Dockery v. . French .

RodMAN, J. As Dockery purchased the land with full notice of all the circumstances attending the alleged payment by Morrissey, we are at liberty to consider him as standing in the shoes of Morrissey. It is properly conceded also, that the payment by Morrissey extinguished the debt to the value of the Confederate money on 6th February, 1864. So that the only question is, did it extinguish and satisfy the surplus of the debt beyond such value. A creditor in his own right, may receive payment in what he pleases, or may voluntarily release his debt. But it is otherwise with a trustee who is bound to protect the interests of his cestui que trust. It has been long settled, in this Court at least, that if, during the war, a trustee in good faith, and exercising a prudent discretion, received payment of a trust debt in Confederate money^ he incurred no liability thereby, notwithstanding the money was depreciated at the time, and afterwards became lost. On like grounds the debtor who made such payment, was discharged. ' If a trustee acting mala fide, or with gross imprudence, received payment in such money, he was liable to his cestui que trust, for any loss thereby sustained. But it would not necessarily, and in all cases follow, that the debtor still continued liable. This would depend upon his own ionafides. It may be admitted that a debtor may lawfully pay his debt to *426 a trustee in depreciated money, under ordinary circumstances, if the trustee be willing to receive it. There may be circumstances, making such payment at the time an advantage, or at least not injurious, to the cestui que trust, and the debtor is not bound to inquire, whether it be so in fact or not. But it is clear, that if the debtor fraudulently colludes with the trustee, and obtains a release without consideration, or upon a consideration which he must know to be grossly inadequate, such a release will not be permitted to avail him in a court of equity: the debt will still exist for the benefit of the real creditor, the cestui que trust, who may enforce it against the debtor, and is entitled to the benefit of all the securities attached to it. The fraudulent release of a trust debt, is analogous to a fraudulent sale of trust property, upon which the cestui que trust has his election, either to go against the trustee for the price, or to follow the property in the hands of the purchaser. The equity of this principle is so apparent, and the principle itself of such familiar application, that it seems unnecessafy to cite any authorities to establish, or illustrate it. Nevertheless we refer to Story, Eq. Jur. sec’s. 422, 423, 580, 581, 1256 to 1259, and the cases in this Court, cited by the counsel for the defendant. Is this a case in which that doctrine will apply? In Emerson v. Mallett, Phil. Eq. 234, it was suggested that the receipt of Confederate money by a collecting officer, after 1863, was unauthorized, the depreciation being then so great, as of itself, to amount to notice from the party interested, that it should not be received. The position of a guardian who is under no requirement to collect, is very different from that of a collecting officer, who is ordered to collect. In Sudderth v. McCombs, 65 N. C. Rep. 186, it was held that a guardian who early in 1865 received Confederate money in payment of solvent notes, was apparently inexcusable. In Purser v. Simpson, 65 N. C. Rep. 297, it is said, that no fiduciary should have collected well secured notes, in Confederate money, after the 4th of July, 1863. At the date of the payment under consideration, $6,820.00 in Confederate *427 money was worth in gold only $277.14. The actual value-of the money we must assume was known to both Morrisey and Thompson. The debt of Morrisey was amply secured upon land, the most stable of all property. No occasion of the wards required its collection. The counsel for the defendant do not impute any actual fraud either to Morrisey, or Thompson. But we are of opinion that under such circumstances, there is a legal intendment of fraud, which there is no evidence to rebut. There are some things which from public policy, and for the protection of cestui que trusts, must be assumed to be prima facie, fraudulent, or at least forbidden, and in that sense fraudulent: and we are of opinion that the payment which we have been discussing, comes clearly within that principle. As the wards of Thompson are not parties to this action, no judgment for a sale of the land under the deed in trust can be made. Pee Cueiam. Judgment below reversed, and the action of plaintiif dismissed.