Heart v. Bryan, 17 N.C. 147, 2 Dev. Eq. 147 (1831)

Dec. 1831 · Supreme Court of North Carolina

17 N.C. 147, 2 Dev. Eq. 147

Spencer L. Heart et al. v. Dempsey Bryan et al.

Where a testator died indebted lo a bank, and his note was renewed by his executor as executor, and afterwards discharged by a surety who became liable subsequently to the death of the testator, it was held, that the surety had aright to be substituted to the claim of the executor and the bank .against the assets; and the executor being in advance to the estate by reason of the debt which the surety had paid, that balance was decreed to be paid to the latter in prefe- ( rence to a subsequent assignee of the executor.

David Barnes was the executor of WhitméU Bell, and upon a bill filed by the legatees against him for an account of his administration, the following facts appeared. The testator at his death owed the State Bank §1500, for which Barnes was surety. Afterwards the note was renewed several times by other notes, signed by Barnes as executor, and by him and others as sureties, until it was reduced to $>900, when a note of Elia a.-? belli Bell,'the widow of the testator, for §2500, was substituted for it. The excess was used for the benefit of Bell’s estate, and to that note Barnes and Dempsey Brij-án were sureties. After five renewals, the note was again taken up by the discount of another for $>1800 signed by Barnes as executor, and by him and Bryan as sureties. It was renewed several times and reduced to $>1600, when Barnes becoming insolvent, it was paid by Bryan. Upon taking the accounts of Barnes with the estate of his testator, and allowing him credit for the note of $>1500, due by the testator at his death, he was in advance to the estate the sum of $>1375, which was paid into court under an order directing a sale of the assets of Bell the testator, and liberty was given for any person to apply for it by petition. Under this order Heart and others filed their petition, setting forth a general assignment of “ all the real and personal property, bonds, notes or book debts, of which the said David Barnes was seised or possessed,” in trust to convert the same into money and pay certain enumerated debts, with a power to Barnes “ to apply so much of the aforesaid “ funds as shall be requisite and necessary, to the settle- “ ment of his accounts as executor of Whitmell Bell.” The petitioners insisted, that the fund in court was the property of Barnes at the execution of the assignment, and prayed that it might be paid to them.

Dempsey Bryan, on the other hand, in his petition, set forth the above mentioned particulars respecting the discount and payment of the note, and insisted that as the proceeds of the note .went to the use of Bell’s estate, he, the petitioner, being a surety, was to be substituted to the rights of Barnes against the estate of the testator, and had a better equity to the money in court than the pther petitioners. '

Devereuoc, for the petitioners, Heart and others,

cited Bayard y. Hoffman (4 Johns. C. R. 450) Jackson v, Hudson (3 Johns. 375~) Jackson v. Gardner (8 Id. 394) Sumner v. Williams (8 Mass. 162) Dey v. Dunham (2 Johns. C. R. 182, 189) Stephenson v. Haywood (Tree, in Gh. S10) Tourville v. Naish(S F. Hms. 308) Braces. Marl- , , , __ vorough (2 Id. 491),

The Attorney General and Gaston, for Bryan.

Hale, Judge.

.The defendant Barnes, by his deed of assignment in favor of his creditors, transferred and assigned over to the trustees therein named, considerable real and personal estate particularly described, and all other real and personal property of which he was seised or possessed, all book debts, bonds and notes of every description ; and the trustees are directed to collect the debts, whether due by bond, note, open account or otherwise. He also expresses that the trustees shall have and hold the real and personal estate, and choses in action, and accruing interests, with the appurtenances &c. in trust &c. I am inclined to'the opinion, that this general description of property includes any balance that might be due to Barnes from the estate of Whitmell Bell. (Bayard v. Hoffman 4 Johns. Ch. R. 450). Neither is that opinion varied by a clause in the latter part of the deed of assignment, in which he reserves the right to apply so much of the funds, as shall he requisite and necessary to the settlement of his accounts, as executor of PTIdlmell Bell. This clause was only inserted to secure that estate against loss by his insolvency ; and can have no application, where it turns out that the estate is in, debt to him. But this view of the case arises only from the deed of assignment, and the account that has been taken, and now made an exhibit, between Barnes and his testator’s estate. From that account it appears, that the estate of Whitmell Bell falls in debt to Barnes in the sum of $1375. It is necessary to consider, how that balance arose, and this leads us to the consideration of Dempsey Bryan’s petition. It appears from an exhibit in the case, which is admitted to bo evidence, that Dempsey Bryan became an indorser for Elizabeth Bell on a note to the bank at Tarborough, for $2500, in the year 1826 ; that in the year 1828, David Barnes the defendant, renewed the note in his own name, and as executor for Whitmell Bell, with Dempsey Bryan as surety or indorser, for the balance of the money due on Elizabeth Bell’s note, which was §1800. This note ivas renewed by the same parties on the 9th day of December, 1828, for §1600. Suit was brought upon it, and the judgment was paid off by Bryan. It is to be observed too, that part of the money, for which Elizabeth Bell gavcher note to the hank, had been received by her husband. ' After his death, his note was renewed by Barnes as executor, with different indorsers, up to the time when Elizabeth Bell gave her note with Bryan as her indorser. It appears from this statement, and it is admitted by Barnes in his answer, that the money thus obtained from the bank was applied to the use of Whitmell Bell’s ostate ; and it is owing, no doubt, to that application of it, that a balance has been found in favor of Barnes in his settlement of that estate. For if Barnes had paid the debt due to the bank, his claim to it would be both legal and equitable. But that debt was discharged by Bryan, and he ought to stand in the room of Barnes, as to that balance coming from Bell’s estate ; for the money borrowed from the bank, which he had discharged, has produced it. No doubt this construction of the transaction occurred to Barnes, when he drew the deed of assignment. For if §1600, the amount paid by Bryan, is deducted from his credit in his account with Barnes’ estate, he would have fallen two or three hundred dollars in debt to it; and therefore it was, that he made provision against loss to that estate, on account of his insolvency.

It is for these reasons, and from this view of the case, that I think the prayer of the petitioner Bryan ought to be granted.

Buefin, Judge, dissented, but delivered no opinion.

Henderson, Chief-Justice

If Barnes, the executor, had borrowed the money of the bank himself, although he might have applied it' to the payment of his testator’s debts, perhaps the equity of Bryan who afterwards paid the debt, would be too slight to charge the estate of Bell with-its repayment. The justice of the claim would be felt by all; although perhaps it could be brought within no rule heretofore acknowledged by the court. But I think any honest man would be unwilling to hold under the mere bounty of one, whose assets were in conscience one-rated with such a claim. The property is certainly benefited to the amount of the money paid. This impugns not the equity of the petitioner Heart’s claim, for he is a sufferer, and is contending de damno evitando. In this case the money was borrowed by Bell himself and went to his use. The debt has continued ever since, sometimes in the name of the widow, and sometimes in the name of Barnes the executor. Although by the forms of the bank this debt was extinguished upon each renewal, as it is called, by discounting a new note, and carrying the proceeds to the credit of the preceding one, yet in reality it-is the same debt. I view this case therefore, as if the original debt had continued until discharged by Bryan. And if this were the case, the equity is plain, and he is substituted to the rights of the bank, when they held Bell’s note. And notwithstanding it may have been cancelled, or delivered by the bank to those who first renewed it, and by them thrown aside or destroyed, this court will set it up, even if the cancellation was made with the consent and by the directions of those who first renewed it; for these were acts which ought not to have been done or assented to. The original note should have been preserved for those who afterwards paid the money given upon its surrender. For the executor gave no consideration for it. It is true, he promised to pay, but did not. Bryan has done what he promised to do. Those not acquainted with the ai’tificial rules of the bank, and who looked at the transaction itself as it really existed, considered it still the debt of the estate. Notes given for its renewal were signed by Barnes, as executor, as principal, and by himself as surety ,• and further he swears, that he thought the assets of the estate were bound for its payment. I am satisfied, that the time is not far distant, if it lias not already arrived, when upon a note given in a form not to preclude an inquiry in*' •to the consideration, as where it is signed as executor, aad given for a debt due by the testator, the assets maybe reached even at law.

I concur therefore, with Judge Hah, that there should be judgment for the petitioner Bryan.

Pee, Curiam. — Direct the fund to be paid to the petitioner Bryan, and let each petitioner pay his own costs.