Opinion
(August Term, 1851.)
1. An administrator may sell or pledge the effects, or discount a note belonging to the estate, and the party who deals with him will get a good title, provided he deal honestly; for the legal title is in the administrator, and the purposes of the estate may require the representative thus to dispose of parts of it.
2. But when a person gets from an administrator or other person acting in a fiduciary character, the trust fund, or a part of it, as payment of the trustee's own debt, that person cannot hold the fund from the cestui que trust, any more than the original trustee could; for it is a clear fraud, in violation of the obligations of the trust in one of the parties, and a concurrence in the fraud by the other, and both are equally liable.
3. The next of kin could recover the assets so disposed of, and the surety of the administrator, who has paid the claim of the next of kin, on account of the administration being insolvent, and having committed the devastavit, will be entitled to the same relief they could have had.
TRANSMITTED from the Court of Equity of UNION, Spring Term, 1851. Battle, J., presiding.
Avery and Wilson for the plaintiff.
Osborne and Hutchinson for the defendant.
Upon the pleadings, and by the written admissions of the parties, the case is as follows: Moses Starnes died intestate in Union County, and Alexander W. Richardson, one of the defendants, administered on his estate, and in May, 1843, sold it and took bonds for the amount of sales, payable to himself, as the administrator of the intestate Starnes, on 22 May, 1844. Among the bonds was one given by James McKorkle for $411.50, and, before the same fell due, Richardson endorsed it to the defendant Doster, who received the money at maturity. William Wilson and the defendant, Elias Preslaw, were the sureties of Richardson in his administration bond; and, he having wasted the estate of the intestate, and became insolvent, the next of kind instituted an action on the administration bond against the obligors, and (232) recovered therein for the devastavit, $741.36, besides the cost of suit; and the plaintiff has been obliged to pay the same, and, being unable to recover any part thereof from Richardson, by reason of his insolvency, she brought this suit in September, 1850. The bill charges, that Richardson was much embarrassed by debts, when he administered, and became more involved until his utter insolvency; and that among the debts he owed, was one to the defendant Doster, who became alarmed at the prospect of losing it, and pressed Richardson for payment, who was unable to make payment by his own means; and, in order to satisfy the defendant Doster, so far as he could, he agreed to let him have the bond of McKorkle, so belonging to the estate of the intestate, and payable to Richardson, as administrator; and Doster agreed to accept the same in payment and satisfaction of the debt from Richardson, and upon that agreement, Richardson endorsed the bond to Doster, and delivered it to him. The bill further states, that Starnes died, and the other parties all lived in the same neighborhood, and that Doster was well informed that Starnes was very little in debt at his death, and that Richardson had converted the assets to his own use, and was, in fact, insolvent at the time he passed McKorkle's bond to him. The bill prays, amongst other things, that Doster may be decreed to pay to the plaintiff the sum received by him upon McKorkle's bond, with interest thereon, in part satisfaction of the sum paid by the plaintiff on the judgment recovered by the next of kin of Starnes.
The defendants Richardson and Preslaw did not answer, and the bill was taken pro confesso against them. The other defendant, Doster, put in an answer, which denies that Richardson owed him any debt on his own account, or that he took McKorkle's bond from him in satisfaction of any such indebtedness. The answer states that the manner in which he came by the bond was as follows: (233) Richardson, in 1843, applied to this defendant for the loan of $200, saying that some of the next of kin of Starnes wanted some part of their distributive shares, and that the purpose of the loan was to pay them, as much as he could; and he offered to deposit with him, Doster, McKorkle's bond for $411.50, as security therefor; and that he agreed to the proposition, and then advanced Richardson the sum of $200, and received McKorkle's bond; and afterwards collected the sum due on it, and paid the same to Richardson, retaining to his own use the sum of $200 only, with lawful interest thereon for the time. The answer denies that the defendant knew, or believed, that Richardson had wasted the assets of his intestate, or was in failing circumstances; and it states, that Richardson was the sheriff of the county, and was believed by this defendant to be an honest, industrious and thriving man, and that he made the advance with the intent to enable him to administer the estate the better, and for the accommodation of the next of kin, who were pressing for their distributive shares, as he then supposed. The parties took proofs, and the cause has been sent here for hearing.
The answer for the defendant Doster makes a clear case for him, if sustained as true; for, there is no doubt that an administrator may sell or pledge the assets, or discount a note belonging to the estate, and that the party who deals with him will get a good title, provided he deals honestly; for the legal title is in the administrator, and the purposes of the estate may require the representative thus to dispose of parts of it. Cannon v. Jenkins, 16 N.C. 422; Tyrell v. Morris, 21 N.C. 559. The subject was fully discussed recently in Gray v. Armistead, 41 N.C. 74, and there needs no more to be (234) said on it now. But the Court is obliged to admit, that the answer is not supported by the evidence. On the contrary, notwithstanding the clear and explicit statement in the answer, the proofs, both direct and circumstantial, contradict it very clearly, and establish the truth to be, as charged in the bill, that Richardson was previously indebted to Doster on his own account, and was unable to pay him with effects of his own, and that Doster, in order to save his debts, took McKorkle's bond in satisfaction of it — seeing on the face of the bond; indeed, knowing, as admitted in the answer, that it was part of Starnes's assets. It is settled law, that when a person gets from an administrator, or other person, acting in a fiduciary capacity, the trust fund, or any part of it, as payment of the trustee's own debts, that person cannot hold the fund from the cestui que trust, any more than the original trustee could; for, it is a clear fraud, in violation of the obligations of the trust, in one of the parties, and a concurrence in the fraud by the other; and both are equally liable. Bunting v. Ricks, 22 N.C. 130; Exum v. Bowden, 39 N.C. 281. The next of kin of Starnes could, therefore, have recovered this money from the defendant, Doster; and the same cases show, that the plaintiff, who, as surety for the administrator, has paid them, is entitled to a decree against him for it at once, since the defendant Doster now admits the insolvency of Richardson, and his devastavit, and declines asking any enquiry on those points.
PER CURIAM. Decree for the plaintiff.
Cited: Smith v. Fortescue, 45 N.C. 129; Latham v. Moore, 59 N.C. 169; Paxton v. Wood, 77 N.C. 17; Dancy v. Duncan, 96 N.C. 117; Hendrick v. Gidney, 114 N.C. 546; Wooten v. R. R., 128 N.C. 125.
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