Jones v. Sherrard

22 N.C. 179 | N.C. | 1838

Thereupon Mardsden filed this bill against Sherrard, his wards, and the other heirs of Mrs. Radford, and against Radford, stating the foregoing facts, and that it was not the intention of any of the parties to discharge the land by substituting the personal responsibility of Radford and Mardsden, and that the land was not discharged from the said sums, but remained liable therefor, and the note was only additional and collateral security for the same, and prayed to be relieved against the note, and that the land might be declared to be the primary fund for the satisfaction of the sums for which the note was given; and further prayed that the mortgage might be foreclosed by a sale of Radford's life estate, and the proceeds applied to discharge whatever sum the plaintiff might be liable for on the note.

The answer of Radford admitted the statements of the bill and submitted to any decree.

The answer of Sherrard and of the heirs of Mrs. Radford submitted that there was a lien on the land for the sums assessed, to which the persons in whose favor those sums were charged might resort at their election, but were not compelled so to do, and admitting that it was not intended to extinguish the real security by taking the note, the answer yet insisted that the note was a voluntary collateral security given (181) by Radford which the guardian is at liberty to enforce, as being most to the advantage of his wards. The answer also stated the annual value of Mrs. Radford's dividend to be $75, and on that ground claims that the note might be enforced for the whole principal and interest. The principal questions discussed in this case are, whether the money to be paid to the owner of a dividend of inferior value, upon partition, is the personal debt of the owner of the more valuable dividend or is an encumbrance fixed on the land, and on the land alone. And if the latter, whether the land is yet primarily liable, notwithstanding the events subsequent to the partition.

The opinion delivered as that of the majority of the Court in Wynne v. Tunstall, 16 N.C. 23, however indistinct as to the precise grounds on which the decree was to be based, is explicit as to the meaning of the act of 1787, 1 Rev. Stat., ch. 85, sec. 1, upon the first of the foregoing points. The Court held the charge directed by the act to be "a legal charge upon the land," which rendered a knowledge of its existence by a purchaser immaterial; and also that by such a charge "the land was not a security only for the money, but was itself the debtor." It is true, the decision was not unanimous, and Henderson, J., dissented without giving his reasons. It is nearly certain, however, that he differed not on this point, but on others; on which the opinion must be admitted to be unsatisfactory, and the decree, in some respects, unquestionably erroneous. Besides the inquiry, whether the land was the debtor for the money charged, there were the other questions: first, whether the money charged was realty or personalty, as between the husband and wife, and as between them and the owner of the land, from which the money was to be raised; and, secondly, whether Tunstall was a purchaser without notice; and whether, as such, he would be protected. Now, it cannot be denied that the proposition there contended for on (182) behalf of the defendant has great force in it, namely, that an actual conversion of realty into money by judicial sale or sentence is, legally and equitably, a conversion out and out into personalty, unless there be a provision by statute, or a reservation by the decree or judgment, to the contrary. Many reasons are readily conceivable why the Legislature should not impart to small sums of money in this situation the character of land; and there is no plain intent to do so expressed in the act. Judge Henderson's difficulty may have been on this head. But, besides, the decree proceeds upon a declaration in it that Tunstall had notice, after the opinion had declined entering into that inquiry, upon the ground that it was immaterial. Above all, after holding the money to be land, and to be charged on the land as the debtor, the decree gives authority to the plaintiffs, at their election, to raise the money from the land or from the defendant and his sureties personally; and further directs it to be raised immediately and settled for the benefit of the wife, although Tunstall had the undoubted right to Wynne's interest as tenant by the curtesy, or at least during the lives of himself and his wife. It is thus obvious that Judge Henderson might not have concurred in that opinion for other reasons than a doubt whether a dividend of the land was the debtor for the money charged on it for equality. His own opinion in Gregory v. Hooker, 8 N.C. 394, shows that he entertained no such doubt; for he there held — whether right or not, is not a subject of consideration now — that without any statute, money payable, upon a division of slaves, out of one share to equalize the division, was secured upon the property. However open to observation, therefore, Wynne v. Tunstall may be in other respects, its authority cannot, we think, be denied on the question now under discussion, on which it uses the unequivocal language before quoted.

But without that guide, the language of the act of 1787, the provisions of other acts in pari materia, and the natural equity and reasonableness of the thing lead us to the conclusion that the money is a legal and adhering charge on the lands, and constitutes a debt of the realty exclusively.

(183)

The commissioners are empowered to charge the more valuable dividend with such sum as may be necessary to render the division equal; to be returned, with a description of the different parcels of land, lots, or houses. Those words per se seem sufficient to make the land the debtor. It is to be remembered that the debt is one of legal creation and regulation, entirely independent of any contract of the parties. Ordinarily such a debt is that of the realty and not of the terre-tenant personally. An instance is the descent of mortgaged premises to the heir, who enters into no covenant. Another is a judgment against the ancestor or statute merchant acknowledged, on which the land is subjected by scire facias to the heir and terre-tenant, on which there can be no judgment against those parties personally, but only for execution against the land descended from the debtor. In reference to the case before us, there is a plain propriety and equity that a part owner of the land, who does not get a full share of it, but is compelled by law to take money in lieu of the deficit of land, should have the most permanent security of the realty, and that security an absolute one. The personal responsibility of the party to whom the land is allotted could not be deemed adequate, especially when we advert to the circumstance that the payment is deferred for a year, and that in that time the land might be disposed of and the person out of jurisdiction. Nor should what is called an equitable lien be much more efficient, as a purchase without notice would free the estate from it. There seems, therefore, sufficient reasons why the Legislature should have meant to bind the land conclusively; and we are satisfied that in that sense is to be understood the charge on the land given by the act.

This construction is confirmed by the subsequent and supplemental acts. That of 1801, Rev., ch. 588 (see 1 Rev. Stat., ch. 85, sec. 34), is, in its preamble, demonstrative that, as then understood in the Legislature, the sum charged was not the personal debt of the infant, nor payable by his guardian out of any other property of the infant, but only out of the profits of the land. To avoid the necessity of a sale of the land itself, which would often arise from the state of the law, the act enlarges the time for payment until the infant's full age, and in the meantime authorizes and requires the guardian to make payment out of any assets of his ward, upon pain, in case of neglect, of answering the interest out of the guardian's own pocket.

The act of 1831, 1 Rev. Stat., ch. 85, secs. 12, 13, 14, for (184) partition of lands in this and other states, also uses the language of the act of 1787, that money may be charged on the more valuable dividend to be paid to the tenant in severalty of one less valuable, and then adds in express terms, "and the sum shall be a charge on the land into whose hands soever it may come, although it may be taken without notice." The same principle is thus seen to run throughout the statutes, which fix the debt on the land, and subject it to sale under venditioni exponas against one who was party to the partition, or against his alienee if made a party by scire facias, as in the other cases before alluded to.

It nearly follows from holding the land as debtor that it is the sole debtor. It is a general principle, where a sum of money is due in respect of land, and there is no contract of the terre-tenant, that the land alone is liable. Some examples have been already given. A rent charge granted for equality of partition is another. Co. Lit., 169; 1 Thomas Coke, 522, note. Of the same character seems to be the encumbrance created by our statutes. There is no stipulation by the party to make the debt his own. While the one may justly claim the land for his debtor as being generally the best security, the other may with equal justice require the former to be confined to the land and not to charge him personally for the money exacted by law, for land imposed on him without his consent. The act provides affirmatively that the land shall be liable. It is silent as to any judgment against the person except as to costs. If a personal liability has been intended, a clear provision to that end would not have been omitted. As a security for the money, a personal responsibility, instead of a liability of the land, is inadequate; and in addition to the liability of the land could not be necessary or right. A whole dividend must be supposed a sufficient security for a sum of money assessed on it, to reduce it to an equality with the other dividend. In cases in which it could be otherwise, the party entitled to the money ought to bear the loss. The land can never prove a deficient security unless from the act of God, an unforeseen accident, or (185) fall of prices. In such case it is hard enough upon the one party to have his own share of the land taken for the satisfaction of the sum assessed on it for a cotenant without being called on to make good a deficiency, the effect of an earthquake, a fire, or of national pecuniary distress. By buying the land for the money charged on it, the one party may get the whole share of the two in the realty. It is against reason and conscience to go beyond that, and endeavor to take also the other estate of the person to whom it was once supposed the more valuable dividend had been assigned, but which, in the event, proves to be in fact the less valuable.

Besides, the interests in estates held in common are not necessarily present interests; but there may, as to a particular share, be a life estate in one, with a remainder or reversion in another. In such case, how could the personal judgment be rendered — for what proportions and when payable?

The case of husband and wife, now before us, must also have been within the contemplation of the Legislature, who could not have overlooked the danger to her and the injustice to him of charging them personally by judgment in partition for this money as for a debt of the wife. The wife's inheritance is her separate estate, and in respect to it she and her husband are to many purposes regarded, even at law, as distinct persons. Lord Camden, indeed, uses the strong language that in a court of equity, in respect of money raised on the wife's land for the husband, they are looked upon as divorced pro hac vice. So it must upon principle also be quoad money paid by the husband in respect of burdens thrown by the law on the land of his wife without his concurrence. It is very right that each should be chargeable with the proportions which, upon settled principles, they respectively, as the terre-tenants, from time to time ought to pay in respect to the value of their several interests. But it would be contrary equally to legal analogies and natural justice to make the husband, by compulsion, the purchaser of inheritance for his wife and her heirs. On the other hand, there is a policy in (186) relieving the husband by holding the land liable before him, and so subject to reimburse to him money advanced upon an encumbrance on it; as otherwise it must be expected he would suffer the wife's land to be sold in every case for owelty of partition. It is true that he may so act, though the land be the primary fund, by refusing to make an advance of the money. But there will be less, and indeed little, danger of that if it be the husband's privilege, after answering the encumbrance, to keep it on foot for reimbursement at his death, either by the surviving wife or her heirs. It is, therefore, the true interest of the wife and of her heirs, as well as of the husband, that the debt should charge the land primarily.

The opinion of the Court also is that the land continues to be the primary debtor, at least for the principal money and future interest. The giving of the note did not exonerate the land. If Radford, instead of his wife, had been the owner, giving a note merely would not have that effect, for the note is looked on as collateral security only, and the makers as sureties for the land. Matheson v. Hardwicke, 2 Pr. Wms., 665, note; Basset v. Percival, 1 Cox, C. C., 268; Billinghurst v. Walker, 2 Bro. C. C., 604. It is much more clearly so when the husband gives his note for the debt of his wife's land, for it is difficult to suppose he intended to take the debt on himself as a gift from his wife and her heirs. The onus is therefore on those who allege the intention to give, and a plain indication of such intention ought to be very clearly shown. Although in such cases the creditor may proceed at law against the husband, yet the latter will be relieved in equity by having the money raised out of the land to discharge the judgment at law, or to reimburse the husband if he has already advanced the money. Baggot v. Oughton, 1 Pr. Wms., 347; Kinnoul v. Money, 3 Bro. C. C., 206 (better reported in 3 Swans, 202); Pitt v. Pitt, 1 Turn., 183.

It is not suggested by either party that the inheritance here is not of value sufficient to satisfy the whole money charged on it; and of course it is good for all that the note of the husband covers. In this particular case, too, the admission of the answer is that neither party intended to discharge the land; the heirs of the wife contending only that they have a right to raise the money on the note, as a subsisting (187) collateral security, although the charge on the land be merged by reason that the land has come in part to those who are entitled to the charge. This would be true if the two securities were independent of each other, for the loss of one security could not impair the other. But here the one is dependent upon the other. The land is the principal debtor, and the husband its surety; and if the creditor cannot raise the money, or if it be vain for him to raise the money from the principal, then the surety is discharged, also. Here it would be idle to enforce the note, since out of the land the heirs would be compelled immediately to restore the money. They can, therefore, only use the note as a security for such sum as their estate in the land would not be bound for to Radford, for which he ought personally to answer; and to that extent the note must be upheld as a valid and independent security.

What, then, is the extent of Radford's personal liability in this case? In the first place, it is to be observed that the terre-tenant of land, liable to encumbrance, must take care that such encumbrance does not accumulate to the injury of those who are to come after him. But then, in doing this he is not bound to give anything for the relief of the land but what is derived from the land. Therefore, one who is liable in respect of the occupation of land cannot be called on for more than the rents or actual annual value of the premises during his time. To that extent, it is clear a tenant for life must keep down the interest on encumbrances, and the reversioner may file a bill to make the rents amenable, and a receiver will be put upon the tenant for that purpose. Penrhyn v. Hughes, 5 Ves., 106. A dowress, for example, redeeming a mortgage, must allow the heir one-third of the interest. Banks v. Sutton, 2 Pr. Wms., 716; Monksford v. Bunbury, 2 Bro. C. C., 128 (Belts ed.); Corbett v. Barker, 3 Anstr., 759. But the arrear of interest which accrued during the life of the wife is not chargeable to the husband as a distinct item of interest after her death. During the coverture the husband is not in of any estate of his own, but he and she are in as (188) of the estate of the wife, the tenant in fee. Now, the owner of the fee may let the interest run in arrear at pleasure, and the whole will remain a charge on the estate, against which the heir has no equity to be relieved. Hence the husband of a mortgagor in fee is not obliged to keep down the interest during their joint lives. How, then, is that arrear of interest to be disposed of? It was held by the House of Lords in Ruscombe v. Hare, 6 Dow. P. C., 21, upon the opinion of Lord Eldon, that such arrear of interest must, upon the death of the wife, be turned into principal, so as to make the original principal and that interest together, the capital, on which the husband as tenant by the curtesy must keep down the interest. There seems, indeed, to be no other mode of dealing with arrear of interest, although it violates the general rule that interest shall not be paid on interest.

There must, therefore, be an inquiry as to the sums due for principal and interest at the death of Mrs. Radford, and Radford and the plaintiff declared liable for the interest since accrued thereon, provided the annual profits of the land be found equal thereto, as to which there must also be an inquiry.

Of course, Radford and the plaintiff will be liable for future interest up to the death of the former, unless they will surrender the life estate, in which case the other parties must settle the matter between themselves; or unless some of the parties require the proportion of the principal money to be ascertained, for which the life estate and the reversion would be respectively liable, if the whole debt were to be actually raised. The creditor may insist on calling in the debt; and generally, either the tenant for life or the remainderman may be unwilling to have the encumbrance kept outstanding; and in either case the party has, ordinarily, a right to a sale to raise the money. In case of a sale of the whole estate, what remains after discharging that part of the encumbrance for which the land was liable would be invested and the interest paid to the tenant for life. But as the charge and a part of the reversion have here come to the same hands, it would be unreasonable to sell the land out and out.

The encumbrance, so far as respects the plaintiff and Radford, is (189) already discharged to the extent to which the reversion is liable; and between the heirs themselves, being all defendants, the Court cannot decree in this suit. The encumbrance is, therefore, substantially subsisting so far only as the life estate is liable, or the plaintiff and Radford responsible in respect of the life estate. On those parties or that estate ought, therefore, to be assessed a due proportion of the debt.

Formerly, that was rated at one-third, and the reversion in fee at two-thirds, as a proper average by way of general rule. Ballet v. Spranger, Pr. Ch., 62; Verney v. Verney, 1 Ves., 428, Amb., 88. But the payment of a gross sum or any arbitrary proportion must be unjust in many cases; and therefore that rule has more recently been disallowed. It is now usually referred to the master to inquire what proportion of the capital the life estate ought to pay, regard being had to the rate and amount of interest, the annual value of the land, and the age, state of health and habits of the tenant for life, estimated upon the principle of life annuities. Penrhyn v. Hughes, 5 Ves., 106; Allen v. Backhouse, 2 Ves. and Bea., 70; Neimeewicz v. Gahn, 3 Paige, 652.

There must accordingly be a reference of that kind here, unless the parties should make arrangements that may render the inquiry unnecessary. Such an arrangement is deemed probable, since neither party has made any specific motion on this part of the case; and the heirs of Mrs. Radford ought to be willing to accept a surrender of the life estate and give up future interest, as they say the annual value is greater than the interest, while the other parties ought to be willing to make such surrender, as they say the interest exceeds the income. But after the opinions here declared, should there still be no arrangement between the parties, then, for the sum that may be ascertained as the just proportion of the life estate, that estate must be sold. If it bring less than the sum, the creditors must of course lose the difference, as the highest bid is the best criterion of value, and they can look only to the land for the principal money. If it bring more, the surplus will go to the indemnity of the plaintiff, as mortgagee, for his liability or payment of interest heretofore accrued, and anything over will belong to Radford, as tenant for life and mortgagor.

This is not a case for costs to either party, up to this point in it. (190)

PER CURIAM. Decree accordingly.

Cited: Atkins v. Kron, 43 N.C. 4; Blount v. Hawkins,57 N.C. 164; Young v. Trustees, 62 N.C. 265; Ruffin v. Cox, 71 N.C. 256; Pullen v. Mining Co., ibid., 565; Dobbin v. Rex, 106 N.C. 447; Meyers v. Rice, 107 N.C. 28; In re Walker, ibid., 344.