Murray v. Witte

The opinion of the court was delivered by Simpson, C. J. This is an action to foreclose a statutory lien -on lands of an intestate sold for partition. The defendants demurred to the complaint. The demurrer was overruled and judgment of forelcosure pronounced. The defendants appealed — 508 — and the following is a statement of the facts out of which the legal questions arise. Samuel J. Murray, late of Sumter couuty, died intestate, in/1850, leaving a considerable estate real and personal. On January 5th, 1852,-his real estate was sold for partition by order of the Court of Equity. His widow became the purchaser of the Grove Hill tract, a portion of which was located on the west side of the Charleston road. The remainder of his lands was also partitioned at the same time, but as this remainder is not involved in this action no further reference thereto is needed here. The purchase of Mrs. Murray of the Grove Hill .tract on the west side of the Charleston road amounted to $4,788.03. She complied with the terms of sale by receipting for $145.50, the amount to which she was entitled as one of the heirs, and by executing and delivering to the commissioner three bonds dated January 17th, 1852, bearing interest from January 5th, 1852, with surety, two of which were conditioned each for the payment of $1,865.35, and the other for $911.83, all payable in three annual equal instalments. Thereupon, the commissioner by deed conveyed to her the land. In the meantime, Mrs. Murray had been appointed guardian of two of her minor children, who are the plaintiffs here. Under the order of sale the commissioner was directed to distribute the securities and other proceeds of sale among the parties entitled thereto, to the said parties who were of age and to the guardians of the minors. In pursuance of this order, he made the distribution, turning over to Mrs. Murray, for her ward Elizabeth N., in October, 1852, one of her own bonds for $1,865.35, and on the same day, another of her bonds, for the same amount, for her ward George. The third bond was turned over to some other of the parties, and having been long since paid, disappears from the case. This action of the commissioner was duly reported to the court and was filed for information on June 6th, 1853. During her guardianship Mrs. Murray received other funds for her wards more than sufficient to pay their current expenses. In her annual returns to the commissioner Mrs. Murray charged herself with the instalments and accrued interest on these bonds at or about the time at which they became due and payable respect — 509 — ivcly. On July 7th, 1858, Elizabeth having arrived at age, a computation was made of the amount due her in the hands of her guardian. This amount was ascertained to be $4,870.58; of this amount, $2,790.94 came from the bond which the guardian had received from the commissioner. On the same day Mrs. Murray liquidated her indebtedness as guardian to Elizabeth by executing to her her penal bond of that date for $9,600, conditioned for the payment of $4,870.00 oli January 1st, 1860, with annual interest until finally discharged. On this bond payments have been credited in discharge of the interest up to January 1st, 1860. George M. arrived at age in July, 1859, and the same arrangement was made with him. The amount found due him was $4,208.63, of which $2,936.89 came from the bond received by the guardian as his share of the Grove Hill land. This indebted- ■ ness was liquidated by Mrs. Murray giving to George her penal bond for $8,000.00, conditioned for the payment to George of $4,000.00. Upon this bond appears credits on January 1st, 1860, of $245.00 in excess of the interest up to that date. In 1866, George and Elizabeth (who had intermarried with one Samuel J. Bradley) commenced actions on these last bonds, upon which Mrs. Murray confessed judgments for the penalty in each of the bonds. These judgments were duly entered and signed by the cleric on December 12th, 1866, and on the same day executions were issued and lodged in the sheriff’s office for Sumter county. Thereafter, some time in 1868, the sheriff of Sumter, by virtue of these executions, levied upon and sold the Grove Hill plantations, then in the possession of Mrs. Murray, with other property. At this sale, one James D. Kirkpatrick became the purchaser of the land at the price of $500.00. In January, 1869, Kirkpatrick having received titles from the sheriff sold and conveyed a portion of his purchase, embracing two hundred and eighty-seven acres, more or less, of the Grove Hill tract on the west side of the Charleston road, to Samuel J. Bradley. The remainder of this tract on the west side of the Charleston road Kirkpatrick sold to William Bonneau Murray, taking his bond and a mortgage of the premises. This bond and mortgage Kirkpatrick subsequently assigned to the defendant, George W. Witte. — 510 — Witte afterwards obtained' a judgment of foreclosure of this mortgage against the heirs of Bonneau Murray, then deceased. At this foreclosure sale Witte became the purchaser, receiving a deed from the sheriff on February 11th, 1874. Samuel J. Bradley died in November, 1869, having a short time before his death conveyed to Samuel J. Pinckney that portion of the Grove Hill tract which he had bought from Kirkpatrick, with other lands, in trust for certain purposes. Under this deed the defendant, Bobert J. Brownfield, became trustee, so that Brownfield and Witte (Geo. M. Sanders being the tenant of Witte) became possessed of all the Grove Hill tract lying west of the Charleston road purchased at the original partition sale by Mrs. Murray, to secure which purchase it is claimed by the plaintiffs that the statutory lien now sought to be enforced, attached under the act of 1791. The plaintiffs claim that no part of Mrs. Murray’s bonds to the commissioner given for this land has been paid, and they now seek by this action to enforce the statutory lien on the land in possession of the defendants, which, they allege, attached at the purchase by Mrs. Murray in 1852, and which they claim is still of force, to secure to them the payment of the purchase-bonds received for them by their guardian. The presiding judge sustained the plaintiffs and gave judgment for the foreclosure of this statutory mortgage. The grounds of appeal are numerous, being fifteen in number, but the leading question is, whether, upon the facts stated, one or all, the statutory lien which it is admitted originally covered the land, has since become extinct, and before this action was commenced. If so, the case will end at that point, and this opinion in that event need not be encumbered with the discussion of the other questions raised. We will address ourselves first to this leading question. The main facts relied upon by the appellants in support of their position, that the statutory lien has been extinguished, are: First. That the relation of creditor and debtor became united in the person of Mrs. Murray as to the bonds in question, when they were assigned to her in 1852 by the commissioner, and hence they were then paid by operation of law, and hence, also, — 511 — the land pledged for their payment was then released. Second. That Mrs. Murray in her annual returns as guardian charged herself with the receipt of the instalments on these bonds, with accrued interest, at about the time they fell due respectively. Third. The settlement between Mrs. Murray and her wards, the plaintiffs, after they arrived at age, when they each took from Mrs. Murray, in liquidation, as they state in the complaint, the penal bonds mentioned above; and, lastly, they rely on the lapse of time. The effect of the union of the characters of creditor and debtor in the same person, has been often before the courts, not only in our own State but elsewhere. The most recent decision with us is Charles v. Jacobs, 9 S. C. 297. In that case the question was fully discussed, and the general rule, with the exceptions, presented in a concise and compact form. The authorities sustaining the positions there announced, will be found cited and discussed in the opinion delivered, so that it will be unnecessary for me to make further reference than to that case and the cases therein referred to. The rule, as is said there, appears to be, that where a debtor becomes executor <j>r administrator of his creditor, the debt is presumed to be paid from the time of its maturity. * * * This is the general rule. But this does not bind the creditors and distributees not having assented thereto, so as to prevent them from reaching such securities, if any, by mortgage pledge or lien originally taken to secure said debt, if it should turn out that the debt had not really been paid. In other words, the presumption of payment by operation of law in such case will not defeat the securities mentioned as against creditors and distributees, in the event that no payment has in fact been made. The presumption of payment is not conclusive, so as in itself to extinguish such securities by mortgage pledge or lien, if any. So, too, the executor or administrator may prevent the presumption of payment from attaching as to themselves, by dealing with the obligation as still outstanding, by transferring it to creditors of the estate, as was done in the case of Charles v. Jacobs and also in Clowney v. Cathcart, 2 S. C. 402. But in that case the unión of the two characters, though not discharging the principal — 512 — •debtor, will discharge the personal sureties. If, however, the executor or administrator, as was said in Charles v. Jacobs, “ actually treats the debt as paid and accounts for it as such, it becomes legally extinguished, and it cannot be revived by any act of the executor afterwards, such as transferring it in payment of debts of the estate; and if payment is accepted by the distributees on such account, they, too, are precluded from setting up the debt.” Yow, according to these principles, the statutory lien under the act of 1791 having attached on the bonds of Mrs. Murray, the mere union of the character of creditor and debtor in her person did not in itself extinguish this lien in so far as to prevent the distributees from enforcing it. Yet, if it subsequently appears in the case that she has treated her debt as paid, and that it has so been accepted and regarded by the parties entitled to the proceeds, and that an accounting has been had upon- the basis of payment to herself and accepted by the parties in interest, then the case of Charles v. Jacobs is authority for the position that the debt is extinguished and consequently with it the statutory lien also.- So that the real questions are: Do the admitted facts force the inference that Mrs. Murray c^ealt with and treated her bonds as paid — that she accounted for the proceeds on settlement as if collected'! Did her wards so understand, and have they accepted other bonds in payment 1 It is stated in the complaint that Mrs. Murray, during her guardianship, charged herself in her annual returns with the instalments and accrued interest on her bonds at or about the time they respectively became due and payable. In Clowney v. Cathcart, supra, which is similar in many of its features to this case, the real estate of an intestate was sold by order of the court. James Cathcart, the acting administrator, became the purchaser, .and gave his bond secured by mortgage of the premises. The order of the court, after directing the commissioner to apply the funds in his hands to the payment of certain debts, directed the balance to be paid over to the administrator to be administered in due course of administration. Under this order Cathcart’s bond and mortgage were delivered to him. Shortly after receiving them, and after the characters of creditor and debtor had — 513 — thereby re-united in his person, he assigned these securities to Robinson and Caldwell, creditors of the estate, in payment of their demand, thus treating the debt as a subsisting obligation, notwithstanding the union of the two relations. Shortly after this, in his returns he charged himself with the amount of his bond with the accrued interest, and credited himself with the amount as paid to Robinson and Caldwell. The question in the case was whether the bond and mortgage had been extinguished. The court said: “ That had the administrator done any act expressive of an intention to- treat the securities as extinguished and in its nature equivalent to payment, the debt would have become extinguished and the mortgage discharged.” The return of the administrator was relied on, but that was held not sufficient, because, before t-lys return was made, the administrator had assigned the bond and mortgage to Robinson and Caldwell as a subsisting obligation, and the court said: “ That the return was intended to express the transaction, which was complete by the transfer of the bond and mortgage into the hands of the administrator, and the subsequent transfer of the same by him to Robinson and Caldwell.” In other words, the object of the return was to show that this bond and mortgage had come into the hands of the administrator as part of the estate, and had been accounted for in the transfer to Robinson and Caldwell, and this entry in the administrator’s accounts, instead of affording evidence that the debt had been paid, was evidence directly to the contrary. In that case, therefore, it was properly held that thejprortgage should be enforced. The case before the court differs very materially from Clowney v. Cathcart and also from Charles v. Jacobs, in the fact that there is no evidence that Mrs. Murray dealt with her bonds as a subsisting obligation. She did not transfer them to her wards or to any one else. We never hear of them after the assignment by the commissioner, except at or about the time the instalments fell due, when she returned the proceeds with the accrued interest in her hands as so much cash. This was certainly an act on her part expressive of her intent to treat the original debt as extinguished, and in its nature equivalent to payment. What else could have been her purpose ? If she had regarded the bonds as — 514 — still outstanding, why have not returned them as investments, and Avhy especially did she make this return jiart of the time that the instalments fell due, embracing the interest which had accrued up to that date ? This transaction, so far as she is concerned, can be explained upon no reasonable hypothesis except that she had complied Avith her contract, and had paid herself as guardian tlie amount Avhich she OAAred herself in that character as an individual. But the important question is, has this debt, thus received by the guardian, been accounted for on settlement, and haATe the appellants accepted this settlement as payment in such AAray as to preclude them from iioav setting up the statutory mortgage against the land? The appellant, Elizabeth, came of age in 1858, and George in 1859. Very soon after each arrived of age an accounting took place. In these accountings, if the bonds of Mrs. Murray had been understood by the parties as still in existence and unpaid, they should have been produced and turned over to them respectively. The guardian AAras the mother of the appellants, and Ave cannot suppose that she had any purpose of defrauding her oavu children. And no doubt had the bonds been in existence as uncollected interests they AArould have been produced and delivered to the parties, and her notes given for the balance of the funds in her hands. But this course aatus not adopted. The computation Avas made upon the basis of her returns, as Ave must suppose, embracing the proceeds of these bonds as collected by her, and the remainder of the funds received by her during her administration as guardian. The amount ascertained upon this basis to be due, in the strong*language of the complaint, AAras liquidated by Mrs. Murray to each of the parties by giving her penal bonds in double the amount thus found due. In 1866, actions were instituted by both plaintiffs on these bonds, in which actions Mrs. Murray confessed judgment. Under these judgments the lands now attempted to be subjected to the statutory liens were sold in 1868, and the proceeds applied, and thus matters haA-e remained until 1879, when this action aaus commenced. Now, do these transactions furnish evidence that plaintiffs accepted and ratified the understanding of Mrs. Murray that her original bonds had been paid ? That the accounting and settle — 515 — ment above was made on that basis, and her penal bonds taken by them in payment of the amounts then found due as a finality? Or, do they show that this settlement was intended simply to ascertain the amount due, and that the bonds of Mrs. Murray were taken as mere memoranda showing the result, leaving the original bonds outstanding and to be enforced Avith the statutory mortgage on the lands at such time in the future as the plaintiffs might desire? The fact that the computation and settlement Avere made; that the original bonds Avere not produced and turned over; that heaA'y penal bonds of the guardian Avere taken for the full amount in liquidation, as is stated in the complaint; that suit AA'as aftenvards brought on these bonds; that Mrs. Murray confessed judgment in these suits, that her land was sold thereunder, and the proceeds applied; that twenty years elapsed from that settlement before this action AA'as brought, nearly eleven years of Avhich defendants or their grantors were in possession of these lands, Avith the plaintiffs living near by and making no Avhisper of their rights under the statutory lien, afford a very strong moral presumption that it Avas the understanding of all parties that this settlement Avas final and conclusi\re as to the past. And the attempt uoav to revitalize the original indebtedness of Mrs. Murray, in the face of these facts, and after this long delay, has much the appearance of an after-thought. ■ ’Tis true that the mere taking of a neA\T bond does not in itself extinguish a prior bond. The authorities of this State are full to the effect that a neAv obligation does not amount to a satisfaction, unless it is so agreed and understood by the parties. Thomas v. Kelly, 3 S. C. 214; Kelsey v. Rosborough, 2 Rich. 244. In Adger v. Pringle, 11 S. C. 527, McIver, A. J., said: “ The rule of laAV is AA'ell understood, that Avhere a creditor takes an obligation of inferior or equal rank it does not extinguish ipso facto the prior obligation, as that is payment only Axliich is intended and accepted as payment; hence, Axdien a creditor takes a neAv bond for one previously held by him, which has been lost or destroyed, the original debt or obligation is not extinguished unless it is made to appear that the creditor accepted such new bond in payment; and the burden of proof is upon him Avho — 516 — asserts the fact that the new bond was taken as payment.” In Johnson v. Clarke, 15 S. C. 72, the same doctrine was held, with the statement that the fact that the new bond was accepted as payment might be shown by the facts and circumstances as well as by positive proof. In Burton v. Pressly, Cheves Eq. 9, Chancellor Johnston said in the Circuit decree, which was adopted as the opinion of the court: “ That if the new was given in payment of the old, the fair inference is that the mortgage must fall with the note. But if for mere convenience a new note was executed to take the place of the old one, the object being substitution and not payment, I suppose that all the incidents were transferred to the new.” Whether a new note then is to operate as payment, depends entirely upon the intent of the parties, and, when so intended, if there be a mortgage or other security attached to the old, it will fall with the old note. The error of the Circuit judge was not in the conclusion which he drew from the facts which he applied to this question, but in not applying all the facts. He based his decision upon the naked facts that a new obligation had been given and the confession thereon. If these had been all the facts of the case, his conclusion was in accordance with the cases above referred to. We think the return of the guardian, the failure to produce the original bonds at the settlement and to turn them over, the long delay and the profound silence of the plaintiffs for • more than twenty years after the settlement and liquidation, all of which are admitted, were significant facts bearing upon the question as to the intent and understanding of the parties as to the purpose of the settlement. These were all circumstances connected with the transaction, surrounding and intermingled with it, and should have been considered. The judgment of this court is that the judgment of the Circuit Court be reversed. McIver and McGowan, A. Jfs, concurred.