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

May 5, 1884

JOHNSON, DATIVE TESTAMENTARY EX'R, ETC., AND OTHERS
v.
WATERS, ADM'R, ETC.



The opinion of the court was delivered by: Bradley, J.

John A. Campbell, for appellants.

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

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 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 succession of the deceased, for the amount of the drafts and interest thereon, which judgment it is alleged has never been paid. 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 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 depreciatio 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 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 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 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 descedant 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 insure this object, on the ninth 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-grand on, 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 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, ut 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 Rob. 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 Gen. 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 30 "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 donationsinter 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 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 go d 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 per cent. 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 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 ...


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