I concur with Judge REYNOLDS in the disposition of this cause. I desire to add a few words upon a question much discussed on the argument, which is, whether the money in litigation could have been collected by the administrator on the theory that it was personal property. This depends upon the correct application of the doctrine of "equitable conversion." In order to become personal estate for the purposes of administration, the money must have belonged to the decedent as personalty. Whatever once descended to her heirs or devisees cannot be divested from them, except for the purpose of liquidating some superior claim. After that has been satisfied, any surplus belongs to the heir or devisee, on the theory that it stands in the place of, and represents, the original fund. The conversion of the land into money was only made for a special purpose; and that having been accomplished, the surplus, by a fiction of equity, is reconverted into land. *Page 504
The truth of this view can be easily shown by supposing that the mortgaged property had consisted of separate lots, and no more had been sold on the foreclosure than was necessary to satisfy the mortgage. The unsold residue would then, of course, belong to Mrs. Dunning's heirs or devisees. Could it possibly have made any difference, if the lots had happened to be sold and a surplus realized? If so, this would be to make the rights of heirs and devisees depend upon accident rather than upon principle. As this property once belonged to the devisee in trust, and for the space of time between the date of the testatrix's death and that of the foreclosure, the surplus which represents in equity that estate, still belongs to the devisee. An action to recover it could be brought by no other person. The devisee, owing to the renunciation of Jennings not being in existence until an appointment was made December 28th, 1869, the statute of limitations did not begin to run until that time, and, of course, is no bar to this action.
These views are clearly sustained by the authorities. Wright v. Rose (2 Sim Stuart, 323) is distinctly in point. In that case the mortgage contained a power of sale with a direction that the surplus money should be paid to the mortgagor, his executor or administrators. The interest on the mortgage having remained unpaid, the mortgagee sold the estate after the mortgagor's death, under the power of sale, for a sum which considerably exceeded the mortgage money and interest. The action was brought by the plaintiffs as administrators of the mortgagor, for an accounting as to this surplus. The bill was demurred to by the defendant, on the ground of want of equity. The court said, that if the estate had been sold by the mortgagee in the lifetime of the mortgagor, then the surplus moneys would have been personal estate of the mortgagor, and the plaintiff would have been entitled. But the estate being unsold at the death of the mortgagor, the equity of redemption descended to the heir, and he is now entitled to the surplus produce. See, also, to the same effect, Polley v. Seymour (2 Yo. Coll., 721); *Page 505 Brown v. Bigg (7 Ves., 279); Bourne v. Bourne (2 Hare, 39); Matson v. Swift (8 Beavan, 374); Van v. Barnett (19 Ves., 102); Biggs v. Andrews (5 Sim., 424); Dalzell on the Law of Equitable Conversion (89); Varnum v. Meserve (8 Allen, 160).
The Massachusetts cases hold that the executor or administrator may bring the action for the surplus when the mortgage provides that it shall be paid to the mortgagor, his "executors or administrators." They recognize the doctrine that a surplus, under such circumstances, is usually real estate, but declare that the equity of redemption in mortgaged lands is but a trust estate, and that the legal title to the money is in the executor or administrator by force of the contract with the mortgagee, and that when he collects it he holds it in trust for the heirs or devisees, as the case may be. (Varnum v. Meserve, supra.) These views cannot prevail here. The equity of redemption is a legal estate in New York. The case of Varnum v. Meserve is in direct opposition to Wright v. Rose (supra), where the promise was also made to pay the mortgagor, his "executors or administrators." The true construction of those words undoubtedly is, that the promise is to pay the executors or administrators whenever it might have been collected by the mortgagor, as,e.g., where the land was sold in his lifetime.
The statute of 1867, chapter 658, cited on the argument, is not in the way. This act lends no countenance to the theory that the present surplus is to be regarded as personal property. On the other hand, it is carefully framed on the supposition that it is real estate. The first section provides that the surplus shall be paid over to the surrogate of a court having jurisdiction to entertain an application for the sale, or mortgage, or lease of the real estate of a deceased person for the payment of debts. The second section requires that the surrogate shall, upon the application of an executor, administrator or creditor, made in the same manner as upon proceedings for the sale, etc., of land, make an order disposing of the surplus moneys as proceeds of real estate. *Page 506
This section has, as would appear, only a limited scope, and is simply designed to provide a method for applying the surplus tothe payment of debts. It makes no change in the law as to the proper person (considered as owner) to bring an action for the surplus. The terms of the statute show that the surplus is regarded as real estate. The most careful precautions are taken to prevent the heirs from being deprived of it, except in the same manner and to the same extent that would be permitted in case the land had remained unsold.
The judgment should be affirmed.
All concur.
Judgment affirmed.