South Carolina. G., the executor of his father, who had devised
his estate to G. and his other children, sold the estate and became
himself the purchaser of it, and in order to secure the portions of
the other devisees, who were minors, confessed a judgment, June 1,
1819, on a promissory note in favor of two persons without their
knowledge in a sum supposed to be sufficient to be a full security
for the amount of the portions of the minors. The judgment was kept
in full operation by executions regularly issued upon it, so as,
under the laws of South Carolina, to bind the property of G. He was
then engaged in mercantile pursuits, and had other property than
that so purchased by him. G. afterwards became insolvent, and the
claims of the devisees of his father under the judgment were
contested by his creditors as fraudulent, the plaintiffs in the
judgment, having no knowledge of it when it was confessed, the
amount of the sum due to the co-devisees not having been
ascertained when it was confessed, no declaration of trust having
been executed by the plaintiffs, and false representations of his
situation having been made by G. after the judgment whereby his
creditors were induced to give him time on a judgment confessed to
them subsequently.
The judgment of June 1, 1819, was held to be valid, and the
plaintiffs in that judgment entitled to the proceeds of the sales
of the estate of G. for the satisfaction of the amount actually due
to the co-devisees by G.
The appellants, on 4 April, 1827, filed their bill in the
Circuit Court of the United States for the District of South
Carolina to set aside a judgment or postpone the effect of the
same, which had been confessed by William S. Gillett, in the
Barnwell District Court of the State of South Carolina for the sum
of $30,000.
The judgment was founded on a promissory note drawn by William
S. Gillett, in favor of James Higginbottom and William Provost for
$30,000, dated 1 June, 1819, and payable on demand. The judgment
was confessed on 1 June as of the fourth Monday of March, 1819.
William S. Gillett was the acting executor of the last will and
testament of his father, Doctor Elijah Gillett, by which a specific
portion of the estate was devised to him and other parts of the
estate
Page 34 U. S. 49
were given to the children of the testator. By the terms of the
will, the executors had power to sell such part of the estate
devised, as it might be beneficial or expedient so to dispose of.
William S. Gillett was also, at the time of the confession of the
judgment, the guardian of his infant brothers and sisters, the
devisees of his father of all the estate not specially devised to
him.
In December, 1818, the personal estate of the testator, Elijah
Gillett, was appraised and $56,474, and on 22 March, William S.
Gillett, after having selected or taken by lot a portion of the
estate to which he considered himself entitled, sold at public
auction a large number of the negroes and all the personal estate
of the testator. The proceeds of the sale exceeded $40,000, and
William S. Gillett was the principal purchaser at the sale.
The judgment for $30,000 was confessed for the use and benefit
of the younger children of Elijah Gillett, the testator, all at
that time minors, was for about the sum which was supposed to be in
the hands of their guardian after the sale, and was alleged to have
been given in trust to the said Higginbottom and Provost to secure
to them their interest in the estate of their father.
At the time of the confession of this judgment of 1f June, 1819,
William S. Gillett was largely indebted to the complainants and
concerned in a mercantile house in Savannah, the affairs of which,
a witness stated, he did not seem to consider very prosperous; he
did not represent the house to be bankrupt or likely to become so,
but, on the contrary, he then and long afterwards appeared
confident that the affairs of the house would wind up
satisfactorily.
On 21 October, 1821, William S. Gillett confessed a judgment in
the Circuit Court of the United States for the South Carolina
circuit for the sum of $7,849 in favor of the Bank of Georgia under
an agreement that time should be given to pay the amount thereof,
viz. one, two, three and four years.
The bill states that, the debt due on that judgment being
unpaid, the complainants, to have satisfaction thereof, lately sued
out a
fieri facias against William S. Gillett on it, under
which a sufficient sum was made to pay the debt due on the
Page 34 U. S. 50
same, but the proceeds of the said execution are claimed under
the judgment in favor of Higginbottom and Provost for the payment
and satisfaction of the same. The bill prays for general relief,
&c.
It appeared in evidence that on 12 April, 1825, James
Higginbottom and William Provost, the plaintiffs in the judgment of
June 1, 1819, at the request of Robert, Isaac and William
Scarborough, who had been named as co-executors of the will of
Doctor Gillett, assigned over, under their respective hands and
seals, to them the judgment of June 1, 1819, to the use and benefit
of the testator's younger children for the purpose of securing and
assuring to them respectively their interest in the testator's
estate.
In answer to an interrogatory propounded to him on behalf of the
complainants, the counsel who prepared the confession of the
judgment of June 1, 1819, stated,
"The judgment confessed by William S. Gillett to Higginbottom
and Provost was prepared by me as a security for the parts or
portions of the younger children of Doctor Elijah Gillett deceased,
of the estate of their father, and I think that at the time, I
wrote or sketched off a draft of a declaration of the trust upon
which the judgment was given, to be signed by Higginbottom and
Provost, neither of whom were present. I do not recollect to have
seen this paper after it was executed, although I may have seen it.
Indeed, I always believed that I had seen it till I came to tax my
recollection for the purpose of answering this interrogatory. My
impression has always been that such a paper was executed, and I
have now no doubt but that it was. I recollect perfectly that
Gillett expressed a determination not to confess the judgment
unless a declaration of its object was signed by the nominal
plaintiffs."
The plaintiffs in the judgment of 1 June, 1819, issued a
fieri facias to October term, 1819, of the Barnwell
District Court, which was entered in the sheriff's office on 19
July, 1819; an alias
fieri facias was lodged in the
sheriff's office on 3 February, 1824; and a pluries
fieri
facias was "lodged to bind," in the sheriff's office on 31
December, 1824.
The accounts of William S. Gillett, as the executor of his
father, were audited and a balance found due by him to the estate,
including interest to July 11, 1831, of $48,961.92.
Page 34 U. S. 51
After appropriating to the payment of the balance due by the
executor on the judgment to Higginbottom and Provost all the
proceeds of the sales under the judgment of the Bank of Georgia,
there would be a deficit, to make up the amount due by William S.
Gillett to his co-devisees and legatees, of $14,138.66.
On 25 June, 1825, the circuit court, by a decree, held that the
declaration of trust contained in the assignment of the judgment of
1 June, 1819, executed by Higginbottom and Provost, under which the
minor children of Doctor Elijah Gillett claimed precedence,
"was a sufficient declaration in writing, and that a regard to
the interests of the minors, sanctioned the court in sustaining the
judgment for any amount that should be justly due to them."
Afterwards, on 22 July, 1832, the circuit court gave a decree in
favor of the defendants in that court, and the complainants entered
this appeal.
Page 34 U. S. 56
MR. JUSTICE McLEAN delivered the opinion of the Court.
In their bill the complainants ask the court to set aside or
Page 34 U. S. 57
postpone a judgment for $30,000, confessed by Gillett in favor
of Higginbottom and Provost on the ground of fraud, and that
certain moneys made by execution on a judgment subsequently
obtained by the complainants be directed to be paid over in
satisfaction of such judgment.
The judgment for $30,000 was confessed in 1819, on which
executions were regularly issued from time to time and entered in
the clerk's office, so as, under the laws of South Carolina, to
bind the property of the defendant.
The appellant insists that this judgment, which was held to be
valid by the circuit court, should be set aside because the
promissory note on which the judgment was confessed was given
without consideration, and that the judgment must consequently be
declared void or postponed to the demands of
bona fide
creditors.
From the facts of the case, it appears that William S. Gillett
was the acting executor of the estate of his father, and that under
the will he sold the property and became the purchaser of it to a
much larger amount than the sum for which judgment was confessed.
He was then engaged in mercantile business, and had other property
than that which he purchased at this sale, and the judgment was
confessed to secure the payment of the purchase money to the
brothers and sisters of the defendant, who were the devisees in the
will.
This sale, having been made by a trustee to himself, must have
been set aside and annulled on the application of the
cestui
que trust, but no such application being made, it cannot be
treated as a nullity as it regards strangers to the
transaction.
The appellants insist that the plaintiffs in the judgment had no
knowledge of it at the time it was entered; that the amount to
which the devisees were entitled had not been ascertained; that
false representations were made by Gillett, subsequent to this
judgment, as to the extent of his property, through which the
complainants were induced to give time on the judgment entered in
their behalf; and that these facts are evidence of fraud.
The evidence does not show that at the time the judgment was
confessed, Higginbottom and Provost had any knowledge of it, but
this is not deemed material, as they subsequently recognized the
trust and acted under it. Nor is it essential to
Page 34 U. S. 58
the validity of the judgment, that the distributive shares of
the devisees should have been ascertained, provided they exceed in
amount the sum for which judgment was entered. And this appears to
be the fact from a final adjustment of the executor's account.
The false representations by Gillett respecting the extent of
his property, if true, as charged by the complainants, could not
affect the previous judgment, if entered in good faith. But,
connected with other facts, they may go to show in its true light
the conduct of the defendant. If he represented his property as
wholly unencumbered after the judgment for $30,000 had been
confessed, it would show a design on his part to practice a fraud
on the complainants, and might cast a suspicion over the first
judgment. But these representations are not proved, as alleged in
the bill. They were not, as made by the defendant, so incompatible
with the facts of the case as not to be accounted for by a somewhat
partial estimate of the value of his property, free from motives of
fraud. The defendant subsequently became a bankrupt, but this was
produced by various occurrences stated in his answer, which were
not and could not be foreseen.
Shortly after the purchase, it appears the defendant was
solicitous to secure the devisees, and he consulted counsel as to
the best mode of effectuating this object. A mortgage was at first
suggested, but afterwards a judgment was deemed preferable. This
mode, it seems, is frequently adopted in South Carolina to secure
the payment of money. A judgment being entered, it is only
necessary to issue an execution from term to term, which may remain
in the clerk's office, to create and continue a lien on the
personal property of the defendant.
As a matter of form, a note was executed by the defendant for
$30,000, and this was made the foundation of the judgment. Was this
note given without consideration? The defendant had purchased the
property of the infant devisees, to a greater amount than that for
which the note was executed. And was not the executor bound by
every consideration arising from the agency he exercised, and the
relation in which he stood to the devisees, to secure for their
benefit the purchase money?
They were infants, and consequently incapable of protecting
Page 34 U. S. 59
their own interests. The defendant was enriched by the purchase
of their property to a greater amount than the $30,000. And if by
the conditions of the sale, time was to be given for the payment of
the money, that circumstance does not make either the note or the
judgment fraudulent. The judgment was intended to operate as a
security for the payment of the money, and the defendant was bound
in good faith to give this security. Had he failed in this respect,
he would have been guilty of a most aggravated fraud against his
infant brothers and sisters, whose property had been placed at his
disposal.
But the appellants contend if a judgment may be taken to cover a
future debt, the intent should appear on the face of the
proceedings, or at all events be evidenced by a contemporary
written declaration. That in this case the judgment is assumed as a
security for a debt to third persons not named in the proceedings,
and whose interest in the judgment can only be proved by parol
evidence.
No written declaration of the trust, made at the time judgment
was entered, is in evidence, but the counsel who procured the
judgment swears that at the same time he thinks he wrote or
sketched off a draft of a declaration of the trust upon which the
judgment was given, to be signed by Higginbottom and Provost, and
his impression has always been that such a paper was executed; that
in taking the judgment, he acted for the children of Doctor
Gillett; and that William S. Gillett, the defendant, expressed
apprehensions that the judgment, at some future period, might be
used to his injury and contrary to his intention, and to obviate
that difficulty it was concluded that a declaration of the trusts
upon which it was given should be signed by Higginbottom and
Provost.
From this evidence it is extremely probable that a declaration
of trust was executed at the time of the judgment or shortly
afterwards, but whether this was done or not, the trust is clearly
established by the evidence, and the transaction is not impeachable
under the statute of frauds.
If, as contended by the appellants, the judgment was confessed
by the appellee with a view of covering his property from his
creditors, it would have been fraudulent. And if he had expressed
to no one the object of the trust, the confession
Page 34 U. S. 60
of a judgment for so large a sum to persons who had no claim
against him would be evidence of fraud. But there are no facts or
circumstances connected with the entry of the judgment which cast a
suspicion of a fraudulent intent by the defendant.
It is insisted that this judgment is void, as it gave a
preference to certain creditors and tended to delay others.
There was no unjust or illegal preference in the case, and it is
not seen how creditors were delayed by the judgment. It did not
prevent any creditor from bringing suit and obtaining judgment and
execution. This was done by the appellants, and a large sum of
money was made on their execution, by a sale of the defendant's
property. This proceeding was in no respect embarrassed by the
previous judgment for the benefit of the infant devisees of Doctor
Gillett. But that judgment having been kept in force by the issuing
of executions from term to term, the money made under the junior
judgment must be applied in discharge of the prior lien. There is
no injustice or hardship in this. After the first judgment shall be
paid, any money collected from the defendant by execution would of
course be paid on the judgment of the appellants.
But the counsel of the appellants contend that the continued
possession by the defendant of the property on which the executions
under the first judgment operated as a lien is conclusive evidence
of fraud. And a number of authorities are cited to show that where
an absolute bill of sale of property is made, and the possession
does not accompany the deed but remains with the vendor, the
transfer is not only voidable, but is absolutely void.
The authorities referred to seem to have no direct application
to the case under consideration. The judgment does not purport to
transfer the property of the defendant, nor was it intended to
produce this effect. Connected with the executions which were
issued, a lien was created, and this was not only the fair and
legal effect of the proceeding, but the one which the parties to
the transaction intended to secure.
The possession of the property by the defendant was perfectly
consistent with the judgment, and affords no evidence of fraud. It
was like every other case of judgment and execution, which bind the
real and personal property of the
Page 34 U. S. 61
defendant, though in his possession. By the laws of South
Carolina, this lien may be continued for any time not exceeding
twenty years.
No one could have been misled by this judgment. It was entered
on the public record of the district, and the executions which were
issued on it were duly noted on the clerk's docket, and these
constituted the lien under the usages of South Carolina. It was
therefore unnecessary to express on the record or in any other
manner what the effect of these proceedings would be.
But it is contended that the lien set up under these proceedings
cannot be sustained, as it covered the entire property of the
defendant, and that this must be considered evidence of fraud.
The lien, it is true, extended to the entire property of the
defendant within the State of South Carolina, but it could at any
time be discharged by the payment of the judgment. This lien,
therefore, neither withdraws the property of the defendant from the
reach of his creditors nor delays the legal enforcement of their
claims.
The circuit court, with the consent of parties, directed the
sale of the entire property of the defendant, and as the proceeds
of this sale fall many thousand dollars below the judgment and a
still greater sum below the amount the executor owes the devisees,
it cannot be necessary to examine some of the principles settled by
the circuit court preparatory to a final decree. We think the
application made of the money arising from the sale, by the final
decree of the court below, was right, and it is
Affirmed. The bill of the complainants must therefore be
dismissed with costs.
This cause came on to be heard on the transcript of the record
from the Circuit Court of the United States for the District of
South Carolina and was argued by counsel, on consideration whereof
it is ordered, adjudged, and decreed by this Court that the decree
of the said circuit court in this cause be, and the same is hereby
affirmed with costs.
