Bank of the United States v. Lee

ON appeal from the Circuit Court of the United States, for the county of Washington, in the District of Columbia.

The appellant filed a bill in the Circuit Court, stating, that in 1817, Richard Bland Lee represented himself to be the owner of certain after mentioned property, then in his possession; that he applied to the bank for a loan of $6000, and offered to convey the said property in trust, to secure the repayment of said sum of money; that the loan was made, and a deed of trust executed and delivered on the 11th June, 1817, to Richard Smith, as trustee; that the said Lee died in 1827, intestate and insolvent, leaving said debt unpaid; that no administration was taken on his estate; that his widow. Elizabeth Lee, the defendant, has taken possession of said property, and withholds it from said trustee, alleging that it had been previously conveyed by her said husband, in January, 1809, to trustees, for her use.

The bill charges, that the said deed of the 9th January, 1809, if ever made, was a voluntary and fraudulent deed; and, therefore, void against the complainants, who are bona fide purchasers, for a valuable consideration without notice: that the considerations expressed in the said deed are false, or, if true, insufficient to give it solidity; that at the date of the said deed, Richard Bland Lee was largely indebted, and incompetent at law to make the same; that if the said deed had every legal requisite, it was executed in Virginia, and never was recorded in Washington county, in the District of Columbia, to which place the said Lee and his wife removed, bringing with them the said property, or was other notice given to the public then of its existence: that E. J. Lee, the surviving trustee, in the deed of the 9th January, 1809, and Mrs. Lee, herself, knew that the complainant had loaned the $6000 to Richard Bland Lee, upon his representations that he was the owner of the said property, and that Richard Bland Lee had conveyed the same to Richard Smith, to secure the payment of the said sum of money; and never communicated to the complainants, or to Smith, until several years after the death of Richard Bland Lee, the existence of the deed of the 9th January, 1809.

The bill prayed that the deed of the 9th January may be produced, the execution thereof and the recitals therein fully proved; and that it may be declared fraudulent and void against the complainants.

Elizabeth Lee, in her answer, admits the loan, and the execution of the deed to Richard Smith, but avers she was ignorant of its execution until long after it had been delivered, and never consented thereto; she denies any knowledge of the representations made by Richard Bland Lee, respecting the ownership of said property, when he applied for the loan.

She says, that on the 9th January, 1809, she and her husband, then living, and having a long time before dwelt in Fairfax county, Virginia, and the property in the deed mentioned therein, being in the said county, she agreed with her husband to relinquish her right of dower in certain lands in Spotsylvania county, Virginia, in which her husband held five-eighths of eight thousand acres; also to convey her right in certain Fairfax land, containing two thousand one hundred acres, her separate property, to trustees, to secure a debt of $10,034 28, due from her husband to Judge Washington; in consideration of which, and of her execution of the conveyances and relinquishment of her dower, her husband agreed to convey to E. J. Lee, William Maffit, and R. Coleman, certain slaves, &c., of which those mentioned in the bill of complaint are part, for her use; that it was agreed that her said husband should be authorized to sell any part of the said property, with consent of a majority of the said trustees, provided he should convey to the said trustees other property, to the full value of that sold. She avers that, in execution of this agreement, and in consideration of the deed of the slaves, &c., of the 9th January, 1809, she executed the deed of the Spotsylvania land, and relinquished her dower therein; that on the 9th January, 1809, she conveyed the land in Fairfax, to secure Judge Washington's debt; and on the same day her husband, in fulfilment of his part of the agreement, made and executed the deed of the 9th January, 1809, to E. J. Lee, Maffit, and Coleman, of the slaves, &c., which deed was duly proved and recorded in Fairfax County Court, within eight months from its date; in which said county, she still continued for some time to reside with her husband, and where she continued to hold the said property. The deeds are exhibited with the answer.

She declares the agreement to have been bona fide, and without fraud, and claims to be the owner of said property. She admits her husband sold part of the property, with the consent of her trustees, and other part under the pressure of great distress, without their consent, after they removed to Washington; that her husband died in 1827; that they lived together until his death; and that her possession of the property, being domestic servants and household furniture, could not be separated from his, and was consistent with the deed.

The case is stated more at large in the opinion of the Court.

The Circuit Court decreed that the bill should be dismissed; and the complainants prosecuted this appeal.

For the appellant, Coxe and Mr. Sergeant contended:--

I. That the deed of 9th January, 1809, was, from the beginning, fraudulent and void.

1. Because on the face of said deed no valid consideration appears; but the same is voluntary, by a person largely indebted, in favour of his wife and children.

2. Because no such agreement, as is set forth in defendant Elizabeth Lee's answer, is proved; although put in issue by the pleadings, and strict proof is required by the complainants.

3. Because it is admitted that the property recited in said deed to have been conveyed to Turner and others, was merely conveyed, by way of mortgage, to secure a debt due to Judge Washington; which debt has been paid from other sources, and the said property so mortgaged has been exonerated from said incumbrance.

4. Because no such deed as is recited in the deed of 9th January, 1809, as having been then made to Ludwell Lee, appears ever to have been executed.

5. Because the deed of 16th July, 1809, from R. B. Lee and Elizabeth his wife, to Ludwell Lee, does not correspond with the description in the recital of the deed of 9th January, 1809.

II. Because the continued possession, use, and enjoyment by said R. B. Lee, of the said property, purported to be conveyed by the deed of 9th January, 1809, was evidence of a continued ownership; and avoids said deed as against subsequent bona fide purchasers and creditors, without notice.

III. That said deed, so executed in Virginia, will not validate the possession, use, and enjoyment of said property in the city of Washington.

IV. Because the whole case exhibits a case of gross and palpable fraud, which ought not to stand in a Court of Equity.

For the appellees, Mr. Marbury and Mr. Cooke insisted, that the deed of January 9th, 1809, is valid against the complainants. That, considered as a voluntary settlement, it is good against the complainants, they being subsequent creditors.

That the said deed was made for good and valuable considerations between the parties.

That there is no evidence to charge Mrs. Lee, or her trustee, with any fraudulent practice on the complainants; in the concealment of their title to the property at any time.

That the possession of Richard Bland Lee, after his removal to the District of Columbia, was consistent with the deed, and the necessary consequence of his relation to Mrs. Lee.

That it was not necessary to record the deed in the District of Columbia, on the removal of the parties and of the property to Washington city.

That the power reserved to Mr. Lee, to dispose of the property with the consent of the trustees, is not a badge of fraud; and does not affect the validity of the deed in which that power is reserved.

That the sale by Richard Bland Lee of portions of the said trust property, without the assent of the trustees, cannot affect the title of Mrs. Lee to that part which he did not sell.

Mr. Justice CATRON delivered the opinion of the Court.--