88 Iowa 358 | Iowa | 1893
Some time prior to the execution of the note in suit, Fanton R. Lawlor desired to borrow a part of
On the same day (January 6, 1890), F. R. Lawlor ■assigned to the plaintiff, as trustee, an existing lease of ■said land; the rents to be applied in payment of taxes, and interest on said mortgage and trust deed indebtedness. F. R. Lawlor was at that time insolvent. So far as appears, no default had been made in the payment of annuities, or in otherwise executing the trust, unless it be in loaning this money to F. R. Lawlor.
January 17, 1890, E. S. Jaffray & Co. commenced an action, aided by attachment, in the district court of Crawford county, Iowa, against Fanton R. Lawlor, to recover two thousand, eighty-one dollars and twenty-five cents on account. The attachment was levied
Upon these facts the plaintiff asks judgment against F. R. Lawlor, and a decree foreclosing said trust deed, and establishing it as a lien prior to any .lien of the appellants. The appellants ask that the plaintiff’s petition be dismissed; that it be adjudged .that this interest, if any, is junior to the defendants’; and that he be required to turn over to E. S. Jaffray the rent notes.
As already said, the controlling question is whether said trust deed is valid as against the personal creditors of F. R. Lawlor. That the money in the hands of F. R. Lawlor is of the trust fund, and that he is liable therefor at the proper time, and to the proper person, there is not, and can not be, any question. It is trust funds in his hands as trustee, and he is liable for it as trustee, whether he received it as borrower or otherwise. Holding him liable as trustee, we do not now determine whether or not he is liable as borrower, but proceed to inquire whether, being liable as trustee, he might legally give the security that he did, as against his personal creditors. The appellants contend that the deed is a security to himself for a debt which he owes to himself, and that by it advantages are reserved to him in fraud of his creditors.
While it is true that, as between a trustee and third persons, the trust estate may be said to belong to the trustee, as between him and the ceskd que trust, his ownership is only for the purposes of the trust. He is at all times liable to the cestui que trust, and the liability may mature at any time upon - an order of court
The evidence shows that this trust deed was executed, not only in pursuance of F. R. Lawlor’s agreement with Mr. McG-arry, but on the demand of Mrs. Margaret Lawlor, who was prepared to proceed by an action in court to secure her annuity, if the security had been refused. The deed was taken with the consent of at least two of the heirs. Surely, Mrs. Lawlor and these heirs had a right to demand and receive this security from the insolvent trustee who had converted the trust fund to his own use.
Authorities are cited to the effect that an alienation by a debtor, containing a provision for the debtor which impairs the rights of his creditors, is fraudulent as to such creditors. It is argued that F. R. Lawlor is left to enjoy this land during the life of Mrs. Margaret Lawlor, to the prejudice of his general creditors, and therefore the deed is fraudulent and void as to them. Had this security been given in good faith to a general creditor, to secure a bona fide debt to become due, the fact that Mr. Lawlor might enjoy the benefits of the land until the debt became due would not vitiate the
Our conclusion is that this trust deed is valid as against the general creditors of F. R. Lawlor.