Robert R. Braswell by his will, duly executed and proven, gave to his children Benjamin, Joseph, Thomas, Robert S., Arnetta, Ansey, Margaret, and to Anseylina, his widow, certain specific legacies, and then bequeathed the remainder of his estate to be sold and the proceeds "to be equally divided between his living children and their lawful heirs." Benjamin G. Braswell and Joseph J. Braswell were appointed executors, but only Benjamin qualified, the other having renounced. Margaret, one of the children, intermarried with Loeston Cobb, who with his wife are made defendants.
In October, 1848, Loeston Cobb executed a deed assigning all his interest in the estate to the plaintiff for the benefit of his creditors, which was duly registered. In the same year, but after the execution (138) and registration of the deed of assignment to the plaintiff, the executor, without notice of this assignment, under an authority in the will, sold to Loeston Cobb a tract of land for two hundred dollars and took his note without security, with an understanding that this sum should be deducted out of his share of the estate; he also, after this assignment and registration, but without notice, at the request of Cobb, paid notes and a judgment for him to the amount of forty-three dollars with the same understanding; these sums, with interest on the $200, amount to $300. Loeston Cobb is insolvent. The prayer of the bill was for an account. It was referred to the Clerk and Master to take an account, who reported allowing this sum of three hundred dollars as a credit to the executor, to which the plaintiff excepted. It was held in Allen v. Smitherman, 41 N.C. 341, that the assignee of a distributive share takes it subject to all the Equities to which it was liable at the date of the assignment. We go further and *Page 95 hold that he takes it subject to all Equities up to the time that he gives notice to the administrator.
In our case an executor held a residuary fund to be divided among the children of the testator. The husband of one of the children assigned his share. Afterwards the executor, having no notice of the assignment, took his note without security and paid off debts at his request, with an express understanding that the amount advanced should be deducted from his share. We think it clear that he is entitled to a credit for the amount in a settlement with the assignee.
Such an interest is not assignable at law. Equity permits it to be assigned, but to guard against fraud the assignment is (139) considered imperfect until consummated by notice of the trustee. It is supposed that prudent men will make enquiries of him before dealing with the cestui que trust; and the object of requiring notice to be given to the trustee is to put it in his power to give correct information.
In regard to land, fines and common recoveries, which are matters of record, livery of seizin and the enrollment of deeds of bargain and sale give notoriety to the change of ownership. A lease for years is consummated by the entry of the lessee, the purchaser of chattels may take them into possession (if he fails to do so it is a strong badge of fraud, Twyne'scase), and the change of possession is evidence of a change of ownership. The endorsement of negotiable instruments or the possession of paper, when payable to bearer, shows for itself; but a trust, when the subject is personal property and choses in action other than negotiable instruments, are not susceptible of actual possession, and Equity, pursuing the analogy of the law in allowing the assignment, requires that the change of ownership shall be shown by giving notice to the trustee or the person liable, which is taken as tantamount to a change of possession. Notice is necessary to perfect the assignment so as to deprive the assignor of any subsequent control. Adams Eq., 54. Before notice is given to the trustee or person liable the assignment is binding upon the assignor and volunteers and all who are affected with notice, but the assignment is imperfect and is put on the footing of a mere contract of purchase. After such notice the title is perfect and the assignee has a complete right in rem.
It is insisted that as the assignment was by deed of trust to pay debts, and was registered before the advancements were made by the executor, the registration was notice to him. We do not think so for two reasons: Admit, for the sake of argument, that a deed of trust assigning such an interest is within the operation of the registration laws; (140) admit, too, which is also for the sake of argument, that the notice required to be given to the trustee, like the notice which will affect a purchaser, may be by implication, it is certain that an absolute assignment *Page 96 of such an interest need not be registered. So the necessity for registration depends on the accident of the assignment being absolute or in trust. It cannot be law that an administrator or executor before he may safely pay, in part or in whole, a distributive share must search the office for an instrument which he has no reason to expect to find there, unless it happens to be of a particular kind, when he has no intimation or ground for belief or suspicion that one of any sort has been executed.
But a deed of trust assigning such an interest does not come within the operation of the registration laws. The acts concerning the registration of mortgages and deeds of trust are intended to prevent debtors from committing frauds, and are confined to lands and chattels — such things as may be sold under execution. The act of 1828, although it uses the general terms "estate, real and personal," goes on to restrict the meaning to lands and chattels by providing that the deed, if for land, shall be registered in the county where the land lies; if for chattels, in the county where the bargainor resides, or if he resides out of the State, "in the county where said chattels, or some of them, are situate."
No provision is made in reference to the counties where a deed of trust assigning choses in action or distributive shares is to be registered. Suppose a merchant assigns book-debts, notes and judgments, in which county must it be registered? It is evident such a deed does not come within the words of the statute, and it is equally clear that it does not come within the mischief intended to be remedied. A creditor (141) cannot be hindered or delayed in having his execution satisfied by such a deed, because his execution cannot reach the subject of it. This construction is sustained by the opinion of the Judges in Doakv. Bank, 28 N.C. 309. It is true they differ as to whether a "pledge," as distinguished from a mortgage of a chattel, must be registered, but they agree that a mortgage or deed of trust assigning "bank stocks, debts and choses in action generally" need not be registered. Dearle v. Hall, 3 Russ., 1; 3 Eng. Cond. Chan., 266, is direct authority for our decision in both points of view. One being entitled to an annuity of £ 93 to be paid out of a fund held by the executor, assigned it by deed indented to Dearle in trust to secure the payment of £ 37 a year to said Dearle during the life of Brown and to pay the residue to Brown; this deed was enrolled, but notice was not given to the executor. Afterwards Brown assigned the whole annuity to Hall; before completing the purchase Hall enquired of the executor if Brown had a right to assign, and was informed that he had. Hall thereupon took the assignment and gave notice to the executor. It was decided that Hall was entitled to the annuity on the ground that Dearle had not perfected the assignment to him by giving notice to the executor. In reply to the suggestion that the enrollment amounted to notice so as to affect Hall (there was not even a *Page 97 suggestion that it required such notice as is required to be given to the trustee), it was said: "It is true the assignment, being given to secure an annuity, was required to be enrolled, but if the annuity had been assigned absolutely no enrollment would have been necessary, how then could Hall be expected to look in the offices for a decument [document] which had no natural connection with the transfer of the fund?
"It was mere accident that it required enrollment. It would be too much to impose on a purchaser the obligation of making a search, to which there was nothing to lead him." (142)
Our case is stronger than that in two particulars: here the executor advances a part of the fund to the person originally entitled to it. There the contest was between two purchasers. Here the deed required no registration; there the deed to the first assignee required enrollment and was enrolled accordingly. The exception must be overruled.
Decree accordingly.
Cited: Miller v. Moore, 56 N.C. 436.