In Louisiana, a donation to take effect at the death of the
donor, so far as it is gratuitous, is a donation
mortis
causa, which can be made only by will and testament, or by an
instrument clothed with the forms required for validity as such and
clearly showing by its provisions that it is a disposition by
will.
In Louisiana a donation of land
inter vivos, reserving
the use to the donor until his death, is void if made without
consideration -- if made with a partial consideration, the value of
the object given exceeding by one-half or more that of the charges
or services --
quaere whether the gift will not be of a
mixed nature, one part sale and valid, and one part donation and
invalid.
A circuit court of the United States has jurisdiction in equity
of proceedings under a bill filed by a creditor of the estate of a
deceased person to set aside for fraud a sale of the real estate of
the deceased which was made and confirmed by order of a state court
having competent jurisdiction, when the inquiry is not into
irregularities of proceeding in the other court, but into actual
fraud in obtaining the judgment or decree of sale and
confirmation.
A creditor of the estate of a deceased person may maintain an
independent suit in equity to set aside for fraud a sale of real
estate of the deceased made under order of court, though a party to
the proceedings, if he was no party to the fraud, and was ignorant
of it until after confirmation or homologation of the sale, and no
question about it was before the court which confirmed the sale and
passed upon the executor's accounts.
In Louisiana, the acknowledgment of a succession debt by an
executor or administrator, and the ranking of it by the judge in
the manner provided by the Code of Practice, suspend the
prescription.
A complaint which sets forth as cause of action a subject which
is prescribed, without setting forth the matter which takes it out
of the prescription, may be amended so as to set that matter forth,
if the answer admits its truth.
Page 111 U. S. 641
A defective description of the representative capacity of a
defendant in the subpoena which summons him in is cured if he is
properly described in the bill and if he appears, even by the
defective title, and answers generally without objection.
In a creditor's bill, brought on behalf of the plaintiff and
such other creditors as may become parties, it is error in granting
relief to confine it to the creditor complaining. The usual and
correct practice is, by means of a reference to a master, to give
to all valid creditors an opportunity to come in and have the
benefit of the decree.
On the facts in this case, the sale of the testator's real
estate made by order of a parish court in Louisiana and confirmed
by that court is void for fraud as against
bona fide
creditors.
The facts are stated in the opinion of the Court.
MR. JUSTICE BRADLEY delivered the opinion of the Court.
This suit was commenced by a creditors' bill filed by William
Gay, a citizen of Kentucky, on behalf of himself and all other
creditors of Oliver J. Morgan, late of Louisiana, deceased, against
Oliver T. Morgan, his testamentary executor, John A. Buckner,
Ferdinand M. Goodrich, Edward Sparrow, and J. West Montgomery,
citizens of Louisiana. The bill alleges that Oliver J. Morgan, at
the time of his decease (which occurred in October, 1860), was
indebted to the complainant and to divers other persons; that he
owed the complainant $33,250, for which he had given him three
drafts of bills of exchange, one for $3,000, dated January 7, 1860,
payable twelve months after date; one for $10,250, dated February
2, 1860, payable January 13, 1861, and one for $10,000, dated
February 10, 1860, payable January 25, 1861, all of which were
unpaid at maturity and were duly protested, and that on the 23d day
of December, 1870, the complainant obtained judgment in the Circuit
Court of the United States for the District of Louisiana against
the succession of the deceased for the amount of the drafts and
interest thereon, which judgment it is alleged has never been
paid.
Page 111 U. S. 642
The main object of the bill is to set aside as fraudulent and
void certain sales of the testator's lands made by the testamentary
executor in January, 1869, to the defendants Buckner, Montgomery,
and Goodrich, and to have the said lands resold in due course of
administration for the purpose of paying the debts of the
complainant and the other creditors, and for an account of assets
and debts, an injunction, and a receiver.
It is alleged in the bill, among other things, that at the time
of his decease, Oliver J. Morgan was the owner of a large estate,
valued at nearly a million of dollars, consisting mostly of lands,
abundantly sufficient, if honestly applied, to pay all his debts;
but the bill charges in substance that the defendants have
fraudulently combined to defeat the claims of the creditors by
procuring the sale which is sought to be set aside. It is stated
that this sale was made under an order of the probate court of the
Parish of Carroll (where the lands are situated), on application of
Buckner, as guardian of his daughter, and of the executor, the
petition being signed by the other defendants as attorneys and
untruly representing that the lands were unproductive and that it
was necessary to sell them all to pay the debts of the estate. It
is further stated that a simultaneous order was made, on the
application of Oliver T. Morgan as executor of the will of Julia
Morgan (adverse to and irreconcilable with his duties and trust as
executor of Oliver J. Morgan), for the sale of three-fourths of the
same lands as belonging to the estate of Julia Morgan, and that the
sale was made under both orders. It is also stated that before the
sale, the confederates procured a false and fraudulent appraisement
of the lands to be made at $2.75 per acre, reducing the whole value
thereof to $43,205.25, instead of $947,153.80 at which they had
been correctly appraised in the inventory. It is further stated
that at the sale, Buckner became the purchaser of 9,171 acres of
the lands at $3 per acre; Montgomery of 5,040 acres, and Goodrich
of 1,500 acres at the same price, and it is charged that this price
was grossly inadequate, and that the sale was a sham sale, intended
as a means of securing the lands to the benefit of the family and
of cheating and defrauding
Page 111 U. S. 643
the creditors. Various allegations are contained in the bill
tending to establish the charge of fraud.
The defendants filed separate answers denying generally the
charges of fraud and setting up various matters in explanation of
the sale complained of and in opposition to the equity of the bill.
They concurred in admitting the plaintiff's demand, and the
recovery by him of a judgment thereon in the circuit court of the
United States, but say that the judgment was allowed to be taken by
an arrangement between the attorneys of plaintiff and defendant
that the plaintiff Gay should acquiesce in the provision made for
the creditors at the sale complained of, which provision was the
purchase at said sale, by the defendant Montgomery, of 5,040 acres
of land for the common benefit of the creditors, in making which
arrangement they allege that E. D. Farrar acted as attorney for Gay
and Edward Sparrow for the estate. They also admitted the various
appraisements made in 1860 and 1868, but deny that the latter was a
false appraisement or that it was procured by fraud, and referred
to various circumstances in explanation of the great depreciation
of the land at the latter period, such as the depressed and
unsettled state of the country, the uncertainty of labor, and the
high rate of taxation. All the answers rely upon the regularity and
validity of the mortuary proceedings in which the sale was made,
and, for the purpose of showing that as much was done for the
creditors as could fairly have been demanded, they placed great
stress upon the alleged fact that three-fourths of all the lands
sold belonged to the succession of Julia Morgan, the deceased
daughter of Oliver J. Morgan and wife of Oliver T. Morgan, and not
to the succession of Oliver J. Morgan, and also upon another
alleged fact that John A. Buckner, as tutor of his daughter, had a
mortgage lien or privilege on the whole property for more than
$100,000, which (as they contended) was more than the whole
property could possibly have produced at the time of the sale.
If these statements were true, they would go far to remove
Page 111 U. S. 644
the imputation of fraud in the proceedings complained of, for
there would have been no motive for fraud if the just rights of the
heirs precluded the possibility of a surplus for the general
creditors. The matter will be better understood, however, by a
short history of Oliver J. Morgan's estate.
His wife, Narcissa Deeson, had died in 1844, leaving two
children by him, namely Julia and Ann. Julia married first one
Keene, by whom she had several children, and secondly Oliver T.
Morgan (a nephew of Oliver J.), by whom she had a daughter. Ann
married a Mr. Kellam, by whom she had a son, Oliver H. Kellam, and
the latter had a son, Oliver H. (whom, for convenience, we will
call Oliver H. Kellam, Jr.), and died, leaving a widow, Melinda M.,
and his infant son, Oliver H., Jr. Thus, Oliver H. Kellam, Jr.,
became sole heir of his grandmother Ann, and was himself
represented by his mother Melinda as his natural tutrix. Melinda
afterwards married John A. Buckner, and by him had a daughter.
Oliver J. Morgan (sometimes called General Morgan) had a large
landed estate, situated on the Mississippi River, in Carroll
Parish, Louisiana, consisting of five plantations contiguous to
each other, Albion and Wilton in the center, Melbourne to the
southeast down the river, and Westland and Morgana to the west and
northwest, amounting altogether to over 15,000 acres of land, much
of it rich cotton land. He also had a large number of slaves, and
considerable movable estate. The greater part of this property was
community property, but some of it had been acquired after the
wife's death. Only one-half of the community property belonged to
Oliver J. Morgan; the other half belonging to his two daughters as
heirs of their mother. Ann having died, her share was inherited by
her grandson, Oliver H. Kellam, Jr. In 1857, Oliver J. Morgan filed
a petition in the District Court of Carroll Parish for a partition
of the estate. An inventory was taken, answers were filed by Julia
Morgan (who was then living) and by Melinda M. Kellam as tutrix of
her minor son, and evidence was taken as to the amount of
improvements. The slaves were inventoried at $125,715.60, and were
divided between the parties. The lands were inventoried, but
the
Page 111 U. S. 645
appraisers reported that they could not be conveniently divided,
and recommended that they should be sold. An order of sale was
accordingly made, and the sale took place January 18, 1858, and
Oliver J. Morgan himself purchased all the lands for $362,201.80.
The value of his improvements was appraised at $92,219, leaving a
balance of $269,982.80, the one-half of which, $134,991.40,
belonged to the heirs. One-half of this sum, or $67,495.70, was due
to Julia Morgan, and the other half to the minor, Oliver H. Kellam,
Jr. Although the sale was for cash, no money was paid. Julia Morgan
and her husband, Oliver T. Morgan, executed a request that the
money coming to her should be left in her father's hands, and Mrs.
Kellam acquiesced in the same course with regard to the share of
her infant son. Thus, Oliver J. Morgan became absolute owner of the
whole landed property, but was indebted to his daughter Julia, and
to his great grandson, Oliver H. Kellam, Jr., each in the sum of
$67,495.70. A certificate of the sale, signed by the sheriff and O.
J. Morgan, was filed in the court as part of the proceedings in the
cause, stating the fact that the money was not paid, but remained
in O. T. Morgan's hands.
By virtue of this sale, a vendor's privilege arose in favor of
the heirs; but it is declared by the Civil Code of Louisiana, art.
3238, that
"The vendor of an immovable or slave only preserves his
privilege on the object when he has caused to be duly recorded at
the office for recording mortgages, his act of sale."
It appears from the recorder's certificate that this was never
done in this case.
As Oliver J. Morgan had but one descendant by his daughter Ann
and several by his daughter Julia, he desired as far as possible to
equalize their ultimate portions in the succession of his estate;
but having two heirs, his daughter Julia, and great-grandson,
Oliver H. Kellam, Jr., he had the power of disposing of only
one-half of his estate, and the two heirs would be forced heirs for
one-fourth each. Civil Code, art. 1480. He determined, therefore,
that his great-grandson, Oliver H. Kellam, Jr., should have only
the one-fourth which the law secured to him as forced heir, and
that his daughter Julia should have the other three-fourths of his
estate. To
Page 111 U. S. 646
ensure this object, on the 9th of March, 1858, he executed an
act of sale and donation to his daughter Julia in which it was
stated that, for the purpose of paying her the sum of $67,495.70
which he owed her, and to give her three-fourths of his landed
estate, and to Oliver H. Kellam one-fourth, according to the
estimates put upon the portions conveyed to each, he gave to her by
way of donation certain described lands, composing the Wilton and
Albion Plantations, 3,047.86 acres, estimated at $50 per acre, and
the Morgana and Westland Plantations, estimated at from $45 to $10
per acre, the whole amounting to 11,477.79 acres, estimated at
$304,254.22, and leaving the Melbourne Plantation for his
great-grandson, though there is no evidence that it was ever
conveyed to him. The act of donation to Julia reserved the donor's
usufruct for life and declared that he was to retain possession of
the property, with the revenues arising therefrom, till his death.
And it was further declared that the act of donation, as [well as]
delivery under it, was to take place and effect on the day of the
donor's death. This act was signed by Oliver J. Morgan, Julia
Morgan, and Julia's husband, Oliver T. Morgan, and was duly
recorded in the recorder's office.
Such a donation, namely to take effect at the death of the donor
-- so far at least as it is gratuitous -- is a donation
mortis
causa. Article 1455 of the Civil Code of Louisiana defines a
donation
mortis causa to be an act to take effect when the
donor shall no longer exist. And article 1563 declares that "no
disposition
mortis causa shall be made otherwise than by
will and testament. All other form is abrogated." It is added that
the name is of no importance,
"provided that the act be clothed with the forms required for
the validity of a testament, and the clauses it contains, or the
manner in which it is made, clearly establish that it is a
disposition by will."
The donation in question had not the form of a will, and was
never treated or proved as such, and by the last will of Oliver J.
Morgan, executed but a few months before his death, he revoked all
former wills made by him.
If the document in question could be regarded as a donation
inter vivos, it would still be void for another reason. By
it, the
Page 111 U. S. 647
donor reserves the usufruct of the land to himself during his
life, but by article 1520 of the Civil Code, treating of donations
inter vivos, it is declared that "the donor may dispose
for the advantage of another of the enjoyment or usufruct of the
immovable given, but cannot reserve it for himself." It has been
decided by the Supreme Court of Louisiana in a number of cases that
a donation of land or of a slave reserving the use to the donor for
life is void.
Lagrange v. Barre, 11 Robinson 309;
Dawson v. Holbert, 4 La.Ann. 37;
Haggerty v.
Corri, 5 La.Ann. 433;
Davis v. Carroll, 11 Ann. 705;
Carmouche v. Carmouche, 12 La.Ann. 721.
It may be urged that there was a consideration for the act and
that this prevented it from being void. But that consideration, as
shown by the account contained in the act itself, was only
$67,495.70 due to Julia (which the act was to satisfy), and
$9,530.72 to be paid by her to Oliver H. Kellam, amounting in all
to $77,026.42, while (by the same account) the value of the land
conveyed by the act was $304,254.22. So that the consideration or
charge, in pecuniary estimation, was only one-fourth of the value
of the whole property conveyed. The exact account of the value of
the lands, and of the rights of the heirs in reference thereto as
made up by General Morgan himself and embodied in the act of sale
and donation to Julia, is as follows:
Whole amount of community lands . . . . . . . $362,201.80
Lands acquired since the dissolution
of the community. . . . . . . . . . . . . . 75,760.00
-----------
Whole amount of land. . . . . . . . . . . . . $437,961.80
Deduct amount due to heirs arising
from sale of community lands on
the eighteenth of January,
1858, to each $67,495.70. . . . . . . . . . 134,991.40
-----------
Balance divided by four . . . . . . . . . . $302,970.40
===========
Portion coming to Oliver H. Kellam. . . . . . $ 75,742.60
Amount due him as above . . . . . . . . . . . 67,495.60
-----------
Entire interest of Oliver H. Kellam, in
estimated value of lands. . . . . . . . . . $143,238.20
Page 111 U. S. 648
Three-fourths interest for Julia Morgan. . . . $227,227 80
Amount due as above. . . . . . . . . . . . . . 67,495.70
-----------
Entire interest of Julia Morgan. . . . . . . . $294,723.50
===========
Value of land conveyed in this deed to
Julia Morgan . . . . . . . . . . . . . . . . $304,254.22
Deduct entire interest . . . . . . . . . . . . 294,723.50
-----------
Excess to be accounted as before stipulated 9,530.72
This account, better than anything else, explains to the eye the
motives and intent of Oliver J. Morgan in executing the act of sale
and donation under consideration.
Now the Civil Code, art. 1510, divides donations
inter
vivos into three kinds -- the purely gratuitous; the onerous,
which is burdened with charges, and the remunerative, of which the
object is to recompense services rendered. By article 1513 it is
declared that
"The rules peculiar to donations
inter vivos do not
apply to onerous and remunerative donations except when the value
of the object given exceeds by one-half that of the charges, or of
the services."
In the present case, the value of the object given exceeded not
merely by one-half, but by nearly three times, that of the charge
or consideration. The act is subject, therefore, to the incidents
and conditions of a donation, and it is void by the express letter
of the Code unless it can be sustained in part by virtue of its
being a sale in part and a donation for the residue.
Pothier, writing under the old law, says that where the charges
of an onerous donation are of less value than the thing given --
for example, 2,000 livres, when the thing given has the value of
3,000 livres -- the act will be of a mixed nature -- a sale for
two-thirds and a donation for one-third. Contrat de Vente, Nos.
613, 614. Zachariae, professing to give the modern French law under
the Code, states it substantially as the former law is stated by
Pothier, and this would probably be the construction of the Civil
Code of Louisiana. By this rule, the act in question would have
been a sale for one-quarter of the land contained in it, and a
donation for three-quarters, or, to speak with accuracy, the
proportion would be as $77,026.42
Page 111 U. S. 649
to $227,227.80 -- the whole amount conveyed by the act being
$304,254.22. If the old rule applies under the specific provisions
of the Code, the act was a good conveyance for the above proportion
and void as to the residue. As this matter (of validity in part)
was not discussed before us, it may come up for consideration by
the circuit court, if called upon to instruct the master as to the
ulterior disposition of the proceeds of any sales that may be made
of the lands in controversy. As the representatives of Julia Morgan
allowed the lands to be sold in 1869, they cannot claim any portion
of them now specifically as lands; but they may be entitled in
equity to such proportion of the proceeds, as the act of sale and
donation was a sale, and not a donation. The whole value of the
lands was shown by the account to be $437,961.80. Of this amount,
the sum of $77,026.42, the only real consideration of the act, is
about 17.6 percent. Should all the lands be sold, the heirs of
Julia Morgan may be entitled to this proportion of the proceeds
free and clear of all debts. We do not now decide this question.
For the present purpose, it is enough to say that it is very clear
that the act of donation did not convey to Julia Morgan
three-fourths of the land as claimed, and did not in fact convey to
her even one-fifth of the land, if it conveyed any portion
thereof.
But prior to these transactions, and probably not long after his
wife's death, Oliver J. Morgan had placed his daughter Julia on the
Westland, and (perhaps) on the Morgana, Plantation, and his
grandson Oliver H. Kellam on Melbourne; the latter being succeeded
by his widow, Melinda M. Kellam, and her minor son. The two
families continued to occupy these portions of the property,
respectively, until the sale made in 1869, and Julia Morgan and her
representatives also succeeded to the possession of Wilton and
Albion plantations after her father's death.
Whether Oliver J. Morgan had doubts of the validity of the
donation made to his daughter or not, he subsequently made a will
by which he substantially confirmed to her the benefit which he
intended by it. This will is dated May 1, 1860, and the testator,
after directing the payment of
Page 111 U. S. 650
all his debts, and giving certain legacies, gave and directed as
follows:
"Fourth. I give and bequeath unto my beloved daughter, Julia
Morgan, one-half of all the residue of my estate, it being my
intention thereby to give to her all that portion of my estate that
I have a right to dispose of over and above the portions going to
my forced heirs, and in the event of my said daughter Julia dying
before I do, then it is my will, and I do hereby bequeath unto her
children, Narcissa Keene, Alexander C. Keene, William B. Keene,
Morgan Keene, and Julia H. Morgan, or such of them as may be living
at my death, the said one-half of my entire estate as above, it
being my will that my said daughter shall have, inclusive of her
forced heirship, three-fourths of my entire estate; but in the
event that should she die before I do, then it is my will and the
express intention of this testament that those of her children who
may be living at my death shall have the said three-fourths of my
estate."
"Fifth. I do hereby appoint and ordain Oliver T. Morgan, my
nephew and son-in-law, executor of this my last will and testament,
without requiring him to give security as such."
Oliver J. Morgan died October 4, 1860, and his will was proved
in the same month, and an inventory of his estate was made November
7, in which his lands were appraised at $947,153.80, his slaves at
$196,961, and his movable property at $38,200; total,
$1,182,314.80. Julia Morgan died prior to 1868, leaving a will, of
which her husband, Oliver T. Morgan, was executor. Melinda M.
Kellam married John A. Buckner, by whom she had a daughter, Mollie
Buckner. Oliver H. Kellam, Jr., died without issue, leaving his
mother as his sole heir, and she soon after died, leaving her
infant child, Mollie Buckner, her sole heir, who thus came to be
the sole heir and representative of Ann Kellam.
Notwithstanding the large estate left by Oliver J. Morgan, he
died considerably in debt, and owed, among others, to William Gay,
the complainant, the amount before stated. The
Page 111 U. S. 651
coming on of the civil war produced a great change in the value
of the property; the slaves were a total loss, and no doubt much
other property was injured or destroyed, but through the management
of agents, and in other ways, considerable income was derived from
the lands prior to the sale which took place in 1869. The crop of
1860 was over 2,500 bales of cotton, which must have produced at
least $90,000 soon after General Morgan's death. The sum of
$21,870.68 was recovered from the government for cotton collected
under the superintendence of army officers in 1862.
The defendant Buckner, being examined as a witness, states
that
"Montague had charge of and cultivated Melbourne and Wilton in
the year 1863, and H. B. Tebbetts had charge of some of the places
during the years 1864 and 1865. In 1866, H. B. Tebbetts rented
Wilton and Melbourne. Don't think he took Albion. He was to pay ten
dollars per acre rent for all the land that he cultivated. Tebbetts
promised Matt. F. Johnson and witness to pay ten dollars per acre
for such land as he should cultivate on Melbourne and Wilton in
1866. The most of the land was overflowed on Melbourne in 1866, and
witness don't know how much land was cultivated. Wilton was not
overflowed in 1866, to his knowledge. Witness states that Tebbetts
paid him $3,000 for the rent of Melbourne in 1866. Don't know how
much he paid Matt. F. Johnson for Wilton, but that the rent was
coming to Matt. F. Johnson from Tebbetts, according to the
contract. Matt. F. Johnson and Samuel L. Clambliss cultivated
Wilton in 1867 together -- that is to say, a portion of the place.
Charles Atkins cultivated a small portion of Melbourne in 1868, as
witness' agent and manager. Very little was made on the place in
1868. Witness don't remember who cultivated Wilton and Albion in
1868."
Henry Goodrich, a planter, nephew of Oliver J. Morgan, states
that he had charge of Wilton and Albion in behalf of the heirs from
December, 1868, till April, 1873, and that in 1869 these
plantations produced 800 or 900 bales of cotton, and about 700
bales in each of the years 1870, 1871, and 1872, and that during
these four years the price of cotton averaged
Page 111 U. S. 652
about $60 per bale net. Dr. Devine, another witness, states that
he, with two others, hired about 100 acres of Wilton in 1869, and
they received about 30 bales apiece, or nearly a bale to the acre,
and sold it for 27 to 30 cents per pound, or about $120 per bale.
So that the annual product of Wilton and Albion alone in these
years was not less than from $40,000 to $50,000, and that of
Melbourne, half that amount, and while the result in the previous
years, from the close of the war to the beginning of 1869, was
undoubtedly less, it must have amounted to a considerable sum.
Adding together the amount of the movable estate, the proceeds of
the crop of 1860, the sum received from government, and the income
realized from the landed estate down to 1869, the aggregate was
probably not less than $200,000, all of which was first applicable
to the payment of the debts due from the estate. But as the outside
debts were not paid, the heirs or executors must have received it.
The executor's final account is in evidence, and does not show that
this money ever came into his hands, and the proof is very strong
that he allowed the heirs to appropriate it. The amount which they
thus appropriated, as well as the rental value of the plantations
occupied by them before General Morgan's death, was properly
chargeable against any claims that they had against the estate. How
much they did receive nowhere appears. No credit is given
therefor.
As to Julia Morgan's interest, it is not claimed that the estate
was in debt to her; but it is claimed, and was claimed at the time
of the sale in 1869, that her succession was entitled to
three-fourths of the property by virtue of the act of donation made
to her in 1858, and that this portion of the property was not
subject to the debts of General Morgan except the debt due to
Buckner as tutor of his minor child. It was conceded to be subject
to this debt, perhaps for the purpose of giving greater force to
the sale, as there was evidently an understanding between the
parties, as we shall hereafter see. But we think we have
conclusively shown that the entire interest of Julia Morgan in the
property of her father was subject at his death to all his debts,
inasmuch as it was derived to her partly by last will and partly as
forced heir. If any portion of her
Page 111 U. S. 653
interest was not thus subject, it could only have been a small
fraction, at most -- less than one-fifth of the whole property.
As to the Kellam interest, John A. Buckner, as tutor of his
infant daughter (who represented Oliver H. Kellam, Jr., through the
mother of both), claimed the entire sum of $67,495.50, and interest
thereon from 1858, amounting at the time of the sale (January,
1869) to more than $100,000. At five percent interest, it amounted
to $104,618.33.
As to this claim, it may be remarked that as Oliver J. Morgan
intended to pay to his daughter Julia what was due to her from her
mother's estate by giving to her the lands which she succeeded to
and received, so he evidently intended to pay to his
great-grandson, Oliver H. Kellam, what was due to him on the same
account, although, so far as the record discloses, he executed no
act of donation for that purpose. But the careful statement in the
act of donation to Julia of the account between Oliver J. Morgan
and the two heirs of his wife in relation to the landed estate
shows that the lands conveyed to Julia exceeded by $9,530.72 the
three-fourths intended for her, including the $67,495.70 due to her
from her mother's estate, and the donor directed that she should
pay this sum of $9,530.72 to Oliver H. Kellam. This payment,
according to the account, together with the remaining lands not
given to Julia, but appropriated to Kellam, completely paid and
satisfied the debt of $67,495.72 due to him, and the one-fourth to
which he was entitled as forced heir. So that it is quite clear
that Oliver J. Morgan regarded the debt as paid, with the exception
of the small sum of $9,530.72 to be paid by Julia Morgan.
In other words, by means of the sale of the lands in the
partition suit and the subsequent distribution of his estate,
Oliver J. Morgan intended that his great-grandson should receive
just what, if no sale had been made, the law would have given him,
and no more, and that Julia Morgan should receive the remainder, so
that in reality and in equity there was no such thing as a debt due
from him to his great-grandson any more than to his daughter Julia.
Whatever debt there might have been was paid by the property which
he
Page 111 U. S. 654
received, except the said sum of $9,530.72, which was made a
charge upon Julia's share.
This, as it seems to us, was clearly the intention and
understanding of Oliver J. Morgan. Why should he have been indebted
to his heirs for the land, or any part of it, when they received
every foot of it at his death, and had enjoyed a great deal of it
in his lifetime, he being entitled by law to the use of it during
his life? The idea of an existing debt seems to have been an
afterthought. This supposed debt was claimed and represented to be
a mortgage on the estate, and as having priority over all other
debts. But we have seen that this claim was untenable, since
article 3238 of the Civil Code declares that the vendor of an
immovable or slave only preserves his privilege on the object by
recording the act of sale at the office for recording mortgages,
which was never done in this case. John A. Buckner, in his petition
for the sale of the property in December, 1868, makes the following
allegation on the subject, namely:
"That your petitioner, Buckner, tutor, is creditor by judgment
of the district court in said parish [Carroll], as appears by
reference in the suit in said court styled _____ v. _____, no. ___,
on the docket as _____."
The only judgment to which reference could have been made (so
far as appears in the record) was the judgment in the partition
suit instituted by Oliver J. Morgan in 1857. The judgment for
partition was made November 7, 1857, and the judgment for selling
the lands was made December 2, 1857. The certificate of sale,
showing the amount bid for the lands and the sums due to the heirs
of Narcissa Deeson, was filed in the court on the 19th day of
January, 1858. If this certificate of sale could have been called a
judgment, it might have been a judicial mortgage; but it would have
had no effect as such until recorded in the office of mortgages for
the parish. Civil Code, Articles 3290, 3297, 3314, 3318. The only
exception to this rule is made in favor of the legal mortgages of
minors and interdicted and absent persons on the property of their
tutors, curators, etc., and of the wife on the property of her
husband for her dotal rights. Civil Code, Arts. 3298, 3333. In the
present case, neither the judgment in the partition
Page 111 U. S. 655
suit nor the certificate of sale was ever recorded in the
mortgage office, and Oliver J. Morgan was not the tutor or curator
of Oliver H. Kellam, Jr., who was under the tutorship of his
mother, Melinda M. Kellam. The claim therefore that the debt due
from Oliver J. Morgan and his succession to Oliver H. Kellam, Jr.
(if any such debt existed) was a first lien upon the lands of the
succession, secured by mortgage, and entitled to be first paid, was
entirely unfounded. Yet this pretended debt, and its pretended
priority over all other claims against the estate, and the mortgage
by which it was declared to be secured, were used throughout the
whole of the proceedings instituted in 1868 for the sale of the
land, as potent factors in getting up the idea and impression that
it was useless for any other creditors to interfere or make
opposition, inasmuch as this privileged debt was sufficient to
absorb the entire property, and that if anything at all should be
conceded to the general creditors, it would be a mere matter of
grace and generosity on the part of Mr. Buckner.
We next come to the proceedings for selling the property
commenced in December, 1868, and consummated in March, 1869.
First comes the petition, and as it is important we state it in
full. It was presented to the parish judge December 9, 1868, and is
as follows:
"
To the Honorable the Judge of the Parish Court in and for
the"
"
Parish of Carroll, Louisiana"
"The petition of John A. Buckner, who applies as natural tutor
of his minor child, Mollie Buckner, issue of his marriage with
Matilda M. Mason widow of Oliver H. Kellam, and of Washington
Jackson, and Dudley and Nelson and Ann B. Wilkins, all of which
petitioners appear as creditors of the succession of Oliver J.
Morgan, deceased, represent:"
"That you petitioners are creditors of said estate; that your
petitioner Buckner, tutor, is creditor by judgment of the district
court in said parish, as appears by reference in the suit in said
court styled _____ vs. _____, No. ___, on the docket as _____; that
your petitioners Washington Jackson
Page 111 U. S. 656
and Ann B. Wilkins have claims which have been acknowledged and
ranked according to law."
"Petitioners show that said estate of O. J. Morgan is under
administration in the hands of Oliver T. Morgan, executor; that
said estate is possessed of landed property situated in this
parish, but which is not yielding any revenues, and that the only
means for paying the debts of said estate is by a sale of the
property thereof. Wherefore, petitioners pray that said O. T.
Morgan, executor, may be ordered to sell the property of said
estate for the purpose of paying the debts thereof; that an order
may be granted for the sale of the property of said succession, as
mentioned in the inventory, and for general relief, &c."
"And the said Oliver T. Morgan, executor of the last will and
testament of Oliver J. Morgan, dec'd, appears and intervenes in
this proceeding, and shows to your honorable court that said
succession is indebted to the creditors aforesaid and various other
creditors, and that as said estate is without any means or funds on
hand in order to pay said debts, a sale of said property is
necessary."
"Wherefore petitioners and intervenor pray that an order may be
granted for the sale of the lands of said estate according to law,
and that inventory and appraisement of said lands may be made; that
a commission may issue for that purpose to the recorder of the
parish, and that a writ of sale may issue to said executor
authorizing him to make said sale, and for general relief in the
premises."
"SPARROW & MONTGOMERY"
"
Att'ys for Creditors"
"FERD. M. GOODRICH"
"
Att'y for Executor"
The following order was thereupon made by the judge:
"The foregoing petition being considered, it is ordered,
adjudged, and decreed that the prayer of the petition may be
granted; that a commission to take an inventory be directed to the
recorder of the parish; that the lands of said estate be sold in
subdivisions in such manner as the said executor may direct and in
other respects according to law, and that such subdivisions be sold
in block, and after making such sale, the said executor
Page 111 U. S. 657
shall file a tableau of distribution, and that a commission
issue to said executor, O. T. Morgan, to make such sale."
"Done and signed in chambers this the 9th day of December, A.D.
1868."
"C.A. DE FRANCE,
Parish Judge"
Thereupon a commission was issued to the recorder of the parish,
who appointed Michael Gingery and W. D. Davis appraisers, and the
appraisers made an inventory as follows:
1. Certain specified lots, comprising the Melbourne
plantation, 2,171 acres at $2.75 . . . . . . . . . $
5,970.20
2. Certain lots, composing the Wilton and Albion
plantations, 7,000 acres at $2.75. . . . . . . . . 19,250.00
3. Certain lots, composing Westland Plantation, 5,040
acres at $2.75 . . . . . . . . . . . . . . . . . . 13,860.00
4. Certain lots, composing the Morgana Plantation,
1,500 acres at $2.75 . . . . . . . . . . . . . . . 4,125.00
----------
Total, 15,711 acres at $2.75 . . . . . . . . . . . $43,205
25
This inventory was dated December, 1868.
Then followed a writ of sale, directed to the executor, Oliver
T. Morgan and dated December 18, 1868, directing him to sell the
said lots; terms, cash on the spot.
On the same day (December 18) the executor, according to his
return, advertised the sale for the 19th of January, 1869, but
before the day of sale arrived, the idea occurred to the parties
that Julia Morgan owned three-fourths of the property, and hence,
on the 13th day of January, 1869, Oliver T. Morgan, as executor of
the estate of Mrs. Julia Morgan, presented to the judge another
petition stating the fact of having presented the previous
petition, and of the order of sale and advertisement, and then
adding as follows:
"Your petitioner shows that said Julia Morgan claimed to be
owner of three-fourths undivided interest in said land, although
they are claimed
in toto by the estate of said Oliver J.
Morgan, and are offered for sale in order to pay his debts; that
the debts due by him to the heirs of Oliver H. Kellam, who are also
heirs of Mrs. Narcissa Morgan, deceased, late wife of said Oliver
J.
Page 111 U. S. 658
Morgan, amounts to $137,000, being for one-fourth of the
interest of said Mrs. Narcissa in the community existing between
her and her said husband, which devolved to said heirs, and which
community had been adjudicated to said Oliver J. Morgan at said
sum; that said sum of money, so due by said Oliver J. Morgan, is
secured by legal mortgage on all of said land; that in order that
said property may be sold to the benefit of said estate, it is
necessary that the interest of said Mrs. Julia Morgan may be sold;
that her said interest is under the encumbrance of said mortgage,
existing against said Oliver J. Morgan, for the amount so due to
the heirs of Oliver H. Kellam, that for the purpose of paying the
said sum the said heirs of Kellam, the interest of said Julia
Morgan, deceased, should also be sold."
"Wherefore petitioners pray that an order for the sale of the
interest of said Julia Morgan, deceased, in said land, may be made
for the purpose of paying said debt, and that the proceeds of such
sale may be paid by preference to the settlement thereof."
"That for this purpose a writ of sale may issue to your
petitioner, in his capacity of executor, to make such sale; that
such sale take place on the premises at Wilton Plantation, in
block, and for general relief, etc."
"FERD. M. GOODRICH"
"
Att'y for Executor"
And upon this petition the following order was granted:
"The foregoing petition being considered, it is ordered that the
prayer of the petition be granted; that the undivided interest of
said Mrs. Julia Morgan, deceased, in said land, be sold at public
sale in order to pay said debt; that said sale be made at the
'Wilton Plantation,' for cash, in block, and that for this purpose
a writ do issue to said executor, and that he be authorized to make
said sale."
"Carroll Parish, La., January 13, 1869."
"C. A. DE FRANCE,
Parish Judge"
On the same day, a writ of sale was issued in pursuance of this
order.
The sale took place (as advertised) on the 19th day of January,
1869, and the lands were bid off as follows: The Melbourne
Plantation (2,171 acres), and the Wilton and Albion
Page 111 U. S. 659
Plantations (7,000 acres), to John A. Buckner, for three dollars
per acre; the Westland Plantation (5,040 acres), to J. W.
Montgomery, for three dollars per acre, and the Morgan Plantation
(1,500 acres), to Ferdinand M. Goodrich, for three dollars per
acre; total, $47,133. Deeds were given to the purchasers on the 23d
of January, 1869. On the 26th, separate petitions were filed by
Buckner and Goodrich for monitions to be published and the sales to
them homologated. Publication was accordingly made, and decrees of
homologation were entered on the second of March, 1869.
This is an outline of what took place in the formal proceedings,
and of what appears on paper. Several things outside and behind the
mere forms are to be noticed, all tending to corroborate the
conclusion that this sale was projected and carried out not for the
purpose of paying the debts due to the creditors of the estate, but
for the purpose of defeating their payment and of preserving the
estate for the benefit of the heirs. The general scheme seems to
have been first, to circulate and give currency to the fact that a
large indebtedness of the succession existed in favor of one of the
heirs, sufficient in amount to absorb the entire estate, and
secured by a mortgage giving it priority over all other claims;
secondly, to depreciate the value of the property so that this
supposed indebtedness would cover it all; thirdly, to put forward
the claim of Julia Morgan to three-fourths of the property, which,
even if not sustained, would show a complication of the title that
would affect the salable value of the land; and fourthly, to
procure a judicial sale by which the title might be cleared of all
encumbrances, and the land might be distributed to the heirs
according to their prior interests therein, free from all liability
to the debts of the estate. If this scheme was not distinctly
formed in the minds of the parties, it seems nevertheless to have
been substantially carried into effect, with the added circumstance
of providing a liberal compensation to the attorneys and counsel by
whose aid it was accomplished.
The following is the account given by J. W. Montgomery of the
manner in which the proceedings were initiated and carried out:
Page 111 U. S. 660
"He thinks it was in the fall of 1867 John A. Buckner called on
him in the Town of St. Joseph, where he (witness) was attending
court, with a request that he should take charge of the collection
of a claim against the estate of Oliver J. Morgan, which, with
interest, amounted to about $100,000, and which he was attempting
to collect as a representative of one of the minor heirs of the
estate of Mrs. Oliver J. Morgan, and which claim he represented to
be, and which witness knew to be, in judgment against Oliver J.
Morgan during his lifetime, and secured by mortgage on all of his
property, and was really the only mortgage on it. When witness
returned home, he mentioned the proposition of Buckner to his law
partner, General Edward Sparrow, who refused to go into it unless
some arrangement was made by which something could be secured to
some other creditors whom they represented. Witness himself was
willing to take charge of Buckner's claim and give up the others,
because the heirs whom Buckner represented had always been their
clients, and had a preferred claim by which witness thought he, the
heir, could sweep the whole property, but General Sparrow adhered
to the proposition that something must be done for the other
ordinary creditors whom their firm represented, and insisted on a
compromise by which something should be secured to them. Afterwards
it was agreed between counsel, Sparrow & Montgomery and
Buckner, that the creditors should be protected to a certain
extent. In the meantime, F. M. Goodrich, attorney at law,
representing certain creditors, also insisted that his clients
should participate in such an arrangement. Subsequently Oliver T.
Morgan, the executor of Oliver J. Morgan, insisted that there
should be no preference among the ordinary creditors. If one was to
come in, all were to come in; that if Buckner was willing to make a
concession in favor of the creditors represented by Sparrow &
Montgomery, he did not see any reason why all the other creditors
should not come in too. It was therefore agreed that other
creditors, whom their law firm did not represent, should
participate in any compromise which might be made in that respect.
It was then agreed between Sparrow & Montgomery and Buckner
that all the creditors of Judge Morgan might be permitted to bid
upon the 5,040 acres before mentioned, without interference from
his mortgage claim; that he would not press his mortgage claim
against the land that they should bid on, and that they might
Page 111 U. S. 661
bid on it free from interference on his part, though there was
no contract or understanding that the creditors should absolutely
buy it, but only had a right to bid on it so far as their attorneys
might deem it to their interest."
"Witness had no further authority than this for buying in for
the creditors. In the exercise of a fair discretion, witness though
he was doing the best for those whom he represented, knowing that
Buckner's claim was sufficient to sweep the whole property, and
that whatever he might get for his clients under such an
arrangement was just so much clear gain, and so F. M. Goodrich,
attorney for other creditors, and Oliver T. Morgan, executor,
thought. Accordingly, after Buckner had made his concession in this
form, recognizing their right to bid on some of the property
without interference from him or the claim he represented, they
then, as his attorneys and as attorneys for some of the other
creditors whom they represented, presented a petition to the court
asking for a sale of the property to pay debts against the estate
of Oliver J. Morgan."
The witness added that at the sale, by request of some of the
representatives of the creditors and by understanding between
himself and his law partner, he, Montgomery, bid upon the 5,040
acres [Westland] for the creditors, and Buckner permitted him to
buy in said property free from interference by his preferred claim,
which "was the result of a pressure brought to bear upon Buckner,"
and he holds said 5,040 acres for the benefit of such creditors as
choose to come into the arrangement.
This statement is certainly a very remarkable one in view of all
the facts of the case as they have been demonstrated by the
evidence. The gravity with which the "compromise" was made between
Buckner and the other creditors, after "the pressure brought to
bear upon Buckner," is certainly interesting when we recollect what
was clearly proved in the cause, that the Westland Plantation,
consisting of 5,040 acres, which was thus allowed to be bid off for
the benefit of the other creditors, was at the time overflowed with
water, and was estimated by several credible witnesses as worth not
over a dollar and a quarter per acre, while the Wilton and
Albion
Page 111 U. S. 662
plantations bought in by Buckner were worth probably $25 per
acre, as will be shown more fully hereafter.
The first thing that was done after the presentation of the
petition for a sale was to appoint appraisers and have the property
appraised; since no bid could be accepted which did not equal the
appraised value of the property. Of course, it was essential to the
accomplishment of the supposed object of the parties that this
appraised value should be as small as possible. It certainly was
small enough -- $2.75 per acre for each of the five plantations.
They were all razeed down to one uniform value per acre, when the
proof is overwhelming that they were very unequal in value. But the
appraisement was a mere sham. The appraisers knew nothing about the
plantations; they never saw them. They seem to have been picked up
in the street and made their appraisement at guess, if not at the
dictation of some of the parties interested. Their names were Davis
and Gingery.
Ingram, one of the witnesses, who had been General Morgan's
overseer for several years, and now a planter himself, says he was
well acquainted with Davis, who lived in West Carroll [the Morgan
estate being in East Carroll] He had the reputation of being
somewhat of an idiot. His mental weakness was notorious in the
country, and he was usually known by the name of "fool Davis." He
also knew Michael Gingery. He resided in the western part of the
parish, and was a man of very poor judgment -- a carpenter. Witness
would not feel safe in buying or selling by their judgment. He
said, further, that he would not think it a fair appraisement to
appraise lands like Wilton, Albion, and Melbourne at five dollars
per acre; that such lands were worth from eight to ten dollars per
acre rent ever since the war; that before the war they could have
been sold for $70 or $80 per acre, and that they were worth half as
much since the war.
Davis himself, when examined as a witness, admits that he had no
knowledge of the Morgan property except a general knowledge he had
of all the swamp lands of Carroll Parish; that he had no knowledge
of the condition of the Morgan property in 1869, except what he
heard from others. He admits
Page 111 U. S. 663
that he got his ideas of the value of property in the parish
from the prices at which property was sold at succession and other
public sales about the courthouse.
A number of witnesses were examined as to the real value of the
property; but perhaps none more competent than Mr. Henry Goodrich,
a nephew of General Morgan, and manager of his plantations from
1838 to 1843, and again manager for Matthew F. Johnson from 1868 to
1873. He thought the appraisement of the land in 1860 was rather
high, and that about $500,000 would have been a fair valuation. He
said that three dollars per acre, the price bid at the sale in
January, 1869, was a low valuation; thought that the open lands in
1869 were worth $75 per acre, and the wood lands worth $15. He
spoke particularly of the Wilton, Albion, Morgana, and Melbourne
Plantations -- not of the Westland.
Mr. Le May, who had been a planter most of his life, testified
that he had known the Morgan property since the year 1858, and in
1862 he managed the Westland Plantation for the succession. He
added:
"Westland Plantation and the adjacent lands are subject to
overflow, and have been overflowed every year since the war. Said
Westland Plantation and adjacent lands are of little value, and
witness says he could not estimate them to be worth more than one
dollar and twenty-five cents per acre at present and ever since the
war. He means to say that Westland Plantation and adjacent lands
belonging to the succession of Oliver J. Morgan he could not
estimate higher than one dollar and twenty-five cents per acre.
Wilton, Albion, Melbourne, and Morgana Plantations are not included
in this estimate. Westland Plantation is established on the lands
of the succession of Oliver J. Morgan furthest back from the
Mississippi River, and the adjacent lands referred to are wild
lands belonging to said succession. Says that Wilton, Albion, and
Melbourne Plantations have always been regarded as first-class
plantations in the Parish of Carroll. Regards the lands embraced in
said plantations as worth about seventy-five dollars per acre
before the war, and twenty-five dollars now and since the
Page 111 U. S. 664
war, cash valuation. Such lands have been renting for from eight
to ten dollars per acre since the war. . . . Witness, having heard
read to him the deposition of witness N. D. Ingram, corroborates in
the main his testimony in regard to the location and description of
the property, but does not appraise the lands since the war quite
as high. Witness does not think that the appraisement of said
Wilton, Albion, and Melbourne Plantations at three (3) dollars per
acre in 1868 was a fair valuation of said property. Witness
considers that the same were worth in cash at that time,
twenty-five (25) dollars per acre. Witness was acquainted with
Michael Gingery and W. D. Davis, who were the appraisers of said
property. Gingery was a carpenter by trade, and resided in the
western portion of the Parish of Carroll, now West Carroll. . . .
Witness considered Mr. Gingery to be an illiterate man, and not
competent to fix a value on said property. Witness says he has
known W. D. Davis as a citizen of the western portion of the Parish
of Carroll, now West Carroll, for several years. Witness says he
does not know of two more incompetent persons than Gingery and
Davis to appraise property. Thinks that more incompetent persons
could not have been found to make said appraisement in 1868."
Testimony of a different character was adduced, it is true, but
in our judgment the result of the evidence is that the
appraisement, as we said before, was a mere sham. We have little
doubt that the property of the estate which, in the aggregate, was
bid off by Buckner, Goodrich, and Montgomery for $47,133, was worth
at least five times that amount.
But there is no wonder that the property sold at a mere nominal
price; there was no competition. The facts which were circulated,
that Buckner had a preferred claim for over a hundred thousand
dollars, and that three-fourths of the property belonged to Mrs.
Julia Morgan or her heirs, were sufficient to drive away all
bidders, and, as if this were not sufficient, one person at least,
who had intended to bid on the property was actually deterred from
attending the sale by being told that it was to be a sale for the
benefit of the heirs, or a family affair. Rhodes, one of the
witnesses, says:
Page 111 U. S. 665
"That on the morning of the sale of the succession property of
Oliver J. Morgan, in January, 1869, he and John Lynch went to the
Wilton Plantation, where the sale was to occur, expecting to attend
the sale, and Lynch was calculating upon buying some of the
property. When they reached Wilton, they found no person present
authorized to make the sale. Passed above said plantation and met
Judge J. W. Montgomery and Ferdinand M. Goodrich, attorneys, going
down to the sale. Major Lynch spoke of going back to attend the
sale, and questioned them as to the terms of the same. Mr. F. M.
Goodrich replied to him that it was to be a sale for the benefit of
the heirs, or a family affair. Lynch was informed that if he went
back and purchased at the sale, he would get a long litigation on
his hands, and they induced him not to attend the sale. . . .
Witness is satisfied that if John Lynch had been let alone by Mr.
Goodrich, he would have attended the sale and would have bid
something like the value of the property, and it would not have
been sacrificed for the nominal price of three dollars per acre.
Lynch, Ruggles & Co. paid about forty dollars per acre for the
Illanara Plantation, situated about four miles below Wilton, and it
is far inferior to Wilton and Melbourne Plantations in value per
acre. Witness is satisfied that Lynch would have given more than
twenty-five dollars per acre for Wilton, Albion, and Melbourne
Plantations had he attended the sale, and believed he could have
obtained a valid title."
J. W. Montgomery was examined on the subject of the conversation
between Lynch and Goodrich to contradict Rhodes, and he says
"That F. M Goodrich stated to Major Lynch . . . that the
property was being sold to pay in part a large claim against it
held by the family. This is what I remember of Goodrich's
statements."
We do not see that the contradiction materially affects the
result of the evidence. Besides, the actual events which ensued,
the proceedings at the sale itself, and what took place after the
sale go to prove most conclusively that it was intended as a mere
family arrangement for securing the property, against the demands
of the creditors in the hands of the two branches of the family
precisely as they had always held it, except that, for the sake
Page 111 U. S. 666
of appearances, the Westland Plantation of 5,040 acres, then
overflowed, and not worth more than a dollar and a quarter an acre,
was bid off by Montgomery for the creditors, and Morgana,
consisting of 1,500 acres, was given to Montgomery and Goodrich for
their services, and was afterwards sold by the latter for about
$10,000. The Wilton and Albion plantations, although bid off by
Buckner, never changed hands, but continued to remain, and still
remain, in the possession of Julia Morgan's heirs, while Buckner
himself kept Melbourne and occupied it as before. This is conceded
by all the parties; Buckner and Montgomery being fully examined on
the subject, and admitting the fact. The pretense that the sale was
made to satisfy Buckner's claim of over $100,000 was nothing but a
pretense. When pressed on the subject, he admitted that, although
the aggregate amount of his bids on the three plantations sold to
him (which was $27,513) was legally a credit on the amount of the
debt, yet that he did not claim the plantations held by the
representatives of Julia Morgan, namely, Wilton and Albion. He was
examined as a witness in 1878, nine years after the sale, and
testified, among other things, as follows:
"The heirs of Julia Morgan have held possession of the land they
had before the war, and witness has held possession of the land he
had before the war. Witness does not hold the property in common;
there is only a temporary division."
"Witness has held possession of Melbourne ever since the war,
and the heirs of Julia Morgan have held possession of Wilton and
Albion, except that the heirs recognized Oliver T. Morgan as
executor, but he did not require of them any account of the rents
and revenues."
"Witness says that his understanding was at the time of the
sale, in January, 1869, when he bought in the property for the
heirs, that they were to receive their proportion of the land
purchased in witness' name, and he was to retain his
proportion."
"They were (the heirs of Julia Morgan) to take three-fourths of
the land and witness one-fourth, and this understanding was had as
to the exact amount in the division after the sale. There
Page 111 U. S. 667
was no conversation or agreement with the heirs, or any other
parties, as to how the division should be made."
It is unnecessary to pursue the subject further in relation to
the question of fraud. We are entirely satisfied that the sale was
a sheer fraud as against the general creditors of the estate.
The next question is whether the complainant is in a situation
to contest the validity of the sale by the present suit. It is
contended that he is concluded by the proceedings in the Probate
Court of Carroll Parish, which is alleged to have had exclusive
jurisdiction of the subject matter, and its decision is alleged to
be conclusive against all the world, but especially against the
complainant, who was a party to the proceedings.
The administration of General Morgan's succession undoubtedly
properly belonged to the Probate Court of the Parish of Carroll,
and, in a general sense, it is true that the decisions of that
court in the matter of the succession are conclusive and binding,
especially upon those who were parties. But this is not universally
true. The most solemn transactions and judgments may at the
instance of the parties, be set aside or rendered inoperative for
fraud. The fact of being a party does not estop a person from
obtaining in a court of equity relief against fraud. It is
generally parties that are the victims of fraud. The Court of
Chancery is always open to hear complaints against it, whether
committed in pais, or in or by means of judicial proceedings. In
such cases, the court does not act as a court of review, nor does
it inquire into any irregularities or errors of proceeding in
another court; but it will scrutinize the conduct of the parties,
and if it finds that they have been guilty of fraud in obtaining a
judgment or decree, it will deprive them of the benefit of it, and
of any inequitable advantage which they have derived under it.
Story's Eq.Jur. ยงยง 1570-1573; Kerr, Fraud and Mistake 352, 353.
This subject was discussed in
Gaines v. Fuentes,
92 U. S. 10, and
Barrow v. Hunter, 99 U. S. 80. In the
latter case, speaking of the proceeding in the Louisiana practice
to procure nullity of a judgment, we said:
"If the proceeding is merely tantamount to the common law
practice of moving to set aside a judgment for
Page 111 U. S. 668
irregularity, or to a writ of error, or to a bill of review on
appeal, it would belong to the latter category [that is, a
supplementary proceeding, connected with the original suit], and
the United States court could not properly entertain jurisdiction
of the case. . . . On the other hand, if the proceedings are
tantamount to a bill in equity to set aside a decree for fraud in
the obtaining thereof, then they constitute an original and
independent proceeding, . . . a new case arising upon new facts,
although having relation to the validity of an actual judgment or
decree,"
&c.
These considerations apply with full force to the argument based
on the monition proceedings which were resorted to after the sale,
for the purpose of procuring a homologation thereof as against all
the world. The monition, as issued by and published under the
direction of the probate court, called upon
"all persons who could set up any right to the property, in
consequence of any informalities in the orders and decrees under
which the sale was made, or any irregularity or illegality in the
appraisement or advertisement, or time and manner of sale, or of
any other defect whatsoever, to show cause within thirty days why
the sale should not be homologated and confirmed."
In the case of
Jackson v.
Ludeling, 21 Wall. 616, we held that the judgment
of confirmation or homologation, on such a monition, has relation
only to mistakes and omissions of the officers of the law, and not
to the question whether the purchasers obtained their title by
fraud, or were trustees mala fide for others, and that such a
judgment is conclusive of nothing but that there have been no fatal
irregularities of form. The concluding remarks of the opinion in
that case have a strong bearing upon the present. It is there
said:
"A sale may have been conducted legally in all its process and
forms, and yet the purchaser may have been guilty of fraud, or may
hold the property as a trustee. In this case, the complainants rely
upon no irregularity of proceeding, upon no absence of form. The
forms of law were scrupulously observed. But they rely upon
faithlessness to trusts and common obligations, upon combinations
against the policy of the law, and fraudulent, and upon confederate
and successful efforts to deprive them wrongfully
Page 111 U. S. 669
of property in which they had a large interest, for the benefit
of persons in whom they had a right to place confidence.
Homologation is no obstacle to such a claim."
In our judgment it is equally no obstacle to the claim of the
complainant in the case before us. The same observation may be made
with regard to the proceedings had in reference to the executor's
final account and discharge.
Had the question of fraud been before the probate court in any
of these proceedings, and had the complainant been apprised of
them, the case might have been different. This Court would not try
over again a case already tried, nor permit the complainant to
litigate matters which he had notice of, and which he had an
opportunity to litigate in the probate proceedings. But one of the
grounds of complaint made by the bill is that the very attorneys
whom he had employed to secure his claim acted as attorneys for the
succession and heirs, and conducted the proceedings for the sale,
and participated as active parties therein, without giving him any
notice of what was being done. These allegations were substantially
proven. It was shown that Gay, the complainant, resided in
Louisville, Kentucky; that early in 1866 he sent his documents (the
three bills of exchange described in his original bill) to General
Sparrow, of the firm of Sparrow & Montgomery (lawyers) in
Louisiana to secure his claim against Oliver J. Morgan's
succession. The bills were presented by the attorney to the
executor, Oliver T. Morgan, in April, 1866, and he endorsed and
assigned on each an acknowledgment that it was a just claim against
the succession, to be paid in due course of administration, and
thereupon they were submitted to the probate judge, who endorsed on
each bill an order that it be ranked as a just claim, to be paid in
due course of administration, according to law. The bills remained
in the hands of Sparrow & Montgomery until the commencement of
the proceedings for sale (or about that time). Buckner having
applied to them to conduct these proceedings, the farce (for it
seems to us nothing but a farce) of making a compromise with the
creditors took place in Sparrow & Montgomery's office, and the
claims which they held against the estate were handed over to other
attorneys.
Page 111 U. S. 670
Montgomery, when examined as a witness, admitted that the bills
of exchange belonging to Gay were handed over to Farrar, and did
not pretend that Gay was ever consulted on the subject. When
pressed for an answer on this point, he admitted that his partner,
General Sparrow, "did voluntarily, and of his own accord, put the
claim in Farrar's hands." He further stated that this was only six
or eight weeks before the day of sale, and that Farrar had the
bills on the day of the adjudication, that is, the day of sale, and
there is not the slightest proof to show that Gay had any notice of
any of the proceedings. After having put himself, in his bill, upon
want of notice, and after this evidence on the subject, drawn from
one of the defendants, it was incumbent on the defendants to have
shown, if they could, that he had notice.
It is alleged, however, that, since the commencement of this
suit, the judgment obtained by the complainant on the bills of
exchange has been reversed by this Court on writ of error, and that
the claim on the original securities is prescribed.
It is true that the judgment was reversed in March, 1874, and
that the complainant, by leave of the court below, filed an amended
bill setting forth the acknowledgment and recognition of the
original bills of exchange, and relying on these evidences of his
debt, thus sanctioned, instead of the judgment. This raises a
question of law, whether a debt thus presented to and acknowledged
by the executor, and ranked by the judge of probate, is subject to
prescription like ordinary demands.
By the Code of Practice of Louisiana it is declared:
"Art. 984. No bearer of a claim of money against a succession
administered by a curator appointed by a judge or by a testamentary
executor shall commence an action against such succession before
presenting his claim to the curator or executor."
"Art. 985. If such claim be liquidated and be acknowledged by
the curator or testamentary executor or administrator, he shall
write on the evidence of the claim, or on a paper which he shall
annex to it, a declaration signed by him, and stating that he has
no objection to the payment of the claim, after which the bearer of
such claim shall submit it to the judge, that it may be ranked
among the acknowledged debts of the succession. "
Page 111 U. S. 671
Article 986 provides that if the claim is not liquidated, or is
objected to by the curator, etc., the bearer may bring his action
in the ordinary manner.
These articles show very conclusively that when a claim has been
duly acknowledged by the executor and ranked by the judge (as this
was), no judgment on it is necessary. And such is the doctrine of
the Supreme Court of Louisiana. In a late case,
Renshaw v.
Stafford, 30 La.Ann. 853, the subject was very fully
discussed, and it was held that the acknowledgment of a succession
debt suspends the prescription of it as long as the property of the
succession remains in the hands of the executor under
administration. The court said:
"We think it manifest that the law never contemplated that a
creditor whose debt has been formally acknowledged should bring a
suit to establish his claim. The policy of the law discourages such
proceeding; would punish it by inflicting the costs thereof on the
creditor. True, the law gives him, after a reasonable time, . . . a
right to compel the administrator to account."
After referring to previous decisions, the court concludes as
follows:
"We therefore conclude that after a creditor of an estate has
had his claim duly acknowledged by the administrator, the law does
not contemplate any further proceeding on his part to establish it
as against the estate; that, in principle, the administrator is his
trustee, and holds in possession for his benefit the property of
the estate which is the common pledge of the creditors."
From this authoritative exposition of the law of Louisiana, we
think it clear that the plea of prescription cannot avail the
defendants in this case. The bill was filed in January, 1872, just
three years after the sale complained of, and within six years
after the bills of exchange were acknowledged and ranked among the
just debts of the succession. The bills could not have been
prescribed before acknowledgment, because they came to maturity in
January, 1861, and the civil war interrupted prescription as
against the complainant (a citizen of Kentucky), from April 27,
1861, to April 2, 1866. The acknowledgment and recognition in
April, 1866, had the effect
Page 111 U. S. 672
to place the claim on the tableau of succession, and obviated
the necessity of any other legal demand. Although this was
sufficient to preserve the status of the debt free from
prescription, yet there was another interruption by the legal
demand made by the action which was brought in 1870, and which was
in the course of prosecution until the reversal of the judgment by
this Court in 1874, if not longer. Such a legal demand interrupts
prescription, "whether the suit has been brought before a court of
competent jurisdiction or not." Civil Code, Art. 3518 (3484). It is
clear therefore that the debt was not prescribed when this suit was
brought.
The defendants, however, place some reliance on the fact that
the bill was not amended until March 28, 1879, then first stating
the fact that the claim was presented to the executor, and
acknowledged and recognized, a period of more than five years after
the reversal of the judgment. We do not regard this as material.
The making of the bills of exchange was fully stated and set forth,
and the bills described, in the original bill of complaint, and it
was admitted and stated in the answer of the defendant that the
said claim of the complainant was duly acknowledged by the executor
as a just claim against the estate. With such a statement in their
own pleading, they could hardly be heard to aver that the claim was
prescribed. Besides, it is difficult to see how it could possibly
be prescribed anyway during the pendency of this suit, brought for
the purpose of securing its payment.
It is not insisted, as it could not be, that the fraudulent sale
is prescribed.
We are clearly of opinion that the complainant is not precluded
from obtaining relief in the present suit.
Some technical points have been made in the case which we have
examined and think untenable. One is that after the decease of
Oliver T. Morgan, Matthew F. Johnson was substituted in his place
in the suit as dative executor of the said Oliver T. Morgan, and
not as dative executor of Oliver J. Morgan. He was in fact both,
and the bill of revivor, as amended, distinctly states that
subsequent to the filing of his plea, answer, and demurrer by
Oliver T. Morgan, testamentary
Page 111 U. S. 673
executor of Oliver J. Morgan, in the year 1873, the said Oliver
T. Morgan died, and that, subsequent to his death, Matthew F.
Johnson had been appointed dative testamentary executor of the last
will of said Oliver J. Morgan, and that assets of said Oliver J.
Morgan had come into said Johnson's hands in that capacity, and
prays that he may answer and set forth whether any and what assets
of said estate of Oliver J. Morgan had come into his hands, and for
an account, etc. Upon this bill a subpoena was issued commanding
the marshal to summon Matthew F. Johnson, dative testamentary
executor of Oliver T. Morgan, to appear and answer the bill of
revivor. Matthew F. Johnson did appear, entering his appearance as
"dative testamentary executor of Oliver T. Morgan" to the bill of
revivor, and to the amendments thereof, "wherein Stephen Waters,
administrator of the succession of William Gay, deceased, is
complainant, and said Matthew F. Johnson and others are
defendants." This appearance was entitled in the cause by its true
title and number. The subpoena was mere process to bring the
defendant into court. When he came into court and read the bill of
revivor, he was informed that he was called upon to answer as
dative executor of Oliver J. Morgan. This was sufficient. From that
day until the cause came here on appeal, he defended the cause as
representative of the estate of Oliver J. Morgan, and made no
objection to the technical defect in the subpoena. The defect was
cured when he entered his appearance without raising the objection,
and it is certainly too late to raise it now.
There is nothing else in the case, except the form of the
decree, to which we deem it necessary to give our attention.
The decree made by the circuit court in the first place affirmed
the debt due to the complainant, and secondly declared the sales
made on the 19th of January, 1869, null and void as against the
estate of William Gay, complainant, and directed that the lands be
seized and sold by the marshal to satisfy the debt due to the
estate of Gay, with interest and costs. We think that the latter
part of the decree ought to be modified. The bill was filed by
William Gay
"in behalf
Page 111 U. S. 674
of himself and of all others, creditors of Oliver J. Morgan, . .
. who shall come in and seek relief by and contribute to the
expense of this suit."
In other words, it is a creditors' bill filed on behalf of the
complainant, and of all other creditors that choose to come in and
share the expenses, for the purpose of securing the due
administration and application of a trust fund, namely, the estate
belonging to the succession of Oliver J. Morgan, deceased. On such
a bill, it is the usual and correct course to open a reference in
the master's office and to give other creditors, having valid
claims against the fund, an opportunity to come in and have the
benefit of the decree. In our judgment, therefore, the decree
should be modified so as to declare and direct as follows; that is
to say:
I. That the estate of said Oliver J. Morgan, deceased, herein
represented by Matthew F. Johnson, dative executor of the last will
of said Oliver J. Morgan, is indebted to the estate of said William
Gay, deceased, herein represented by Stephen Waters, administrator,
in the sum of $33,250, with interest at five percent per annum
until final payment on $13,000 from the 10th of January, 1861; on
$10,250 from the 16th of January, 1861, and on $10,000 from the
28th of January, 1861, and for all costs of this suit.
II. That the sales of the lands of said estate of Oliver J.
Morgan, adjudicated in parcels and subdivisions on the 19th of
January, 1869, to John A. Buckner, J. West Montgomery, agent, and
Ferdinand M. Goodrich, respectively, and conveyed to them,
respectively, by Oliver T. Morgan, executor, by notarial acts
passed before D. C. Jenkins, notary public, on the 23d of January,
1869, and recorded in the office of the parish recorder of the
Parish of Carroll, in notarial book N at folios 212, 213, and 214,
be declared null and void as against the estate of the said William
Gay, complainant herein, and against the other creditors of said
estate of Oliver J. Morgan, deceased, and that it be referred to
_____, one of the masters of the court, to take and state an
account of the assets belonging to said estate in the hands of said
dative testamentary executor, Matthew F. Johnson, and that the said
master be authorized to summon said Johnson to appear before him
and
Page 111 U. S. 675
render account of said assets, and that said master give three
months' public notice by advertisement in a newspaper published in
the Parish of Carroll, and in a newspaper published in New Orleans,
to all creditors of the said estate of Oliver J. Morgan, deceased,
to appear before him, the said master, and establish their several
debts.
III. If other sufficient available assets of said estate to pay
the said debt be not found in the hands of said Johnson, dative
executor as aforesaid, the said master is authorized and required
to sell so much of said lands in proper parcels as may be necessary
to pay and satisfy said debts, and the lands so sold shall be free
and discharged of any lien, claim, or title arising from or by
reason of said sales so made on the 19th day of January, 1869. If
the available assets and the proceeds of said lands should not be
sufficient to pay all the debts of said estate established before
said master, including the debt due to the complainant, there shall
be a
pro rata distribution thereof after the payment of
all costs and expenses of the complainant, and of said reference
and sale. The sale shall be advertised and proceeded in according
to the laws of Louisiana in reference to succession sales.
IV. The said master may apply to the court from time to time for
further directions, which are hereby reserved, especially as to the
question whether the succession of Julia Morgan, deceased, is
entitled to any portion, and what portion, of the proceeds arising
from the sale of said lands by virtue of the act of sale and
donation made to her by Oliver J. Morgan in 1858, so far as said
act was a sale and not a donation.
It is further our opinion, and
We order and adjudge, that each party pay his and their own
costs on this appeal, except the cost of printing the record, which
shall be equally divided between the appellants and
appellees.