[Rresent, Chancellors Rutledge, James and Thompson-.]

JUNE, 1808.

#### M. Menude, *vs.*Delaire, Executor of Doctor Polony.

An informal paper, acknowledging that the writer had been entrusted with the funds of another person, and manifestly intended to operate as a security on certain specified property, shall have the effect of a mortgage of such property, and, entitle the holder to a priority *565over other creditors of the deceased signer of the paper, after prior encumbrances are satisfied. Interest to be allowed from the time the money was received.

An acknowledgment of the sale of the property and the receipt of a certain sum of money, belonging to another person, and the investment ofit in personal property, is a declaration of trust, or gives an equitablelien. The court supposed it was the latter. Interest allowed from the time of receiving the money.

Other monies received, to be on the footing of a common creditor.

The court referred the party to a suit at law, for another sum prov-edto have been received by defendants testator, but not charged in the bill nor stated.in the account.

THE object of this bill was to establish alien on certain property in the possession of the late Dr. Polony, or to have him declared a trustee, for the complainant, and certain property purchased with the funds of the complainant, to be adjudged to be her property; arid for other purposes stated in the bill.

The bill set forth, that complainant, a widow, formerly of Cape Francois, on the 28th August, 1791, was persuaded by the late Dr. Polony, to embark for Charleston, and to bring with her all the funds she could command.. That' she brought to Charleston a valuable property, and after-wards sent for the remainder of her estate, which could be remitted. That the same was received and deposited in the hands of Dr. Polony, in consequence of his promising to manage the same, and place it to the best advantage for her interest. That Dr. Polony made use of complainants funds in the purchase of a plantation and negroes, and house in Church street. That he could not have made said important purchases, or placed his household on its enlarged establishment, without said funds, having brought a trifling property with him. That complainant supplied his household with linen, plate, furniture and servants. That Dr. Polony received the wages of her1 servants. For all which deposits, funds and advances, complainant has never received any interest or income. That on the 1st. January, 1801, Dr. Polony, desirous of doing-justice tq complainant, executed an obligation which *566he confirmed by a supplementary obligation, of 22d. Au-> gust, 1804, (exhibit A.) acknowledging'to have received from complainant the aforesaid funds, and others, all which he secures by1 a mortgage (being the said paper) on said plantation and dwelling house in town *;*which said funds and advances, amount, including interest, to $17,239, (exhibit B.)' That Dr. Polony died on the 18th September, 180S, having made a will, dated 9th of said njonth, v/Jierebyhe devised to complainant the whole of his estate in South-Carolina, (exhibit C.) thus shewing his sense of the preference due to her claim, and that the said estate had been acquired with her funds. That defendant, the executor of said will, has filed an inventory of the personal estate of the deceased, the whole appraised at about $23,000, (exhibit D.) and that testator’s real estate would not yield more than IS or $16,000. That defendant has exhibited a- schedule of testator’s debts,, amounting to $30,000, (exhibit E.) among which is one due on open account, for $3,000.

The complainant from the above statement conceives that hér claims as a creditor are paramount to those of the other creditors ; and that her demand of $17,000, ought in the first instance to be secured to her, as -having an equitable lien on the whole of testators property.

That complainant called on defendant to settle’ and acknowledge- her rights to the real estate as devisee and preferred creditor, and to deliver over to her the personal estate, or to secure to her. the amount of her debt, as preferred creditor. But the defendant has refused. Wherefore complainant prays relief.

The defándant, James Delaire, Executor of the late Dr. Polony, put in the following answer :

He admitted that Dr. Polony came to this country and that complainant accompanied him, probably induced by the then dangerous situation of the Cape. Defendant is ignorant what funds she brought with her, but believes remittances 'were made to her. in coffee, since her arrival, and *567from some papers be believes the said coffee was sold and paid over to Dr. Polony. He is ignorant whether Dr. Polony promised and undertook to place out any of her funds to the best advantage, or with what funds Polony purchased the house in town. All his information on this subject being' derived from complainant’s exhibit A. Defendant therefore can’t admit or deny that the property was bought with her funds. Defendant does not know what funds Dr. Polony brought to this country; but has heard and believes he brought with him 300 half joes, or $2,400, as well as some other funds..

Admits the servants, (one excepted) about Dr. Polony’s house, belonged' to complainant, but believes the wages were received by complainant’s son, and appropriated to her use. Admits the household of Dr. Polony was on an expensive establishment, but denies it was supported by complainant’s funds. Defendant has' reason to believe that Dr. Polony’s' resources were ample. Defendant knew Dr. Polony at the Cape,:andthathe had property of Considerable value there and in France ; and he drew bills on Foache at Havre, for $5405, which were honored. He practised as a physician in Charleston, with repute,-and he took in boarders and sick people.

Defendant has seen the obligation stated by complainant. He does not know whether the transaction is correct. Defendant admits Polony’s hand writing to the original papers. Defendant cannot admit complainant’s account against the estate, and apprehends a considerable deduction must be made therefrom on account of her board and maintenance, and that of her children.

Admits Dr. Polony died at the time mentioned, and left a will as set forth, and that exhibit D. contains a copy of the inventory„•

Defendant intends to apply to the ordinary for permission to sell the personal estate, and' to apply the assets which may come to his hands according to law. Defendant intends to. resort to the personal estate for the payment of the debts, and does not intend to take any steps *568toward selling the house and lands, till it appears thatthfe personal estate is insufficient.

Defendant considering the lands and negroes mentioned by Polony in his will as his property, after the debts are paid, he will consider himself bound to distribute the surplus according to the directions of the testator. Defendant does not consider complainant as having any lien on the estate, or entitled to any preference. Dr. Polony being in possession of the house in town, a plantation and ne-groes, and considered the owner of them, obtained credit to a considerable amount. Defendant apprehends her paramount claim is not sustainable, and that unless abandoned, she will not be entitled to the benefit of the devises in the will. Defendant prays complainant may make her election as creditor or devisee, and submits to the direc - tion of the court.

At the hearing of the case, the papers stated in the bill of complaint, and referred to as exhibits, were admitted.

It was also established that the complainant Madame Menude brought with her and afterwards received considerable funds, which were placed in the hands of Dr. Po-lony, to be laid out and improved for her *advantage;*and ■that his own funds were not large, and would not have-enabled him to have made the purchases of real and personal estate which he had done.

The cause was fully argued by Mr. W. L. Smith and Mr. Des rus sure for the complainant; and by Mr. Gaillard for'the defendant;

but tbe notes of tbe argument have not been preserved.

Chancellor Rutledge

delivered the decree of the court.

In this case there are three points tó be considered.

1st. Whether the exhibit A. is to be considered as a mortgage of tbe bouse & plantation, fortbe sum of §8,466, received by defendant’s testator from complainant, to be by him laid out for her1 benefit and advantage, or merely ae< *569an acknowledgment of so much money received by him for her use, and to be accounted for ?

2d. Whether defendant’s testator is to be Considered as a trustee for complainant, as to §2500, received for her plate sold in 1804, with which he purchased negroes; which negroes are either to be considered as hers, or he made responsible for the amount of the purchase money ?

3d. Whether any interest is to be allowed complainant on the monies received on her account by Dr. Polony, and from what time ?

As to the first point, in whatever view this paper is considered, there can be no doubt that the intention-of Dr. Polony was to secure to complainant the amount of the different sums of money therein specified, and that too in preference to all his other creditors, (though indeed those whose claims are secured by mortgage and judgment, will have a preference) and therefore though this paper has not the legal form of a mortgage, yet it bears all the features of one ; and as the intention of the party that it shall be so considered, is manifested, *by his declaring that the house andpalntation are mortgaged to complainant in preference to all other*creditors, this court, which regards the substance .only, and not forms and circumstances, will give it all the efficacy of a mortgage, and support the claim of complainant as far as the funds will extend, with respect to the §8466, after the prior incumbrances are fully satisfied. Indeed it was conceded by one of the defendant’s counsel, that it might operate as far as the §8466.

With regard to the 2d question, it is evident from the paper adduced, that Dr. Polony sold a considerable quantity of plate belonging to the complainant, amounting to §2500, and with that money he declares he.purchased ne-groes for his *plantation;*and further, that for that sum his estate is indebted to complainant, until^ he should put all his business in order.

This must either be considered as a declaration of trust arising by implication, or it must be considered as anequi *570table lien : in either view it will have ultimately the samh effect; with this difference only, that if it is- considered as a declaration of trust, the individual negroes will be bound; but if it is an equitable lien, the estate generally.

The court are rather inclined to consider it an equitable lien-on Dr. Polony’s estate than a trust, because it does not appear'on the face of the paper that he was intrusted with this sum, to be laid out for her benefit and advantage, as he was with that which he first received on complainant’s account; and he has not in this last memorandum fixed on any specific property, as a fund out of which this money is to be paid ; therefore it must be paid out of the estate generally. With respect to the $696-, as he has not noticed it at all, although it has been proved that he received it, yet we do not think complainant entitled to be paid with interest in any other way than in average and proportion, with Dr. Polony’s other simple contract creditors; and as to the $1,000, another item reported by the master, which was not .mentioned in complainant’s account, the court refers her to her action at law. On the 3d ground respecting the interest, we are of opinion, that as the house and plantation are pledged for the payment of the $8466, that money shall draw interest from the times the sums*, were respectively received by Dr. Polony, tobe paid however only out of funds arising from the sales of the house and plantation ; and the $2,500 should draw interest from August, 1804, and to be paid out of the estate generally. -

Refer it to the master to ascertain the principal and interest due to complainant, and report thereon.