Creditors' Bill — Statute of Limitations.
Where a creditors' bill is filed against the estate of a person deceased, and the assets are not sufficient to pay the outstanding debts, each creditor is at liberty to dispute the debt of any other creditor; and the debt so disputed must be proved de novo; the debt of the original plaintiff in the bill may be thus disputed by any other creditor. And in such case it is competent for any creditor who has proved his debt to plead the statute of limitations in bar of the debt of any other creditor of the estate.
BYNUM, J.
In a creditors' bill seeking payment out of assets in a course of administration the first inquiry is as to the debt. If there is any question about that the court will require the parties to establish their right at law before proceeding to administer the estate, and to enable them to do so will sometimes retain the bill with liberty to bring an action or submit an issue to the jury. But if the facts are before the court, so that it can be seen that the petitioning creditor is (162) not entitled to relief, the court will not put the parties to the expense and useless formality of submitting an issue to the jury.
When it is admitted or found on reference that the fund is sufficient to pay the debts, one creditor has no interest in disputing the claim of another creditor. But when the fund is not sufficient to pay the debts, each creditor is allowed to dispute the debt of any other, and the debt of such other must be proved de novo before the referee, for in such case the creditors have a direct interest in the question of debt or no debt, inasmuch as its allowance will diminish the fund pro tanto. Overman v. Grier, 70 N.C. 693. And a creditor may thus impeach the debt of another creditor who offers to prove his debt, though such last mentioned creditor may have been the plaintiff in the suit and obtained the decree for an account for the debts. 2 Spencer Eq. Jurisdiction, 361; Tomlin v. Tomlin, 1 Hare, 248; Seton on Decrees, 252; Watson v. Parker, 2 Phillips, 8.
The note offered to be proved against the estate of the intestate was executed in 1861. The statute of limitations was suspended until January, 1870, when it began to run against the note. The petition to be allowed to prove the debt in the creditors' suit was not filed until May, 1874. The statute had then barred the creditor's right of action upon the note, and the estate of the intestate being insufficient to pay the debts, it was competent for the creditors, who had made themselves parties to the bill and proved their debts, to object to the proof of the Lash note, and plead the statute of limitations in bar of such debt.
Nothing is shown or offered to take the case out of the operation of the statute. After January, 1873, Lash could not have maintained an action on the note without a new promise.
As the debt could not be recovered in an action against the (163) administrator, of course it cannot be proved against the estate.
PER CURIAM. Reversed. Cited: Glenn v. Bank, 80 N.C. 99; Oates v. Lilly, 84 N.C. 644; Long v. Bank, 85 N.C. 357; Dobson v. Simonton, 86 N.C. 497; Barrett v. Brown, ib., 558; Speer v. James, 94 N.C. 424; Hancock v. Wooten, 107 N.C. 20; Smith v. Summerfield, 108 N.C. 286; Clayton v. Ore Knob Co., 109 N.C. 398; Dunn v. Beaman, 126 N.C. 769.
Overruled: Dobson v. Simonton, 93 N.C. 273.