Case ID: sc-eq_6/html/0119-01.html
Source: Caselaw Access Project
Author: {"author": "Nott, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Administrator of Hugh Rutledge v. Executors of Sarah Smith and others.
    The bill alleged that in 1783 Thomas Smith, the grand father, complainant’s intestate, being possessed a very large unincumbered estate, executed his will, in which he made a very extensive and minute of his property among his numerous family. That among other legacies, he bequeathed £300. to each of his grand chiidren. That some of his children becoming involved, and being apprehensive that his objects might be defeated, either from this circumstance or the complicated' character of his will, he, on the 31st of December 1787, made another will, in which he devised and bequeathed the whole of his estate, real and personal, to his wife Sarah Smith absolutely, and died soon afterwards. That although the will was absolute on its face, yet it was made in trust, that the executrix, Mrs Smith, should pursue implicitly the directions of the first will; the last will being only a power to enable her more satisfactorily to fulfil the desire of the testator as set forth in the former instrument: that the property was received by Mrs Smith on this express engagement. The trust was proved by evidence of the uniform and repeated declarations of Mrs Smith in her life time — by her conduct in the distribution of the property received, which conformed strictly with the professions of the first will. That the legacies were all paid, as far as complainant could learn, except that to his intestate: that he being a youth, and generally absent from the state, did not receive payment. But on the 23d of June 1809 Mrs Smith, aware of the justice of his claim and as a declaration of the trust under which she took the estate of the testator, executed “an acknowledgment in writing,” by which she declared that “ there is due to her grand son Hugh Rutledge the sum of £1367 18s. on account of the legacies left him by his grand father Thomas Smith, Esq., and promises that the same, together with the interest to grow due thereon from this day, shall be paid to him by her executors, out of whatsoever- estate she shall die possessed of or be entitled unto, in preference to any other claim thereon, within one year after the day of her death, unless it should be previously paid by her.” That this acknowledgment was witnessed by Peter Smith. That subsequent to the death of Thomas Smitht and anterior to the above acknowledgment, to wit, in 
      October 1799, Mrs Smith executed a voluntary conveyance of a large portion of the property which had belonged to Thomas Smith to her son Peter Smith, in trust for his children : that the legacy due to complainant’s intestate remained unpaid at the death of Mrs Smith in 1810. Mrs Smith made her will in 1799, and Judge Grimke, Peter Smith, James Smith and Benjamin Smith, Esqs. were appointed executors: that Judge Grimke died in possession of a house in Church street which had belonged to Mrs Smith. In October 1819 the complainant obtained a judgment, on the above acknowledgment, against the executors of Sarah Smith, for §10,094.98 on which an execution was issued and returned nulla bona.
    
    
      a written ac-executor of a uj^es-tate of the tes-ed'bylhe'ex-ecutor or trustee to a voluntary purchaser, with notice.
    
      1825.
    
      Charleston.
    
    
      The bill prayed that this legacy might be paid out of the estate of Thomas Smith, part of which was in the possession of the representatives of Judge Grimke, and part in possession of Peter Smith, as trustee for his children : that it might also be regarded as a debt due by Mrs Smith from one year after the death of Thomas Smith: and in that view, the conveyances to the children of Peter Smith being voluntary, and when Mrs Smith was much indebted, that it might also be regarded as an equitable mortgage on her estate from the time of its date. An account and discovery were also sought.
    The answer of Peter Smith admitted the execution of the original will, but contended that it was revoked by the last will; and he neither admitted nor denied the trust. He admitted the sufficiency of his father’s estate to pay all his debts and legacies, but contended that the whole was given to his mother. That the deed to himself, in trust for his children, was voluntary; but submitted that his mother had a right to dispose of it.
    The answer of Mrs Gi'imke, a daughter of Thomasr Smith, admitted the existence of the original will, which, she said, was the uniform guide by which her mother was governed in the distribution of her father’s estate; was'always so declared by Mrs Smith; and it was we^ understood in the family from the repeated decla-tions, as well as the conduct, of Mrs Smith, that the object of the second will was only to secure the complete execution of the provisions of the former will. That the property of Mr Smith was distributed among the persons entitled under the first will. The rest of Mrs Grimke’s answer related to the right under which she claimed the house in Church street.
    The answer of James Smith stated, that he was the son of Thomas Smith; that, until he left Charleston in 1798, he always transacted the business of his mother as executrix df his father’s will. She always recognized the first will referred to in complainant’s bill, as containing the desire of her deceased husband, and as the rule by which she was governed in the management of the estates. The first will was altered in consequence of some embarrassment in the affairs of testator’s sons, by which he apprehended that the property devised to them would go to their creditors, and not to their families ; that reposing implicit confidence in his executrix, he gave her the whole property, under an engagement that she would fiilfil his desire as expressed in his first will, with which she was well acquainted. That this was often declared by Mrs Smith, and perfectly so understood by every member of the family. The property was divided and the affairs of the estate settled in 1792. Mrs Smith received, under the first will, about $50,000. The estate of Thomas Smith was very large, consisting of real property of great value, and personal effects to the amount of ‡-. After defendant left Charleston in 1798 Mrs Smith’s affairs were chiefly managed by her son Peter Smith. After filing the bill, Peter Smith died, and the suit was revived against his executors, R. R. Gibbes, and the cestui que trust, Mrs Ann Gibbes- 
      and Middleton Smith. In the answer of Mrs Gibbes she stated, that she believed her father, Peter Smith, conveyed some of the property, mentioned in the trust deed, to his mother, Mrs Smith, for the purpose and on the condition, that she would reconvey this with other property in,trust for his children, which was accordingly done.
    Waties, Chancellor.
    I should have felt a difficulty in deciding on the present claim, if it had been necessary to ascertain previously the interests of all the parties who are entitled to portions of the estate of Thomas Smith; but I think that this claim has been established on independent ground, and may be provided for without interfering with any other interest which has been manifested to the Court. All the parties admit, that though the last will of Thomas Smith gave the whole of his estate unconditionally to his wife, yet that it was intended only as a trust, and that the estate was to be distributed by her according to the directions of a preceding will. The last will has been produced, .but not the preceding one. This however has been proved to have existed, and to have served as a guide for Mrs Smith in the distribution which she made of the greatest part of the estate. And it is admitted by all parties that in such preceding will a legacy of £300 sterling was left by Thomas Smith to each of his grand children (one of whom was Hugh Rutledge, the complainant’s intestate), with interest from their respective births. It further appears that Mrs Smith, by her written obligation, recognized this claim as so derived, giving it a preference to all others, and making it a specific charge “ on whatever estate she should die possessed of.” The only question then made in this case is, whether a house and lot in Church street, of which Mrs Smith died possessed, is liable to this claim % It has been contended on the part of Mrs Grimke, one of the defendants, and who now holds possession of the house, that it ought not to be made liable until ,the personal estate of Thomas Smith is exhausted, and that a large portion of this, having been illegally conveyed by Mrs Smith to Peter Smith, ought first to be resorted to. I can see no legal ground for such a distinction. If the claim of the complainant’s testator was to be regarded only as a common legacy, the personal estate of Thomas Smith alone would be liable to it. But Mrs Smith, by her special obligation, has converted it into a debt, and made it a charge on her whole estate, and there was a good consideration for this. The legacy had been long due, and the payment of it was still to be postponed until Mrs Smith’s death. The complainant then has a lien on the house and lot, as a part of the estate of which Mrs Smith died possessed. He might indeed pursue the personal estate of Thomas Smith, conveyed by her to Peter Smith: for her written obligation recognizes the preexistence of the intestate’s claim; and the conveyance to Peter Smith being voluntary and otherwise invalid against creditors, could not affect this or any other legal demand. But the property thus conveyed is said to be so involved or so disputed, that the complainant might not be able to make it available, and it would be unjust to refer him to a doubtful fund, when there is.a certain one to which he has a right to resort. The claim of Mrs Grimke to the house has not been supported by any legal evidence. She holds possession of it under a conveyance to Her, since the death of Mrs Smith, from Peter. Smith, as executor of Thomas Smith, and the consideration is alleged to be her claim to a residuary share of the estate of her father, Thomas Smith. But this claim has not been manifested by the production of the will of the said Thomas Smith, on which it is founded, or by any other legal proof. And as Mrs Smith was in possession of this house at her death, it must be presumed that she held it previously as a part of the estate of Thomas Smith, subject to her disposition, which would give her a right to charge it with the claim of the complainant’s intestate, and no subsequent disposition of it by the executor could divest the charge. It is therefore ordered and decreed, that the Commissioner do ascertain the amount of the complainant’s claim; that the executors of the late John F. Grimlte do account for the rents of the house in Church street, received by him in his life time, and by them since his death, and that the same be applied to the payment of the said claim. It is further ordered, that if the said rents be insufficient to discharge fully the said claim, the Commissioner do forthwith sell the said house, to discharge the same. It is also ordered, that if the said rents and proceeds of the sale of the said house be also insufficient for the purpose, the said complainant may enforce his execution against any part of the personal property, conveyed as aforesaid by Sarah Smith to Peter Smith, which belonged to the estate of Thomas Smith. And lastly, that the costs be paid out of the proceeds of any of the said funds.
    
      April 1823.
    
      24 March 1825.
    On an appeal from this decree, so much of it as regarded the house in Chwrch street was affirmed. On the other point the opinion was suspended.
    From the report of the Commissioner it appeared, that he had tried in vain to sell the house in- Church street. But the maximum value was $4,000. The nett amount of rents was less than $2,000, and the demand of the complainant was now about $12,000. Under these circumstances the complainant prayed, that he- might be permitted to enforce his execution against the other property designated by the decree of the Circuit Court.
    
      JJunkin, for the motion.
    The' answers of James 
      
      Smith and Mrs Grimhe and, above all, the written declaration of Mrs Smith go to prove, beyond doubt, that the éstate was devised to Mrs Smith, in the trust and confidence that she would dispose of it as provided for in the first will. When a gift is absolute, though coupled with a secret trust, a letter from the donor to the donee is a sufficient declaration of the trust: and where one procured a former will to be revoked and the estate devised to him, on a promise that he would only hold to the usé of the legatee under the first will, he was declared a trustee. 2 Bridgm. 607. 2 Vern. 50. 106. 2S8. 1 Vera. 296.
    It will be contended, that under the 7th section of the statute of frauds, the trust must be in writing; but the better construction is, that the evidence of the trust, and not the trust itself, must be in writing, which writing may be subsequent to the commencement of it. The declaration of the trust is the only thing required to be in writing. 3 Ves. 696. 5 Ves. 315. 12 Ves. 74.
    A wish, desire or recommendation, made by a testator, is as obligatory as a positive request. Harding v. Glyn, 1 Atk. 469. 3 Bridg. 46. Brown v. Higgs, 8 Ves. 574.
    The former decree of the Court subjects the property in Church street to the payment of this demand; and it is manifest that the other judgment creditors of Mrs Smith have a lien on the property conveyed to Peter Smith in trust; as that conveyance was voluntary and void as to creditors. To that fund they ought to be transferred, and this fund left to the application of this demand. When a trustee has accepted the trust he cannot afterwards divest himself of it; and the Court will follow'the trust estate.in the hands of a purchaser to effectuate the trust, if he was informed of the trust. P(>ter Smith is a witness to Mrs Smith’s acknowledgment of the trust, &c. Shepherd v. M’Evers et al. 4 Johns. Cha. Rep. 136. If Mrs Smith was a trustee to pay the legacies of the first will in one year after the death of the testator, she became debtor to complainant in the amount of the legacy ; and a voluntary deed is void as to him. Toionshend v. Windham, 2 Yes. Sen. 10. There is no case in which a man has made a voluntary deed to his child, and died indebted, in which the creditor had a right to a lien on the estate for the payment of his debt. 1 Madd. 218. 3 Johns. Cha. Rep. 498. All the authorities are reviewed (and result in the same conclusion) in Sexton v. Wheaton, 8 Wheat. 242. Tunno v. Trezevant, 2 Desaus. Rep. 264, was a case founded in consideration of marriage, which is an exception to the rule.
    
      King, contra.
    The creditors of Mrs Smith are not parties to this proceeding, and the question as to postponing them as respects the property in Church street, and the argument on this point, are gratuitous. The decree of the Court of Appeals cannot be otherwise regarded than as overruling the decree of the Circuit Court, and concludes the question. But if the question were not disposed of, an attempt would be made to shew that the question was with the defendant. It is admitted that if the parties to be charged acknowledge the trust, the statute is satisfied. Now the writing here is not a general admission that defendant accepted the trust in reference to the first will taken in its greatest extent, but is confined to the specific case of complainant, and cannot therefore affect the estate generally.
    
      Petigru, Attorney General, in reply.
    The question is, whether complainant has the right to impeach the voluntary deed to Peter Smith, and to resort to the trust fund 9
    The opinion of the Judges, on which defendant relies, concedes the fact that complainant’s was a legal demand, and founded on a good consideration: and the decree of ^1<3 Court places it on that footing. Admitting then it is a mere debt, the deed being voluntary would be void; or if it be put on the footing of a trust, it is equally void, and complainant may pursue the fund. The admission is, that a debt was due to complainant, arising out of a legacy bequeathed him by his grand father, and all the circumstances shew the truth of the fact.
    The cases prove that the acknowledgment of a- secret trust has all the effects of a direct trust, and all the rights attach under it. 9 Ves. 519. 10 Ves. 471. Under the '4th section of the statute of frauds, the contract cannot take effect until it is reduced to writing. 2 Bro. C. C. 569. But under the 7th section, by a subsequent written admission, the statute is fully satisfied. 2Atk. 165. Upon the answer of the defendant admitting the trust, although it was not pretended that it was in writing, the Court decreed that the trust should be carried into effect. 6 Ves. 52. 1 Cruise,'463. These are cases where the defendant was called on and compelled to answer. This case is stronger in as much as the acknowledgment was voluntary. Ambrose v. Ambrose, 1 P. Wms, 321. A declaration of a trust refers back to the original deed, although made long afterwards. Ryall v. Ryall, 1 Atk. 59. And this is an answer to the objection that the declaration in this case could not operate to affect the deed to Peter.
    
    An executor is liable on his express promise to pay a legacy. 5 Term Rep. 590. 3 East, 124. In Lush v. Wil-, kinson, 5 Ves. 384, a bill by a subsequent creditor to avoid a prior deed was dismissed, on the ground that there were' no antecedent debts.
    But when there are antecedent creditors, the subsequent creditors may set aside a fraudulent deed.
    
      Nov. 1825.
    
      King. The acknowledgment is a testamentary paper, and not a contract. 4 Ves. 555.
    To set aside a deed or settlement for fraud, it must appear that it was made with a view to defraud creditors. 4 Desaus. 232. 3 Desaus. 1.
    The deed to Peter was made in 1799, and this bill was not filed until 1820; so that á period of more than twenty years had elapsed, and the Court will not now open the transaction. 13 Ves. 397. 2 John. Ca. 432.
   CüRia, per

Nott, J.

By the decree of the Chancellor the two following points appear'to have been decided in this case.

1st. That Mrs Smith, the executrix of T. Smith, was a trustee under his will for the purpose of carrying into execution a former unexecuted will which he had made.

That although no trust was actually expressed, yet there was a secret confidence reposed which subjected her to the liabilities of a trustee.

2d. That being such trustee, she could not defeat the interest of the cestui que trust, by disposing of the property, except to a bona fide purchaser for a valuable consideration, without notice. And that as Peter Smith was a mere volunteer the property contained in the deed to him was subject to the claim of the plaintiff. The decree therefore proceeds to subject the real and personal estate of Mrs Smith to the payment of the plaintiff’s demand, and if that should prove insufficient, then the property of Thomas Smith which has been conveyed to Peter Smith is made liable also. The first part of the decree has been affirmed by the unanimous opinion of the former Court of Appeals in Equity. That Court expressed no opinion on the other part, and it now remains to be decided whether that part of the decree shall be affirmed or reversed. In considering this question we must first ascertain what has been decided by the former Court of Appeals; for so far as the case has f}een decided by that Court the decision must be obligatory on this, and' we must so dispose of the remaining questions connected with the decision, as to render the decree consistent with itself. The late Court of Appeals have not left us the reasons on which they supported the decree of the Chancellor. We ought therefore perhaps prima facie to presume, that they have adopted the reasons of the Court below. But as it does not follow that a concurrence of opinion necessarily admits a concurrence in the reasons on whicli that opinion is founded, it becomes necessary to go into an examination of the question. And if we find that the grounds on which the decree of the Circuit Court is founded do authorize the decree of the Court of Appeals, and can see no other grounds on which it can be supported, then it strengthens the presumption that the Judges of the Court of Appeals adopted the reasons there assumed as the grounds of their decision. On the contrary, if we find that those reasons will not support the decision, but see' others on which it can be, supported, then we ought to adopt those as the grounds of our decision and shape our decree accordingly.

All must bef¡nUSt writing except such as arise by con-la™etIThef trust need not writing if it can be proved

The first question is whether there is sufficient evi-of a trust to support the decree on that ground1? The objection to that part of the case is, that under the statute of frauds all declarations of trust must be in . . . . writing except such as arise by construction ol law, and ^ere was no such declaration in this case. But it is not considered necessary that the trust should be constituted by writing, it is sufficient to shew its existence by yyyRtgn evidence. Randal v. Morgan, 12 Ves. 67. And for' that purpose a letter of the trustee acknowledging the trust has been held sufficient. Crook v. Brooking, 2 Vern. 50. So an acknowledgment of a trust, though not in writing, will bind the party. Thynn v. Thynn, 1 Vera. 296. 2 Vera. 288. Foster v. Hale, 3 Ves. 696. 5 Ves. 315. Indeed there is no principle better settled than that a voluntary acknowledgment will dispense with written proof. In the case of Strickland v. Aldridge, 9 Ves. 516, the Lord Chancellor went so far as to compel the defendant, to whom property had been devised absolutely, to discover whether the devise had not been coupled with a secret parol trust that he would hold the property for a particular purpose not expressed in the will. And in that case he said, “ if a father devises to hi's youngest son, who promises if the estate is devised to him he will pay £10,000 to the eldest son, this would compel the former to disclose whether that passed in parol, and if he acknowledged it, even praying the benefit of the statute, he would be a trustee to the amount of the £10,000. Now here is an express and voluntary acknowledgment of Mrs Smith that she is indebted to the complainant’s intestate £1,000, as a legacy left him by his grand father. It is not a debt created by her promise ; but it is an acknowledgment of a preexisting debt. If she was indebted to complainant’s intestate to that amount, it must have been on the ground of a secret confidence reposed in her by her husband, which she had promised to perform. For without such promise no such debt could ever have existed.

But a voment will dis-wvitteiTpvoof.

Equity has compelled the mentTf a^fa-tn?sti statute of reu¿fdon?S

It is not to be sure a declaration in so many words that she was a trustee; but it is án acknowledgment of facts which admit of no other conclusion. For if she was indebted to him a' legacy left him/by his grand father, then she was a trustee for the purpose of carrying that will into effect. All the parties regarded her as such, and the whole course of her administration goes to establish the fact. She paid every legacy contained in that will except the one due the complainant’s intestate. Peter Smith must have considered her as such; for he received the legacy to which he and his family were entitled to. He was a witness to the contract in which jjis mother acknowledged the existence of this debt; and as her executor suffered a judgment against himself for the amount. It is from this view of the subject that this Court now presumes the Court of Appeals supported the decree of the Circuit Court, and they can see no other upon which it can be supported. And if that is the ground it seems to follow as a necessary consequence that complainants have a right to follow the property of Thomas Smith in the hands of Peter Smith and his heirs, provided the estate of Mrs Smith should prove inadequate. For no principle of equity is better settled, than that a trustee cannot dispose of a trust estate to the prejudice of the cestui que trust, unless it be to a oona purchaser for a valuable consideration, having no knowledge of the trust. 2 Fonb. 166. Taylor v. James, 4 Desaus. Rep. 1. It is admitted that the deed to Peter Smith was voluntary, and there is abundant reason to J . that he had full knowledge of the trust. It is said in the dissenting opinions of two of the chancellors, that «the promise of Mrs Smith is binding on her, and that the acknowledgment that there was due to the complainants the sum mentioned has the effect merely of shewing the consideration of the promise, but gives no claim against Mr Smith’s estate.” But it must be observed, that the consideration for the promise was a legacy left him by his grand father. Now, Mrs Smith must have been liable to .pay that legacy as a trustee, or not at all. If not as a trustee, then there was no consideration for the promise even to bind her own estate. It was a mere nudum pactum, which could not be enforced either in law or equity. Peter Smith could not have viewed it in that light, or he would not have suffered judgment to go against him. The Court of Appeals could not have considered it as such, or they would not have •made the property liable for it. It is true that Mrs Smith could not, by any contract which she could enter into, make the property of Peter Smith liable to pay her debts. But on the other hand she could not exempt the property of Thomas Smith from paying a legacy which she justly owed the complainants by a voluntary conveyance. The property of Thomas Smith is therefore still liable, though conveyed to Peter Smith. Where a person makes a voluntary deed to another having a knowledge of the trust, it is conveyed subject to that trust. Shepherd v. N'Evers et al. 4 Johns. Cha. Rep. 138. So where a person dies indebted, having made a voluntary deed, the property shall still be considered a part pf his estate. 2 Ves. 10. 3 Johns. Cha. Rep. 438. Threewitz v. Threewitz, 4 Desaus. Rep. 560. So that although the promise by Mrs Smith to pay the legacy to complainant was subsequent to the voluntary deed to Smith, yet it was nothing more than the recognition of an antecedent debt. If therefore Mrs Smith was liable at all (and the Judges of the late Equity Court of Appeals have unanimously declared that she was) it must have been upon the ground of trust. We are bound, therefore, in order to observe consistency to affirm'the decree of the Circuit Court.

A trustee can not dispose to the prejudice of the trust,unless purchaser/^6 without notice; and it otherwise may biffoV

Where a person was indebted having made a voluntary deed, the property shall still be considered a part of his estate.

Decree affirmed . 
      
       Vide post, the case of Edmunds and wife v. Crenshaw and M’Morris.