Settlement of Joseph Smith’s Estate

Early revelations given to Joseph Smith commanded the Latter-day Saints to gather and build communities, cities, and temples. These endeavors required large amounts of money, especially to purchase land. As President of the Church, Joseph Smith led out in efforts to fulfill these revealed obligations, choosing to borrow money from creditors since the Church was small and had few resources. A nationwide recession in the late 1830s and early 1840s made it more difficult for him to pay his creditors in Ohio. After he moved to Missouri in 1838, he gave others authority to continue the process of settling his Ohio debts.

The Saints were soon driven from Missouri and settled around Nauvoo, Illinois. The injustices of this forced departure included financial devastation as Joseph and the Saints lost a large amount of Missouri land for which they had paid cash. They petitioned the United States government for compensation but were denied. At the same time, thousands of converts were arriving from the Church’s missions, and Joseph wanted to help these displaced and immigrant families obtain land and opportunities to thrive. For this purpose, between 1839 and 1841, he arranged the purchase of dozens of lots in Illinois, totaling nearly 500 acres.¹

These land purchases involved numerous financial and legal technicalities. Under Illinois law, a church could own property only by electing a trustee to hold title to the property on the church’s behalf. At a special conference in January 1841, Joseph was appointed trustee-in-trust of the Church, under which title he managed Church property. Accordingly, he began to transfer many properties previously held in his name to himself as trustee for the Church.² Neither Joseph, other Church leaders, nor their legal counselors appear to have understood that also according to law, churches in Illinois could not own more than five acres of land.³

Joseph’s personal debts remained a significant burden. In 1841 a new law went into effect that allowed debtors (not, as previously, only creditors) to declare bankruptcy. Courts soon heard scores of requests for debt relief. On the advice of his lawyers, Joseph took the opportunity to file for bankruptcy to discharge his debts, including lingering obligations from Ohio, a major land deal in Illinois, and the balance on a steamboat several Nauvoo businessmen purchased, whose debt Joseph had guaranteed.⁴

In 1842 a former Latter-day Saint and public critic of the Church, John C. Bennett, alleged in newspaper articles that Joseph had fraudulently conveyed properties to his family and the Church in order to prevent the land from being auctioned to pay creditors during bankruptcy proceedings.⁵ A district attorney, Justin Butterfield, discussed the allegations with the solicitor of the United States Treasury, who approved opening an investigation into Joseph’s transactions. Butterfield filed to deny Joseph’s application for bankruptcy, and the district court delayed a final bankruptcy hearing for 11 weeks.⁶ In the interim, Butterfield met Joseph Smith and agreed to serve as his defense attorney during an extradition trial.⁷ A few months later, Butterfield wrote to the solicitor, signaling that he did not plan to oppose Joseph’s bankruptcy based on fraud allegations but to allow the application to proceed once Joseph had paid the steamboat debt.⁸

Joseph Smith’s untimely death in 1844 interrupted the bankruptcy proceedings. Joseph’s widow, Emma Smith, felt immediate pressure from creditors to pay Joseph’s debts and urged the Church to appoint a trustee-in-trust without delay. The question of Joseph’s finances was discussed at length in the early council meetings following Joseph’s death. Beginning with his appointment as trustee in 1841, Joseph Smith had begun to distinguish more carefully between his personal finances and those of the Church, but the two remained entangled at the time of his death. Church leaders and members of the Smith family disagreed over some aspects of Joseph’s estate, including who was responsible for some of his unpaid debts. Ultimately, they all deferred to probate proceedings to satisfy creditors.⁹

In August 1844 Bishops Newell K. Whitney and George Miller were sustained as trustees-in-trust for the Church, and they soon began to sell land Joseph had held on behalf of the Church.¹⁰ Emma also made efforts to secure assets to protect her and her children against foreclosure. Confronting the many technicalities and claims surrounding Joseph Smith’s estate proved demanding for both Smith family members and Church leaders.¹¹

In 1850 a United States attorney sued to collect on the steamboat debt through the sale of land held by Joseph Smith’s estate. The attorney’s complaint claimed, as had Bennett many years earlier, that Joseph had conveyed land to the Church fraudulently. The judge, however, found no fraud.¹² He cited instead the Illinois law restricting the number of acres of land a church could own, determining that most of the land Joseph held as an individual and as the Church’s trustee could be sold to satisfy the steamboat debt. The court ordered the sale of the land and appointed a special master to inspect the properties and deeds. Emma agreed to relinquish her claim as Joseph’s widow to a life estate in one-third of his land (meaning she could live on or rent the land but not sell it or pass it on to her children) in exchange for one-sixth of the proceeds of the land sale. A commissioner appointed by the judge held three auctions and oversaw the payment of claims in 1851 and 1852, which effectively concluded the settling of Joseph’s estate in Illinois. In Ohio and Iowa, estate matters continued into the 1860s.¹³

Bibliography

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Dallin H. Oaks and Joseph I. Bentley, “Joseph Smith and Legal Process: In the Wake of the Steamboat Nauvoo,” Brigham Young University Studies, vol. 19, no. 2 (Winter 1979), 167–99.

Joseph I. Bentley, “Suffering Shipwreck and Bankruptcy in 1842 and Beyond,” in Gordon A. Madsen, Jeffrey N. Walker, and John W. Welch, eds., Sustaining the Law: Joseph Smith’s Legal Encounters (Provo, Utah: BYU Studies, 2014), 309–28.

“Volume 8 Introduction: Joseph Smith Documents from February through November 1841,” in Brent M. Rogers, Mason K. Allred, Gerrit J. Dirkmaat, and Brett D. Dowdle, eds., Documents, Volume 8: February–November 1841. Vol. 8 of the Documents series of The Joseph Smith Papers, edited by Ronald K. Esplin, Matthew J. Grow, Matthew C. Godfrey, and R. Eric Smith (Salt Lake City: Church Historian’s Press, 2019), xix–xxxvi.