Gaston, Judge, after stating the case as above set forth, proceeded as follows: ^ *s manifest, we think, from an examination of the act of 1785, referred to in the answer, that the creditors thereby intended to be protected are the creditors of the husband, recited in the preamble is, that marriage settlements and other contracts constituting charges or incum-brances upon the estates of husbands — binding the estates hLls':)ancls” — have been made and kept secret, and that the “ possessors” upon the credit of the property not’ known to be encumbered, “ upon the credit of their apparent property have been enabled to contract debts to the deception and . . . r injury of their creditors. The creditors contemplated in the preamble are, exclusively and evidently, those of the husband. The enactment contained in the 1st section is not so explicit as taken per se, to leave no room for dispute, whether the creditors therein mentioned be those of the husband, or of the wife or both. It requires that all marriage settlements and contracts whereby any money or other estate shall be secured to the wife or husband, shall be registered within a prescribed time, “ or be void against creditors.” But when the *47 section is regarded in connexion with the preamble, and the enactment in the second section, there is little room to douht whose creditors were here contemplated. The second section which directly bears upon the question before us — for the registration of the articles within the tim…
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SMITH v. GAREY,22 N.C. 42(1838)
A. B. AND H. D. SMITH v. RHODERICK B. GAREY.
Supreme Court of North Carolina
Where the slaves of a feme sole were, upon her marriage, agreed to be settled upon the intended husband for life, and in default of issue subject to a power of appointment in the wife by writing in the nature of a will, and the wife died having made an appointment, and an executor, and a creditor of hers obtained one judgment against the husband for her debt, and another judgment for a different debt against her executor, and at the sheriff's sale first purchased the interest of the husband under the judgment against him, and then that of the wife under the judgment against her executor, he has, in equity, only an estate for the life of the husband, and as the amount which he bid for that extinguishes pro tanto the first debt, he cannot hold the slaves against the voluntary appointee of the wife until it is paid. But he has a right to hold the slaves as a security for the latter judgment, because under it he got nothing.
PLAINTIFFS set forth in the bill that in 1817 Sarah Smith, their mother, and then the widow of Etheldred Smith, being about to contract another marriage with Leonard Purdy, certain marriage articles werePage 41drawn up and executed between them, by which it was declared that after the marriage the said Leonard should be entitled to the use and possession of the land and slaves of the said Sarah during his life, and that the said Sarah should have power, should she die without issue of that marriage, to give and bequeath the said slaves to whom she pleased; that the contemplated marriage, shortly after the execution of these articles, took effect, and the articles were duly proved and registered; that the said Sarah died in December, 1819, without having had issue by the said Purdy, leaving the said Purdy her surviving, and having duly made and published a will, or writing in the nature of a will, whereby in execution of the power reserved by the said articles, she bequeathed certain of the said slaves to the plaintiffs in absolute property, share and share alike, and the residue thereof to Rebecca, the wife of the defendant Roderick B. Garey, for life, with the remainder to her children, and that at March Term, 1820, of NORTHAMPTON County Court, this will, or writing in the nature of a will, was duly (43) proved as such, and William B. Lockhart, the executor therein named, qualified thereto, and took upon himself the execution thereof. The plaintiffs further set forth that in October, 1817, the defendant was duly appointed guardian of the plaintiffs, who were then infants; that the plaintiff Absolem came of age in 1822, and the plaintiff Henry in 1824; that Leonard Purdy died in 1832, upon which event they became entitled to the enjoyment of the slaves bequeathed to them by the last will, or writing in the nature of a will, executed by their mother in pursuance of the power reserved in her marriage articles; that the said slaves before the death of Purdy came to the possession of the defendant, and were yet held by him as having been purchased at an execution sale as the property of Purdy in 1821; that the plaintiffs had applied to the defendant and required of him the surrender of the said slaves to them, and to account for their hire and profits since the death of Purdy, which application had been rejected by the defendant, who set up an absolute title to the said slaves upon several grounds which the bill impeached as unfounded and pretended. The prayer was for a discovery of the names and ages of the negroes, a delivery of them, and an account of hire and profit.
The answer of the defendant admitted all the charges in the bill above stated, and then set forth several distinct grounds of defense upon which he repelled the claim advanced against him. In the first place, the defendant alleged that before the marriage of the mother of the plaintiffs with Leonard Purdy she had been administratrix of the estate of her late husband, Etheldred Smith, and the guardian of the plaintiffs; that she was largely indebted to the estate of Etheldred Smith, and to other persons as administratrix of the said Etheldred, and also on her ownPage 42personal account; particularly, that she was indebted as administratrix to the defendant and his wife, of whom the said Etheldred had been guardian, in the sum of $1,800, and was personally indebted to the defendant in the sum of $600; that the debts of the said Sarah at (44) the time of executing the said articles and of her marriage with the said Purdy exceeded the amount of her whole estate and that of the said Purdy; and therefore the defendant insisted that the said marriage articles as a settlement were within the equity of the act of 1785 entitled "An act directing that marriage settlements, and other marriage contracts, shall be registered, and for preventing injuries to creditors", and were void as against creditors, and should be so declared against the defendant; and the defendant averred that the fact of the debts of the said Purdy and the said Sarah at the time of their marriage exceeding their entire ability, has been manifested by the subsequent insolvency of the said Purdy. The defendant further sets forth in his answer that the said Sarah being indebted as administratrix of Etheldred Smith unto the defendant and his wife in a large amount because of the mismanagement of the said Etheldred, who had been guardian to the defendant's wife, the defendant and his wife, after the marriage of the said Sarah with the said Purdy, filed a bill against them to recover what was due, and thereupon the said Purdy and the defendant referred the matter in dispute to arbitration, and mutually executed bonds for the performance of the award; that an award was made in favor of the defendant and his wife, against the said Purdy and wife, for the sum of $1,812.21; that for the nonpayment of the sum awarded the defendant brought suit upon the bond of the said Purdy, and obtained a judgment thereon for the sum of $1,868.07; and the defendant insisted that said judgment, notwithstanding the form thereof, having been rendered for the debt of the said Sarah, the property of the said Sarah was in equity liable for the satisfaction thereof. The defendant also set forth that after the death of the said Sarah, he instituted an action against William B. Lockhart, her executor, and in September, 1820, recovered a judgment for the sum of $609.49, because of moneys due to him personally from the said Sarah, in her lifetime. The defendant then showed that having obtained these judgments, the one against Purdy and the other against the executor of Mrs. Purdy, he so arranged that executions upon both should come to the hands of the sheriff, and a sale of the interests respectively of the said Purdy and the said Sarah in the slaves should be made at the same time, and that his object in doing so was to (45) advance the interest of the plaintiffs, his wards, by making the property bring its full price, as he had heard doubts expressed as to the legal efficacy of the marriage articles; that in pursuance of this arrangement, the slaves demanded in the bill of the plaintiffs were sold,Page 43first under the execution against Purdy, and then under that against Lockhart, the sheriff declaring publicly, before any sale was opened, that both titles were to be thus disposed of, and that therefore the defendant bought all the said negroes; and the defendant referred to the said executions and the returns of the sheriff thereon. Defendant then set forth that in pursuance of his purchase under the executions aforesaid, which happened on 22 February, 1821, he took immediate possession of the slaves so bought, and from that time had continually kept possession thereof as his own absolute property, and the defendant insisted that the claim of the plaintiffs to the said slaves, if they ever had such claim, was barred by the statutes of 1715 and 1820, to which he specially referred, and of which he claimed the benefit. Defendant further set forth that an action was instituted for the benefit of the plaintiffs, upon the administration bond given when the said Sarah was appointed administratrix of Etheldred Smith, against Purdy and his said wife and the sureties on the said bond, and a judgment recovered thereon for the sum of $5,500, which judgment was paid by the said sureties; that thereafter the said sureties, three in number, commenced actions respectively against the defendant, alleging that they had become sureties for the said Sarah upon the defendant's promise to indemnify them; that in truth the defendant had merely informed them that he was to act as the agent of the said Sarah in the administration, and would in all things which came under his management faithfully conduct the administration, and had not by any means rendered himself responsible for the mismanagement or defaults of the said Sarah, or any husband she might marry; that nevertheless, upon some attempts to try the causes, it having become apparent that the extent of the defendant's engagement was misconceived, or misrepresented by the witnesses brought on to testify in relation to it, the defendant, by advice of counsel and of his friends, submitted to a verdict and judgment in each case of $500, and paid the same, whereby he had in truth paid off $1,500 of debt (46) due by the mother of the plaintiffs under whom they claim the said negroes, and he was remitted in respect thereof to the claim which the said sureties had, or might have, against the said Sarah and the said negroes. The defendant therefore insisted that if he was bound at all to surrender the slaves demanded in the bill, he was entitled in equity to retain that possession until full satisfaction should be made to him of his two judgments aforesaid, and also of the $1,500 so paid off by him in discharge of the claim of the said Sarah's sureties.
There were other allegations in the bill and defenses in the answer thereto, but as the judgment of the court was not founded upon them, it is not deemed material to state them. The plaintiffs replied to the answer, and the cause was heard on the proofs.Page 44
Badger for plaintiff.
Iredell and Devereux for defendant.
GASTON, J., after stating the case:
It is manifest, we think, from an examination of the act of 1785, referred to in the answer, that the creditors thereby intended to be protected are the creditors of the husband. The evil recited in the preamble is, that marriage settlements and other contracts constituting charges or encumbrances upon the estates of husbands — binding the estates of husbands — have been made and kept secret, and that the "possessors" upon the credit of the property not known to be encumbered, "upon the credit of their apparent property," have been enabled to contract debts to the deception and injury of their creditors. The creditors contemplated in the preamble are, exclusively and evidently, those of the husband. The enactment contained in section 1 is not so explicit as, taken per se, to leave no room for dispute whether the creditors therein mentioned be those of the husband or of the wife, or both. It requires that all marriage settlements and contracts whereby any money or other estate shall be secured to the wife or husband shall be registered within a prescribed time, "or be void against creditors." But when the section is regarded in (47) connection with the preamble, and the enactment in section 2, there is little room to doubt whose creditors were here contemplated. Section 2, which directly bears upon the question before us — for the registration of the articles within the time prescribed by the first section is not disputed, and, if disputed, is fully proved — points unequivocally at the creditors of the husband. "For preventing injury to creditors," it forbids that a greater amount shall be secured to the wife and the children of the marriage than the portion received with the wife in marriage and the net amount of the husband's estate after deduction of his debts. The whole amount of her property — without any deduction for her debts — may be included in the settlement for her benefit and that of the children; but only the balance of his after a deduction of a sum sufficient to meet the demands against him. The injury guarded against is a subtraction of his property from his creditors so as not to leave enough for the satisfaction of their demands. The marriage articles, therefore, are not affected by the act of 1785, and not being impeached on any other ground, they are valid against the defendant.
Upon the marriage the legal estate in the slaves whereof Mary Smith was possessed passed to her husband, Purdy, subject to the trusts thereby declared, one of which trusts was for the appointees of his wife, if she should leave no issue of that marriage. The legal estate of Purdy having been transferred to the defendant as a purchaser thereof at execution sale, it passed charged with that trust independently of the notice, whichPage 45the defendant admits he had thereof; and the plaintiffs as appointees under the power reserved to Mrs. Purdy have a right to demand the execution of that trust against the defendant, unless the estate in his hands has been discharged therefrom, or he be protected against its assertion in whole or in part by the means alleged in his answer. It is contended in his behalf that although the judgment and execution under which he first purchased were against Purdy only, yet as the judgment was because of a claim which the defendant had in right of his wife, against the wife of Purdy before their intermarriage, the defendant has a right, in equity, to be satisfied in respect thereof by the property secured to her, or over which she exercised her power of appointment. (48) It is unnecessary to examine this alleged equity very particularly, because if it could be established (of which we say nothing), there is no room for its application here. The defendant purchased under the execution against Purdy his interest in the slaves at prices which, with a small sum in money paid by Purdy himself, paid off this judgment, and left no part thereof unsatisfied. This appears distinctly from the return made upon the execution, which is referred to as a part of the defendant's answer. Assuredly, under that purchase he acquired no further or other rights than would have been acquired by a stranger to the execution, and a stranger by such a purchase would have acquired all Purdy's interest — that is to say, the entire legal estate, but a beneficial interest only during his life. In this Court the price would be regarded as paid for this beneficial interest — and in this Court no further interest passed by the sale. The defendant claims to have been both purchaser and creditor upon this execution. As purchaser under it, he bought but Purdy's life estate; as creditor, his demand has been satisfied by the sale of that estate. He has enjoyed what he bought, and whether it has turned out more or less profitable than he anticipated — whether it was an advantageous or a losing bargain — it has been his profit or his loss, with which neither the plaintiffs nor any other persons but himself have any concern.
The Court sees nothing in the claim set up by the defendant as a creditor or purchaser, in relation to the judgment against Purdy, which in any way affects the right asserted by the plaintiffs.
The Court is of opinion that the defendant acquired nothing by his alleged purchase under the execution against Lockhart as executor of Mrs. Purdy. One reason alone — although others are not wanting — will be given for this opinion. The negroes in question were not the property of Mrs. Purdy, which upon her death came to the hands of her executor, for which he was liable to be charged as assets, and which might be seized and sold on an execution as the goods of the testatrix in his hands; but they were property in the hands of her husband, overPage 46(49) which she had a contingent naked power of appointment. Had the power been exercised there would have been no pretext for holding them to be assets at all, and the exercise of the power did not pass them as assets into the hands of the executor. He could not claim against the will under which he set up all his authority. Upon the probate of the instrument called the will, the estate thereby appointed passed directly to the plaintiffs — not through the executor, or by virtue of his assent, but as though they had been named as appointees in the instrument creating the power of appointment. But it is a well established principle of equity that where there is a general power of appointment, which it is absolutely at the pleasure of the donee of the power to execute or not, he may appoint in favor of himself, or his executors, if he pleases. If, therefore, he executes it gratuitously to the neglect of the just demands of creditors, the thing so appointed shall be considered, as to them, as a part of the estate, as assets for the satisfaction of their demands. But how is this doctrine of equity carried into execution? Not by annulling the appointment, or altering the disposition, but by holding the appointee a trustee for the creditors. Townsend v. Windham, 2 Ves., 1; Lofeelles v. Cornwallis, 2 Ves. 465; Jenny v. Andrews, 6 Mad., 264. The defendant in this case has established his claim as a creditor by reducing it to judgment. The plaintiffs have in no way attempted to impeach it. There has been no satisfaction of it, in whole or in part, except by the purchase made by the defendant at the execution sale against Lockhart. The plaintiffs claim, and in the judgment of the Court are entitled to, the whole interest which was sold, or attempted to be sold, under that execution; but that interest is in their hands chargeable with the debts of their mother. Claiming equity, they ought to do equity. Our law recognizes as a legal obligation the liability of the defendant in execution to refund to the purchaser at sheriff's sale the price applied towards the satisfaction of the judgment, if the purchaser be deprived of the property so bought. See act 1807, ch. 723; Rev. Stat., ch. xlv, sec. 22. We think, therefore, that it is right to require in this case that the plaintiffs shall not compel the surrender from the defendant of the slaves in question without satisfying (50) the ratable part of the debt of their mother, for which he obtained judgment against her executor.
With respect to the claim which the defendant prefers as constituting another charge upon the property, for the $1,500 paid under the circumstances stated in his answer to the sureties of Mrs. Purdy, there is more difficulty. But whether it can or cannot be established, it seems to us that upon the present pleadings, and as between the present parties. the Court has not a right to decide. If the claim be well founded, it is because the defendant is pro tanto subrogated to the sureties whose lossesPage 47he has in part discharged. As a partial assignee, he cannot proceed to subject this interest without making his assignors parties. When made parties, they will be equally entitled with him to satisfaction out of this interest for that part of their loss which has not been remunerated. Until there has been some judgment or decree by which a priority is established, the plaintiffs are at liberty to pay any debts for which the estate is charged, and after paying the value of it they can be subjected no further. Under these circumstances the Court deems it prudent to decline passing upon this claim, and leave it open to the defendant to assert it in any other mode of proceeding, if he thinks proper and be so advised.
The defense set up under the acts of 1715 and 1820 is altogether untenable. The right of the plaintiffs to the enjoyment of the property for which they have filed this bill did not accrue until the death of Purdy in 1832, and the bill was filed in 1833.
There must be an account taken of the hire and profits of the negroes since the death of Purdy, allowing to the defendant the reasonable expenses and charges of maintaining them, and also an account of the debt due from the late Mrs. Purdy to the defendant, and an inquiry what is the part thereof which the negroes of the plaintiffs should near in proportion to the whole value of the slaves appointed; and the plaintiffs are to be declared entitled to the possession of the negroes, and the balance that may be found due to them on taking these accounts, if the balance be in their favor, or entitled to the possession of the negroes on paying the balance that may be found due against them if on taking the accounts the balance be in favor of the defendant. (51) Care will be taken in the decree to reserve to the defendant the right of urging hereafter the claim on which the Court has forborne to pass.
PER CURIAM. Decree accordingly.
Cited: Saunders v. Smallwood,30 N.C. 130.Page 48