In re Dunavant , 96 F. 542 ( 1899 )

EWART, District Judge.

Upon tbe above statement of facts as found, the referee concludes:

(1) “That, as a matter of law, a proceeding in bankruptcy does not affect liens accruing four months prior to petition filed, and that the trust-deed mortgage from Dunavant to Charles Boot is a valid mortgage and first lien on the farm in controversy, in favor of the first holder thereof.”

I approve this finding.

(2) “The referee further finds, as a matter of law, that a fiduciary making a sale under an instrument providing for such sale is only authorized to make title upon the payment of the price bid. I conclude, on the findings of fact, that the deed made by S. T. Pearson and W. C. Ervin to the Piedmont Bank on the 7th day of August, 1893, was unauthorized and invalid, and, the grantee having taken with notice of the failure of the Piedmont Bank to pay the price hid, the said deed did not operate to devest the title and interest of S. D. Dunavant in said farm, but the status theretofore existing between said Piedmont Bank and S. D. Dunavant still subsists, so far as said farm is concerned, and that S. D. Dunavant has a resulting trust therein, subject to the Boot mortgage, liable to be subjected, under a decree, to the payment of his debts.”

I approve this finding. Ex parte Macay, 84 N. C. 59; 16 Am. & Eng. Enc. Law, p. 805.

(3) “I find, as a matter of law, that the docketing of a judgment constitutes a lieu on all real property of the judgment debtor in the county where the same is docketed, from the dato of its docketing. I therefore conclude, on the finding of facts, that the judgment of S. M. Rice is a valid, subsisting, and first lien on the interest of the said S. D. Dunavant in the farm on the Catawba river, to the extent of his said interest as hereinbefore found, to wit, on his resulting trust therein.”

I approve this finding. Code N. C. § 435.

(4) “I find that executions issued on the judgments of respondents, and the same were levied on the interest of said S. D. Dunavant in said farm,' and at a sale under said execution on the 5th day of September, 1890, the interest of said S. D. Dunavant in said farm was sold by the sheriff of Burke county, and purchased hy one .1. T. Perkins as trustee for respondents. I find that, as a matter of law, that a resulting- trust cannot be sold under execution under the laws of North Carolina, and that ,1. T. Perkins, trustee, took no estate under his deed from T. M. Webb, sheriff.”

I approve this finding. Hardin v. Ray, 94 N. C. 456; Clark’s Code (N. C.) § 450, subsec. 4.

(5) “I find, as a conclusion of law, that the services and earnings of a minor son, until he arrives at the age of 21 years, belong to his father, and, it having been shown that the purchase money, to.wit, §2,073.30, paid for said land to said hank by II. J. Dunavant, was received by him from the profits of the work of Dmiavant & Co. in Jamaica in 1890, before he had attained his majority; that by virtue of the law this money became the property of the father, and, being invested in said land, the land became the land of S. D. Dunavant, and the said S. D. Dunavant now owns said land, subject to the incumbrance of $3,000, and accrued interest, to Mary Sheafer, assignee of the Root mortgage: that the attempted emancipation of the son, H. J. Dunavant., hy S. 1). Dunavant, was not of sufficient notoriety to put creditors of S. D. Dunavant on notice that his earnings and profits were his own.”

This conclusion oí law I do not concur in. It appears from the evidence taken hy (he referee — not only of the bankrupt, but his son, M. J. .Dunavant, and of other witnesses — that Dunavant, the bankrupt, had in the year 1801 emancipated his son, and has never since that date in any way interfered with his business, or received any benefit, profit, or share of his earnings. It further appears that the son. H. J. Dunavant, an active and energetic young man, had not only had the enthe conduct and management of his own business, but was very often consulted by his father in the business affairs of the latter. At an early age as 20 he was a partner with his father in a railroad contract in Jamaica, out of which he made a large sum of money, and which, it appears from the evidence, he controlled absolutely, without, any interference whatever on the part of his father. Browne, Dom. Rel. (a text prescribed by the supreme court of North Carolina.) p. 79, says;

“The rigid of action for a minor’s services is presumed to be in tbe fattier. But the fattier may voluntarily relinquish this right to the child. This is called ‘emancipation.’ This agreement may he expressed or implied from the circumstances. The father may do this although insolvent. In such ease payment hy a third person of a minor’s wages to him is valid.”

In this east’ it appears that the emancipation was express. II. J. Dunavani testified as follows:

‘T have made a lot of contracts, both good and bad, before I was twenty-one years of age. "When I first started into business my father told me that I could have all I made.”

This statement of Dunavant, Jr., is corroborated by the father, S. D. Dunavant, and other witnesses.

“Emancipation gives the child a right to his own time and wages, and the control of his own person, and discharges a parent from obligation to support, unless the child becomes unable to support himself. It may be in writing or by parol, for the whole minority or part of the time.” Browne, Dom. Rel. p. 85. “The child’s earnings cannot, after emancipation, be recovered by the father, although he has notified the employer not to pay the child. jNbr can the father’s creditors attach them, although he is insolvent; and after emancipation .the father may deal with the child as a stranger.” Id. p. 86; Campbell v. Campbell, 11 N. J. Eq. 268; McCloskey v. Cyphert, 27 Pa. St. 220; Stanley v. Bank, 115 N. Y. 122, 22 N. E. 29; Bray v. Wheeler, 29 Vt. 514; Chase v. Elkins, 2 Vt. 290; Lackman v. Wood, 25 Cal. 147. The emancipation may be implied from circumstances. See Beaver v. Bare, 104 Pa. St. 58; Ream v. Watkins, 27 Mo. 516. The emancipation may be complete, although the child continues to reside with parents. Rush v. Vought, 55 Pa. St. 437; Beaver v. Bare, 104 Pa. St. 58. “A minor who works for his father after his time has been given to him may recover for his wages.” Gen. Dig. p. 788.

In Halliday v. Miller, 29 W. Va. 426, 1 S. E. 829, the court says:

“It is universally agreed that the father may voluntarily relinquish his child’s, earnings, though he he a minor, and allow him to earn for himself, and receive and appropriate his own earnings at his pleasure. Such an arrangement between the father and his minor son is an emancipation of the son. By such an agreement the son is put, as to his services, on the same footing as if he had attained the age of twenty-one years, when the law would emancipate him. Such emancipation by the father may be by parol or in writing, and it may be proved by circumstantial evidence or it may be implied. The right of the father to emancipate his minor son 'is unquestionable, and this right exists though the father be insolvent.” Campbell v. Cooper, 34 N. H. 49; Cloud v. Hamilton, 11 Humph. 104; Armstrong v. McDonald, 10 Barb. 300; Atwood v. Holcomb, 39 Conn. 270; Lackman v. Wood, 25 Cal. 147; McCloskey v. Cyphert, 27 Pa. St. 225; Dierker v. Hess, 54 Mo. 250; Hall v. Hall, 44 N. H. 293; Chase v. Elkins, 2 Vt. 290.

“The father may emancipate his child whenever he chooses to do so. That right is not within the control of his creditors, and they cannot prevent an insolvent father from relinquishing all right to the future services or .earnings of his child.” Penn v. Whitehead, 17 Grat. 503; Bobo v. Bryson, 21 Ark. 387; Wilson v. McMillan, 62 Ga. 16; Penn v. Whitehead, 94 Am. Dec. 478; Bobo v. Bryson, 76 Am. Dec. 406; Trapnell v. Conklyn (W. Va.) 16 S. E. 570. “The father of a minor whom he has emancipated is not entitled to his earnings during his infancy,'nor damages recoverable by the infant after majority for a tortious act committed during his infancy.” Blumenthal v. Shaw, 23 C. C. A. 590, 77 Fed. 954. It appears from the evidence in this case that the money invested in the purchase 'of the land in controversy was the money of young Dunavant, and was used by him in good faith, and with no purpose or intention of defrauding the creditors of S. D. Dunavant. Having been fully emancipated by his father, the profits accruing to him as a partner (receiving one-fourth from the Jamaica contract) belonged to him, and could be used in any manner he saw fit. The emancipation appears to me to have been amply sufficient to put creditors on notice that his earnings and profits were his own.

The referee further reports, “The plea of the statute of limitations, interposed by the bankrupt, is respectfully referred to your honor.”

Code N. C. § 155, subsec. 9, reads as follows:

“An action for relief, on the ground of fraud or mistake, in cases which heretofore were solely cognizable by courts of equity (the cause of action in such cases not to be deemed to have accrued, until discovery by aggrieved party of the facts constituting such fraud or mistake), is barred within three years.”

“If, by matter appearing on the face of the pleadings, the plaintiff either has no equity, or his remedy therefor is barred by force of a public statute, the objection is valid at the hearing, though not insisted on by plea or demurrer, nor relied on in the answer.” Robinson v. Lewis, 45 N. C. 58. “Where the statute of limitations applies, it may be pleaded, or is ground for a demurrer to á bill in equity.” Falls v. Torrence, 11 N. C. 412. “If it appears on the face of the bill that the plaintiff’s case is barred by the statute of limitations, advantage may be taken of it by motion on the trial.” Whitfield v. Hill, 58 N. C. 316, approved in Isler v. Dewey, 84 N. C. 345. If the bill alleged no matters to avoid the bar apparent on its face, it would be considered as stating no cause of action. 6 Enc. Pl. & Prac. 201.

The deed which is attacked in this case by Bice and Anderson, administrator, judgment creditors of Dunavant, bankrupt, as being invalid, and as having been procured by the bankrupt to defraud his creditors, bears date December 30, 1893. The subscribing witness to the said deed is Mr. I. T. Avery, who was the attorney of record for S. M. Bice, and took the judgment against Dunavant and in favor of Bice in the superior court of Burke county March 20, 1893. It is insisted by creditors that the statute can only begin to run from the date of the discovery of such fraud or mistake. Code N. C. § 155, subsec. 9, above quoted. Conceding that to be true, it appears from the evidence that all the material facts in this matter were known to the judgment creditors and their attorney of record more than three years before the filing of the petition in bankruptcy by Dunavant. “Where the creditor employs an attorney to collect his debt by suit, and all the facts made necessary by the bankrupt law to invalidate a preference gained by such suit are known to the attorney after he enters on such employment, the knowledge of the attorney is the knowledge of the creditor.” Black, Bankr. 201; Mayer v. Hermann, 10 Blatchf. 256, Fed. Cas. No. 9,344; Rogers v. Palmer, 102 U. S. 263. It appears in this case that Mr. Avery’s partner, Mr. W. C. Ervin, was attorney for the Piedmont Bank, and that the interlineation made in the deed drafted December 20, 1893, is in the handwriting of Mr. Ervin. Clearly, he must have known of the contract and the provisions of the said deed. The deeds of trust drawn on the 1st of June, 1891, and 5th of September, 1892, were drawn by one or the other of these attorneys. In the answers filed in this case by respondents Bice and Anderson, administrator, it is alleged that executions had been issued on their judgments in 1896, and a sale of Duna-rant’s interest made in September, 1896, so that it is manifest that all the material facts in this matter must hare been within the knowledge of these respondents for more than three years, before the adjudication in bankruptcy of S. D. Dunavant. The plea of the statute of limitations in this case interposed by the bankrupt is sustained. The petition on the part of the judgment creditors, S. M. Rice and Anderson, administrator of T. I. G-illam, to sell the interest of the bankrupt, S. D. Dunavant, in the Catawba tract of land, is refused.