Bridget Laughlin, Appellant v. the Bank of Potomac and Others

• Decision Date: 01 January 1849
• Citation: 48 U.S. 220,12 L.Ed. 675,7 How. 220
• Parties: BRIDGET McLAUGHLIN, APPELLANT, v. THE BANK OF POTOMAC AND OTHERS
• Court: U.S. Supreme Court

48 U.S. 220

7 How. 220

12 L.Ed. 675

BRIDGET McLAUGHLIN, APPELLANT, v. THE BANK OF POTOMAC AND OTHERS.

January Term, 1849

THIS was an appeal from the Circuit Court of the United States for the District of Columbia and County of Alexandria, sitting as a court of chancery.

The bill was filed in the Circuit Court by the President, Directors, and Company of the Bank of Potomac, Elijah Dallett and Elijah Dallett, Jr., trading under the firm of Elijah Dallett

& Co., William H. Miller, and A. C. Cazenove & Co., who sue in behalf of themselves and such other creditors of the estate of Edward McLaughlin, deceased, as will make themselves parties and contribute to the expense of this suit, against Edward Sheehy, in his own right and as administrator of Edward McLaughlin, and Ann Sheehy, wife of said Edward and one of the children and heirs at law of said Edward McLaughlin, Bridget, otherwise called Biddy McLaughlin, another of the children and heirs at law of said Edward McLaughlin, and surety for said Edward Sheehy's administration on said estate, and Edmund I. Lee, trustee under a deed of trust from the said Edward Sheehy.

The narrative of the case is as follows.

Edward Sheehy's notes, indorsed by Edward McLaughlin, were discounted at the Bank of Potomac as follows, viz.:——

1828.—Dec. 12, 1 note for $2,000

1830.—Jan. 15, 1 note for 2,000

Feb. 5, 1 note for 2,000

And they were curtailed and renewed from time to time, until they all became due the 20th January, 1832, viz.:——

1 note for $1,375

1 note for 1,900

1 note for 1,975

Amounting to $5,250

when they were amalgamated, and one note substituted for the three, which note was renewed from time to time until 15-18 April, 1834, when it became due and was protested.

Whilst these notes were running on, namely, on the 27th of September, 1830, one James Robinson conveyed certain property in Alexandria to Bridget McLaughlin, who was the daughter of Edward McLaughlin, the indorser of the above notes. Sheehy, the maker, was married to another daughter. One of the allegations in the bill was, that this property was seeretly paid for by Edward McLaughlin, who, it was alleged, procured it to be conveyed to his daughter for the purpose of placing it out of the reach of his creditors.

On the 24th of November, 1830, Sheehy conveyed a lot of ground in the town of Alexandria to Edmund I. Lee, in trust, to secure McLaughlin against his indorsements in the bank, as far as the sum of $3,950. Lee was to sell it whenever McLaughlin requested him, in writing, to do so.

On the 6th of November, 1832, Edward McLaughlin conveyed to his daughter Bridget four lots in Alexandria, in fee simple, reserving to himself a life estate.

On the 15th of March, 1833, Sheehy and wife conveyed to McLaughlin certain other real property and slaves, and other personal property. It was an indemnity against loss from the indorsement of McLaughlin upon the notes in question and other notes.

On the 9th of November, 1833, McLaughlin executed another deed in fee simple of certain property to his daughter Bridget.

In April, 1834, the note mentioned in the beginning of this narrative became due and was protested. Its amount was $5,250.

In May, 1834, the Bank of Potomac brought suit upon the note, and in August, 1834, obtained judgment by default, against Edward McLaughlin.

On the 15th of September, 1834, McLaughlin executed another deed for certain other property in fee simple to his daughter Bridget.

In September, 1834, after the execution of the above deed, McLaughlin died.

On the 12th of November, 1834, Sheehy took out letters of administration upon his estate, and Bridget McLaughlin became the security upon his bond. It is not necessary to state the appraisement, or the measures pursued by other creditors than the Bank of Potomac. No administration account was filed.

In June, 1835, the judgment which the bank had obtained against McLaughlin in his lifetime was revived, by scire facias, against his administrator, upon which an execution was issued. The return was, that no effects of the said McLaughlin, in the hands of his administrator, were to be found whereon to levy the said execution.

In April, 1836, the bank brought an action against Sheehy, suggesting a devastavit, and in June, 1837, obtained a judgment against him de bonis propriis. Execution was also issued upon this, the return to which was, that no goods and chattels of the said Sheehy were to be found.

In January, 1838, the bank filed its bill on the equity side of the court, suing for itself and such other creditors of the estate of Edward McLaughlin as chose to make themselves parties and contribute to the expense of the suit. The bill recited the above facts; averred that a large amount of personal property came into the hands of the administrator; that the said administrator, and his said surety, combining together to defraud the creditors of the said McLaughlin, caused his personal estate to be appraised at prices greatly below its value, and then sent off the said slaves to distant parts for sale, where they were actually sold for sums greatly exceeding the said appraisement; that no account of the sales of the said McLaughlin's personal estate had ever been returned to the said Orphans' Court, nor had the said administrator ever made any settlement of his administration accounts; that large sums of money of the said estate yet remain unaccounted for, and misapplied to their own use by the said administrator and his surety; that McLaughlin had combined and confederated with his daughter Bridget fraudulently to convey and transfer his property to her, with a view to protect it from liability for his debts; that all the said deeds were fraudulent and void; that the deceased left no real estate, having thus conveyed it all fraudulently away; that his personal estate had been made away with and misapplied by the administrator and his surety, the said Bridget; that the bank had a right to be substituted to the benefit of the trust deeds. The bill then prayed a discovery and account of the personal estate; that the fraudulent deeds might be set aside and annulled, and the property mentioned in them be applied to the payment of the debts of the estate, and for general relief.

A supplemental bill and answer were filed in the course of the proceedings, which did not essentially vary the state of the case.

In May, 1838, Bridget filed her answer, which was afterwards withdrawn, and another filed in May, 1842. Sheehy and wife filed their answer in May, 1839. The answer of Bridget denied all the allegations in the bill, and especially a legal recovery against Sheehy for said debt, but, if proved, contested that she was bound for the same, being no party thereto. She further admitted giving the bond as surety for Sheehy, but denied that it was binding on her, or that personal property of more value than $1,653.28 came to his hands, as shown in the inventory thereof. She denied any combination to defraud the creditors of Edward McLaughlin, by undervaluing his personal estate, or selling it higher than the appraisement, or not having it accounted for. She denied the existence of any indebtedness now by Edward McLaughlin, or at his death, as indorser for Sheehy, which existed in September, 1830, and averred that notice of protest was necessary to make him so liable, which had never taken place, and that the deed then given to her was not fraudulent as to the bank. She further averred that the deeds were not void, because Sheehy was the principal debtor, and possessed sufficient real estate then to satisfy the debt. She further alleged, that the real estate of her father was liable in the hands of his heirs only for specialty debts, which this was not. She proceeded to deny fraud in the various other deeds to her, and to allege a moneyed consideration therefor. She admitted the conveyances in trust by Sheehy, and averred that the bank had never requested the land held in trust to be conveyed and applied to the discharge of this debt, or it would have been done, and that it ought now to be done before a resort to the personal estate. She denied the validity of the judgments against Sheehy as affecting her, and proceeded to answer the special interrogatories addressed to her.

Sheehy and wife, in their answer, denied all fraud in the inventory or management of the estate; admitted that no account of his administration had been rendered by Sheehy, but averred his readiness to do so; that although he was the nominal administrator, yet Bridget McLaughlin transacted all the business, and denied all combination with Bridget, or with any other person, to defraud the creditors of Edward McLauglin.

In April, 1839, the court passed a decree for the sale of the property mentioned in the two deeds of Sheehy to Lee, of the 24th of November, 1830, and Sheehy and wife to Edward McLaughlin, of the 15th of March, 1833. The reports of sale need not be further adverted to.

In May, 1843, the cause standing under a general replication and issue, the court ordered it to be tried at law, for the purpose of ascertaining,——

1st. Whether any, and what, valuable consideration was paid or given, and by whom, to James Robinson, for the property conveyed by him to the said Bridget McLaughlin in the bill mentioned; and whether the said property, in the said deed mentioned, was purchased bon a fide by the said Bridget, with her own funds.

2d. Whether the deeds of the 6th of November, 1832, and the 9th of November, 1833, in the bill mentioned, from the said Edward McLaughlin and the said Bridget McLaughlin, or either, and which of said deeds, were or was made with intent to hinder, delay, or defraud the complainants of their just and lawful actions as creditors of the said Edward McLaughlin, or whether the said deeds were made for valuable consideration, and bon a fide.

3d. Whether the deed of the 15th of September, 1834, from the said Edward...