
    NATHANIEL C. GORDON vs. HAMILTON BROWN.
    Equity disregards penalties.
    A penalty limits the sum which may be recovered in an action of debt for a breach of a contract.
    The party who claims for the breach of a contract is not restricted to his legal remedy by an action for the penalty, but may claim an execution of the contract, as it is understood in a Court of Equity; that is, as a stipulation, without reference to the penalty, to do the several things stated in the condition.
    Cause transmitted to this Court by consent of the parties from the Court of Equity of Wilkes County at the Fall Term, 1846.
    The facts of this case seem to be these, as collected from the pleadings and exhibits. Sarah Gordon was in 1834 of an advanced age and owned some slaves and other property; and among them was a negro man, named Jim, and a woman named Harriett. She had a numerous family of descendants. Two of her sons were then dead, namely, Nathaniel and John. The former left several infant children, of whom the present defendant was the guardian and step-father. The latter left a son, who is the present plaintiff and was then of full age and resided in Mississippi. John Gordon was, at the time of ■his death, indebted to one Thomas Brown on a judgment in a Court of Tennessee for the sum of $550; and the present defendant was the agent of the creditor to collect or secure the debt. In that state of things, Mrs. Gordon • was desirous of making some immediate advancement for the children of her deceased son Nathaniel, and provide for the payment of the debt of her late son John, and also make some prospective provision for the present plaintiff; and she determined to give to Nathaniel’s children the use of the negro Jim during her own life, and to give the remainder in him after her death, and also the other negro Harriett to her grand son, the plaintiff, subject, nevertheless, to the payment at her death of what should be then due for principal and interest upon the judgment of Thomas Brown against his father; and to that arrangement the defendant, as the agent of Thomas Brown, assented. In order to carry it into effect the parties adopted this method. Sarah Gordon and Nathaniel C. Gordon, the plaintiff, made an absolute bill of sale to the defendant for the two negroes, bearing date March 13th, 1834; and at the same time he, with a surety executed to them a bond in the penal sum of $1000, with a condition, reciting that, whereas Sarah Gordon and Nathaniel C. Gordon, had sold to H. B., the defendant, the two slaves Jim and Harriett, and for the purpose of re-purchasing them had agreed to pay him at the death of Sarah Gordon the sum of $550 and interest thereon, to be applied to the judgment in favour of Thomas Brown against John Gordon, and then providing that the bond shall be void, if during the. life of Sarah Gordon H. B. shall allow her to have the use and possession of Harriett, and, during the same term, shall hold the slave Jim for the benefit of the infant children of Nathaniel Gordon deceased, and, upon the death of the said Sarah, shall convey the said two slaves Jim and Harriett to Nathaniel C. Gordon; (the plaintiff) he, the said Nathaniel C. first paying to H. B. the said sum of $550, with the interest thereon. 
      On the 15th of March, 1834, the bond was proved before a Judge and registered.
    In March 1842, Sarah Gordon died, having made a will, in which the defendant is appointed executor. In October 1843, this bill was filed by Nathaniel C. Gordon against Hamilton Brown, to obtain the conveyance of the two slaves and an account and payment of their profits, since the death of Sarah Gordon, the plaintiff offering to pay the principal and interest of the debt of his father to Thomas Brown. The bill charges, however, that the defendant'was unable to convey the negroes, because he had sold them in the life time of Mrs. Gordon ; that is to say, Jim for the price of $637 to a person in this State, who has since carried him to parts unknown, and Harriett to some person in Georgia for $1000: that those sums were less than the value of the slaves, but that the plaintiff was willing and had offered to accept them instead of the slaves, and, after deducting the sum due on Thomas Brown’s judgment, to receive the residue and interest thereon from the death of Mrs. Gordon ; but that the defendant refused to settle on that principle or any other, except that of accounting to the plaintiff for the penalty of $1000, named in his bond, by deducting therefrom $814 for the debt to Thomas Brown, and paying the balance of $186 to the plaintiff. The prayer is for a conveyance and delivery of the slaves, and the increase of Harriett, or payment of the sums for which they were sold, or payment of their present values.
    The bill states that the original bond was in the possession of Sarah Gordon, and has been lost, and a copy from the Register’s books is annexed as an exhibit.
    The answer admits the execution of a bond in the penalty of @1,000 and that “it was not materially variant from the copy annexed to the bill; but “ the defendant upon the best of his recollection does npt admit, and does not deny, that the paper, annexed as a copy, is a true copy of the bond.”
    
      The answer states, that the bond was executed with the understanding, that Sarah Gordon might, nevertheless, at her will and pleasure, dispose of the negroes, provided she should pay the debts to Thomas Brown: that in 1836 Sarah Gordon, on account of the bad qualities of the negro, sent Harriett to Georgia, and had her sold there on a credit for $1,000, for which a note was taken payable in Georgia bank notes to one Gwyn, her agent. The defendant admits that Sarah Gordon made known to him her wish to dispose of Harriett, and her intention to appropriate a part of the price to making a further provision for the children of Nathaniel Gordon, who were the wards of the defendant; and that the defendant did not interfere to prevent her, but advanced the money for the expenses of carrying the slave to Georgia. The answer states that in 1833 the defendant received ©300 on the note for the price of Plarriett: and that no other part of the debt has as yet been collected, though he thinks that, after a short delay, the residue may be collected. He says that the reason he did not receive the money before, was the depreciation of Georgia notes, being as much at one time as 16 per cent, below those of this State ; and therefore he let the debt continue outstanding, until the circumstances of the debtor became doubtful: but that in doing so and in all his other conduct, he acted upon the best of his judgment for the interests of those concerned as he would for himself. He furthermore states, that Sarah Gordon after-wards made her will, and therein bequeathed divers legacies, which will be defeated by reason of a deficiency of assets, unless a part of the price of Harriett be applied to their satisfaction.
    The answer states the reason for the sale of Jim to have been, his insubordination and the apprehension, on certain circumstances mentioned, that he designed an escape into Canada or a north-western State. It admits the price to have been $637, which it says was the full value: and states the defendant’s ignorance, whether Jim or Harriett be living or dead, or what is their present value, or whether Harriett had any children. It also admits that the defendant hath kept out at interest the said sums of $637, and @300, and states that he paid the interest to Mrs. Gordon during her life, and is ready to account for the principal and interest since her death to the plaintiff, if he be entitled thereto. The .defendant states, that when he executed the bond, his understanding was, that the demand of the plaintiff for a breach of the condition was limited to the penalty of $1,000 ; and he insists on that, as the law of their contract. Moreover the answer insists, that, as the bond was payable to Sarah Gordon and the plaintiff, he is bound by the acts of his co-obligee, and that, as she sold the negro Harriett and directed the disposition of part of the proceeds, and therefore could not complain thereof, so neither can the plaintiff. The defendant then submits to pay the plaintiff the penalty of $1,000, deducting therefrom the debt to Thomas Brown.
    The plaintiff put in as evidence two letters written to him by the defendant. One dáted April 29th, 1842, in which he advises him of the death of Mrs. Gordon, and that he was desirous that the plaintiff should come in and settle the business between them. He then 'states, that he. had sold Jim for @637, and then proceeds: “I sent Harriett to Georgia and sold her tor $1,000 in Georgia money. I have paid the interest annually to Mrs. Gordon. As there was and now is a large discount between Georgia and North Carolina money, I let it remain in Georgia, with the expectation that Georgia money would get better. I was there last January and had the misfortune to lose @700 of that money.” The other is dated November 18th, 1842. and appears to be in answer tó one from the plaintiff, in which he claims the negroes or their value, and his unwillingness to bear the loss of any part of the price of Harriett. The letter then says : “ I intended, after Brown’s claim was settled, to pay you the balance of the sale of the two negroes ; but I was unfortunate and lost in Georgia $700 of the price of Harriett. If 1 had been unfortunate and both of the negroes had run or died, I still would have expected to pay you the amount of the bond at Mrs. Gordon’s death. As I was unfortunate in losing a part of the price of Harriett, I must fall back on the amount of my bond.”
    
      Dodge, for the plaintiff.
    Bynum, for the defendant.
   Ruffin, C. J.

The plaintiff would be entitled to a decree for a conveyance of the slaves, if the defendant had them in possession. It is true, as the defendant says, the penalty was the law of their contract, limiting the sum which could have been recovered from the defendant in an action of debt. But equity disregards penalties. If the penally here had been ten times as much, the defendant would have then thought it reasonable and equitable, that he should be relieved from it by performance of the act, upon the non-performance of which the penalty accrued by strict law. So, the other side is not restricted to his legal remedy by an action for the penalty, but may claim an execution of the contract, as it is understood in this Court; that is, as a stipulation, without reference to the penalty, to do the several things stated in the condition.

The negroes, however, have been sold; and several questions are made, how far the defendant is thereby discharged. As to Jim, there is no allegation in the answer that Mrs. Gordon directed or even assented to the sale made by the defendant, and therefore the defendant is undoubtedly liable for him. The defences as to Harriett must also, we think, all fail. In the first place, it Is clear that Mrs. Gordon had parted from all control over her, except for the term of her life. Her conveyance was by deed, in part for a valuable consideration in respect of Thomas Brown’s debt; and,' moreover, good without that circumstance, inasmuch as the St. 27 Eliz. (Rev. Stat. ch. 50, sec. 2,) in favour of purchasers,- does not embrace personal chattels. McKee v. Houston. 3 Murp. 429. Still less can a sale to raise a fund for the payment of legacies defeat a bona fide voluntary conveyance to or for a grand-son. For the same reason that in this Court the penalty is not respected, the acts of Mrs. Gordon in making or assenting to a sale of the negroes cannot affect the interest of the plaintiff. The form of the contract is nothing. The substance is, that upon the death of that lady, the defendant became the trustee of the slaves for the plaintiff, subject to the incumbrance of Thomas Brown’s debt.

But, setting aside all those considerations, the defence fails for want of proof. There is no evidence, that Mrs. Gordon sold or agreed to the sale of either of the negroes. On the contrary the only evidence upon the point, except the answer, are the letters of the defendant, in which he assumes the act, as exclusively his own. Then, it is the common case of a trustee undertaking of his own head, and without the concurrence or .knowledge of the cestui que trust, to dispose of the trust property ; and he must undoubtedly make it good, by answering for the value, at the least. If the cestui que trust chooses, he may claim the price got by the trustee, however far above the value ; for a trustee can make no profit for himself, though he may lose by a breach of trust. But if the cestui que trust claim the price, he must take it in its actual state ;• for when he follows the fund, he gets it as it is-. Therefore the plaintiff cannot charge the defendant with $1000 for Harriett (if that exceeds her value) without accepting the money collected by the defendant and the sureties held by him for the residue. But he has the right to take the sum of $637, received for Jim, as his counsel says, he is content to do ; and, at his election, to have a decree for the present value of Harriett, and her issue, if any, or for the sum received by the defendant and the securities for the residue of the price ; and to those ends he may have ail necessary enquiries.

Per Curiam.

Decreed accordingly.  