Benbury v. Benbury, 22 N.C. 235, 2 Dev. & Bat. Eq. 235 (1839)

June 1839 · Supreme Court of North Carolina

22 N.C. 235, 2 Dev. & Bat. Eq. 235

MARTHA BENBURY et al. vs. RICHARD W. BENBURY, Adm’r. of JOSEPH N. HOSKINS.

If property be conveyed by deed to a trustee for certain purposes, and he joift in the execution of the deed by signing and sealing the same, and expressly covenant therein for the performance of certain acts, a breach of trust by him, will create a debt by specialty to the cestuy que trusts; and, it seems, it would, were there no express covenant on his part to perform the duties imposed by the deed; but if he only accept the deed without joining m its execution, by signing and sealing it, a breach of trust by him will^be only a simple contract debt; and in the administration of his estaté on his death, such debt will be posponed to debts by specialty.

Where a trustee misapplies the trust funds and dies, the cestuy que trusts, will, in equity, be entitled to have such assets of his estate, as are not covered by debts of superior dignity, laid out or settled, under the direction of the court, to the purposes declared in the deed of trust.

-On the 22nd of August, 1835, by an instrument declared to bean indenture, and to have been made between Richard W. Benburyof the first part, and Joseph N. Hoskins of the other part, but which purported to be sealed, and was in fact sealed by the saidBenbury only, the former, in consideration of the sum of five dollars therein acknowledged to have been paid unto him by the said Hoskins, conveyed unto the latter a certain tract of land, to have and to hold unto him, his heirs and assigns forever. The deed then proceeded to declare that the land was conveyed upon the following trusts, namely: “that the said Hoskins is to sell the above tract of ^ail(^; at s,lc^ time, and upon such terms, as to him may seem meet; he is to make good and sufficient deed or deeds to the purchaser from him; and to apply the proceeds of the sale in the following'mauner: first, he is to pay all the existing debts of the said Richard, at the time of thp sealing of the deed; he is to receive the balance, and to hold it for the joint benefit of the said Richard and his wife Martha, during their joint lives, and afterwards for the benefit of the survivor of the said Benbury and wife Martha; and after the death of the survivor of those two, he is to transfer the said proceeds or the property purchased therewith to the children of the bodies of the said Richard and wife Martha, and to their heirs forever; the said Hoskins is to be permitted to apply the above mentioned balance of the proceeds as he pleases, always applying the interest or profits arising therefrom to the benefit of the said Richard and his family, in the manner and order above described.” In pursuance of this deed, and, in a few months after its execution, Hoskins sold the land to Joshua Skinner for the sum of $10,875, of which $5,000 was paid on the 1st of January, 1835, and the remaining $5,875 was secured by notes drawing interest from the 1st of January, 1836; and these notes, after they became due, were fully paid to the said Hoskins. In the Fall of 1838, Hoskins died intestate, having applied the sum of $4,674:89 cents, in full discharge of all the debts of Benbury mentioned in the deed, and having misapplied the surplus of the proceeds of the said land to his individual purposes. Ben-bury, in November, 1838, administered on the estate of Hos-kins, and, immediately thereafter, this bill was filed against him. The plaintiffs were his wife Martha, and their infant children, suing by a next friend, and they claimed to have the amount of the trust funds, so misapplied, paid out of the assets of the defendant’s intestate, and prayed for the appointment of a new trustee; and that the money, when paid, might be laid out or settled under the directions of the court, in conformity to the purposes declared in the deed of trust. The material allegations of the bill were admittedin the defendant’s answer, who also acknowledged, that he had, in his hands, assets of his intestate, sufficient to satisfy the claim of the plaintiff; and declared his desire to apply these assets to the satisfaction of that claim, if he could do so consistently with his duty as administrator; but he stated, that he was advised that, in law, the specialty debts of his intestate, were entitled to a priority over this claim; and that if this were so, then there would be, in his hands, but the sum of $2 000, applicable to the satisfaction of simple contract debts. The cause came on to be heard upon bill and answer.

view °£ aIfl ^ts are dignity-debts lie"Ü 5iually due science — Court dccree-me,l?aby- an of a 'or the or-<iei- of preference es-it might enmp'ei the assets miiis hands, íieít’^of’the oat oTT."L s°ods'

Heath and Devereux for the plaintiffs.

No counsel appeared for the defendant in this court.

Gaston, Judge,

after stating the allegations contained the pleadings as above, proceeded as follows: The plaintiffs, in this case, are not pursuing the proceeds of the land sold by the trustee, and seeking the aid of a Court of Equity to secure their application to the trusts declared in the deed, but are demanding satisfaction, out of the estate of the trustee, for a breach of trust in the misapplication of those proceeds, The cestuy que trusts are creditors of the trustee, and of his estate, to the extent of the money so misapplied. In the view of a Court of Equity, all debts are of equal dignity — because all debts are equally due in conscience. But it is not so at law, and a Court of Equity, in decreeing by an executor or administrator, of a debt of his testator intestate, must respect the order of preference established law; for, otherwise, it might compel him, who is liable by reason of the assets in his hands, to pay the debt of the , r , , , 1 , , ceased out of his proper goods. It is a rule of the common 1 aw, that debts due'on bonds, covenants and other ments, under the seal of the party, shall be paid by an . . J 1 J tor or administrator, before debts due by simple contract, This rule has been so far modified by the acts of our 1 ature as to place debts due by “notes and bills, not *■ v 1 seal, and signed accounts,” m the privileged class of specialties; and, with this modification, it is the settled law of the State. The question before us then, is, whether the claim asserted by this bill is to be regarded as a debt due by cialty?

If Hoskins had joined in the execution of the .deed, and had expressly covenanted for the performance of the trusts therein declared, there can be no doubt ,but that the demand against his estate, because of misapplication of the proceeds which came to his hands from the sale of the land conveyed by the deed, would have been “ a debt by specialty,” within the meaning of this rule. ' This is settled by many adjudications. -- v. Casey, 2 Wm. Black. Rep. 965 — Plumer v. Marchant, 3 Bur. Rep. 1380 — Benson v. Benson, 1 P. Wms. 130. Mavor v. Davenport, 2 Sim. 227 (2 Con. Eng. Ch. Rep. 395.) If he had but joined in the execution of the deed, without an express covenant for the faithful perforar anee of the trusts, we think the instrument, in its present form» would have sufficiently shewn a covenant on his part to do the several matters therein set forth as to be doné by him— namely, to sell the land, to execute titles, to apply the proceeds, in the first place, to the payment of Benbury’s debts, to hold the residue during the lives of Benbury and wife, and the life of the survivor, for the purposes declared; and, after, the death of the survivor, to pay them over to their children. An indenture is a mutual agreement between the parties thereto, solemnly testified by their seals, and speaking in the names of all of them. And, as a covenant is but an agreement under seal, by which one person engages with another that some act hath or hath not been done, or that some future act shall or shall not be done, any declaration in an indenture that one of the parties thereto is to do certain-things therein mentioned, is a declaration of his agreement to that effect, authenticated by his seal. But this instrument is not an indenture; for it does not purport to be sealed, nor is it sealed by the trustee. It is, therefore, the deed of Benbury alone — . a declaration by him to all mankind, informing them that he thereby conveys the land to Hoskins, for the purposes therein set forth. If Hoskins has made an agreement, or entered into an engagement with Benbury, in relation to the subject matter of that conveyance, he has not testified that agreement or engagement under his seal — and, therefore, it is not secured by his deed.

It would seem thus to follow, that the debt asserted for the plaintiffs is not a debt by specialty — and, therefore, must be postponed to those which by law are included in that class. But, the counsel for the plaintiffs has contended that it is es. tablished by authority, that an action of covenant might be brought upon this deed against Hoskins or his representatives, because, by acceptance of the estate conveyed, he bound himself to the performance of the duties enjoined by the deed, as effectually as if, in the most formal manner, he had sealed and delivered the instrument as his deed. Nothing, certainly, can be more plainly just, than that a man who accepts a benefit, conferred upon any reasonable conditions, should not be permitted to enjoy the benefit and reject the conditions. His acceptance of a gift, thits qualified, is an assent to the qualifications of the gift, and he is bound by that assent. But it is not an assent testified by his deed; it is an assent testified by his act of acceptance; and the remedy for breach thereof . — if the conditions be of a nature which a court of law can notice — must be such as the law provides for breaches of agreement, or of duty consequent thereon, in cases of agreement not by deed. The dicta referred to in the argument have all been so thoroughly examined, and so fully explained in a late learned work, Platt on Covenants, 10 (1 Law» x _ . , ' i i • i /-« • , _i i Library, 5,) highly commended in 1 Chitty s Plead. 135, as to save us from the necessity of noticing them particularly. Thev are undoubtedly correct, to the extent of asserting the 3 . - . ■ obligation on a party taking under a deed, to do what in the deed is required of him — but they are incorrect in supposing that an action of covenant will lie against a party, who, without executing the deed, has availed himself of a benefit under it. If there be any cases in which this may be done, they are of a peculiar kind, and are special exceptions from the general rule.

thunder <ked, is bound to do what in the q„f1?e(is0fe' but if the deed he not execut-fus^not'mi ' seal, and an Tovenant for a breach

There can be but few cases of conveyances in trust, other than by deed. If the doctrine contended for by the plaintiffs were correct, a debt by specialty wduld arise in every instance of a breach of trust, in one taking under a deed. Nothing is clearer, upon authority, than that this position cannot be sustained. A breach of trust, generally speaking, creates- a debt by simple contract only. Gifford vs. Manly, Cas. temp. Talb. 109 — Vernon vs. Vawdry, 2 Atk. 119 — Bartlett vs. Hodgson, 1 Term Rep. 42, and Townsend vs. Windham, 2 Ves. sen. 4, 7. We cannot, therefore, grant to the plaintiffs the full relief asked by the bill; but they are entitled to relief ^ ^ extent 0f the assets in the hands of the defendant, not covered by debts of superior dignity. It is obviously proper that a new trustee should be appointed, and the money secured to the trusts expressed in the deed — and we think it right that the costs of this suit should be paid out of the assets in the hands of the defendant, declared liable to the satisfaction of the claim of the plaintiffs.

Per Curiam. Decree accordingly.