Graham v. Lockhart

8 Ala. 9 | Ala. | 1845

GOLDTHWAITE, J.

1. The principal question here, which, somewhat out of its order’, we shall consider first, is that arising out of the refusal of the Court to instruct the jury, that the deed of trust, in evidence, is fraudulent and void, on account of the reservations for the grantor’s benefit, contained in it.

Since the cause was argued; two others, Elmesv. Sutherland and Pope v. Irvin, have been determined by us, in both of which the same general principles were involved, and m which we held, that deeds of trust, operative only as securities for the payment of money, were not fraudulent per se, on account of reservations of uses for the benefit of the grantor. [7 Ala. 262; id. 690.]

2. After a deliberate consideration of this deed, we are satisfied there is nothing on its face to warrant us in pronouncing it as intended to delay, hinder or defraud creditors, and that such cannot be the legal effect of it.

The intention is very apparent, we think, to appropriate the debtor’s property to the payment of the specified debts, and for the indemnity of the persons who stand upon many of them as sureties for the grantor. It is questionable, whether this deed, either as to creditors or sureties, according to what is said in Elmes v. Sutherland, has any effect as a conveyance, without the assent of the creditors, or sureties, or some of them. If such an assent was given, then it operated as an agreement by the creditor, to postpone the payment of his debt until the law day of the deed, and its effect on the surety was to prevent him from resorting to a sale of the trust effects, for the same period. The reason why this deed does not at once operate as a conveyance in favor of the sureties, is, that it is not necessarily beneficial to them, inasmuch as there is no reason why they should assent to be responsible to the creditor out of their own estate, if the effects of the debtor is sufficient to pay all his debts. It cannot, at this day, be questioned, that a debtor has the right to appropriate the whole, or any part, of his estate to the indemnity of his sureties, and it is equally clear, that if the same stipulations as are found in this deed, were contained in a mortgage, no other debtor would have just cause of exception to it. Every mortgage, or deed of trust, intended as a security, necessarily contains a resulting trust for the debtor, and the stipulation so customary in conveyances of these kinds, that the debtor shall have the control and benefit of the estate, until the law day, is no more than he is entitled to, without any stipulation.

3. It is a very different matter, however, when it is asserted, that a debtor', under pretence of a mortgage, may continue his effects in trade, or in planting, for a definite or indefinite period. So far as the particular creditor is concerned, this is all a fair subject of stipulation and contract, but it cannot interfere to pi’event any other creditor from his right to sell the resulting trust of the debtor in satisfaction of his execution.

4. So, too, it is a subject deserving great consideration, whether a debtor can, by a mortgage of his perishable personal estate, for the security of one creditor, prevent others from reducing that article to money, and thus determining the risk there must always be of its destruction, or depreciation in value; a risk which might fall upon all alike, as the mortgage creditor would have the same right as any other creditor, to look to the residuum of his debtor’s estate, or to that afterwards acquired by him, in satisfaction of the debt, in the event of the depreciation or destruction of the mortgaged estate; and thus the unsecured creditors’ fund might be lessened.

5. All these difficulties could be avoided by an immediate sale, and the powers of a Court of Equity are amply sufficient to prevent injury to the mortgage creditor, as well as to prevent injustice to the one who has no security.

6. Assuming that all the creditors and sureties indicated by the deed of trust, have assented to the proposed delay, in the payment of the debts named, it by no means follows that another creditor must wait the termination of this contract between these parties, if by a present sale of the property, any thing would remain for his satisfaction; nor is he bound by the stipulations between others, that perishable property may be consumed in the use of it. His right, is, to have all the debtor’s estate reduced at once, to its money value, and if the secured creditors choose to become purchasers, and thus continue the relations between them and their debtor, a Court of Equity is competent to let them in to the extent of their debts, but all beyond, in common justice, ought to be fairly appropriated to such other creditors as pursue the common debtor with legal vigilance.

Under the views here expressed, it is obvious there can be no well grounded fear, that debtors will make these sorts of conveyances the means of delaying or defrauding other creditors, and the great evil is avoided of vitiating securities, which, in many, perhaps most cases, are honest and bona fide.

These conclusions necessarily dispose of all the charges requested to be given, as the deed, if free from fraud in fact, is valid in law.

7. The other points in the case will now be examined, in the order they are disclosed by the record. And first, of the motion to dismiss the claim, because the bond was not executed by the claimant, The condition of the bond, as now required by law, is for the forthcoming of the property, if found subject to the execution, and for the 'payment of such costs and damages as shall be recovered. [Clay’s Digest, 213, § 62.] In practice, the claim is a distinct ¡suit, in which the plaintiff in execution is the actor, and the claimant is the defendant; costs are rendered against either,, according as the suit is determined, and damages are sometimes assessed against the claimant, when it appears that the claim is interposed for delay. It is obvious, therefore, so far as the cost and damages are concerned, that the bond is merely an additional security,inasmuch as the claimant is already liable for them by force of the judgment. But the bond is also intended to secure an indemnity, if the property, after condemnation, is not re-delivered to the sheriff. This indemnity may be equally benefical to the plaintiff without, as with, the claimant’s name to the bond ; and as cases may occur in which it will be onerous on the claimant thus to bind himself, we consider the proper construction of the act, to be such as will advance the remedy intended by it. The intention of the acr, was, to give those whose property is seized under executions against others, the right' to contest the party’s claim to sell it, instead of a suit against the sheriff, or persons purchasing it. In a great variety of cases, the person having the legal title may be, as he is here, a mere trustee; and there is no reason why he, instead of those actually interested in the property, should give the bond. At a very early day, it was held by this Court, that one of several claimants might give the bond, (Marrs v. Gantt, Minor, 406,) and it is only an extension of the same view, to hold, that it may properly be entered into by any one claiming to be beneficially interested in the property levied on.

8. It is not essential, to let in a deed as evidence, that the subscribing witness should remember, with precision, its execution by the parties. If this was the rule, the imperfections of the witness’s memory would avoid the deed. Here, however, he stated that his signature, as a subscribing witness, was genuine, and that it would not have been placed there, unless he had been called to witness the instrument. This, in our opinion, was sufficient to let in the deed to the jury, though it would obviously be of little reliance, if the question at issue had been the execution, or non-execution, of the deed.

9. The plaintiff having avowed his intention to attack the deed for fraud, it was entirely proper for the claimant to offer evidence' of every matter which could raise a contrary inference. Although we are not prepared to say, that any act or omission of action, by the trustee, would vitiate the deed, yet an inference of fraud might be drawn, if the cestuis que trust had permitted the property to be uséd by the debtor as his own. In this view, it was entirely proper to show the action of the trustee, with reference to the trust property, and in accordance with the deed, to rebut any presumption which might arise from the acts of the debtor.

10. The questions arising out of the admissions of the evidence offered to sustain the consideration of the deed, or, in other words, the proof of the indebtedness described by it, are of some importance, and call for a more extended consideration. It is objected, that the description in the deed, is variant from the proof, and also, that the indebtedness could not be shown, without producing the notes, or accounting why they were not produced.

The necessity for proof to sustain the consideration of the deed, is shown by the decisions of Bradford v. Dawson, 2 Ala. Rep. 203, and Ravisies v. Alston, 5 Ala. Rep. 297; but in neither of these cases is it asserted that the proof must correspond precisely with the description in the deed. It is quite evident, that in drawing deeds of this description, the draftsman, and the grantor may be ignorant of the precise terms of the writing, evidencing the indebtedness intended to be secured; and it seems most unreasonable that a conveyance otherwise bona fide, should be avoided by a misdescription of the debt. There is a dearth, quite remarkable, of decided cases, bearing directly on this subject, and we have found but two in point. In Johns v. Church, 12 Pick. 557, one of the questions was, whether parol evidence was admissible to show, that a note for #256, produced at the trial, was the instrument described in a mortgage given to secure it, as for the sum of #236; and the evidence was held proper. In Commercial Bank v. Clapier, 3 Rawle, 335, the testimony of the grantor of a deed was allowed, to show, that a note different from that described in the deed, was the one intended to be secured, and that the one described never existed.

There is a marked distinction between letting in parol evidence to show a different consideration from that stated in the deed, when the contest is between the parties to it, and a stranger. The rule is universal, that a stranger may attack a deed by showing, either that it is without consideration, or is for a different one than stated, (2 Starkie’s Ev. 556;) and though it is said that one who claims under a deed, will not be permitted to show a consideration, in support of it, different from that expressed, (2 Starkie’s Ev. 556,) yet we think this expression must be understood as referring to a difference in the quality of the consideration, and not that it must be shown to be precisely as stated. Thus, in Garret v. Stuart, 1 McCord, 514, it was held, that a greater or less consideration of the same character might be shown. And in Hinds v. Longworth, 11 Wheat. 199, a deed importing a voluntary conveyance from a father to a son, being assailed by a creditor, the party claiming under the deed, was allowed to shew the indebtedness of the father to the son, in an amount equal to the value of the property conveyed. See also, Jack v. Dougherty, 3 Watts, 151; Rex v. Scammander, 3 Term. 374; Williams v. Beaumont, Dyer, 146, a.; Duval v. Bibb, 4 H. & M. 113; Eppes v. Randolph, 2 Call, 103; Harvey v. Alexander, 1 Rand. 219; Bullard v. Briggs, 7 Pick. 533.

When the matter of consideration is collaterally presented, as it seems to be always, when a deed is to be-supported by proof of a consideration, or defeated for the want of it, the question of letting in parol evidence, to explain br alter the written instrument does not arise. Lord Thurlow, in Coote v. Boyd, 2 Bro. C. 527, puts the matter on its proper gi'ound, when he says, “a question of presumption donee probetur in contrarium will let in all sorts of evidence. When the presumption arises/rom. the construction of words, merely as words, no evidence can be admitted. In this case, the question is not one of construction, but is of intention, and the deed is valid, or void, as there may be a consideration or the want of it shown. In this connection it is of little importance whether there is a mistake in the description of the debt, as the deed would be bona fide, if there was one substantially agreeing with the description, and if entirely misdescribed, there is no doubt of the power of Chancery to correct the mistake. In Brooks v. Maltbie, 4 S. & P. 96, and Mead v. Steger, 5 Porter, 498, the conclusions to which we have arrived, are stated as the result of the cases, though the questions then before the Court were not the same as they now are. See Stover v. Herrington, et al, 7 Ala. Rep. 142.

The decisions we have cited, lead directly to the conclusion, that so far as there may be a difference between the debts described as the consideration of the deed, and those shown in evidence, either as to the names of the sureties, debts or sums, this does not affect the validity of the deed, but at most furnishes grounds for presumptions, as the scale of evidence may incline.

We are satisfied this is the proper consideration to be given the subject and it seems the only one which will enable the true merits of a conveyance to be put before a jury, in a contest between a creditor and one claiming under the deed.

11. With regard to the objection, that the notes and other evidences of debt were not produced, or their absence accounted for, there is a different and sufficient answer- It is obvious, that neither the trustee, nor the debtor’s sureties, have the control of the notes, &c. described in the deed. We do not know from the bill of exceptions, whether it was the sureties or the creditors, who availed themselves of the provisions of the deed, and if it is the former, as seems most probable, no suspicion arises that the originals were withheld from any improper motive. It is very questionable if the trustee or the sureties could compel the creditors to produce the notes held by them, to the used in this suit, (Bell v. Lorilard, 10 Pick. 9; Mills v. Oddy, 6 C. & P. 728; Scheleneker v. Maxey, 3 B. & C. 789;) though it is said this is rather the privilege of the witness than of the party. [Mills v. Oddy, supra.] But, however this may be, we think, on other and more general grounds, there was no necessity to produce the notes. The general rule is, that when the writing is the exclusive medium of proof, it must be produced or its absence accounted for. [See cases collected in Cowan & Hill’s Notes, 1208.] Here the fact to be proved, is the indebtedness of the grantor, or that the sureties named stood in that relation to him, and both these may as well be proved orally, as by the production of the writing. Indeed, it will admit of question, whether the production of the notes, without further proof, would be sufficient to establish either fact, on account of the facility with which such evidence might be fabricated. In Lamb v. Maberly, 3 Monroe, ; the action was for the price of a note, sold by the plaintiff to the defendant, and it was held, evidence might be given of the sale, without producing the note. In Spears v. Wilson, 4 Cranch, 398, evidence was given of a deed'of slaves, without producing it, to show the nature of the possession which accompanied it. These cases seem to recognize the rule just stated, and as there is nothing to authorize the inference, that the notes themselves could be procured, or were within the control of the party offering the evidence, we think the objection cannot be sustained.

12. The next question is that which relates to the exclusion of evidence of the admissions of the trustee, with respect to the deed. What those admissions were, we are not informed, but the inference is, they were offered to defeat the deed, and in this view, we think the evidence inadmissible.

The English Courts seem generally to maintain, that the admission of the plaintiff on the record is always evidence,though he be but the trustee for another. [Craib v. D’Aeth, 7 Term, 670, in note; Bauerman v. Radenius, ib. 663.] In the latter case, Mr. Justice Lawrence said he had looked into the books, and could find no case in which it had been held, that an admission by the plaintiff on record was not evidence. To permit a mere nominal party to defeat a suit by his admission, and yet refuse the same effect to his release oí the action, seems to involve a contradiction of principle. However this is, it is certain the English Courts have held the latter doctrine. In Payne v. Rogers, 1 Doug. 407, where the defendant had procured a release from the nominal plaintiff, the Court ordered it to be delivered up, and permitted the real plaintiff to proceed with the action. And a nominal plaintiff in ejectment, has been committed for a contempt, upon releasing an action. [1 Salk. 260.] On the other hand, it is said, in Buller’s Nisi Prius, 233, that the answer of a trustee can, in no case be received against the cestui que trust, and it has also been held, that the admissions of neither guardian, or prochein ami, can be received against an infant. [Cowling v. Ely, 2 Stark. Ca. 366; Webb v. Smith, 1 R. & M. 106; to the same effect is Isaacs v. Boyd, 5 Porter, 388.] In many of the Courts of this country, a rule different from that usually recognized in England, has obtained very generally; and the party having the beneficial interest in a chose in action, is not affected by the admissions, or release, of the nominal plaintiff. [See cases collected in Cowan & Hill’s Notes, 163; Chitty on Bills, 9, note 1.] In conformity with the general current of decision, we held, in Chisolm v. Newton, 1 Ala. Rep. N. S. 371, that the admission of the nominal plaintiff, made after the commencement of the suit, could not be given in evidence to defeat the action. And in Duffee v. Pennington, ib. 506, as well as Prewit v. Marsh, 1 S. & P. 17, it was considered the nominal plaintiff might be called as a witness by the defendant and sworn, if he made no objection.

It is true that most of the American cases are upon assigned choses in action, but the principle on which they proceed is, that one having no interest in the suit, ought not to be permitted to defeat or affect it, by his admissions ; this seems equally applicable to a trustee, who is invested with the legal title to a specific chattel, solely for the benefit of others. Whether the claimant, under the circumstances of the case, might have been called as a witness, it is not necessary to determine, but we may be permitted to remark, that independent of his relation to the cause, as a party upon the record, there seems no objection on the score of interest. [12 East, 250; Duffee v. Pennington, 1 Alabama Reports, N. S. 506; Mann v. Ward, 2 Atk. 229; Hall v. Tyrrel, Bard. K. B. 12; Goss v, Tracey, 1 P. Wms. 290; Craft v. Pyke, 3 ib. 181; Philips v. D. of Bucks, 1 Vern. 230; 1 P. Wms. 595; Ballew v. Russell, 1 B. & B. 99.]

13. The deed authorizes the trustee to apply the proceeds of the crop of the year, when it was made, to the payment of the then subsisting judgments against the grantor. Thecircum-sance, that these were afterwards superseded by writs of error sued out by him, and subsequently paid by the trustee, was proper evidence to rebut any presumption of fraud arising out of the omission to show what had been done with the property.

From what we have said,’it will be seen that w'e consider the case as free from error, in all the points presented.

Judgment affirmed.

Case Details

Case Name: Graham v. Lockhart

Court Name: Supreme Court of Alabama

Date Published: Jan 15, 1845

Citation: 8 Ala. 9

Court Abbreviation: Ala.