Doe on dem. of Hawkins v. Sneed, 10 N.C. 149, 3 Hawks 149 (1824)

June 1824 · Supreme Court of North Carolina

10 N.C. 149, 3 Hawks 149

Doe on dem. of Hawkins v. Sneed & Sneed.

From Granville.

A. being much indebted, absconded; executions issued against his property, at the instance of several creditors. Prior to the sale of the property, C. who was a creditor by bond, received from A. the sum of 8300, to be applied in satisfaction of the claim of a judgment creditor, P, whose judgment was 8 357. C. failed to make the application as directed, but permitted the property levied on to be sold by tbe Sheriff, and became himself the purchaser, at the price of $ 800, and paid off the judgment of P. only, and after-wards conveyed to the lessors of the Plaintiff. Between the time of C’s purchase, and the conveyance to Plaintiff’s lessors, the property was sold under -the executions of some of the other creditors, and Defendants purchased. In an ejectment between the last purchasers, and C’s vendees, it was held, that C’s conduct was not fraudulent as to the creditors of A. and though, in equity, A. had a claim against C. and a re-conveyance to A’s creditors might, perhaps, be decried, yet A’s equitable lien, was not such as was contemplated by the act of 1812, rendering lands, held in trust, liable to an execution against cestui que trust ,■ and, at all events, whatever might have been the conduct of C. the purchasers from him were bona fide purchasers, without knowledge of, or participation in, his breach of trust, and, therefore, should be protected.

Ejectment for house and lot, tried before Donnell, Judge. — On the trial, the Defendants admitted themselves in possession of the premises mentioned in the de ■ claration, and both parties claimed under William U. ^aJ’ w*10’ was a('rutted, once had title to the premi-sos. The Plaintiff deduced his title in the following m!Uinci*; Absalom Yancey recovered a judgment in Granville County Court, November sessions, 1819, against Clay, for $785, with interest thereon, from 4th April, 1819, till paid, and costs,’ on which a payment of $470 was made, on 13th April, 1819, and on which the sum due in July, 1820, was $346 19, whereon a f. fa. issued from February sessions 1820, of said County Court, and was returned to May sessions 1820, levied on the premises in dispute. Samuel Parkhill and John Park-hill, also, on the 25th day of November, 1819, sued out an attachment against the estate of said Clay, as an absconding debtor, returnable to. Granville. County Court, February sessions, 1820, which was also levied on the premises in dispute, and due return thereof made to the County Court, where, at May sessions, 1820, the said S. and J. Parkhill, recovered the sum of $327 95, with interest on $263 41, from 1st May, 1820, until paid, and costs, on which the amount due in July, 1820, was $ 357 90*. The Plaintiff gave in evidence the records of the said judgments, and, also, that writs of venditioni exponas issued on each, from May sessions, 1820, of said Court, and were delivered to the Sheriff of Granville, who, by virtue thereof, sold the promises in dispute, on the 29th July, 1820, and Thomas Cooke became the purchaser, he being the highest bidder, at $800, but satisfied Park-Iiiirs execution only; and afterwards, viz. on 2Sth March, 1821, the Sheriff made a deed to said Cooke therefor, which has been duly proved and registered; and the Plaintiff further deduced title to the premises' in dispute, by a deed of trust, in fee, made by the said Cooke, to the lessor of the Plaintiff, on the 27th day of February, 182!, to secure the endorsers of the said Cooke, in the Banks, to the amount of 3 or $4000, which deed included, also, all the other property of Cooke. No evidence was offered of any. money having ybeen paid by the lessor of the Plaintiff, to said Cooke, or of the debts mentioned in said deed, as due to the Banks, except the recital in the said deed. The Plaintiff, also, read in evidence to the Jury, a bond from Win. H. Clay, to said Cooke, witnessed by John Green and dated 25th May, 1820, for § 551 66, payable one day after date.

The Defendants claimed title as follows : The said Wm. H. Clay was indebted to Willie P. Mangum, on 20th May, 1820, in the sum of §28; for which a warrant was brought before a Justice of the Peace, in Gran-ville county, who rendered judgment thereon, from which an appeal was taken'to the next County Court of Granville, to wit, August sessions, 3 820, in which case, at the succeeding November sessions, 3 820, judgment was given in favour of the said Mangum for his said debt and costs, and, thereupon, a ft. fa. issued, which was levied on the disputed premises, by the Sheriff, on 4th December, 3 820, and return thereof was made to February sessions, 1821, of said Court, and, thereupon, a venditioni esoponas issued to May sessions, 1823, upon which the Sheriff, on the 29th March, 1821, sold the premises, in legal form, and conveyed them by deed to the Defendants, who, upon the trial, read in evidence the record of Maugum’s recovery, the writs of execution issued thereon, and the Sheriff’s deed to them, which had been duly proved and registered.

Tire Defendants further alleged, that the purchase made by the said Cooke, and the deed by him taken, were fraudulent and void as against the said Mangum and other creditors of Clay; and to prove this, they gave in evidence that Clay had resided for several years in Granville county, and that in the year 1819, he was greatly indebted, and removed to Georgia, and soon af-terwards became insolvent; that in the Spring, or early in the Summer of 1820, he sent by one John Green, the sum of g 646 19, to the said Cooke, to be appiiad to the satisfaction of said debts owing to S. <§• J. Parlthill; that the Sheriff agreed to take tlie promise of said Green to pay the debt of Yancey, and tiiat on the 29th July, 1820, the said Green did pay to the Sheriff the sum of g 346 19, in satisfaction of Yancey’s execution, and that, also, on the. 29th July, 1820, the said Green paid over to said Cooke, the sum of g 300, and took his receipt therefor, in the following words, viz.

“29th July, 1820. Received of William H. Clay, by the hands of John Green, three hundred dollars, for the purpose of applying to the credit of an attachment, which J. & S. Pafkhill had against said Clay.

(Signed) “THOMAS COOKE.”

That the said Cooke did not, thereupon, pay the said monies over to the Sheriff, hut suffered the disputed premises to be sold, and bought them himself, as aforesaid.

On behalf of the Plaintiff, it was then contended, that although Cooke had not credited the bond of Clay, which lie held, with the said g 300, yet he had a right to apply the said money to his own debt, and then to purchase the premises at the Sheriff’s sale, without imputation of fraud ; and the Plaintiff’s counsel further contended, that although the said Cooke had not applied the said sum to the satisfaction of the said executions, yet his purchase of the premises did not, thereby, become fraudulent and void, but it only constituted a breach of trust, for remedy whereof, the said Clay, or his creditors, must apply to a Court of Equity, since the legal title passed to Cooke, by the sale of the Sheriff, and his deed is good and valid. And they, also, further contended, that even if the purchase made by Cooke, was fraudulent and void, while he himself should claim under it, yet tiiat the lessor of the Plaintiff, was a bonajide purchaser for a valuable consideration, without notice, and that, by reason thereof, his title was good. And, on behalf of the Plaintiff, the Court was moved to instruct the Jury accordingly. But the Court refused so to instruct the Jury, and charged the Jury “that if they should believe that Cooke purchased the said house and lot, with said Clay’s money, and in trust for him, and took the deed to himself with intent to defraud or hinder the said Mangum, or other creditors of said Clay, of their debts, the same was void, and the premises still would remain subject to the creditors of Clay.” And the Court further charged the Jury, if they should be of opinion that the said purchase and com eyance to Cooke, was fraudulent and void, as aforesaid, in the hands of said Cooke himself, that the same still continued fraudulent and void, and could not be set up against the said Man-gum and the Defendants, by the lessor of the Plaintiff, notwithstanding the said deed, from the said Cooke, to the lessor of the Plaintiff, under the circumstances aforesaid. The Jury found for the Defendant, and judgment was given accordingly. On motion for a new trial, the same was overruled, and the Plaintiff appealed to this Court.

Gaston Sf Hillman, for Appellant — Ruffin, for Appellee.

Taylor, Chief-Justice.

The conduct of Cooke after receiving Clay’s money, under a promise of applying it in payment of Parkhill’s judgment, though not reconcilea-ble with strict morality, is yet susceptible of some extenuation. The sum was insufficient to pay the debt, and would not, therefore, have arrested the execution. Cooke was himself a creditor, and must have passively witnessed a sale of the property and the probable loss of his own debt ,* hence, the temptation was strong upon him to seize a plank in the shipwreck; and though in justice, such temptation should have been resisted, after his promise, even at the hazard of losing his debt, yet his conduct cannot, in any point of view, be considered as fraudulent upon Clay’s creditors; all that they, or Clay, can rightfully demand from him is, the surplus of the money for which the property sold. To a certain extent, Cooke became a trustee for Clay, but to what amount, depended upon the adjustment of accounts between them. But the act of 1813, rendering lands liable to execution against the cestui que trust) does not affect this case; for that act, relates only to those fraudulent trusts in which the trustee has nothing more than the formal legal title, and the cestui que trust, the whole, beneficial interest. For the act provides that on such ■sales, the land shall be held and enjoyed, “freed and discharged from all incumbrances of such person or persons so seised or possessed in trust, for the person or persons against whom such execution shall be sued.” It is very evident that executions were not intended by the statute to reach those equitable interests which depend on the consideration and adjustment of various points of equity, and the settlement of accounts.

I am of opinion, that Clay’s interest in this lot, or rather his equitable claim upon Cooke, was not one of those contemplated by the act.

But, whatever the conduct of Cooke was in the purchase of the lot, it cannot affect the title of Hawkins, he was a fair purchaser, without knowledge of, or participation in, the breach of trust committed by Cooke, and is entitled to recover. — There must be a new trial.

Hall, Judge.

I am at a loss to see how the statute of frauds, has any bearing upon this case; certainly not by the purchase of the property at the day of sale; every person was invited to purchase; and Cooke gave more than any body else was willing to give. With respect to the amount of Clay’s money in his hands, it could have been on the trial, reduced to a certainty, there was not as much as the execution calls for, under which the property was sold: whether, if it had been paid to the Plaintiff in the execution, it would have stopped the sale, is not known. I admit, Clay had an equity against Cooke; perhaps Cooke might have been compelled to rc-convey the property sold to Clay, or perhaps to Clay’s creditors; but not without paying the debt which Clay owed him by bond. If he was, in this respect, a trustee for Clay, it was such a trust as could not be sold under execution'.— .1 think there ought to be a new trial.

Henderson, Judge, concurred.