Case ID: sc-eq_32/html/0323-01.html
Source: Caselaw Access Project
Author: {"author": "Johnston, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Nicholas Culleton vs. Thomas Garrity and others.
    
      Practice.
    
    Bill filed to subject trust property to demands for work done and improvements put on it by the tenant for life. Held, that no decree should have been made, subjecting the property to the claim, without directing an enquiry into the nature of the contract; by whom made; and the degree of his authority; the value of the work to the estate; its cost, and the different interests held in the estate; also, as to a proper scheme of providing for paying the demands.
    BEFORE DARGAN, CH., AT CHARLESTON, FEBRUARY, 1S5S.
    Dargan, Ch. The facts stated in the bill are not disputed. Thomas Garrity being possessed of certain real estate, consisting of houses and lots in the City of Charleston, by deed, bearing date 27th April, 1854, conveyed the same to Richard S. Baker, his co-defendant, with certain personal property, desribed therein in trust, “to permit and suffer him, the said Thomas Garrity, during the term of his natural life, to take and receive the rents, issues and profits of the said real estate, and the income derived from the personalty, and apply the same in payment of the interest accruing on certain mortgages, alleged to exist against said real estate, that is to say, a mortgage to the Charleston Building and Loan Association, to secure the sum of $2,000, and also a mortgage to the Commercial Insurance Company, to secure the sum of $12,000, which last has been assigned to the Provident Institution for Savings, in the City of Charleston, and gradually to pay off the principal, and for the support of himself and family, and for the education and advancement of his children, so that neither the said property, nor the income therefrom, shall in any way be subject to the future debts of the said Thomas Garrity, and from and immediately after the death of the said Thomas Garrity, then upon trust, that the said Richard S. Baker shall hold the said property, real and.personal, and dispose of the same in such manner as he, the said Thomas Garrily, by his last will and testament, may direct, and in case he shall publish no last will and testament, and shall leave a wife, then in trust; that the said Richard S. Baker shall take and receive the said rents and profits, and other income, and apply (the same) for the maintenance of the widow and children of the said Thomas Garrity, and for the education and advancement of his children, so long as his said widow shall remain unmarried; and after her death, or marriage, if she shall survive the said Thomas Garrity, or in case he shall leave no widow surviving him, then in trust for the benefit of the children of the said Thomas Garrity.” On the 7th June, 1854, the deed was recorded in the office of the Register of Mesne Conveyance, and also in the office of the Secretary of State, in Charleston. The family of Garrity, at the date of the deed and now, con-' ¡feists of his wife, Catherine Garrity, and of his three children, namely, Christopher Garrity, Thomas Garrity and John Gar-rity, who are infants, and are parties defendants to the bill, and have answered, by their guardian, ad litem. The defendant is, and has from the date of the deed been, in the sole and exclusive possession of the property, and manages and uses it as his own.
    The plaintiff is, by trade, a bricklayer, and has been employed by Thomas Garrity, by various contracts, for building on and improving the lots of land conveyed in the said deed of trust, subsequently to the date thereof. The account for the work and the materials is considerable. The defendant, Garrity, admits the charges of the bill about the work, differing from the complainant, as to the amount due. The plaintiff prays that the trust estate may be subjected to his demand, and for general relief. The defendant, Garrity, •resists the prayer, simply on the ground of the trust, as do gdso.the other defendants.
    
      It is a rule of law, as well as of morality, that property should be subject to the payment of the debts of the proprietor, — to the enforced payment, if necessary. This liability is one of the incidents of property. The only questions that can be made in such cases is, whether the property sought to be, is the property of the debtor. The only exceptions to this rule are persons under disability, as feme coverts, infants, lunatics; and these, properly speaking, are not exceptions, for, by reason of their disability, they cannot contract debts, except under certain restrictions. .So far as these persons have the competency, they can make their estates liable.
    As to the liability of property for the debts of its owner, there is no difference between legal and equitable estates; one is as much liable as the other. The only difference is in respect of the tribunal through which the property is reached, and the mode in which payment is enforced. Where the debtor is possessed of the legal estate in the property, the judgment of a Court of law, with its writ of fieri facias, are sufficient. Under this process, the sheriff can* levy upon and convey the legal estate in .chattels and lands, but he cannot levy upon and sell an equity. The debtor’s equitable estate can be reached alone in the Court of Equity. And it would indeed be a reproach to this Court, if, having the exclusive jurisdiction of trusts, it did not enforce on such estates the payments of the debts of cestuis que trust, where no higher intervened. I say here, as I have said elsewhere, there is no scheme or device, which the skill or ingenuity of man can concoct or invent, which can baffle or defeat the principle of law, that the property of the debtor is liable for his debts, unless the attempt is sustained by successful perjury.
    There is no fraud in this case. The deed is a bold and undisguised attempt, by means of a trust, to enable the owner of property to have all its uses, benefits and enjoyments, without its being liable for his debts. What incident of property is there which in the scheme of, this trust is not reserved to Thomas Garrity ? He was to have the sole and exclusive control and management of it, and from the income to pay certain debts, that are mentioned, for which the property was already generally and specifically liable, without any limit as to the time when this application of the rents and profits should be made to the payment of debts. Such of that income as he did not think proper to apply to the payment of the debts ^mentioned in the deed, he was to apply to the maintenance and support of himself and his own family, at his own discretion, without any one to call him to account for the manner of its disbursements. At his death, the trustee is to hold the property for the use of such persons as he by his last will and testament should designate and appoint. And if he should leave no will, the property was disposed of to his wife and children very much in the same way that it would go by the statute of distributions in cases of intestacy. Here is the case of a man affecting to dispose of his property, yet reserving to himself all the benefits, enjoyments and control of it, while living, and the right to dispose of it at his death. This is a very barefaced attempt. If this scheme succeeds, this case would be a marked one, and it would afford a precedent for a great deal of knavery. It would be an easy matter to defeat the principles so important, so well established, that the property of the debtor is liable for the payment of his debts, and the absurd distinction arise that the legal estates are so liable, equitable estates are not.
    It is ordered and decreed, that the deed of trust mentioned in the pleadings be set aside, so far as regards the debt due to the plaintiff, and that it be referred to one of the masters to state the account between the plaintiff and the defendant, Garrity. "It is further ordered and decreed, that after the amount has been found by the master, and the same has been reported, and the report confirmed, the said trust estate, without distinction between income and corpus, be subject to the demand of the plaintiff, and that the plaintiff may proceed against the same by a writ of fieri facias, to be lodged in the hands of the sheriff, and to be executed as in cases where the defendant in execution is possessed of the legal estate in the property proceeded against.
    The costs of this suit to be paid by the defendant, Thomas Garrity, and to be collected in the same way.
    The defendants appealed upon the grounds:
    1. That the complainant cannot aver against his own bill, and on the face of the bill the deed is bona fide on good consideration, and the complainant must be taken to have had notice of it, as notice is not denied, and, therefore, the bill should be dismissed.
    2. That the decree is not warranted by the pleadings. That on the pleadings the case is that of a creditor claiming payment out of trust funds, by application of the income to the satisfaction of the debt; but the decree sets aside the deed as fraudulent, and orders payment out of the property as free from any trust.
    3. That the decree is inconsistent with the complainant’s case, as stated by himself. The complainant states a case proper for a certain relief. The decree grants relief, which would not be granted, if the plaintiff’s case be true.
    4. That the remedy should be confined to the relief claimed by the bill, or the bill be dismissed on the ground that the complainant had contracted with the defendant upon his personal security, without reference to the trust property.
    
      Northrop, for appellants.
    
      Magrath, contra.
   The opinion of the Court was delivered by

Johnston, J.

The bill does not allege that the deed is fraudulent; nor is it easy to see how Culleton, who contracted in the face of notice of its provisions, from the public registry, could well have sustained such an imputation, if he had made it.

The only questions in the case were, whether the contract made with ‘Garrity entitled him to charge the trust estate, or Garrity’s interest in it, for the work done by him.

Supposing it to be true that a trust estate is liable to be charged for repairs, according to the estates held by the. successive tenants, or that the corpus may be charged for permanent improvements, proportionably to the value of such work, as explained in Magwood vs. Johnston, 1 Hill Ch., 228, (reference being had, perhaps, to how far the trustee, or person ■making the contract, is a debtor, or in advance to the settled estate,) and moreover, that any interest such contracting party may hold in the trust property, may be subjected, in order to supplement the workman’s wages, on the principle of Divers vs. Thayer: it appears to us that the Chancellor should have made no decree until he had directed an inquiry into the nature of the contract; by whom made; and the degree of his authority; the value of the work to the estate; its cost, and the different interests held in the estate by the persons ■to whose use it was settled, as well as by Garrity, with whom the workman is supposed to have contracted. Inquiry might, also, have been made as to a proper scheme of providing for paying the demand of Culleton.

It is ordered, that the decree be set aside, and the cause remanded; that these inquiries be made; when the case will be properly before the Circuit Court for its judgment.

O’Neall, C. J., and Warddaw, J., concurred.

Decree set aside.