Carmichael v. Foster

SPEER, Justice. This was a rule to distribute money brought in Greene superior court, arising from the sale of certain lands by the sheriff of said county. Certain fi. fas. in favor of creditors of Jas. H. Willis were levied on land, sold as property of J. H. Willis, and a fi. fa. in favor of F. C. P'oster, as trustee, was likewise levied on same land as a part of the assets of the estate of R. J. Willis, deceased. By agreement the land was sold under these levies and the proceeds brought into court, and it was agreed the liens of the several fi. fas. should be transferred from the land and attach to the proceeds of sale, and that if the lien of the Foster fi. /«.was of superior dignity, the proceeds should be appropriated to it, otherwise the applications should be according to their respective priorities. Under an issue made, the facts were submitted to a jury for trial, who, under the charge of the court, returned a verdict in favor of certain fi. fas. in favor of the creditors of James H. Willis, based upon an indebtedness contracted by him prior to nth February, 1876, and found after these fi. fas. were paid balance should be applied to the Foster fi. fa. The creditors of James H. Willis, who were excluded by the verdict, made a motion for new trial on certain alleged errors in the charge of the court in his instructions to the jury as to the distribution of said fund, which were overruled, and they excepted. The contest arose as to the priority of the liens of the fi. fas. of certain creditors of J. H. Willis, who had sued and obtained judgments against him, and a decree rendered in chancery in favor of Foster, as trustee, for certain devisees under the will of Richard J. Willis, deceased. It appears that the will filed by Foster, as trustee, on nth July, 1876, was against the two surviving executors of Richard J. Willis, J. H. Willis being one, and Inman, [381] Swann & Co., for the purpose of vacating and setting-aside a sale of the lands had at the executors sale, and at which sale the executors became the purchasers at a price greatly under its value. On the trial of the bill, etc., a. verdict was had for complainants for the sum of $6,333.-24, and also finding the land of the estate of Richard J.. Willis subject thereto. Upon'this verdict a decree was^ rendered directing execution to issue in favor of complainants to be levied of said tract of land. Under the proofs submitted on the trial of this rule,, the court charged: (1.) That the effect of the decree was to declare the sale of the lands by the executors to themselves, to be fraudulent and void, that the title remained in the estate, and the land was subject to pay the ft. fa. of Foster, trustee. (2.) That the ft. fas. of the creditors of James H. Willis, founded on debts created subsequent to the filing of complainant’s bill (nth February, 1876,) were to be postponed to the ft. fa. of Foster. (3.) That the ft. fa. and distress warrant of Inman,. SwannJ& Co. were not entitled to be paid out of the fund,, because they were parties to the bill and decree and were bound by it. (4.) That if Cozart & Hogue, creditors of J. H. Willis,, had a note against him prior to the filing of the bill, and after this the parties to said note by agreement divided said note into small notes, in order to give jurisdiction to the county court, the intention being by such division to give Cozart & Hogue equal advantage with Story, then suing J. H. Willis, and said note so divided are the foundation of the ft. fas. of Cozart & Hogue, then the notes thus divided were upon a new consideration, and were a novation of the original note, and the ft. fas. of Cozart & Hogue were postponed to that of Foster. 1. The point most earnestly pressed before this court against the charge of the court in the first ground of the motion for new trial, was that the defendant in error, by [382] his bill, had but two courses to adopt in asserting the •rights of his cestuis que trust — either to seek to vacate the sale and put the title again in the estate of testator, or if he sought a decree in money, to affirm the sale, and take the proceeds by a money decree. And as the plaintiffs in error claim that complainant below sought and obtained a money decree, that this affirmed the sale by the executors, the title passed from the estate, vested in James H. 'Willis, and the fund in hand should be paid to his credit- ■ ors according to the priority of liens against him. While it is true, that under the bill of defendant in • error as filed, and the prayer thereof, an accounting is prayed for and also a decree setting aside said sale, canceling deeds, etc., yet, by an amendment to said paper, “a -decree is also sought requiring said executors or persons .holding under them, who are parties to the bill, to pay complainants their distributive share of the proceeds of said land, with interest, at the valuation of $9,000.00, and that complainants have judgment for said sum, and that all of said land in possession of said executors, or those ■ claiming under them at the time the bill was filed, be subject to levy and sale to satisfy said judgment.” “It is a clearly established principle in equity jurisprudence, that whenever the trustee has been guilty of a breaph of the trust and has. transfered the property by sale or otherwise, to any third person, the cestui que trusts has full right to follow such property into the hands of such third person, unless he stands in the position of a bona fide purchaser for value without notice.” 3 Howard Rep. (U. S.) 401; 51 Ga., 181. The same principle is recognized in the Code 3152, which provides “when .assets are misapplied and can be traced in the hands of the person affected with notice of the misapplication, the trust still attaches to the assets, and equity will aid in restoring them to their legitimate purpose.” Here the court charged that the effect of this verdict and decree •■was to declare the sale of said lands fraudulent, and that [383] James H. Willis and Inman, Swann & Co. had purchased the lands of the estate affected with notice of this fraudulent sale and misapplication of the assets, and hence the trust in favor of these complainants still attached to those assets and they should be subject to this judgment. The mere fact that complainants, in the accounting sought in connection with their pursuit of these assets, recovered a verdict in money to be paid out of these assets, cannot affect the principle involved. It was eminently proper, under the pleadings for an account, that equity should decree the amount due simultaneously with the mode and means of its payment. We can see, therefore, no error in the court refusing to charge as complained of, or in charging as set forth in the record. 2. Nor do we find any error in the court holding that Inman, Swann & Co. were not entitled to participate in the distribution of this fund. They were, under the record, charged with notice that the title to these lands was voidable in J. H. Willis, and with such notice they did not occupy the position of innocent creditors, who bona fide gave credit on the faith of-the title he held. This notice came to them in 1873, and the credit they extended to J. H. Willis was after that period. 3. Neither was there error in - admitting the record between F. C. Foster, trustee for these complainants, vs. J. H. Willis et al. in evidence on the trial of this issue. The court instructed the jury that all the fi. fas. founded on defendants created subsequently to the filing of complainant’s bill should be postponed to the fi. fa in favor of Foster as trustee. This ruling was in full harmony with the one that excluded the judgments of Inman, Swann & Co., from participation. Whenever complainants filed their bill, this “ lis pendens" was notice to all the world of the claim of these complainants and their assault upon the title of J. H. Willis, and any one who gave-credit with such notice, gave it of course subject to the equities of the complainants. 1 Johns. Ch. Rep. 576; 35 Ga., 213; 53 Ga., 118. [384] It is claimed also that the court erred in instructing the jury that Cozart & Hogue were not entitled to participate in this fund before Foster, if they believed from the evidence that since the filing of the bill their notes upon which their fi. fas. were obtained, by agreement between the parties, were received by dividing their original debt into small nofes in order to give the county court jurisdiction to entertain suit thereon, if it were the intention in so dividing, to give Cozart & Hogue equal advantage with Story, whose notes were then in suit — that said notes, so divided, were upon a new consideration, and were a novation of the original debt due by Willis to Cozant & Hogue. One simple contract as to the same matter, and on no new consideration, does not destroy another between the same parties. Code, 2724. Was there a new consideration entering into these new notes taken in lieu of the original debt ? “ A consideration is valid if any benefit accrues to him who makes the promise, or any injury to him who receives the promise.” The obvious purpose here, on the part of the promissor, was to give Cozart & Hogue, not only an equal chance with Story, but also a priority of lien over these complainants to be paid out of this property. It was to pay his debts out of this property rather than to pay complainants out of the assets of the estate, and hence it clearly was to his benefit that they should have prior liens to reap such a result. The decree complainants were seeking was to subject this property as trust assets in the hands of the trustee, but, if, in dividing these notes, Cozart & Hogue were to secure a prior lien and be paid first out of the assets, of course it was a benefit to Willis to divide the debt, and hence this new consideration entering into it made it a new contract, and we find no error in the court holding its lien should be postponed to the lien of Foster, trustee. Judgment affirmed.