Lead Opinion
On the 9th day of December, 1884, Wilson & Beardsley, a firm operating a large flouring mill in Cabell county, in this State, made an assignment of their property both real and personal including their flouring mill, to W. T. Thompson, trustee, to secure certain creditors therein named, who were divided into three classes and preferred in the order named. This deed was recorded on the 10th day of December, 1884. The plaintiff who held a claim for $722.04, which was not secured in said trust, brought his action in assumpsit in the Circuit Court of Cabell county on the 20th day of December, 1884, and filed his affidavit and sued out an attachment and had the same levied on the real estate included in said trust and garnished W. T. Thompson as having in his hands money and effe.cts belonging to .said firm. On the 2d day of March, 1885, the .attachment was docketed and on the 25th of the same month the defendants appeared in court and confessed judgment on the plaintiff’s claim and moved to quash the attachment, on the ground that the affidavit filed was insufficient to support the attachment. On the 19th day of August, 1885, the court overruled the motion to quash. W. T. Thompson, trustee, then filed his petition under the statute claiming the attached property as such trustee and having given bond, as the statute required, the question of the right of the property was tried before a jury; and on the 21st day of August, 1885, the jury rendered a verdict against the petitioner; and 'Thompson having before answered the suggestion against him, that he had sufficient funds in his hands of the firm of Wilson & Beardsley to pay the plaintiff’s claim, the court ■entered judgment for the claim and costs.
To this judgment the said Thompson and the said Wilson & Beardsley obtained a writ of error.
The deed offered in evidence provided as follows: — “In executing this trust, and to carry out the purposes thereof, the said trustee is to proceed to collect by himself or agent and attorney appointed by himself all and singular the notes, bonds, bills and evidences of debt and to make sale of all the property of every kind mentioned in schedule “A” either at public or private sale, as may seem to be to the best interest of the creditors of the said Wilson & Beardsley. And should the said trustee, W. T. Thompson, deem it to the best interest of said creditors, he is hereby authorized either to rent out or run the mill-property in the city of Huntington, Cabell county, West Virginia, hereby conveyed, known as the Biggs Mills, for the period of one or more years or for a greater or less period of time, as shall seem to him advis
The latter clause is the one, on which the Circuit Court based its judgment, that the deed was fraudulent on its face. The deed does not provide for the payment of the creditors generally. It divides the creditors therein mentioned and secured into thx-ee classes and gives priority in the order named; and no provision is made for the disposition of the surplus, if there should be any.
Schedule “A” is substantially as follows :
REAL PROPERTY.
Warehouse and stable on block No. 95. $500 00
Biggs Mills, ill Huntington, &c. 20,000 00
Interest of Beardsley in land. 4,000 00
“ “ in other land. 830 00
“ of Wilson in land. 250 00
—-$25,580 00
PERSONAL PROPERTY.
■Flour &c. 3,842 27
Debts due Arm. 15,703 51
- 19,545 78
$45,125 78
Schedule “B” shows indebtedness;
Tn 1st dn sft. $11,035 00
11,970 00 §
1,902 00 CO
- 23,907 00
Reaving a surplus. $21,218 70
The deed purports to convey all the property both real and personal of the grantors. Is the deed fraudulent on its face; and was the refusal of the court to permit it to be read ip. evidence right ? The owner of property may do as he pleases with it, so long as no other person has any interest in it. He may, when he is out of debt, convey it to whomsoever he pleases, although he receive no consideration therefor. If he owes no one, he can do absolutely as he pleases with his own, unless restrained by statute. He may in good faith convey his property or any part of it to secure
In Lang v. Lee, 3 Hand. 411, the deed was held void. It disposed of “all the entire stock of goods in the possession of the said Lee in his store in the city of Williamsburg; * * * that the said goods are- to remain in said Lee’s possession, and he is empowered to make sale of them and to account with the trustee, if called on.”
In Shepperd v. Turpin, 3 Gratt. 373, the deed provided after conveying the whole of the grantor’s property, consisting of a lot of ground, a number of slaves, horses and other personal property, that if the grantor failed to pay the debts secured before the 1st of March, 1816, (three years after the deed was executed) it should be optional with a majority of the creditors, who might assent to the deed, either to extend further time or to require the trustees to sell the property for cash to raise the amount then due to the assenting creditors; that the trustees should have power to aid said grantor in carrying on his business of brick-making by a loan of as much money, as in their judgment would be sufficient to enable him to prosecute his business, and, if after such aid they should think him injudicious or unthrifty,
In Spencer v. Bagnell, 6 Gratt. 444, the deed was executed on the 1st of November, 1841, and provided that the grantor “should be permitted to remain in possession of the property and use the same and enjoy the profits thereof until the 1st of March, 1843.” This deed was also held to be void.
In Addington v. Etheridge, 12 Gratt. 436, the deed provided that the grantor should keep possession of and sell the stock of goods in the usual line of his trbde and occupy the store until default in the payment of any of the debts secured, and until the trustee should be requested by any of the creditors secured to close the deed by a sale. This too was held void.
In Kuhn, Nutter & Co. v. Mack Bros., 4 W. Va. 186, the deed permitted the grantor to retain possession of goods and sell them in his business. This- deed was held void.
In Gardner v. Johnston, 9 W. Va. 403, wheat and other perishable property by the terms of the deed was to remain-in the possession of the grantor. This Court held the deed void.
In Claflin v. Foley, 22 W. Va. 434, the deed provided,, that the conveyance should include “such goods and merchandise, as may be added to said stock from time to time-by the grantor and brought into the store in the course of business -or to take the place of such goods, as may hereafter be sold,” but did not authorize the trustee to take possession or control of said goods, until the grantor should make default in payment, &c. The deed was held void.
In Livesay v. Beard, 22 W. Va. 585, the deed of lands- and personal property fixed no definite period, at which a sale could be required, and put it in the power of the grantor by collusion with a part of the creditors to indefinitely postpone a sale under the deed. The deed also provided that all the live stock conveyed, by the deed and the-increase thereof and all future crops, until sale should be made, should be in. the quiet enjoyment of the grantor,, from which he might support his family and pay the
It is insisted by counsel for plaintiff in error, that there is-nothing in the deed here under consideration, which reserves-any possession or any interest in the grantor and nothing in the powers conferred ujjon the trustee, which can be fairly construed to hinder, delay or defraud the creditors of Wilson & Beardsley, the grantors. The deed provides for a sale either public or private. The provision, that the trustee might sell at private sale would not make the deed fraudulent on its face. (Shackelford v. Bank, 22 Ala. 238; Burgiss v. Burgiss, 1 Ired. Law, 453; Skipworth v. Cunningham, 8 Leigh, 273; Kyles v. Harveys, 25 W. Va. 729.) If the deed is fraudulent on its face it is rendered so by the following provision: “And should the said trustee, W. T. Thompson, deem it to the best interest of the said creditors, he is authorized either to rent out or to run the mill-property in the city of Huntington, Cabell county, West Virginia, hereby conveyed, known as the Biggs Mills, for the period of one or more years or for a greater or less period of time, as shall seem to him advisable after having consulted with the said creditors and obtained their consent or the majority thereof in interest herein.” It is argued, that such a provision is no more fatal to a deed, than were the provisions in the deeds in the following cases: Jones v. Whitbread, 5 Eng. L. and Eq. 431; Coates v. Williams, 9 Eng. L. and Eq. 481; De Forest v. Bacon, 2 Conn. 633; Kendall v. Corfat, 13 Conn. 383; Cunningham v. Freeborn, 11 Wend. 240; Woodward v. Marshall, 22 Pick. 468; Robins v. Emory, 1 Sm. & M. Ch’y 207; Dunham v. Waterman, 3 Duer 166 and Marks v. Hill, 15 Gratt. 400, where the deeds were held to be valid. We will examine some .of these cases.
In Jones v. Whitbread an assignment was made by a debtor of all his estate and effects to a trustee upon trust for sale for the benefit of the creditors, and contained a provision enabling the trustee to employ the debtor or any other person “in winding up the affairs of the debtor and in col
In Robins v. Emory it appeared, that a railroad corporation assigned its property for the benefit of its creditors. The road had been nearly completed, and the means of the corporation were exhausted, and the period for completing the road under its charter had nearly expired, and the expiration of the time without the completion of the road would forfeit its charter. The road in condition at that time would be comparatively worthless; and if it should not be completed, the amount already expended would be a total loss to the company. It was held, that a provision in the deed authorizing the assignees to borrow $250,000.00 to complete the road and pledging the assets of the company and the profits of the road for the payment of the same before any of the other debts did not vitiate the assignment that an assignment otherwise free from the imputation of fraud is not vitiated by the fact, that it wa.s made in •part to secure anticipated advances,- especially when those advances are in aid of the general purposes of the assignment.
In Kendal v. Carpet Co. the assignment was of a carpet-mill. The deed provided, that the assignor should have the right to make up the stock on hand and to make purchases necessary for that purpose. The court said: — “ That such a power may be greatly beneficial to all parties connected with the affairs of a large manufacturing establishment, is very apparent. That such a concern should be suddenly suspended, and the stock in the various stages of manufacture be sold in parcels or together, must greatly diminish the value of the property to the creditors and impair their security. Accordingly it has been holden by this court, that such a power fairly conferred was a valid power (DeForest v. Bacon, 2 Conn. 683.) "We see no cause to reverse that decision. It is indeed a power, which may be abused; but the interest of vigilant creditors will generally prevent its being used improperly, or, if it is, procure its detection.”
The case of Marks v. Hill, 15 Gratt. 400, is much relied on by counsel for appellant. They say, that in that case the authorities above cited are approved. In that case Hill & Nichols, partners in business, executed a deed of trust upon their stock of goods to one Collier, to secure, -first, a debt of $2,500.00 due from Hill to one Bragg, and a note of Nichols’s for $2,000.00 endorsed by one Thompson and the trustee, Collier; second, certain firm-debts “in trust, that Collier with the consent in writing signed by Bragg and Thompson should permit Nichols as agent to carry on said business, the stock of which was thereby assigned, with authority to replenish said stock, for the purpose of paying off the debt of Hill to Bragg and said note of Nichols’s and in trust also, that Collier should proceed to dispose of the effects of the firm and collect the credits specified in a schedule annexed to the deed, and pay the debts of the firm specified in
Judge Daniel in reviewing the latter case says : — “It was however concluded by the court, that there might be cases, in which the stipulation in question would be proper,
How long would it take in a case like Marks v. Hill, to wind up the business, when the seller of the merchandise was continually from the proceeds of sale “replenishing the said stock ? ” In the case in 7 Md. there was no express provision for “replenishing the stock,” yet the court held that deed void on its face. Daniels, Judge, in Maries v. Rill applies the principles of those cases, which are manifestly right, to the facts in his case, to which, it seems to me, the cages are wholly inapplicable. He says, pp. 412, 413:
“In the deed under consideration the clause conferring upon Nichols as agent the power to carry on the business and replenish the stock does not in terms declare, nor is it in any other part of the deed declared, that the power is given for the purpose of winding up the business of the concern. But on reading the clause in connection with the other provisions of the deed, and more especially the provision contained in the last paragraph, the true construction to be put on the provision directing the manner of disposing of the goods and their proceeds taken as a whole is, I think, that Collier is vested with the power, as soon as he shall deem it advisable or as soon as he shall be requested in writing either by Bragg or Thompson, the preferred creditors, or by any three of the other creditors to make sale of said goods at auction in such way, as the said Collier shall judge best for the benefit of the parties interested ; and that in the meantime Collier with the consent of the said Bragg and Thompson may employ Nichols as his agent to sell the goods at private sale and replenish the stock, whilst so carrying on the business; apcl that the prq-*714 ceeds of the sales, whether of the sales made by Collier at auction or of those made by Nichols whilst continuing the business, are to be applied in the payment of the two preferred debts. So construing the deed 1 can not see, that there is any provision in it inconsistent with an honest surrender by a debtor to> his creditors of his property for the payment of his debts. The grantors have parted completely with all their property, and with all dominion and control over it.”
This it seems to me is a forced and unnatural construction of the deed, which goes to the verge of, if'not beyond, the just rule, which compels a debtor to make a complete surrender of his property for the payment of his debts.
In Jones v. Syer, 52 Md. 211, it was held, where an assignment professing to be for the benefit of creditors generally of certain goods, stock in trade and other personal property, contained a clause authorizing and empowering the trustee “to cany on and conduct said business in his discretion, for such time as in Ms judgment it shall be beneñeial to do so, or to sell all such goods and the stock in trade and property, at such times, in such manner, and for su'ch prices as he may deem proper, and apply the proceeds, &c.,” that the certain effect of this clause would be to hinder and delay creditors, and as against them such provision rendered the deed void; that a deed must speak for itself, and its obnoxious provision cannot be aided, modified or explained by extrinsic evidence. For the court, Alvey, J., said: — “ It is an attempt on the part of the debtor to place his property for an uncertain and indefinite period beyond the reach of his creditors, and to make their rights in a great measure dependent upon the uncontrolled discretion of a trustee of the debtor’s own selection. The law will tolerate no such attempt but treats the act as a fraud upon creditors, and the instrument of conveyance as simply void as against them.”
In Gardner v. Bank, 95 Ill. 298, it was held, that the placing of property in the hands of an assignee for any other purpose than to distribute it or its proceeds among creditors is fraudulent and void as to creditors. If made to procure time for the assignor, it is fraudulent, and when the assignor has, or thinks he has, more property than is necessary to pay his debts, the assignment can only be presumed to be in.
While the authorities, outside of Virginia and this State; are more stringent as to the rights of debtors in making assignments, yet I have found no case in Virginia or in this State, that would sustain the provision in the deed, we have before us. How stands the provision in this deed ? The question is : Taking the deed alone, do any of its provisions
(Trammel v. Truber, 3 Md. 11; Inloes v. Bank, 11 Md. 183; Jones v. Syer, 52 Md. 211.)
In Malcom v. Hodges, 8 Md. 418, it was decided, that the validity of deeds must be determined without regard to the surrounding circumstances, which in that instance were, that a large majority of the creditors had examined the aifairs of the debtor and concluded unanimously, thal it would be to the advantage of all the creditors, that an assignment should be made, and the deed in question was executed accordingly ; and in reference to the argument of counsel that the grantors had derived no benefit from the reservation by resulting trust, and that the creditors were not injured by that feature of the deed, as there was no surplus, it was said; “We cannot look outside the assignment to ascertain, whether there will be a surplus or not. That would make the efficiency of the instrument depend on extrinsic circumstances, when the law requires, that its intent shall be gathered from its face.”
In the opinion of this Court in Kyle v. Harveys, delivered by Green, J., great stress was laid upon the fact, that it was evident, that the debts could not be paid out of the property conveyed. There the question was, whether a provision authorizing the trustee to sell the goods at private sale made the deed fraudulent, and it was held, it did not. Judge Green says in that case, 25 W. Va. 727: “The property of the debtor, W. T. Earles, being as appears on the face of the assignment of September 24th, 1882, insufficient to pay his' debts, the effort to protect it from sacrifice by the insertion of the provision, that the assignee Neal should sell the goods transferred at private sale, was not inconsistent with fail"
On the deed before us the contrary appears upon the face of the deed. The estimate of the value of the property by the grantors themselves in the deed is much more than the debts therein secured. The' deed commences: “Whereas the said Wilson & Beardsley are justly indebted in sundry and considerable sums of money, and have become unable to promptly pay and discharge the same, and are desirous of conveying all their property and rights of property as hereinafter mentioned; Now therefore this deed, witnesseth,” &c. It does not pretend to mention any creditors except the three classes therein referred to, who are preferred in the order named. How many outside creditors there may be, does not appear. The plaintiff here is certainly an unsecured creditor, and his rights are just as sacred as if a hundred more stood in the same position with him. Now what do these grantors provide ? They provide for a trust-sale of all the property and that the mill-property need not be sold for an indefinite period of’ time, if the trustee thinks it to the best interest of the secured creditors, not the unsecured ; their rights are not to be considered at all. If the said trustee deem it advisable after consulting with the said secured creditors and obtaining their consent or the consent of a majority in interest of them, that is, by obtaining the consent of Biggs, who held $11,035.00 of the debts, and the Peabody Insurance Company, which held $4,000.00, making a majority in interest, that is, by consulting two of the sixteen secured creditors, and obtaining their consent, he is authorized “to rent out or run the mill for the period of one or more years or for a greater or less period of time,” that is, run it indefinitely for ten, twenty or more years ; or rent it for ten, twenty or more years, and thus put it out of his
The case can not be brought within the scope of the decisions, we have cited, justifying a clause in a deed permitting business to be carried on until it was wound up. Looking at the circumstances disclosed in the deed, the property being worth more than the debts secured itis very evident to my mind, that the intent in inserting the provision to run or rent the mill, was not to benefit the creditors, but to benefit the debtors, to delay the sale, until the mill at a sale would bring more money. The law does not tolerate any such practice as that. When a debtor devotes his property to the payment of his debts, he must not in the assignment regard his own interest at all, and if a provision is inserted to postpone the sale beyond a reasonable time, it will be held to be for the debtor’s interest; and, if he can not hold the possession himself against the interest of his creditors, the trustee appointed by him can not be permitted to do the same thing for him. The grantor can not place his property in the
But while it is void as to said power, is it void in toto ? A deed held fraudulent on its face is so held, because the court is under the law compelled to declare, that it was executed with intent to hinder, delay or defraud creditors. It has often been held and may be considered as well settled, that where an assignment is fraudulent as to any of its provisions, it is void in toto as against creditors, who are entitled to take advantage of the fraud. (Pierson v. Manning, 2 Mich. 446; Caldwell v. Williams, 1 Ind. 405; Burke v. Murphy, 27 Miss. 167; Mackie v. Cairns, 5 Cow. 548; Goodrich v. Downs, 6 Hill 438; McClung v. Lackey, 3 Pen. and W. 83; Ticknor v. Wiswall, 9 Ala. 305; Rissam v. Edenmuston, 1 Ired. Eq. 180; Mofner v. Irwin, 1 Ired. L. 490; Fiedler v. Day, 2 Sandf. 594; Russell v. Winra, 37 N. Y. 596; Wakeman v. Grover, 4 Paige 23; Darling v. Rogers, 22 Wend. 483.)
In this last case the court made a modification of the doctrine held in Rogers v. De Forest, 7 Paige 272, and in speaking of the rule, “void in part void in toto” the court said : “There is no such general principle as the maxim would seem to indicate. On the contrary the general rule is, that if the good be mixed with the bad, it shall nevertheless stand, provided a separation can be made. The exceptions are: first where a statute by its express terms, declares the whole deed or contract void on account of some provision which is unlawful; and second, where there is some all-pervading vice such as fraud for example, which is condemned by the common law, and avoids all parts of the transaction, because all are alike affected.” Our statute of frauds provides : “Every assignment given with intent to hinder, delay or defraud creditors shall as to such creditors be void.”
But one question more remains to be considered in this record, and that is: Was the affidavit sufficient? If the attachment was sued out without a sufficient affidavit, then the court erred in refusing to quash it. The only objection made to the affidavit is, that the “material facts” stated, on which the affidavit was based, shows no sufficient ground for the attachment. A number of grounds are stated in the affidavit, but only two will be noticed: first, “ that the defendants have assigned and disposed of their property with intent to defraud their creditorsand second, “ that the said defendants fraudulently contracted the debt for the recovery of which the suit was brought.” It is insisted, that according to the principles settled in Delaplain v. Armstrong, 21 W. Va. 211, the affidavit was wholly insufficient. It was held in that case, that the grounds for the attachment were conclusions of law. The “material facts,” which the statute requires' the affidavit to state, are the allegations, from which the court may be properly authorized to conclude, that the grounds exist. Consequently an afín ■davit, which only states, that the debtor did an act or acts, which of themselves are not necessarily fraudulent, with an intend to defraud his creditors, is not sufficient. The law is there clearly, concisely and correctly stated. To sustain the charge in the affidavit, that the assignment was made with intent to defraud the creditors of the grantors, the material facts stated are the making of the assignment and the powers which it contains, which, we have held, were conclusive evidence that it was made with fraudulent intent. That is certainly sufficient. The material facts relied on to .sustain the charge, that “the debt was fraudulently con-
Concealment of his insolvency by a purchaser, who obtains possession of goods without intending to pay for them, is a fraud and the property does not pass. [Durell v. Haley, 1 Paige Ch’y 492 (19 Am. Dec. 444); Harris v. Alcock, 10 Gill & J. 226 (32 Am. Dec. 158); Bedault v. Wales, 19 Mo. 36 (59 Am. Dec. 327); Donaldson v. Farnell, 93 U. S. 631.]
In Mulleken v. Millar, 12 R. I., it was held, that, where A through his agent purchased certain merchandise on credit and the day after its delivery made for the benefit of his creditors a general assignment to I; and A’s liabilities were large and his assets were small, and the seller brought trover against I for the merchandise, it was not necessary for the plaintiff to show a particular intent on the part of A to defraud in the particular transaction in question; that it
The court did not err in overruling- the motion to quash the attachment. We see no error in the judgment of the Circuit Court, and it is therefore affirmed.
Dissenting Opinion
dissenting;
It seems to me, that the views expressed and conclusion announced in the foregoing opinion, - are unsustained by 'either principle or authority. There can be no question that the provisions of a trust-deed muy be of such a character as of themselves to furnish evidence sufficient to justify the inference of a fraudulent intent and thus render the deed void in law, without reference to. extrinsic facts. Such is the oase where the grantor reserves, either to himself or some one else for his benefit, a power over the property conveyed incompatible with the professed purposes of the trust and adequate to its defeat. Deeds of this class appear in many cases, among which are the following: Lang v. Lee, 3 Hand. 410; Sheppards v. Turpin, 3 Gratt. 357; Quarles v. Kerr, 14 Id. 48; Kuhn v. Mack, 4 W. Va. 186; Claflin v. Foley, 22 Id. 434; Shattuck v. Knight,, 25 Id. 590.
While this principle is fully established by these and other decisions, it is equally well settled, at- least in this State $nd
In Skipwith v. Cunningham, 8 Leigh 271, decided in 1837; an insolvent debtor by trust-deed conveyed certain real estate, sundry slaves, all his stock of horses, mules, cattle, sheep, hogs, crops and household and kitchen furniture, ten •gether with all debts due him, except $350 which he reserved for his individual use and disposition, upon trust to two trustees, with a provision that the trustees, so soon as they or the survivor might deem expedient and proper, should sell the trust-property, either publicly or privately; in whole or in part, as they might judge best; the lands in three equal annual instalments, and all the other property on a credit of 12 months, or such other terms as they or the survivor might deem most expedient, and collect the proceeds, as well as the debts, and pay the creditors in the classes they are secured upon their executing a full release and discharge of all claims against the grantor. The court held that this deed was not fraudulent, although it postponed the sale at the discretion of the trustees, required the creditors to exe^ cute a release, the sale to be made on a long credit, and in the meantime the property was retainéd for the use and in the possession of the debtor.
In Lewis v. Caperton, 8 Gratt. 148, decided in 1851, there were a number of trust-deeds. One of them conveyed household furniture, the various kinds of stock on a farm, bacon and lard, and was not to be enforced for 18 months. The court held this deed valid against unsecured creditors, though it was made without the knowledge of the eestui que trust and the grantor was insolvent at the time. Another trust-deed, by the same grantor conveyed land to secure a loan of money and not to be enforced for ten years, was held to be valid against creditors. The land and personal prop-'
In Cochran v. Paris, 11 Gratt. 348, decided in 1854, it was held, that “A deed of trust, which among other things-conveys growing crops of wheat, rye and oats, and which is-not to be enforced for two years from its date, is not necessarily fraudulent as to creditors.” The property was by the terms of the deed to remain in the possession of the grantor for said two years and thereafter until a sale upon the request of the creditors secured.
In Dance v. Seaman, 11 Gratt. 778, decided also in 1854, the court held: “A deed of trust to secure bona hide creditors, conveying land, slaves and crops, cut and growing, not to be enforced lor two years, reserving the profits in the meantime to the grantor, and directing the surplus proceeds-of sale, alter payment of the debts- secured, to be paid to the grantor, is not fraudulent per se, though made without the knowledge-of the creditors.” This deed provided for a sale, after two years, upon the request of any preferred creditor, upon a credit of one and two years as to the land and cash as to the personalty. Allen, President, for the whole court, says : “If the questions presented by the record in this case were of the first impression in this- court, it would be a matter for grave consideration, whether deeds of trust,, such as those assailed by the bill of the appellees, did not contravene the spirit of the statute against fraudulent conveyances. * * * But these questions have been settled by a series of adjudications of this Court. It would disturb many titles if the principles heretofore established, and sanctioned by the practice of the country, were now to be questioned. If inconvenience results from the construction heretofore given to the statute against fraudulent conveyances, the remedy should be administered by the law-making power.” (11 Gratt. 780; Kevan v. Branch, 1 Gratt. 274; Janney v. Barnes, 11 Leigh 100.)
In Marks v. Hill, 15 Gratt. 400, decided in 1859, the deed! was executed by Hill & Nichols, a mercantile firm, and conveyed all their stock of goods, effects and credits, in trust, that the trustee, with the consent of two of the preferred •creditors, should permit Nichols, one of the grantors, as
All and each of the foregoing cases were decided by the Supreme Court of Appeals of Virginia before the division of the State, and therefore they are authorities and precedents just as obligatory and- binding upon us and the courts of this State as are the decisions of this Court.
Since the separation, these cases have been faithfully adhered to and carefully followed in the mother State, as binding precedents and settled law, in numerous cases — Gordon v. Cannon, 18 Gratt. 387; Sipe v. Earman, 26 Id. 563; Brockenbrough v. Brockenbrough, 31 Id. 580; Williams v. Lord, 75 Va. 390.
In none of the numerous cases, decided by our own Court, in relation to fraudulent conveyances, has any of these decisions been overruled or their authority and obligation been denied. In Harden v. Wagner, 22 W. Va. 356, the deed was made by the keeper of a livery stable and conveyed all his livery stock, consisting of horses, buggies, wagons &c., together with all his household and kitchen furniture, in trust, to secure two creditors. The grantor owed many other debts and was hopelessly insolvent. The deed provided, that “upon the demand of the secured creditors, or either of them, the trustee shall sell the trust property at public or private sale, and at retail of wholesale, and for cash or upon reasonable credit, as may best promote the i/nterest of the grantor and the secured creditors.” This deed was held to be not only not fraudulent on its face, but that it was valid notwithstanding the insolvency of the grantor and the circumstances existing at the time of its execution.
In Klee v. Reitzenberger, 23 W. Va. 749, this Court de
This Court again in Kyle v. Harveys, 25 W. Va. 716, decided as follows : “A merchant, being insolvent, assigns his whole stock of goods for the benefit of his creditors, two of them being preferred, and by the assignment authorized the assignee to sell said goods at private sale as soon as possible, and after paying the expenses of sale to distribute the proceeds of sale as directed by the assignment among the creditors of the assignor, Heed — This assignment was not fraudulent on its face.” In this case most of the Virginia cases above mentioned are cited and relied on as law in this State. And Green, J., delivering the opinion of Court, says : “In Virginia and this State the courts have gone farther (in holding deeds valid, which provide for a private sale), and held, that a provision in a deed of trust to secure creditors, that the trustee may continue the business and replenish the stoolc, if intended merely as a means of realizing the trust fund and with a view of winding up the business, is not fraudulent per se so as to avoid the deed” — citing Marks v. Hill, 15 Gratt. 400, and other cases — 25 W. Va. 729.
If it is possible to settle any legal principle conclusively and beyond question by precedent, or if there is any such a thing in this State as the doctrine of stare diasis, then, it seems to me, incontrovertible that the repeated decisions hereinbefore mentioned, running through, at least, a half century, without a single break, have conclusively and un-ecpúvocally settled for Virginia and this State the following legal propositions: “First, That a provision in a trust-deed, made by an insolvent debtor, to secure a bona fide debt, postponing for a reasonable time a sale of the trust property, is not fraudulent per se, even though a portion of the property may be perishable in its nature and consumable in the use.
In Clarke v. Figgins, 27 W. Va. 663, this Court held, that,' S‘Where a decision has been rendered in the State of Yir-ginia and followed in two other cases in Virginia before the separation, the decisions will be followed by this Court without enquiring into the grounds on which said decisions are based.” In that case some of the decisions before recited were questioned in the argument; but this Court, without enquir-ing into the policy or reasons on which they were founded, sustained the principles decided by them. In delivering the opinion of the Court, Johnson, President, says: “The common law was only builded into a magnificent structure by our fathers laying a broad foundation, and the judges followed them, being careful that every successive stone placed upon the foundation should not be different from those already laid. Thus we see harmony in the building throughout. If a different course had been pursued, and hasty and ill-advised decisions made without regard to precedents, the common law instead of showing symmetry in its perfection would be one incongruous mass, and no one could form any idea how a matter would be decided, as in each case the judge would decide according to his own peculiar notion of what in that particular case might be right; and we know that it is often true, that what one would consider right in a particular case, another would regard as wrong. Nothing keeps a judge so strictly in the line of his duty, as the feeling and constant realization of the fact that he is bound by precedents. * * * It is only safe to know how the ques
It thus appearing that the law on the question before us has been fully and finally settled by our own adjudications and those of Virginia, which are binding upon this Court, it is wholly unnecessary and irrelevant to consider or refer to the law or decisions of the courts of other States. I may, however, state in this connection, that if the question before us was one of first impression, I should hesitate long before I would go to the extent of some of the Virginia decisions in sustaining the validity of trust-deeds made by insolvent debtors. Some of these decisions it seems to me, hold valid provisions in such deeds which strongly contravene the spirit if not the very letter of the statute against fraudulent conveyances; and, therefore, I am unwilling to extend the doctrine of those decisions one iota beyond what has been clearly settled by them; but to the extent the decisions have gone, duty as well as sound policy and safety, requires, that they should be sustained as establishing a rule of property and adhered to in good faith. If any alteration or departure is deemed necessary it should be made by the Legislature and not by the courts.
It must not be forgotten that the sole question here presented is, whether the provisions of the trust-deed in this case are such as to render the deed fraudulent upon its face as a simple question of law; and not whether its provisions, taken in connection with extrinsic facts to be shown by evidence other than what appears on the face of the deed itself, were intended for an illegal purpose, and therefore fraudulent in fact. These are two very different questions. In the former case, if the provisions of the deed can be reconciled with an honest purpose, it must be sustained. The presumption of law is in favor of honestjr, and the Court cannot presume fraud unless the terms of the deed preclude any other inference.
But if the question before us were res integra, and we
The property and choses in action conveyed by this dee4 are shown by it to be over $45,000.00 in value, while the debts secured aggregate less than $24,000.00, leaving an excess of over $21,000.00 for the payment of unsecured creditors. The Biggs Mills, the only property embraced in the above recited provision, is valued in the conveyance at but $20,000.00, leaving $25,000.00 in value of the property conveyed to be at once and unconditionally applied by the trustee to the payment of the debts secured, and more than sufficient to pay the whole of said debts. This is what the conveyance shows upon its face ; and however fictitious the values, thus appearing, may be proven to b© by extrinsic evidence, they must be taken as absolutely correct in determining the question now presented, that is, whether or not said conveyance is fraudulent upop its face.
It will be observed that the provision of the deed above quoted does not restrain the action of the trustee by any prohibition or limitation upon his discretion. The qualifications of his discretion are simply permissive and none of them are absolute or- prohibitory. The trustee is to use his judgment and exercise it for “ the best interest of the creditors of the said Wilson & Beardsley, ” and in doing so, he may, with the consent of all or a majority in interest of said creditors, rent or rup said mill property for one or more .
It has cértainly never been held 'in any well considered decision, that an express grant to a trustee of authority to-ase his discretion in the control and disposition of the trust property so as best to promote the objects of the trust, would render the conveyance fraudulent per se, especially when no-prohibitory limitation is imposed and there is nothing in the deed postponing default or preventing an immediate sale. The vice in the deeds declared fraudulent in Quarles v. Kerr, 14 Gratt. 48, and Livesay v. Beard, 22 W. Va. 585, and other" eases of that class, was that by the stipulations of the deeds the sales were postponed and positively inhibited for an uncertain time, which might, by the terms and conditions of the deeds, with the connivance or consent of a portion of the secured creditors, be made indefinite. The deed before us is-very different from these. Here no inhibition is interposed and no consent to a sale is required. By the terms of the-deed no creditor can control the discretion of the trustee so as to prevent an immediate sale-. Whether or not such sale shall be made at once is, so far as the grantors and the ees-tuis que trusts are concerned, a matter entirely within the discretion of the-trustee. While this discretion of the trustee is thus absolute the deed expressly declares that it shall beso exercised as-to promote the best interests of the creditors of the grantors. If, therefore, the trustee should use his discretion i-n such manner as in the judgment of a court-of equity would be regarded as a breach of his trust, such court would, upon the application of any party interested,, whether such party be the grantor, or one or more of the secured creditors, or an unsecured creditor of the grantor, interpose its authority and 'compel the- trustee to execute the trust in good faith according to the expressed purposes and
If this deed is condemned as fraudulent per se, then I humbly and with deference submit, that no valid trust-deed can safely and with any certainty that it will not be set aside by the courts, be made to secure a bona hde debt by any debtor, however solvent he may be, or however small may be the debt secured in proportion to his property, if in such deed he confers upon the trustee any discretion as to the time and .terms upon which a sale of the trust property shall or may be made. According to the facts appearing upop the face of this conveyance, here is a debtor owning and possessed of property and credits of the value of $45,000.00, a part of which consists of a mill property worth $20,000.00, all of which he conveys to a trustee .to secure less than $24,-000.00 of debts, without airy conditions or suggestions to the trustee as to the disposition of $25,000,00 Worth of said property and credits, leaving the statute alone to control him entirely as to the disposition of that portion of the trust property, and nothing appearing upon the face of the conveyance or elsewhere of which we can take cognizance to show, that he owed a single farthing other than' the debts secured in this deed; with this deed before us, showing these facts, will this Court, at the' instance of an unsecured creditor of the grantor having a simple contract debt of less in amount than $800.00, declare and solemnly hold said conveyance fraudulentjner se, merely because and upon the sole ground, that it grants permission to the trustee to rent or operate the mill property for one or more years, or for a greater or less time if he shall deem it advisable to do so after having consulted and obtained the consent of all or a majority in interest of the creditors of the grantor ? With due deference to the opinion of this Court, I must say, that if it were not a fact, it would seem to me incredible.
For the foregoing reasons I dissent from the opinion of the majority of the Court, and am of the opinion, that the Circuit Court erred in refusing to allow the defendant, Thompson, to
And being thus of opinion, that the said trust-deed is not fraudulent per se, I am also of opipion, that the court should, have quashed the plaintiff’s attachment because the affidavit on which the same is founded is insufficient.
Affirmed.