The question presented by the demurrer in this case, was decided adversely to the plaintiff in Allyn v. Thurston (53 N Y, 622). It was there held that a creditor at large could not maintain an action to enforce a resulting trust in lands purchased and paid for by his debtor, and by his direction conveyed to another person. In that case the action was brought after the death of the debtor, and it was averred in the complaint that he died insolvent, and unable to pay his debts. The defendant, by his demurrer, admitted the existence of the debt, and the insolvency and death of the debtor, but the court were of opinion that this did not dispense with the general rule requiring that the debt must be ascertained by judgment, and that legal remedies must be exhausted before the creditor could proceed in equity for the collection of the debt out of assets liable in equity for its payment.
The reason of the rule, that the creditor's debt must be ascertained by judgment, before proceeding in equity, does not fail by the death of the debtor before judgment recovered for the debt. The creditor may prosecute the claim to judgment against the personal representatives of the debtor, and although it would not be conclusive against his heirs or his grantees, by title acquired before his death, or in this case against the defendants, it would conclude the creditor as to the amount of his debt.
In a suit against the personal representatives of the debtor to recover it, any defence which the debtor himself could have made, could be interposed, and the claims would be subject to set-off, or to the plea of the statute of limitations, or to any defence existing when the action was brought. These questions would be settled as between the creditor and the estate by a judgment in the creditor's action against the representatives. It is convenient and reasonable to require this to be done before subjecting third persons to litigation with the plaintiff, who may never be able to establish any claim against the estate. It is sufficient, however, to say that the case of Allyn v.Thurston (supra) is decisive of this.
The allegation that the intestate's estate only amounted to *Page 267 forty per cent. of his debts, is no stronger than the allegation of insolvency in the case referred to, and the averment of the existence of the debt, although admitted by the demurrer, does not give jurisdiction to a court of equity to proceed to subject the property in question to the operation of the alleged trust.
The judgment of the General Term should be reversed, and judgment for defendant ordered on the demurrer.
All concur.
Judgment accordingly.