Case ID: sc-eq_8/html/0482-01.html
Source: Caselaw Access Project
Author: {"author": "O’Neall, J.,", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

E. W. W. G. Houseal v. William H. Gibbes, and Hugh Patterson.
    The statute of limitations does not run in favor of a master in equity, against an account for the proceeds of property sold by him in his official character, until a demand on him by the party intitled, or notice by him to the parly that he claims adversely: at least the plea of the statute will not avail, where the master had been directed to apply the proceeds to the maintenance and education of the complainant, and to invest the surplus; so that he was, in fact, constituted his trustee. The case of Thompson v. Wagner, and Gibbes, 3 Desaus. 94, contra, was decided under special circumstances, and is not an'authority for any other case.
    A master in equity, having sold lands of an infant, under an order of Court made upon the petition of one who styled himself guardian of the infant, but who yvas not so in fact, transferred to the supposed guardian the cash and bonds taken at the sale, having previously indorsed on the bonds an agreement, that interest should not be charged until the obligors had obtained full possession of the lands; and neither the agreement to remit the interest, nor the transfer of the cash and bonds, had been authorized by any order of the Court. Held, that the master was liable, as guarantor of the supposed guardian, for the cash and bonds transferred to the latter; and they were ordered to account jointly: but that the master was liable, solely, and in the first instance, for any loss sustained by the agreement to remit the interest of the bond, oven if the agreement had been sanctioned by the supposed guardian, as the latter was without any authority in fact, and his sanction would have been utterly nugatory.
    This was a bill for an account of the value of certain lands of the complainant, which had been sold by the defendant, Gibbes, as master of the Court of Equily, under an order made upon the appli■cation of the defendant, Patterson, the complainant being at that time an infant. In the petition, upon which the order for sale was made, the defendant, Patterson, styled himself guardian of the infant, but was not so in fact, although, a few years previously, he had been the guardian ad litem of the present complainant in certain proceedings in partition in relation to the same lands. The order of sale was made in the year 1809, but the lands were not actually sold until 1815, when they were purchased by Sampson W. Leith, and Bur-well M’Bride. Parts of them were then in the possession of trespassers, and a part of them were actually recovered from Leith, and M’Bride, in an action at law, by one Youmans. The sale was for one-third cash, the residue to be paid in one and two years, and secured by bonds. The cash payment, and the bonds, were transferred to the defendant, Patterson, by the defendant, Gibbes; but previously thereto the latter had indorsed on the bonds an agreement, that interest should not be charged, until the obligors had obtained full possession of the lands. Previous to the sale to Leith, and M’Bride, the land had been put up for sale by the defendant, Gibbes, pursuant to the order of sale, and was purchased by the defendant, Patterson, who did not comply with the terms of sale. The bill prayed, that both defendants might be declared liable, either for the price at which the lands were bought in by Patterson, or for that, for which they were sold to Leith, and M’Bride.
    The defendant, Patterson, in his answer, alleged that the proceedings for sale were instituted at the request of the complainant’s father, who, together with the complainant, resided in England; and that his own purchase was for the benefit of the complainant, there being in fact no bid at the sale. He admitted the receipt of the cash part of the proceeds of the sale to Leith, and M’Bride, and the transfer of the bonds, as also the receipt of a small payment on account on the bonds ; but he alleged, that all the moneys received had been faithfully applied to the use of the complainant, and that every possible exertion had been made to recover the balance due on the bonds, but without success.
    The defendant, Gibbes, insisted, by his answer, that he was discharged by the transfer of the cash and bonds to his co-defendant, Patterson. He also prayed the benefit of the statute of limitations.
    The cause was heard at Charleston, in January, 1831, before Johnston, Chancellor, who by his decree declared the defendant, Patterson, liable for the whole value of the lands, subject to a deduction for the relative value of the part recovered by Youmans; and it was directed, that the defendant, Patterson, should be charged, either with the price bid by himself, or that for which the sale was made to keith, and M’Bride, as should appear to be most for the advantage of the complainant. The grounds of this decree against the defendant, Patterson, it is unnecessary to state, as, upon appeal, the questions in relation to that defendant were reserved by the Court of Appeals. His Honor declined making any decree against the defendant, Gibbes, considering himself bound by the case of Thompson ». Wagner, and Gibbes, 3 Desaus. 94, of which, however, he expressed his disapprobation.
    The complainant appealed from so much of the decree as discharged the defendant, Gibbes; and the defendant, Patterson, also appealed from the decree.
    I. E. Holmes, for defendant, Patterson.
    Grjmke, for defendant, Gibbes.
    De Saussub.e, for complainant.
   O’Neall, J.,

delivered the opinion of the Court.

As to the defendant, Patterson, the complainant having consented that the decree should be so modified, as to limit his accountability to the purchase made by Leith, and M’Bride, the decree is, in this respect, modified accordingly: and all the other questions in relation to this defendant are reserved until the master’s report shall be made, and decided upon by the Circuit Court.

The only questions now to be considered relate to the defendant, Gibbes; and these are; first, whether he is protected by the statute of limitations: second, how far he is liable in the first instance; and how far in the event of Patterson’s being unable to perform the eventual decree.

In the case of Wright v. Hamilton, decided by the Court of Appeals, at Columbia, in December, 1830, (2 Bailey, 51,) it was held, that a sheriff could not avail himself of the statute of limitations, in an action against him for money collected under fi. fa., until four years after a demand for payment had been made on him. The principle decided by that case applies with full force to that now before us. The office of master of the Court of Equity is, in some respects, perfectly analogous to that of sheriff of the Court of Law. Both are the receiving officers of their respective Courts. They both, in this capacity, receive and hold, for the parties, the money to which they may be intitled; and neither of them could be forced to pay over money by a suit, until a demand had been made: nor would either, generally be liable for interest until payment had been required, and neglected, or refused to be made. In the case of the master, where it is his duty to make interest on money, and he either failed to do so, or actually received it, he would of course be liable for interest. It would follow from these premises, that the statute of limitations could not, in most cases, be any protection to the master, for a failure to perform a duty which he' owed to a party, and for the performance of which no specific time was fixed.

In this case the complainant’s minority, for a great part of the time which has elapsed, would be an effectual answer to the defendant’s statutory defence. After maturity he had the right to demand from the defendant an account of the proceeds of the sale of his land; but until that demand was made, he could not have a cause of action against him: much loss could the defendant until then be skid to hold the funds in a right hostile to the complainant. I am very much disposed to say, that a public officer can never plead the statute of limitations against an account, unless he can shew, that, more than four years before the suit was brought, he put himself on the assertion of a right hostile to the complainant, as by refusing to account on demand; or that notice had been given to the complainant, that he ceased to hold the funds as an officer, and claimed them in his own right. In the case under consideration, the sale was made under an order of the Court of Equity, directing the master to apply the interest of the proceeds, and so much of the principal, as might be necessary for the maintenance, and education, of the complainant; the surplus to be improved by the master on interest, or invested in public securities. This made the defendant, Gibbes, as master, the complainant’s trustee; and of course he cannot, in that point of view, plead the statute of'limitations, until he had previously divested himself of that trust by discharging it, or by denying his liability to discharge it further. It does not appear that a demand was made upon the defendant to account, before the filing of this bill. If it had been, it was for him to have shewn, that it was made sufficiently long to have given him the protection of the statute.

The case of Thompson v. Wagner, and Gibbes, 3 Desaus. 94, cannot be considered as an authority to govern this, or any other case; for the Court acknowledging, that, generally, the master cannot plead the statute, places its allowance, as a protection in that case, on special circumstances.

On the second question, it appears to me, that the defendant, Gibbes, is liable, in the first instance, for the loss which the complainant may have sustained by the agreement to suspend the interest on the bonds of Leith, and M’Bride, until they obtained possession of the whole of the land sold them. This was a stipulation which he had no right to make, and was a plain and palpable violation, both of his general duty as an officer of the Court, and of his special duty under the order of sale, for which the complainant has a right to look to him for compensation. It was he who committed the wrong, and even if it had been done with the sanction of Patterson, it was the sanction of one having no authority to give it. It was therefore nugatory, and cannot excuse this defendant. It cannot have the effect of throwing the responsibility on Patterson; for under the order of sale the master is made the manager of the fund, to improve it at interest, or in government securities for the benefit of the complainant. If he violated this trust by the advice of another, having no control over the fund, he must abide the consequences. We have no right to visit them on the head of his adviser; for he owed no duty to the complainant in this respect, and of course there can be no consequent liability.

But as to the residue of the complainant’s claim arising out of Leith and M’Bride’s purchase, I think Patterson should be first liable; and in the event of his inability to perform the decree, then the defendant, Gibbes, must be also liable. It ajrpears that the defendant, Gibbes, was authorized to expend the interest, and so much of the principal as might bo necessary, for the complainant’s maintenance. Under this order he paid to Patterson, who had no authority'Eo receive it, the cash payment of $500, and turned over to him Leith and M’Bride’s bonds for the balance. Patterson’s receipt of the money, and the bonds; was in the supposed character of guardian, when in truth he was not guardian: and although he was not legally the complainant’s trustee, yet this act made him a voluntary' one; and in that assumed, and voluntary character, he must account for the funds which he re-' ceived. But as the defendant Gibbes, had no authority to make the payment to him, he stands in the character of guarantor of Patterson’s ability to make the account.'

The defendants must therefore account, jointly, for the sum of $500, and the interest thereon, and the principal of Leith and M’Bride’s bonds. In that account they will be allowed credit for any proper, and reasonable advances, made by Patterson for the maintenance, and education of the complainant, at the dates, when they were respectively made; and a credit must also be allowed for the relative value of that part of the land, which was recovered by Youmans, as of the date of the purchase made by Leith and M’Bride, together with the costs and expenses of the suit brought for the recovery of the land from the time when they were paid by Leith and M’Bride. After making these deductions, if any balance should be left on Leith and M’Bride’s bonds, the defendants must be charged, jointly, with the interest on the balance from the date of the recovery of the land by Youmans. The defendant, Gibbes, must be charged, alone, with whatever loss the complainant may have sustained by his agreement that Leith and M’Bride should not pay any interest on their bonds until they had -recovered the whole of the land.

It is therefore ordered, and decreed, that the case be referred to the , ’ . . . . , master to state the accounts between the parties, on the principles contained in this decree. The costs to be paid by both of the defendants.

Johnson, J., and Harper, J., concurred.

Decree modified.