Montgomery v. Givhan

24 Ala. 568 | Ala. | 1854

CHILTON, J.

We have given to the record in this case a laborious examination, and proceed to state, as briefly as we can, the conclusions we have attained.

1. It is very clear, that the voluntary deed executed by the testator, and which, since his death, has been set aside by the Court of Chancery in South Carolina, can have no legitimate influence upon the decision of this cause ; first, for the reason, that both the executor and the legatees undér the will seem uniformly to have regarded it as inoperative; and, secondly, the bill proceeds under the will for distribution, and not under the deed, and the executor admits the receipt of certain property belonging to the estate, and which is embraced in the deed, in his capacity as executor, and his liability to account as such, but insists that the complainant has received her full share. As neither party insists upon the deed, we will lay that out of view, and proceed to ascertain the rights of the parties irrespective of it.

2. It is conceded, that the testator, Job P. Givhan,., made his will, by which, after making certain dispositions of portions of bis property, he directed that the balance of his estate, both real and personal, should be “ divided, in equal parts, among his eight children.” The complainant is one of his children, and entitled to share an interest of one-eighth in the estate. It appears, that Richard Appleby first qualified as executor of the will, the said George Givhan being then under age ; that several judgments were rendered against him as executor, and that Appleby treated the deed, which disposed of the testator’s slaves, and which was executed prior to the will, as passing the property. One of the creditors thereupon filed a bill in equity, and the deed was declared fraudulent and void as to pre-existing debts ; and the commissioner was ordered to take an account of the debts due from the estate, and to seize upon sufficient of the assets embraced in the deed for their satisfaction. The cause having been removed from the Charleston to the Colleton District, the commissioner of the Colleton District proceeded to state the account, ascertaining the sums due to the creditors, and to seize upon and sell divers slaves belonging to said estate.

At said sale, the defendant, Givhan, who was then one of the executor’s, purchased divers of the slaves ; and the first question we propose to notice, is, whether this purchase is to enure to his individual benefit, or is to be considered a purchase for the benefit of the estate. The bill charges him with having procured the sale, and with having purchased with the means, and for the benefit, of the estate. In response to such allega ■ tions, the defendant states, that by the decree of the Chancery Court, setting aside the deed, it was decreed that the assets of the estate should be placed in the hands of the commissioner of said court, and that the commissioner should proceed to sell so much thereof as should be necessary to pay and satisfy the debts of the estate ; that in pursuance of said order, the commissioner proceeded to sell thirty-seven of the slaves ; that he does not recollect the amount of the debts, but avers that no money was left after paying the demands against the estate ; that these thirty-seven slaves were all that belonged to the estate, except nine which the respondent had before that time brought to the State of Alabama. He denies that he received any portion of the proceeds of the sale, and says that he had nothing to do with the sales, or settlements. He admits that he purchased the following slaves, at the sales made by the commissioner, viz., Morris, Venus, Frank, Plenty, Scipio, Ellick, Sarah, and her two children George and Phibby ; also Peggy, Linda, and Sam; that he paid cash for Sam, and may have raised the money which purchased him from a sale of the cotton made in Alabama with the negroes brought to this State; but in making this arrangement, he left debts due from the estate unpaid, which required him to pay out his individual funds in their extinguishment, to an amount greater than that used by him from the proceeds of the crop ; that Sam died in less than a year after his purchase ; that Peggy died in about three years after her pm chase, and Scipio in about four years thereafter; that as to the other slaves purchased by him, he paid for them out of the proceeds derived from the sale of town lots in Hayneville, two or three hundred dollars in the sale cf horses and other individual property, besides some means which he borrowed, and the proceeds of cotton crops raised by nine hands, which he and his two brothers had, and of nineteen working hands, which he had in his possession during the years 1836 and 1837, of the estate of one Drury Fort, of which estate he was administrator. He denies that one dollar of money belonging to the estate, or arising from crops made by hands belonging to the estate of J. P. Givhan, was paid ; but on the contrary, insists, that there were but five of said nine slaves capable of working, and that the proceeds of their labor did not support the children of the said Job.

The defendant also avers in his answer, that, upon his purchase at the commissioner’s sale, which was made at.Charleston, the Hamiltons agreed to extend the time of payment, and to give him a receipt for the amount of his bid against so much of their claim. The amount thus receipted was $1500, for which he gave his note to the said Hamiltons. The other portion of the slaves were purchased at Waterborough ; and for the amount bid by him, it was agreed that the Hamiltons should indulge him, upon his executing a mortgage upon the slaves, and giving his bond for the amount, being about §1400; which mortgage and bond, it seems, were afterwards assigned to the Hamiltons, by the commissioner, in payment of their debt against the estate. These papers, together with a transcript of the proceedings in equity in South Carolina, appear in the record before us.

From the report of the master it appears, that the total amount of debts proved before him, embracing the demand due the Hamiltons, was $7565 45. The amount of the proceeds of the sales appears by the record to be §8012 50 ; thus leaving a balance of §447 05 as overplus, after paying the debts. To this sum should be added the price at which the slave Sam was afterwards sold, being $300, which makes the overplus, after paying the amount of the indebtedness of the estate as disclosed by the record, the sum of $747 05. What disposition, if any, was made of this sum, the record does not inform us.

Conceding that an administrator, or an executor, with an interest, may purchase at a sale made of the goods of the estate which he represents, if the sale is conducted fairly and openly, as has been several times decided by this court; still, we think, there are circumstances connected with the sale and purchase of these eleven slaves by George Givhan, which show, beyond a reasonable doubt, that he concluded the purchase for the benefit of the estate, and not on his individual account. We do not propose to comment upon tne voluminous testimony of the numerous witnesses who have been examined, and which with much care we have sifted, but merely upon the leading facts in the cause which have led us to this conclusion.

In the first place, the record of the chancery proceedings in the State of South Carolina, presents the claim of the defendant in no very favorable light. It seems, by the proceedings had in that State, that, although the assets of the estate of Job P. Givhan were more than sufficient to pay all the debts due from it, still, expensive measures were resorted to unnecessarily to affect their adjustment. Instead of the executor’s selling sufficient of the property to pay the debts, and distributing the residue as required by the will, the debts remain unpaid, and the creditors are driven to their bill, and the estate put to all the expense consequent upon a protracted suit in equity. It may be replied, that the mismanagement of Appleby, and not of Givhan, caused this litigation. There is no doubt, that the misconduct of the former originated it; but it is equally clear, that the defendant, Givhan, contributed to its continuance, at least in respect of the property which he purchased. He was qualified as executor in November, 1827, and in the same year was made a party to the bill, before the cause was transferred from the Charleston to the Colleton District, at which time only seven of the slaves had been sold, which brought $1115. He had, previous to that time, and before the commencement of the chancery suit, removed a portion of the slaves to this State; which circumstance the chancellor in South Carolina (Dessaussure) regarded as creating just suspicion against the parties, and which, no doubt, had its influence in the question of costs which were taxed against the estate, as well as in originating the proceedings. On the 14th May, 1828, the decree was rendered in the case of Hester A. Forde, subjecting the property embraced in the voluntary deed to the payment of her demand-It will be observed, that hers was not a creditor’s bill; she only prayed relief for an amount which, she alleged, was due her from the testator, and for which the bill sought an account. Three days after the decree in her favor, a decree was rendered, by the consent of the parties, that the commissioner in equity for Colleton District should “ immediately proceed to seize as many of the negroes included in the voluntary deed, as may be sufficient to satisfy the demands of the creditors entitled to payment,” &c. ; and he was further ordered to sell the same and retain the proceeds in his hands, until he could advertise for the creditors of the estate to come in and prove their demands before him; after which he was ordered to marshal the assets, and to pay over the funds in his hands to such of the creditors as should prove their demands, according to their legal priorities.

In obedience to this last decree, the commissioner of Colleton seized seventeen slaves, and sold them for $4,830, from which he deducted expenses (say $135 86). This, added to the net proceeds of the sale of the seven slaves ($1,108 36), makes $5,802 50. Now, the amount of debts, exclusive of the demand of F. & M. Hamilton, embracing cost and interest, with the commissioner’s fee for disbursements, was $4,576 35 ; leaving a balance of $1,226 25 in the hands of the register. It does not appear when the sale of these seventeen slaves was made ; but it must have taken place between the time when the decree which authorized it was rendered, and the confirmation of the master’s report, which was the 22d day of January, 1829. At this sale, George Givhan became the purchaser of only three of the slaves, viz., Frank, Morris, and Venus, which he bid off at $1,230. The master, in the report which gives an account of the sales, states, “ that upon investigating the account of George Givhan, as one of the executors of Job P. Givhan, it appears that he has paid, on account of the estate, part of the demand

of F. & M. Hamilton, $1,500 00

Other small charges, 25 00

Commissions at 2* pr. cent., 38 12

Making in the aggregate, $1,563 12;

and has received nothing; whereby the estate is indebted to him in this amount. But as a claim by him to be paid out of the assets of the estate in hand, to the exclusion of any other creditors, would lead to many intricate investigations ; and as there are assets of this estate which will probably be recovered, the said George is willing to seek payment from them, leaving the funds in hand to the creditors here. It is therefore recommended, that the amount of $1,563 12 be decreed to be paid him by the estate of his said testator.”

If this report correctly sets forth the facts of the case as they there existed, the conclusion irresistibly follows, that the $1500 receipt taken by George Givhan from the Hamiltons, in part for their debt against the estate of Job P. Givhan, was not received by the commissioner in equity in payment of the three slaves above named, as sold by him to said George ; and further, that the arrangement made with the Hamiltons, at least so far as regarded the $1500 receipt, was for the benefit of the estate, which thereby became debtor to the said George, for the sum thus paid, or agreed to be paid, and for which he was then, as the record recites, willing to seek payment from the other assets of the estate. If we exclude from the debts to be paid out of the proceeds of the seventeen slaves this $1500, and allow the remainder of the claim of Hamilton with the costs, which amounted to $1,525 58, the amount of said sale only fell short of paying the entire indebtedness of the estate proved before the commissioner, by the sum of $194 83. It appears, however, by another report, that the commissioner proceeded on the 2d day of February, 1829, to sell nine other slaves, eight of which were purchased by said George Givhan for $1,910, and one by a stranger at the price of $300; and here the record closes, without giving us any further information as to what disposition was made of the proceeds-

The sale to the stranger for $300, was sufficient to have paid the remainder of the debt, and have left say $100 to meet the costs of the suit. It is manifest, then, that the eight slaves were sold for the benefit of George Givhan, to pay him the sum upon which he had procured indulgence from the Hamiltons ; for, as to the demand insisted upon by H. T. Crumpton, that was rejected by the commissioner, as constituting no charge against the estate; the note upon which the judgment was rendered, having been executed by Applebly, and there being no proof that the estate was in any way bound for its payment.

The question then comes up, was it competent for George Givhan to avaikhimself of this demand, which he assumed to pay to the Hamiltons, to sell the assets of the estate under this general order of the Court of Chancery, which was made by consent, and to acquire a good title to the property in opposition to the estate 1 It will be remembered, that he paid no money upon the purchase of these eleven slaves; and the Hamiltons, of whom he obtained an extension of the time of payment, expressly state that the indulgence was granted for the benefit of the estate. Moses Hamilton swears, that the defendant, George Givhan, told him, at the time the indulgence was granted, “ that his motive was to get time, in order to work the pi’operty to the best advantage to pay the debt, so as to enable him to save the property for the benefit of the estate.” Frederick Hamilton, who then resided in this State, deposes, that said George wrote to him, and stated, that if he would consent to the indulgence, and permit him to bring the slaves into this State, where he could have fresh and rich land to cultivate, it would enable him to work the slaves and pay this debt, without the property being sacrificed ; and that the arrangement was made wholly for the benefit of the estate. Under these circumstances, we feel constrained to pronounce that the purchase at the commissioner’s sale, did not vest in the said executor a title which he can successfully urge in opposition to the estate.

The general rule, applicable to all such cases, is, that a trustee is never permitted to make any profit to himself in any of the concerns of his tsust.—Docker v. Somes, 2 Myl. & Keene 664; 1 Story’s Eq. § 465. “A trustee,” says Judge Story, “is bound not to do anything which can place him in a condition inconsistent with the interest of the trust, or which has a tendency to interfere with his duty in discharging it; and this doctrine applies, not only to trustees strictly so called, hut to other persons standing in like situation,” &c. He also adds, that executors or administrators will not be permitted, under any circumstances, to derive a personal benefit from the manner in which they transact the business, or manage the assets of the estate. — lb. § 322. The rule is well settled, that an administrator, or an executor, is not permitted to purchase up the debts of the deceased on his own account; but whatever of advantage is thus derived by him, by purchases at an under value, is for the common benefit of the estate. — Ib. This rule is not founded upon the supposition, that there is always, in such cases, something morally wrong, but upon the policy of the law, withholding inducements to peculation and fraud— thus shielding the party from temptation.

In Ex parte Lacey, 6 Ves. 426, Lord Eldon, speaking of the purchase by an assignee, of the debts of a bankrupt, and of his estate, says . “ In that respect, there is no difference between assignees and executors, who cannot, for their own benefit, buy the debts of the creditors. I do not say there may not be cases of that kind, in which, in a moral view, the transaction between the executor and the creditor may not be blameable; but the court must act upon general principles.— Unless the policy of the law makes it impossible for them to do anything for their own benefit, it is impossible to see in what cases the transaction is morally right.” In Ex parte James, 8 Ves. 337, the same learned Chancellor said, “An executor cannot buy for his own benefit debts due from the testator’s estate. Any stranger may; but the executor is bound to do his best for the estate.” In Van Horne v. Fonda, 5 Johns. Ch. R. 388 (408), it was held, that an executor had no right or power to extinguish a mortgage or other debts for his own benefit, or to traffic with the estate for his own emolument: that he cannot be permitted to raise in himself an interest opposite to that of the party for whom he acts.' —See, also, Tebbs v. Carpenter, 1 Madd. Rep. 300; Forbes v. Ross, 2 Bro. Ch. R. 403.

So in purchases by a trustee, other than executors or administrators with an interest, of the trust effects, it has been several times held by this court, that the cestui que trust can have the sale set aside by timely application to a court of equity.—Saltmarsh v. Beene, 4 Port. 283-293; McKinley v. Irvine, 13 Ala. 681; Cunningham v. Rodgers, 14 ib. 147; Harrison, adm’r, v. Mock et al., 16 ib. 616. In Harrison and Gardner, adm’rs, v. Mock, 10 Ala. 185, it was held, that where a trustee, after the acceptance of the trust, caused a sale of part of the trust property to be made under execution for his own benefit, and became himself the purchaser, he would be considered as having purchased in his character of trustee, for the benefit of those concerned in the trust.

On the other hand, as respects executors and administrators, as we before said, the doctrine of this court as first settled in Brannan v. Oliver, 2 Stew. R. 47, and explained in Saltmarsh v. Beene, 4 Porter 283, and affirmed in McLane v. Spence, 6 Ala. 894, is, that where they have an interest in the property purchased, they may conclude the purchase for their own benefit; provided there is no unfairness, and the property is exposed to sale in the usual and ordinary mode, and under such circumstances as will command the best price. The case before us does not come within these decisions of our court. Here the property was not sold in the ordinary mode : a bill is filed for the ascertainment and payment of one debt, which, by consent, is invested with the properties of a creditor’s bill; and the assets, instead of being duly administered upon and sold in the ordinary mode for the satisfaction of the debts, are turned over to the commissioner in equity, who makes a forced sale. The executor avails himself of an indulgence or credit given to the estate, to become the purchaser of the property. Upon $1500 of that sum he is allowed two and a half per cent, as executor for making the payment for the estate, and then avails himself of the debt, as though no indulgence had been given or payment made, to purchase in the property, as upon a cash sale. To hold that suoh purchase would vest in him a title to these slaves, in opposition to the estate, would be to extend the doctrine asserted in Brannan v. Oliver, and to fritter away a most salutary rule, conceived in the profoundest wisdom; which is, that the beneficial arrangements made by an executor of an estate, with the creditors thereof, shall enure not to him individually, but to the common benefit of the estate. — 1 Story’s Eq. (4 ed.) § 322, p. 348, and the authorities cited in note 4; 2 Hen. & Munf. 245; 1 Dess. 150.

If, however, we were mistaken in the application of this rule of equity to this case, we are, in the second place, very clearly of opinion, that there is a strong preponderance of the proof in favor of the proposition that these eleven slaves were purchased by George Givhan for the benefit of the estate. The two notes given by George Givhan to the Hamiltons, for the $1500, were executed by him as executor of his father’s estate. He was allowed commissions of two and a half per cent, upon the same, as so much paid by him for the estate. In addition to his repeated declarations, at various times, that he had bid in the property for the estate, and his recital of the fact in the mortgage given to the Bank, he told ,P. R. Appleby, at the time of the sale, “ that he was bidding in said slaves for the benefit of the estate, and that he was to work the property to the best advantage, to pay the debts and save the property for the estate.” This testimony, connected with the evidence-of the Hamiltons, above alluded to, and the proof of Geo. Givhan’s admissions, made by the witnesses W. Givhan, Wm. Crenshaw, H. M. Phillips, E- Marven and others ; as also with the fact, that at the time of the purchase, and for several years thereafter, said George had no property of his own ; and with the further fact, that the bills of sale for the slaves, and the mortgage given by him to the commissioner, were not executed until more than a year after the purchase : all these considerations impel us to conclude, that, whatever may have been his intention after he had bid off the eleven slaves, at the time of the purchase he designed them, and bid them off, for the benefit of the estate of which he was the executor; and he must be regarded as holding them in that capacity, and liable to account for them as assets of said estate.

In respect to the payment for these slaves, we think the allegations of the bill are unsustained by evidence. The proof on this point is wholly insufficient to overcome the positive averment in the defendant’s answer, in response to the bill, that not one dollar belonging to the estate was used in making the payment ; and while the defendant must be held to account for the slaves, and their reasonable hire, or the profits of their labor, if such can be ascertained, he is entitled to have an account of the money he paid out for the estate, which will be allowed him with interest from the payment thereof.

But it is insisted, that this shows a variance between the proof and allegations of the bill, and that upon chis ground the relief should be denied. We do not think the objection can be sustained. The gravamen of the bill is for an account against the executor, who is charged to have in his possession, and to be liable for, certain assets belonging to the estate; and these eleven slaves are charged to constitute a portion of those assets. The bill charges that they were purchased with the funds of the estate. This, we find, is not proved; still, they are assets, and the plaintiff’s right to have the executor account for them is sufficiently made out; and this is substantially the right claimed by the bill. That the defendant, instead of the estate, paid the demands under which, it is alleged, they were sold, does not show a title to relief variant from that set up, but is important only upon the accounting, as affecting the amount to be recovered. That the executor paid for the slaves with the funds of the estate, is only one of several reasons assigned by the bill why they should be regarded as assets. The allegation may, therefore, well be rejected, and the plaintiff’s title remain the same. — See Gresley’s Eq.Ev. lJO, et seq.; 2 Dan. Ch. Pr. 1000-1-2.

In respect of the profits arising upon a sale of the Hayneville lots, and the proceeds or profits of the land in South Carolina, on which was located the ferry, as also the ten slaves purchased of Scott, we are distinctly informed by the record, that at the hearing of the cause in the court below, the solicitor for the complainant abandoned all claim for them. When an admission is thus made, which obviates the necessity of introducing proof in the court below, to rebut the plaintiff’s claim, it cannot be withdrawn in this court, so as to render a decree irregular, made in conformity with such admission. Further, “ if the fact is admitted by the attorney, on the record, with the intent to obviate the necessity of proving it, he must be supposed to have authority for this purpose, and his client will be bound by the admission.” — Gres. Eq. Ev. 39. But, laying the admission of the solicitor out of view, we agree with the Chancellor, in the opinion that the complainant is not shown by the proof to be entitled to a decree on account of these items. It is true, that some declarations of the defendant are proved, which tend to establish the contrary ; but they are not sufficient to overcome the positive denials of the answer, which, in respect to two of the items, is very fully sustained by the proof. Neither is it satisfactorily shown that the executor has used the funds of the estate in the purchase of other property. On the contrary, it pretty satisfactorily appears, that the purchases were made with the means and moneys of the defendant, arising from the sale of his Hayneville town lots, and other accruing sources of income, which are set forth in the answer.

The conclusion which results from these inquiries, is, that the defendant, George Givhan, should be chargeable with, and should account for, not only the nine slaves which he brought from the State of South Carolina, and their increase, together with the annual profiits arising from their labor, as also for the five thousand dollars for which the lands belonging to the estate situate in Lowndes County were sold, and the interest on the same (which is the decree rendered by the Chancellor) 5 but he should also be decreed to account, as executor, for the twelve slaves purchased by him in South Carolina, together with their increase and the annual profits of their labor. These items must be regarded as composing the estate of Job P. Givhan, for which the defendant as executor should be held responsible, deducting the expenses of such as could render no service, and crediting him for such of them as have died.

It remains to consider, what portion of the complainant’s share of the estate she has received, and what credits should be allowed the executor upon the accounting. And, first, we are clearly of opinion, that he ought to be allowed all reasonable charges for boarding, clothing, and expenses incurred in educating the complainant; and although such expenses should exceed the interest or annual profits arising upon the complainant’s share, still, if they were under the circumstances necessary, and such as a Court of Chancery would have decreed, they should be allowed. — Clay’s Dig. 268 ; Stewart, guardian, v. Lewis, 16 Ala. 734. On the other hand, if the complainant, while residing with the said executor, who was also htr guardian, performed services for him, she is entitled to set-off the value of these services against this Remand for board, &c., as far as it may go.

In the next place, we think the executor should be allowed for the board of tho said complainant and her husband, and for the keep of their horses, so far as these items are shown to exist by the proof and were not intended as gratuitous. We think it hut a reasonable inference from their continuing to board with the defendant after the marriage, as the complainant bad done before (the defen lant having in his hands the share of the estate to which they were entitled), that it was understood between the parties the price of the board should be charged to the effects in the hands of the executor, in the absence of any agreement that the same should be otherwise settled ; and that the disallowance of such item, now that the husband is insolvent, would be inequitable and unjust. If, however,, the-5husband of the complainant contributed provisions and the like, which were consumed by the family, or the wife rendered services, these should be allowed.

In the third place, we think the three negro slaves which were turned over by the executor to the complainant and her husband, should be considered a payment to the extent of their value at the time of the delivery, and . allowed the executor upon accounting. It is shown that they have continued in possession of complainant and her husband, down to the time of the exhibition of her bill. In the mean time, the husband has become insolvent, and has availed himself of the benefit of the bankrupt law. It is not shown that he now asserts any claim to these three slaves, or that his marital rights have attached to them. They may, then, be considered as subject to the wife’s equity, as property belonging to the estate, since they are in possession oí herself and husband, and the latter assents by his answer to the claim of complainant to have her share of the estate settled upon her, and no proposal is made by either of them to return the slaves to the estate, or to account for their hire. . While she shall receive, she must do equity, and the slaves being retained by her, she should be charged with them.

With respect to the indebtedness of R. B. Montgomery to the executor, both for the town lot sold, and moneys' loaned or paid out for him, which dealings had no reference to the estate of the wife in the hands of the executor, and were not designed to be credited to that fund, we think it very clear from the authorities, that the complainant’s right to a settlement remains unaffected by it. We had occasion to examine this question in the case of Savage, adm’r, v. Benham, at the present term ; and we there held, that where the husband of a legatee receives money from the executor, not as husband in payment of the legacy, but under a contract to refund the same, the wife’s equity remained unimpaired. With this decision we are satisfied ; and as it is decisive of this point, it is needless to add more upon it. If, upon the accounting, it should turn out that the portion of the estate which belongs to the wife, to-wit: one’ eighth, should be more than adequate to the decent support of herself and children, and Robert B. Montgomery should be indebted to the executor after balancing the accounts between them, the executor should be allowed to retain the balance due him, after making a suitable settlement upon the wife.

That the executor has made a settlement with another of the legatees, by which the latter may have recovered and received less than was actually due, does not entitle the complainant to receive more than her appropriate share.— She is entitled to her share as though no settlement had been made with any of the others. If too little has been paid, it is the moral duty of the executor to pay the remainder, if it cannot be enforced by judicial interposition; and for aught that this court can know, the proceedings determining the amount of the executor’s liability may yet be opened, and the proper amount decreed. Be this as it may, we do not feel justified in taking the share properly belonging to one distributee and conferring it upon another.

It results from the views which we have taken, that the Chancellor both mistook the facts and misconceived the law in his decree. It must consequently be reversed, and the cause must be remanded, that the matters of account, &c., may be referred, and a final decree rendered in conformity with the priciples above laid down.

Note by the Reporter.' — This opinion was pronounced at the November term, 1849, but has never been reported.