Walker v. Crowder, 37 N.C. 478, 2 Ired. Eq. 478 (1843)

June 1843 · Supreme Court of North Carolina

37 N.C. 478, 2 Ired. Eq. 478

RICHARD H. WALKER & AL. vs. ROBERT A CROWDER & AL.

A father, who had been appointed guardian to his children and given sureties guardian, and who had received moneys belonging to his children and had become insolvent, made a deed of trust in April 1838, conveying all his property to trustees for the payment- of debts, in which, after preferring certain specified creditors, and reciting “ that whereas the said R. A. B. (the father,) may be, and doubtless is now indebted to other individuals or companies in divers small amounts, or in amounts, which are not now recollected, or the persons to whom they are due,” provides among other things, stating how the creditors are to be preferred, as follows : “ Thirdly, the debts on which the said R. A. C. or F. & C. have given a surety or in-dorser ; fourthly, all other debts now owing by the said R. A C. in equal proportion, if there be not a sufficiency to pay the wholeHeld that the children, or the sureties of their father as substitutes where they had paid the debts due the children, had a right to come in for a proportionable share of the property or surplus so secured by the deed of trust.

Held further, that when the grand-father of these children, by will dated in March 1839, had directed certain property to be sold and the proceeds applied to the payment of the debts so due by the father to the children, and the balance to be given to the children themselves ; that the children, or the sureties who had paid them, ought first to resort to this fund left by the grand-father, before they applied for satisfaction out of the funds placed by their father in the hands of his trastees.

Held further, that the sureties- of the guardian, who had paid the children, were entitled to be substituted to the rights and remedies of the children so paid.-

The father, or his trustee, in the settlement of the guardian accounts, has no right to charge the children with the amount expended for their education, the father being of sufficient ability to maintain and educate them'.

U was the duty'of the father, if of ability, to maintain his children';' aitd if not, he should have had the sanction of tho proper court to an application of the children’s property to that purpose.

The Court will never make a decree, when one of the patties sues by a next friend and that next friend has, or may have, an interest in the suit, opposed to that of the infant. It will require another next friend tobe appointed to attend to the cause in behalf of the infant.

There are some modern English cases, in which it has been held, that the maker of a deed of trust for the payment of debts may, under certain circumstances, revoke the purposes declared in the deed and direct other dispositions of the property; but this doctrine has not yet been recognized in this State.

This cause having been set for hearing upon the several bills, answers, proofs and exhibits, was, by consent of parties, transmitted to this Court from the Court of Equity of Caswell County, at Spring* Term, 1843.

The following facts appear from the pleadings and proofs to constitute the case:

In 1822, Henry Crowder, Mary Crowder, Giles Crowder, and John Crowder, the four infant children of Robert A. Crowder, then of Mecklenburg county in Virginia, became entitled to a sum of money under the will of an uncle, and' in order to its collection, their father was duly appointed by the County Court of Mecklenburg their guardian, and, as such, entered into-bond in the sum of $20,000' with Thomas B. Puryear and another person, who is since dead', as his sureties, and- then received the legacy belonging to his children. Afterwards, Robert A Crowder removed to Caswell county in- this State, and brought his children with him.— Becoming much embarrassed by debts, to a greater amount, as it afterwards appeared, than all his property would discharge, he o'n the 3d’ of .April 1838, executed a deed of trust for all his estate to Nathaniel J. Palmer, and Edward H. Robertson, of Caswell, upon trust to sell, and out of the proceeds thereof, to pay his debts in the order therein named'. The deed enumerates a great number of debts for'certain sums due by judgment, bond, note or account to different persons'who are named, among whom the said' Robertson, one of the trustees, is mentioned as a creditor and also as a surety for Crowder for several of the debts to other persons. ■ The deed proceeds as follows : “Ancl whereas the said Robert A. Crowder may be, and doubtlessjs, now indebted to other individuals or companies in divers small amounts, or in amounts which are not now recollected', or the persons to whom thev are due. If so, whether they are due by bonds, bills, notes, accounts, judgments or otherwise, they arehere-by intended and are to be as fully secured and paid out of the property herein conveyed or its proceeds, as if they were specially named in this deed:'My trustees however being satisfied that they are bona fide due and were contracted before or at the time of the execution hereof, and then they are fully authorized to pay the same, as the other debts particularly named. Now, in consideration of an honest desire of the said Robert A. Crowder to secure and pay all the debts before mentioned, or, if not mentioned, which may be by him now justly owing or contracted, and in the further consideration, &c.” The deed then directs the order of payment as follows : First and secondly, judgments then rendered or that might be rendered- during Caswell County Court, then sitting, and the expenses of executing-the trusts. “Thirdly, the debts on which the said Robert A.-Crowder, or Farly and Crowder have given a surety or'endorser.— Fourthly, all other debts now owing by the said Robert A. Crowder, in equal proportion, if there be not a sufficiency to pay the whole.”’ Mary Crowder, one of the children, intermarried with Lewis Webb and died, and her husband administered on her estate, and, in 1838, Webb, as administrator of his deceased wife, and Henry Crowder,- another of the children, who had then come of age', instituted in Virginia against Thomas B. Paryear an action of debt on the guardian bond, in the name of the justices to whom it was payable for their benefit as relators, and therein recovered in October 1839,. against Puryear, one of the sureties, the sum of $1840 94; On the 26th March, 1839, Godfrey Crow-der, who was the father of Robert A. Crowder, and resided in Mecklenburg, made his will, which was proved in January 1840, after the testator’s death, and therein directed the remainder of his estate to be sold, and his executor John Nelson to apply a certain share thereof “to the payment of the legacies, which accrued to Henry, Giles, Mary, and John Crowder, children of Robert A. Crowder, from the estate of their deceased uncle, Henry Moody, and which is in the hands of Robert A. Crowder, as their guardian, so far as shall be necessary to discharge s,aid legacies with the accru ing interest, and the balance, if any, I give to be equally divided between the said Henry, Giles, Máry, and John Crow-der, children of my son Robert A. by his first wife.” The original bill in this case was then, May 1840, filed at the instance of Lewis Webb, and Henry Crowder, against Palmer and Robertson and Robert A. Crowder, setting forth the foregoing facts, except the will of Godfrey Crowder, and his death, and that they were unwilling to raise their judgment out of the property of Puryear, the surety, if they could have satisfaction thereof out of the estate of Crowder, the guardian himself, and they prayed an account of the trust fund created by the deed and to be let in for a due proportion thereof, as being entitled thereto under the provision in the deed for all debts contracted by Robert A. Crowder before the date of-the deed and not therein named, and as being entitled in that class of debts, for which the debtor had given sureties.

The trustees and Crowder answered. They state, that the principal object of the deed was to secure the debts due to the defendant Robertson and others, for which he and others were sureties in Caswell, and to prevent the sacrifice of the property by forced sales on executions, which would soon be obtained, and that the general clause was intended to embrace only such small debts as might have escaped the debtor’s memory, and not those from him to his children, for they were large and not forgotten, but were remembered, and were expected by him to be provided for by his father, God-frey Crowder, by a donation in his will for that purpose of such property as his father had intended for him, Robert A. Crowder, before his embarrassments ; and they insist that the provision made in the father’s will, as before mentioned, for his four grand children, was intended to be in satisfaction of their claim in the premises, and that the children must take the same accordingly, if sufficient to cover their whole demand, or pro tanto, if not sufficient. The answers likewise claim a.reasonable deduction for the education and support o.f the children by their father, not exceeding the interest accrued on the money in his hands. And the trustees submit, whether, if the plaintiffs be entitled at all to a part of the funds in their hands, they are to be paid equally among tke iagt c[ass 0f creditors, or are to be preferred as having debts, for which the debtor had given sureties.

The bill was afterwards, October 1841, amended by consent, by making Thomas B. Puryear and the other two children, Giles Crowder and John Crowder, plaintiffs, the latter two being infants and s.uing by T. B. Puryear as their next friend ; and is filed on behalf .of these plaintiffs and all other creditors of Robert A. Crowder, and it makes John Nelson, the executor of Godfrey Crowder, a party defendant, and sets out the will of the testator as before quoted, and charges that the sum to which the children of Robert A. Crowder may be entitled thereunder, was intended as a satisfaction of their respective demands on their father as their guardian, and calling on Nelson accordingly to account therefor, and submitting to receive under the deed of trust, as their debts, the balance due from-their father to them, after deducting the legacy from the grand-father. The bill further states, that after filing the original bill, the plaintiffs therein, Webb and Henry Crowder, finding the delays that wore likely to arise in the prosecution of this suit, raised .upon execution against Thomas B. Puryear the money recovered by them at law, in Virginia, and those persons submit that Puryear shall be substituted for themselves in the claim under God-frey Crowder’s will, to the extent of indemnifying him for the sum so paid by him, if sufficient therefor,.

To these proceedings Nelson made no defence. But in February., 1832, Thomas B. Puryear filed his bill in the Court of Chancery in Virginia, against Nelson, as executor of Godfrey Crowder, and against Webb and Henry Crowder, and also against Giles and John Crowder, and therein charged the appointment of Robert A. Crowder as guardian oí his children, and that he gave bond with Puryear as his surety ; that he wasted the estate of his wards and afterwards became insolvent; and that Webb and Henry Crowder instituted their action against Puryear for the recovery of what was due to them; and that, with the view of protecting and in demnifying Puryear from loss, and insuring the payment of their estates in their father’s hands aforesaid, to the four children, Godfrey Crowder, their grand father, made the disposition of his will in their favor, as before set forth ; and it charges, that the plaintiff therein, Puryear, had paid to' Webb and to Henry Crowder their recovery, and was entitled to- stand in their place in respect of the said legacy under G. Crowder’s will, and also that he was entitled to have the shares thereof belonging to the two other children, Giles and John, applied in discharge oí their father’s debt to them, in exoneration of himself, as surety therefor; and he prayed the proper accounts and relief in the premises.

To the bill all the parlies defendant put in answers ; that of John Crowder, who was still an infant, being put in by his brother Giles, who had then come of age. And on the 20th May, 1842, it was therein declared that under the will of Godfrey Crowder, Henry Crowder and Lewis Webb, as administrator of Mary Webb, had a right to receive'their due proportion of the fund directed by the testator to be applied to the payment of the debt in the said will mentioned to be due by Robert Crowder, as the guardian of the said Henry, Mary, Giles and John ; that the plaintiff, Puryear, had paid the said debt to said Henry and Mary, and that he was entitled to stand in their place. ' And it was decreed that Nelson, as executor, should accordingly account before a commissioner, who should ascertain the amount subjected by the will of -the testator to -the payment of the said children of Robert A. Crowder. The Master afterwards reported the sum.then in the hands of the executor and due to the four children, and that there would be a further sum of $861 84 (or $215 46 each), due to them on the 10th of February, 1833. And thereupon it was decreed on the 15th of October, 1842, that Nelson should pay to 'Thomas B. Puryear, the sum of $902 94, with interest on $872 32, part-thereof, from the 10th of February, 1842, till paid,-that being the sum in the hands of the executor due to Henry Crowder and the late Mary Webb, of .the fund directed by the will of the testator to bo applied to the payment of the debt due to tiiem by Robert A. Crowder, their guardian; and leave was reserved to the plaintiff, Pnryear, to apply for further directions as to the other funds coming into the hands of the executor, which may be subject to the payment of that debt.

After the foregoing decree in Virginia, the defendant, Palmer (the other defendants, Crowder and Robertson being dead, and Palmer being their representative) put in a further answer in this cause, in which he relies on the Virginia decree and the facts ascertained therein, and insists that Pur-year and the two children, Giles and John Crowder, shall look to that fund, as lar as it will extend, before they can come on the funds in his hands, if they can do so at all.

By an exhibit recently filed, it appears that an action was also instituted in Virginia, against Puryear, on the guardian bond, for the benefit and at the relation of Giles Crowder and John Crowder, in which the debt to them was on the 19th of May, 1843, found to be $1802 05, with interest at 6 percent. on $1010 02, part thereof, from 1st January, 1839, “subject to a credit for $1492 07, paid thereon on 10th of February, 1843, by John Nelson, executor of Godfrey Crow-der, deceased.”

Graham for the plaintiffs.

Norioood for the defendants.

Ruffin, C. J.

Although from various judicial proceedings in this case, and the circumstance, that many of these were founded on matters which occurred since the original suit began, several alterations and amendments became necessary in this cause, which have rendered the statement of it somewhat perplexed and prolix, yet -the questions for decision are not numerous, nor. we think, difficult. It seems to be clear, that under the provisions of the deed of trust, the debts of the father, as guardian to his children, are secured and must be paid pari passu with others of the same class. It was a debt which .existed at the .time .of the creation of th.e deed, and one for which the maker of the deed had given sureties, and the language of that instrument is express,.that all debts of that character, “ whether mentioned or not mentioned, are intended', and are to be as fully secured and paid as if they were specially named in the deed.”’ It is true, the parties say they \Vere not in their contemplation, and they give the Reasons why they were not. But that cannot control the express and positive provisions of the deed. There are some modern English' cases in which, under certain circumstances, the maker of a deed' of trust, for the payment of his debts, has been held at liberty to revoke those purposes, and direct other dispositions of the property. We are not aware that the doctrine' has been at all recognised in this country, and certainly it has not'as yet in this State.— But if it prevailed here, it could not affect this ease, inasmuch as a creditor, indeed the principal creditor and surety of the maker of the deed, namely. Mr. Robertson, was a party to the deed; being'one of the trustees, and the trustees accepted the office, sold all the property, and paid many of the debts. It is too late, after that, for the party to stop the further execution of the trusts, were he to attempt it. But he has made no such attempt; but only Slates, that in making the deed he had no purpose to include these debts, and for that reason contends they are not' included by the terms of the instrument. We think they are, and that they are to be paid in the class next to the judgments mentioned in the deed.

The court is likewise of opinion, that the grand-father, Godfrey Crowder, intended-the legacy to these children as a satisfaction, at least pro tanto, for-their demand against their father and his sureties. He directs his executor to apply the fund “ to the payment of the legacies &c., which are in the hands of Robert A. Crowder as their guardian, so far as shall be necessary to discharge said legacies.” Indeed, as he knew that his son was insolvent at the time he made his will, March 26.1839, his principal object in making the gift, and in expressing himself as he did; must have been to indemnify his son’s surety, who was then sued by two of the children. We think, therefore, that the children were un« der the obligation in equity to resort to that fund for their satisfaction, before coming upon the father or his surety: for, , ., . under the will, they are to have, ns a pure gift, what may remain after paying what their father owed them, and they cannot increase that fund by raising the money from the surety or their father, which the grand-father intended his estate to pay. It follows that the grand-father’s estate is thus made the primary fund for paying these debts, and that the children ought to resort to it in the -first place, and that, if they would not, and had recourse to the surety, the latter has the right to stand in their place and receive their share of the fund provided by the grand-father. This has been definitively done in respect to the shares thereof belonging to two of the children, Henry and Mary, by the decree of October 15th, 1842, under which Puryear was then reimbursed the sum of $902 94, and he has probably received since, the further sum of $215 46, each, from Nelson, on account of his payments to Henry and Mary’s administrator. Why the decree did not also declare the other two children, Giles and John, bound to receive the same sums from Nelson, and require Nelson to-pay them on account of their debts, and in exoneration of Puryear as surety, we do not perceive, as they were all parties to the suit, and the accounts fully taken. But it is not material, since it seems probable those payments have been since made to them by Nelson, and have been allowed as a credit in taking their judgment against Puryear, and the whole can be shewn before the Master, should the parties find- it -necessary to go before the Master for an account. We presume, however, the parties can readily settle among themselves, after knowing the opinions of the court upon the question raised. Upon this point, that opinion is, that only so much of the debt of Robert A. Crow-der to his children, as shall remain after applying thereto the fund provided by the grand-father, forms a charge against the trust funds of the father in the hands of Palmer. Upon the ordinary-principle of substitution, as applicable between the creditor and the principal and his surety, Puryear is em titled to stand, in respect of the. balance of the debt thus forming that charge in the place of Henry Crowder and Lewis Webb, whom he has fully paid, and, as regards the other two children, Giles and John, they will be entitled, or Puryear in their place, as it shall appear before the Master that Puryear hath or hath not paid the debt to them, to such part of it as was not discharged out- of Godfrey Crowder’s fund. There can be no deduction on-account of the education of the children. It was; by the settled rule of our courts the duty of Mr. Crowder, as father; to maintain his children, if of ability; and, il not, he should have the sanction of the proper court to an application of the children’s property to that purpose. We doubt not, that such is also the, law of Virginia, for if it had not been, the proper deductions would' have been made in the suits brought by the wards in that State, in which the surety would be inclined to make every defence. But here the father seems to have had'no lack of means, but to have possessed a competent fortune, until ruined by a mercantile partnership ; and he never designed charging his children; as is manifest by his keeping no accounts against them. Besides, the grand-father’s wilL covers the whole portions, interest as well as principal, and enough is got from that source to cover much more than all the profits of the ward’s property, which is all that could be allowed-for maintenance in any case : so there are many reasons why this deduction cannot' be admitted. The court can, however, only make these declarations, and cannot order the cause to a reference in the present state of the pleadings; At the time of filing the amended' bill, Giles and John Crowder were infants, and the billl is filed in their behalf by_Puryear, as their next friend. ■ It seems that Giles Cmwder hath since come of full age, and can prosecute the suit for himself. It may, likewise, be the case as to John • but it does not appear. If the case were sent in this condition before the Master, it would be the interest of Puryear to shew that he had paid the whole debt due to John Crowder, in order to lay hold of his part of the fund in Palmer’s-hands, while he would, at the same time, be chaged with the-4uty to the infant of shewing that he had not made such payment, if, in truth, and as it may be, he has not made it. The court cannot permit a suit to be carried on in the name an jnpant ^ a nex(. fr¡enc]) who can have an interest in conflict with that of the infant. The cause, therefore, must stand upon these declarations, until another next friend can be found, or the party himself shall come of age. When that shall be the case, it will be referred to take the usual accounts of the trust fund and the payments made thereout, with directions for allowing all creditors to come in under the decree and prove their debts in order to distribute the fund in conformity to the deed.

Pee- Curiam. Cause ordered to stand over.