Case Name: Margaret Stock v. Charles Parker and Others, Administrators of B. B. Smith
Court: South Carolina Court of Appeals
Jurisdiction: South Carolina
Decision Date: 1827-03
Citations: 2 McCord Eq. 377
Docket Number: 
Parties: Margaret Stock v. Charles Parker and Others, Administrators of B. B. Smith.
Judges: 
Reporter: South Carolina Equity Reports
Volume: 7
Pages: 553–558

Head Matter:
Margaret Stock v. Charles Parker and Others, Administrators of B. B. Smith.
When a tenant for life of slaves dies after the first of March, the slaves employed on the plantation to make the crop, must so continue until the crop is made, which becomes assets in the hands of the executor of the tenant for life, without payment of hire to the remainder-man. The rig'ht of dower is a charge upon the lands and not upon the general funds of the estate oi"the husband; and where the commissioners assessed the widow’s dower at $500, which the administrator paid, the item was not allowed in his account. A note or bond made for the purpose of being sent into the market, and without any consideration, is usurious, even in the hands of an innocent holder, if discounted in the first instance at an usurious rate of interest: but strict proof of the fact is required as to an innocent holder. In absence of proof the bond implies a consideration, and the mere fact that it was sent into market by the drawer will not raise the presumption of usury, when it was in the ¡rover of the creditor raising the objection to have made a witness of the obligee, who had assigned the bond. Moneys received by an executor or trustee on bonds, and not paid over, cannot be charged by his newt ai qne trust against his estate, upon the death of the trustee, as a bond debt. A broach of trust only forms a simple contract debt.
This was a bill against the administrator of B. B. Smith to marshal the assets among the creditors. In the examination of the administrator’s accounts several questions arose, which were decided by his honor, Chancellor DeSaussure, as follows:
By a marriage settlement, executed before marriage, certain negroes were conveyed" to trustees, in trust for the use of B. B. Smith, during the joint lives of himself and his wife, and on the death of either, to the survivor. Mr. Smith died on the 2d of June, 1823. The admin istrators, by the advice of counsel, paid Mrs. Smith for the hire of her negroes from the time of Mr. Smith’s death to the end of the year. This payment was rejected by Mr. Elliott the Commissioner, and on exceptions, his report in this particular was confirmed; the act of 1789, expressly providing, that if a tenant for life of negroes die after the 1st of March, such negroes as were employed on the plantation to make the crop, should continue until the crop is finished, and such crop shall be assets in the hands of the executor of the tenant for life. Pub. Laws, 494.
*Mr. John Louden offered to prove a bond of the intestate, conditioned for §3,000. The bond was opposed as usurious. The evidence was, that the bond was carried by the intestate to a broker, to sell and raise money. The broker sold it, and received §2,700. The bond on the face of it was payable to Thomas R. Smith, in one year, with interest from the date, and assigned by him. The commissioner rejected this bond as usurious. An exception was taken by Louden, who it was admitted was a bona fide holder, and his honor sustained the objection, and directed the commissioner to receive the proof and admit the bond.
Ann Downes Smith, widow, another creditor, in her lifetime, put a number of negroes into the hands of a broker, to be sold on her account. On the day of sale she died, and appointed B. B. Smith executor, who proved her will, completed the contracts of sale, by executing bills of sale to the purchasers, and taking their bonds to him as executor. He received the money afterwards, and died without accounting to the legatees of Mrs. Smith, who were minors. Mr. Elliott, on the authority of Gadsden v. Lord, 1 Desaus. Rep. 208, admitted the legatees of Mrs. Smith to prove the sums that the intestate owed them, on account of bonds which he had thus collected, as a bond debt against his estate. An exception was taken to the report on this point, and sustained by his honor, who directed the accounts to be stated over, and this debt to corne in as a debt by simple contract only.
From this decree Mrs. Smith the widow, and the administrators, appealed, because his honor refused to allow to the administrators the sum of §1,500, which they paid to her for the hire of her negroes, from the death of Mr. Smith to the end of the year.
Richard D. Smith, administrator, with the will annexed,* of Ann Downes Smith, appealed, on the ground that he was not allowed to prove as a bond debt, the sums that Smith the intestate had received on bonds, as trustee for the legatees of his testatrix. And the administrators appealed on the ground, that the decree admitted the bond produced by Louden, which, from the evidence, was usurious, to be proved as a good debt against the estate.
Another point in the case was this. The intestate, B. B. Smith, sold a tract of land to the complainant Stock, on which his wife had not renounced her dower, and the intestate gave Stock a bond of indemnity against her claim. This bond was not allowed by the commissioner, and an exception on that ground taken up to the chancellor. ITis honor confirmed the report of tíre commissioner, and allowed the bond for §500, so much having been paid to Mrs. Smith, for her claim, to come in as a simple contract debt, Toller’s Ex. 282, on the ground that a bond to save harmless stood as a simple contract debt.
From this part of the decree, Thomas R. Smith, a creditor, appealed, on the ground that his honor was wrong in allowing this payment of $500 out of the general funds of the intestate’s estate, as Mrs. Smith’s claim was only a special charge on the land, and not on the general funds of the estate.
Petigrtj, as to the hire of the negroes,
contended, that the act of assembly did not apply in this case. Here the right of Mrs. Smith to the negroes, on the death of Mr. Smith, was secured by contract, which would control the operation of the act. Co. Litt. 55 b. -note, 363. If two are jointly seized, and one die, the emblements go to the survivor. Com. Dig. Biens. G. Y. The effect of the marriage settlement entitles Mrs. Smith to the survivorship, which took effect eo instanti of the death *of Mr. Smith. Admit that by the terms of the act the executor was entitled to the possession of the negroes, it did not follow that they would not be bound to pay for their hire, as in the case provided for in the act.
As to Louden’s bond, the question was the same as in the case of Fleming v. Mulligan, 2 M’Cords Rep. 173.
Frost, as to the trust funds received by B. B. Smith.
The devastavit committed on the estate of Mrs. Ann Downes Smith was the same as in the case of Gadsden v. Lord, and that case has been regarded as law from the establishment of the court of equity up to the formation of the present court of appeals. 1 Desaus. Rep. 208. 3 Desaus. Rep. 116. The principle on which that case proceeded, is that the parties in interest were minors, and the debts collected specialties; and all these circumstances entered into the present case. The objection to the principle in that case was, that equity regarded the breach of trust as a simple contract debt, and all the authorities refer to the case of Vernon v- Vaudry, 2 Atk. 119, and that was a mere dictum. That rule does not always hold. Equity will follow the trust fund, in whatever it may be vested, in favor of the cesti que trust. 2 Mad. Cha. 147. 2 Atk. 59. 2 Meriv. 131. Cooper, 146.
As to the negro hire, the marriage settlement gave Mr. Smith a life estate in the negroes, and it was the very case provided for by the act, and the executor was entitled to the emblements.
Grimke.
The act of 1789, obviously intended to put negroes on the same footing with real estate in England. There, whether the estate is created by the act of the party or by operation of law, if the tenant for life die after the beginning of the year, the remainder of that year goes to his executor, without any further compensation.* A contract for a life estate must be understood in reference to the law, and the construction will control the otherwise apparent intention of the parties expressed in the contract.
As to the dower, the act concerning the admeasurement of dower creates a charge on the heir at law for the dower of the wife, so that the payment by the administrator to Stock vva sa devastavit, and that credit ought to be struck out of the account.
With respect to Louden’s bond, although he came in with the. other creditors as a quasi defendant, yet he was in effect a complainant, and according to Fleming v. Mulligan he was not entitled to recover.
King, for Louden.
It did not in fact appear that Louden’s bond was usurious. The fact of usury ought to be clearly proved, especially as it is now in the hands of a bona fiule holder without notice. Mail’s, the witness, did not state what the consideration of the bond was. It was a mere matterof conjecture that it was originally usurious. Prima facie, a consideration will be presumed. The intestate carried his bond into the market, holding it out as being founded on a sufficient consideration, and he received on it, in a fair course of speculation, §2,700; and will he be permitted to take advantage of his own fraud, and discharge himself from liability ? Again, this objection was not raised by the representatives of Smith, but by his creditors, and according to the case of Moffatt v. M’Dowall & Black, 1 M’Cord’s Cha. Rep. 441, they will not be permitted to do so. 2 Mad. Cha. 490. Purchasing a note at a discount is not usurious, nor will the defence of usury avail in opposition to a bona fide purchaser without notice. 2 Munf. Rep. 36. Gilmer’s Rep. 16.
Harper, in reply.
The decree rejecting the charge *for negro hire is founded on a narrow and literal construction of the act. It is a general rule, that laws are to he construed in reference to the existing laws, and the rights of the parties under them. On general principles, if one use the property of others he is bound to pay for such use. And if the act be construed in reference to this right, it will follow, that although the executor of the tenant for life is entitled to hold to the end of the year, he will be bound to pay reasonable hire. The provision made by the act in the case of a sub-tenant favors this construction. All the right which the executor of the tenant for life has is the right to enter and take away the growing emblements. Toller, 149. 2 Black. Com. 122. 2 Com. Dig. 290. Bien, G. 2. Coke Liu. 55 b. If the tenant for life die before the time that the rent falls due from the under tenant, the under tenant was not bound to pay either. Neither could sue. The statute of 11th Geo. II. Ch. 14, p. 14, provided for this evil, and it wTas obvious that the provision of our act was intended to remedy the evil here.
March, 1827..,
Vide ante, p. 84, the case of Leverett v. Leverett, S. P.

Opinion:
Curia, per
Johnson, J.
This court concur with the very learned chancellor, who tried this cause, in alibis conclusions on the questions growing out of this case, except that which allows to the defendants a credit of §500 in their accounts with the estate of their intestate for so much paid by them to Mrs. Smith, the widow, on account of hex dower in the Green Savanna plantation. As explained in the argument, it appears that Mrs. Smith had instituted proceedings to obtain her dower in the lands, and the commissioners finding it impracticable to lay off the dower in the land itself, without doing injustice to the parties, assessed the sum mentioned in lieu thereof, and the defendants paid her the amount out of the general funds of the estate, and the land still remains undisposed of. The objection now is that assessmenB ⅛ a charge upon the land itself, and not on the general funds of the estate, and that the payment was a devastavit, and ought not to have been allowed.
The right of dower consists of a property in the soil itself, and although the act of the legislature regulating the admeasurement has, under particular circumstances, authorized the substitution or assessment of a sum of money in lieu of it; yet the character of the right is unchanged, and it operates as a charge upon the land itself, and not on the general funds of the estate. It is not perceived how this question can materially affect the rights of these parties, if the lands are worth the sum assessed; but cases might arise in which it would be important, and in settling principles we ought to look to all the consequences. Let us suppose, for instance, that a particular creditor has a specific lien on Green Savanna for the payment of his debt, and that there were other debts of superior degree sufficient to cover the whole residue of the estate real and personal. Now it is obvious in such a case the payment of the sum assessed, in lieu of dower, out of the general fund would in effect transfer so much from the creditors of the last description to the first, in direct violation of the act regulating the distribution of assets. Many other examples of the same sort might be put, and it is very clear that in point of principle this payment was improperly made. In this respect therefore the decree must be reformed, and this item expunged from the account.
There are two other points in the case, as to which the court deem it necessary to state, in a concise way, the reasons on which its concurrence with the chancellor is founded. The first of these relates to the bond purchased by Mr. Gailuchal, and by him transferred to Mr. Louden, who has exhibited it as a demand against the estate of the defendant's intestate.
The case of Fleming v. if any doubt about it ever
Mulligan has established *the doctrine, existed before, that a note made for the purpose of being sent into the market and without any consideration is usurious and void even in the hands of an innocent holder, if discounted in the first instance at an usurious rate of interest; and the doctrine applies with all its force ta bonds similarly situated. But in that case the fact was clearly and distinctly proved ; and I apprehend that according to principle strict proof would be required in all cases operating as a forfeiture on innocent holders. Let us then examine the evidence adduced in this case, and inquire whether the facts be proved.
In the first place, the bond itself being a contract under seal presupposes a consideration; and in the next there is no direct evidence of a want of consideration. It is attempted to be inferred, however, from the evidence of the witness Mairs, who negociated the sale to Gailuchal, who supposed that is was made without consideration in the first instance, and intended to raise money; but he furnishes no fact from which this conclusion can be drawn, except that it was put into his hands to be sold. Now, although it is notorious that these means are often resorted to for the purpose of raising money, it is equally certain that individuals frequently find it to their interest to send notes, bonds, and other securities into market to be discounted, although they are founded on adequate considerations, and such paper is clearly the subject of legitimate traffic. The chances then are equal whether this bond was or was not founded on a consideration, and the presumption in its favor must prevail. Again, conclusive proof of the fact was in the power of the defendants, if in truth it existed. Thomas R. Smith, one of the parties, is under the act a competent witness ; he was within the process of the court, and might have been required to give evidence; and although the omission to do so is not conclusive* against the defendants, it may be taken into the account in weighing the evidence.
The remaining question which the court deem it necessary to notice is that arising out of the claim made to charge the devastavit committed by the intestate B. B. Smith, executor of Mrs. Ann Downes Smith, as a bond debt against his estate. The act of 1789, directing the mode in which debts due by an estate shall be paid, provides first for the funeral and other expenses of the last sickness, and the expenses of administration; next debts due to the public; next judgments, mortgages, and executions, the oldest first; next rent; then bonds and other obligations; and last, of all, debts due on open accounts. The question then arises to which of these classes does this demand belong? Now I take it, that it is impossible by any subtility or refinement to transform it into judgment, mortgage, execution, bond or other obligations; and of necessity it must fall within the last, and be postponed until all the preceding are paid. The case of Gadsden's Ex. v. Lord's Ex. 1 Desaus. Rep. 208, has been relied on as conclusive of the rights of the parties to have this demand placed on the footing of a bond debt, and the analogy between them is certainly very striking. It will be difficult, however, to maintain that case on principle, and its authority as a precedent is shaken bjr the refusal of the court to adopt the principle in any subsequent case; for without laying the axe to the root, they have evidently been laboring to get rid of it by carving out exceptions after exception (vide 3 Desaus. Rep. 116); therefore without saying more of it, I will refer to the opinion of this court in the case of Rolain v. Darby, 1 M'Cord's Cha. Rep. 472, as overruling its authority.
Neither the wisdom nor the policy of the discrimination made in ^le Payment of debts of different grades *out of an insolvent estate is readily perceived when applied to the state of things in this country, and I were now permitted to make a law on the subject it might be otherwise, but to us belongs the exposition of the law only, and on this subject we find the rule prescribed in terms that are not to be misconceived, and so strong that we are unable to bend it to subserve even the cause of the orphan.
Decree affirmed.