Opinion
June Term, 1837.
1. A sale by an executor of the chattels belonging to his testator is good, and the purchaser is not obliged to see to the application of the purchase-money; and this, although the testator has created a particular fund for the payment of his debts, of which the property sold does not form a part, and the purchaser has notice of the will. But if the sale be collusive, or in a way to enable the executor to commit a devastavit, in equity the purchaser will be liable.
2. The same rule applies to a pledge by the executor, also to an agreement turning a pledge into an absolute sale.
THE plaintiffs were the children of Joel Tyrrell, deceased, and, with their mother, who was one of the defendants, were the legatees of all his personal estate; and they brought this bill against their said mother, the executrix, and James L. Tyrrell, the executor of their father, and against James Morris, John Rowland, and Robert G. Twitty, to impeach the sales of certain negroes belonging to the estate of the deceased, made by his executors to Morris, and by him, as was alleged, to the other defendants. Joel Tyrrell, by his will, directed that his negroes should be kept for the support of his wife and children — a part to be employed in cultivating a farm, and the residue hired out as his executors should deem most advisable. He further directed that his lands and stock of every kind should be sold or retained at the discretion of his executors, and the product, together with the hire of his negroes, should go to the payment of his debts, and the surplus to be laid out in lands, at the discretion of his executors, as a residence for his wife and children. Upon his death, which took place in 1819, James L. Tyrrell and the widow qualified as executors to the will. There was no sale made of any of the property, nor were the negroes hired out, but the widow continued on the farm with all the children, retained the possession of all the property, supported herself and the children out of the produce of the farm and the labor of the negroes. The testator died considerably indebted, and the creditors, seeing no arrangements made for discharging their demands, brought suits, obtained judgments, and took (560) out executions against the estate. The executors, from time to time, as they were pressed by the creditors, disposed of the negroes, and, amongst others, in the years 1822 and 1824, disposed of five, viz., Reuben, Patrick, Katy and her two children, to the defendant Morris, who afterwards sold some of them to the defendant Rowland, and he was alleged in the bill to have sold to the defendant Twitty. The plaintiffs contended, in the first place, that the sales of these negroes by the executors should be set aside and declared to be void, because made in violation of the injunctions of the testator; because made at private sale and without any order of court; because, although ostensibly made for the relief of the estate, the purchase money was in fact advanced to the executors, or one of them, for private and personal uses, or was applied to such uses, or otherwise wasted; of all which matters the purchaser was charged to have had notice; and, secondly, that the conveyances by the executors should be declared to be but securities for refunding certain sums of money loaned to the executors, and that the plaintiffs be allowed to redeem the negroes thus conveyed.
W. A. Graham for plaintiffs.
Badger and J. W. Norwood for defendants.
The cause has been brought to a hearing only as against the defendant Morris and the alleged purchaser under him. Whether the plaintiffs will ask for any relief against the executors we know not. Our decision on the case as heard will not prejudice such an application if they should hereafter make it.
The bill must be dismissed, and dismissed with costs against the defendant Twitty. He has denied by his answer that any of the negroes were conveyed to or holden by him, and there is no proof that they were.
The first ground on which the plaintiffs rest their claim against the defendants Morris and Rowland will not avail unless they can make out a case of fraud in the defendant Morris. However inattentive the executors may have been to the injunctions of their testator, or however remiss in the performance of their duties, the debts of (561) the testator were, nevertheless, to be paid by them, and their power to dispose of the estate of their testator for the purpose of meeting these demands was complete. It is the general rule of equity, as well as of law, that an executor has the absolute power of disposal over the whole personal effects of his testator, and that it is not incumbent on the purchaser of the assets to see the money raised by the disposition of the assets properly applied. In the language of Lord Thurlow (Scott v. Tyler, 2 Dick., 725), "His title is complete by sale and delivery, and what becomes of the price is of no concern to him." Fraud, however, will vitiate every transaction; and, therefore, in the language of the same eminent judge, "If one concerts with an executor by obtaining the testator's effects at a nominal price, or at a fraudulent undervalue, or by applying the real value to the purchase of other subjects for his own behoof, or in any other manner contrary to the duty of the office of executor, such concerts will involve the seeming purchaser or pawnee and make him liable to the full value." This concert or collusion between the executors and Morris to enable the former to commit a devastavit of the assets, the plaintiffs have utterly failed to establish. Morris was, indeed, aware of the dispositions contained in the will of their testator, but these did not contain a peremptory injunction to sell the land, and, if they had, did not take away the power of the executors to sell the personal property for the payment of debts. The will, indeed, directed that the negroes should be kept together or hired out, and that the hire should be applied to the discharge of his debts. But the time had come when these debts must be paid off, although no such funds had been prepared for discharging them as the testator contemplated, and when there was no other means of meeting the exigency than by a sale of part of the estate. There is no evidence of any contract or agency of Morris in bringing about this state of things. A sale was then necessary, and it must be made, either under execution or by the executors. The latter had a right to sell, and those who dealt with them in the exercise of that right, unless dealing (562) collusively, are not liable to be called to account for the past misconduct of the executors, which induced the necessity of a sale. There is no allegation in the bill that the negroes were obtained by Morris at a fraudulent undervalue. If there had been, it would have been disposed of by the testimony which establishes that they were sold at fair prices, and probably for more than could have been obtained at public auction. It cannot be pretended that a sale by an executor is invalid, either in law or equity, because not made at public auction nor under an order of court specially granted for that purpose. The most that can be required from the purchaser under such circumstances is to repel the presumption that he may have bought at an undervalue. The charge that the sales were made for the private benefit of the executors, or of either of them, and not with a view or for a purpose connected with the administration of the assets, is not proved. All the evidence tends to establish that it was professedly made to raise money to pay off the debts of the estate. A considerable portion of it was unquestionably applied directly to that purpose, and there is no evidence to show that any part of it was misapplied to other purposes. Under these circumstances, more especially as it is apparent that the purchases were made by Morris with the knowledge of the family, one of whom, the complainant, Evalina, was then of full age and the others nearly of age, and as no attempt was made to impeach these purchases until nine years after the last took place, we have no hesitation in saying that the first ground on which the claim to our interposition rests is wholly unsupported.
The plaintiffs further allege that in truth the conveyances made by the executors were intended but as securities for refunding moneys loaned by the defendant Morris. There is little or no doubt in regard to the facts in relation to this charge. In 1822 the negro, Reuben, was conveyed to the defendant Morris by an instrument which, however unskillfully written, did amount but to a security for the repayment of $326 then advanced to the executors. In April, 1824, a similar conveyance was made of the negro Patrick for the repayment of (563) $900 then advanced. On 12 July, 1834, Katy, the wife of Patrick, and her two infant children, were sold absolutely, at the price of $500; a further sum of $80 was advanced to make up the price of Reuben, $400, and a formal release was executed by the executors of the equity of redemption, with respect to Reuben and Patrick, so as to convert the pledge of them into an absolute transfer. The same principles which hold in the sale of assets by an executor apply to a pledge of them. Mead v. Orrery, 3 Atk., 239; Scott v. Tyler, 2 Dickens, 725; McLeod v. Drummond, 17 Ves. Jun., 154. He has the power to pledge or sell, and the pawnee or vendee is not responsible beyond the terms of his contract, except by reason of covin and improper concert with the executor. The change of the pledge into a sale must be tested by the same principle. The pawnee has a right, by enforcing his pledge, to compel the payment of his debt; and if, by agreement with the executor, the thing pledged be taken in absolute property in payment of the debt, the validity of that transaction must depend on the good or bad faith in which it was done. We see no indications of collusion in the transaction; and, therefore, from the date of it, the property was not holden as a security for a debt, but the debt was paid off by a sale of the property.
It is, therefore, the opinion of the Court that the bill must be dismissed against the defendants, Morris and Rowland, and with costs. It will be retained a reasonable time to see whether the plaintiffs will move against the other defendants. If they do not in the course of the next term, the bill will stand dismissed altogether, but as to the latter defendants, without costs.
PER CURIAM. Decree accordingly.
Cited: Gray v. Armistead, 41 N.C. 77; Bradshaw v. Simpson, id., 246; Wilson v. Doster, 42 N.C. 233; Wooten v. R. R., 128 N.C. 124.
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