53 Ark. 545 | Ark. | 1890
Mrs. Edrington was the widow of J. H. Edrington and sole executrix of his estate. At the time of her husband’s death he was the owner of two plantations, in Mississippi county, Arkansas, one of which was known as the P'ain place and the other as the Whitmore place. He executed a deed of trust upon these plantations in 1874 to-J. W. Jefferson, as trustee, to secure the payment of his fourteen notes payable to the trustee, amounting in the aggregate to $28,754.21, which were for the benefit of creditors whose names were not set out in a schedule. When this deed was executed, Edrington owed $10,000.00 on the Fain place for unpaid purchase money, and $8,000.00 on the Whitmore place on a mortgage executed by him in which his wife joined to relinquish dower. These liens were superior to the incumbrance created by the Jefferson deed of trust. After letters testamentary were granted to Mrs. Edrington, she paid off the first lien on each of the places, leaving the Jefferson deed of trust wholly unpaid. The debts secured by the prior liens were never probated against the estate; the creditors whose claims were secured by the Jefferson deed of trust caused their debts to be probated. The estate proved to be hopelessly insolvent. The question of first importance to the parties to this protracted litigation is, whether the liens prior to the Jefferson deed of trust have been discharged by the payment made by Mrs. Edrington, thereby letting in the second lien to be first paid; or, if that is not the state of the case, whether Mrs. Edrington’s representative or the administrator of her husband’s estate shall have the benefit of the first liens by subrogation.
Mrs. Edrington alleged in the cross-complaint whereby she sought to foreclose the first liens, that she had paid off the claims secured by them out of her own individual means; .and the administrator of her estate, in whose name the cause has been revived since her death, contends that she became subrogated to the rights of the prior incumbrances, and that he, as her representative, should be first paid, "fhe determination of ‘this contention involves first an examination of the facts as to whether Mrs. Edrington used her own money or that of the estate in paying off the incumbrances.
As to the lien on the Fain place: It was represented by the two notes of J. H. Edrington for $5,000.00 each. Mrs. Edrington paid them off through her commission merchants with whom she had deposited large sums of money raised by the sale of a crop of cotton gathered from the lands of her deceased husband. She had no funds in their hands derived from any other source, except the sum of $5,034.25 of her individual means. That amount, like all the other credits, was placed to her account as executrix by the commission merchants, and statements showing that the accounts were so kept were regularly rendered to her. The merchants advanced $5,000.00 to pay off the first note, and charged it to her account as executrix; a few weeks later they advanced the further sum of $5,000.00, with interest from the date of the negotiation, for the discharge of the second note, and charged the amount as before to' the executrix. The account was paid out of the assets before mentioned. Prima facie, this shows payment from the funds of the estate. To avoid that conclusion, Mrs. Edrington’s representative attempts to show that the sum of $5,034.05 of her individual means before referred to was-appropriated to the payment of the first note; that she was entitled to one-third of the funds of the estate absolutely as dower in personalty, and that out of that fund she discharged the second note.
The advances made by the merchants to discharge the notes were charged to the executrix on the 4th of January and the 3d of February, 1875, respectively. The credit of $5,034.05 of her individual means was made on the 16th of January of the same year. No instructions were ever given to the merchants to appropriate it to any particular purpose. It was paid to them through a draft payable to the widow by an insurance company, and was given in settlement of a policy on her husband’s life. The draft was delivered to the merchants a day or two before the credit was entered on their books; on the day before it was entered, the merchants paid a draft drawn on them by Mrs. Edrington for about $5,000.00 to discharge a lien upon property which she claimed as her separate estate; and, in a suit between her and creditors of her husband in regard to it, she filed an answer in the following June, while the transaction was yet fresh in her . memory, alleging that the amount had been paid out of her individual means. If the payment was not made out of the fund raised by the draft for $5,034.05, it is not clear how it could have been made out of her individual means at all; and, as there is no other explanation of the payment, we must regard Mrs. Edrington’s conduct in that suit as an election to appropriate that amount of the sum of $5,034.05 to the payment of that debt. She could not afterwards make a second appropriation of the same fund to the payment of another debt; and we must conclude that the draft for $5,034.05 did not go into the purchase of the notes.
The only pretense of payment of any other sum out of her individual means was that she was entitled to dower out of the estate in the hands of her merchants. But it does not appear that dower had then been set apart to her by the court, and she had no authority to appropriate the money of the estate to her own use until that was done. All the cotton of the estate had not been converted into cash at that time, and the full value of her dower interest in all the personalty did not amount to $10,000.00 — the price paid for the notes.
The administrator is trustee for the widow and creditors alike to the extent of their respective interests (Crowley v. Mellon, 52 Ark., 1); and,, where he wrongfully diverts the fund of either from its proper channel, to permit the injured party to lay claim to the rights of those whom the fund has relieved or to the new species of property into which it has. been converted, is but an application of the doctrine that equity will follow the trust fund into whatever form it assumes, so long as it can be traced and no superior equity in another intervenes. Appeal of Miskimins, 114 Pa. St., 530; Atkinson v. Ward, 47 Ark., 533; Humphreys v. Butler, 51 Ark., 351.
Now the Jefferson lien creditors have no equities superior to those of the general creditors of the estate whose funds have been traced into the first mortgage on the Fain place. To subrogate the latter to the rights of the first lien leaves the second lien only in the condition it was when it was taken. The position of the creditors under the Jefferson deed has not been altered by the conduct of the executrix, and they have no equity to assert against the subrogation.
We conclude that the administrator of J. H. Edrington’s estate is entitled to foreclose the first mortgage on the Fain place for the benefit of the general creditors of that estate.
Mrs. Edrington was not, therefore, a volunteer. Her equity is not affected by the fact that there was a second mortgage on the land in which she had joined to relinquish dower. She supposed that would be discharged by the estate of her husband, and so leave the land free. The second mortgagees are in no worse attitude than if she had not •redeemed the land from the first mortgage.
If she had been sui juris when the mortgage was exe- • cuted, the position would be tenable. If the land had been-her separate estate, the authorities cited by counsel opposed-to her interest would be in point as sustaining the same rule. But she was under the disability of coverture when the deed was executed, and had no interest in the land save the inchoate right of dower. The mortgagees under the Jefferson deed were apprised of these facts, and had actual knowledge, as well as constructive notice, of the prior incumbrance when, their deed was executed. They have not therefore been misled or deceived; and if that consideration could influence the determination of the question of estoppel when the disability of coverture, unrelieved by statute, is the defense, this case would be freed of it. The case stands then upon the covenants of a married woman in relation to her husband’s land. In that respect her common law disability remains, except in this: she is authorized to relinquish her' right of dower by a conveyance executed in accordance with the statute. She incurs no personal liability for a breach of such covenants, and they do not work an estoppel against her. Benton County v. Rutherford, 33 Ark., 640; Wood v. Terry, 30 Ark., 385; Bagley v. Fletcher, 44 Ark., 161; Bank of America v. Banks, 101 U. S., 240. As was said by Judge Dillon in Childs v. McChesney, 20 Iowa, 431: “While many authorities hold that a wife who conveys her own land with covenants of warranty will be estopped to set up a subsequent title, yet few, if any, of them hold that she is thus estopped where she unites in a conveyanee of her husband’s real estate, though she joins in a covenant.” S. C., 89 Am. Dec., 545 and authorities cited; Griffin v. Sheffield, 38 Miss., 392; Edwards v. Davenport, 20 Fed. Rep., 756.
Under our statute an after-acquired interest in land inures to the benefit of the grantee who holds by a deed without covenants of warranty, and the statute is applicable to conveyances by way of mortgage. Kline v. Ragland, 47 Ark., 111. The effect of the statute is to import into the body ■of the conveyances, as though written there, a provision to the effect that the grantor conveys all the estate he possesses at the time of conveyance, or which he may thereafter acquire. Clark v. Baker, 14 Cal., 630. But as the wife is only authorized to relinquish dower in her husband’s land, ■the latter provision as to the after-acquired interest in his .■land would be void as to her. Felkner v. Tighe, 39 Ark., 361. And as the express and implied covenants made by her with her husband in a conveyance of his land are nullities, the deed is no more than a release of her present interest in the land (Bagley v. Fletcher, 44 Ark., 161; Witter v. Biscoe, 13 Ark., 422), and would not for that reason carry an after-acquired interest. The statute has therefore no application to the case, and the deed does not operate to bar the right to enforce the mortgage.
But it is argued with much zeal that a court of equity •should decline to aid Mrs. Edrington for the reason that she did not render a faithful account as executrix to the probate court in the administration of the estate of her deceased husband. But, as we have before pointed out, we cannot look behind the items contained in the accounts which were confirmed, after exceptions to them were passed upon, to find the evidence of the frauds complained of. There must be an end to litigation, and the prior judgments upon the issues then as now involved are conclusive of the facts required to establish their truth. Confining our inquiry to the investigation of supposed frauds which were not involved in the settlement of the accounts about which the previous litigations were had, we are unable to fix the value of assets unaccounted for by the administratrix at more than $10,000.00. But that amount has been restored to the estate with accrued interest in the form of the first mortgage on the Fain place. The-beneficiaries under the Jefferson trust deed who have probated their claims against the estate are then in position to receive all that they were entitled to out of the diverted assets of the estate. The funds have been restored, and the fact of their once wrongful diversion alone remains. The wrong has thus been divested of its injury. The beneficiaries-under the Jefferson trust deed as such had no interest in the assets of the estate of J. H. Edrington. Their interest in the general assets of the estate arose only by reason of the probate of their claims. When the interest thus acquired in those assets is fully satisfied, they have no legal cause of complaint against the administratrix.
The right of subrogation which she invokes does not come through a breach of trust or other wrong committed by her, nor will any scheme of fraud be aided, or any injustice done to the second mortgagees, by permitting the doctrine to have operation. It is only in such cases that equity refuses its aid to those who show themselves otherwise entitled to it.
The representative of Mrs. Edrington is, therefore, entitled to the benefit of the first lien on the Whitmore place.
The established rule is that such a claim can be successfully asserted only by one who is a bona fide occupant, and to constitute such occupancy the statute requires that the-possession should be peaceable. But possession which is-contested by litigation is not peaceable. Suit for the possession is the highest evidence of hostility to the possessor’s-right. Fee v. Cowdry, 45 Ark., 419; Beard v. Dansby, 48 Ark., 187. Litigation adverse to Jefferson’s title was pending during the whole period of his possession. It is argued that he had no actual knowledge that his title was contested. The chancellor found otherwise, and the testimony sustains-the finding. Although not a party to the record, he had. been a party in interest from the inception of the litigation, and was actively concerned in the management prior to his-purchase at the supposed judicial sale. From time to time pending the suit and prior to the decree in the United States-court, he had purchased at a heavy discount from parties to the record a large majority in value of the debts secured by" the Jefferson trust deed, and, before any improvements were made upon the land, he had become practically the sole beneficiary under that instrument. The attorneys employed by Jefferson, the trustee, received their fee and retired from the litigation several years before the decree in the United States court, and the counsel previously employed by Jefferson, not the trustee, on behalf of the interest known as the Washington Insurance Co. claim, assumed control of his entire interest in the litigation. Before any improvements were made, Jefferson, not the trustee, took a conveyance of the interest acquired by McCombs at the supposed judicial sale, which recites that the appeal, which was afterwards prosecuted to a successful termination, had been prayed by the parties adverse to his interest; and it was expressly stipulated that Jefferson took McCombs’ interest subject to all the hazards of the appeal; and, as assurance against loss by the appeal, Jefferson took from McCombs an assignment of the secured claim controlled by him. There is nothing in the record to indicate that Jefferson ever entertained the belief that the appeal would be abandoned, or that there was any reason for such belief. His reliance was placed upon the advice of counsel to the effect that the appeal could not affect his title. But his adversaries continued to press the appeal, and the advice of counsel, upon whatever ground it was based, could not shield him against any of the consequences of the judgment rendered thereafter. Sedg. & Wait, Trial of Title to Land, sec. 695. There is no question of constructive notice of the facts material to his interest in the oase.'as Jefferson’s counsel argue. He had actual knowledge of the prayer for and of the perfected appeal, the object of which was to oust him under a superior right. He knew therefore that his title was contested; his possession was not peaceable and he was not a bona fide occupant within the meaning of the statute.
He is liable also to account to the receiver for the rents which he withdrew from the registry of the United States court. The money was rightfully in the hands of the receiver, and Jefferson wrongfully got possession of it. If it is essential to the interest of the prior lienors that the sum should be repaid by Jefferson to satisfy their demands, it should be repaid with interest for that purpose. But as it was received by him on account of his mortgage, which was due and is still unsatisfied, the parties other than the first lienors cannot complain if it remains as a credit on the interest due on his debt, and it should be so regarded until it is ascertained that it is necessary to resort to it to satisfy the earlier liens. The same is true of the rents due from Jefferson for the period the appeal was pending. As to all persons, save the receiver and those represented by him, it would be equitable to regard Jefferson in the light of a mortgagee in possession, in so far as the appropriation of the rents to the payment of his debts is concerned; and so to credit the gross sums to be charged against him on that score as of the time they became due. But if those sums are required to pay off the prior liens, then, as we have said with reference to the,money obtained from the receiver, it must be refunded; and proper orders may be made for that purpose in the cause when the occasion arises.
The receiver has regularly let the premises to Jefferson, not the trustee, from year to year, since the State court resumed jurisdiction of the cause. No rents have been paid by him, but security has been taken by the court for the payment. Jefferson should be charged with the amount due on that score with interest.
The cause will be referred to W. P. Campbell, as master, •to ascertain and report from the evidence in the record, (i) the value of the use of the plantations separately pending the appeal to the Supreme Court of the United States with interest for each year at the legal rate; (2) the credits to be allowed on this account for repairs, taxes, etc., on the basis before indicated; (3) a statement of the amount withdrawn from the hands of the receiver through the medium of the United States court with legal interest; (4) the amount due upon the Jefferson trust deed after crediting the net amount charged for rent and the amount withdrawn from the hands of the receiver as of the dates when the several credits were payable; (5) state Jefferson’s account with the -receiver for each plantation, separately as near as may be, for rents due since the State court resumed jurisdiction of the cause.
When the account is stated, Jefferson will be required to pay over forthwith the amount found due under the fifth direction made above, which will be applied toward the extinguishment of the first lien on the plantations, devoting the rent of the Fain place to the extinguishment of the prior lien on that place, and the rent of the Whitmore place to the prior lien thereon.
If the rent shall be insufficient to discharge either of them, the land will be sold to pay the residue and to satisfy the Jefferson trust deed. What remains from the rents or the sale of the land, after discharging the prior liens, will be applied to the extinguishment of the Jefferson trust deed. If in any event the prior liens are not paid in full, then Jefferson shall be required to refund the entire amount due by him from both sources, or as much thereof as is required to satisfy the prior liens.
Additional opinion after the Master’s report. Filed November 29, 1890.
The report of the master has been filed, in accordance with the directions contained in the opinion of the court. As no exception has been taken to it, it is regarded as correct, and will be confirmed.
It shows that the amount due October 1, 1890, on one-of the prior liens is $25,822.22, -and $20,600 on the other; that the amount due on the Jefferson trust deed is $65,855.77, which is the second lien on both plantations; and that the amount for which Jefferson, not the trustee, is chargeable after allowing proper credits is $54,969.64. As it appears that Jefferson, not the trustee, is the sole beneficiary under the' Jefferson deed of trust, if we pass to his credit the amount with which he is charged, it will still leave a balance due him of $10,886.13, and the land must be sold to pay the first liens and this amount. If, instead of crediting the amount in his hands upon the sum due him, he be required to discharge the first liens out of that amount, there will then be due him the sum of $57,308.35, for the payment of which the lands must be sold. It is evident therefore that a sale of the lands to discharge the liens is inevitable, whether Jefferson be required to pay into court the amount charged to him or not; unless the heirs or administrator of Edrington’s estate shall pay off all the liens. If the lands are of sufficient value to pay off the first liens, there is no hardship in requiring the creditors holding them to await the delay of a sale; while the other course would subject the lands or Jefferson to the expense, to say nothing of the harassment, incident to the payment of a large sum of money into the registry of the court, only to be paid back by an immediate-sale of the lands. It is urged that, as a portion of the amount due the administrator will be paid to Jefferson on his claims probated against the estate of Edrington, and will, to that extent, diminish his charge against the lands, he ought to be required thus to reduce his demand before the sale of the lands. But we are unwilling to undertake the distribution of the assets of the estate of Edrington. If it be conceded that it appears that the probate court has fully performed its functions, leaving nothing to be done except a distribution of the assets (see Reinhardt, Admr. v. Gartrell, 33 Ark., 727), it is apparent that there are tedious details connected with the distribution which the encumbered state of the docket of this court precludes the consideration of. It cannot be said, therefore, that the payment by Jefferson would accomplish what the representatives of the estate desire. If the proceeds of the sale prove insufficient to discharge the first liens, Jefferson must make good the deficit out of the funds in his hands, and the court, by appropriate orders, should require him to do so; otherwise it is not necessary to require of him the payment of any sum.
Further directions are necessary as to the proceeds of the mortgage to which Mrs. Edrington’s administrator has established the right to succeed. The record discloses that, in her third settlement in the probate court, she obtained credit against the estate of her husband for the full amount paid by her on each of the prior mortgages mentioned in the opinion of the court. It has been found that she paid off one of the mortgages from the funds of the estate and the other from her individual means. To take credit for the first was a fraud upon the estate, and all that she is entitled to will be restored if she is subrogated to the right she seeks to enforce here. Her settlements, as we have seen, were drawn in question in this litigation, not for the purpose of surcharging her account, but only to test her right to subrogation. We have found that she was entitled to subrogation, but, as a condition to the enjoyment of the fruits of that right, she, or her representatives for her, must do equity; and they will be required to enter a release upon the record to her husband’s administrator of all claim against the estate based upon the payment of the mortgages referred to.
The decree of the circuit court will be reversed, and the cause remanded with instructions to enter a decree establishing the liens upon the lands in the order, and upon the condition, specified in the opinion, and for the amounts found by the master; and, if the same are not paid, to cause the lands to be sold to satisfy them; if there is a deficit in the, payment of the prior liens, to cause Jefferson, not the trustee, to make it good out of the funds in his hands; if it should appear to the court that the Edrington estate is ripe for distribution, and that justice will be subserved by a distribution in equity, to proceed to distribute the fund going to Edrington’s administrator; otherwise, to remit the distribution to the probate court; and to take such other steps consistent •with the opinion and direction of this court as may seem ■proper.
Jefferson will pay the costs of the appeal and cross-appeal, except such as are incident to the reference to the master, which will be adjudged against the administrator of Edrington’s estate, and paid out of the fund to be recovered by ihim. *
