Case ID: miss_18/html/0418-01.html
Source: Caselaw Access Project
Author: {"author": "Mr. Chief Justice Shaekey", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Laurena Williams, Executrix of John Williams, deceased, vs. Ebenezer P. Stratton, administrator of Shubal Foote, deceased.
    Where an estate has been reported insolvent to the probate court, and an order made by that court, that the real estate shall be sold, the administrator thereof has by such order of sale become so far invested with the legal ownership, as to enable him to remove incumbrances on the real estate by bill in equity, and have the title perfected, so that the decree of sale may be carried out for the best interests of the estate and of the creditors.
    F. bought of B. a lot of ground for $1000,- paid half in cash, and gave his note, with S. as indorser, for the residue, and took a bond for title when his note should be paid; and left the bond with S. as his indemnity for the in-dorsement; F. died, leaving W. his executor, who sold the lot at private sale to D. for $1400, $500 of which was paid in cash, with which W. paid the note indorsed by S., and induced B. to make a deed of the lot to D., who, becoming dissatisfied with his bargain, cancelled the sale with W. by the agreement that W. should retain the $500 paid B., and should give up io D. his notes for the residue of the $1400 agreed to be paid, in consideration of which D. was to convey the lot directly to W. in his own right, which was done ; held, on these facts, that the sale by W. to D. was void, and the conveyance by D. back to W. passed no title which could prejudice F.’s estate.
    Nor would W., under such circumstances, be entitled to any equitable lien on the lot for the amount of the note indorsed by S. and paid to B.; for while a deposit of all the title-deeds, as a security for a debt created at the time the deposit is made, is generally recognized as constituting an equitable mortgage, yet in this case there was no evidenee that S. delivered the title-bond left with him by F. to W. as a security; and if he did, W. delivered it to B. when the latter executed the deed to D., and the delivery up of the bond to B., would be, it seems, an abandonment of the equitable lien, if any existed, in favor of W.
    Before an equitable mortgage will be sustained in equity, there must be clear and unequivocal proof of the intention to create the mortgage, and of the sum which the mortgage is to secure.
    Where an executor sold a lot of his testator, and received on the sale a cash payment, and by contract with the vendee and the executor, the sale was rescinded, and the cash payment relinquished to the executor by the vendee as the condition of the rescission, and the executor had previously, with the cash payment thus made, taken up a prior incumbrance on the lot created by his testator, it was held, that the executor was not entitled to a lien on the lot for the repayment to him of the money thus received and paid out by him ; the property of his testator was not a subject for speculation in the hands of his representative; he could make no illegal disposition of it, and then claim a benefit of his own wrong.
    If minor heirs answer by a guardian ad litem, and the chancellor receive the answer of the guardian, as such, for them, the high court of errors and appeals will presume that the guardian had been regularly appointed .for the purpose, though no order to that effect appear in the record below.
    A decree of the chancery court, in relation to the realty of minors, which contains no saving clause as to their rights on arrival at age, is erroneous; but the decree being regular in other particulars, the high court of errors and appeals will protect the minors’ rights by decree in that court.
    It seems, that where certain persons, claiming property in their own right, are decreed to be trustees of the legal title for the use of others, the decree should require the former to make conveyance of that title to the latter; and is defective in not doing so, hut will not be .reversed therefor at the instance of those holding such legal title.
    On appeal, from the decree of the vice-chancery court, held at Carrollton; Hon. Henry Dickinson, vice-chancellor.
    Ebenezer Stratton, administrator of Shubal Foote’s estate, states, in his bill, that he had reported the estate of his intestate insolvent, and it had been so declared by the probate court of Yalabusha county. That in the year 1837, Foote died, having in his lifetime bought of A. S. Brown a certain lot, (described,) in the town of Grenada, for a price unknown to complainant, and had obtained a bond for title to it; at Foote’s déath $500 was due to Brown; that one John Williams, illegally obtained letters, testamentary or of administration, complainant, as the record of the probate court, was contradictory, could not tell which, on Foote’s estate; after which, Williams sold this lot at private sale, to complainant, and George G. Waters and Robert L. Bingham, for about $1500, in three annual payments, of $500 each, and agreed that Brown should make them a title, .which he did on the 25th of August, 1838; one of the conditions on which Williams agreed that Brown should make them a title, was. that they won Id pay Brown the residue due by Foote, which they promptly did before Brown made them a deed.
    On the 5th of August, 1840, Williams was removed from his office, as executor, and all his acts declared void by the probate court; and, after his removal, with intent to defraud Foote’s estate, he proposed to complainant, Waters and Bingham, that if they would convey to him the lot, and lose the amount they had paid Brown, he would release them from the payment of the residue of the purchase-money due by them for the lot, falsely representing that he had power to do so; town lots having depreciated greatly in value, they accepted his offer, and made Williams a deed to the lot and delivered them up their notes.
    Williams afterwards died, and James Williams and Laurena Williams were appointed administrator and administratrix of his estate, took possession of the lot and had retained it ever since the first of March, 1841, renting it out at an annual rent of $150, refused to permit complainant to take possession of the lot, and thus prevent his making sale of it, or obtaining an order of sale, or paying the debts of the estate of Foote, whose property the lot is alleged to be.
    Williams left four minor children, who, by name, are made defendants to the bill, together'with his administrator and ad-ministratrix. The bill prays, that possession of the lot may be decreed to complainant as administrator; that the defendants, James and Laurena Williams, may be compelled to account for the rents of the lot, and for other relief, &c.
    The infants answered by E. S. Fisher, Esq., their guardian ad litem; the record shows no appointment, by order of the court, of Fisher as such.
    Laurena Williams answered by attorney; she states, that she is sole surviving executrix of John Williams’s estate; that Shu-bal Foote borrowed $1000, or $1095 from the Manchester bank, and pledged the title-bond to the lot in controversy to Samuel Smith, his surety on the note, for the borrowed money; that on Foote’s death, Smith was anxious to pay the money to the bank and keep the lot; that Williams, as executor of Foote, took advice of counsel to know how he could save himself in case he borrowed the money and paid the bank; he was advised, if he did so, to take the title to the lot, and if he could.sell it for more than would repay him, to account to the estate for the balance. Williams, therefore, borrowed the money at heavy interest, from one N. Ingram, and paid the bank, and made two sales of it, both of which he was compelled to take back; the last time he received a sum of money for so doing.
    She insists, that these are the facts of the case, and calls upon complainant to prove the statements of his bill.
    William P. Bryan, a witness for complainant, stated that Foote bought the lot for one thousand dollars; five hundred paid in cash, the rest secured by note. This note was paid by the sale of the lot to Stratton, Waters & Bingham ; the money paid by them being appropriated to its payment. That he had heard Williams so state, and also heard Williams say that he intended the lot for Foote’s daughter, then in Texas; that he thought he could save that much from the estate. That Williams, in his lifetime, and Laurena Williams, his widow, since his death, had held and rented out the lot, which was worth from seven to ten dollars per month.
    Hiram Pettybone, also for complainant, stated that Foote bought the lot of Brown for one thousand dollars; he made the first payment in the Commercial Bank of Manchester; five hundred dollars was paid in cash and the balance in twelve months, the last payment being made by Williams out of the payment by Waters, Bingham & Stratton to him, which on the rescission of the sale to them they gave up. * That Williams and his widow had held possession of the lot.
    Daniel Robinson, for complainant, stated, that he had heard Williams say that he had a deed for the lot, and when the estate paid him what it owed him, he intended to keep the lot for Foote’s daughter, in Texas.
    R. L. Bingham, also for complainant, stated that Foote died in 1837, and some time in 1838 Williams, as administrator of his estate, sold to Stratton, Waters, and the witness, the lot in controversy, for fourteen hundred dollars ; five hundred paid in cash, and two notes for the residue, due in one and two years. When they bought of Williams, the title bond from Brown to Foote was in the hands of Samuel Smith, as collateral security, Smith having indorsed a note for Foote for the amount of five hundred dollars, due by Foote as his last payment on the lot; the cash payment of five hundred dollars was appropriated to the payment of the note on which Smith was indorser, to release the property from Smith, who required the note to be paid at maturity, or else he was to take the property for the $550. They bought at private sale, and obtained a deed from Brown. In 1S40, they conveyed the lot back to Williams, he giving them up their two unpaid notes. Williams died in 1841, and held the possession of the lot before he died, after the rescission of the contract, and his widow after his death ; the annual rent was worth seventy-five dollars per year. In answer to the cross-interrogatory, whether he spoke from his own knowledge or from information of others, he answered, principally from his own knowledge.
    A. C. Baine, for defendants,
    testified that after Foote’s death, Williams administered. Foote in his lifetime had given a note for $900 or $1000; he thinks $1000, to the Manchester Bank, with Samuel Smith as security, and delivered the title bond of the lot in controversy to Smith, to indemnify him as security, and to hold the lot absolutely, in case Smith had the money to pay; Foote being dead, and the property supposed to be worth more than the note, Smith wanted the note not to be paid, that he might hold the lot; in the meantime, Williams advised with the witness as to what he should do, and informed witness he could raise the money at heavy interest, and take up the note; witness advised him to do so, and told him the lot would always be security to him for the money and interest he might outlay for its redemption. Williams told witness, he thinks, that he had borrowed the money of Nat. Ingram, and taken up the note; Williams, with the note, took up the title bond from Smith. In the meantime property fell in value; Williams, being likely to lose, again consulted with witness, who advised him to sell the lot as his own, informing him if the matter was canvassed they would be obliged to repay him his advances and interest. Foote sold to Stratton, Waters and Bingham; but the witness was not very familiar with the circumstances of this sale, and of its subsequent rescission; he does not recollect from whom Foote purchased. The note given by Foote for the $1000 was given for the lot, and discounted by the Manchester Bank, or left there for collection. He derived his knowledge of the facts from the transaction itself, from Williams, Smith and the actors. He could give no dates to the transactions detailed by him; he does not think Foote paid any cash. Williams paid the note given by Foote at its maturity, to the bank. This he knows from both Williams and Smith, and from the fact that the latter wanted to pay it, and would have done so, if Williams had not. That Williams made the efforts he did make, to pay for the lot, under the belief that he could certainly sell it for more than the purchase-money, intending to give Mr. Foote’s child the benefit of the advance, but when property fell he had to struggle to save himself.
    The cause was referred to a commissioner, who reported that $471.50 was due for the rent of the lot, from March, 1841, to December, 1846. Upon which the chancellor decreed that the defendant, Laurena Williams, pay upon demand, to complainant, the amount of rent due; that the defendant deliver up the lotto complainant; that the conveyance from Brown and wife to Bingham, Waters and Stratton, and from them to Williams, be set aside, and for naught held, and the lot and improvements belong to the estate of Shubal Foote, and constitute a part thereof, subject to his debts; and that Laurena Williams pay the costs of the suit.
    The defendants appealed.
    
      E. $. Fisher, for appellant.
    1. Foote’s transferring the title-bond to Smith, to secure him against danger as security or indorser for the former, created an equitable mortgage to the latter, and gave him the right to call on the vendor for the legal title, on complying with the condition of the bond. 4 Kent’s Com. 150; Coote on Mortgages, 84, 16 Law Library.
    
      2. When Williams paid off the liability of Smith, and took up the bond, he was substituted to Smith’s equities, and acquired all the rights under the bond which Smith had acquired.
    3. The complainant has no right to rents. Immediately after Foote’s death the property descended to his heirs. Can an administrator recover rent from the heir at law ? An administrator can assert no claim for rent against a third person, which he could not assert against the heir.
    4. The bill as to the infants must be considered by the court as on demurrer.
    
      Acee, for appellee.
    1. The administrator of an insolvent estate had the right to proceed in equity to have the title to the realty perfected; the probate court could give no relief; adequate relief could be had only in equity. Baines v. McGee, 1 S. & M. 208; Martin, Pleasants & Co. v. Glasscock, 1 S. & M. Ch. R. 17-23; Johnson v. Lewis, 1 Rice’s Eq. R. 40; How. & Hutch. 394, § 33 ; Rogers v. Rogers, 3 Wend. 503; Tappan v. Cain, 12 Johns. R. 120; JEhison-v. •Wallace, Richardson’s Eq. R. 1; Pickering v. Bowles, 1 Brown’s C. C. 198.
    2. The rents and profits of the realty, when an estate has been declared insolvent, belong no longer to the heirs, but to the administrator; they are but incidents, and follow the principal ; that being assets, so are they.
    3. The sale to Stratton, Bingham and Waters was void, being a private sale by an executor; no title passed, and none of course passed back to Williams.- Smith v. Denson, 2 S. & M. 326; Laughman v. Thompson, 6'Ib. 259; Worten v. Howard, 2 lb. 527; Murphy v. Clark, 1 lb. 221; Cable v. Marlin, 1 How. (Mi.) R. 559.
   Mr. Chief Justice Shaekey

delivered the opinion of the court.

The appellee, Stratton, as the administrator on the estate of Shubal Foote, which had been reported insolvent, and an order made that the real estate should be sold, filed this bill to perfect the legal title to a lot in the town of Grenada, to which Foote in his lifetime had acquired an equitable title.

Whether an administrator can, under such circumstances, claim to have the legal title to real estate perfected, is a preliminary question. Under different circumstances he could not of course. But on a deficiency of personal property, the probate court may decree a sale of the land, which, by law stands chargeable with the debts, in case the personal estate be insufficient. The sale is to be made by the administrator. Through him the proceeds of the sale, as assets, are to be administered. By the decree of sale the title of the heir is divested, and the administrator is so far invested with the legal ownership as to enable him to remove incumbrances, so that the decree of sale may be carried out for the best interests of the estate, and of the creditors. This being the case it becomes necessary to./ inquire whether the complainant in this bill^^ftajMsde out a proper case for the aid of a court of chanceras ^,

Foote, in his lifetime, purchased the lotljormne Bról $1000. He paid half in cash, and gave his irate and took a bond for title when the residue of the-11 money should be paid. This bond Foote tola of Smith, who was his indorser, as a securities: an IT After Foote’s death, John Williams took out let ry, and whilst he was acting as executor, sold the lot at private sale for $1400, to Stratton, Waters and Bingham, and received from them a cash payment of $500, which sum, as most of the witnesses state, he appropriated in discharge of the bal anee due Brown on the lot, and thereupon requested Brown to make title to Stratton, Waters and Bingham, which he did. Stratton, Waters and Bingham becoming dissatisfied with their bargain, agreed with Williams to rescind their contract of purchase, and to relinquish the $500 which they had paid, but their notes were to be delivered up, in consideration of which they agreed to convey the lot to Williams in his own right, and they accordingly made him a title. His letters testamentary were after-wards revoked, as having been improvidently granted.

On this state of things it is manifest that the sale by Williams to Stratton, Waters and Bingham, was void. It is equally clear that their conveyance back to him passed no title which could prejudice Foote’s estate. The consequence is that Williams held the legal title as trustee for Foote’s heirs, and since his death his heirs hold in the same way.

But here a further question arises in regard to a lien claimed for Williams. It is contended that he discharged the debt on which Smith was indorser, to secure which the title bond was deposited, and that he has a right therefore to be substituted to the equity of Smith.

It would be difficult to sustain such a lien as that claimed, either on the law of the case, or the proof. A deposit of all the title deeds, as a security for a debt created at the time the deposit is made, is generally recognized as constituting an equitable mortgage. Such equitable liens have met with very decided opposition in England, though they have been generally sustained, but it is admitted on all hands that they should not be extended beyond their present limit. Such a mortgage is in direct opposition to the statute of frauds, in regard to which we have said that we will create no exceptions not found in the statute. Lord Eldon said that in departing from the rule of the statute, there was no rule to go by; and it was essential that those who wished to render such securities valid should learn the utility of requiring two or three lines in writing. A transfer of these equitable mortgages may be made, but it must be done in the way they are at first created, by a deposit of the deeds as a security. See 3 Powell on Mortgages, 1050-1061. It is not necessary that we should hold such mortgages to be invalid in any case. The record does not furnish evidence that Smith delivered the title-bond to Williams to be held as a security. If he did so, Williams no doubt delivered it to Brown, the original vendor. He thereby parted with the deposit which constituted the mortgage, and did he not thereby part with the lien % No case has been cited in which such an equitable mortgage has been preserved to this extent. The equitable mortgage arises by the single act of deposit, and that act must be unequivocal. It differs very materially from a legal mortgage, which is transferred by the transfer of the debt, because it is an express lien, clearly and precisely defined by the written contract of the parties. It differs also from the lien of a vendor who gives a title-bond.

But apart from the question of law, there is some confusion in the testimony as to the actual payment by Williams of the money which is said tobe the foundation of the lien. Bingham, who was one of the purchasers from Williams, states that when they purchased the lot, the title-bond was in the hands of Smith, as security for his indorsement on a note for $500, which had been given by Foote for the last payment of the purchase-money, and the $500 paid by him and his co-purchasers, were appropriated by Williams to the payment of that note. It was necessary that the note should be paid at maturity, to prevent Smith from holding the lot, which was then considered to he worth more money. This witness details the transaction with great precision, and concludes 'by saying that his statement is made from his own knowledge.

Bryan makes .the same statement. He says that Foote purchased the lot of Brown for $1000; paid $500 in cash, and gave his note for the balance, which was paid by Williams with the money received from Stratton, Waters and Bingham for the lot. Pettybone confirms, in substance, the testimony of these witnesses.

A. C. Baine, who was examined for the respondents, states that the title-bond was deposited by Foote with Smith, to secure him for his indorsement on a note for $900, or $1000, he thinks the latter sum, and that Smith was anxious to take the lot, about which Williams expressed much anxiety, and stated to the witness that he could borrow the money at a high per cent. He states that Williams did borrow the money, he thinks from Ingram, and paid the debt. The note on which Smith was indorser, was discounted in the Commercial Bank of Manchester, for the benefit of the person from whom Foote purchased ; or, that it was made payable there and deposited for collection. Mr. Baine obtained his information partly from Williams, Foote, and from his own knowledge of the transaction. It is possible Mr. Baine’s memory may have failed him, in regard to the minutice of this transaction. There seems to be no doubt but what Foote gave $1000 for the lot, and paid $500 in cash, and gave his note for the balance. If the note was discounted in bank for the benefit of the vendor, from whom Foote purchased, it would seem that it could only have been given for $500; yet it is possible that Foote may have borrowed the first payment made by him, from the bank, and in this way become indebted in the sum of $1000. This supposition, however, rests upon conjecture. Smith could have explained this transaction, and so could Brown, and they should have been examined. There is too much uncertainty in the testimony about the sum paid by Williams, to sustain an equitable mortgage. Such a lien can only be established on clear proof. It seems certain that Williams paid $500, but that sum he received by the sale of the lot. For this he is not entitled to a lien. The property of a deceased person is not to constitute a subject for speculation in the hands of his representative. He can make no illegal disposition of it, and then claim a benefit from his own wrong.

It is objected that the decree was improper as to the minor heirs of Williams. They answered by their guardian ad litem,, and we must presume, as the vice-chancellor received their answer, that a guardian had been appointed for the purpose. The decree contains no saving as to their rights; in that particular they may be protected by the decree of this court.

The decree seems to be defective also in this, that it does not direct that a title shall be made by Williams’s representatives to Foote’s heirs.

Decree affirmed.