Opinion
December Term, 1852.
Where an administrator, under the Act of 1846, sold land, of his intestate's estate, to obtain assets to pay the debts, and transferred by endorsement the bond of the purchaser, receiving therefor a quantity of corn from the endorsee, who had notice that the corn given for the bond was for the individual use of the administrator: — Held, in a bill brought by the administrator de bonis non of the intestate, and the sureties of the former administrator, that the endorsee is liable to account for the bond.
CAUSE removed from the Court of Equity for HYDE, at Fall Term, 1852.
Donnell, for the plaintiffs.
Shaw, for the defendant Fortescue.
The bill is filed to follow the assets of the estate of Benjamin Russell, who died in the year 1847. Upon the death of said Benjamin Russell, administration upon his estate was by the proper authorities granted to Charles B. Russell, who entered into bond with the plaintiffs as his sureties. In order to obtain assets to discharge the debts of his intestate, he filed a petition in the County Court of Hyde for a sale of the real estate; and such proceedings were thereupon had, that a decree was regularly made, and the land sold on a credit, in January, 1848. At the sale, the defendant Warner became the purchaser, at the price of three hundred and twenty-five dollars and fifty cents. To secure the payment, he executed his note to Charles B. Russell, with the defendant Slade as surety. This note was, upon its face, made payable to Charles B. Russell, as administrator of Benjamin Russell. The said Charles B. Russell, in the spring thereafter, contracted with the defendant, Fortescue, for the purchase of a quantity of corn, and in part payment therefor, transferred by endorsement the Warner note to him, which was subsequently paid to him by the principal and the surety. The bill charges that the defendant, Fortescue, had full notice, before he delivered the corn or received the note, that the latter was the property of the estate of Benjamin Russell, and that the said Charles B. Russell was purchasing the corn for himself. In 1849, Charles B. Russell died intestate and insolvent, and administration de bonis non on the estate of Benjamin Russell was granted to the plaintiff Smith; and letters of administration on the estate of said Charles (128) B. Russell were granted to the defendant, Willord. Fortescue, in his answer, denies that at the time he sold the corn and took the transfer of the note, he knew that Charles Russell was purchasing it for his own use. Upon this question — the plaintiffs having taken replication to the answer — the parties proceeded to take proofs; and the cause having been set for hearing, was removed to this Court.
It is abundantly proved by the depositions on file, that the defendant, Fortescue, did know that Charles B. Russell purchased the corn of him for his own use. In the first place, his denial is evasive. His statement is, that "Charles Russell kept a country store and traded for corn and again sold it, generally at an advance by retail, or shipped it to a northern port with a view to profit expected from such sales, and for money; that he did not inquire of him, and does not know, whether said Russell bought said corn for his own use, or to raise money on it to pay the debts of the said Benjamin Russell's estate," c. This statement is sufficiently suspicious to deprive it of all weight as an answer to the plaintiff's interrogatory. Weakened as it is by the terms in which it is clothed, it is entirely destroyed by the proofs. Mr. Mason's deposition shows, that when Fortescue was talking of selling the corn to Russell, he told the deponent that William J. Smith had forewarned or begged him not to take the Warner note, and that he had promised him he would not; but that afterwards Fortescue told him he had concluded to take it, as he was getting a better price for his corn — that Russell had offered him his own note, but he was afraid of it, and that Russell was compelled to have the money to pay in Bank. Mr. May proves, that before the corn was sold, he heard the plaintiff tell Fortescue not to take the Warner note, and that Russell would use the funds for his own purpose. An executor and an administrator has the legal title to the property of him they represent, and may sell and dispose of it (129) so as to convey the title that is in him, and a purchaser will acquire a valid title, unless he knows that the trustee is violating his trust; — as that he is using the fund for his own purposes, to pay his own debt. Nor is it necessary that the purchaser should have an actual knowledge of the particular fraud intended. If any thing appears calculated to excite his attention, the party is considered in Equity as having knowledge of all that the inquiry would have disclosed. McLeod v. Drummond, 17 Ves., 159; Exum v. Bowden, 39 N.C. 281; Wilson v. Doster, 42 N.C. 231. It was the duty of Fortescue to have made the necessary inquiry — he made none, as he states himself, and with the evident intent to evade its effect, and with the knowledge that Charles B. Russell wanted to raise money by the sale of the corn to pay his debt in Bank.
To sum up the case, as far as the defendant Fortescue is concerned — here is a man dealing with an administrator for the funds of the estate, with full knowledge of that fact — for not only is he informed of it, but upon its face the note is payable to Russell, as administrator — he is put upon his guard not to take it, that the administrator is using it for his own purposes; — the case is too plain to occasion a moment's hesitation in saying, we are entirely satisfied that he did know that Russell was abusing his trust — that he wanted the money which the corn would bring, not to pay any debt due by the estate of Benjamin, but to pay in Bank on his own debt. He was, in the transaction, a particeps criminis of a gross fraud.
The bill is dismissed as to Warner and Slade, with costs as to Warner, but none as to Slade, as he does not answer. They had a right to take up the note, by paying its contents to any legal holder; and as to Willord also, the bill states that his intestate died insolvent — he therefore has no assets.
There must be a decree against Foretscur [Fortescue] for the amount of the note, with interest from the time it fell due, and he must pay the costs of this suit.
PER CURIAM. Decree accordingly.
Cited: Dancy v. Duncan, 96 N.C. 117.
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