Geigers v. Kaigler

| S.C. | Nov 15, 1877

The opinion of the Court was delivered by

McIver, A. J.

This action' was brought to foreclose a mortgage of real estate given by the defendant to Alexander Geiger as executor of Henry J. Geiger, to secure the payment of the purchase money of a tract of land sold and conveyed by said Alexander Geiger, as executor as aforesaid, to the defendant. The plaintiffs are the heirs-at-law and devisees of Henry J. Geiger, and one of them, John A. Geiger, is likewise the administrator de bonis non, with the will annexed, of said Henry J. Geiger, he having taken out such letters after the death of said Alexander Geiger as well as after the death of one Inabinet, to whom letters of administration de bonis non upon the estate of Henry J. Geiger had been originally granted. The defense set up was, that by an agreement entered into between the defendant and the plaintiff, John A. Geiger, as administrator de bonis non of Henry J. Geiger, who then, as now in this action, claimed to be the legal owner and holder of the mortgage, together with the bond which it was given to secure, the defendant was to surrender to the said John A. Geiger, as administrator as aforesaid, full possession of the premises, with all improvements thereon, and reconvey the same to him, and he, the said John A. Geiger, as such administrator, was to cancel and return to the said defendant the said bond and mortgages fully satisfied; that, in pursuance of such agreement, the defendant immediately surrendered possession of the premises to said John A. Geiger, and that he has ever since held possession of the same, receiving the rents and profits thereof, and that the only reason why the settlement was not completely carried out was that the attorney of the former administrator, (Inabinet,) who had possession of the bonds and mortgage, refused to deliver them up until administration was taken out upon the estate of Inabinet. The plaintiffs denied the making of any such agreement, and also took the ground that, even were such agreement established, it could not have the effect, claimed for it, of barring the action of the plaintiffs. The Circuit Judge, having heard the case upon the pleadings and evidence and argument of counsel, decided as matter of fact:

1st. That the agreement as set up by the defendant was made, and that, “in pursuance of this agreement, the said administrator was let into possession of the said premises, and assumed, and has ever since exercised, an exclusive control over the same, receiving the rents and profits of the land and dealing with it in all respects as the owner.

2d-, That the defendant has always been ready and willing to complete the performance of the agreement upon his part, and that it was the fault of the said administrator that the agreement was not perfected by the legal conveyance of the land and the satisfaction of the bond and mortgage.

3d. That the agreement was made in good faith on both sides and was, “ under all the circumstances, a fair and most reasonable settlement,” or, as he says in another part of his decree, “ that, under the circumstances, the settlement was so fair and reasonable that the Court would have sanctioned it had the administrator applied there for authority.”

He then finds as matter of law, “ that the plaintiffs are bound in equity by the settlement,” and concludes his decree with an order: “ That the plaintiffs have leave to apply at the foot of this decree for all necessary orders to carry it into effect by the foreclosure of the mortgage set forth in the complaint and the sale of the mortgaged premises; but that the said defendant be, and he is hereby, adjudged to be discharged and released from all personal liability upon the said bonds, which must be marked fully satisfied upon the sale;” and then directed that the plaintiffs pay all the costs of the action.

In conformity with the well-settled rule, this Court will not interfere with the findings of fact by the Circuit Judge unless where such findings are without any evidence to support them or against the overbearing weight of the evidence. Without entering into any discussion of the testimony, it is sufficient for us to say that we are unable to perceive any ground upon which the findings of the Circuit Judge can, under the rule above stated, be interfered with. We shall, therefore, in the further discussion of this case, assume the correctness of the facts as found by the Court below. It will be observed that this is not a case in which a party is seeking by an action to enforce the specific performance of an agreement, but the defendant is here simply invoking as a defense in bar of the plaintiffs’ action the agreement hereinbefore stated. Upon.the well-established principle that he who seeks equity must first do equity, the Court should not lend its aid in the enforcement of a claim which, though not technically discharged, ought to be by virtue of a previous agreement between the parties. This would involve the esercise of the power of the Court to enforce that which in equity and good conscience ought not to be done, and the Court will not so exercise its powers. There can be no doubt that if the agreement to satisfy the mortgage and cancel the bonds, followed up by a surrender of the mortgaged premises to the mortgagee, in pursuance of such agreement, had been a transaction between two parties acting in their own right, the defense here set up would have been complete and effectual. The only question, then,'remaining is whether an administrator could make such an agreement in reference to a chose in action belonging to his intestate’s estate with like effect. This involves the general question whether an administrator has a right to compromise a claim which constitutes a portion of the assets of his intestate.

The question as presented here cannot be affected by the provisions of the statute as has been supposed, (Gen. Stat., Chap. XC, § 9, p. 458,) for two reasons: 1. Because that statute is, by its very terms, merely permissive. It merely authorizes a compromise in certain specified cases and does not purport either to establish a general rule or to prohibit compromises in any other cases. 2. The case now before the Court does not come within any of the specified cases. The demands referred to there are such as would be appraised — that is, such as were in existence at the time of the death of the intestate and those which arose subsequent to his death; for example, notes taken at the sale of the estate by the administrator cannot be brought within the terms of the statute. Here the bonds and mortgage were taken subsequent to the death of Henry J. Geiger, and were payable to his executor and not to him, and would not, therefore, be appraised as a part of his estate. The question must, therefore, be determined upon the general principles regulating the rights and duties incident to the office of an administrator. We are, however, saved the necessity of inquiring into these principles by express adjudications of the Court of last resort, which, in our judgment, finally settle the question.

In Bacot vs. Heyward, (5 S. C., 441,) a cestui que trust attempted to set up a judgment which had been compromised by the trustee without his knowledge or acquiescence, and the act of the trustee in making the compromise was sustained upon the ground that it was such a compromise as the Court would have authorized if it had been previously applied for. Moses, C. J., in delivering the'opinion of the Court, uses this language: “It cannot be questioned that as a general right, incident to his office, a trustee has no power to compromise a debt on behalf of his cestui que trust. ***** While, however, the general right is withheld, its denial is subject to conditions and exceptions which qualify the rule. If the Court which is asked to vacate it finds from an examination of the circumstances under which it was made that its sanction to the trustee if previously applied for would have been accorded, it will recognize it as an act consistent with the principles and doctrines which it enforces and sustain it.”

It is very true that these remarks were made in reference to a trustee, strictly so called, but we see no reason why they are not equally applicable to an executor or administrator, who is certainly a trustee; or as Inglis, in Rhame vs. Lewis, (13 Rich. Eq., 292,) in speaking of the tenure by which an administrator holds the assets of his intestate, says: “He holds the title not in any wise for his own use and benefit, but wholly for the uses of the office as the means wherewith to fulfill its duties. * * * * His estate is, therefore, according to the strictest definition of a special trust.”

The case of Smith vs. Prothro, (2 S. C., 391,) furnishes an instance in which the same principle was applied to the ease of an administrator. Indeed, the various cases in which this Court, as well as the late Court of Appeals, have sanctioned the acts of administrators and trustees in accepting Confederate treasury notes in satisfaction of bonds secured by mortgages of real estate must necessarily ultimately rest upon this principle, for such notes never acquired the legal attributes of money, they never having been made a legal tender even by the authorities of the Confederate Government; and, therefore, when the holder of a claim accepted satisfaction of it in anything other than money, it was to that extent a compromise, — a yielding of legal right, — for certainly every creditor has the right to have his claim paid in money, and he is not bound to accept anything else in satisfaction of it; and if he does, he, to that extent, compromises or yields his legal rights. The case, therefore, resolved itself into a question of fact whether the arrangement between the administrator and the defendant was such as the Court would, if previously applied to, have sanctioned. This question having been determined by the Circuit Court in favor of the defendant, must, as we have above stated, be regarded here as conclusively settled.

There is another view which maybe taken of this ease. Assuming, as has been done by the Circuit Judge, and as contended for here by the appellants, that John A. Geiger, as administrator de bonis non of Henry J. Geiger, was the legal owner and holder of the bonds secured by the mortgage, it is difficult to understand why he could not and did not bring the action as sole plaintiff We are unable to perceive the necessity or propriety of uniting with him, as co-plaintiffs, the heirs and devisees. The reasons suggested for such a course, though quite ingenious, do not strike us as satisfactory. Suppose, then, the action had been brought in the name of the administrator alone, could it for a moment have been doubted that the agreement, partially performed, as it was found to be by the Circuit Judge, on the part of the defendant, would have been a bar to the plaintiff’s action ? Certainly, then, the addition of unnecessary, not to say improper, parties plaintiff cannot be allowed to change the result. The Court is not unmindful of the right of parties interested in an estate, upon a proper case made, to set aside an arrangement made between an executor or administrator and a debtor of the estate for the settlement or satisfaction of the debt without actual payment, as, for example, in the ease of Thomas vs. Gage & Johnson, (Harp. Eq., 197,) where an insolvent administrator, by collusion with the debtor, accepted satisfaction of a judgment in favor of the estate against such debtor in a receipt for an individual debt due by the administrator to the debtor, or in any other case where the transaction amounts to a breach of trust, in which the debtor of the estate knowingly participates. But in such a case it is necessary to allege and prove fraud or collusion between the administrator and the debtor. This, however, is not such a case, for there is no such allegation and no such proof. In Mayer vs. Mordecai, (1 S. C., 380,) an effort was made by a cestui que trust not merely to hold the trustee liable, but also to set up certain bonds and mortgages, in satisfaction of which the trustee had received Confederate treasury notes, worth at the time, in the market, much less than the bonds and mortgages. But the Court, while holding the act of the trustee to be a breach of trust, for which he was liable, refused to set up the bonds and mortgages as against the original debtors, upon the ground that there was no proof of any fraud or collusion upon their part. Now, in that case the debtors knew that the trustee was not only receiving, in satisfaction of their bonds and mortgages, something that was not money, but something that was of less value than such bonds and mortgages, just as in this case the defendant knew that the administrator was agreeing to receive in satisfaction of the mortgage something that was not money, but whether of greater or less value in the market does not appear from the evidence, there being no testimony as to whether defendant was solvent or insolvent at the time the agreement was made, and if insolvent it must have been at least of equal value, for in such case the administrator could get no more than what he did get — the land. So that if the absence of fraud and collusion in the one ease be a protection, it must likewise be in the other.

As is said by the late Court of Appeals in Austin vs. Kinsman, (13 Rich. Eq., 265,) “ a creditor, though entitled to demand payment in lawful money, may waive his right and accept any substitute he pleases, and his voluntary acceptance of such substitute as payment makes it so or, as is said by the law Court in Bush vs. Kilcrease, (1 Strob., 419,) in which the question was whether the Ordinary could accept a bond of third persons in satisfaction of a bond given by defendant to secure the purchase money of laud sold for partition: “It cannot be questioned that the Ordinary who receives a bond for the payment of the purchase money of lands directed by him to be sold for partition may collect the money and thus discharge the bond, or he may, for aught that appears to the Court, throw the instrument into the fire; and if he may do the one or the other, it is not perceived why he may not receive satisfaction for it in another bond, in a bill of exchange, or in any manner by which such a debt is extinguished, as other parties.’’ So that it would seem to be the rule of law that if the legal owner and holder of a chose in action, in consideration of something other, than money, acknowledges satisfaction, the claim is absolutely extinguished.

This rule, however, like most others, is subject to this qualification : that where such legal owner holds the chose in action not merely in his own right but for the benefit of others, and accepts in satisfaction of it anything other than money, such claim may, at the instance of the parties beneficially interested in it, be set up against the debtor, provided it can be shown that there was fraud or collusion between the debtor and such legal owner and holder of the chose in action. The decree of the Circuit Judge, however, in ordering a sale under the mortgage, after having determined that the mortgage was extinguished, was erroneous and must to that extent be set aside. But as the conclusion reached by the Circuit Judge as to the effect of the defense set up is sustained by this Court, the action cannot be sustained.

It is, therefore, ordered that so much of the decree of the Circuit Judge as provides for a sale of the mortgaged premises be set aside and that the complaint be dismissed.

Willard, C. J., and Kershaw, acting A. J., concurred.