Allen v. . Smitherman , 41 N.C. 341 ( 1849 )

Elijah Spencer died in 1843 intestate, leaving a widow, Sarah, (342) and several children, and the defendant Smitherman became his administrator. At a sale made by him of his intestate's estate, the widow purchased three slaves at the price of $575, and gave her bond therefor, with George Allen as her surety. Afterwards Allen and said Sarah intermarried, and Allen took the three negroes into his possession. He also applied in part payment of the bond the sum of $75, which had been assessed in money in part of the year's allowance of his wife out of Spencer's estate, but he made no further payment on the bond, nor was anything said to him or to his wife, during his life, on account of her distributive share of Spencer's property. The bill states, as a reason therefor, that it was agreed by and between Smitherman, Mrs. Spencer, and Allen, when the bond was given, that no payment should be made on either side until the estate should be ready for a final settlement, and that then the debt and the distributive share should be applied, the one to the satisfaction of the other as far as it would go. Allen died intestate in November, 1847, and the said Sarah had dower assigned of his lands of the value of $200 or $300, as stated in the answer; and she also made purchase of personal effects to the value of $600 at the sale made by his administrators, who are the plaintiffs, and the defendant Smitherman became her surety in a bond therefor. She had no other property but her said dower and the effects so bought from Allen's administrators, and her distributive shares in the estates of her two deceased husbands. The value of the whole was not more than sufficient to discharge those debts, and she was in fact insolvent: In that condition of things, Mrs. Allen conveyed to the defendant Smitherman her dower lands aforesaid and her distributive shares; and then Smitherman brought suit against Allen's administrators on the bond which he took from Mrs. Spencer and Allen for her purchases, and recovered the balance of the (343) principal, $500, and the interest thereon. This bill was then brought against Smitherman and Mrs. Allen; and, after stating the above facts, it charges that the conveyance and assignment from the latter to the former, who married her daughter, were voluntary, and were in fact made with the resign and to the end that, by suing the present plaintiffs alone on the bond, Smitherman might raise the money out of Allen's estate, and that the plaintiffs should have no effectual remedy over against the principal, Mrs. Allen, by reason of her insolvency. The prayer is that the amount of the defendant Sarah's distributive share of the estate of her husband, Spencer, may be ascertained, and to that end the defendant may account, and that the same and also the dower lands may be applied to the satisfaction of the debt for which the plaintiff's intestate was the said Sarah's surety, or so much as may be necessary for that purpose, and for general relief; and in the meanwhile for an injunction against taking out execution on the judgment for the debt.

The answer of Smitherman states that the estate of Spencer was much involved and its affairs so complicated that he had been unable to close his administration and settle the estate, and, therefore, that he could not render a final account nor make a probable estimate of the amount of the widow's distributive share, but that he did not think it would amount to as much as the debt due on her bond. It denies positively any agreement whatever with the said Sarah or with Allen that the distributive share was to be applied in payment of the bond or any part of it; but it admits that upon a settlement of the estate, if anything had been going to her, he would have discounted the sum in his hands. It further states that, after the death of Allen, his widow had but little estate, and that all her children were grown and most of them had left the State, (344) and that she was unable to cultivate her dower land; and that by reason of the distress to which she was reduced it became necessary for her to dispose of the dower and of her distributive share in Spencer's estate in order to provide a comfortable home and livelihood for herself; and to that end that he, Smitherman, purchased the dower and said distributive share, and that the consideration therefor was his agreement to provide his mother-in-law with a comfortable home and maintenance during her life; that the agreement and conveyance and assignment were not intended to defraud or defeat the plaintiffs, but bona fide for the purposes mentioned, and in the discharge of a final duty on his part, and of an obligation on the part of the said Sarah to remunerate him therefor, as far as she had the means. The answer further states that the reasons for suing the plaintiffs alone on the bond were that this defendant thought it just and equitable, as Allen got the negroes, that his estate should pay for them; and that he did not deem it prudent, by bringing a joint suit, to enable the plaintiffs to establish that said Sarah was the principal debtor, and thus compel him to proceed against her in the first instance at much expense, trouble, and delay before resorting to them — especialy [especially] as the other defendant, Sarah, had no property, after the death of Allen, but the claims before mentioned, which she had disposed of as aforesaid.

On the motion of the defendant Smitherman, founded on his answer, the injunction which was granted on the bill was dissolved, and the bill dismissed with costs; and the plaintiffs appealed. That part of the decree which dismisses the bill was probably inserted by mere inadvertence, as it is so obviously erroneous. On motion to dissolve an injunction, there may be an order for the dissolution or for its continuance to the hearing. But the bill (345) cannot be dismissed before the hearing; for that is the ultimate disposition of the cause, after the parties have taken issue by a replication and taken their proofs upon the issues, and a hearing had thereon upon the merits. It is contrary to the course of the Court, and also unjust to the parties, to dispose of the bill at an earlier state; for here, for example, the plaintiffs ought to have had liberty to reply to the answer and establish by evidence, if they could, the agreement, alleged on one side and denied on the other, that the widow's purchases and her distributive share should extinguish each other to the amount of the smallest of the two. The decree must, of course, be reversed in that respect.

But the Court holds that it was also erroneous to dissolve the injunction; for, without any such agreement for setting one demand against the other, the plaintiffs have a clear equity, and a right to the relief they ask. It need not be considered now whether the conveyance of the widow's dower, upon the consideration and under the circumstances stated, was not fraudulent against creditors, and whether this surety of an insolvent principal — as the other parties concur in describing Mrs. Allen — is not in a situation, by reason of the judgment against the plaintiffs, to insist on it as against these defendants. There is great reason to consider it fraudulent in an insolvent woman, against whose body no process is given in our law, to convey all her visible estate to a son-in-law for the purpose of securing to herself an intangible annuity in the form of his obligation to provide for her a comfortable support as long as she lives. That is especially true where the circumstances render it so highly probable, as in this case they do, that the object of those parties was not merely to provide for the mother-in-law, but in so (346) doing to throw the burden of the debt on the surety, because they thought the surety ought in conscience to pay it, and then deprive the surety of the means of getting reimbursed from the principal's property. But, for the present purpose, that transaction may be deemed fair, and still the plaintiffs ought to be relieved, upon the ground that the creditor has in his hands adequate means belonging to the principal to satisfy the debt, or a great part of it, and, as the principal is insolvent and the surety has no other means of obtaining indemnity, if he should pay the money, it is the duty of the creditor to protect the surety by applying the fund to the satisfaction of the debt, instead of raising it from the surety.

First, let the case be considered in respect to the sum in which the administrator of Spencer is indebted to the widow for her distributive share. It is quite clear that if one who is entitled to a distributive share becomes indebted to the administrator, the latter has a right in equity to require the next of kind to take his own debt in payment of his distributive share; and if the text of kin sell the share, it cannot affect the rights of the administrator. At all events, it cannot when such sale is made after the debt to the administrator has fallen due and the next of kin has also become insolvent; for although a distributive share may be assignable in equity, yet it is not assignable like a negotiable instrument, but the assignee only comes in the shoes of his assignor and is subject to all equities against the claim. If, then, the widow had assigned her share to any third person, the administrator would still have been at liberty to insist that such assignee should take the widow's bond in payment, as she would have been obliged to do. Having that security in his hands, the creditor would have been obliged to insist on it for the protection of the surety, and he could not surrender it to the prejudice of the surety without discharging the latter pro tanto; for (347) sureties are entitled to all the securities which the creditor acquires, and the latter cannot capriciously nor for his own advantage discharge or impair them. He cannot act willfully to the prejudice of the surety; and if he does, he is bound to make good the loss to the surety. Nelson v. Williams 22 N.C. 18. We conceive, therefore, that the creditor here, buying as he did, with knowledge of Mrs. Allen's insolvency, stands bound to the sureties in the same manner precisely as he would be if, after he knew of her insolvency, he paid the distributive share to her or to her assignee; for he could not have made such purchase or payment without, in effect, giving up a specific security for the debt upon the real debtor's effects, apparently with the view of throwing the debt on the security, as that would obviously be the necessary consequence. For the same reason he is bound to apply towards the discharge of the debt, at least in respect to the surety, the value of such an annuity as he is bound himself to make to Mrs. Allen — that is, her comfortable support for life. All these mutual liabilities have arisen in the administrator's time, and they constitute demands which, on equitable principles, ought to extinguish each other; and there can be no doubt that the administrator would insist thereon, if he had no other security for his debt but the widow's own bond. But he is equally bound to take care of the surety when he can; and if he want only or in bad faith refuse to do so, he must take the loss to himself. There can be little doubt that the matter would have been readily adjusted if Allen had lived; and the course of the defendants, since his death, has obviously been adopted as a device to avoid what they considered the hardship of Allen's getting the slaves purchased by his wife, and at the same time leaving her to pay the price of them. Indeed, nearly as much is stated in the answer, which insists that in equity and conscience the debt thereby became Allen's own. But that notion is entirely (348) unfounded, for at law, the negroes belonged to the husband by his reducing them to possession, while the price remained the price of the wife as principal in the bond and her husband as her surety only; and there is no equity between those two parties which will enable this Court to vary their respective rights as fixed by the law.

Upon the whole, then, the court holds that the plaintiffs are entitled at least, to have the distributive share of Mrs. Allen in the estate of Spencer applied in their exonoration [exoneration], and also the value of the dower land, or, rather, of such part of the annuity to the widow as the land would purchase; and, therefore, that the order dissolving the injunction was erroneous, and must be reversed, with costs. It is true, it does not appear that the debt will be thereby satisfied. But, on the other hand, it does not appear that it will not be; and it is the fault of the defendants not to have stated the accounts so as to show the amount of the distributive share. Those matters can now appear only by an inquiry; and therefore the injunction ought to stand to the hearing, when an inquiry can be directed.

PER CURIAM. Decree accordingly.

Cited: Wallston v. Cobb, 54 N.C. 138; Ramseur v. Thompson 65 N.C. 630.

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