25 W. Va. 590 | W. Va. | 1885
The first enquiry to be made in this case is : Was the deed of trust of January 9,1884, referred to in the bill and charged to be fraudulent, either on its face fraudulent or in fact made with intent to delay, hinder and defraud the creditors of the grantors, and was this fraudulent intent known to the beneficiaries in the deed of trust ? If either of these enquiries must be answered in the affirmative, the decree of the circuit court must be reversed, even if the attachment was improp
Was this deed of trust fraudulent per se ? After conveying certain real estate it proceeds: “ And also the following personal property, to-wit, all the goods and wares and merchandise nowT in the store-room of S. N. Knight & Bro (the grantor) in the town of Clifton in said county, and the goods, wares and merchandise, that they may hereafter purchase or acquire in said firm and have in said store, in trust to secure certain debts named.” The deed concludes: “ If all of said notes (secured) are not paid within thirty days, all of said property may be advertised and after giving thirty days notice sold for cash, or so much as will pay said notes and costs of sale.” It is not claimed in the argument of counsel for the appellee, that this deed or any other deed of trust could pass the title to the goods, wares and merchandise, "which the grantors might thereafter purchase and place in this store, or that the creditors of the grantor secured by this deed of trust could in a court of equity set up, that they had any lien by virtue of this deed on any such goods subsequently purchased by the grantors and placed in this store. That this is so, is obvious. But it is claimed by appellees’ counsel, that the insertion of this nugatory clause in this deed of trust did not render it fraudulent per se. To sustain his views he refers to several authorities, most of which throw no light on this point. The most pertinent of these is Brockenbrough v. Brockenbrough, 31 Grat. 589, where it was held, that a deed of trust conveying a farm and all the grantor’s horses, mules, cattle, sheep and hogs, and all such cattle, as should thereafter be placed on said farm by the grantor, to secure certain debts then due, was not per se fraudulent.
While the Virginia cases have especially of recent years gone much further in sustaining deeds of trust alleged to be fraudulent than the courts of West Virginia, yet I do not hesitate to say, that the simple inclusion in a deed of trust conveying existing property of the grantor of personal property,
' To which class of these cases the deed of trust under consideration belongs, I will now investigate. In so doing I will confine myself to the West Virginia authorities and those of the State of Virginia decided before the establishment of this State. They suffice to settle clearly this question; and a reference to other authorities on this point would only confuse. There are certain principles governing in cases of this description, which are well settled in this State. In the first place it is well settled, that the retention by the terms of a deed of trust by the grantor of certain kinds of personal property, such as household furniture, farming implements, libraries, &e., not perishable in its nature nor consumable in its use, which is conveyed to secure debts, and which is not to be sold for some time, does not render the deed of trust
But if the property conveyed by the deed of trust is of such a character, as must be consumed in the use, and by the provision in the deed it is not to be sold for a considerable time, and the grantor is to remain in possession of it till the sale, then such deed is per se fraudulent, for the obvious reason that the postponement of the sale for a considerable time and the retention of the possession of such property till the sale could only have been inserted for a fraudulent purpose and with a view of enabling the grantor in such deed of trust to defeat its declared purpose of having such property devoted as a security for certain specified debts. For if the grantor had really intended, that such property should be sold for the payment of specified debts, he would not have provided for its retention and use by himself for such a considerable length of time, inasmuch as such retention and use by consuming the property would defeat the professed object of the deed. The same conclusion must be reached, if the property, though not consumable in its use, is perishable in its character and could not be preserved till the time of sale. The retention of the possession of such property could not have been stipulated for by the grantor on the face of the deed except with thedesign of selling such property, before it perished or was greatly diminished in value, and appropriating the procoeds as he pleased; and therefore it was not intended by the deed to appropriate it, as the deed professed, to the payment of specified debts, and such deed could have been intended only to protect such property from other creditors. It is therefore perse fraudulent. (Klee v. Reitzenberger, 23 W. Va. 754;
But if the provision in the deed of trust be, that the trustee in such a case may continue the business in order to realize the trust-fund and wind up the business, the deed is not fraudulent per se; and if the deed further provides, that the grantor shall attend to the business under the control and direction of the trustee, that provision will not render the deed of trust per se fraudulent. (Harden v. Wagner, 22 W. Va. syl. 8, p. 357; Marks v. Hill, 15 Grat. 400; Gorden v. Cannon, 18 Grat. 387.) In a case where a stock of goods, wares and merchandise is conveyed in a deed of trust to secure debts, the property not to be sold for a considerable time, if there be any provisions in the deed, which cleai’ly indicate, that the grantor, when he made it, intended to remain in possession of theproperty until the day of sale, such deed will be regarded as per se fraudulent, precisely as it would be, had there been in it an express provision, that the grantor should
Let us now apply these principles to the deed of trust of January 9, 1884, with a view to ascertaining, whether it be perse fraudulent. It does not expressly provide, thatthegran-tors are to remain in the possession and control of the goods, wares and merchandise conveyed by the deed of trust, and which under its provisions could not be sold in less than sixty days after the deed was executed; but it appears on the race of this deed of trust as distinctly, as if it had been expressly so stated, that the grantors intended, when they executed this deed, to remain in the possession of this storeroom and of the goods, wares and merchandise and to sell and dispose of them at their pleasure. It is almost in words stated, that they intended or expected to add to this stock of goods after the execution of this deed of trust by purchasing other goods; for the deed says, “the goods, wares and merchandise that the grantors may hereafter purchase or acquire in said firm or have in said store” are thereby conveyed. Now it would be absurd to suppose, that these parties expected to purchase more goods and put them in this store simply to be sold by the trustee at public sale. This would be imposing on the grantors much trouble and loss, for of course the goods could not be sold at public auction for what they cost. One of the grantors in his deposition estimates the loss on goods, so sold at twenty-five per cent. It is obvious, that no such folly was dreamed of, and that in addition to the stock of goods, after the deed of trust was given, the grantors intended to sell as usual the goods so added; and of course it was designed by the grantors to mingle the goods so purchased by them with the goods, which they already had on hand. This is almost expressed on the face of the deed of trust; for it provides for the disposition of the old stock and these additions in precisely the same manner. It is further obvious, that the grantors in
The deeds of trust executed by S. N. Knight & Bro. and S. N. Knight and G. W. Knight individually, and by their wives, dated January 15, 1884, and January' 17, 1884, and duly acknowledged and recorded the same day conveyed to II. G. Nease, trustee, the goods, wares and merchandise belonging to S. N. Knight & Bro., in Clifton, West Virginia, to secure certain debts specified in the deeds. The form -of these deeds of trust was that set out in the Code of West Virginia, chapter 72, section 5 ; and on their face they are wholly unexceptionable. Of course the wives of the grantors need not have united in them, hut their uniting while perfectly useless did no harm. There is not a particle of evidence to show, that the grantors in these deeds of trust designed any fraud in executing them. Indeed the evidence shows, that after the execution of these two last deeds of trust the grantors'in them never were in the possession or had any control over the goods, wares and merchandise conveyed. They are therefore valid and binding and have precedence over the plaintiffs’ attachment, which was not issued or served for more than two weeks after these valid deeds of trust were executed.
The plaintiffs’ attaehmentin this case was valid and cannot be quashed and created a lien on the property, upon which it was levied, from February 2, 1884. The affidavit, on which this attachment was issued, was sufficient to authorize the issuing of the attachment; and the material facts set out to show the existence of the first .ground, on which the attachment was based, were sufficient to establish this ground, that is : “ that th'e defendants had assigned and disposed of their property with intent to defraud their creditors.” This affidavit stated the execution by the defendants of the deed of trust dated January 9,1884, and there was filed with the affi-
The final decree of the circuit court of Mason county must be reversed; and this cause must be remanded to the circuit court of Mason county to bo further proceeded with. S. N. Knight in his deposition states, that the goods, wares and merchandise of 8. N. Knight & Bro., on which the attachment in this cause was levied, and which was conveyed in the trust-deeds dated January 15, 1884, and January 17, 1884, mentioned in the proceedings in this cause, have been sold by an order of the court at fifty-five cents on the dollar of their cost. No such order appears in the copy of the record as presented to this Court. But, I presume, some such order has been entered, and such sale made either of the whole or of a part of said goods, wares and merchandise. If the whole of them have not been sold, they must all be sold ; and after paying the costs of sale the proceeds must be applied first to the payment of what may be due on the debt secured by the said deed of trust of January 15, 1884, and then to the payment of what may be due on the debts secured by the said deed of trust of January 17, 1884, and then to the payment of the debts of the plaintiffs in the bill named, and to the payment of all the costs of this suit incurred in the circuit court of Mason county: if the proceeds of such sale shall prove insufficient to pay all the sums aforesaid, then the said circuit court of Mason county shall order the sale of the real estate, on which the attachment issued in this cause was levied, selling first the real estate owned by S. N. Knight and Gf. W. Knight jointly or as partners under the name and firm of S. N. Knight & Bro., and then, if necessary, the real estate of Gf. W. Knight levied upon; and the proceeds of such sales shall bo applid to the payment of the costs of this suit in the circuit court of Mason county and to the debt of the plaintiffs
REVERSED.