43 Ky. 296 | Ky. Ct. App. | 1843
delivered th.e opinionvof tlie Coutt.
This is an appeal from a decree rendered in four consolidated suits, (one of which has been compromised,) whereby a deed of trust from Pearson & Anderson to J. Anderson, J. Marshall and E. M. Taylor, dated 25th of September, 1838, was set aside as fraudulent and void against creditors, and the Trustees, jointly, with Pearson & Anderson, the debtors, were decreed to pay to the creditors who assailed the deed, the full amount of their debts, making a sum in the aggregate exceeding $10,000.
Without’stopping to inquire what circumstances might or might not justify such a decree against persons who were no otherwise concerned with the affairs of the real creditors and debtors than by having become Trustees in a deed professing to secure all debts due by the grantors, we shall proceed, very briefly, to consider the question, whether this deed should be regarded as fraudulent either in fact or in law.
The,deed is, in substance, similar to that which is sustained in the case of Vernon, &c. vs Morton &c. Smith, (8 Nana, 247,) except, 1st, that it divides the debts into two classes, giving preference to the first class. 2d. It puts the debts,of the second class, whether due by note or account, on the same footing, and directs the principal of the notes to be paid before any interest is paid thereon; and, 3d. That the debts to be secured are all stated in two schedules appended to the deed, the first containing the preferred debts, and the other the remaining debts, for payment of which, so far as the holders of them should accept the deed within the ninety days, the funds remaining after payment of the first class are directed to be rateably appropriated, A third schedule annexed to the
They had a right to íáke the stock of goods at fair prices, for these purposes; and they had a right to secure themselves to the full extent of their danger, out of the assets of Pearson & Anderson, though there- were actions pending against them when they made the deed of trust for 'that purpose. No lien had been created, and the irnminency of the danger to be apprehended from the creditors; who being about to obtain judgments, on which the executions must be returned “úulla bona,” would, by attachment bills, tie up the debts due to Pearson & Am derson, and prevent, to an indefinite amount, the application of those which were most, if not alone available to meet the liabilities of their securities, was itself a pressing and justifiable motive for their seeking and for
The deed was not the mere voluntary act of the grantors, without the solicitation or assent of creditors. For J. & J. W. Anderson, representing the entire preferred debt, were solicitous for its execution,' and one of them .executed it as Trustee. It was not made a secret — for not only was it spread upon the records with its schedules, within twelve days from its date, and before any judgment against the grantors, but it was known of before its execution, to those most deeply interested; and of the postponed creditors, (all of whom, with the exception of one having a very inconsiderable claim, were residents of distant States.) Bowles, representing some of them, was consulted about it before its execution, and informed of its execution afterwards; the agent of the complainants, Rockhill & Co. was told by Pearson & Anderson, on presenting the claim before suit brought, that if suit was brought, they would have to make an assignment, which
The deed did not deprive the postponed creditors of all right in the assets transferred, but only preferred others, who might’be equitably preferred. It did not, on its face, secure to the grantors, and it has not, in the administration of it, secured to them the enjoyment or avails óf the property conveyed, in any sense in which possession is to be regarded as a badge of fraud; for this is property which is not enjoyed by the mere possession of it. And though Pearson was employed as agent to collect the debts* and received a compensation not more than equivalent to bis very arduous services, yet this circumstance, as decided in the case of Vernon, &c. vs Morion, &c. is not inconsistent with the utmost good faith. And as it appears in this case, that the debts to be collected were scattered over seven States, and that it was important, as far as possible, to see the debtors; and that Pearson rode several thousand miles in the performance of his duties as agent, we think the employment of Pearson throws not the slightest suspicion on the fairness of the deed. The circumstances also account for the amount of the expenses incurred; and the fact that when the account was taken by the Master, moneys had been collected, including the entire debts of J. & J. W. Anderson, sufficient to discharge the whole of the preferred debts, which was done, leaving a balance of several thousand dollars for the second class of debts, together with the fact that not one cent of the funds assigned appears to,have gone to the personal use of either of the grantors, beyond the expenses properly incurred in the business of the trust, tends to confirm the honesty of the deed and of the administration of the duties enjoined by it.
The'deed, it should be added, requires no release from, the creditors as a condition of their receiving the benefit of its provisions; nor was any thing of the sort required by the Trustees. The only burthen imposed is that which places specialties on the footing of simple contracts, until the entire principal should be paid; and although the limitation of ninety days for them to come in and consent to the deed, was not absolutely necessary for enabling the Trustees to make the pro rato- distribution among the creditors of the second class, and although we think it might be more proper, and especially in cases where the assets put in trust might probably pay all or nearly all of the debts, to inserta provision by which creditors who shall not have actually refused, might be-allowed to come in at any time, receiving only the same per cent, upon their debts, in each subsequent distribution, which others should receive at the same time, and to be postponed only as to the. proportions previously distributed; yet as a similar provision to that in the present deed is not unusual, and was contained in the deed already referred to, which was sustained by this Court, in Vernon, &c. vs Morton, &c. we think the objection is not entitled to any weight, especially as urged by those who had ample opportunity to accept within the ninety days ; nor do we suppose that the provision, as to the mode of paying specialties, should have any decisive influence. It does not, in our opinion, tend to establish a fraudulent intent in making the deed, nor does it make it fraudulent in law, since the simple contract creditor might have been absolutely preferred.
Some other circumstances outside of the deed, which have been urged as objections, might be noticed, but we deem it unnecessary to do so. They are susceptible of explanation, and were explained by the parties in a man? ner which is entirely consistent with the known facts and with the fairness of the transaction. And upon the whole case, we feel convinced that the deed of trust and assignment, was solicited and accepted by J. & J. W. Anderson in good faith, for their, own security, and that it was made by Pearson & Anderson in good faith, for the secur rity and payment of the preferred creditors first, and then of all of their creditors. And so far as appears, their'
We conclude, therefore, upon the whole case, that the deed of trust is valid, and was and is entitled to its full operation, so far as the preferred debts ate concerned, and also, so far as the other debts have been brought within its provisions by the accession of the holders to the deed; and that the complainants in these several suits, having absolutely rejected and attempted to overthrow it, must, to this extent, be postponed.
Wherefore, the decree in each case is reversed, and the cause remanded, with instructions to dismiss so much of the bill and claim of the several complainants, as seeks to invalidate the said deed on the ground of fraud, and to hold the Trustees or either of them liable for their acceptance of said deed, and of the assignment therein made, or to subject particular debts of Pearson & Anderson to the satisfaction of their respective demands, in violation of the deed, with the entire costs of the proceedings in relation to said several matters: but to retain the said bills, should the complainants desire it, with a view to the ultimate appropriation of the remnant of the assigned choses in action or their proceeds, to the satisfaction of their demands, for which purpose the Chancellor will, of course, have power and control over the Trustees and the trust, for the purpose of ascertaining the debts which have been brought within the provisions of the deed; of expediting the fulfilment of the trust; of calling for an account thereof from time to time ; and finally, after the satisfaction of the debts which are entitled to the provisions of the deed, to compel payment of any such money, the proceeds of the assets held in trust, as may remain, or to cause such of said assets as may remain, to be sub