Case ID: nc_22/html/0313-01.html
Source: Caselaw Access Project
Author: {"author": "Gaston, Judge,", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

ELZABETH DAVES et al. vs. WILLIAM H. HAYWOOD, Jun., E’xr. of JOHN P. DAVES.
    Where a testator gave all his estate, both real and personal, to his wife for her life, and afterwards to his son and two married daughters, and to the survivors or survivor of them, in ease either of them should die in the lifetime of his widow, without children, but to his or her children, if he or she should so die, leaving children to survive his widow; and after the death of the testator, certain lots, belonging to his estate, in the City of New York, were diminished in value by the ■widening of the streets in that City; whereupon assessments were made upon certain other city property to repair the injury so sustained by said lots, and the money so assessed paid into the treasury of the corporation for the use of the owners of the lots; and afterwards the widow of the testator, his son, and the husbands of his daughters, made the following agreement under their respective seals in relation to the said assessments, to wit: the widow agreed to “ relinquish to the other parties all her right and interest in said money, so that it might be received by the other parties thus:” the son one third, and the husbands for themselves and their wives each one third: and after a similar covenant on the part of the son, each of the husbands covenanted respectively “with the other parties (for the use of his wife or of any other person or persons who may hereafter become entitled to the money received by him,) that upon the happening of any contingency whatsoever, that vests a right to receive said money by him received from the estate of the testator, he will repay the same or cause it to be done, but without interest, until the contingency happens;” and it was stated to be “ the true agreement of the parties, that the widow surrendered her interest in said money, without prejudice to, the rights and interests of all the persons;” and that the covenants should be “ construed for the benefit of the wives, unless they choose to execute a release in due form of law to discharge their right under this deed:” It was held, that upon the death of one of the husbands, insolvent, it was unnecessary to decide whether the share of the said money, which, under his directions, had been placed to his credit in bank, was real estate under the law of New York, and therefore his widow and children entitled to it as such, for that, if considered as personal estate, his widow and children were entitled to it under his covenant in the agreement, and were his specialty creditors to that amount, and that the other husband, who was his executor,- should retain the assets of his testator to the amount of their claim against the other specialty creditors.
    Edward Graham Esq. formerly ofNewbern, in this State, duly executed his last will and testament with the ceremonies required to pass real and personal estate, whether in New York or North Carolina, and thereby devised and bequeathed as follows::í I give, devise, and bequeath to the use of my dear wife Elizabeth Graham, for and during the term of her natural life, all my estate, both real and personal, ’whether lying and being in the States of New York, North Carolina,, or elsewhere, and from and after the decease of my wife aforesaid, I give and devise all my estate, real and personal of every nature and kind whatsoever, and wherever situated or to be found, unto my dear children, Elizabeth, Jane, and Hamilton; and in case of the death of either of my said children before the death of their mother, unto the survivors or survivor of them; but in case either or any of my said children should die in the lifetime of their mother, and leave children or child, such child or children shall take, under my will, what the parent would have been entitled to, had he or she survived his or her mother. My intention is, that the above devise to my children shall extend to them, their heirs and assigns forever, after their mother’s death.”— The wife and children of the testator, mentioned in the will, all survived him, his daughter Elizabeth being then the wife of John P. Daves, Esq.; and his daughter Jane the wife of William H. Haywood, Jun. Esq., the defendant. After the death of the testator, the corporation of the city of New York, under authority of the laws of that State, made alterations in certain streets of the city, whereby the lots of the testator in that city, which had been devised as aforesaid, were diminished in value, and thereupon certain proceedings •were had under those laws under which there was assessed, upon the owners of other real estate deriving benefit from these alterations, a considerable amount of money, to be paid into the treasury of the corporation, for the use of the owners of the lots so injured. After receiving information of their proceedings, and that the sum of money so assessed had been actually paid into the treasury of the corporation, Mrs. Graham, John P. Daves and his wife Elizabeth, Wm. H. Haywood, Jun. and his wife Jane, and Hamilton Graham, on the 16th of February, 1838, executed a letter of attorney unto David Banks of the city of New York, whereby the latter was empowered and authorised to receive from the said treasury the sum of money aforesaid; and upon receiving the said sum, the letter of attorney declared, that the said David Banks should pay the same, as follows: one third part thereof as Hamilton C. Graham should direct him, by letter or otherwise; another third part thereof as John P. Daves should direct him, by letter or otherwise; and the re. maining third part thereof as William H. Haywood, Jun. should direct him, by letter or otherwise. This letter of attorney was executed with the solemnities which, by the laws of New York, are required in instruments transferring the estates of femes covert there. At the time of executing the letter of attorney aforesaid, and, as a part of the same transaction, another instrument was executed by Elizabeth Graham, Hamilton C. Graham, John P. Daves, and W. H. Haywood, Jun., under their respective seals, in the words following: “ State of North Carolina. Whereas, certain sums of money are owing to the estate of Edward Graham, deceased, for assessments in New York, in widening Mill, Pearl, and Wall streets; and whereas, the said money has been paid into the treasury of thé corporation of the city of New York, for the use of said estate, and the same bears no interest, and it has been this day agreed between the parties interested as follows, to wit: Mrs. Elizabeth Graham, agrees to relinquish to the other parties, all her right and interest in said money, so that it may be received by the other parties thus: II. C. Graham is to receive one third, W. H. Haywood, Jun., for himself and wife onethird, and J. P. Daves for himself and wife another third. But the said II. C. Graham covenants and agrees to, and with the other parties, (for the use of those who may hereafter become entitled to have said sum by him received,) that if he should die before his mother, or by the happening of any other contingency, the same money shall become due, and payable to any other person or persons, as a part of Edward Graham’s estate, then the same shall be repaid, without interest, until the contingency happens. J. P. Daves covenants with the other parties, (for the use of his wife, or of any other person or persons, who may hereafter become entitled to the money received by him,) that upon the happening of any contingency whatsoever, that vests a right to receive said money by him received from the estate of Edwaard Graham, deceased, he will repay the same ' ' 1 J or cause it to be done, but without interest, until the contingency happens. And W. H. Haywood, Jun., covenants and a^reeg wjtj1 t^e other parties, (for the use of his wife, or of any other person or persons who may hereafter become entitled to the sum received by him,) that upon the happening of any contingency whatsoever, which vests a right in any person to receive said money (paid to him) from the estate of Edward Graham, deceased, he will repay the same, or cause it to be done, but without interest, until the contingency happens. It being the true agreement of the parties, that Mrs. Graham surrenders her interest to said money without prejudice to the rights and interests of all the persons. And these covenants shall be construed to operate for the benefit of Mrs. Daves and Mrs. Haywood, although they are severally the wives of John P. Daves and Win. H. Haywood, Jun., unless they choose to execute a release, in due form of law, to discharge their right under this deed. In witness whereof, Elizabeth Graham, (widow,) Hamilton 0. Graham, John P. Daves and William H. Haywood, Jun., have severally executed the same, this 16th February, 1838. The parties referring for certainty, as to the sums by them, or any of them, received, to the records and proceedings of the corporation of New York.”
    The letter of Attorney to David Banks was forwarded by mail from Newbern, on the 28th February, 1838, and with it was transmitted a letter of that date from John P. Daves unto said Banks, in which the latter was instructed to de-posite his (the said Daves’s) share or third to his credit in the bank of New York, and send on to him a certificate of the deposite as soon as possible. After the receipt of the letter of Attorney, and of the letter from John P. Daves, viz. on the 20th of March, 1838, David Banks received, as the attorney of all his principals, the full amount of the assessed sum; and, on the 22d of March, 1838, in pursuance of the instructions in Mr. Daves’ letter, deposited the one third of the nett amount, that is to say, $3,648:75 cents, in the bank of New York, to the credit of John P. Daves. On the 21st of March, the day intervening between that on which Mr. Banks received the amount of the assessment, and that on which he made the deposite of the third of it to Mr. Daves’ credit, the latter died, at Newbern, having previously made his last will and testament, which has been duly admitted to probate, and whereof the defendant, Wm. H. Haywood, Jun., one of the executors therein named, has solely undertaken the execution. Very soon after the death of the defendant’s testator, it was discovered that his estate was not only insolvent, but was inadequate to the full payment of even his specialty debts.
    This bill was filed by Mrs. Elizabeth Daves, the widow of the defendant’s testator, and her infant children; and the object of it was, to have her and their right to the said sum of money, so remaining in deposite, or the amount thereof, out of the assets in the hands of the executor, declared and established; and to have the same so secured and invested as it might be enjoyed according to her and their rights, and the rights of those who may hereafter become thereunto entitled. This claim the plaintiffs rested upon two grounds. In the first place, they insisted that the compensation assessed for the injury sustained, by the lots which were of the estate of the late Mr. Graham, is, by the law of New York, a substitute for so much of the real estate whereof the owners had been divested; that although it be in its form money, yet, as the substitute for real estate, it has the properties of real estate; and, therefore, in this Court, is to be regarded as land; that, under the will of her father and surrender of her mother, Mrs. Daves is entitled to the present enjoyment of one third of such real estate; that the deposit of the money, the substitute for, and representative of, that one third, to the credit of her deceased husband, under the circumstances herein stated, did not change its character; that the executor ought not to take it as a part of the assets of his testator, but should, under the directions of the Court, perform the necessary acts for causing it to be applied according to the present and future rights of the plaintiffs therein. But, in the second place, they’ insisted that, waiving the inquiry whether the money so deposited, be real estate, and admitting that it may be regarded as part of the personal assets of the testator in the hands of the defendant;;yet the covenant herein before stated, of the testator, made^by him to the defendants, with others, is, in conl:emP'a^ou Court, in effect, made with these ’plaintiffs, for whose benefit the same was executed; that no action of law can-thereon be sustained, because, in such action, the defendant would be a necessary party plaintiff, as one of the covenantees, and also the party defendant, as executor of the covenantor; that by reason of the application of the money so received by the testator, and of his insolvency, the covenant aforesaid is broken; and those for whose benefit it was made, are, in this Court, to be deemed creditors of the testator by specialty; and that it is the duty of the defendant to retain, out of the assets in his hands, a sum sufficient for the discharge of this, their demand, in preference to others of equal degree.
    In regard to the law of New York, the answer set forth the statute of the State of New York, under provision of which the assessment for damages to the city lots was made, and stated that the defendant, being solicitous to learn the character of money so assessed, applied to an eminent jurist of the State for information; and, from the information thus received, he stated “ that compensation for damages, because of street improvements, is, by law, awarded to the' owners, lessees, parlies and persons respectively entitled to an interest in such lauds, according to their just rights therein” ---that, although no judicial decisions have been made, “it is believed that the Courts there would regard the money as a substitute for the land; so that, upon the death of the owner, before receiving the money, the same would descend to his heirs, and would be liable to the dower of the widow; and if the money be paid over to the husband of a feme covert, the owner, with a reservation of all rights, it would no more belong to him than her land, whereof be might be in possession.” In regard to the “ agreement” of the 16th February, 1838, whereunto the defendant was a party, he said that the design of the parties was not as explicitly declared therein as it would have been, if any one of them had anticipated the insolvency of either of the others; but declared that it was folly understood that the arrangement thereby made, was in no way to affect, change or after the rights and terests of the wives of the testator and of the defendant, to the money, the subject of the arrangement. If, in the opinion of this Court, the executor had a right to retain against the specialty creditors of his testator for the sum $3,548:75 cents, claimed by the bill, he admitted assets to that amount, and submitted that a decree might pass against him therefor.
    
      Badger and Devereux for the plaintiffs.
    
      W. II. Hayxoood for the defendant. '
   Gaston, Judge,

after stating the case as abbve, proceeded' as follows: The Court has felt much perplexity in forming an entirely satisfactory opinion in this base. Upon the best consideration, however, which it has been able to givil to the case, it is of opinion that the plaintiffs are entitled to relief upon the second ground taken by them in their bill; and, being of that opinion, it forbears from forming any judgment upon the first ground, as not necessary for the purposes of justice. Nothing, indeed, short of necessity, could induce us to make a judicial decision upon questions involvirig thb construction of the law of New York, wheré that law has not been settled by the decisions of its dóméstic tribunals. In undertaking such a duty, with the very imperfect lights we have, we could scarcely hope to avoid error. It has been by no means an easy task to fix the meaning of the agreement of the ifith of Febrüafy. 1838. The subject matter of that agreement was money, paid into the tréastny of New York, for the use of the estcite of the late Mr. Graham; and if to be regarded as nloriey to all purposes, yet, as the proceeds of property disposed of by his will, it was subject, as far as money could be, to the limitations in that will declared in regard to all his property. According to these limitations, Mrs. Graham was entitled to the use and benefit of it for the term of her life; but who were to be the proprietors Of it after her death, was then unknown. If her children, Hamilton Graham, Mrs. Haves and Mrs. Haywood should ail survive their mother, they are to have it ;ls tenants in coirimon. If one or more of them should die before their mother, and die childless, it was to vest in the survivors or survivor wholly. But, if any ^lem so dying before their mother, should leave children, then such children were to take the share which the father or mother would have had, if surviving Mrs. Graham. ‘ It is to be remarked, too, that Mrs. Graham had not only the interest in this money during life, under her husband’s will, but that she was wholly and solely the executrix of that will. It cannot be supposed, unless the agreement explicitly so declared, that it was the intent of the parties to the agreement, to affect thereby the ultimate rights in contingency. And, so far from such a declaration, the instrument, in the strongest terms, disclaims such a purpose:' “It being the true agreement of the parties that Mrs. Graham surrenders her interest to said money, without prejudice to the rights and interests of all other persons.” The agreement contains no words of gift, sale, transfer or assignment; will be found to use no technical terms; and professes merely to set forth an arrangement which has been made in respect to the receipt, custody and future forth-coming of the money. In the beginning, it declares Mrs. Graham to relinquish, and, in a subsequent part, she is said to surrender her interest therein. But, manifestly, these terms cannot be understood to mean a technical surrender; for there can be no surrender of a particular estate, except to those having a vested interest in remainder or reversion. They mean no more than her consent to forego the exercise of her right to the use of this money, and to permit the enjoyment of it by others. The inquiry is, who are those for whose benefit she has, in this sense, relinquished her interest — and the answer, we think, must be, her children. It was a natural direction for her benevolence to take, from the promptings of maternal affection; it was a proper direction, as one conforming most to the spirit of her husband’s will. Although these children had no vested interest in the money, yet they stood in the foremost rank of expectants, and were the persons most likely, according to the course of nature, to become entitled to it. The money was lying in the city treasury inactive — she did not want the use of it, and she was willing that her children might use it during her life. The money, too, was the substitute of, and equivalent for, real estate; and whether it had or had not the properties of such, it was natural for all concerned and intending to out fully the late Mr. Graham’s will, to make all their ar-rangementsso as to secure the enjoyment of it, as it would have been enjoyed, if real estate. And this purpose, we think, is substantially admitted by the answer, and may be collected from the instrument, when its different parts are attentively considered. The instrument purports, in the commencement, to be made for carrying out into effect an agreement in relation to the money so paid in for the estate “ between the parties interested.” It cannot be questioned, we think, but by these words are intended Mrs. Graham on the one part, and her children on the other; for though, in the strict sense of the words, they were not interested in the estate, yet they were the persons most likely to be interested therein; and, in common parlance, might have been spoken of as persons actually interested. This agreement, then, is set forth, viz. that she is “ to relinquish to the other parties” her interest in the said money, so that it may be received by the other parties. The instrument then proceeds to state how it is to be received by the other parties, viz. thus: H. C. Graham is to receive one third; W. H. Haywood, Jun., for himself and wife, another third; and J. P. Daves, for himself and wife, another third. If the phrase had been, W. H. Haywood is to receive for his wife one third, and J. P. Daves is to receive for his wife another third, perhaps the intent of the agreement would have been more clearly manifested, that in thus receiving, the husbands were but the agents whereby their wives respectively were to receive. Yet the words erm ployed are not unapt for the purpose of declaring that they take in right of their wives. The benefit of this surrender was for the wives; but, as during the coverture, the money would be held by the husbands, without accountability for interest, the money might thus be said, without impropriety, to be received for themselves and their wives. The words are plainly inconsistent with the supposition of a gift of Mrs. Graham’s right to the husbands. Then follow the covenants of the son, and of the husbands of the daughters. The son had received a third of the money for himself, as of the bounty of his mother, The only purpose proper to be secur-. ed by his covenant, in relation to this money, was to have it forth-coming to answer the ulterior purposes of his father’s will, if, by any casualty, the property thereof, instead ofvest-ing in him, as was anticipated, should vest in some other person or persons — and his covenant is so drawn accordingly; and it is expressed to be for the use of those “ who may thereafter become entitled to the said sum by him received.” The covenants of the husbands are in different words; and, it must be admitted, are more obscure. J. P. Daves covenants with the other parties — here intending, no doubt, the parties executing the.instrument — “for. the use of his wife, or any other person who may hereafter become entitled to the money received by him — that upon the happening of any Contingency whatsoever, that vests a right to receive the money by him received from the estate of Edward Graham, deceased, he will repay the same, or cause it to be done, but without interest, until the contingency happens.”

Upon these words, it-is not clear but that it was the sole purpose of the covenant, to secure the forthcoming of the money at the death of Mrs. Graham, either to his wife or to any other person or persons, who might then, according to the provisions of the will, be entitled to the ownership of it. And some weight seems to be given to this contraction, by the phrase “ any contingency which vests a right to receive it.’; We rather think, however, without examining the instrument further, that the covenant ought to be interpreted in a broader sense. It is reasonable to intend it to have been designed to cover the performance of all the duties imposed by, and resulting from, the arrangement testified by the instrument. The money received by him, under it, was received/or Ms wife, to whom the use thereof had been relinquished by Mrs. Graham. It became his duty to preserve the fund inviolate, as well for her benefit, as for the benefit of all who might he interested therein. His agency, as husband, would terminate with the marriage. If, at the termination of the marriage by his death, Mrs. Grahapr should be alive, then, under the arrangement, his wife was entitled to the use of the money, and therefore entitled to receive it; $nd in case she should ultimately survive her mother, would become entitled to keep it as owner; but if'Mrs. Graham should survive her, then the right to the prórerty would go over, under the special limitations of the will, to her children, or to her brother and sister. If the marriage should not terminate during Mrs. Graham’s life, then, both the temporary interest, and the final property in the money, would be Mrs. Daves’, and of course, by the operation of the law, become absolutely his — and if it terminated during Mrs. Graham’s life, by the Death of Mrs. Daves, he, as husband, was to succeed to her right therein, as so much money, under her mother’s relinquishment, or by way of analogy to the law of curtesy, in respect of real property. The covenant, therefore, if it means any thing, must be interpreted to have been designed, as a security for rights that were to be called into active existence, by the contingency of his dying before his wife, and,during the life of Mrs. Graham — and, it is fair to hold, upon the strong and general terms used, that all rights, whether of his wife or others thus depending thereon, were to be protected by that covenant. Nor is there much force in the inference drawn from the technical import of the words “vest a right.” Throughout the instrument, technical terms are scarcely to be found at all. And,'in the immediately preceding covenant of Hamilton Graham, where the phrase “vest a right,” in its technical sense, world have been peculiarly appropriate, (for, upon the contingency there contemplated, the right to the money would ®esfunder the'will of Mr. Graham,) the technical phrase is not used, but instead thereof, are found the inartificial expressions “ whereby the same shall become due and payable.” But whatever interpretation wehnight put upon these covenants, per se, without further explanation, we think a sufficient explanation for the purposes of the present enquiry is afforded in a subsequent part of the instrument. It is declared that “ these covenants shall be construed to operate for the benefit of Mrs. Daves and Mrs. Haywood, although they are severally the wives of J. P. Daves and Wm. H. Haywood, unless they choose to execute a release in due formof law, to discharge their right under this deed.” Now, no right was, or could have been derived to them, under this deed, but what passed thereby from Mrs. Graham; that is to say, a right to the money during her life. It is expressly provided that the covenants shall operate for their benefit, unless they release this right. The covenants therefore must be construed to operate for the protection of this r¡ght — and to stipulate against the only injury which this right could sustain, by providing that the money should be forthcoming to the wife, if the husband should die before her, and during the continuance of this her temporary interest. In the case of Benbury v. Benbury, decided at this term, the principle was clearly recognized, that beneficial interests of this description, secured by the covenant of a testator or intestate, are, in the administration of his assets, to be regarded as of the same dignity with the claims of specialty creditors — and that, where the executor or administrator is the person in whose name the legal right on the covenants must be asserted, it is his duty to retain assets for their satis-action, as against creditors-of equal dignity.

It is the opinion of the court, therefore, and will be so declared, that the defendant do pay into this court, the sum of $3,548:75 cents; and that the same shall be secured under a scheme, to be approved of by the court, according to the rights of the plaintiff, Elizabeth, therein, under the agreement aforesaid, of the 16th February, 1838; and the rights of the infant plaintiffs, and of any others who may hereafter claim, under the limitations in the will of the late Mr. Graham. And the cause is reserved for that purpose, and for further directions,

Per Curiam. Decree accordingly.