Ward v. . Brandt , 62 N.C. 71 ( 1867 )

The bill was filed to Spring Term, 1866, of CUMBERLAND, and alleged that the complainant, who was a citizen of Pennsylvania, being a creditor of the defendant, Curtis, for about four thousand dollars, had been secured by him, in the year 1855, by a conveyance of a house and lot in Fayetteville to the defendant, Shepherd, as trustee; that the debt, not having been satisfied at the breaking out of the late war, was confiscated under an act of the confederate Congress, passed in September, 1861, and the trustee compelled, by an order of the Confederate Receiver, to sell the house in December, 1862, and pay over its proceeds to him; that at such sale the defendant, Brandt, became purchaser, paying the price to Shepherd in Confederate Treasury notes, and receiving a deed from him; and that he bought with full knowledge that the sale was made under an order of the Confederate Court, sitting at Salisbury; and that the money which he paid was to be applied (72) under that order, and not for the benefit of the complainant. The prayer was that the deed from the trustee to Brandt might be delivered up to be cancelled, and for further relief.

A copy of the deed from Curtis to the trustee, which had been duly registered, was filed with the bill, as an exhibit, and recited the fact that complainant was of Bradford County, Penn.

The answer of the defendant, Brandt, admitted that the lot had been conveyed to Shepherd to secure a debt due by Curtis to Ward, and that at its sale he had become the purchaser; it denied that the price was paid in Confederate notes, and asserted that, on the contrary, it had been paid by his check upon the Bank of Clarendon, in Fayetteville, which check was good for its amount "in good and lawful money"; it also denied that he knew of any Confederate Court held at Salisbury, or that the house had been confiscated, and asserted that he had bought bona fide, being assured by the trustee, to whom he had applied for information, that he would get a good title; that no proclamation was made at the sale; that the house was sold as confiscated, but that it was then publicly said that it was sold as trust property. The answer also denied that Brandt knew that Ward was of Pennsylvania, or was treated as an alien enemy, or that the proceeds of the sale were to be applied to satisfy any decree in a Confederate Court, or that the trustee could not remit them to the complainant. It admitted that Brandt was a merchant of Fayetteville, residing nearly opposite to the house last mentioned.

The deed from Shepherd to Brandt was filed with this answer as an exhibit, and recited that it was "between Jesse G. Shepherd, trustee of Thomas J. Curtis, under a deed of assignment in favor of C. L. Ward, of the one part, and George Brandt," etc.

The answers of Shepherd and Curtis admitted all the material allegations in the bill.

(73) Several depositions, taken upon the part of the complainant, tended to show that the defendant, Brandt, had been informed in April, 1862, and again just before and upon the day of sale, that the house was to be sold as confiscated property; that for some days before, as well as upon the day of sale, the trustee was absent in Raleigh, and that the sale was made by a public auctioneer.

The deposition of the auctioneer, taken for the defendant, Brandt, was that at the time of the sale, in response to an inquiry, he had announced that a trustee's title would be given; also that Brandt's check was good and was paid, and that B. was worth its amount (viz.: $4,500) in gold; but that it was his impression that it was not a specie check, but payable in currency, which then was Confederate money; and that when the trustee employed him to make the sale, he had informed him that the house was sold in consequence of a decree of the Confederate Court. The scope of the bill is to set up a trust, according to which the house and lot mentioned in the pleadings was held by the defendant, Mr. Shepherd, in order to sell and pay off, when required, a debt due by Curtis, one of the defendants, to the complainant, and to pay the excess of purchase money to Curtis; and this, upon the allegation that Mr. Shepherd exposed the house and lot to sale at public auction, and conveyed the premises to the defendant, Brandt, not for the purpose of executing the trust in favor of the complainant, but for the purpose of excluding him, and diverting the trust fund so as to pay it over to the Confederate Government, under the pretext that the fund was payable to the Confederate Government by reason of certain confiscation acts, by force and effect whereof that Government, instead of the complainant, had become entitled to receive the debt secured by the deed of trust.

This equity does not rest on the motion that a purchaser at a trustee's sale must see to the application of the purchase money; but upon a broad principle of justice, recognized and acted upon in Courts of Equity, and which is too plain to admit of discussion. It would have been "plainer sailing" had Mr. Shepherd set out in the deed executed by him to Brandt the purpose and reason for exposing the property to sale and passing the legal title, for there can be no question that the original trust in favor of the complainant, or the resulting trust in favor of the defendant, Curtis, are still subsisting, and must be made to attach to the house and lot, unless Brandt can protect himself as a purchaser without notice under the rule, "When equities are equal the law prevails." And as the complainant does not seek, by his bill as framed, to charge Mr. Shepherd for the breach of trust, but only to follow the land and subject it in the hands of Brandt to the original trust, the whole matter is narrowed down to the single point, Has the complainant fixed Brandt with notice, so as to affect his conscience, and make it iniquitous in him to insist upon the (75) legal title, so as to bring the case under the principle by which Courts of Equity relieve against fraud or illegality in procuring the execution of deeds, by converting the party into a trustee?

It would have better evinced on the part of Mr. Shepherd the desire, which no doubt he felt, to protect the interests of his cestui que trusts, as far as it was in his power to do so under the circumstances in which he was placed, had he set out in his deed to Brandt the fact that he made the sale at the instance and by order of the Confederate Government, through its agent, Mr. Wilder. That would have furnished his cestui que trusts with full evidence to fix the purchaser with notice, and have enabled them, without any difficulty, to set up their equity upon the events which have since transpired. The complainant has undertaken to supply this omission on the part of his trustee, and we think he has succeeded in doing so.

The defendant, Brandt, in order to avoid giving up valuable property, which would have been his had the late war resulted differently, was evidently greatly tempted, in framing his answer, to deny notice, by the use of general terms; and he shows a want of candor, in trying to take advantage of ignorance of what is considered in equity sufficient notice to affect the conscience and prevent a party from setting up a legal title, in order to deprive one of his original equity. We need hardly repeat that such circumstances as will put a man of ordinary prudence upon inquiry amount to notice. Without entering into a particular discussion of the proofs in the cause, the admission in the answer of defendant Brandt, that he made inquiry of Mr. Shepherd as to whether he could make a good title, tends strongly to show the existence of circumstances calculated to excite inquiry; for if the trustee had been selling in the usual way, in order to pay off the debt secured by the deed of trust to the party entitled to the money according to the provision of the deed, there would have been no occasion to ask for any such (76) assurance; and, taking this admission in connection with the general tone of the answer, the proofs in the cause and such matters of public notoriety, of which the courts take notice as part of the history of the times, the court declares the fact to be that the defendant, Brandt, purchased with notice, and that he bought under the expectation and belief that if the independence of the Confederate States should be established, he was acquiring a good title; otherwise, he would be subject to the trust and to the equity of the complainant, and to the resulting trust of the defendant, Curtis.

The specific relief prayed for by the bill is to have the deed, executed by Shepherd to Brandt, "set aside and delivered up to be cancelled." That relief is only appropriate when there is fraud in the factum of the deed. Under the general prayer, however, the complainant is entitled to a decree, declaring Brandt a trustee, and directing a sale by the Clerk and Master; and requiring the defendants, Brandt, Shepherd and Curtis, to join in a conveyance to the purchaser. The proceeds of the sale, together with the amount for which Brandt is chargeable on account of rents (as to which there will be an account), will be applied, in the first instance, to the satisfaction of the complainant's debt and interest, and the surplus, if any, will be paid to defendant, Curtis; and Curtis will be allowed, in respect of his resulting trust, the privilege of discharging the complainant's debt and interest by a given day, six months from the first day of this term, in which case the defendants, Brandt and Shepherd, will execute a deed to him, to be approved of by the Master. The complainant's costs will be paid by the defendant, Brandt.

PER CURIAM. Decree accordingly.

Cited: Justice v. Hamilton, 67 N.C. 112.

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