Case Name: W. J. Smith et al. vs. George W. Brown et al.
Court: South Carolina Court of Appeals
Jurisdiction: South Carolina
Decision Date: 1853-01
Citations: 5 Rich. Eq. 291
Docket Number: 
Parties: W. J. Smith et al. vs. George W. Brown et al.
Judges: Dunkin and Dargan, CC., concurred.
Reporter: South Carolina Equity Reports
Volume: 26
Pages: 291–300

Head Matter:
W. J. Smith et al. vs. George W. Brown et al.
Tenant of trustee not allowed compensation, from the corpus of the estate, for improvements put upon the premises.
Trust property was sold, and bonds for tho purchase money given to the Master, and assigned to the trustee: the purchaser made payments to the cestui que trust for life, without the consent of the trustee : the payments were allowed to the extent, only, that the cestui que trust would have been entitled to receive them from the trustee, had they been made to him, as they should have been.
Before Dunkin, Ch., at Charleston, June, 1851.
Dunkin, Ch. This cause was heard on the report of the Master. In order to understand the exceptions, a brief statement will be necessary, which can be enlarged or corrected by reference to the pleadings, and the evidence which is reported. The property called Gibbes’ Wharf, including two slaves, Tom and Pompey, attached to the Wharf, formerly belonged to two brothers, George Gibbes and James Gibbes. In 1835, George Gibbes conveyed his moiety to a trustee, for the benefit of the children of his brother, Paul G. Gibbes. • The deed provides, that upon certain conditions, (which were complied with,) “ the trustee should semi-annually pay over to Catharine Gibbes,” (the widow of Paul C. Gibbes, and the mother of his children,) “ as long as she should continue a widow, and until all the children should die, or the youngest attain twenty-one years of age, the whole nett income of the property, to be applied by her to the support of herself and children, as she might deem expedient.” On the 6th October, 1841, the complainant, William J. Smith, became the substituted trustee under this deed.
In January, 1843, William J. Smith, the trustee, and James Gibbes, (who owned the other moiety of the wharf,) united in a lease of the premises to the defendant, George W. Brown, for one year, at the rent of $5,000 per annum — payable 1st July and 1st January — to each a moiety. The lease also included the use of the two slaves attached to the wharf. By the stipulations of the lease, the negroes were to be fed and clad, the taxes paid, and the premises repaired, and kept in repair, at the expense of the lessors; a lease, to the same effect, had been made between the same parties in the year 1842. Before the close of the year 1843, James Gibbes made a lease of his moiety to the defendant, George W. Brown, for five years, on the same terms; but the complainant refused to unite in this lease, and, at the expiration of the lease of 1843, he attempted to enter upon his moiety of the premises. This led to much litigation, to the particulars of which reference is made in the case of Gibbes vs. Smith, 2 Rich. Eq. 131. The object of that suit was, to have the complainant removed from the trust, principally on the ground, that he declined to renew the lease for five years, (though requested by Mrs. Catharine Gibbes, the complainant in that proceeding,) and had refused to authorize her to receive the rent of the premises from the lessee, and had brought an action against the defendant, G. W. Brown, for moneys which had been paid to her. The cause was heard in February, 1845, and the bill was dismissed — the Court remarking that, by the provisions of the trust deed, the management of the property.was committed solely to the trustee, who was to receive the rents, and, after the necessary deductions, to pay the surplus to the complainant, for the purposes specified. That the trustee was directed to lease the premises, or such part as he thought proper, and direct such repairs and improvements as he might think necessary. That all this was left to his discretion, and not to that of the complainant, Mrs. Gibbes, who had only to receive from the trustee, semi-annually, the nett proceeds of the estate. On an.appeal taken, this decree was affirmed in January, 1846.
It seems, that James Gibbes had died in November, 1844, intestate, leaving, as his heirs at law, his sister, Caroline L. Brown, wife of the defendant, and the children of Paul C. Gibbes, a deceased brother. Under certain proceedings in partition, the entire premises hereinbefore mentioned were ordered to be sold by the Master, in April, 1846. They were accordingly sold, on the 23d April, 1846, and bid off by the defendant, George W. Brown, for the sum of fifty-eight thousand dollars. The Master’s report of sales was confirmed by Chancellor Johnston, on the 3d July, 1846. The order further directed, inter alia, that one moiety of the proceeds of the sale should be paid or transferred “ to William J. Smith, trustee, to be held and applied to the uses and trusts declared by the deed of George Gibbes to M. P. Walsh, recited in the pleadings.” After certain other directions, not important in the present inquiry, the decretal order concludes as follows: “ It is further ordered that, inasmuch as all parties are before the court, the Master take an account of the rents due to the said W. J. Smith, trustee, by the said George W. Brown, and of all just allowances against the same : and also, that he state the account between the trustee and Mrs. Catharine Gibbes, and report as to the proper investment to be made of the trust fund.”
The bonds executed by the defendant, George W. Brown, to the Master, on the 23d April, 1846, were payable in one, two and three years, with interest., from the date. On the 3d May, 1848, proceedings were instituted to foreclose the mortgage executed by the defendant, to secure the payment of these bonds. The report of the Master, filed 14th March, 1851, purports to be a statement of the amount due on these bonds, under a decretal order of reference. One of these bonds, conditioned for $21,833, had been assigned to W. J. Smith, trustee, under Chancellor Johnston’s order of 3d. July, 1846; another, for $8,733 34, had been assigned to W. J. Smith, as guardian of the minor children of Paul C. Gibbes, deceased ; and a third, for $2,183 31, to Richard M. Butler, who had married a daughter of Paul C. Gibbes, deceased.
No exception is taken as to the amounts reported by the Master to be due on the two latter bonds ; but exceptions are filed on both sides, as to the statement of the bond assigned to W. J, Smith, trustee. Those of the complainant will be first considered. The bond is dated 23d April, 1846, and the first instalment (■§-) was due on the 23d April, 1847. On the latter-day, the Master credits the defendant with the sum of $3,093 57 as “ the balance due G. W. Brown, for his account with the wharf to 1st March, 1846,” and $216 54, being the interest on that sum for one year — aggregate $3,310 11. It will be remarked, that the allowance of this credit of $3,093 57 is a diminution of the capital of the trust estate to that amount. It was contended, that it was an expenditure for permanent improvements made on the property. This Court has, on more than one occasion, withheld its sanction from this mode of improving a man out of his estate, without his consent. Under the stipulations of the lease, the premises were to be kept in repair, taxes to be paid, etc., and, if done by the lessee, might be deducted from the rent, which was to he semi-annually paid to the trustee, who, by the deed of 1835, was to pay the “ nett proceeds, after deducting all charges and expenses, to Mrs. Catharine Gibbes, for the support of herself and the main tenance and education of the children hut it is an express stipulation of the lease, that the lessee, George W. Brown, “shall neither make, nor suffer to be made, any alterations or additions therein, without the consent of the trustee, for that purpose, in writing, first had and obtained.” It was very properly said, that if these were valuable improvements, the rent should have been proportionately increased ; but no authority was shown for these expenditures, and the Court can perceive no warrant for making this deduction from the bond of the defendant. The complainant’s second exception is sustained. This also disposes of the defendant’s first exception.
The first exception of the complainant may be considered with the second, third and fourth exceptions of the defendant. All the difficulty arising out of these exceptions is attributable to the determination of the defendant to usurp the authority of the trustee. Both by the condition of his bond, and the opinion of the Court in Gibbes vs. Smith, he was informed to whom his payments were to be made ; certainly, after January, 1846, the defendant was aware that the trustee, and he alone, was to judge of the nett proceeds of the income to be paid to Mrs. Gibbes. It was specially provided by the trust deed, that all the expenses and charges incurred in the management of the trust should be first deducted, and then, that the nett income should be semi-annually paid by him to Mrs. Gibbes, for the purposes specified. It was desirable, for obvious reasons, that she should know what income she had to expend, and also, that it should be paid to her in the mode prescribed by the deed. The Master reports, that the annual income payable to Mrs. Gibbes, after the sale, was $1,223 07; but the defendant, instead of paying to the trustee, undertook to pay Mrs. Gibbes, from 23d April, 1846, to 23d April, 1848, the sum of $3,742 44, nearly the income to which she was entitled in three years — ■ thus leaving no income properly payable to her for the third year. In the trustee, this would have been an abuse of his trust. But the defendant not only .claims credit for them, as if the payments were made to the trustee, but he claims interest on the whole, from the time of payment, including interest on the excess. Prior to the decree of 1845-6, it might be said that the defendant acted under misapprehension, and that he should be subrogated to the rights of Mrs. Gibbes; but, after that time, he was fully apprised of the course he should pursue, and, if he encounters difficulties, they are of his own seeking. He had no concern in the transactions between Mrs. Gibbes and the trustee ; and the effect of his interference is only to render complicated a very simple transaction. Plis plain duty was, to pay the bond to the Master, or his assignee — and, in ascertaining the amount due, payments thus made should alone be allowed. These exceptions of the defendant are overruled, and the complainant’s first exception sustained.
The remarks before made are illustrated by a consideration of the 6th, 7th'and 8th exceptions of the defendant. It has been heretofore stated, that prior to the sale of the premises, in April, 1846, there was a litigation as to the rent due for the premises. In the decretal order of July, 1846, provision is made for taking an account of the rent due to the trustee by George W. Brown, after all just allowances; and also directing the Master to state the account between the trustee and Mrs. Gibbes. The exceptions to be now considered, relate to this account between the trustee and Mrs. Gibbes, as reported by the Master. There had been three successive trustees under the deed of 1835, to wit: M. P. Walsh, William Smith, sen., and W. J. Smith, the complainant; the last named having become trustee in October, 1841; no account was ordered in relation to the former trustees, nor were they parties to the proceedings. The only account to be taken was in relation to the present trustee. It will be remembered, that difficulties had arisen between him and Mrs. Gibbes in the latter part of 1843, both in reference to the renewal of the lease and the payment of rent by George W. Brown, the lessee, to her. The trustee, at the expiration of the lease, attempted to enter on his moiety of the premises, and also instituted a suit at law, against the defendant, for the rent due. No rent was received by the com plainant from the trust estate ; but he was subjected to expenses for the trust estate — such as State and City taxes for 1844,1845 and 1846, professional advice, and other disbursements, amounting, between November, 1843, and July, 1846, when the account was ordered to be taken, to eight hundred and four dollars and fifty-two cents, ($804 52,) according to the account reported by the Master, rejecting the disbursements of Wm. Smith, sen., which form no part of the case. ' This sum was a proper charge upon the income, and should be deducted from any rent found at that time to be due, and from any subsequently accrued income, if the rent then due was insufficient. The Master’s statement of the account should be thus modified. But subsequent to the sale, and the order of July, 1846, the defendant had nothing to do with the after transactions between the trustee and Mrs. Gibbes. He had only to pay the debt which he contracted with the Master for the purchase of the property, and upon the terms of the purchase. It is manifest, that, if he departed from this, and undertook to make arrangements with Mrs. Catharine Gibbes, he must settle with her for such advancements as he thought proper to make: — for instance, between April, 1847, and April, 1848, she was entitled to receive, at most, $1,223 U9 — probably much less. The defendant paid to her, in that time, $1,916 75 — certainly, this could not be allowed as a payment on his bond, for it was about $700 more than, in any view, Mrs. Gibbes was entitled to receive. But as between Mrs. Gibbes and the defendant, it was a voluntary payment on ’ his part, she had, therefore, good reason to suppose that she was entitled to receive this amount, as the income due to her, and arrange her expenditures accordingly. How far shall she refund to the defendant? And must she not only refund, but with interest? The same remark is applicable to the following year, during which the defendant paid Mrs. Gibbes $1,825 69, when her income certainly did not exceed $1,223 07. The trustee would have no authority to make any such payment, thus annually encroaching upon the capital of the estate. It seems, that, in 1849, Mrs. Gibbes was again married, and, by the terms- of the deed of 1835, she was entitled thenceforth, to only a fixed income of seven hundred and eighty dollars. It appears to the Court, that the adjustment between the defendant and Mrs. Gibbes may require that it should be made upon different principles from those that would apply to a settlement between the defendant and the trustee, or between the trustee and Mrs. Gibbes. The defendant should be required to pay his bond, according to the stipulations therein contained, and the equitable adjustment between him and Mrs. Gibbes should be ascertained and fixed upon pleadings framed between them for that purpose. Let the Master correct his statement of the amount due on the bonds given for the purchase of the mortgaged premises, as herein indicated.
The remaining exceptions of the defendant are overruled.
The modification of the report hereinbefore directed is merely ministerial, and does not require a further reference. It is ordered and decreed that, unless the amount due on the bonds given for the mortgaged premises, together with the interest thereon, be paid on or before the first day of February next, the mortgaged premises be sold at such time, and upon such terms, as may be fixed by an order hereafter to be submitted for that purpose. It is further ordered and decreed, that the defendant, George W. Brown, pay to the complainant the sum of five hundred and nineteen dollars and thirty-seven cents, with interest from 28d January, 1851, as recommended in schedule (C.) of the Master’s report.
The defendant appealed, on the grounds :
1. That the credit of $3,093 allowed the defendant by the report, should be allowed as a charge on the capital of the trust fund.
Because this sum was expended in necessary permanent improvements to the wharf, which improvements were contemplated by William [Smith, sen., the trustee, when the wharf was originally' leased to defendant, and was acquiesced in by him and his successor, W. J. Smith, as shown by the testimony reported to the Court.
Because, the allowance of the credit is not, in fact, a diminution of the capital of the trust estate, in as much as the improvements, for which it is allowed, were necessary to make the wharf yield rent, and enhanced the value of the property beyond the amount of said credits, as shown by the testimony reported to the Court.
2. That the payments made by the defendant directly to the cestui que trust, Mrs. Gibbes, allowed by the report, and disallowed by the decree, should be sustained : because, the said payments, as shown by the report, do not trench upon the capital, nor interfere with any claims of the trustee against the income.
That Mrs. Gibbes had full power to receive her income as she pleased, or to assign it for valuable consideration ; and Mr. Brown, by paying her income to her, was substituted to her rights by her express consent.
That an account having been ordered between the trustee and Mrs. Gibbes, Mr. Brown has a right to have that account taken.
PetigrUi Lesesne, for appellant.
Memminger and Jervey, contra.

Opinion:
The opinion of the Court was delivered by
Wardlaw, Ch.
This Court is satisfied with the conclusion of the Chancellor to reject the claim of Mr. Brown for compensation, from the corpus of the estate, for improvements put upon the premises while in his possession. The claim of this defendant, for compensation for improvements, is weaker than similar claims, which have been rejected, in the cases of Thurston vs. Dickinson, 3 Rich. Eq. 316, and of Corbett vs. Laurens Ms. Charleston, Jan. 1852.
The remaining ground of appeal concerns the disallowance of the payments made by Brown to Mrs. Gibbes, the tenant for life, after his purchase of the wharf. In this respect, too, we are content with the general conclusion of the Chancellor ; but we think the defendant, Brown, is entitled to credit for such payments to Mrs. Gibbes, the cestui que trust for life, as did not exceed her interest in the proceeds of sale, after deducting the expenditures and commissions of the trustee. Brown was contumacious in paying directly to the beneficiary, after the decree of this Court, affirming the right of the trustee to control the expenditure of the fund, and we are little disposed to encourage such contumacy; still, it is not just that the beneficiary should be twice paid, nor that the trustee should retain the fund for his own emolument. The case is to be treated as if Brown had paid the money to the trustee, and the trustee had paid it over to the beneficiary. Brown is entitled to be subrogated to the rights of the beneficiary, without disparagement of the rights of the trustee; and it is adjudged that the payments by Brown to Mrs. Gibbes shall be allowed, to the extent of her nett income, after all proper allowances to the trustee.
The extent of the trustee's expenditures is ascertained, and the amount of his commissions, if he claims them, is of easy calculation. So, too, the nett income of Mrs. Gibbes, which may be covered by Brown's payments, is simply a matter of figures, not requiring additional evidence. The whole correction of the Master's report, which we have directed by this opinion, is ministerial, and not requiring a new reference.
It is. ordered and decreed, that the Master conform his report to the opinions hereinbefore expressed, and that, unless the defendant, Brown, pay the amount due on his bonds for the mortgaged premises, with the interest thereon, before the first Monday of March next, that Master Gray do sell, on the day last mentioned, the mortgaged premises for cash, or upon such credit, with interest from the day of sale, as those beneficially interested in the mortgage may direct, In all other particulars, the Circuit decree is affirmed, and the appeal is dismissed.
Dunkin and Dargan, CC., concurred.
Johnston, Ch., absent at the hearing.
Decree modified.