Rhea v. . Tathem , 54 N.C. 290 ( 1854 )

The whole case is set forth in the opinion of the Court. The defendant Tathem purchased of the defendant Vannoy the "preemption right," at the price of ten dollars and the further consideration that Vannoy should be allowed the full benefit of all mineral interests in the land; and to secure the enjoyment thereof, Tathem executed to Vannoy a penal bond. Tathem paid to the State the amount at which the land was valued, and in the words of the bill, "the said land was duly and legally granted in fee simple to him." Tathem avers that he is a purchaser without notice of any equity on the part of the plaintiffs.

After Tathem obtained the grant, Vannoy sold all his interest (291) in the minerals to the defendant Woodfin for the sum of four hundred dollars, and he associated with him the other defendants, Woodfin and McDowell, and they aver that they are purchasers without notice of any equity on the part of the plaintiffs. The plaintiffs have not by their proofs affected these defendants with notice, and as to them the case fails; so the question is as to the defendant Vannoy. In 1838, Vannoy, the plaintiff Rhea, and Garland, the assignee of the plaintiffs Thomas and McKay, the ancestor of the other plaintiffs, entered into a written agreement, under seal, in regard to certain tracts of land bid off at the land sale in Cherokee, among others, No. 41, District 7 (the subject of this controversy). According to this agreement, the partners were to own the land as copartners, pay for it equally, and share equally in all profits arising from mining operations or agricultural pursuits or other use or disposition of the land; such disposition was to be made of the property "as a majority of them might deem advisable." One-eighth of the price was paid in cash, and the balance secured by note and sureties as required by statute.

In 1845 all the plaintiffs being absent from the State (as the bill alleges) "engaged in private business," Vannoy surrendered the land to the State, according to the provisions of the act of 1844, entitled "An act more effectually to secure the debts due from the Cherokee lands, and to facilitate the collection of the same," the securities given for the balance of the purchase money (upon which judgments had been taken) were cancelled, and the judgments discharged.

In 1847, the plaintiffs being still absent from the State, Vannoy applied for and obtained a certificate of the preemption right allowed to purchasers who had surrendered. He took the certificate in his own name alone, and afterwards sold it to Tathem, reserving the mineral interests, which he afterwards sold to Woodfin, as stated above.

The plaintiffs insist that Vannoy had no right to make a surrender; that he did so in fraud of their rights, and with a view to (292) his own benefit, and is bound to account and pay over to them equal shares of the sums realized by him, for and on account of the preemption right, to which, as they allege, they were equally entitled; that is, $400 by the sale, and other large sums by working a rich gold mine before he sold the mineral interest.

They insist further that if Vannoy had a right to make the surrender in their absence, and cannot be made liable on the ground of fraud, still as they were copartners and joint purchasers, they were under the 2d section of the act of 1846 entitled as purchasers to a joint interest in the "preemption right," and the defendant, although he took the certificate in his own name, will in equity be deemed a trustee, so as to let them in for equal shares of the profit derived from the "preemption right."

Vannoy in his answer avers that the bonds for the balance of the purchase money were executed by him and McKay alone as principals, with one Piercy and Carson as their sureties; that McKay became insolvent, ran away, and went to parts unknown, and the writs issued upon the bonds against himself and McKay, and the two sureties, were returned non est inventus as to McKay, and the judgments were taken against himself and the sureties; that the plaintiff Rhea was also insolvent and had left the country; that Garland resided in the county of Yancey, and paid no attention to the business; that his alleged assignee, the plaintiff Thomas, resided in the county of Haywood, and was at the time absent from State; that neither Rhea, Garland or Thomas offered to assist him in any way, either by furnishing credit or funds, and thus he was deserted and left unsupported and alone to do the best he could in the premises; that he himself became insolvent, and although he wished to hold on to the land, yet he was compelled to take the benefit of the act of 1844, which allows the land to be (293) surrendered when the commissioners certify that the principals in the bonds are insolvent; that accordingly the commissioners did duly certify (and according to the truth) that he and McKay (the principals in the bonds) were insolvent; that the land was thereupon surrendered and the bonds and judgments thereon discharged and considered to be released and satisfied, and that in making the surrender he acted under compulsion and without fraud, that being the only way in which he could relieve the sureties, which in conscience he felt bound to do.

The answer further avers that afterwards, upon the passage of the act of 1846, the defendant Vannoy became entitled, under section 2, to the "preemption right" as a purchaser who had surrendered, and who was anactual settler on the land; that neither McKay or his heirs, or Rhea, or Garland, or his alleged assignee Thomas, were in any way interested or entitled to participate in such preemption right, for they were all expressly excluded by section 7, which provides: "The preemption right granted by section 2 of this act shall not extend to any person or persons who are not actual settlers on the land, who do not design to become permanent residents of the county."

Upon looking into the proofs we are satisfied that McKay and Vannoy alone executed the bonds as principals. That McKay became insolvent and left the State. Vannoy also became insolvent, and judgments were taken against him and his sureties. There is no evidence that either of the plaintiffs offered to assist in any way by credit or cash, and consequently Vannoy was compelled, in order to relieve his sureties, to make the surrender. So the charge is wholly unsupported; in fact, Vannoy could not have made the surrender with a view to his own benefit, for he did so before the passage of the act which confers the "preemption right on purchasers who had surrendered, being actual settlers (294) or persons desirous of becoming permanent residents of the county."

The charge of fraud certainly comes with an ill grace from the plaintiffs, who deserted their partner and left him to get out of the difficulty in the best way he could. The first ground on which the plaintiffs place their equity fails.

The second ground depends upon whether the plaintiffs or either of them were entitled, under the act of 1846, to a participation in the preemption right as purchasers who had surrendered, for if they had such an interest, they have an equity by which to hold Vannoy as a trustee, and to consider him as having obtained the preemption right as well for their benefit as his own, by reason of their former connection as partners, and to hold him to an account for such profits as he may have realized therefrom. This equity we think clear from analogy to the well settled doctrine in regard to the renewal of leasehold estates. "If a trustee or executor holding renewable leaseholds renew in his own name, he cannot hold for himself, even though a renewal of the former trusts may have been refused by the lessor; the same result will follow by a mortgagee or partner, or by a tenant for life; for although he may not be bound to renew, yet if he does renew behind the back of the other parties interested, he cannot, by converting the new acquisition to his own use, derive an unconscientious benefit out of the estate on which it is a graft." Adams Eq., 60. So the question is: were the plaintiffs, as purchasers who had surrendered, interested and entitled to participate in the "preemption right"? The 7th section expressly excludes all who are not actual settlers on the land or desirous of becoming permanent residents of the county. McKay is out of the question, and there is no allegation in the bill by which to bring either Rhea, Garland or Thomas within the requirement of the act; so the field was open to Vannoy, and there was no reason why he could not with a good conscience avail himself of a benefit which the act conferred, and which was preserved to him on account of his residence.

PER CURIAM. Dismissed with costs.

Cited: Rhea v. Vannoy, ante, 288.

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