Brown v. Deford
| Decision Date | 27 March 1896 |
| Citation | 34 A. 788,83 Md. 297 |
| Parties | BROWN ET AL. v. DEFORD ET AL. FARMERS' & MECHANICS' NAT. BANK OF FREDERICK v. DEFORD ET AL. (THREE CASES). |
| Court | Maryland Court of Appeals |
Appeals from circuit court, Frederick county.
Appeals by Samuel H. Brown and another, trustees of Brown & McKinney and by the Farmers' & Mechanics' National Bank of Frederick, in the matter of the trust estate of Brown & McKinney. Affirmed.
Argued before BRYAN, BRISCOE, PAGE, ROBERTS, and BOYD, JJ.
Wm. P Maulsby, for appellants.
John P Poe and J. Roger McSherry, for appellees.
On the 19th of May, 1891, Henry C. Brown and Mathew S. McKinney trading as Brown & McKinney, made an assignment of all their property to the appellants Brown and Trail, in trust for the benefit of their creditors. This firm was engaged in the tanning business in Frederick, Md., and for some years prior to their failure shipped their leather to the appellees, Deford & Co., of Baltimore, who sold the same on commission, but permitted the consignors to draw drafts in advance of the sales of the leather. In this way, Brown & McKinney became largely indebted to Deford & Co., and on the 24th of July, 1888, the following agreement was entered into between the two firms:
"It is understood and agreed between Deford & Co., of Baltimore City, and Brown & McKenny, of Frederick City, all in the state of Maryland, that all money advanced to Brown & McKenny by Deford & Co. is for the purpose of purchasing hides and bark which are contained in the tannery and on the premises of Brown & McKenny, situated at Frederick City, Md.; and that the said hides are to be tanned into leather, and the leather is to be sent to Deford & Co., Baltimore, to be sold on commission, and after Deford & Co. deduct their commissions and charges, the net amount is to be placed to the credit of Brown & McKenny to pay the indebtedness due Deford & Co. It is further understood that the hides and leather referred to above are the property of Deford & Co., and they are authorized at any time to come forward and take possession of the same, and there are no other parties furnishing us money for the purpose of buying hides or bark. Baltimore, July 24, 1888. Brown & McKinney.
We accept the above. Deford & Co.
Witness: H. Hough. W. H. Russell."
It is admitted that there was, at the time of the execution of the deed of trust, a large balance due Deford & Co., which was however, subsequently reduced to the sum of $5,631.28, by sales of leather then on hand, and which had been shipped by Brown & McKinney. There was on the premises of Brown & McKinney, at the time of the assignment, a large number of hides, which were afterwards sold by an agreement between the parties, and the fund derived therefrom is now the subject of this controversy. The appellees contend that the hides, in their green state, were purchased with money furnished by them, and, under the terms of the contract of July 24, 1888, continued their property at the time of the assignment to the trustees. This claim is, however, contested on the part of both the trustees and the Farmers' & Mechanics' National Bank, one of the creditors of Brown & McKinney. The sole question in the case, then, is whether the appellees are entitled to the fund, under the agreement of July, 1888, to the extent of their claim. By an agreement between the parties this fund is to be dealt with here as if no sale of the property had taken place. It is manifest that the trustees have no standing in a court of equity to contest the validity of the appellees' claim. Conventional trustees, claiming under a deed of trust for the benefit of creditors, cannot impeach a prior conveyance executed by their grantor, even though that conveyance be fraudulent against the grantor's creditors. They stand in the shoes of the assignor, and take the property subject to all the equities against the assignor. Ratcliffe v. Sangston, 18 Md. 391; ...
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