McLure v. Melton

The opinion of the court was delivered by MR. Justice McIver. The principal case in which the petition of appellant has been filed, was an action brought by the plaintiff, as administrator of George W. Melton, deceased, against his heirs and creditors to marshal the assets of the estate of said George W. Melton, which is insolvent, and it was commenced on the 17th of July, 1877. On the 24th of August, 1877, an order was passed in said case enjoining all creditors of George W. Melton “from suing on said claims or prosecuting their actions at law thereon against said administrator until the further order of this court.” On the 13th of October, 1877, another order was passed whereby, amongst other things, all creditors were required to prove their demands before the clerk, on or before the 15th of [382] January, 1878, and on the 14th of November, 1881, A. G. Brice was substituted as referee in place of the clerk, who, after holding several references, made his report on the 1st of February, 1884. ascertaining the debts proved and classifying them according to their legal priorities. To this report some of the creditors filed exceptions to the classification adopted by the- referee, and his report with the exceptions thereto came before his honor, Judge Wallace, who, on the 20th of May, 1885, rendered judgmént sustaining the exceptions, but in all other respects confirming the report of the referee. From that judgment some of the mortgage creditors appealed, and on the 22nd of April, 1886, the Supreme Court rendered judgment affirming the judgment of Judge Wallace.1 The case was then carried by writ of error to the Supreme Court of the United States, where the writ of error was dismissed,2 and the mandate from that court, together with the remittitur from the Supreme Court of this State, was filed in the Circuit Court on the 4th of June, 1890. In the meantime the real estate of the said George W. Melton had been sold, and a considerable portion of the proceeds of such sale remain in the hands of the clerk; and it is conceded that there are assets yet in the hands of the administrator, who has not yet formally accounted. On the 25th of June, 1890, the appellant filed his petition in the cause, praying for leave to come in and prove his alleged claim against the estate of George W. Melton. Ilis claim is based upon the following allegations contained in his petition: that Mrs. Wright, on the 15th of November, 1867, recovered a judgment against C. I). Melton, which became a lien on certain real estate in and adjoining the town of Chester; that on the 25th of November, 1867, C. D. Melton conveyed said real estate to his brother, George W. Melton, with general warranty, and received from his brother four notes under seal, bearing that date, and secured by a mortgage of the premises; that when the last of these notes became payable, to wit, on the 25th of November, 1871. an agreement in writing, not under seal, was entered into by the Melton brothers, whereby George W. Melton assumed the payment of certain specified judgments, including that in favor of Mrs. Wright, which had been previously obtained [383] against O. D. Melton, and were liens upon said real estate, and thereupon the said C. D. Melton cancelled and surrendered the said four notes, together with the mortgage to secure the payment of the same, to the said George W. Melton, but the record of said mortgage still remains uncancelled; that thereafter, to wit, in August, 1875, the said George W. Melton conveyed the said real estate, with the usual covenants of warranty, to certain trustees for the benefit of his wife and children; that in January, 1880, the said trustees, being duly authorized so to do, sold and conveyed the said real estate to the appellant, who bought in entire ignorance of the agreement above mentioned between the Melton brothers; that in April, 1881, the said appellant sold and conveyed the said real estate to James C. Hardin, with the usual covenants of warranty; that on the 13th of July, 1886, the "Wright judgment, which had not been paid by George W. Melton in his life-time, or by any one since his death, was levied upon the real estate in the possession of James C. Hardin, and the appellant, in exoneration of his covenant of warranty, having no defence to an action thereon, paid up the Wright judgment; wherefore the appellant claims that by the payment of said judgment he became the assignee of the covenant of warranty in the deed of George W. Melton to the said trustees; and that having been compelled to pay the Wright judgment, which George W. Melton had undertaken to pay by his agreement of the 25th of November, 1871, the appellant stands as a surety to George W. Melton’s estate, “and is entitled to set up said judgment in equity in his own favor in the marshalling of the assets of the estate of the intestate.” Again, appellant claims that, by the payment of the Wright judgment, he in effect paid the balance of the purchase money due by George W. Melton for the said real estate over which C. D. Melton held a mortgage, and appellant “is entitled to have the benefit of said mortgage as against the estate of George W. Melton, and to have leave to set it up as a mortgage debt against his estate, and to be subrogated to all the rights of the estate of C. D. Melton in said mortgage.” To this petition the creditors of George W. Melton, who have heretofore established their claims, filed an answer, admitting all of the allegations of the petition, except the following, which [384] they deny: that appellant has become a creditor of the estate of George W. Melton ; that appellant bought the real estate “'in entire ignorance of the agreement” set forth in the petition ; that petitioner had no defence to an action on the covenant of warranty contained in his deed to James C. Hardin; and that appellant, by the payment of the Wright judgment, became an as signee of the covenant of warranty in the deed from George W. Melton to the trustees. They also plead the statute of limitations. It is conceded that the deed from George W. Melton to the trustees was a voluntary deed, based upon the consideration of natural love and affection only ; and we 'presume that the deed from the trustees to the appellant contained no warranty. The testimony adduced on the part of the appellant was that of Maj. Hamilton, who stated that he was the attorney of George W. Melton, and as such drew the deed to the trustees, as well as the proceedings under which the trustees obtained leave to sell, and conducted the sale made by them to appellant, and that at that time the Wright judgment was supposed by all parties to be no judgment and no lien upon the property sold, and that the agreement between the Melton brothers, of the 25th of November, 1871, was n'ot known to witness or any one engaged in the case until it was produced in evidence by W. A. Clark in 1884. G. W. S. Hart, Esq., a witness examined for respondents, testified that he with his partner were the attorneys of Mrs. Wright, and they first learned that George W. Melton had assumed the payment of the Wright judgment some time in the latter part of 1881 or early part of 1882 — prior to July, 1882 ; but the appellant, it is admitted, had no personal knowledge of such assumption at the time he purchased. It appears from the statements made in the case that C. D. Melton died in December, 1875, and George W. Melton in July, 187C, both being insolvent. The case was heard by his honor, Judge Wallace, who rendered judgment dismissing the petition, and from his judgment the petitioner appeals upon the several grounds set out in the record. Inasmuch as the decree of the Circuit Judge, together with appellant’s exceptions thereto, should be incorporated in the report of the case, it is unnecessary for us to state them particularly here. [384] The fundamental inquiry in the case is, whether the appellant [385] has any such claim against the -estate of George W. Melton as entitled him to the aid of the court in enforcing it. Whatever claim he may have is unquestionably based upon the fact that he has paid the Wright judgment, the payment of which was assumed by George W. Melton by the agreement of 25th of November, 1871; but as such payment was not made for the purpose of relieving the estate of C. D. Melton, but solely for the purpose of relieving the property from the lien of said judgment, which the appellant had bought with notice of the judgment, and conveyed with warranty to another, in order to perform his covenant of warranty, it is difficult for us to understand what equity he has to be subrogated to the .rights which the holder of that judgment, or to the rights which C. D. Melton’s estate, may have had against the estate of George W. Melton. There was no privity whatsoever between the appellant and C. D. Melton. He was not a surety of C. D. Melton, and in no way bound to pay said judgment for him. Indeed, practically he paid no debt for which the estate of C. D. Melton was in equity and good conscience liable; for though such estate was legally liable to pay such judgment, yet in equity and good conscience it was really payable out of the property which the appellant saw fit to buy with notice that it was subject to such lien. But in addition to this, as the Circuit Judge well says, the judgment was against C. D. Melton and not against George W. Melton, who was never liable to pay the amount thereof as a judgment, but only liable by reason of his agreement of 25th of November, 1871, which was a mere simple contract obligation, and hence we do not see how it is possible, under any view of the case, for the Wright judgment to be set up as a judgment against the estate of George W. Melton. 2 As to appellant’s claim to set up the mortgage originally given by George W. Melton to C. D. Melton to secure the payment of the purchase money of the Chester property, the same remark as that just made in reference to the Wright judgment may be made. That mortgage never was a lien on anything but the Chester property, and did not cover any other portion of the property belonging to the estate of George W. Melton, and hence it could not be proved as a mortgage debt [386] against the estate of George W. Melton, under the principle decided in McLure v. Melton (24 S. C., 659); but if set up at all, it must take the same rank as the debt which it was given to secure, to wit, that of a sealed note. It is necessary, therefore, to inquire whether the appellant can set up the sealed notes as a claim of that rank against the estate of George W. Melton. These notes were extinguished by the arrangement between the Melton brothers of the 26th'of November, 1871, when they were cancelled and surrendered to George W. Melton, and they cannot nowr constitute any legal cause of action against the estate of George W. Melton, and whatever equities C. D. Melton or his .estate may have had, as intimated in the case of Hardin v. Clark (32 S. C., at pages 485-6), the appellant has no connection with so far as we can see. 3 He cannot claim as assignee of the covenant of warranty contained in the deed from C. D. Melton to George W. Melton, as was held in the case just cited, and we do not see what claim he could have against the estate of George W. Melton as assignee of the covenant of warranty contained in the .deed from George W. Melton to the trustees; for that being a voluntary deed, and the measure of damages for breach of a covenant of warranty being fixed by statute at the amount of the purchase money paid, with interest from the time of the alienation, where there was nothing paid, nothing could have been recovered. If the trustees had been evicted, they certainly could have recovered nothing from the estate of George W. Melton for the breach of the covenant of warranty contained in the voluntary deed under which they held; and the appellant, as their assignee, could have no higher rights than his assignors. [387] 5 6 [386] If, therefore, the appellant has any claim at all upon the estate of George W. Melton, it must arise from the agreement of 25th of November, 1871, whereby George W. Melton assumed the payment of the Wright judgment. But how can the appellant connect himself with that agreement? That was made for the benefit of C. D. Melton, and possibly might have enured to the benefit of the holder of the Wright judgment, but appellant is neither the assignee of C. D. Melton nor of the holder of the Wright judgment. It seems to' us that the true [387] position of the appellant is that of a purchaser of real estate under a quit claim deed, without warranty, upon which there rested the lien of a judgment of -which he had not only constructive notice unquestionably, arising from the record, which would have been sufficient; but also, as it would seem, actual notice (if wé are at liberty to refer to the decision in Hardin v. Clark, 32 S. C., 485, supra., offered in evidence in this case), at the time he purchased, and has seen fit to remove such lien by payment in order to protect himself against an action for breach of his covenant of warranty in his deed to his vendee. If this be so, then it is plain that he has no cause of action' against the estate of George W. Melton; for if so, then in every case where a person who sells real estate, covered by a judgment or other lien, of which his vendee has notice, and conveys the same without warranty, the vendor would be liable for any amount which the vendee might be called upon to pay for the purpose of removing such lien ; and this could hardly be pretended, as it would destroy all distinctions between a quit-claim deed and a warranty deed. The fact that the vendor may have assumed the payment of such lien by a contract with a third person, with whom the vendee has not been able to connect himself, cannot alter the case, as such third person might at any time he saw fit release the vendor from the performance of such contract. But even if appellant could connect himself with the agreement of 25th of November, 1871, that would create a simple contract obligation, which could not be enforced by action after the lapse of six years — not four, as contended by one of the counsel for respondents, as the change in the statutory period was effected by the Code which was adopted 1st March, 1870, and not by the Revised Statutes of 1872. So that it is clear that C. D. Melton or his administrator would have been barred of their action on such promise long before the petition in this case was filed, unless protected by the order of injunction, and the appellant, who certainly could not claim any higher rights, would be in like condition. [387] We must consider, then, the effect of the order of injunction which was granted before the expiration of the six years. It will be observed that this order only restrained creditors from [388] prosecuting their actions at law, and did not prevent them from coming in and proving their demands in the case in which the order of injunction was granted. On the contrary, they were called upon to do so by a time fixed for that purpose — 15th of January, 1878. But the appellant not only failed to come in within six years from that date and present his demand, but he failed to do so within six years from the filing óf the report on claims — 1st February, 1884. So that even if appellant ever had any claim against the estate of George W. Melton, growing out of his promise to C. D. Melton to pay the Wright judgment, it was barred by the statute before he filed his petition or presented his claim, which, according to what was held in Warren v. Raymond (17 S. C., at pages 203-4), must be regarded as the time when he commenced his action, The fact .that the appellant filed his petition, commenced his action, within six years after he paid the judgment cannot affect the question; for without considering the question1 whether he could have brought his action, before making such payment, it is sufficient to say that he can claim no higher rights than C. D. Melton, and certainly he and his administrator were barred long before the appellant instituted this proceeding. The judgment of this court is, that the judgment of the Circuit Court be affirmed. Footnotes [1] 24 S. C.. 559. [2] 133 U. S., 380.