Case Name: A. Howard, Escheator, and the City Council, vs. J. W. Schmidt
Court: South Carolina Court of Appeals
Jurisdiction: South Carolina
Decision Date: 1831-04-16
Citations: 1 Rich. Cas. 452
Docket Number: 
Parties: A. Howard, Escheator, and the City Council, vs. J. W. Schmidt.
Judges: Johnson and O’Neall, JJ., concurred.
Reporter: South Carolina Equity Reports
Volume: 9
Pages: 452–458

Head Matter:
A. Howard, Escheator, and the City Council, vs. J. W. Schmidt.
The term escheat applies, in this State, as well to personal as to real property.
An administrator setting up a claim to the fund in his hands, held liable for interest pending the litigation — the claim having been decided against him.
It is only where interest is actually received, and vested so as to accumulate, that an administrator is entitled to ten per cent, commissions thereon.
Though it is within the power of the Court, in conformity to the English Chancery, to charge executors and other trustees less than the legal rate of interest; yet to authorize the Court to change the established practico of charging the legal rate of interest, a thorough investigation would be necessary, founded on the fullest evidence of the present value of money.
Administrator allowed commissions on paying over the amount reported to be due by him.
Before Harper, Ch., at Charleston, January, 1829.
Harper, Ch. The bill is filed against tbe defendant as administrator of the estate of Joseph Clark, deceased, for an account of the personal estate of his intestate, which is claimed by the complainants as escheated property, the said Clark having died intestate and without relations, under a grant from the State by the Act of the Legislature passed in 1799. The defendant admits that Clark died intestate and without relations, and that he, defendant, has possession of his personal estate. But defendant states, that he has claims against the estate of his intestate, growing out of a partnership which existed between them, in the business of running-packets between Charleston and Sullivan’s Island. The defendant states, that he was a dormant partner, entitled to one-fourth of the profits of the business; that the' intestate in his lifetimé accounted with him, as he then supposed, fully and fairly, for his share of the profits of the business ; but he now alleges that Clark defrauded him by retaining much more than his due proportion of profits. Defendant also claims the whole of the estate as survivor.
The first question made, is as to the existence and terms of the copartnership. The statements of the answer and the proofs in the cause are peculiarly vague and unsatisfactory. It is certainly extraordinary that a partnership should have existence for twelve years, settlements continually taking place between the parties, and the defendant be unable to oifer any distinct proof in writing or otherwise, of any transactions between them. Yet unless I discredit the witnesses, (which I have no right to do,) I must believe that some partnership connexion did exist. Two witnesses (Logan and McGee) state expressly that Clark acknowledged the partnership to them. The former fixes the date of the acknowledgment in 1810 — the latter, so far as I can perceive, fixes no date. I lay little stress on the circumstance, that Logan represents Clark to have said, that defendant rvas interested in the business to the extent of one-half, while defendant only claims to be entitled to one-fourth of the profits. The witness’ expression is, “ he said it was Dr. Schmidt who was half concerned with him in the packet boat business, and that Dr. Schmidt owned half of the boat.” The memory of the witness may not have been precise as to expressions. Clark may have said that Dr. Schmidt owned half of the boat, and the witness inferred, as of course, that his interest in the whole business was one-half. The testimony of these witnesses is corroborated by other circumstances. The defendant is proved to have advanced the whole, or a considerable part of the money for the purchase of the packet (Eagle) with which the business was commenced. The control of the defendant over the sale and disposition of the negro Bingo, (a boat hand,) indicates an interest beyond the agency of a mere friend and adviser, and the note, of which the existence and contents are proved by the witness Cuckow, certainly shews that there had been some common interest in the boats and other property specified in it. I think a partnership is shewn to have existed. If nothing else appeared, it would be inferred that the parties were equally interested. But the defendant must be restricted, by his admission and the claim set up in his answer, to one-fourth of the profits. A claim is advanced in the argument, though it does not seem to be distinctly set up in the answer, to one-half of the property which constituted the stock or capital of the concern. This property, I suppose, is specified in the copy note proved by Cuckow. That is as follows :
“ $2,100. — Charleston, So. Ca., May 1st, 1S22. Due Dr. J. W. Schmidt, two thousand one hundred dollars, or half of the packets Eagle and Mary — also half of the negroes Prince, Tartar, Henry and Sango — also half of the Hughes.
“ Signed JOSEPH CLARK.”
This paper seems to indicate that the defendant, previously to the execution of it, had an interest of one-half in the property specified. Clark, the intestate, was the ostensible and legal owner of the whole. But it also appears to me, this was an arrangement made with a view to his becoming the absolute and entire owner,-or, in other words, as an arrangement for the purchase by Clark of Dr. Schmidt’s interest in the property. It is an acknowledgment that there is due to Dr. Schmidt, either the sum of $2,100, or (notwithstanding the apparent ownership of Clark) one-half of the articles enumerated. It is an engagement either to pay Dr. Schmidt $2,100, or to transfer to him one-half of the property. I am forced to draw conclusions from scanty premises, but I cannot conceive any other explanation of this transaction. Now, there is no account given of the original of this note. If the $2,100 mentioned in it were shewn to have been paid, I should conclude that there was an end of Dr. Schmidt’s rights in the property. But the fact that the original note is not produced, seems to raise a presumption that it has been paid, or the note in some manner satisfied and taken up. On this, point, however, I shall conclude nothing, but reserve it for the coming in of the report.
The answer states that the intestate, Clark, from time to time, accounted with the defendant for his share of the profits of the business. This accounting may have amounted to a settlement or the stating of an account. If so, in order to have avoided it, fraud should have been proved. Though this was alleged, no evidence was offered to prove it. This matter I also reserve for the coming in of the report, as well as the question, how far back the account ought to be carried, supposing the defendant to be entitled to an account as against the estate of his intestate. It is hardly necessary to observe, that there could be no right by survivorship to the partnership property.
It is ordered and decreed, that the defendant account before the proper officer of this Court, for the personal estate of his intestate, and that on such account; he be at liberty to establish against the estate of his intestate, subject to all legal exceptions, any demand growing .out of the partnership transactions of the defendant and his intestate, and his claims to any portion of the property which was held as partnership property, and that he pay to the complainants the balance that may be found due on such account.
In January, 1831, the cause was heard before his Honor, Chancellor JohnstoN, on exceptions to the report. His Honor decreed as follows:
JohnstoN, Ch. The bill, in this case, claimed from .the defendant the estate of his intestate, as escheated property. Such proceedings were had, that it was, by decree of the Court, referred to the Master to report on the accounts, allowing the defendant, who was a copartner of Clarke, to establish any demands he might have against the estate. The defendant professes to have had suspicions excited in his mind, by finding, after the decease of his intestate, that he possessed an estate to an unexpected amount; that, notwithstanding they had repeated settlements up to the intestate’s death, on the copartnership concern, the intestate had accumulated that estate by fraudulently abstracting from the profits of the copartnership — and laid claim to his copartner’s estate, in his hands, as compensation. The Master heard testimony and reported — but the report was recommitted upon a suggestion, that the Master was a member of the City Council, and, therefore, one of the complainants in this case; and the accounts were referred' to the Commissioner on the same terms as they had been to the Master. The Commissioner has reported, and the defendant has put in two exceptions to the report — and it is this report and these exceptions that come before me.
The first exception is, to the allowance of interest on the funds in the defendant’s hands, while he was bona fide litigating his demands against the estate.
The demand of the defendant appears to have had no other foundation, than his own suspicions. The testimony shows, that he ought not to have referred the acquisitions of Clark to fraud, but that he should have attributed them to the industrious pursuit of a profitable business, which although in part unlawful, he did not conceal. If surmise and suspicion should excuse from the payment of interest, it would be easy to escape it. But why did not the defendant pay the money into Court, a measure which would at once have rendered secure the interests of whoever should have been proved entitled to it — and demonstrated that the defendant was not profitably employing it. If paid in, the Court would have seen to its profitable investment, pending the litigation. As a general rule, I consider every trustee liable to interest pending the suit, who does not pay into Court, or tender payment to the person who eventually shows that he rightfully demanded it. This exception is overruled.
The second exception is decided, I apprehend, by the case of Wright vs. Wright, and is overruled^.
It is ordered and decreed, that the Commissioner’s report be confirmed, and that the defendant do pay to the complainants the sum reported against him, being nine thousand seven hundred and sixty-three dollars, sixty-and-three-fourth cents, with interest thereon from the first of January, 1824.
The defehdant appealed on the grounds
1. That the decree of Chancellor Harper was founded in error, in decreeing that complainants were entitled to an account from the defendant, administrator of Joseph Clark, of the personal estate of said Clark, — personal estate not being the subject of an escheat, and the complainants were not authorized, under the Act of 1787, to sue for any part of the personal estate in the hands of the administrator.
2. That he ought not to be charged with interest on the balance in his hands, because, while his claim against the estate was in a course of litigation, he was guilty of no laches in not paying over the fund ; but was entitled to the same privilege where he was the claimant, as he would have had, if a third person had been the claimant.
3. That, as the defendant is charged with interest on the fund in his hands, as though he had now collected and were ready to pay over the principal and interest of a bond arising from a sale of the estate, he ought to be allowed the usual commission of 10 per cent, on the amount of interest to be paid over under the report.
4. That the rate of interest charged should have been fixed at 5 per cent.
5. That, as the decree of Chancellor Johnston was founded on a mistake of the state of the accounts, as reported by the Master and Commissioner, alleged by complainant’s solicitors, and acquiesced in by the defendant’s solicitors, that the fact was correctly stated, the decree ought to be’ reformed,' by allowing to the defendant the commissions on the final payment of the amount and interest reported as due by him.
Grimke, for defendant.
Accson, for complainants.

Opinion:
The opinion of the Court was delivered (April 16, 1831) by
Harper, Ch.
The principal point made in this case is, that which is involved in the first ground of appeal.
Whatever may. have been before the legitimate meaning of the term escheat, the Acts of the Legislature on the subject, explain in a manner too clear to be doubted, that it is intended to be applied as well to the case of a person's dying intestate, possessed of personal property, and leaving none who are known as next of kin, as to that of one's dying possessed of real property and lea-ving no heirs.-
The reasoning of Chancellor Johnston is entirely satisfactory on the point of interest, which forms the second ground of appeal.
As to the claim of a commission of 10 per cent, on the amount of interest which has accrued in the administrator's hands, this Court has already decided, that it is only where interest is actually received, and vested so as to accumulate, that an executor oradministratoris entitled to such a commission. The purpose of giving the commission is to encourage executors to accumulate.
The rate of interest charged by the Court has heretofore been uniformly the legal rate of seven per cent. I suppose that it is in the power of the Court, in conformity to the practice of the English Chancery, to charge less than the legal rate of interest, if justice to executors and trustees should seem to require it. To authorize us, however, to change the established practice, a thorough investigation would be necessary, founded on the fullest evidence of the present value of money. This has not been afforded in the present case, and we cannot depart from the practice.
The counsel on both' sides agree with respect to the fifth ground of appeal, that it was by mere inadvertence, that the commissions claimed were not allowed.
It is therefore ordered, that the decree be reformed, so as to allow the defendant commissions on the final payment of the amount due by him.
Johnson and O'Neall, JJ., concurred.
Decree reformed.