43 W. Va. 323 | W. Va. | 1897
Baer ¡Sons Grocer Company and others, creditors of N. B. Williams, filed their bill in the Circuit Court- of Mason County against John E. Beller, trustee, and others, attacking the following deed of trust as fraudulent-per sc, fraudulent in fact, and void as a preference, under section 2, chapter 74, Code : “Deed of Trust. This deed, made the 21st day of November, 1894, between N. B. "Williams, of the first part, and John E. Beller, trustee, of the second part-, all of Mason county, "West Virginia, wit-nesseth: That for and in consideration of the. sum of one dollar, the receipt whereof is hereby acknowledged, the said party of the first part- does hereby grant unto the said John E.
1. Is the deed fraudulentsc? Plaintiffs insist that the clause allowing the grantor to replenish the stock renders it, so, although the trustee is to take immediate possession thereof, and manage the same for the benefit, of the trust. There is nothing on the face of the deed to show that the grantor is indebted to any one else, or that she has not, other means to purchase goods to replenish the stock; and it is not unreasonable to suppose that she desired to keep the stock fully replenished, so as to keep the business profitable, that the proceeds thereof would sooner pay off the trust lien. Between herself and the trust creditor, where the rights of others do not interfere, there is no good reason why the new goods purchased by her should not become subject, to the trust lien without the continual renewal thereof. If, however, it was contemplated by the grantor and the trust creditor that she should buy goods on credit, and that the trust-should extend to such goods, such trust would be fraudulent as to subsequent creditors. This does not appear from the deed, but depends on extraneous testimony; and, as far as the deed shows, it may have been entered into in perfect good faith, without the. remotest intention to commit, fraud. -If the grantor had retained the right to sell as well as replenish, then the deed would have been fraudulent per fie. The possession is given at once to the trustee, which precludes the implied right to sell, which would have otherwise resulted from the language used. Counsel insist that the possessory clause was inserted to evade the former decisions of ■ this Court. Was it not inserted rather to comply therewith, and render the trust legal and valid? It is also insisted that the trustee had no power of sale for thirty days. This means in bulk. The power given him to manage the same for the benefit, of the trust, it being a stock of merchandise, would authorize him to sell at retail, if
2. Is the deed fraudulent in fact? O. E. Williams, who was doing business in the name of his sister, N. W. Williams, and who engineered this whole transaction in her name, and almost entirely without her knowledge, did so undoubtedly with fraudulent intent towards the creditors. Instead of endeavoring to pay them, he was trying to get. their property beyond their reach. Pressed by the creditors, he borrows one thousand dollars on the stock, part of which he pays on the debts, but the larger part of which he at least pretends not to know what he did with, except that he used it. In the whole transaction his fraudulent
3. Is this deed of trust void as a preference, under Code, c. 74, s. 2? The clause of the section referred to is in these words: “And every gift, sale, conveyance, assignment, transfer or charge ma.de by an insolvent debtor to a trustee, assignee, or otherwise giving, - or attempting to-give a iiriority or preference- to a creditor or creditors of such insolvent debtor, or which provides or attempts to provide for the payment in whole or .in part of a creditor or creditors of such insolvent debtor, to the exclusion or prejudice of other creditors, shall be void as to such priority, preference or payment so made, or attempted to be made.” N. B. Williams was undoubtedly insolvent, from her own showing. tflie owned nothing at all, but what was covered with debt. The only thing tangible that she had, other than the store, was a piano, bought on the installment plan, unpaid for, with the title reserved. She makes an absolute assignment of the store and fixtures, turning them over to a trustee immediately to secure a single preferred creditor, to the exclusion of all her other creditors. Tt is true that it was not to secure a debt wholly pre-existing. The statute makes no .exceptions as to creditors with regard to when the debt is created, ex
The appellants claim that goods to the amount of one hundred and eighty-four dollars and forty-six cents went into the store, and were taken possession of and sold by the trustee after the assignment, which had been ordered from it. before. The witness O. F. Williams says these goods were ordered before the trust was executed, and were withheld by the appellants; but, on the day the trust was executed, he sent them a check for two hundred and twenty-five dollars on account, and then appellants sent the goods, which were received by the trustee as part of the stock. An agent of the appellants saw the goods in the store, but did not demand them. It is well settled that, where an insolvent person orders goods on credit on the eve of assignment, the title to such goods does not pass, although they were received prior to the execution of the assignment. Donaldson v. Farwell, 93 U. S. 631. In the case of Durell v. Haley, 1 Paige 492, a judgment and execution were obtained against, the defendant Haley on
The decree, complained of is reversed, and the deed of trust executed by N. B. Williams on the 21st day of November, 1894, is held invalid as to the preference thereby sought to be created, but as a valid assignment for the benefit of all the creditors of the grantor, subject, however, to the debts created by the trustee beneficial to the trust estate; and this cause is remanded to the circuit court, with directions to settle the accounts of the trustee, and, after the payment of the just and beneficial debts incurred by the trustee in the management of the trust, to disburse the residue of the trust funds pro rata, among all the creditors of N. B. Williams, and, in doing so, to conform to this opinion and the rules and principles of equity.
Reversed.