22 Miss. 30 | Miss. | 1850
delivered the opinion of the court.
This appellant filed her bill in the vice-chancery court, to enforce her mortgage lien on certain slaves in the hands of the defendant, Silas F. Trotter. From a very complicated case, we shall extract such facts as seem to be necessary to a correct understanding of our conclusion.
It seems that the defendant, Joseph Trotter, a resident of Tennessee, was indebted to the complainant, a resident of Virginia, in about the sum of $27,000, on a debt that had been contracted with complainant’s husband in his lifetime. Trotter was also largely indebted to other persons. He held a plantation, containing one thousand seven hundred and sixty acres of land, in the Parish of Caddo, Louisiana, on which he had near sixty slaves. On the 5th of May, 1841, he duly mortgaged this property to secure the following debts, then existing, to wit: the sum of $ L0,000 to the heirs of G. W. Mayers of Alabama; the sum of $22,000 to F. W. and T. Boyd of Virginia, and also $10,000 to Kuhman, Abernethy and Hanna, of New Orleans. On the 22d day of May, 1841, he mortgaged the same property to complainant to secure her debt. It seems that he had also made a prior mortgage in favor of Miles S. Watkins. The bill alleges that the debts in the first mortgage mentioned were nearly paid off by the latter part of the year 1845, and it seems to be establised that the balance then due Watkins was $3058, and to Boyd $4,000. Watkins had procured an order of seizure under his mortgage in June, 1845, but no sale seems to have
First, in regard to'the evidences of fraud in fact, which, if it exist, may affect the rights of the parties to it in a manner different from the effect of a mere constructive fraud. Here we must examine the particular circumstances which have been relied on as evidence of such fraud. It is charged in the bill, that Joseph Trotter conceived the scheme of fraud early in 1845, and procured the cooperation of other creditors, and of his son Silas F. also. A proposition to compromise with complainant, by giving certain property, is relied on as entitled to much weight, inasmuch as by it complainant was induced to believe her claim would be settled in 1846, and misled or thrown off her guard as respected the necessity of pressing her claim. This proposition was made in a written communication to Pearsall, a joint debtor with Trotter, in order that it might be laid before Mrs. White’s agent, which was done. But it was not accepted, nor was any definite answer given.' White’s reply was, that he would see Pearsall again on the subject, or write to him. This was in October, 1845. On the 28th January, 1846, Thomas W. White, the agent of Mrs. White, the complainant, wrote to Joseph Trotter, from. Huntsville, informing him (Trotter) that he was then at leisure, and would be pleased if a time of meeting, either in New Orleans, or on Red River, could be appointed, “for the purpose of making a settlement, and carrying out something of the views proposed by you to me, through our friend Mr. Pearsall, last fall.” Then it seems a reply to the proposition for compromise was delayed several months, and when it was made, it was not an acceptance of the terms, but only for a settlement in which might be carried out “ something of the views proposed.” Trotter was not bound to wait an indefinite period for an answer to his proposition.
In the next place, we come to consider of the confession of judgment by Trotter in favor of P. D. Mayers as tutrix or guardian. This circumstance is not entirely free from grounds of suspicion, it is true, but still of itself was not fraudulent as to complainant: it did not postpone her lien, nor did it give Mrs. Mayers a preference, as she already held a prior mortgage, and was therefore entitled to preference. The judgment was not necessary as to the mortgaged property, because the mortgagee was entitled to have the mortgage foreclosed, by the law of Louisiana, by order of seizure and sale. By the judgment, however, a preference was obtained as to certain property on the plantation, work-horses, farming utensils, &c., not covered by the mortgage. But there is no complaint that Mrs. Mayers’ debt was not a just one; the confession of judgment was, therefore, not of itself fraudulent, and the particular circumstances attending the confession of judgment are not shown. Then, in the next place, áre we authorized to conclude that there was fraud from the circumstances, attending the levy of the execution and the sale? The judgment was confessed on the 29th of November, 1845; execution issued on the 2d of December, and was levied on the same or the next day. This, to be sure, indicated haste on the part of some one, still it may have been all right. The defendant in execution was entitled to three days’ notice of the levy before the property was advertised; this notice he waived, but Crain says this was done at his instance, as he wished to press the sale, in order that he might not be detained a month longer from going to New Orleans. It manifested a willingness to accommodate not very common with
Another circumstance relied on, as evidence of fraud, is the
We have thus noticed the material circumstances of the case; they are of themselves not inconsistent with entire fairness; and if the complainant had been fully cognizant of the proceeding, manifestly there would be no solid ground of complaint. But it is mainly on her ignorance of the proceeding that the charge of fraud is rested. Without fault in her, this could not have been so. She, it seems, had an agent in New Orleans, and that agent says that Joseph Trotter had promised to let him knew if proceedings should be instituted for the sale of the property. When •this promise was made, does not appear, nor does it appear how much reliance was placed upon it. It is a circumstance, to be sure, which tends to show a secret design, but not sufficient to sustain the charge.
For the law of this case, we are referred to articles 1973 and 1979 of the civil code. These articles seem to refer to mere contracts between individuals, and furnish nothing very satisfactory as applicable to the present case. The last article provides that contracts shall be deemed fraudulent as to creditors, when the obligee knows that the obligor is in insolvent circumstances, and when such contract gives to the obligee, if he be a creditor, an advantage over other creditors. The case of Bandac v. His Creditors, cited from 4 La. Rep. 247, was a decision based on article 1979. It was a contest between a mortgagee and other creditors who had been postponed. It decides that a debtor, in a failing or insolvent condition, cannot give a preference to a creditor who takes the security, knowing the obligor to be insolvent or unable to pay his debt, but it must be clearly shown that the preferred creditor knew the fact of insolvency. The case of Ingham v. Thomas, 6 La. Rep. 83, but reiterates the same principles. The cases moreover decided that article 1979 establishes a rule of presumption, which makes contracts so entered into,
• Second, was there a fraud in law? On this point it will be only necessary to notice a single feature of the case; the position which Silas F. Trotter occupied with regard to the debtor and creditor, and the property pledged. First, he was attorney in fact for the debtor, who lived in Tennessee. His authority or power of attorney was very comprehensive, and he levied on and mortgaged the plantation in Louisiana. In the next place, he was attorney in fact for the creditor, Mrs. Mayers, acting under an authority which invested him with full power to do any thing and every thing in securing or in collecting her debt, and he also wished to become purchaser, and actually did so. He was acting in a threefold capacity, —for the debtor, for the creditor, and for himself. For the debtor, he was bound to make the property, if it should be sold, bring as much as possible, and he was under the same obligation towards the creditor, but for himself he was interested in getting it as low as possible. The law decides which interest preponderates, and on that account imposes its check, and declares purchases made by a person so situated, fraudulent in law. It will not permit any one to make a profit, or have the opportunity of doing so, in consequence of the confidence reposed in him. One of the chief heads’ of constructive frauds includes those cases which arise from some peculiar confidential relation, existing between the parties, or out of some fiduciary capacity; and the principle upon which courts of equity act in such cases is one of public policy. It is the surest means of protecting the unwary, and of guarding against
Jeremy, in speaking of this rule in its application to trustees, says, “But it being considered that no court of justice is equal to the full investigation of the truth, or capable of avoiding deception in all cases of this kind, this court will not affect to sift into the motives of the parties in every such instance, or to ascertain whether the transaction is morally right; but seeing that if a trustee were permitted to purchase in an honest case, he might do so in one having that appearance, but which, were it not for the infirmity of human testimony, or falsehood, would appear to be grossly otherwise, it has thought fit to lay down a general rule on the subject.” He says this rule applies to attorneys, executors and administrators, agents, commissioners in bankruptcy, and in all cases where confidence is reposed, and one party has it in his power, in a secret manner, for his own advantage, to sacrifice those interests which he is in conscience bound to support. Jeremy’s Equity, 395. It was applied by Chancellor Kent to the case of a trustee, in Green v. Winter, 1 John. Ch. Rep. 26, and to the case of an agent in Parkist v. Alexander, Ib. 394. It was not necessary in such cases to prove that the purchaser made a profit, or that loss resulted to the other parties; the law acts on a general principle of public policy. In the application of this rule, it is proper that we should not state it too broadly as to all cases. It would seem that it has sometimes been regarded as a rule of prohibition, and in other instances only as a rule of presumption, or 'prima facie evidence of fraud. Thus, in reference to a trustee, Jeremy says, “It in a manner
This doctrine, in its application to purchases by assignees, under a commission of bankruptcy, was very much considered by Lord Eldon, in several cases. In Ex parte James, 8 Vesey, 337, he says, “ This doctrine, as to purchases by trustees, assignees, and persons having a confidential character, stands much more upon general principles than upon any individual case. It rests upon this: that the purchase is not permitted in any case, however honest the circumstances; the general interests of justice requiring it to be destroyed in every instance, as no court is equal to the examination and ascertainment of the truth in much the greater number of cases.” • In a similar case, the same distinguished lord chancellor extended the doctrine still further A person, desiring to purchase part of a bankrupt’s estate, desired one who was his attorney and also his banker, t'b bid for him, as he could not be present; the attorney replied that he was solicitor for the commissioners, and could not therefore do so; thereupon he was requested to engage some other person to bid; at the sale, he spoke to one of the commissioners to bid, who did so
The next question is, Can one who occupies the place of a mere creditor, set aside this purchase? On this point we cannot doubt. If the sale was void as to the debtor and the creditor, it was so as to complainant, a mortgagee of the property. She had a direct interest in the subject of the purchase. Nor does it make any difference that this sale was made under execution. Trimble v. Turner, 13 S. & M. 348. The sales of commissioners in bankruptcy, are public, and made in obedience to law, and to such cases we have seen the doctrine applies.
It is scarcely necessary to say any thing as to the proceeding by monition, as it does not cure defects in sales which are vicious by the acts of the parties.
It only remains to settle the principles of the decree. Ordinarily, in cases at law, the party must lose all advantages gained by fraud, as well as the money that may have been paid by him. Stovall v. Farmers and Merchants' Bank of Memphis, 8 S. & M. 305. But this rule does not apply in equity, where the party seeking to set aside a purchase, has been benefited by the discharge of incumbrances, or the payment of debts. Walker v. Brungard, 13 S. & M. 723; Grant v. Lloyd, 12 Ib. 191.
On this principle it is an easy matter to adjust the rights of the parties. The purchase was invalid as to the property. The property was valued, and Trotter purchased at two thirds of the value. If he has discharged the prior mortgage to that extent, to wit, the amount paid by him on the particular property which may be in this state, he is entitled to be reimbursed. He must pay hire for the negroes, and will be allowed interest not to exceed the amount of the hire. The complainant will be entitled to the balance, produced by a sale of the property, and an account must be taken. /
Judgment reversed, and cause remanded.
Mr. Anderson filed a petition for a re-argument, on the ground that it nowhere appeared in proof in the case, what was the law of Louisiana, on the point upon which the case turned. That the sale took place in that state, and if fraudulent in law, and not in fact, as had been determined, it must have been so by laws of that state; a circumstance which could only be shown by proof; of which he insisted there was none in the record; but the question bad been adjudged upon a principle of equity, prevailing in this state, and in England; and having no application, so far as appeared, in Louisiana.
The petition was refused.