Opinion
No. 4604.
Argued June 3, 1958.
Decided July 1, 1958.
1. Where the allegations of a petition under RSA 556:28, for leave to file a claim and prosecute an action against the estate of a deceased person, if proved, would warrant a finding that the failure of the plaintiff to act within the statutory time provided by Ib., ss. 1-3 was due to the fraud of the decedent or his agents, relief may be granted although the funds of the estate have been distributed.
2. Such equitable rights as were available to the plaintiff against the decedent, who allegedly was the perpetrator of the fraud in connection with a sale of real estate to the plaintiff, were also available against the decedent's corporate trustee to which the property was transferred without value from the ancillary administrator following foreclosure by the latter of a real estate mortgage thereon.
3. The fact that such ancillary administrator held no assets of the estate at the time of plaintiff's filing of such petition did not require that the petition be dismissed as to him where prior to the suit he did hold assets of the estate and the real estate which was the subject of the fraud and upon which the mortgage was foreclosed by him is located in this state.
PETITION, under RSA 556:28 for leave to file a claim and to prosecute an action brought by the plaintiff against the ancillary administrator, and the Northern Trust Company trustee under the will of Thomas H. Sheridan. By agreement of the parties, two questions were submitted to the Court, both of which were answered in the affirmative and which read as follows;
"1. In view of the condition of the estate of Thomas H. Sheridan at the time of the filing of the plaintiff's petition on March 12, 1954, can the plaintiff be allowed to file this late claim under the provisions of Revised Laws, ch. 385, [c. 355] sect. 28, assuming it later was determined that the necessary statutory conditions were found otherwise to exist?
"2. Can a bill in equity be maintained against a testamentary trustee which seeks rescission of and damages allegedly ensuing from a real-estate sale consummated by the decedent, on the ground of false or negligent misrepresentations by the decedent or his agents?"
Sheridan owned real estate in Moultonboro, New Hampshire, which on March 10, 1952, he sold to the plaintiff who, on April 15, mortgaged the premises to Sheridan to secure payment of his installment promissory note for $24,500, this being payment of part of the purchase price. On July 26, 1952, Sheridan died testate at his domicile in Illinois, and on August 14, 1952 his will was probated there. The will left the entire estate after payment of debts, administration expenses and certain legacies to the defendant, Northern Trust Company of Chicago, Illinois, as trustee, which was also named executor. The inventory filed in Illinois showed, among other assets, a small parcel of land in New Hampshire and the plaintiff's note secured by a mortgage on real estate here. The defendant John H. Ramsey was appointed ancillary administrator by the probate court in Carroll County, New Hampshire, on January 5, 1953. The inventory filed by him set forth as the only property under his administration a small house and lot valued at $3,000. In September, 1953, Ramsey made an agreement to sell this property for $4,000 and on October 30, he did so. By December 7, 1953, he had sent the bank as trustee the entire proceeds of the sale.
Around December 1, 1953, the bank as executor transferred to itself as trustee the plaintiff's note, secured by a mortgage, on the Moultonboro property. In the spring of 1953, lumber operations were conducted on these premises and the proceeds of the sale, by agreement with the plaintiff, were turned over to Ramsey on behalf of the bank as executor to apply to delinquent payments on the note. After repeated efforts to obtain payment from the plaintiff had failed, the defendant trustee instituted foreclosure proceedings through Ramsey, and on March 12, 1954, Ramsey on behalf of the trustee bought in the property for the sum of $26,789.94. On the same day the plaintiff filed this petition. On April 6, 1954, the deed on foreclosure together with the proper returns were recorded in the Carroll County registry of deeds.
The plaintiff claims in substance that a large amount of timber had been cut off the property before he bought it and that due to the misrepresentations, fraud and concealment of Sheridan and his agents, this was unknown to him. He alleged that relying on the fraudulent representations he remained justifiably ignorant of the fraud until in January, 1954, and that he brought this action as soon as practicable after that date. The defendants excepted to the Trial Court's answering both questions submitted to it in the affirmative, to certain findings of fact and rulings of law, and to the refusal of the Trial Court to dismiss the petition as to both defendants. Further facts appear in the opinion. The bill of exceptions was approved and allowed by Sullivan, J.
Normandin Normandin (Mr. F. A. Normandin orally), for the plaintiff.
Upton, Sanders Upton and Wesley E. Whitney (Mr. Whitney orally), for the defendants.
The first of the transferred questions which we shall consider is whether the plaintiff can be allowed to file a late claim under the provisions of R.L., c. 355, s. 28, now RSA 556:28, assuming it is later determined that the necessary statutory conditions are found otherwise to exist. The defendants argue no late claim may be filed under RSA 556:28. This statute provides in substance that one who has not prosecuted his claim within the time limited by law and is not chargeable with "culpable neglect" for not doing so, may petition the Court for relief, setting forth the facts and it may give him judgment for the amount due him, but the judgment shall not affect "any payments or compromises made before the beginning of the proceedings." See Mitchell v. Smith, 90 N.H. 36, 37.
In essence, the defendants' contention is that any claim the plaintiff may have had was provable against the executor or the ancillary administrator, and since there was failure to do so, distribution now having taken place, there can be no relief. To sustain this proposition they rely mainly on University v. Forbes, 88 N.H. 17. This was a case where the plaintiff brought a bill against the executor and residuary trustee to enforce a pledge given by the decedent, and through no fault of its own the claim was not seasonably presented. RSA 556:1-3. The assets had been paid over to the trustee but not distributed by him. The Superior Court dismissed the bill against the executor and sustained it against the trustee. Upon appeal, judgment was rendered for the defendant trustee on the grounds that since he held in effect for the legatees, "payment" had been made within the meaning of the statute and therefore there could be no relief. However, the Court made clear that a basis of its holding was that in the absence of some fault on the part of the defendant causing the delay, the money rightfully belonged to the legatee trustee who would receive nothing except that to which the beneficiaries of the trust were entitled. The Court said that there was therefore no unjust enrichment as contended by the plaintiff. See Restatement, Restitution, s. 28. It distinguished the situation from that in Redington Hub Co. v. Putnam, 76 N.H. 336, where, due to a mutual mistake in a sale by an administrator, the heirs received funds not rightfully belonging to them. The court permitted suit against the administrator and the heirs to be maintained. The Forbes opinion went on to say there could be no recovery when the claimant failed to sue within the time limit "unless the ignorance is the result of the defendant's non-observance of a duty of disclosure. The statutory remedy for cases of misfortune not caused by another's fault is the extent of the remedy." University v. Forbes, supra, 20. (Emphasis supplied.)
In the case before us the allegations of the petition if proved would warrant a finding that the failure of the plaintiff to act within the statutory limits of RSA 556:1-3 was due to the fraud of the testator or his agents or servants. In such instances we think it clear that relief will be given to the defrauded party. In Preston v. Cutter, 64 N.H. 461, 469, the court said, "The remedy which equity gives to the defrauded person is most extensive . . . A court of equity will wrest property fraudulently acquired, not only from the perpetrator of the fraud, but, to use Lord Cottenham's language, from his children and his children's children, or, as elsewhere said, from any persons amongst whom he may have parcelled out the fruits of his fraud." 3 Pomeroy, Equity Jurisprudence (5th ed.) s. 918; see also, Cook v. Lee, 72 N.H. 569. It thus appears that as a general proposition the fact that funds of a decedent have been distributed is not necessarily a defense under RSA 556:28 where fraud exists. It follows the Trial Court correctly ruled that the plaintiff was not barred from relief under this statute as a matter of law and the defendants' exception thereto is overruled.
The trustee further contends that in this case, since the assets had been transferred from the Northern Trust Company as executor to the Northern Trust Company as trustee, no bill may be maintained for "a rescission of and/or damages" as a result of the alleged fraud. It is undisputed that the trustee was not a purchaser for value. It received the property from the executor and stands in the position of a legatee. University v. Forbes, 88 N.H. 17, 18. It acquired no greater right than the decedent had. Restatement, Conflict of Laws, s. 479, comment b. Any equitable right of the plaintiff here which was available to him against the alleged wrongdoer, in this case the testator, was also good against those who were not bona fide purchasers of the obligation. Plante v. Shortell, 92 N.H. 38, 41; Dearborn v. Nelson, 61 N.H. 249. The transfer here from the Northern Trust Company, executor, to itself as trustee without value cannot affect this basic fact, since equity regards the substance and not the form of the transfer. It follows that the plaintiff may upon proof of his allegations maintain his bill for such relief as may be shown to be just and that the defendant trustee takes nothing by his exception to the Trial Court's so ruling.
A further question to be decided is whether the action was maintainable against the defendant ancillary administrator. Relying upon University v. Forbes, supra, he argues that it should be dismissed because of the fact that he had no assets of the estate in his hands at the time the petition was entered, none subject to his control (Keenan v. Tonry, 91 N.H. 220, 223), and that he had distributed all the assets which he had held as ancillary administrator. However, as previously pointed out, the Keenan case is distinguishable from the situations before us because here fraud is alleged. Ramsey prior to the suit did have assets, and the real estate, which was the subject of the alleged fraud and now transferred to the defendant trustee, is located in this state. If fraud be proved, the original sale from Sheridan to the plaintiff is, of course, voidable. 16 Am. Jur., Deeds, s. 31. In all the circumstances, we believe the bill against the ancillary administrator should not be dismissed at this time.
The result reached renders unnecessary consideration of other issues and the order is
Exceptions overruled.
All concurred.