Opinion
(June Term, 1877.)
Bond — Surrender and Cancellation — Joinder of Actions — Joinder of Parties — Fraud.
1. The legal effect of the surrender of a bond to an obligor and the cancellation thereof is the same as a release of the cause of action on the bond, and may be pleaded in bar of an action to recover the amount of the same. Such surrender and cancellation is a "deed," and is valid without consideration.
2. An action by legatees to follow a fund on account of alleged fraud which the personal representative (also a legatee) failed to collect, cannot be joined with an action brought by such personal representative to collect the assets of the estate.
3. The Code of Civil Procedure does not warrant the joinder of the principal in an alleged breach of trust as coplaintiff with the person alleged to have been thereby injured, in an action against the parties alleged to have participated in the fraud.
4. Where a debtor accepts from the personal representative of his creditor, by way of compromise, a release of his bond in a settlement between them, paying no consideration therefor, and there is no proof or imposition, undue influence, accident, or mistake: Held, that the court will not impute fraud to such debtor.
APPEAL at Fall Term, 1876, of CHOWAN, from Eure, J.
A. M. Moore and Mullen Moore for plaintiffs.
Gilliam Pruden for defendants.
Richard Paxton died in 1863, in said county, leaving a last will and testament, to which the plaintiff, Mrs. E. B. Paxton, qualified as executrix. She is the widow of Richard Paxton and equally interested with her children, the other plaintiffs, as legatee under said will.
Among the articles of personal property left by her testator were two joint bonds against the defendant W. C. Wood and his testator, Edward Wood, amounting in July, 1876, to $6,841.49. Prior to that time one of these bonds was credited with $1,000, paid by W. C. Wood; and Edward Wood at various times had paid to the plaintiff executrix the sum (12) of $2,125, which was not credited on the bonds in question, but Mrs. Paxton gave her individual notes to said Edward for said sum. She stated, however, in a letter to W. C. Wood, in July, 1867, that said sum was to be credited on said bonds.
The two bonds at that date (exclusive of $2,125 covered by her individual notes) amounted to the said sum of $6,841.49. Mrs. Paxton proposed to W. C. Wood to compromise the matter, agreeing to lose $895.60 and to credit said bonds with the amount of her individual notes. This proposition was accepted, and Edward Wood paid to Mrs. Paxton the amount agreed on, and she surrendered to him the said bonds.
In a subsequent settlement between Edward and his brother W. C., said bonds were surrendered to W. C. and canceled by him, he giving his note to Edward.
Mrs. Paxton was adjudicated a bankrupt in April, 1871, being before that time, then, and now indebted to her children, the other legatees, several thousand dollars.
On the trial below the defendants relied on the plea of satisfaction, payment, release, and the statute of limitations, and, after argument, his Honor being of opinion with defendants, adjudged that they go without day, and the plaintiffs appealed.
The case was heard upon the pleadings and the facts set out in the statement of the case, and we concur with his Honor in the opinion that the plaintiffs did not make out a cause of action.
1. Judgment is demanded on the ground that there is a balance due to the plaintiff E. B. Paxton, as executrix of Richard Paxton, on the two bonds mentioned in the pleadings. It is clear that the several (13) amounts advanced to Mrs. Paxton, were intended as payments, and are to be so taken. It is not, however, so clear that the $895.60 which Mrs. Paxton says in her letter "she was willing to take by way of compromise" should not be considered as a balance still due upon the bonds.
We have come to the conclusion that the executrix cannot maintain an action for the $895.60 as a balance due on the bonds, for the reason that the bonds were surrendered by her to the obligors to be canceled, and were canceled; by which deed their existence was extinguished to all intents and purposes, such voluntary surrender and cancellation having a legal effect entirely different from an accidental loss or destruction of the instruments.
Suppose Mrs. Paxton had executed to the obligors a formal release, that is, "an instrument of writing, sealed and delivered," of her cause of action on the bonds; there can be no question that the release could have been pleaded in bar of her action. The surrender and cancellation of the bonds have the same legal effect; both are deeds, the one in the restricted sense of "an instrument of writing, sealed and delivered," the other in the general sense of "a solemn act done by the party"; and both are valid without a consideration, by reason of the solemnity of the act done. A deed of gift for a chattel passes the title; so a gift accompanied by an actual delivery passes the title. No consideration is necessary in either instance, for both are "deeds," and no consideration is necessary to make them valid. A feoffment of land passes the title, although there be no consideration, for the act of "livery of seizin" is a deed, and although there be an instrument of writing, sealed and delivered, setting out the limitations, conditions, etc., accompanying the livery of seizin, the title passes by the act of making livery, and no writing or consideration is necessary. In conveyances operating under the doctrine of uses a consideration is necessary to raise the use. This, however, (14) is exceptional, as is the necessity for a valuable consideration to make conveyances valid as against creditors under 13 Eliz., and purchasers under 27 Eliz.; but voluntary conveyances and voluntary bonds and all deeds are binding between the parties. It follows that the deed in fact to wit, the surrender of the bonds to the obligors and the cancellation thereof, has the same legal effect as a deed in writing, to wit, a release of the cause of action on the bonds, would have had.
The doctrine that payment of a part of a debt does not support an agreement to forego the collection of the residue has no application to this case. That rests on the necessity for a consideration to support an executory agreement; otherwise, it is not valid, being nudum pactum. Whereas we have seen that agreements executed and evidenced by a deed in writing or a deed in fact are valid without any consideration.
2. A decree is prayed for declaring the defendants to be trustees for the plaintiffs as legatees, of the sum of $895.60 not collected by the executrix when she surrendered the bonds (the other claim has been disposed of), on the ground that the obligors committed a fraud in procuring a surrender of the bonds without making payment in full. The two causes of action are misjoined, and are inconsistent, the one being an action by Mrs. Paxton as executrix to collect the assets of her testator, the other being an action by Mrs. Paxton and the plaintiffs as legatees, to follow the fund which she failed to collect. Although the pleader has with much ingenuity confused the matter by the use of generalities, we can hardly suppose even the liberality of C. C. P. will warrant the joinder of inconsistent causes of action. But pass that by.
There is a mijoinder [misjoinder] of parties by making Mrs. Paxton the plaintiff in the second action, when she is manifestly a necessary (15) party defendant; for she was the principal actress in the breach of her trust and fraud alleged, and must be joined with the other defendants, who are alleged to have concurred with her as coadjutors; otherwise we have this singular state of things presented by the pleadings: The plaintiffs allege that they are legatees under the will of Richard Paxton, and that one of them being executrix as well as legatee, committed a breach of her trust as executrix, with the knowledge and privity of the defendants; and the principal in the breach of trust is made a plaintiff in an action to hold her accessory responsible in the first instance; and she not only escapes being called to account for her delinquency, but seeks to charge the defendants by avowing her own turpitude, and avers, as one of the plaintiffs in the action, that at the time of the surrender of the bonds she was insolvent, and the obligors in the bonds had notice. She also avers that "she has committed a devasavit and is largely indebted to the legatees, and was, in 1871, adjudicated a bankrupt"!
Here we have proof that a mother to serve a child will "sacrifice herself."
After full consideration, we are satisfied that C. C. P. does not warrant the joinder of the principal in an alleged breach of trust with the persons alleged to have been injured thereby, in an action against the parties alleged to have been accessory to the fraud.
Apart from this objection, we are of opinion that the facts set forth in the statement of the case do not show a cause of action, that is, a sufficient ground on which the court can declare the obligors to have committed a fraud in accepting the surrender of the bonds, and can make a decree by which they are to be converted into trustees for the plaintiffs.
After the introduction of uses into England it became a settled principle that when a feoffment was made without consideration, and without declaration of the uses or a power of appointment, the feoffee holds to the use of the feoffor. This was put on the presumed intention (16) of the parties. But the idea that the obligors in our case accepted the surrender of the bonds with an understanding that they were to hold the funds for the use of the legatees is so ridiculous that it would not have been alluded to but for the fact that, as the case is before us, that is the only ground on which the plaintiffs can put their case.
The testator was a man of large estate. His widow was executrix, and under the will was entitled to a part of his estate. The obligors, who owed a large debt to the testator, due by two bonds upon which there had been many and divers payments, both before and after his death, on the written proposal of the executrix by way of compromise, paid to her the full amount of the bonds and interest, deducting credits, and including as credits the notes of the executrix, minus the sum of $895.60, and she surrendered the bonds to be canceled. This was in 1867. It does not appear what was the condition of the estate at that time, or what was the amount of the legacy to which she was entitled. Afterwards, in 1871, she went into bankruptcy. "She was then, before, and is now indebted to her children, who were the other legatees, several thousand dollars."
It does not appear that she was insolvent, or had so wasted the estate in 1867 as not to have in hand assets amply sufficient to pay the legacies to her children; and from anything that appears, she was in a condition to be able to release or surrender $895.60 without consideration, and let it stand as an abatement of her legacy, without in any way impairing the rights of the other legatees or subjecting herself to the imputation of fraud. So the question is, If a debtor accepts from the executrix of his creditor a release or surrender of his bonds, the executrix being a legatee to an amount equal to the balance due on the bonds, does the mere fact that he paid no consideration for the release, in the absence of any proof or suggestion of imposition or undue influence, or of (17) accident or mistake, furnish a ground upon which the court can impute fraud to the debtor and convert him into a trustee for the other legatees of the whole sum thus released, or of a ratable part thereof, deducting the portion of the executrix, upon its being proved that the executrix afterwards became insolvent and went into bankruptcy, indebted to the other legatees several thousand dollars? No case was cited on the argument bearing directly upon the point. Wilson v. Doster, 42 N.C. 231, and that class of cases, establishes the doctrine that one who concurs with an executor in a breach of trust, or in a fraudulent misapplication of the assets, will be converted into a trustee, and be held responsible to the legatees, in aid of their remedy against the executor.
Let us analyze this question: An executor is a trustee for the legatees. The executrix in our case is one of the legatees. For reasons not disclosed to the Court, the executrix proposes to accept payment of the amount due according to her figures, minus $895.60, and thereupon to surrender the bonds, which is done.
The state of facts now before us does not authorize a declaration by the Court that the plaintiff, Mrs. Paxton, in this transaction committed a fraud upon her children, or that the defendants had complicity therein.
It may be that in a case properly constituted, and with the necessary averments to show fraud on the part of the executrix and complicity on the part of the obligors, the plaintiffs other than E. B. Paxton may be able to make out a case. All that we now say is, we concur with his Honor.
PER CURIAM. Affirmed.
(18)