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Reports of cases in chancery argued and determined in the Court of Appeals of South Carolina online

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received the money due thereon, which he considered himself as holding
for M'Xish, and offered to pay it to him, but M'Xish i-equested him to
credit his bond with it, which he accordingly did, upon which M'Xish
gave him a paper, which he has unfortunately not kept, in the following
terms : —

Received, 29th January, 1823, of Joseph Longworth, $2800.17, being
the amount collected by him for me, from Messrs. Hardie and Cole, on
account of the estate of Thomas Milliken.

(Signed) J. M'Xisii, Ex'or.

*He denies that he knew the situation of the estate, or that r:^.^/.Q
M'Xish had no right to pay him the money. That he did not con- '-
sider the money his until his settlement and accounting with M'X^ish as
aforesaid. That M'X^ish afterwards paid him the balance due, and he
gave him up his bond and mortgage to be cancelled. That M'Xish was
then in good credit, and continued so till 1827, when his property was
sold by the sheriff; and he believes it would then have paid his del)ts, if
it had not been bought up by his friends. That the farm was bought at
this sale for $800, and a part sold soon after for $2500, and the negroes
sold for $100 per head. That in 1825 the plaintiffs sued M'Xish, and by
diligently prosecuting their suit, might have recovered their money — and
that the defendant was never called on by the plaintiffs to account to
them, or had notice of their claims till the filing of this bill.

In January, 1833, the cause came on before Mr. Justice Harper, sit-
ting for Chancellor De Saussure.

John M'Xish, sworn on the part of the plaintiffs, says : — Longworth
was pretty hard on me for the money I owed him — wrote to me several
times [some of the letters produced] — I went to him and asked him to
take the bonds, as he was more in the habit of collecting than I was, and
if he could collect the money before I could pay him, he should have it.
I took a receipt for them. I gave him a receipt for the money just be-
fore the last Court, as a memorandum of the settlement which took place
in 1823. I have not the receipt which Mr. Longworth gave me ; the
purport was that he had received the bonds, and when collected would ac-
count to me for them. The debt to Longworth was for a plantation of
the estate of Archibald Longworth, at the price of $7000 ; the stock was
$500 more,— $2500 were paid at one time, $2000 at another. Tiie
money received on account of these bonds was $2800. I sold negroes to
Col. Martin to pay the residue, and he took up the b.md and mortgage,
which are now in his hands. I proposed to Mr. Longworth to collect
the lionds and account to me for them, and had no idea of insolvency at
this time ; and I believe Longworth thought the debt well secured. He
said his brother's estate wanted the money. My settlement- with him
was after May, 1823. My insolvency is to be dated from 1824 or 1825,
by the loss of crops by caterpillars. My negroes were all sold in 1826 or
1827, except those I sold to Col. Martin — at the time of the transaction



210 SOUTH CAROLINA EQUITY REPORTS. [*269

♦o'rni ^'^^^^ *Longworth, I paid taxes for forty or fifty, probably more.
'''"-' The plantation sold at sheriff's sale for $800.

Sundry executions in the sheriff's oflBce against M'Nish were given in
evidence.

His Honor decreed that the defendant should account for the $2800
received by him, with interest.

From this decree the defendant appealed, and now moves to reverse
the same.

Petigru, for the appellant, argued, that the conduct of the defendant
was free from artifice or design. He, too, was an executor, acting not
for his own, but the benefit of others. The money was due to him as
such, it was amply secured. In the first instance he acted as the naked
agent of M'Nish, in collecting the money on these bonds, and after col-
lection, while he was still in good credit, and the affairs of Milliken's
estate unknown to him, he had a settlement with M'Nish, in which he
gives up the security he had, on receiving the money collected, and has
since paid it over. The complaint really is, that the defendant has been
more diligent in obtaining money than the plaintiffs. The law favors
the vigilant — every one who collects money from a man in failing circum-
stances, may be said to get another's money ; nor can it be material
whether in receiving payment of a just debt, if it be paid by the executor
with his own money, or with money over which he has a legal control.
Some one must lose. Shall it be the defendant or the plaintiffs ? There
may be great hardship on their part, but equal hardship on that of the
defendant. The equities are at least equal, and in such case the law must
prevail.

Under the circumstances, can the plaintiffs follow these funds ? Whose
were they ? In law, beyond all question, they were M'Nish's ; if he had
died, the bonds would have been his assets. Seabrook v. Williams, 3
M'C. 371. Suppose he had been sued by the defendant, and arrested on
a ca. sa., and the ca. sa. paid by these funds, could he have been detained
in custody, although it might be known that they were Milliken's funds ?
The defendant is chargeable, if at all, for having collected the money on
these bonds and applied it to M'Nish's debt, knowing it to be the funds
of Milliken's estate; but there is no case to be found in which money has
been followed into the hands of a bona fide creditor, nor any principle
5^c,y, -, on which a creditor can be called on to refund *money received in
-^ payment of a just debt, without fraud. He reviewed and com-
mented on the cases cited by the plaintiff's counsel, and thence insisted
that the extent of the rule on the subject is, — that if one by fraud or col-
lusion with the executor, obtain the assets, or the payment of a desperate
debt of the executor, relief will be granted — and that the facts of this
case did not show such fraud or collusion to justify the application of
this principle. — Cited Taner v Ivie, 2 Yes. sen. 466, Ewer v. Corbett,
2 P. W. 148; Nugent u. Gifford, 1 Atk. 463; Elliot v. Merriman, 2
Atk. 41.

Elmore, contra. The first question is, did Longvvorth receive the
bonds on a mere naked trust to collect the money, or to collect and apply
to his debt. Although he states in his answer that he received them
merely in trust to collect and pay over, that he did not, will be seen from



*271] '' CHARLESTON-, MARCH, 1835. 211

the circumstances. The bonds are endorsed in blank by M'Xish, shew-
ing an absohite transfer lu his letters to M'Nish, he speaks uf having
received money on these bonds, as applicable to INI'Nish's bond to him-
self. From the evidence of M'Nish and the statement of the settlements,
it appears that the defendant had actually given M'Nish credit on his
bond for the amount of the bonds of Milliken's estate, a year before the
final settlement in 1823, when he got M'Nish's receipt. [He here went
into a detailed statement of the dealings of these parties to show this
fact.] Lastly, the explicit evidence of M'Nish, that the understanding
under which the bonds were delivered to him was, that the money, when
collected, should be applied to his bond, if it was not paid sooner. Be-
sides, it is not a little remarkable that he should gratuitously undertake
the trouble of collecting these bonds, as the mere naked agent of M'Nish,
expecting to derive no benefit from them. There cannot be a doubt that
he received these bonds with the understanding and intention of further
securing his debt — to be applied to its payment, and not merely to col-
lect. But conceding that he received them merely as agent of M'Nish,
the result must be same. He knew they were assets of Milliken's estate,
and applied them to his own use in fraud of the legatees,

Had M'Nish the right to sell these bonds? It is of great consequence
that the question be clearly settled, how far an executor or administrator
may dispose of the equitable assets of the estate. *The English rj^^otrn
law allows greater control to executors than ours. The Act of '- *"
'89, (2 Brev. Dig. 95,) restricts their rights. It declares, " that when it
shall be requisite to make sale of any part of the personal estate, (for
any purpose,) application shall be made to the Court of Ordinary;"
which Court may " refuse or grant such order for sale, regulating the
time, place and credit to be given, (Why?) so as to do impartial justice
to all persons interested therein,'' And when the will gives the power to
sell — a mere naked power — it may well be doubted whether it is still not
necessary to obtain an order regulating the important requisites of " time,
place and credit," so as to do " impartial justice to all concerned."
Such was clearly the leaning of the Court, in Saxon v. Barksdale 4 Eq,
Rep. 528. The will gives the executors the right to sell such property
as "they may think proper, and to purchase such property as they shall
judge beneficial." The authority is to both executors — one only trans-
ferred the bond, although two were acting ; one acting under authority,
can only bind to the extent of his authority, 5 T. R. 606. If tlie de-
fendant knew that under the will, M'Nish had power to disi)ose of the
funds, he also knew the purpose for which they were to be disi)()sed of;
and by taking the funds into his own hands, he becomes himself the
trustee.. 2 Eq. Rep. 378-9.

Had the defendant notice at the time of the transfer, that these bonds
were assets of Milliken's estate ? He swears in his answer that he had
no notice, except that the bonds on their face were payable to M'Nish as
executor. This however is explicit notice, and supposing it were not, it
was sufficient to put him on the iniiuiry. When defendant might, l)y dili-
gence, have had notice, plea of want of notice shall not avail him. —
Jackson & Wife v. Row, 2 Sim & Stuart, 412; Smith v. Ldw, 1 Atk.
490; Allen & Anthony, 1 Mer. 282; Daniels t;. Davidson, 16 Yes 219;
Powell V. Dillon, 2 Ball & Beatt}', 416, The bonds pointed the defend-



212 SOUTH CAROLINA EQUITY REPORTS. [*272

ant to the Ordinary's office, where he would have learned — from the will,
the petition of sale and the accounts of the executor — that the executor
was always in arrears — that these bonds, by a special provision of the
will, were the property of these plaintiffs. In Saxon v. Barksdale, 4 Eq.
Rep. 528, and Franklin v. Creyon, Harp. Eq. Rep. 251, it was held,
that the record of a will is notice of its contents to all the world; and
by the same reasons, records of petitions, orders for sale, and executors'
^ohq-i accounts in the Ordinary's ^office, are equally notices of their con-
*" -I tents. Long-worth was living in the neighborhood, had access to
these sources of information, and it is hardly credible that he had not
full notice of all the facts.

What is the effect of notice to the defendant ? Lord Hardwicke says,
in Mead u Orrery, 3 Atk. 238, "If one will purchase with notice of
another's rights, he throws away his money." It is settled in the English
authorities, that where the assignment or pledge is for advances made to
an executor or administrator at the time, it will be supported, unless it
be apparent that it was upon collusion and not for the benefit of the
estate. " It is prima facie good, being presumed that the advance is to
enable the executor to pay the debts." — M'Leod v. Drumraond, 17 Yes.
154. Here there was no advance, but the bonds were assigned to be
collected and applied to M'Nish's antecedent debt. " This is very mate-
rial," says Lord Eldon, in M'Leod xi. Drummond. Longworth well
knew that the funds were not to be applied to any of the trusts of the
will, and this, Lord Eldon, in the same case, considers one of the strongest
proofs of "fraud and collusion." If one concerts with an executor to
obtain the testator's effects and apply them to his own behoof, or in ex-
tinguishment of the private debt of the executor, or in any way contrary
to the duty of the executor, such concert will involve the seeming pur-
chaser and make him liable. — Scott i'. Tyler, 2 Bro. Ch. Rep. 431 ; see
also 2 Vern. 444; 1 Bro. Pari. Ca. 11. And in Downes v. Power, 2
Ball and Beatty, 491, it is said, "Whoever deals with an executor for
assets for a purpose inconsistent with due administration, subjects himself
to a devastavit. See also Hill v. Simpson, 7 Ves. 152 ; Bonney v. Rid-
gard, 1 Cox's Ch. 145; Field v. Schieflin, 7 John. Ch. Rep. 150, to the
same effect. The whole doctrine is strongly and concisely stated by
Mr. Eden, in his note to the case of Andrew v. Wrigley, 4 Bro. C.
R. 137.

It is urged that the equities are equal ; and that being the case, the
law must prevail. They are not equal. The plaintiffs were infants,
ignorant of their rights and confiding in their father's executor. The
defendants knowing these funds to be theirs, concerts with him to mis-
apply them. If he should sustain loss, it will be from his own wrongful
ai)propriation of funds he knew to be of right the plaintiffs'. Nor is he
so free from " artifice and design," as he is represented. Why take a
receipt lately, dated back in 1828? To supply the one which he lost?
M'Nish says he gave none then.

*274l O'Neill, J.* This case for the first time presents to this Court
the question, how far it can interfere to prevent the negotiation
by an executor or administrator, of notes or bonds taken by him for the
proceeds of the sale of the goods of the deceased.



*274] CHARLESTON, MARCH, 1835. 213

In sucli choses in action he has a clear legal right of property, inde-
pendent of his character as executor or administrator. For at his death
they do not, by operation of law, pass to the administrator de bonis non
of the testator or first intestate, but are, in point of law, the property of
the deceased executor or administrator, and his administrator can alone
maintain an action for their recovery, Seabrook ads. Williams, 3 M"C.
371. It is true that the proceeds of such choses in action are in Equity
regarded as assets, and will be so treated and considered in the hands of
the executor or administrator to whom they were made payable, or any
of his immediate representatives. Miller v. Alexander, 1 Hill's Ch.
Rep. 25; Capehart and wife i'. The Administrators of Huey. — 1 Hill's
Ch. Rep. 405. So, too, in all such cases, they would be protected from
being made liable by the process of law, for the debts of the executor
or administrator. — Glassy. Baxter, 4 Sep. 154; Tolbert i;. Harrison, I
Bail. 599 ; and in all cases of fraudulent alienations, the Court would
follow and treat them as assets of the estate. But beyond this I am not
prepared to go. For generally speaking, an alienee would have a clear
legal estate in the chose in action to which, (unless it can be overreached
by a superior equity, or be shown to be defeated by fraud,) a Court of
Equity as well as a Court of law, is bound to give effect. If the equity
of the alienee and that of the creditor, legatee or distributee, be equal,
the legal estate must prevail. I have looked through the cases referred
to in the decree and in the argument with as much care as I could, and I
concede that they sustain the position that an alienation by an executor
or administrator of chattels or choses in action belonging to the testator
or intestate, in his lifetime, for the payment of the debt of the executor or
administrator, would not in Equity f/eneraUy be allowed to prevail
against creditors, legatees or distriljutees — Scott v. Tyler, 2 B. C. R.
431 ; Andrew v. Wrigley, 4 B. C. R. 124; Bonney v. Ridgard, 1 Cox's
Ch. Rip, 145; Hill v. Simpson, 7 Yes. 152; M'Leod l\ Drummond, 14
Ves. 352, and 17 Ves. 152; Field v. Sehieflin, 7 John. Ch. Rep. 150;
Saxon V. Barksdale, 4 Eq. Rep. 522. All of these cases, in which relief
was granted against alienations by an executor or administrator in pay-
ment of his own debt, or in which the *Court thought that the r;;,.^ -
party on that ground was entitled to relief, but denied it on some '-
other, such as lapse of time, (except Field v. Sehieflin,) were cases of
alienations of chattels belonging to the deceased in his lifetime. The
case of Field v. Sehieflin was an alienation by a guardian of a bond exe-
cuted to him as guardian. The Chancellor, without adverting to the
distinction, which, I think, exists between alienations of chattels, or choses
in action belonging to the deceased in his lifetime, and such as are ac-
quired by the executor or administrator with, or which are given to him
for, the proceeds of the estate, gave relief.

Would it be allowed in England, if it could be shown that the money
received for a chattel aliened by the executor had been vested in bonds or
stock, and these had been aliened in payment of the executor's own debt,
that these last should be followed into the hands of the purchaser, and
his legal title be defeated? That no such case is found in the-English
books is strong evidence that such a case is regarded as too desperate
of even a chance of success to be presented to a Court The sale of the
testator's or intestate's goods and chattels, is made according to law.
Vol. L— 37



214 SOUTH CAROLINA EQUITY REPORTS. [*2T5

ends the equitable rights of the creditor, legatee or distributee, to be paid
out of them. The proceeds are at laic, as we have already seen the
executor's or administrator's property ; so, too, it must be conceded, are
the goods, chattels and credits of the deceased generally. At law, prior
to the Act of 1824, he had no absolute right of disposition, and where
the will directs a sale, he still has that right. Jones v. McNeill, 1 Hill,
84. But to some extent, the goods and chattels, of which the deceased
died possessed, are still regarded as not the absolute property of the
executor or administrator : in a contest between an execution creditor of
the deceased and of the executor or administrator, the goods would be
held liable to the former and not the latter. Jones v. McNeill, 1 Hill,
84. Such a distinction could not, however, be made in favor of a creditor
of the deceased, in a contest at law for payment out of the proceeds of
choses in action, payable to the executor or administrator. "When the
goods and chattels of the deceased are sold, or his choses in action col-
lected, the liability of the executor or iidministrator to account for the
proceeds to all parties interested, is generally that to which they must
look. The right to collect these proceeds is indispensable to the excutor's
or administrator's now safety. The right to use the fund as his own, is
^j)K/.-i also a necessary *consequence from his liability to account. For
-^ after he sells, he is not charged with the proceeds as he receives
the money on the notes or bonds, but with the amount of the sales as
cash received. Wright v. Davis, 2 Hill, 560, decided at Columbia, last
term. Upon this sum (the amount of the sale bill) he is chargeable with
interest, which shows that he is regarded in contemplation of law as in
the use of the money. He cannot be discharged from his liability to
account for the proceeds of the sale, but by showing that without any
fault of his own he has been unable to make them available. If he w^as
not allowed to alien the notes or bonds taken for the proceeds of the sale,
(without any other restriction than it should be done without fraud,) it
would subject him to the consequences of general liability, for the pro-
ceeds of the sale, without any corresponding advantage. For after he
made a sale, and charged himself in the sale bill with the value of the
goods, yet he would stand in relation to the proceeds as if they were the
goods and chattels and credits of the deceased. Such cannot be the
case. If it was, the executor or administrator ought to return to
the ordinary, the bonds or notes so by him taken. There is no difference
in respect to this question between an administrator or executor ; yet, if
it be true that when an administrator transfers the bonds taken by him
for the goods of the deceased in payment of his own debt, such transfer
would be void, it would follow that his securites for the administration
would, as w^ell as creditors, legatees or distributees, have the right to
follow the fund ; yet, I apprehend, such a consequence ought not gene-
rally to be allowed. I have already said that an alienation of the bonds
or notes, payable to an executor or administrator, ought not to be over
reached or defeated but by a superior equity, or by fraud. In the trans-
fer of a chose in action by a solvent executor or administrator, in pay-
ment of his own debt, it would seem to me that the equity of the creditor
of the executor or administrator is fully equal, if not superior, to that of
the creditor of the testator or intestatate, the legatee or distributee. In
such a case, he parts with the precise money value of the thing acquired.



*276] CHARLESTON, MARCH, 1835. 215

For the debt of the solvent executor or administrator, which miu:ht have
been otherwise collected, is given up. The question is, who, of two
innocent persons are to be losers ? It cannot be answered, that he who
has the legal interest is to be the man, and yet this would l)e the case, if
the rights of the alienee were defeated. If *the executor or ad- r^gtr^
ministrator were insolvent, and should transfer the chose in action L '
in payment of his own debt, in such a case the equities would not be equal :
for there the alienee would have paid nothing, and his legal estate would
be over reached by the equity of the creditor, legatee or distributee of
the testator or intestate, and the alienee would be turned into a trustee.
So, too where there has been a fraudulent alienation, there the fraud
defeats the title conveyed, and the alienee holds by a constructive trust
for the uses of the creditor, legatee or dis' ributee of the testator or intes-
tate. From these views these plaintiffs are not entitled to recover. The
executor, McNish, after his testator's death, legally sold his estate accord-
ing to the will. The bonds now in controversy were given to him, as
executor, for the proceeds of that sale. He was indebted to the defend-.
ant as executor of Archibald Longworth, deceased — this debt was secured
by a mortgage. In payment and discharge of this debt, he, when solvent,
paid and delivered to the defendant, the bonds and notes now in dispute,
and thereupon the defendant gave up to him his bond and mortgage and,
has subsequently accounted for and paid the amount to the devisees of
his testator.

According to this statement, his equity is fully equal, if not superior
to that of the plaintiffs, and hence his legal title must prevail.

It is ordered and decreed, that the Circuit decree be reversed, and the
plaintiff's bill dismissed.

Johnson, J., and Evans, J., (sitting for Harper, J,,) concurred.



The Administrator and Administratrix of Thos. N. Johnson, i'. Jos.
Johnson, surviving Executor of Mary Johnson, deceased, the Ad-
ministrator of RoBT. Brailsford, John Miles and wife, the widow of
Alex. W. Garden, deceased, and James H. Hext, Administrator
and Administratrix of the said A. W. Garden, and Kobt. H. Garden,
his only surviving child.

The doctrine of waste, as applicable to this country, considered. [*281]

After the division of an estate and the appointment of a guardian for a minor
legatee, the executors are no longer accountable for the income of the estate
assigned to the minor; his guardian is alone entitled to possession of the estate,
and must account accordingly. [*284]

When from the facts, an executor who was also guardian might be charged with
tne receipt of monies either as executor or guardian, he must account in the latter
character; for whatever funds he had in his hands as an executor, were by opera-
tion of law, transferred to him as guardian. [*285]

A parol discharge of a guardian by his ward just after coming of age, without an
account, will not bar an account against the guardian. [*286]

The security of a guardian is liable for the default of his principal, to the amount
of the penalty of the bond, and not merely to the value of the property set out in
the petition praying the appointment. [*287]



216 SOUTH CAROLINA EQUITY REPORTS. [*277

A father, as sucb, bas no right to receive a legacy of his child: and therefore where
an executor paid a legacy to the father of an infant legatee, and afterwai-ds on
the demand of the legatee's guardian, his co-executor paid it to the guardian, the
last payment was held proper and that the executor who made the first, was liable
to the estate for his improper payment. [*288]

Nor will the fact that the father of the legatee was a co-executor be an excuse ; for



Online LibraryW. R. (William Randolph) HillReports of cases in chancery argued and determined in the Court of Appeals of South Carolina → online text (page 79 of 124)