111 U.S. 640 (1884), Johnson v. Waters

Citation:111 U.S. 640, 4 S.Ct. 619, 28 L.Ed. 547
Party Name:JOHNSON, Dative Testamentary Ex'r, etc., and others v. WATERS, Adm'r, etc.
Case Date:May 05, 1884
Court:United States Supreme Court
 
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Page 640

111 U.S. 640 (1884)

4 S.Ct. 619, 28 L.Ed. 547

JOHNSON, Dative Testamentary Ex'r, etc., and others

v.

WATERS, Adm'r, etc.  

United States Supreme Court.

May 5, 1884

        Appeal from the Circuit Court of the United States for the District of Louisiana.

        COUNSEL

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         [4 S.Ct. 619] John A. Campbell, for appellants.

        Henry B. Kelly, Julius Aroni, and John G. Simrall, for appellee.

        OPINION

        BRADLEY, J.

        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 $13,000, dated January 7, 1860, payable 12 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 twenty-third day of December, 1870, the complainant obtained judgment in the circuit court of the United States for the district of Louisiana against the [4 S.Ct. 620] succession of the deceased, for the amount of the drafts and interest thereon, which judgment it is alleged has never been paid. 

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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 bing 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

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 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 explaination 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 [4 S.Ct. 621] 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

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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 Gen. 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 south-east, down the river, and Westland and Morgana to the west and north-west, 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 movalbe 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

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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 apappraised at $92,219, leaving a balance of $269,982.80, the one-helf 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...

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