McLure v. Melton

• Decision Date: 22 April 1886
• Citation: 24 S.C. 559
• Parties: MCLURE v. MELTON.
• Court: South Carolina Supreme Court

24 S.C. 559

MCLURE v. MELTON.

Supreme Court of South Carolina.

April 22, 1886

1. A question not raised before the referee nor in the Circuit Court cannot properly be brought before this court for consideration.

2. Piester v. Piester , 22 S.C. 139, affirmed and held not to have effected any change in the law, impaired the obligation of any contract, nor divested any rights vested by the decision in Edwards v Sanders , 6 S.C. 316, which was simply an erroneous declaration of what was the law.

3. This case distinguished from Herndon v. Moore 18 S.C. 339, and the extent of that decision stated.

4. That a contract valid under the law as expounded at its date cannot be impaired by subsequent judicial decision, is a doctrine confined to cases of contract, and probably not even then, where it depended upon a single case, never recognized nor followed, and overruled at the first opportunity.

5. The decision in Piester v. Piester does not affect the validity of any contracts; it only declares the proper construction of a statute prescribing the order in which the debts of a decedent are to be paid. The right of priority forms no part of the contract itself.

6. If it be conceded that that case did change the law, still there is nothing in the constitution to prevent a change in the law of priority of payment out of the assets of one deceased which is a mere direction to the administrator as to the manner in which he shall administer the assets-a matter at all times subject to legislative control.

Before WALLACE, J., Chester, March, 1885.

The opinion states the case. The appeal was from the following Circuit decree:

The act of 1879 (5 Stat. , 111) has been much discussed by our courts, in so far as it relates to the order of payment of the debts of a decedent. The case of Tunno v. Happoldt (2 McCord 188), followed by the case of Kinard v. Young (2 Rich. Eq. , 258), in construing the language of that act, decides that a mortgage is a preferred claim only so far as it is a lien upon specific property, and when that lien is exhausted, the debt secured by it took rank according to the nature of the instrument by which it was evidenced. As thus declared the law stood until October 14, 1875, when the case of Edwards v. Sanders (6 S.C. 316) was filed, which announced a different rule as derived from the act of 1789, which had at that time been incorporated in the revised statutes of 1872. By this latter case it was held that after the specific lien of a judgment had been exhausted by foreclosure and sale, the mortgage still took rank amongst judgments and executions as a mortgage, and this without any reference to the nature of the instrument by which the debt was evidenced.

While this case stood as the declared rule of construction of the statute, the referee held that the mortgages set up in this case were preferred claims as such. Before this case came on to be heard upon the exceptions to the referee's report, the case of Piester v. Piester , 22 S.C. 139, was filed, which reverses the rule as laid down in Edwards v. Sanders and reë stablishes the rule as declared in Tunno v. Happoldt and Kinard v. Young, supra . Of course, the mortgages in this case, then, are not preferred claims, as such, unless there is some reason why they are not under the operation of Piester v. Piester . Counsel accordingly argue that the mortgages here are not under the operation of this latter case, but are to be governed by the rule as stated in the case of Edwards v. Sanders , because that was the declared rule, by the court of last resort, while their mortgages were in existence, and rely upon the case of Herndon v. Moore , and the cases there cited, to support this position. 18 S.C. 339.

As is well known to the profession, the Supreme Court of this State, in the case of Davenport v. Caldwell (10 S.C. 317), decided that the Probate Court had no jurisdiction in matters of partition of real property of deceased persons, and that the act of the general assembly of 1868 providing for the exercise of such jurisdiction by that court was unconstitutional. The Court of Probate, provided for in the constitution of 1868, was organized by act of the general assembly of the same year, and immediately proceeded to exercise jurisdiction in the partition of real estates in pursuance of the power provided for in the organizing act. The trial judge, Hudson, J., in his opinion in the case of Herndon v. Moore, supra , says: " No question was made as to the constitutionality of the act. The profession at large and the Probate Courts and the Circuit Courts and the Supreme Court, all recognized and acted upon a conceded jurisdiction to Courts of Probate in matters of partition. Under this conceded and recognized jurisdiction from 1868 to 1878, thousands of acres of land have been sold in all parts of the State, a vast amount of money invested, conveyances and reconveyances made, titles and rights vested, and innocent purchasers, acting under this common error, shared by legislatures, lawyers, and courts, have become involved." These facts are held by Hudson, J., sufficient to sustain the validity of sales, or at least to render them unimpeachable, made under partition proceedings in the Probate Court in the exercise of a jurisdiction provided for in an act of general assembly decided to be unconstitutional-the ground of the opinion of Hudson, J., being that " a common error makes law."

The Supreme Court sustains the Circuit Judge in this view, and rests the affirming opinion mainly upon the remark of Lord Ellenborough in the case of Isherwood v. Oldknow , 3 M. & S. , 396 (55 Geo. III.), who says: " It has sometimes been said communis error facit jus , but I say communis opinio is evidence of what the law is, not where it is an opinion merely, speculative and theoretical, floating in the minds of persons, but where it has been made the ground work and substratum of practice." The Supreme Court held in Herndon v. Moore, supra , that the facts show that an opinion favorable to the jurisdiction of the Probate Court was the " ground work and substratum of practice" for many years, and therefore sustain the validity of the proceedings. With a view to a clear apprehension of the rule, it may be stated thus: where under a prevailing and common mistake as to the rule of law contracts are made by which rights are acquired and obligations incurred, which would not have been made but for the existence of the common error, such contracts will be upheld, and rights and liabilities under them enforced because the law will not allow itself to be made an instrument of fraud and injustice.

Now, in the case at bar the mortgage of Hopkins, Dwight & Co. was executed at a time when it had been declared by the court of last resort, that mortgages were preferred claims against the general assets even after its specific lien had been exhausted. But it does not appear that the contract had been made and the mortgage executed under a common belief in the soundness of the rule declared to be the law at that time, or that the rule so declared had been " the ground-work and substratum of practice," or that the practice of taking mortgages would not have been the same if the rule as stated in Tunno v. Happoldt, supra , had never been changed. It may be added that the rule laid down in Edwards v. Sanders cannot be considered as within the description of the words communis error facit jus , because McGowan, A. J., in the opinion in the case of Piester v. Piester , states substantially that the profession in the State had never accepted that rule as sound construction.

The rule, therefore, as stated in Piester v. Piester is binding upon this court, and there is nothing to take the mortgages in this case from under its operation. It follows that the mortgages here must take rank as against the assets in the hands of the administrator according to the nature of the instruments the mortgage was given to secure, and that the specific lien of the mortgages having been exhausted, they are no longer preferred claims as mortgages. I have not discussed the facts relating particularly to the mortgage set up by Mr. Kerr, because he can stand at least on no better ground than the other mortgage, his mortgage having been executed before the decision in the case of Edwards v. Sanders was filed.

From this decree, Hopkins, Dwight & Trowbridge appealed upon the following grounds:

I. For that his honor, the presiding judge, held that the lien of the mortgage held and owned by Hopkins, Dwight & Co.'s successor has been exhausted, and that the debt secured thereby is no longer a preferred claim, and can only be proved and take rank against the assets in the hands of the administrator, according to the nature of the instrument evidencing the debt and the statute relating thereto.

II. For that his honor, the presiding judge, did not hold that the rank given by the referee to the debt, and mortgage securing the same, of Hopkins, Dwight & Co.'s successor, being in accordance with the decision of the Supreme Court in force at the time of the commencement of the action and of the finding of the referee, must be sustained.

III. For that his honor, the presiding judge, did not hold that the law in force at the time of the execution of the note and mort gage securing the same, and at the time of the death of intestate , should determine the rank of the debt as a claim against the estate.

IV. For that his honor, the presiding judge, held that there was no proof that said note and mortgage were executed by the parties with reference to the decision of Edwards v Sanders ; whereas he should have held that the parties were to be presumed to have contracted with reference to the law as expounded by...