Case ID: nc_40/html/0183-01.html
Source: Caselaw Access Project
Author: {"author": "Ruffin, C. J. Píse Curiam.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

H. ALLMAND vs. MALACHI RUSSELL & AL.
    Where a debt, intended to be secured by a deed of trust, is not correctly described in the deed, though the creditor by identifying it may recover it out of the trust fund, while that remains ; yet ii the trustee has houa fide paid out the trust fund to discharge other debts, without any notice of the mistake by the creditor to the trustee, the creditor cannot make the trustee personally responsible.
    Cause transmitted from the Court of Equity of Pasquotank County, at the Fall Term, 1847.
    William T. Bryant, being more indebted than be was worth, on the 15th of February, 1840, made a deed to the defendant Russell for all bis property and effects, upon trust to pay out of the proceeds certain debts named, in the order in which they are mentioned in the deed. The first is a debt of $2,000 to J. C. E. for which Mathew Cluff and Malachi Russell were sureties. Then follow four other debts to different persons, for which Mathew Cluff was surety. Then follow several other debts to others, particularly named ; and then a general provision for payment proportionally of all other debts.
    The bill was filed in April 1842, and states that, on the 23d of April, 1839, Bryant gave to the plaintiff his promissory note for @259 68, payable six months after date, and that the same remained unpaid at the making of the deed of trust and was the debt mentioned and intended by Bryant to be secured in the deed. It states, that it is true Mathew Cluff was not a party to the note, or in any other way bound as surety or otherwise for its payment.; but that, nevertheless, this was the 4ebt and was sufficiently identified by its amount and the name and resi(fence of the plaintiff, which were truly stated in the deed; and that it was described therein as a debt “ to which the said Mathew Cluff is surety” by mistake. The bill states, that the plaintiff, in December 1841 sued Bryant on the note and recovered judgment, but was not able to obtain satisfaction by execution : and it prays an account and satisfaction out of the trust fund.
    The answer renders an account, and states the amount of the fund to be $S,262 19: which is sufficient to pay the debts, prior in order to that mentioned in the deed as being due to the plaintiff, and also to pay the plaintiff, if he be entitled to it under the deed and existing circumstances. But the answer states that in fact the defendant had disbursed the sum of $8,443 30, in discharge of the debts, making him already $181 11, out of pocket— though it admits that some of those, thus paid, were posterior in order to the debt of H. Allmand, which is mentioned in the deed. The defendant states, that he thus applied the fund bona fide and under the belief that he was bound so to do, because upon enquirj' he did not find that any such debt existed, as that described in the deed, and because he knew that, in a point of fact, the object of Bryant,in mentioning in the deed a debt to the plaintiff was not to secure the plaintiff but to indemnify Cluff, who was surety for it as Bryant and ClufF then by mistake believed ; and because the plaintiff acted on the construction of the deed, that it wrns not a security for the debt now demanded, and prosecuted an action at Jaw against Bryant therefor, and made no claim for it on the trustee, before the whole fund had been disbursed as before mentioned.
    
      Iredell, for the plaintiff
    No counsel for the defendants.
   Ruffin, C. J.

The cause comes to a hearing on bill and answers, and upon the case thereby made, the Court is of opinion with the defendant. The plaintiff might, probably, have entitled himself to satisfaction under the deed ; as his demand seems to be sufficiently identified by its amount and the name and residence of the creditor The addition of a further false description, to which nothing answers, would not, merely as a part of the description, hurt the prior true one. When it appears, then, that there was no debt from Bryant to the plaintiff answering the whole description in the deed, but that this debt and this only existed at the time, the natural construction is, that this debt to the plaintiff for the very sum mentioned in the deed, is that which was intended to be secured. The answer, indeed, states that the part of the description, which fails, was the material part of it; for that the moving cause for placing the debt in its position among the debts, as to the order of payment, was not to secure it to the plaintiff which was considered as already done by the responsibility of Cluff but to indemnify CJuff the supposed surety. Hence the defendant insists, that to consider that an unessential part of the description and disregard it, would really not effectuate, but defeat, the intention of the deed by reason of a pure mistake. We do not conceive it to be necessary to determine that point in this case. For admitting that the plaintiff on the reasoning first adverted to. might insist that the deed secures “ the debt” to him, and sufficiently identifies it, the remark is obvious, that the identity does not fully appear upon the face of the deed by itself, but that it is necessary in order to establish it, to resort to extrinsic evidence of the facts, that this debt existed, when the deed was made, and that it was the only one that did. It may be taken that a trustee is bound to enquire for the debts made payable out of the fund. But it must be enough for him in the first instance, to enquire for them according to the description given in the deed. If he finds none such he may properly conclude, for any thing that can be learnt from the deed, that the debt mentioned has been paid by the debtor himself or had never existed, and was mentioned by mistake. Here, according to the tenor oí the deed, the trustee was not at liberty to pay this debt; because there might be two debts to the plaintiff for the same amount, for one of which Cluff was, and for the other he was not, the surety, and the former only would be payable. If, however, there be another debt, which, though not coming up to the whole description, is yet by legal construction of the deed, upon certain facts appearing aliunde,within the instrument, the creditor may doubtless insist upon the deed as a security for this last debt, as much as if it were correctly described in it in all particulars. If therefore, the trust fund was still in hand and supposing the indemnity of Cluff not to be the primary purpose of the deed and so to form an essential part of the description, there would be no difficulty in holding that the plaintiff should have this debt paid out of it. But that is not now the state of the case; nor the object. It is to charge the trustee with the payment; and to entitle the plaintiff to do that, it is plain, that while the trustee had enough of the trust fund to answer the demand, the creditor should have communicated to him the same facts, on which the Court, by construction, holds the deed sufficient to cover the debt in question. Now it does not appear that the plaintiff over informed the defendant that the debt, now sued for, existed when the deed was made, and that it was the only one between the parties, or had any communication with him on the subject before the commencement of this suit. Nothing of the kind is charged in the bill, but. on the contrary it is admitted that the plaintiff proceeded against the original debtor personally. The trustee, not finding the debt described to exist, and, as far as is charged in the bill or admitted in tbe answer, having no knowlege of any other debt to the plaintiff, paid away all the proceeds of the trust property bona fide. We think it too late, after that, to make known to him the facts, on which he might once have safely paid the plaintiff this demand, and on that ground to insist on payment now out of the trustee’s own pocket. The trustee ought not to be prejudiced by mistakes of the other parties, of which it is not known he was aware.

Píse Curiam.

Bill dismissed with costs.