who had paid simple contract creditors of his testator, a bond being in existence but not then payable, ought to be allowed those payments; but that an ex

ecutor was liable, if he paid the legatees, notwithstanding he had no notice of the bond (see Hawkins v. Day, Amb. 160); and that he was not disposed to agree to what was attributed to Lord Kenyon in the case cited. 21

SECTION 5.-EXECUTORS DE SON TORT

EMERY v. BERRY.

(Superior Court of Judicature of New Hampshire, 1854. 28 N. H. 473, 61 Am. Dec. 622.)

EASTMAN, J.* In examining the questions presented by this case, we shall pursue the order taken in the argument, and consider, first, the ruling of the court by which a verdict was taken for the defendant upon the issue to the jury.

It may be stated, in general terms, that at common law an executor de son tort is one, who, without any authority from the deceased or the court of probate, does such acts as belong to the office of an executor or administrator; and it is said that all acts of acquisition, transferring or possessing of the estate of the deceased, will make an executor de son tort, because these are the only indicia by which creditors know against whom to bring their actions. 2 Bac. Abr. 387, and authorities there cited.

Our statute provides that "if any person shall unlawfully intermeddle with, embezzle, alienate, waste or destroy any of the personal estate of a deceased person, he shall stand chargeable and be liable to the actions of the creditors and others aggrieved, as executor in his own wrong, to double the value of the estate so intermeddled with, embezzled, alienated, wasted or destroyed." Rev. St. c. 158, § 15.

21 That case was The Governor and Company of the Chelsea Waterworks v. Cowper, 1 Espin. N. P. C. 275 (1795).

In Daniel v. Baldwin, 148 Ala. 292, 40 South. 421 (1906), an administrator. without getting an order of court directing him to do so, distributed the estate. An infant had a claim of which the administrator knew nothing, and by statute had till 12 months after attaining majority to present it. The infant presented the claim within that time, and the adminisrator and his sureties were held liable.

In Hanna v. Palmer, 6 Colo. 156, 45 Am. Rep. 524 (1882), where the question was whether a widow, on renouncing the will, took under the Colorado statute one-half the estate of her husband free from his debts, the court said: "If she elects to take under the will, it will not be pretended that her legacy is exempt from the debts of the testator; and upon renouncing the will she takes her legal moiety, not as dower, nor in lieu of dower, but in lieu of the provisions of the will, and impliedly subject to the same liabilities respecting the debts of the deceased." 6 Colo. 161, 45 Am. Rep. 524.

So far as an administrator has paid a debt of the estate with assets which he is compelled to refund to the widow, he will be subrogated to the rights of the creditor. Flowers v. Reece (Ark.) 123 S. W. 773 (1909).

The statement of facts is omitted.