
    Mary A. McPherson and others vs. Edward Lynah and James W. Gray.
    
      Payment — Master in Equity — Confederate Treasury Notes.
    
    Decree, on creditor’s bill, made January, 1859, directed the Master to sell the testator’s estate for one-third cash, and the residue on a credit of one, two, and three years, secured by bond and mortgage— the debts to be paid out of the proceeds, and “the residue, subject to the trust of the testator’s will, to abide the future order of the Court.” The Master made the sales, and took from the purchaser of a plantation his bond for a large sum of money with mortgage. In January and March, 1864, the purchaser paid the bond to the Master in Confederate treasury notes, a currency which at that time had greatly depreciated but which was the only currency in the country. The Court concluded from the evidence that the payment was made and received in good faith: — Held, that neither the purchaser nor the Master was liable to the beneficial owners of the bond.
    BEFORE LESESNE, OH., AT CHARLESTON, FEBRUARY, 1867.
    Tbe decree of his Honor, tbe Chancellor, is as follows:
    Lesesne, Ch. On January 22d, 1859, an order was made by Chancellor Wardlavv, at Charleston, in the cause entitled Coffin vs. McPherson, whereby James W. Gray, Esq., one of tbe Masters of this Court, was directed to sell the estate of the testator, James E. McPherson, on the terms of one-third cash, residue in one, two, and three vears. And it was further ordered, that the testator’s debts should be paid out of the proceeds of sale, and that the residue of said proceeds, subject to the trusts of the will, should abide tbe future order of the Court.
    A plantation on Savannah river, called Vernersobre, which constituted part of the estate, was accordingly sold by Mr. Gray, at public auction, on the third day of January, 1860, and purchased by the defendant, Edward Lynah, at the price of $34,000. Mr. Lynah soon after paid the cash part, and gave his bond and mortgage 'to Mr, Gray, as Master, for the residue, with interest, payable in one, two, and three years. In February, 1861, he paid the first year’s interest, which had become due; and on the 30th January, 1864, the bond being fully due, he paid $22,667 in full of principal, and on the eleventh day of March following, the further sum of $4,943, in full of interest, both payments in treasury notes of the Confederate States of America. The plaintiffs, John McPherson, Mary Ann McPherson, and Cornelia McPherson, are the persons who, according to the will of Col. McPherson, and in consequence of the changes in the family caused by death, are now entitled to the fund that represents said plantation. And the bill seeks to annul the settlement made between Mr. Gray and Mr. Lynah, and to set up the bond and mortgage, or to make Mr. Gray liable for the amount of the same. The transaction between Mr. Gray and Mr. Lynah was perfectly fair on both sides. The bond being past due, Mr. Lynah, who was then in the State of Georgia, simply wrote to Mr. Gray that he was prepared to pay. Mr. Gray replied that he would receive payment, and the money was remitted to him. The whole amount was not paid at one time, because the bond was not accessible at first, and the exact sum due for interest could not be stated. Mr. Gray says in his answer, “there was no persuasion whatever used by Mr. Lynah to induce him to receive payment of the bond, and nothing to distinguish his case, from that of many others, the debtors of the estates whose bonds he held, and who paid them in Confederate money, as they became due.”
    After receiving the first payment, and before the second payment was made, Mr. Gray met with Chancellor Inglis, who advised him, generally, not to take Confederate money any longer, in payment, of old debts, but added that he could not make any order bn the subject, as it was mere matter of opinion. In consequence of this, Mr. Gray wrote to Mr. Lynah, and proposed that the money should be returned, and the receipt for it cancelled, but the proposal was declined.
    When the last payment was made, the bond was given up to Mr. Lynah to be cancelled. The mortgage had been sent to Beaufort District to be recorded, soon after its execution, but was never returned to Mr. Gray, by the friend (now deceased) who took charge of it. The State Records for that district were destroyed by fire in 1865.
    Such are the facts. Mr. Gray was examined by the plaintiffs as a witness at the hearing. My notes of his evidence will accompany this decree.
    It was argued by the plaintiffs’ counsel, that it was beyond Mr. Gray’s duty and power to receive payment of the bond at all, inasmuch as Chancellor Wardlaw’s order directed “the residue” of the sales, remaining after payment of the debts, to await the future order of the Gourt; and that 'Mr. Lynah paid the bond with knowledge of the terms of the order, the same having been recited in the conveyance which he received from Mr. Gray. To this, two answers were given, each of which, in my judgment, is sufficient, Eirst, the order to the Master to pay the debts out of the sales of the property, implied that for that purpose he should receive payment of the bonds which were to represent the sales. And secondly, that part of the order which was relied on, does not mean that the bonds should not be paid to the Master according to their tenor, but that the residue of the fund created by the sale, whether in the shape of bonds or cash, should be retained to abide the further order of the Court.
    And this brings me to the question on which the decision of the case depends, namely, whether the transaction between Mr. Lynah and Mr. Gray was a valid payment of the bond, which cannot now be set aside? Admitting, -with the defendants’ counsel, that the Constitution and laws of the United States were inoperative in South Carolina, during the'existence of the civil war, which was going on when this transaction took place, I cannot agree with him that during that time, according to the laws of the de facto government, anything but gold or silver was a legal tender for the payment of debts. Mr. Lynah then had no right to require Mr. Gray to receive Confederate notes. But it does not follow that it was not, under the circumstances, right and proper for Mr. Gray to receive them. That, therefore, is the question to be considered.
    This case is not, in my judgment, subject to a positive, inflexible rule, which would make Masters in Equity liable for the consequences, if they received anything but gold or silver in payment of debts owing to them in their official character. If, for example, a Master before the war, (when there was a metallic currency in the country,) had received payment of a bond in bank notes, as was customary, and by some public calamity, the value of the notes had suddenly perished, he could not, I apprehend, have been held responsible for the loss. There is some room, then, for the exercise of discretion in this matter. And if Mr. Gray, in the exercise of that discretion, manifested good faith and reasonable prudence, he is entitled to the protection of the Court. In the case of Poloch vs. Dubose, (7 Eich. Eq. 23,) Chancellor Dunkin, speaking of the Commissioner in Equity says: “ In the discharge of his duty, no other rule can well be adopted than that the officer should exercise the same care, diligence, and caution which a prudent man would employ in the management of his own funds.”
    It will be remembered that this bond was past due; there was therefore a right of payment, and the obligor called on Mr. Gray to receive payment. The condition of things at that time is historical. There was no metallic currency in the country. There was no other medium of circulation and exchange than Confederate treasury notes: even the bills of the State Bank had disappeared. Confederate currency was generally received in payment of debts by prudent men. Some few persons may have declined to take it, but such were the exceptional cases. The banks took it; the State government paid all salaries in it; and this Court ordered sales with reference to it.
    If Mr. Gray had officiously called in the bond, the case might have been different. But such was not the fact. He did not even receive Chancellor Iuglis’ friendly advice until after payment had been made. And more than that, he never received one whisper of admonition from the parties interested in the bond. They must have known of its existence, that it was past due, and that such debts were being generally paid with Confederate currency. If they had then considered it unadvisable to receive that currency, I do not say it was their duty to say so to Mr-Gray, but common regard for their own advantage would have prompted it. It is difficult at this day to regard the transactions of that trying period in the same light in which they were then seen.
    Upon the whole, it is my opinion that Mr. Gray, in exercising the discretion with which he was charged, not only acted with perfect good faith, good faith too, in the line of his duty, but that he did exactly what prudent men around him were doing, and that his act is entitled to the sanction of the Court.
    If this be correct — if as the agent of the Court and the parties, he did what was right, the payment of the bond, in the manner in which it was made, was a valid settlement. The case is one of an executed contract, and there being no fraud on the part of the. obligor, it cannot be opened against him. Even in a recent Tennessee case of Wright vs. Overall, (MS.,) in which the Court scouts the idea of Confederate currency being called, money, it uses this language : “ But we do not say a case might not arise involving Confederate money, as the basis of an executed contract, where the rights of the parties were vested, which the Courts for the repose of society, would not disturb.”
    The case is hard for the plaintiffs — for the defendants it may or may not be fortunate.
    But it is one of the many untoward results of a ruinous war.
    It is ordered and decreed that the bill be dismissed.
    The complainants appealed, and now moved this Court' to reverse the decree, for the following reasons:
    1. Because, if Mr. Lynah “had no right to require Mr. Gray' to receive payment of his bond in Confederate money,” as the Chancellor has properly decided, then as against the complainants, for whom Mr. Gray was a mere trustee, the receipt of these notes and the consequent cancellation of the bond and mortgage by Mr. Gray, were breaches of trust, and converted Mr. Lynah, who had notice, into a constructive trustee for the complainants.
    2. Because, there is not only no proof that the complainants ever acquiesced in the payment by Mr. Lynah, of his bond in Confederate notes, but there is no proof that either of them ever heard of the transaction, until a short time before the filing of their bill, and it never was any part of their duty, even had they been aware of the course of business, to caution Mr. Gray against receiving payment in a currency, which, as the Chancellor says, “ Mr. Lynah had no right to require him to receive.”
    
      3. Because, in releasing Mr. Lynah from his obligation to pay $27,000 in gold, in consideration of $27,000 in Confederate notes, worth at that time about $1,300, Mr. Gray did not “exercise the same care, diligence and caution, which a prudent man would employ in the management of his own funds.”
    4. Because, the Chancellor is wrong in comparing the payment and cancellation of the said bond under the circumstances, to an executed contract; if there was any contract, it was between Mr. Gray and Mr. Lynah, for the sale .to Mr. Lynah of his own bond for one-twentieth of its value to which contract the complainants, the owners of the said bond, were not parties.
    5. Because, under the order of Chancellor Wardlaw, Mr. Gray’s only authority was to use “so much of the proceeds of sale as was necessary for the payment of the testator’s debts;” the “residue” (of which the said bond was a part) “subject to the trust of the will,” was “ to abide the future order of the Court.” No such future order ever was made; and though, perhaps, the order “does not mean that the bonds, constituting the residue, shall not be paid according to their tenor,” yet it certainly does mean that they shall not be paid in a currency which the obligor “had no right to require the Master to receive.”
    6. Because it is- respectfully denied- that any such circumstances existed as will justify Mr. Gray in the mode of settlement, but whether he is or is not to be excused, (and the complainants do not care to charge him,) Mr. Lynah who came into possession of the aforesaid bond and mortgage, with notice that they were held for others, must be decreed to be-bound by the trust and to the execution of it.
    
      7. ^Because the complainants only seek to be placed where they would have been had Mr. Lynah’s bond not been released or discharged by Mr. Gray — the right to compel the payment of the bond by Mr. Lynah, or to foreclose the mortgage given to secure it, is all the complainants require — and they hereby submit, that a decree to that extent will in no wise affect Mr. Gray.
    8. Because the decree is in other respects contrary to law and equity.
    
      JDeTreville, Porter & Oortner, Simonton & Barker, Hutson & Legare, for appellants,
    cited 3 M. & S. 574; 2 Story Eq. § 1258 ; 1 S. & Stu. 61; 1 Vern. 149, 342 ; Story on Bills, § 46; 2 Hill Oh. 567; 1 Bich. Eq. 56; 1 Sob. & Lef. 262 ; 2 Story Eq. §§ 1257, 1262; 7 Ves. 166; 1 Strob. 377; 3 Strob. 131; 2 Vern. 197 ; Hill on Trustees, 503, 522; Harp. Eq. 197; Bich. Eq. Oas. 172.
   The opinion of the Court was delivered by

"Wardlaw, A. J.

The decree of the Chancellor is satisfactory to this Court, and very little will be added to the observations he has made.

The dates of the various occurrences may be seen at one view, as follows:

Order of Chancellor Wardlaw, . . Jan. 22, 1859.
Sale b'y Mr. Gray, . . . . ■ Jan. 3,1860.
Beport of sales,.....March, 1860.
Bond and mortgage by Mr. Lynah, . Jan. 1860.

Whereon instalments became due, Jan. 1861, ’62, and ’63. Payment of interest by Mr. Lynah, Eeb. or April, 1861.

Death of Mrs. McPherson, at a very great age, whereupon the rights of the complainants to immediate enjoyment became complete. . . Fall, 1863.
Payment of principal by Mr. Lynah, . Jan. 30,1864.
Conversation between Chancellor Inglis and Mr. Gray, . . . Eeb. 1864.
Payment of balance, being interest by Mr. Lynah, .... March 11,1864.
The bill in this case filed, . . . March 31,1866.

The order of Chancellor Wardlaw, was made in the case of Coffin vs. McPherson, a creditors’ bill, under which debts against the testator, Col. McPherson were to be paid. The order recites " the acquiescence of all the parties, who are directly interested in the sale proposed by the tenant for life, in connection with the fact that such sale must necessarily take place at no distant clay, as well for partition as the payment of debts,” and also “ the application of the solicitors who represent both plaintiff and defendants,” and directs the sale by Mr. Gray, one of the masters of the Court, of the estate of Col. McPherson with some exceptions; further “ that out of the proceeds of sale the debts of the testator be paid, and the residue, subject to the trust of the testator’s will, to abide the future order of the Court.” The report of sales shows that Mr. Gray sold to various purchasers three plantations besides Vernersobre, and many slaves and much other personalty, in the whole amounting to more than $180,000. The residue was the residue of proceeds, and the proceeds must, for payment of debts, have been intended to be cash obtained by the Commissioner from bonds. Not intending in the least to indicate the opinion of the Court, concerning suits commenced, or even payment demanded by the master without the order of the Court, we see in the order which we have cited a justification for Mr. Gray’s receiving payment of Mr. Lynah’s bond, whenever the latter chose to exercise the right of paying it.

But the payment was not, it is said, a payment — it was but the delivery of Confederate treasury notes, which were then far below their nominal value, and since have become worthless. On this head, the defendants have referred to the Act of December, 1861, (13 Stat. 87,) which authorizes trustees, &c., to invest funds in bonds of the Confederate States; but the Act is inapplicable to the case, for here were no funds held in trust for investment and no bonds into which other securities had been changed. Mr. Gray was a trustee, and Mr. Lynah knew at least for what estate the bond was given, and so far may be said to have been constructively a trustee for those who were entitled to its proceeds. The defence of both in the transaction, whereby the bond vas converted into Confederate treasury notes, has been properly placed by the Chancellor upon their good faith and the state of the times. These treasury notes were not as said, even in form valid promissory notes; but they constituted the whole currency of the country, passed as money, were received by prudent men, and paid by the other debtors of McPherson’s estate. They were not equivalent to gold and silver, but they supplied the place of gold and silver; they were not in fact compared with specie, for of that there was none; nor were they expected to be immediately convertible into something of universal acceptance, but were sustained in credit by the expectation of their becoming redeemable in future, and by the sheer necessity which every one felt of their being some acknowledged representation of value. It is, as the Chancellor has intimated, difficult to recall precisely the state of affairs in the beginning of 1864 ; but very many now feel the consequences of their then selling valuable property for this money, now despised, but then eagerly sought. It would be unjust to exact from Mr. Gray more than the same care, diligence and caution, which a prudent man would employ in the management of his own funds. Not one of the complainants was in or near the city — the principal was accepted before Chancellor Inglis’ advice was given, and that was but the opinion of a discreet friend, and no material change in political prospects, nor, as we may suppose, in the credit of treasury notes, took place before the interest was paid. Mr. Lynah is understood to have acted with perfect fairness throughout, and, it would be impossible now to do what the plaintiffs ask in reference to him : restore the parties to the condition they were in when the bond was delivered to be cancelled. We cannot now restore the value which treasury notes, and the land for which the bond was given, then had.

The contract has been executed, and this without evil purpose or violation of duty on either side. To re-open it would transfer a loss from those upon whom it has fallen to another sufferer not less entitled to consideration, and the establishment of a rule which would permit this, might work mischief to an appalling extent.

The decree is affirmed.

Dunkin, C. J., and Glover, J., concurred.

Decree affirmed.  