Case ID: serg-rawl_14/html/0185-01.html
Source: Caselaw Access Project
Author: {"author": "Duncan, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

[Lancaster,
    May 24, 1826.]
    Appeal by JOHN WITHERS from a decree of the ORPHANS’ COURT of Lancaster County.
    APPEAL.
    The interest of a child in the land of his deceased father, continues to be real estate, after an order has been granted to the administrator to make sale of it and until it is actually sold, and cannot, by any parol agreement, be converted into • personal estate, so as to effect the lien of a third person.
    Therefore, a parol agreement by the son of a decedent, that his brother, who had advanced money for him, and who afterwards as administrator of the father, obtained an order of the Orphans’ Court fijir the sale of his real estate, should repay himself out of his brother’s share of the proceeds of the land, when it should be sold,-will not prevail against a judgment, obtained after the agreement .was made, and before the sale took place, by 'a third person, who had no knotv-ledge of the agreement.
    This case came before the court on an appeal by John Withers, from the decree of the Orphans’ Court of Lancaster county, on a citation to Michael Withers jr. and others, to show cause why a certain judgment of Michael Withers and Samuel Eshelman, assignees of John Evans against Michael Withers, jr. should not be paid first, out the said Michael W'ithers, jr’s. share of the proceeds of his father’s estate, sold by his administrators under an order of the Orphans’ Court.
    The facts, as they appeared in a case stated, were these:
    A certain Matthew Irwin having arrested Michael Withers, jr. on a capias ad respondendum, for the use of II. B. Griffiths, special bail was entered by Christian.Sheek, who afterwards took out a bail piece and arrested the said Michael Withers, jr. thereon. At the request of Michael Withers, jr., his brother, John Withers, undertook to indemnify Bheek, for having become bail for Michael, provided he would discharge him from arrest on the bail piece, which was accordingly done. Michael at the same time promised to indemnify John for the engagement he had entered into on his behalf. Christian Sheek having been sued as special bail of Michael Withers, jr. and cotnpelled to pay the debt interest and costs, brought suit against John Withers on his promise of indemnity in the Common Pleas of Lancaster county, to January term, 1813, obtained judgment and issued an execution against him. Of this judgment and execution John Withers gave notice to Michael Withers, jr. and requested him to pay the mdney. Michael acknowledged the obligation he was under to pay the money, but his embarrassments prevented him from doing so. John Withers, the father of. Michael and John, died in December, 1813, as was supposed for some time, intestate, leaving nine children. John and Jacob Withers took out letters.of administration on their father’s estate, and on the 23d of March, 1814, the Orphans’ Court of Lancaster county granted an order to the administrators to sell such parts of the real estate as the heirs had declined taking at the appraisement. On or about the first of Jipril following, it was agreed between John and Michael, that John should pay off the judgment obtained against him by Sheek, and to indemnify himself, retain the amount of it out of Michael’s share of the proceeds of his father’s estate, when the sale should take place. In pursuance of this agreement) John, on the 5th of July, 1814, paid to the sheriff the sum of one thousand two hundred and sixty dollars and seventy-three cents, the amount of the debt, interest and costs indorsed upon the execution. In consequence of the wish of the heirs of John Withers, deceased, that the property should not be sold, and the discovery of a paper purporting to be his will, the sale did not take place at the time ap~ -pointed; but some time afterwards, the heirs, (some of whom were the devisees) of John Withers, agreed to consider the will as a nullity and that he had died intestate. Part of the real estate was then sold and applied to the payment of debts and the residue was sold in the year 1821. The money produced by the sale was paid into court, to be applied as the court should direct. Michael ' Withers, jr was insolvent.
    On the 4th of October, 1814,John Evans, obtained a judgment against Michael Withers, jr. for one thousand eight hundred and thirty-eight dollars and forty-five Gents, the greater part of which he discharged.
    On the 8th of Jlugust, 1815, Evans assigned the residue of this judgment to Michael Withers and Samuel Eshelman, the latter _of whom survived the former. .
    The facts set forth in the case stated, so far’as they depended upon parol evidence, were derived solely from the deposition of Mic/tael Withers, jr., to whose testimony the counsel for Eshelman objected, on the ground that he was interested, notwithstanding he had been released by John Withers. This deposition was read on the argument in this court; and contained some matters not mentioned in the case; but it is not necessary, in order to understand the opinion of the court, that they should be here stated.
    
      The amount of the share of Michael Withers, jr. remaining in court was about seven hundred dollars, which Samuel Eshelman claimed to have applied to the satisfaction of his judgment, while John Withers claimed it utfder the agreement with his brother Michael.
    
    The Orphans’ Court decided, “ that John Withers had no lien for the amount of his claim, and that the judgment of Evans for the use of Samuel Eshelman, was entitled to payment in preference.”
    From this decree John Withers entered an appeal to the Supreme Court.
    
      Hopkins, for the appellant.
    When John Withers paid the money, for which he had been sued, in consequence of his engagement to indemnify the bail of his brother Michael, he had a meritorious claim against Michael, which Michael directed him to satisfy out of his share of the proceeds of the sale of his father’s real estate, which was to come into the hands of John, as one of the administrators of his father. Michael was entitled to one ninth of his father’s real estate, and had a right to dispose of it as he thought proper. Evans’ judgment against, him was entered on the 4th of October, 1814, prior to which, viz. on the 1st of Jlpril, 1814, Michael had agreed with John to appropriate his share of the proceeds to the payment of John’s claim against him. Though the land was not actually sold until long afterwards, yet it was to be considered as money from the time this agreement was made. The children had previously refused to take their father’s land at the appraisement, and the Orphans’ Court, at their request, granted an order of sale. Michael was the'absolute owner of his share. That share was to be money, and therefore the fund out of which it. was to be raised was money. Land agreed to be sold is considered as money. Yohe v. Barnet, 1 Binn. 358. 2 Powell on Cont. 83. If the agreement had been in writing, then no doubt it would have been good against a subsequent judgment creditor, and yet the writing would have been no more a conveyance of the legal estate, than the parol agreement. The legal estate was not necessary to make the appropriation valid. This court uniformly proceeds ae-cordingto the rules of equity, and equity considers an executory contract as executed, from the time theagreementisexeeuted. Powel on Cont. 55,56. M‘Call v. Lenox, 9 Serg. & Rawle, 302. The statute of frauds cannot affect this case. On the faith of this agreement, John Withers, paid money to Christian Sheek, the bail of his brother Michael, who had obtained judgment and taken out execution against John, upon his engagement to indemnify him as the bail of Michael. It was a parol agreement carried into complete effect on one side by payment of the full consideration money, and is not affected by the statute of frauds. From the time of making the agreement Michael was trustee for his brother John. Chancery would, under the circumstances of this case, decree the execution of the agreement. 2 Fonb. 49, note c. 2 Fern. 151. 1 Powel on Cant. 292. 1 Madd. Ch. 301-, 302. 3 Atk. 4.
    
    •4. If Michael had sued John for one-ninth of the proceeds of his father’s estate, John might have set off this debt. Jeffs v. Wood, 2 P. Wms. 129. Wain’s assignees v. Bank of North America, 8 Serg, & Rawle, 77. The judgment creditor has no better right than Michael, against whom the judgment was obtained. It was subsequent to the agreement, and.bound the right of Michael such asdt was, at the time, and this right was subject to the agreement. The case of Finch v. The Earl of Winchelsea, is much to the purpose. A. agreed to convey land 'tp B. for a valuable consideration, and then confessed a judgment to C. The agreement shall be preferred to the judgment; the money paid was an adequate consideration. Foster v. Foust, 2 Serg. & Rawle, 11, went upon similar principles. It is no objéction that the judgment creditor had no notice of the agreement, for he was not entitled to notice.
    Park, contra.
    
    An execution was issued on Evans’ judgment against Michael Withers, jun. which was returnable to November, Term, 1814, and was returned, levied on his share of his father’s real estate, and on a house of his own. On the 8th of August, 1815, this judgment was assigned to Michael Withers, sen. and Samuel Eshelman, the sum then remaining due upon it being about equal to the share of Michael Withers, jun. of the proceeds of sale, remaining in the Orphans’ Court. Of the parol agreement nothing was heard until the month of January, 1824, when application was made to the Orphans’ Court, to permit John Withers to retain the money, in order to satisfy his claim. The only evidence of this agreement, is that of Michael Withers, jun. himself, -wjio was not a competent witness, notwithstanding he was released. But if he was competent, he does not fix the time when the agreement was entered into, with any degree of certainty. He contradicts himself, first saying that the agreement was entered into after, and then before, John paid the money. On the whole it is by no means clear, that the agreement was prior to the judgment. Supposing it, however, to have been prior, the judgment must prevail. This agreement was kept secret for ten years, and being by parol, it can have no effect in law or equity, against a judgment creditor, who stands upon much higher ground than the defendant in the judgment. He has at least an equal equity, and having the law also with him, he must prevail against one who has only equity. 1 Fonb. 38. 2 Fonb. 147, note.
    There was not even a parol agreement for the conveyance of the land; but merely an agreement that when the land was sold, John Withers should be paid out of the proceeds of the sale. It was at that time in every respect land, and remained so, until it was sold. Ferree v. The Commonwealth, 8 Serg. & Rawle, 312. Whatever operation this agreement might havé between the parties to it, it could not affect strangers^ the chancellor would probably decree the execution of it as regards them, but not to the prejudice of a third person, without notice. The parol agreement, *ft cannot be seriously contended, (though the argument seems to go that length) has greater validity than in unrecorded mortgage, and it has been decided that an unrecorded mortgage shall not prevail against a subsequent judgment creditor. Semple v. Burd, 7 Serg. & Rawle, 286. One who advances money upon the credit of a judgment, holds the position of a mortagee or purchaser, who is not affected, even by a parol sale of the land, when the money has been paid, and possession delivered, unless he has had notice of the sale. Lessee of Billington v. Welsh, 5 Binn. 129. 7 Serg. & Rawle, 64. Still less can he be affected by a prospective appropriation of the proceeds of the land, when it shall be sold.
    
      Reply. Michael Withers,
    
    was a competent witness. John had released him, and he remained liable to Evans’s judgment. He therefore testified against his interest; for his evidence tended to deprive the assignees of Evans of this money, which would have discharged the judgment. Taking the whole of his deposition together,"it was clearly proved that the agreement was prior to the judgment, and if so, it must prevail. It is not denied that ?l purchaser without notice, from a trustee, shall hold the land discharged of the trust; but a judgment creditor is not a purchaser, and has never been held in Pennsylvania, to stand on the same ground. The case cited from 7 Serg. & Rawle, 286, differed from this; it was that of an unrecorded mortgage, which is declared by an act of assembly to be of no validity. John Withers was in effect a purchaser w ho had paid the whole consideration. «
   The opinion of the court was delivered by

Duncan, J.

I refer to the case stated on the appeal, for the facts, and on that statement, proceed to give the opinion of the court.

The interest of Michael Withers in his father’s lands, until it was sold by the administrators, continued real estate. It was not possible by mere words to convert it into personal property so as to affect the lien of any third person; the judgment of Evans assigned to Eshelman bound it at law.

Nothing could be more pernicious than cases of parol trust or secret understandings, and nothing Could be more secret than the trust set up by appellant, for it is not only not reduced to writing, but there is no witness to prove it, except Michael Withers himself. There would be no safety, if these secret acts between brothers, locked up in their own breasts, relative to their father’s estate, should prevail against bona fide judgments by strangers.

If this claim can be supported, it must be because a trust was created, for no legal estate passed; and if such a trust were to prevail, it would be repealing the act of frauds and perjuries, which enacts that no estate or interest in land shall be created by parol only, and no trust can be raised by mere words, unless where it is raised by the act and operation of law. ■ A departure from the wholesome provisions of the clear and positive enactments' of that act, of which it has been said by English jurists, that every line of it deserved a subsidy, has been regretted; and judges, instead of extending the exceptions, are drawing in and conforming to the statute. It must be conceded, that at law no interest in the land passed to John Withers. Although the seventh section of the statute of frauds, which enacts that all declarations or confessions of trust or confidence of any lands, &c., shall be manifested and proved by some writing, is not incorporated in our law, yet in substance it is comprehended in the first section of the act: — “No interest in land, either in law or equity, shall pass by parol only, any consideration for making the agreement to the contrary notwithstanding, except for a term not exceeding three years; nor except by deed or note in writing signed by the party, or by the act and operation of law.” Trusts arising by act and operation of law, are where trust money has been laid out in lands, or' where one man pays the money ánd the conveyance is to another. These, and cases falling within the same reason,.áre the only eases of resulting trusts by act and operation of law, which are within the exception .in the act of assembly. Wallace v. Duffield, 2 Serg. & Rawle, 521. To raise a trust by act and operation of law, an actual payment by cestui que trust must be-shown, to have been made at the time of the purchase. Stiner v. Stiner, 5 Johns. Ch. Rep 1. Cases of fraud are always exceptions between the parties to the fraud.

It is said, that these brothers had a right to enter into the agreement, that one who had advanced money for the other, should be paid out of the father’s descended estate, because no other right had then interfered. So they had, but those -agreements, to have a binding effect on others, must be in the mode pointed out by the law, and if they are not, they cannot bind the legal rights of others. They cannot deprive a creditor'of the security he has obtained, by an agreement which the law says shall pass no interest in the land; and where the application is made to a court of chancery, that court never would grant relief to such secret trust as-this, nor take a plank from'a creditor. It is further said,.this was a pledge. T know of no effectual pledge of land but a mortgage Now, if this had been a mortgage, the law requires it to be published by record; thus showing that the law will not tolerate a secret pledge of land. Make the most of- John Withers’ case, the agreement was a security for indemnity, by parol, on land. The land was not in his hands further than as he was the instrument, the attorney, the officer, of the law, to make sale. The accident of his being co-heir makes no difference, — the same consequence'must arise if the party was a stranger. The equity of the judgment creditor, is not only equal -to that of the appellant, but it is superior: he has both the law and equity on his side, and must prevail. This principle is so familiar, that it would be a waste of time to cite authorities to prove it.

The object of all registering acts is to protect third persons, but not to enable the parties themselves to set it up against their own acts. In England, where title deeds are deposited with an agreement to mortgage, this has been treated in the light of an equitable mortgage. But it is apprehended, that one who purchases in a register county, without notice of the deposit and agreement, would be protectéd. He certainly would here. An unrecorded mortgage will not prevail against a subsequent judgment. It w’ould be a matter of astonishment to find the law so inconsistent, as that a man who has obtained a formal mortgage which he neglects to record, should be postponed to a subsequent judgment; and yet that a parol agreement, known only to the contracting parties, and established only by the oath of one of them, should prevail against such judgment. If it was in writing it could not, or the registering act is a dead letter. That it should be set up as a parol agreement, and obtain because it was not reduced to writing, if when it had been reduced to writing, but not recorded, it would be void, would be an obliquity not to be found in t,hé law.

I am opinion, that the decree of the Orphans’ Court should be affirmed.

Decree affirmed.