Malcolm v. Purnell, 38 N.C. 86, 3 Ired. Eq. 86 (1843)

Dec. 1843 · Supreme Court of North Carolina

38 N.C. 86, 3 Ired. Eq. 86

MALCOLM & GAUL & OTHERS vs. T. R. PURNELL, TRUSTEE &c. & OTHERS.

A. makes a deed in trust to satisfy his creditors. The deed recites that A. owed several debts, which are specified by the names of the creditors and his sureties. It states too that “ he is indebted also to other persons whom he cannot now specify,” and further recites that “he is desirous of saving harmless the above named sureties and paying all his just debts, as well others as those named above, and of providing for his wife &c,” He then conveys his property in trust, that out of the same the debts above named shall be first paid and the sureties should be saved harmless, and the remainder &c. shall be applied to the sole use and benefit of his wife — Held that, under the directions of this deed, all the creditors, as well those particularly named, as those not named, came in equally.

Appeal from an interlocutory order of the Court of Equity of Halifax county, at the Fall Term, 1843, his Honor Judge Bailey presiding.

This was a bill filed in order to have a proper construction of a deed of trust made by James Frazier to the defendant, Purnell, and to have the trust fund applied under the direction of. the court. .The material parts of the deed upon which the construction was asked were these : The deed recited “that whereas Robert C. Bond and M. H. Pettway were sureties for the said Frazier to a note to James Moore for the sum of-seven hundred and fifty dollars, and R. C. Bond and R. 3. Hawkins were sureties for the said Frazier to tile Bank of the State for $1,100, and S. H. Gee, T. R. Purnell, R. J. Hawkins and Henry M. Purnell were sureties for the said Frazier to certain notes to B. F. Moore for $1,700, and the said Frazier was justly indebted to Michael Ferrall in the sum of $200, and to other persons whom he cannot now specify.” And it further recited tiiat “ whereas the said Frazier was honestly desirous of saving harmless the above named sureties, and paying all his just debts, as well others as those named above, and of providing for his wife Mary.” The deed then conveyed the grantor’s property to the trustee “in trust and confidence that the debts above named shall be first paid, and the sureties saved harmless — and, the remainder “shall be applied to the sole use and of the said Mary, wife of the said Frazier.”

The matters of account being referred to the Clerk and Master, a report was made, shewing the state of the fund, and submitting to the court, whether, according to the construction of the deed, the said fund should be applied in the first place to the satisfaction in full' of the debts and liabilities particularly specified and named in the deed, and the residue only to be liable to the satisfaction of the other debts of the said Frazier. Upon- consideration whereof, his Hon- or was of opinion, that the said fund was not, according to the true construction of the deed, previously applicable to the said specified'debts, but should be applied pro rata to and amongst all the debts of the said Frazier provided for by the said deed, and he ordered and directed accordingly. From which order the said M. H. Pettway, R. C. Bond and S. H. Gee prayed an appeal to the Supreme Court ;• and there remaining in the said cause other' matters to be settled before a final decree could pass, his Honor was pleased to allow the said appeal and directed the foregoing statement to be certified unto the Supreme Court, according to the statute regulating appeals from interlocutory orders and decrees.

Badger and B. F. Moore for the plaintiffs,

Iredell for the defendants.

Ruffin, C. J.

We think the intention is unequivocal, to put all the debts on the same footing.

The language is express, that it was the purpose to pay all the debts- — “ as tvell others as those named above.” It is said, however, that a preference is given to the enumerated debts in that part of the deed, which declares the trusts, and provides that,' “the debts above named shall beJlrst paid.” But the expression “aboye named” is not used in a restricted sense, as meaning the debts particularly specified, as contradistinguished from the debts generally, but is used to signify “all the debts which had been mentioned in the previous part of the deed.

This construction is unavoidable ; for unless it be correct, ^lere ‘s no pro^isi0'11 for the debts not specifically designated, inasmuch as according to the deed alter “the debts above name¿| sila][ be first paid, then” the provision for the wife arises. But to exclude any of the debts is contrary to the declared purpose of the deed; and, according to the obvious intention, all debts are to be discharged before the wife is to get any thing. That is the order to which the word “first” applies-in the declaration of the trust; which means that the debts, as a whole, are to be paid before the wife can come in. The provision for her shews the expectation of a surplus after satisfying all the creditors. There was, therefore, no motive, at the time of making the deed., for distinguishing between the - different debls ; and no preference is given. It will be certified to the Court of Equity, that there is no error in the decree.

Per Curiam, Ordered accordingly.