Miller v. . Hoyle , 41 N.C. 269 ( 1849 )

The plaintiff and Philip H. Bennick were partners in a small (270) retail store, under the management of Bennick. In 1842 the concern became very much indebted, and, in February, 1843, there were executions in the hands of the sheriff and constables to the amount of $2,519. Of that amount Bennick paid $775, with the money of the firm; and he was unable then to raise any more. As the effects of the firm were all in the hands of Bennick, the plaintiff refused to advance the money for the residue of the debts unless Bennick would secure him for so doing, and he insisted that the sheriff should levy the executions on the goods in the store or on the separate property of Bennick to raise the balance. To prevent that extremity, Bennick proposed that Miller should pay the residue of the executions, and that he would, by way of security or indemnity therefor, assign to him a bond, which he, Bennick, then held on John Hoyle for $1,600, and which was secured by a deed of trust for four slaves made by Hoyle to John Holleman; and on 17 February, 1843, upon an agreement to that effect, Miller paid to the officers the sum of $1,353.41 for the debts and costs, and at the same time took from Bennick an assignment of Hoyle's bond. On 31 July, 1843, Miller and Bennick came to a final settlement of their partnership on the following terms: Bennick was to pay to Miller the sums advanced by him as capital, with interest from the dates of the several advances, and to keep all the effects and pay all the debts of the firm as his own and if he had been the sole owner from the beginning; and accordingly Bennick, after deducting Miller's indebtedness to the firm on that day, gave his bonds to Miller for $1,327 for the advances of Miller as capital, and at the same time the bond of Hoyle was retained by Miller in satisfaction of the sums paid him upon the executions as before mentioned. The bond of Hoyle to Bennick bears date 1 January, 1840, and is for $1,600, payable one day after date and indorsed to the plaintiff, 17 February, 1843. The deed of (271) trust bears date 21 January, 1842, and recites that Hoyle was then indebted to Bennick in the sum of $1,600 on the bond above described, and, for the security of the debt, conveyed four slaves, named, to Holleman in trust that if Hoyle should fail to pay the said debt on or before 1 April, 1843, the trustee should sell the negroes to the highest bidder on a credit of twelve months, taking bond with good sureties for the purchase money, and out of the same, when collected, should pay the reasonable expenses of executing the trusts, and then discharge the money due on the bond, with interest. The bill was filed in January, 1845, against Hoyle, Bennick, Holleman, and Catherine Hinkle, and charges that all the defendants, knowing that the debt had been assigned to the plaintiff, and intending to defraud him of the whole or some part of it, combined to make a pretended sale of the negroes, on 1 April, 1843, to the defendant Catherine, the mother-in-law of Bennick and sister of Hoyle, for the inadequate price of $1,000, and that Holleman took from her a bond therefor with insufficient surety and refused to transfer that to the plaintiff or pay any part of the price upon his debt; and the bill charges the purchase by Catherine Hinkle was merely colorable and was in fact made by her as the agent of, or in trust for Hoyle himself, who has since kept the negroes as before, and that there was no intention that the price should be paid, but the sole purpose of the sale was to baffle the plaintiff in pursuing his remedy for the money thus due him. The bill further charges that the defendants are all in embarrassed circumstances and not able to make good the value of the slaves, if they should be carried out of the jurisdiction. The prayer is that the deed of trust may be declared to have been a security to the plaintiff for the debt and interest; that the defendants Hinkle and Holleman may be compelled to pay the price of the negroes and (272) interest thereon, or that the sale by the trustee may be declared fraudulent and void, and the negroes be resold, under the direction of the court, for the satisfaction of the plaintiff's demand; and that the negroes may be taken and held in custody for the safe keeping, unless the defendant or one of them should give security that they should be forthcoming to answer the decree.

There was an order made on the bill for seizing the negroes by the sheriff, and that the defendant Hoyle gave the required bond.

The defendant Bennick admits the assignment of the debt to the plaintiff, but alleges it was only a security for what might be found due to the plaintiff upon a settlement of their copartnership; and he alleges that nothing is due to the plaintiff on that score, and that no settlement has ever yet been made, though he, this defendant, has repeatedly urged the plaintiff to make one.

The defendant Hoyle denies that he owed the sum mentioned in the bond, or any other sum of money to Bennick, and avers that Bennick, before the indorsed the bond to the plaintiff, had expressly promised to surrender it to this defendant in satisfaction of a bond of the same amount which Bennick had given to him, and which he then held. The answer states that the bond was not given when it bears date, but that it was in January 1842, about the time the deed of trust bears date, and that it was given under the following circumstances and agreement: This defendant was then much indebted, and, besides, one Solomon Hoyle was suing him for an unjust debt, for which he feared a recovery would be made; and he consulted with Bennick as to the best course for him to pursue, and by him he was advised to sell all his other property, except the negroes, for the purpose of paying his just debts, and he did so. That as to the negroes, Bennick advised him that the best way to protect them against the unjust demand of Solomon Hoyle (273) would be for him, the defendant Hyle, to give Bennick a bond for a sum equal to the estimated value of the negroes, and execute a deed of trust for the negroes to secure the payment of the bond; and, in order to assure this defendant against loss thereby, that Bennick should give his bond for the same sum to him, Hoyle, which might be used as a set-off in case any unforeseen event should make it necessary. That accordingly, Hoyle then gave Bennick the bond in question, dated back as of 1 January, 1840, and Bennick then gave Hoyle his bond for $1,600, dated back as of 1 February, 1840, and Hoyle also executed the deed of trust, which bears its proper date. The answer admits that, after the plaintiff got the bond, the defendant prevailed on Holleman to sell the negroes, and that the defendant, having no other resource, procured Catharine Hinkle to purchase them for him, and that nothing was paid thereon, but that the purchase was rescinded by consent of those two persons and Holleman. The answer then states that the plaintiff, at the time he took the bond, knew that this defendant did not owe Bennick anything, because he held the said bond of Bennick; and it insists that, at all events, as the plaintiff took the bond from Bennick after it was due upon its face, the bond of Bennick, held by Hoyle, is a good set-off at law, and therefore in this Court also against it, and prays the benefit thereof.

The answer of Holleman and Hinkle admit the fraud in making the sale of the negroes under the deed of trust from the former to the latter, and that it has been rescinded; and they submit to another sale, if decreed, or to whatever may be deemed right. The plaintiff's equity is fully admitted by the (274) answers, except as to the fact that the bond indorsed to him is his absolutely. Bennick denies that in his answer and says it is only a security, and that he owes the plaintiff nothing. If it were true that the plaintiff holds the bond as security only, the defendant Hoyle would be entitled, upon the admissions of Bennick's answer, to a set-off as to any surplus of the bond after satisfy the plaintiff's demand against Bennick, and it would be necessary to direct an inquiry to ascertain the sum due to the plaintiff upon the whole partnership dealings, including his advances of capital at first, as well as those made for the discharge of the debts at the time the bond was indorsed. But it is established by a witness who was present that in July, 1843, Bennick and the plaintiff settled all the dealings in a way which made the debts paid by the plaintiff in February preceding the debts of Bennick alone, and that upon that settlement there was over and above the amount of Hoyle's bond, a balance due the plaintiff of $1,327, for which Bennick then gave the plaintiff his bond; and in that statement the witness is sustained by the declarations of Bennick to others, that he and the plaintiff had settled, and by the receipts and bonds which passed at that time between those two persons and which they have filed. It must be declared, therefore, that the plaintiff is the bona fide assignee of the bond in question for value, and that he holds it as his own. The Court had some hesitation at first upon the question whether the assignment of the bond gave the assignees the benefit also of the security of the deed of trust. It seemed perfectly just that it should do so, as the incident ought to follow the principal. It would do so between the personal and real representatives of a mortgagee in fee, and in case of an assignment of a bond with a surety and a mortgage as a further security, it is clear the assignee of the bond would, upon the principle of substitution, be entitled to the benefit of the mortgage. So likewise it would (275) seem it should be where there is no surety, because the assignee of the debts would seem to stand in the shoes of the assignor to every purpose, not only as being liable to all equities against him, but as being entitled to all his remedies and securities, unless agreed to the contrary. And, upon investigation, so it is found to have been decided in several cases. Foster v. Fox, 4 W. Serg., 92; Wheeler v. Wheeler, 9 Cowan, 34. It would follow, however, upon the same principle, that the plaintiff would in this Court be liable to any just demand of the debtor against the assignor, attached to the debt assigned; and, according to the doctrine as settled in this State, a set-off is of that character when a note or bond overdue is assigned. We should, however doubt extremely whether the defendant could, upon that principal avail himself of this set-off against the plaintiff, unless he could bring home to him precise knowledge, at the time he took the bond, of the subsistence of the bond of Bennick held by the defendant; for it is a case of flagrant fraud, contrived for the express purpose of deceiving the world, and put into such a shape as of purpose to mislead others upon this point, and, at the same, time intended to enable the deceivers to take advantage of their fraud; for although the debt, according to the face of the bond, had been due more than three years, yet, according to the terms of the deed of trust, it was not due and would not be for six weeks after the assignment; and there can be but little suspicion that the bond given by Bennick to Hoyle, as alleged, was known to the plaintiff or any one else but the parties to it, since the very purpose of it, as now stated, required that it should be kept from the world, let the fraudulent nature of the debt to Bennick and of the deed of trust should be discovered and thus avoid that deed. It is, under the circumstances, much the same as if Hoyle, knowing that the plaintiff was about paying his money on the bond, had encouraged him to do so, or had at least stood by without saying anything, when he saw that the plaintiff was led by the deed of trust to believe that the parties did not consider the money as (276) having fallen due, but that the debts still subsisted. It is not, however, necessary to declare the law upon that point, inasmuch as this defendant has not taken the requisite proof to establish the debt he relies on as a set-off. He has exhibited the bond purporting to be that of Bennick to himself for $1,600, dated 1 February, 1840, and due on day after date. But it is not attested, and the defendant Hoyle has not even proved the handwriting of the alleged obligor, much less taken evidence to establish the existence of the bond prior to the transfer of the debt to the plaintiff. Such proof would be indispensable in such a case, since from the conduct of these parties, as admitted by themselves, it might well be presumed that the pretended bond would be fabricated after this controversy arose, and that they have failed to prove its prior subsistence, only because they could not. This party, indeed, upon the defect of the proof in this respect being pointed out at the hearing, pressed the court to open the case for further proof. But that could not be thought of for a moment, since such indulgences are given only in furtherance of right. It would be a disgrace to the administration of justice if an extraordinary favor were granted to enable a party to supply a defect in so iniquitous a defense. The court, therefore, refused the application; and it must now be declared that the defendant Hoyle has failed to establish that the other defendant, Bennick, gave to him the bond for $1,600, as alleged in his answer; and as it is admitted in all the answers that the sale hitherto made under the deed of trust was all a sham, it must be decided that the defendants Hoyle and Holleman produce the negroes to the clerk of this Court to be sold, and that they, or as many of them as may be necessary, be sold by the clerk, after the usual notice, to the highest bidder for ready money, so as to pay to the plaintiff the sum due upon the said bond given by the defendant (277) Hoyle, and as the defendants do not allege any payment, the sum due thereon is found to be $1,600, with interest at the rate of 6 per cent from 1 January, 1840, until payment; and it will be ordered that Holleman join with the clerk in conveying the slaves to the purchaser or purchasers. Of course, the defendants must pay all the costs.

In the course of the cause Joseph Barringer filed a petition in it, stating that on 16 August, 1844, the defendant Hoyle conveyed to him two of the slaves included in the deed of trust, named Ann and Jane, by way of mortgage to indemnify him against loss as the surety of Hoyle in a bond for $206, before that time given to one Henry Rhodes, and praying that they might be discharged from the sequestration in order that he might sell them to raise the money for the discharge of the debt, agreeably to a power contained in the mortgage. An inquiry was directed as to the petitioner's right, and the master reported that the debt was a just one.

The Court can give no relief upon the petition, as against the plaintiff, whose encumbrance is prior and preferable; and all that can be done for the petitioner is to direct that the negroes which are not mortgaged to Barringer shall be first sold for the satisfaction of the plaintiff, so that if he should be paid before all the negroes are sold, Barringer may take those or that one of the two mortgaged to him which may remain after paying the plaintiff.

PER CURIAM. Decreed accordingly.

Cited: Cannady v. Roberts, post, 429; Winberry v. Koonce, 83 N.C. 355;Watson v. Dobbin, 89 N.C. 109.

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