50 S.C. 241 | S.C. | 1897
The opinion of the Court was delivered by
The following is a copy of the decree from which the appeal is taken: “It appears that on the day of March, 1894, P. W. B. Freeman, late probate judge of the county of Greenville, absconded,'having embezzled many thousand dollars of the funds in his hands as probate judge and public guardian. Very soon after his departure, his successor in office, John C. Bailey, instituted an action in the Court of Common Pleas for Greenville County, to recover of the bondsmen of the said Freeman the amount of their bonds. This action was entitled ‘The State, ex relatione, John C. Bailey, etc.’ Very soon after the institution of such action, these bondsmen, being the plaintiffs in this action, instituted their action against the said John C. Bai-ley, as probate judge and public guardian, etc., and against other parties to whom it was claimed that P. W. B. Freeman was indebted in his official capacity, ac
In the answer of John C. Bailey, as probate judge and public guardian, it was claimed that the note of D. P. Verner, now in the hands of Laura G. Bailey, was in fact an investment of money belonging to the Carrier children, and held by Freeman as public guardian. It was further claimed, that a note of $750, executed by Foster and Cunningham to A. J. Mosely, administrator, and subsequently assigned to P. W. B. Freeman, probate judge, was also a part of the estate of William G. Long, a lunatic, for whom Freeman had been appointed public guardian. The answers of Laura G. Bailey and the American Bank both deny that they were in possession of any notes belonging to the office of probate judge, or which belonged to John C. Bailey as public guardián. The answer of Mrs. Bailey, however, admits that she was in possession of the note of D. P. Verner, Esq., but claimed that she was a purchaser of same for value without notice of any of the equities of the Carrier children therein, if there were any such equities. The American Bank by its answer also admitted that it was in possession of the note of Foster and Cunningham, but denied that it had any knowledge of any of the equities of any one in said note, and claimed to be purchaser for value without notice.
From time to time in the progress of this case various orders have been made herein. Amongst the orders was one of date December 4th, 1895, made by his Honor, Judge Benet, ordering a payment of twenty-five per cent, out of the fund paid into the Court upon all claims established against the bond and for which the bond was liable. After this provision the following stipulation is inserted: ‘It is ordered, that all questions of costs and of the accountability of certain claimants for notes and bonds sought to be recovered in this action from Laura G. Bailey and American Bank are
At the time of the establishment of these claims for the Carrier children and for William G. Dong, the claim was asserted for them that they were entitled to respectively the notes of D. P. Verner and Foster and Cunningham in the hands of Mrs. Bailey and American Bank. The question as to this right of ownership and possession has never yet been determined, but at the July, 1896, term of Court an order was made by his Honor, Judge Townsend, referring it to John H. Earle, special referee, to take the testimony bearing upon these issues, and to report the same to this Court. In accordance with this order the testimony has been taken and reported to this Court, and upon that testimony the issue as to the right of ownership and possession of these notes is now before me.
The note of D. P. Verner is in the following form: ‘$525. One day after date, I promise to pay P. W. B. Freeman, probate judge, or order, $525, for value received, interest from date, this the 14th day of April, 1891. (Signed) D. P. Verner.’ Upon the note appears the following indorsement: ‘To secure a note given this day to Eaura G. Bailey, I deposit this as collateral security for $260. January 19th, 1892. (Signed) P. W. B. Freeman.’ The note of P. W. B. Free
The evidence is sufficient to authorize the findings, as
I also find, as matter of fact, from the evidence, that the note and mortgage of R. C. Foster and George W. Cunningham for $750, payable to A. J. Mosely, as administrator of Emily M. Bong, and by said administrator assigned to P. W. B. Freeman, as probate judge, and indorsed officially by Freeman, and delivered to the American Bank, was held by said Freeman as public guardian of William G. Bong, a lunatic.
I further find, as matter of fact, that P. W. B. Freeman hypothecated said notes to each of said parties for money loaned or advanced by said parties respectively, as collateral security for the individual note of P.W. B. Freeman to said parties for the amount so advanced or loaned. Each of said parties accepted the aforesaid securities after maturity. Under these circumstances, Mrs. Bailey and the American Bank claimed to be purchasers for value of the respective securities without notice that P. W. B. Freeman held said papers in any trust capacity. It does not appear that either Mrs. Bailey or the bank had any notice to put them upon their inquiry other than that appearing upon the face of the respective papers. They each answered that they had no other notice. They each claim to have derived title to said papers by the transfer and delivery of the papers by Freeman. The papers on their face show that Freeman acquired the papers, held as collateral by Mrs. Bailey and the bank, in his official capacity as probate judge. Mrs. Bailey and the bank each knew that they were dealing with Freeman as an individual, and were accepting papers after maturity, impressed on their face with the characteristics of a trust, as collateral security for the individual indebtedness of Freeman. If the collateral notes delivered by Freeman to either Mrs. Bailey or the bank were originally negotiable, they lost their negotiable character when trans
I conclude, as matter of law, that Mrs. Laura G. Bailey and the American Bank took respectively the notes and the mortgages above referred to, subject to all the equities binding upon their assignor, P. W. B. Freeman, and that they cannot claim protection as purchasers for value without notice. Whatever is sufficient to put a purchaser upon notice, that would lead to the discovery of a trust, is constructive notice. The fact that the Verner note was made payable to Freeman, as probate judge, and that the Foster and Cunningham note was assigned to Freeman, as probate judge, and by Freeman officially indorsed to the bank, it seems to me was sufficient to put Mrs. Bailey and the American Bank on inquiry as to the official capacity in which Freeman held said papers. The probate judge is ex officio public guardian. If such inquiry had been pursued, and the records of the probate judge’s office had been examined, it could have been discovered from the books of account of the probate judge, as public guardian, put in evidence, that the probate judge held the Verner note as public guardian of Eugenia Carrier and Henry Carrier. The note and mortgage of-Foster and Cunningham refer to the estate of Emily M. Long. A reference to the records in the probate office of the settlement of the estate of Emily M. Long, and to the books of account of the various estates, pp. 471 and 472, also introduced in evidence, would have indicated the capacity in which P. W. B. Freeman, as probate judge, held the note and mortgage of Foster and Cunningham as public guardian of William G. Long, a lunatic. Mrs. Laura G. Bailey and the American Bank not only failed to avail themselves of the notice furnished by the face of the papers, and the proper investigation naturally suggested by the paper
I conclude, as matter of law, that the defendant, John C. Bailey, successor in office of P. W. B. Freeman, as probate judge, is entitled to the Verner note, and the note and mortgage of Foster and Cunningham, as public guardian, of Eugenia Carrier and Henry Carrier, and the lunatic, W. G. Bong, respectively.
It is, therefore, ordered and adjudged, that the defendant, the American Bank, do deliver to John C. Bailey, probate judge, to be held by him as public guardian, the Foster and Cunningham note, above referred to, as part of the estate of the lunatic, W. G. Bong, and that the defendant, Mrs. Baura G. Bailey, do deliver to John C. Bailey, probate judge, the Verner note as aforesaid, to be held by him as public guardian as part of the estate of the minors, Eugenia Carrier and Henry Carrier. It is further ordered, that the defendants, the American Bank and Mrs. Baura G. Bailey, do each pay one-half of the costs incurred in the establishment-of the aforesaid securities as belonging to the estate of the said wards, William G. Bong, lunatic, and the minors, Eugenia Carrier and Henry Carrier.
“One other question arises for determination in this case: In all orders previously made in this case, the question as to whether or not the bondsman should be liable for the costs of the case, except such costs as are hereinbefore provided for, incident to the issues hereinbefore referred to, has been left open. The matter was submitted to me for
When the Verner and Cunningham and Foster notes are delivered to the public guardian, as aforesaid, the amount established by him against the bondsmen for the Carrier children and William G. Tong should be credited with the amounts of these notes. The parties to this action have leave then to apply to this Court for the orders necessary to equalize the dividends to be paid to the several claimants against Freeman’s bond. This question is, therefore, reserved for future consideration. December 30, 1896. I. D. Witherspoon, Presiding Judge, Eighth Circuit.”
The following are the exceptions to the said decree:
1. In not holding that the defendant, Taura G. Bailey, was an innocent purchaser without notice of the Verner note, and, therefore, entitled to the same. In this connection: Error in holding anything contrary to the above proposition.
2. In not holding that the defendant, the American Bank, was an innocent purchaser without notice of the Booster and Cunningham note and mortgage, and, therefore, entitled to the same. In this connection: Error in holding anything contrary to what should have been held as aforesaid.
4. In not ruling out all evidence going to show that the money of the Carrier children was invested in the Verner note, there being no evidence going to show that at the time of her purchase Mrs. Bailey knew of said fact.
5. In not ruling out all evidence going to show that money belonging to the estate of William G. Bong, the lunatic, was invested in the Foster and Cunningham note and mortgage, there being no evidence tending to show that at the time of the purchase thereof by the American Bank that said bank knew of said fact.
6. In holding that at the time of the establishment of these claims for the Carrier children and for Wm. G. Bong, the claim was asserted for them that they were entitled to respectively the note of D. P. Verner and Foster and Cunningham in the hands of Mrs. Bailey and the American Bank; there being no evidence to sustain this finding.
7. In holding that the Foster and Cunningham note and mortgage was delivered to the American Bank as security for a loan of $379.51, made by the American Bank, and for which Freeman executed his individual note; there being no evidence sufficient to sustain this finding.
8. In concluding, as a matter of fact, that the Foster and Cunningham note and mortgage claimed by the defendant, the American Bank, “was held by said Freeman as public guardian of William G. Bong, the lunatic;” there being no evidence competent as against the defendant, the American Bank, to sustain such finding.
9. In concluding, as a matter of fact, that the Verner note, claimed by the defendant, Baura G. Bailey, was held by said Freeman as public guardian of the minor children,
10. In holding that Freeman “hypothecated said notes to each of said parties for money loaned or advanced by said parties respectively as collateral security for the individual note of P. W. B. Freeman to said parties for the amount advanced or loaned;” such conclusion being as to the American Bank without evidence to sustain it. And as to Mrs. Bailey, the proof showing that the money was advanced by her to Freeman at the time the Verner note was assigned to her, and upon the express representation of Freeman that he wanted to use said money “in the settlement of an estate in his office.”
11. In holding that the papers upon their face show that Freeman “acquired them in his official capacity as public guardian;” there being in this State no law authorizing or requiring the probate judge to receive or hold in any trust capacity papers of the kind in question. And in this connection: Error in not holding that the words “probate judge” on the papers in question were mere descriptio persones.
12. In holding that Mrs. Bailey and the bank were dealing with Freeman as an individual, and were accepting papers after maturity impressed on their face with the characteristics of a trust as collateral security for the individual indebtedness of Freeman; these conclusions being without evidence to sustain them.
13. In holding that if the “notes delivered by Freeman to either Mrs. Bailey or the American Bank were originally negotiable, they lost their negotiable character when transferred after maturity.” And in this connection: Error in holding that under the decisions of this State, and particularly Patterson v. Rabb, 38 S. C., a negotiable note transferred or assigned after maturity is placed upon the same plane with an unnegotiable sealed note; which decision “does not come within the rule whereby equity will protect a purchaser without notice.” Appellants respectfully submit that the above rule is applicable alone to non-negotiable
14. In holding that the fact “that the Verner note was made payable to Freeman as probate judge, and that the Foster and Cunningham note was assigned to Freeman as probate judge, and by Freeman officially indorsed to the bank,” was sufficient to put said parties on inquiry. It being respectfully submitted that the Verner note was made payable to “Freeman, probate judge, or order;” thereby investing him not only with the legal title, but with the power to sell and transfer. That the Foster and Cunningham note was transferred before maturity by A. J. Mosely, administrator, to Freeman, probate judge, and there being no order of the Court at that time authorizing any transfer in his official capacity, the title of the American Bank to said paper would be good in the absence of express notice of outstanding equities, and no such notice was proven in this case. So, too, as to the title of Mrs. Bailey to the Verner note. Also, in this connection: Error in holding that the Verner note was made payable to Freeman “as” probate judge, and that the Foster and Cunningham note “as” probate judge, the word “as” not appearing on either paper.
15. In charging Mrs. Bailey or the American Bank with the duty of examining the private books of Freeman, which contained the statement of his accounts with the various estates in his charge, as public guardian, it being respectfully submitted that there is no law requiring such books to be kept, and, therefore, appellants are not bound with notice .of what they contained. In this connection: Error in holding that appellants had any notice, actual or constructive, of the equities of anybody in the papers in controversy at the time they took them.
16. In ordering that the American Bank and Mrs. Laura G. Bailey do each pay one-half of the costs incurred in the establishment of the aforesaid security as belonging to the estate of the said wards, William G. Long, lunatic, and the
17. In ordering and adjudging that the defendant, the American Bank, do deliver to John C. Bailey, probate judge, to be held by him as public guardian, the Foster and Cunningham note above referred to as part of the estate of the lunatic, W. G. Long. It being respectfully submitted that the American Bank was a bona fide purchaser of the said note and mortgage without notice of the rights of the said lunatic therein, arid is clothed with a legal title thereto and has equities superior to those of said lunatic therein, and, therefore, entitled to the possession thereof.
18. In adjudging that the defendant, Mrs. Eaura G. Bailey, do deliver to John C. Bailey, probate judge, the Verner note as aforesaid, to be held by him as public guardian as part of the estate of the minors, Eugenia Carrier and Henry Carrier. It being respectfully submitted that the defendant, Eaura G. Bailey, is a bona fide purchaser of said note without notice of the rights of the Carrier children therein, is clothed with a perfect legal title and has equities superior to those of said minors therein, and, therefore, entitled to the possession thereof.
The respondents’ attorneys served the following notice: “Take notice that if upon the hearing of this case the Supreme Court shall be unable to affirm the decision of his Honor, Judge I. D. Witherspoon, upon the grounds upon which the said decree is based, we shall move the said Court to sustain the same, in part at least, upon the following additional grounds: 1. That even if it be held that Eaura G. Bailey and the American Bank were bona fide purchasers for value of the Verner and the Foster and Cunningham notes, without any notice of the interest of the probate judge and public guardian therein as guardian respectively for the Carrier children and Wm. G. Eong, lunatic; and that, therefore, the said Eaura G. Bailey and American Bank are enti
Under the view which the Court takes of this case, many of the exceptions raise only abstract questions, which will not be considered.
The appellants’ attorneys admitted in the course of their argument that there were but two main qnestions raised by the exceptions, to wit: First. Were the appellants to whom the notes were transferred, purchasers for valuable consideration without notice? Second. Are the representatives of the Carrier children and Wm. G. Long estopped from pursuing the specific property claimed by the appellants by reason of the fact that they proved their claims against the bondsmen of Freeman for the full amount?
In considering the questions presented by the exceptions, we will adopt the arrangement under which they were argued by the appellants’ attorneys.
It is the judgment of this Court, that the judgment of the Circuit Court be affirmed.