Case Name: Executors of Gadsden vs. Executors of Lord
Court: Court of Chancery of South Carolina
Jurisdiction: South Carolina
Decision Date: 1791-07
Citations: 1 Des. Eq. 208
Docket Number: 
Parties: Executors of Gadsden vs. Executors of Lord.
Judges: Present — Chancellors Hutson, Mathews and Rutledge.
Reporter: South Carolina Equity Reports
Volume: 1
Pages: 208–219

Head Matter:
Present — Chancellors Hutson, Mathews and Rutledge.
Executors of Gadsden vs. Executors of Lord.
JULY. 1791.
CASE LXVIII
r. b. p. 287.
The court husband ^of an executrix the^nonieso? the estatelk-same__.And neatreceived ney iec“Q^ bíconsSe? ed as a bond ven%oC'th¿ prejudice of tors? credl"
The complainants in this case charged in their bill, that they were the only children of Thomas Gadsden, deceased: That the said Thomas was possessed of a considerable estate, both real and personal, and on the 27th °f February, 1770, duly executed his last will and testa-meiit, and therein provided for the maintenance and etlu-cation of complainants until they arrived at the age of ^weirty'onej and ordered, that the estate, both real and personal, should be equally divided between complainants a11^ their 'mother, and appointed complainants’ mother executrix thereof, and Christopher Gadsden, James Gads, den and Andrew Rutledge executors: a copy whereof was filed with bill — That the said Thomas departed this life and their said mother proved the said will, and took upon herself the execution thereof — That some time after the death of complainants’ father, their mother intermarried with Andrew Lord, who took into his possession all the goods and effects belonging to the estate of complainants’ father, and managed the same until his death; during which time he received large sums from complainants’ mother, and divers persons indebted to the estate, 'which he applied to the purchase of valuable lands and negroes.• — Complainants further set forth, that on balancing accounts between the said Andrew Lord and Thomas Gadsden, there appears to be due to the estate of the said Thomas Gadsden, the sum of 4616?. 10s. 10d. sterling, with interest thereon, and that the greater part thereof, to wit, the sum of 43671. 10s. 7d. sterling, was received by the said Andrew Lord for bonds and notes due to the estate of said Thomas Gadsden deceased, as appears by exhibits filed with the bill — That the said Andrew Lord departed this life on the-day of-, 1780, leaving his will in full force, and William and George Ancrum executors thereto, who took upon themselves the execution thereof — Complainants further shew, that they have arrived to the age of twenty-one, and that they have applied to the executors of said Andrew Lord for payment of their respective aliares or proportions of the money received by the said Andrew Lord for the estate of the said Thomas Gadsden, or for a part of the lands and negroes purchased as aforesaid; but they have refused to do so, pretending that the said Andrew Lord did not leave property enough to pay more than his bond debts; and that as complainants had no bond of the said Andrew Lord, they were not warranted in paying them, as complainants could only support thoir claim from the books of the said Andrew; whereas .complainants apprehend that as the said Andrew only acted for them in nature of a trustee, and as the monies received by him were on account of bonds and other specialties due the estate of said Thomas Gadsden, deceased, and vested in valuable property as aforesaid, they are in equity entitled to all the advantages of bond creditors, of said Andrew at least, if their claims arc not indeed of a superior nature to those of bond creditors: Complain ants pray that they may not be placed in a worse situation than they would have been if the said monies had not been received by the said Andrew Lord; and that sucli monies as were paid to the said Andrew, not on account of bonds, notes, and specialties, due to the estate of said Thomas Gadsden, may be considered as that third part of the estate of said Thomas, to which said Andrew was entitled in right of his said wife; and that the remaining two thirds, which complainants are entitled to, maybe considered as debts of the highest nature, and as such may be charged on the es- . late of said Andrew, and that part of the lands and negroes aforesaid may be allotted them — Complainants believe that executors of said Andrew wish to make such allotment, if they thought they could be safe in so doing — . Complainants pray that said executors may make full answer to the premises, atid that the dehiands of complainants may be decreed to be paid out of said Andrew’s estate as a debt of the highest nature, and that complainants may have such other relief as to your honours shall seem meet.
To this bill the defendants put in the folltíwing answer: The defendants in their answcl* admit, that Thomas Gadsden did make his will to the effect as in hill set forth, and did appoint his wife executrix, and other persons his executors; and also that the said Thomas Gadsden al-terwards died, and that his wife proved the said will, and qualified thereon; that some time after the widow intermarried with Andrew Lord; but the defendants do not know (otherwise than may appear from Andrew Lord’s books) that he did take into his possession the goods and effects of the said estate, and also the books, notes, and specialties belonging thereto, and manage the same for several years, until his death; nor do they know otherwise than may appear from entries in his books, that he received any sums of money from his wife, and other persons indebted to the complainants’ father’s estate, nor do they know whether he applied any part of the same to the purchase of valuable lands or negroes; but they think it prob able that as he must have received considerable sums of money from the extensive commercial dealings in which he was concerned, he may have had funds to enable him to pay such cash as was requisite for such purchase of lands and negroes as he may have made; as will appear from the cash account extracted from his books: And they say that they have not been able to find any other entries in the books of Andrew Lord respecting the purchases of said lands and n'egroes, but such as appear by the extracts •herefrom, from which it appears that he did not discriminate from what sources he received the cash he applied towards such purchases, and that they were partly settled by discount of debts due Andrew' Lord or copartner-ships in wdiich he was concerned, or by his own bonds. Some of which arc yet outstanding; and Samuel Douglass, formerly a copartner of the said Andrew Lord, has lately pretended a claim as surviving copartner, to sixty negroes, as having been the joint property of that concern, and as having been carried away, during the war, by Andrew Lord, from one of the company’s plantations in Georgia, The defendants also admit that on balancing accounts between Andrew Lord and the estate of Thomas Gadsden, there appeared to be due the estate 4616Z. 10s. 10fi. stcr ling, besides interest, and that tfic^greater part, 4367, 10s. 7d. sterling, of said money, was received by Andrew Lord, for bonds and notes due the estate, according to the exhibits with bill filed- They also admit, that the said Andrew Lord being indebted to Thomas Gadsden’s estate, died, leaving a will, whereof William Ancrum and George Ancrum were appointed executors, who qualified thereon and took upon themselves the execution thereof: And that the complainants have both arrived to the age of twenty-one, and since their attaining that age have applied to Andrew Lord’s executors for the payment of their por tions of the monies received by Andrew Lord, on account of the estate of Thomas Gadsden, or for a proportionate part of the lands and negroes purchased therewith as the} pretend, and that they refused to comply with such re quest, because they conceived themselves hound by law to apply the estate and effects of the testator, in the first place, to the payment of specialty creditors, under the apprehension which they expressed and still entertain, that the said estate and effects would not be sufficient to pay the debts of the testator of every kind, as well those due and owing on specialty as by simple contract, in which latter class they conceived the complainants’ demands must be ranked. The defendants further set forth, that it did not strike them, nor can they determine, that Andrew Lord acted for complainants only in the nature and capacity of a trustee and agent; nor do they know or believe that the whole of the monies so received by Andrew' Lord, and taken up in bonds, notes and specialties, which were due the estate of Thomas Gadsden, were actually vested in valuable purchases as aforesaid; and submit to the court whether the complainants can have their claims for the reasons stated by them, placed in the rank of bonds or specialties: And they arc not convinced of the propriety of complainants’ prayer, that such part of the monies, so received by Andrew Lord, as were not paid to him in bonds, notes and specialties, due to the estate of Thomas Gadsden, might he considered and taken for a part of that third of said estate to which Andrew Lord, •in right of his wife, was entitled; and that the remaining two thirds of the gaid monies to which complainants entitled, might be considered as debts of the highest fie-gree, and as such might be chai’ged on Andrew Lord’s cs^a*e’ or ^ia* there might be allotted to them a propor-' tionate part of the lands and negroes so purchased: But as there are other creditors to whom the testator was indebt-' ed to a great amount, who would be very much injured, and might make the defendants accountable for such injury, if they were to give the complainants any preference, and as the lands and negroes bought by Andrew Lord were purchased by him absolutely, and in his own name, as his property, they presume they will be justified in not complying with complainants’ requisitions, as they had reason to think that the estate of the said Andrew would be insolvent, as will appear by exhibits with answer filed. They deny all manner of combination, and pray that they may be dismissed with reasonable costs and charges.
The cause came to a hearing on 14th July, 1791, and was argued by general Pinckney and Mr. E. Rutledge for complainants, and by Messrs. Pringle, Parker, and Desaussure for defendants.
Ycry imperfect notes of the arguments remain.
For complainants it was insisted, that Mr. Lord, acting in his character of husband of the executrix, and receiving large sums of money of the estate, on bonds due to the estate, was chargeable for the amount as bond debts: And that having purchased largely, both lands and negroes, he shall be presumed to have purchased them with these funds; especially as the testator had directed his executors to improve his estate for his children by purchases: And that these lands and negroes should be allotted to complainants as purchased in trust for them. The will of a testator directs lands to be purchased in trust for the use of A. — The executor makes the purchase; but makes no other than a verbal declaration of the trust — The executor dies insolvent — The court of chancery directed the estate so purchased to be assigned to A. notwithstanding the statute of frauds says, that all declarations of trust should be in writing. And if a man is security for another on bond, and the security pays tho debt, he may bring his action at law for an assumpsit, or he may take an assignment of the bond, and come in as a specialty creditor.
a. u. p. >gfi.
AUGUST. 1791.
DECHr.K HOOIv p- 12.
«• »■ p- 30&
The cases cited by complainants’ counsel were, 4 Burn. 96. 1 Atk. 59, 135. 5 Bro.P. C. 400. 3 Atk. 754. 2 Verb. 342, 608. 2 P. Wms. 543, 644. 1 Vern. 267. 3 Atkins, Chapman vs. Tanner.
For the defendants it was argued, that a court of equity cannot give relief against a positive statute. It cannot declare a trust as to lands, where there is no declaration in writing, unless in some peculiar cases of fraud. See 2 Comyn’s Digest, 212. The court of chancery in marshalling assets, can do so only as to equitable assets; not as to legal. 1 Vesey, sen. 135 — That it would be very unimportant in what order the debts were classed, unless there was an apprehension of insolvency — That in such an event, the legal rights of others are to be regarddd: The law has said, that a breach of trust raises only a simple contract debt; and to depart from that rule, and raise the debt to the complainants up to the grade of a bond debt, would violate the order prescribed by statute/ and injure real bond creditors of Mr. Lord, and even prejudice certain securities of Mr. Lord, who are entitled to the protection of the court; a specialty debt is a debt under seal, and no other is so.
The cases cited for the defendants were, 1 Comyn’s Digest, 254, 269, 276—title Devastavit. 2 Atk. 119, Vernon vs. Vawdry—(express that breach of trust is but ji simple contract debt, and can fall only on the personal assets of trustee.) 1 Vesey 523. Talbot 109. 1 Vesey 312, 313. 2 Vesey 212, 2 Atk. 246. 3 Atk. 237. 1 Atk. 615.
The court made an order, that it be referred to the master to enquire into the specific nature of the debts which Mr. Lord received on account of the estate of Gadsden; the'dates of the several receipts, and whether any of the monies so received by him were laid out in the purchase of lands or negroes, and report accordingly.

Opinion:
Afterwards
chancellor Mathews
delivered the opinion of the court:
In whatever light this case is viewed, whether considering Mr. Lord acting as a rightful executor in consc- quence of his marriage with the executrix, or as executox* de son tox-t, as a trustee, or as a stranger, who got possession of the infants' property, — he lias acted directly contrary to the will of the testatoi', which ordered that his estate should he improved, as his executor should think fit. He has committed a great breach of trust, for which he was punishable out of his estate if living; and his executors under the statute of Charles, and William and Mary, and our act of assembly of March, 1789, are equally answerable with himself as far as they have as • sets in their hands. All the cases go to prove that the court will indemnify a security for any loss he might sustain by paying debts for which he was security, by assigning over the security on judgment: And to dispose of all the testator's estate, even his wife's parapharnalia, before security should be made liable. Trustees may be guilty of a breach of trust, and are punishable for it. Where executors lay out assets of testator, in the purchase of lands, they should be restored to testator's estate. Committing a devastavit, executors are consider ed as trustees of the estate; and if a stranger enters and receives the profits of an infant's estate, in consideration of this conduct, he shall be looked on as a trustee for the infant. The bankrupt laws put all creditors on a footing; yet where the property can be come at that was sold and not paid for, the court unifox'mly decreed, that the vendor has a specific lien on it, and it should stand charged with payment of purchase money,though no specific agreement. In the case of the Baptist congregation vs. administrator of Leigh, decided in this court, the administrator was ordered to restore bonds to the congregation for bonds which he had received belonging to the trust — That case was not contested, but that does not vary the matter; all the foregoing cases prove, that Mr. Lord acting as executor, trustee, or a stranger, was equally answerable for his misconduct.
Defendants counsel have insisted, that where creditors hy the strictest rules of the court have got an advantage, the court wall not deprive them of it; and that all creditors in equal decree must come in pari passu; and that this court aims at equality of satisfaction, as far as possible, in the administration of assets. We perfectly accord with the cases in opinion; hut then it remains for the court to determine the point whether the plaintiff shall he considered as bond creditors or simple contract creditors: Having settled that point, in whatever class complainants stand, they must be paid by defendants pari passu. As to referring it to a court of law to determine whether complainants shall-he considered as bond or simple contract creditors, this. court we apprehend are full as competent to decide it as a court of law, and rather more so. What relief could complainants have at law, had they brought an action for money received, and how could it have been supported? Where are their proofs? They could have no discovery by the oath of defendants, but in this court, where the whole transaction could he sifted and unravel-led, and the nature of the debts particularly specified; from whom received, when paid, and the amount: and having made the discovery, this court can as well order payment as a court of common law. Discovery draws after it relief. The case in 3 Atk. 333, does not attribute any exclusive jurisdiction to the court of common law; the judge only says, that bond creditors and simple contract creditors shall be considci'ed in the same light in this court as at common law. But should this court, under the circumstances of this case, determine that complainants ought to be considered as bond creditors, they will be. paid as such pari passu.
The case of Verno vs. Vawdry, Ventris 40, lias boon much relied on by defendants' counsel. It is a very ex» traordinary one. There is no case stated to shew upon what principles the court determined the question: There arc ^ircc points settled, but it docs not appear how they came before the court for determination; they are totally unconnected; the first is upon a mere point of practice relative to an original and amended bill, being considered as one; 2d, that a breach of trust is considered as a simple contract debt, and can only fall on tlic personal estate of the trustee; the 3d is relative to a marshalling of assets. Unless some reasons for the determination appear in the cases cited, the court will take no notice of them, nor hold itself bound to follow the determination of any foreign court as a guide for its decisions, further than as such determinations may appear to be founded in equity and good conscience. The case abovementioned, cannot he considered as the law of this country, though it may be in England; because there, lands are only liable to bond debts and specialties where the heir is bound; whereas in this state, a man's real estate is equally liable with his personal property to the payment of all his debts. If was said that complainants arc not specialty creditors, having no bond from Mr. Lord. It may be asked, how it was possible for them to obtain one; they have but lately come of age, and he has been dead several years. It was contended, that Mr. Lord had a right to retain as executor in preference to complainants. But his wife, Mrs. Lord, was only a legatee, entitled to a third of tlio estate, under the same clause of the will that gives the rest to her children. Claiming under the same person, and under the same clause of the will, there can be no priority between them. Mr. Lord was a mere stranger, an intruder; as to Mr. Gadsden, the testator, he was no creditor; but taking from testator's bounty to his wife, he must take it upon the same terms as complainants. This, is not a case between a creditor executor, and another creditor; in such case he would undoubtedly have had a right to retain against creditors of equal rank, but this is a case between the heirs of teátator and his executor, who bias possessed himself of all the assets, and converted them to his own use. It was contended for the creditors, that Mr. Lord should be allowed his full third, and complainants receive a dividend as his simple contract creditors} but upon what principle is not discoverable, unless it may •be supposed Mr. Gadsden intended to make a compliment of one third of his estate, to the creditors of any after husband his wife might marry, absolutely, and subject the re» ihaining two thirds to a diminution, by his children coming in pari passu with such second husband's simple contract creditors, to whom probably the whole money received on account of the estate had been already paid->-It does not appear how Mr. Lord disposed of the money he received* Suppose he had paid off all his simple contract creditors with it, would it-no4"be highly unreasonable and unjust to say, although he has used the complainants' money received on bond debts, in paynient of his simple contract debts, they should nevertheless be considered only as .simple contract creditors, when probably he has left only-assets sufficient to pay his' bond creditors? Hard would be the lot of infants, if, where the misplaced-confidence of the testator in appointing* executors who were unworthy of the trust, and who should waste his assets, this court had not a power to make them account for their misconduct} but peculiarly hard would be the case of chib» dren, if, by the unbounded confidence of a husband in appointing his wife executrix, and her making aft improvident second marriage, she should put her children's estate in the power of such second husband, wbo might waste or dissipate the whole of it, and leave them destitute, if this court had not power to make him account for Ins malconduct. Such would be the situation of the complainants in the present case: But this court having the peculiar charge of Infants, will take care of their interest, and not permit it to he wasted by an ungracious executor. If the court once allowed the doctrine contended for by defendant to he just and equitable, that executors may call ¿1 all debts due the testator by bond, and make what use they please of the money, and that the infant legatees or children of the testator shall only be considered in the light of simple contract creditors of the executors, we may say as lord chancellor King did in the case of Mansel vs. Man-sel, that it will be making proclamation, that all the executors in this country Eire at liberty to destroy or convert own USP' "with impunity, the property of all the orphans committed to their care, which they are intrusted only to preserve. The case of Powell and Bell, as far as our researches have gone, is the only case that bears any analogy to the present case; where an executrix, who was entitled to a third paid of the personal estate, wasted great part of it, married a second husband and died. On a bill against the husband for an account and satisfaction, it was decreed, that he should be charged in nature of a debt absolutely for so much as came to his or his wife's hands after marriage, and for what came to her hands before second marriage, to have satisfaction against husband, so far as he had any of his wife's estate — The decree was affirmed on appeal. So here, — Mr. Lord him - self having wasted the assets, his executors should be answerable in like manner. It is admitted by the answer of defendants, that their testator received considerable sums of money for bond debts, and also for simple contract debts due the estate of Mr. Gadsden. As Mr. Lord in right of his wife was entitled to a third part and received p, many years ago, it would be extremely unjust and unreasonable to say he should have this whole proportion, which lie undoubtedly applied to payment of bis own debts, and that the complainants, the infant legatees, and children of the testator, should be considered merely as his simple contract creditors, in which case they will receive little or nothing. Mr. Gadsden having by his will ordered, that his estate should be improved as his executors should think proper, and them being no other way of improving money, than by putting it out at interest, and eis Mr. Lord retained the whole in his own possession, this court, which always looks upon those things as done which ought to ho done, will, under the circumstances of this case, consider Mr. Lord as a bond debtor, as to so much of the assets as he received for bond debts, and debtor on simple contract for such sums as were origin-, ally simple contract debts.
u. a.p. 317.
X; was ihmd'»re. decreed,, that it he referred to the master to examine the accounts of defendants' testator, and ascertain what sums of money were received by him on account of Thomas Gadsden's estate for bond, and what for notes and accounts; the times when they were respectively received; how much for principal, and what for interest; and whether it be liable to any and what depreciation — That the master do also ascertain the annual income of Mr. Gadsden's estate, and deduct therefrom three fourths of such income annually, until the eldest of complainants attain the age of twenty-one years, the testator having by Ids will appropriated so much for the maintenance of his wife and children — That whatever balance shall appear to he then due the estate, complainants shall be c onsidered as bond creditors, as to two thirds of what was received on the bond debts; and be ranked as simple contra; t. creditors for wiiat was received on the, notes and accounts — That they be allowed interest on such sums from the time the eldest of complainants attained his age of twenty-one years; and that the sayl money he paid to them by the defendants in the same, proportions as the other bond and simple contract creditors of their testator are entitled to receive their debts: And that the same be paid agreeably to the terms of the instalment act: And that the defendants do pay the costs of suit.
And in September, 1791, ilio master made his report conformably to the decretal order of the court, which was confirmed.
See as to the following assets, 2 Vescy 265-9, Jaeomb to. Har-ivood — In this case the court said that executors de son tort, or strangers meddling with an estate, they shall be accountable as trustees: Also, that where the property can be come at, that was sold and not paid for, the court uniformly decrees the vendor should have a specific lien; and it should stand charged with the payment of the purchase money, though no special agreement. — Sed vide decree of thisr court in the case oFYV. L. Smith, and others, representatives of W. AVragg to. the comptroller general and others, decided in May, 1807, wherein the court decreed, that the vendor who did not take a mortgage of the property sold, has no equitable líen, as tfjjto entitle hi® ty a preferences er other creditor;.