CHAP. XLVI. Lord Henley. or the personal estate of his uncle R., should not extend Case of Noel v. to pay; and, after such payments, to invest the residue of the said monies upon trust for certain persons; and then, after giving several legacies, he declared that all his legacies should be paid without any deduction of the legacy duty; and he bequeathed all the residue of his personal estate, after payment of such of his debts as were not therein otherwise provided for, and of his legacies, &c., to his wife, her heirs, executors, administrators, and assigns, and appointed his said wife and two other persons executrix and executors. One question was, whether the sums of £2000, £20,000, and £3000, were payable out of the land exclusively, or only in aid of the personal estate. Richards, C. B., thought that there was not sufficient evidence of an intention to exonerate the personalty from these sums; for, although he admitted that there was no doubt that the testator, in giving the residue of his personal estate after payment of such of his debts as were not therein otherwise provided for, intended to exonerate some part of his personal estate from its liability to pay some of his debts, yet it did not appear what debts, and there was no intimation that he meant the sums particularized as distinguished from the rest of his debts. His Lordship thought that this was the ordinary case of a testator giving his personal estate to A., and his real estate to B., subject to the payment of his debts, and that the circumstance of the testator having enumerated particular debts made no difference. He could not make any distinction between a direction that real estate should be chargeable with a PARTICULAR debt of £20,000, and a devise of real estate subject to ALL the testator's debts; for the £20,000 was only part of these debts. But he thought that legacies stood upon a very different footing: debts (he said) were primâ facie to be paid out of the personal No distinction between direc tion to pay par ticular debts and debts gene rally. estate, legacies might be paid out of the personal or out of the real estate, according to the intentions of the testator; therefore such legacies as were not thrown upon the personal estate were not to be paid out of it. The Court accordingly held that the mortgage of £2000 (which it appeared was not the testator's own debt, but was created by a prior owner, from whom the lands had descended to him (u)), with the £3000 and the legacy duty on both these sums, were to be paid out of the real estate exclusively; but that the testator's mortgage debt of £20,000 and duty were to be raised out of it only in aid of the personalty. As to the £20,000, the decree was reversed in the House of Lords (), but merely on the ground that the mortgage was the debt of the estate, not of the devisor, having been made for the purpose of liquidating incumbrances created by the preceding owner (y). If there had been nothing more than a general provision for debts, as the learned Chief Baron appears from some of his observations to have thought, the case is not an adjudication upon the point in question; but, considering the testator's anxious discrimination between the enumerated debts and the others (2), and his subsequent reference to the debts as consisting of two classes, there was perhaps some difficulty in so treating it. At all events, the doctrine in the judgment is in direct opposition to that of Sir W. Grant's determination in Hancox v. Abbey. Upon principle, the distinction taken by that learned judge, between a trust to pay particular debts and debts generally, seems to be hardly tenable. There is no (u) As to this, see ante, p. 556. general the charging of a particular p. 558. (*) It seems, however, that in CHAP. XLVI. Remarks upon Noel v. Lord Henley. No priority be tween specified debt or legacy and others. CHAP. XLVI. apparent reason why a testator, who provides an additional Where personal fund is subjected to certain charges. General personalty held to be exempt. fund, should intend to discharge the fund primarily liable, more in the one case than in the other; or why debts, which before subsist as a charge upon the personal estate, independently of the will, should necessarily be considered as governed by the same rule as legacies, which owe their existence to the trust to pay them. It should seem, that where a specific portion of personal estate is appropriated to charges to which the general personalty is liable, such fund is not, as in the case of land, subsidiary only, but is primarily applicable. Thus, in the case of Browne v. Groombridge (a), where a testator gave to his executors his Exchequer bills, money at the bankers and due to him on policies of insurance, money in the funds, and debts, upon trust thereout to pay his wife £200, and then to pay his debts, funeral and testamentary expenses, and, after making the said payments, to pay certain legacies, and then to stand possessed of the monies upon certain trusts; it was contended, on the authority of Waring v. Ward and Noel v. Lord Henley, that the specific fund was charged with the debts and legacies only in aid of the personal estate; but Sir J. Leach, V. C., held, that the fund was immediately liable, observing that Waring v. Ward was the case of a devisee of real estate, who was entitled to the aid of the personal estate. So, in Choat v. Yeates (b), where a testatrix gave the residue of her funded property, after payment of her just debts, legacies, funeral and testamentary expenses, to A., and all the residue of her personal estate upon certain trusts; it was held, that the funded property was primarily liable, though the effect was to leave nothing for the legatee. Again, in Bootle v. Blundell (c), we have seen that the (a) 4 Madd. 495. (b) 1 Jac. & Walk. 102. (c) 1 Mer. 193; ante, p. 591. direction to pay the funeral expenses and certain legacies out of a specified fund, was treated by Lord Eldon as tantamount to a declaration, that they should not be paid out of the general personal estate. CHAP. XLVI. trine in Hol ford v. Wood. But a different construction prevailed in the anterior Contrary doccase of Holford v. Wood (d), where a testatrix bequeathed certain leasehold hereditaments, household goods, furniture, and personal estate, then late belonging to W., to F., his executors, &c., for his own use and benefit, subject to the payment of "the following annuities and legacies." The testatrix then specified certain legacies and annuities, and appointed F. executor. One question was, whether the specific property was liable to the legacies and annuities in the first instance, or only in aid of the general personal estate. Sir R. P. Arden, M. R., held, that the specific fund was not primarily charged; his Honor adverting to the hardship of making legatees liable to lose their legacies, if the fund upon which they were specifically charged was deficient. Admitting that, in this case, the legacies were not payable out of the specific fund alone (e); yet it is clear, according to the doctrine now established by Browne v. Groombridge, and Choat v. Yeates, that even if the legacies were general, the fund charged being personal, was primarily applicable. In regard to this point, the case may be considered as overruled by the two last-mentioned authorities, in which unfortunately it was not cited. The doctrine of those authorities seems upon the whole to be the more reasonable; for, although, where a testator subjects real estate to charges to which the personal estate, and most frequently that only, was before liable, there is no reason why the added fund should be applied before (d) 4 Ves. 78. (e) See cases collected, ante, p. 594. Remarks on case of Holford v. Wood. CHAP. XLVI. the original one, yet in regard to personal property, the whole of which was antecedently applicable to debts, as additional security to the creditor could not be the object of the provision, the natural inference is, that the testator, in appropriating for this purpose a particular portion of that estate, intended that it should be primarily applied. Marshalling of assets. In favour of legatees against the heir. IV. It remains to consider in what cases assets are marshalled in favour of legatees or creditors. On this subject it may be stated, as a general rule, that, wherever a creditor, having more than one fund, resorts to that which, as between the debtor's own representatives, is not primarily liable, the person whose fund is so taken out of its proper order, is entitled to be placed in the same situation as if the assets had been applied in a due course of administration, in other words, to occupy the position of the creditor in respect of that fund, or those funds which ought to have been applied, to the extent to which his own has been exhausted. Thus, if the specialty creditors of a testator who died before the 29th of August, 1833 (g), or the simple contract creditors of any other testator, choose to enforce payment from the personal representatives of their debtor, instead of suing (as they may do) the heir in respect of any real estate which may have descended to him, and thereby withdraw the personalty from the claim of specific or pecuniary legatees, the Courts will marshal the assets in favour of such legatees, by placing them in the room of the creditors, as it respects their claim on the descended lands; such descended assets, according to the order of application before stated, being (g) See stat. 3 & 4 Will. 4, c. 104, ante, p. 510. |