Conaway's Adm'rs v. Stealey

• Citation: 28 S.E. 793,44 W.Va. 163
• Parties: CONAWAY'S ADM'RS v. STEALEY et al.
• Decision Date: 01 December 1897
• Court: Supreme Court of West Virginia

28 S.E. 793

44 W.Va. 163

CONAWAY'S ADM'RS

v.STEALEY et al.

Supreme Court of Appeals of West Virginia.

Dec. 1, 1897.

Deed op Trust — Validity-Retaining Possession—Sales—Partnership Assets—Sale to Partner—Rights of Surety.

1. A deed of trust, fully recorded, conveying a stock of goods to secure the purchase money thereof, is valid as to subsequent creditors of the purchasers, even though there is a parol arrangement by which such purchasers are to hold possession of, sell, and replenish such stock of goods, and, after paying necessary expenses, apply the proceeds to the extinguishment of the trust lien.

2. Partnership assets must be first applied to the extinguishment of partnership debts, and a partner has no leviable interest therein, so far as his individual debts are concerned, until the partnership debts are fully satisfied.

3. A sale to a partner of the partnership effects in consideration of payment of the partnership indebtedness is on consideration not deemed valuable in law, and is invalid to give the purchasing partner any separate leviable interest therein to the injury or detriment of the partnership creditors.

4. A person who becomes surety for a partnership debt, in so far as such suretyship is concerned is entitled to be treated as a partnership creditor.

(Syllabus by the Court.)

Appeal from circuit court, Pleasants county; Tavenner, Judge.

Action by C. I. Conaway's administrators against James Stealey and others to subject certain property to payment of partnership debts. From decrees for plaintiffs, the defendant Ella G. Stealey appeals. Reversed.

Vandervort & J. F. Barron, for appellant.

J. G. McCluer and Thos. I. Stealey, for appellees.

DENT, J. Ella G. Stealey appeals from decrees of the circuit court of Pleasantscounty in the chancery cause of C. i. Conaway's administrators against James Stealey et al. The facts are as follows:

On the 2d day of November, 1887, Joseph Porter, a merchant, sold his stock of merchandise situated in his storeroom in the town of St. Marys, in said county, to James Stealey and H. M. Bookman, afterwards carrying on said business as Stealey & Bookman, taking as part consideration therefor their two several promissory notes bearing date the day of sale, each for $1,342.86, with interest, payable, respectively, on the 1st day of November, 1889, and the 1st day of November, 1890, and signed by the members of the firm and their respective wives, Ella G. Stealey and R. P. Bookman, as their sureties. To secure these notes, a lien was retained on the stock of merchandise by a deed of trust duly executed and recorded strictly in accordance with the statutory laws of the state. This deed is as follows: "This deed, made this 2d day of November, 1887, by and between James Stealey and H. M. Bookman, of Pleasants county, and state of West Virginia, of the first part, and J. C. Noland, trustee, of the county and state aforesaid, of the second part, wit-nesseth that for and in consideration of the sum of one dollar cash in hand paid, the receipt whereof is hereby acknowledged, and for the further stipulation and agreements which is hereinafter set forth, the party of the first part doth hereby grant, sell, and convey to the party of the second part their entire stock of general merchandise situated in the storehouse of Joseph Porter, in the town of St. Marys, and on the corner of George and Second streets, Pleasants county, West Virginia; to have and to hold to himself, the said J. C. Noland, trustee, party of the second part, his heirs and assigns, in trust to secure Joseph Porter in the payment of five several promissory notes, executed by James Stealey and Ella Stealey, his wife, and H. M. Bookman and R. P. Bookman, his wife, and notes described as follows: The first note, calling for two hundred dollars, due and payable Feb. 1st, 1888; the second note, calling for four hundred dollars, due and payable May 1st, 1888; the third note, calling for five hundred dollars, due and payable Nov. 1st, 1888; the fourth note, calling for thirteen hundred and forty-two dollars and eighty-six cents, due and payable Nov. 1st, 1889; the fifth note, calling for thirteen hundred and forty-two dollars and eighty-six cents, due and payable November 1st, 1890, —and all said five promissory notes to bear interest from date: Now, if the said James Stealey and Ella G. Stealey, his wife, and H. M. Bookman and R. P. Bookman, his wife, shall well and truly pay off and discharge said indebtedness according to the tenor of the five several promissory notes, then this deed to be void, and of no effect, but, if default be made in the payment thereof, of any one of the above-described promissory notes, according to the tenor thereof, then it shall be the duty of said trustee to sell for cash the property hereby conveyed, and the proceeds thereof to go towards paying off the above-described promissory notes, and the said trustee shall be governed by the statutes made and provided for the government of trust deeds, by the laws now in force in the state of West Virginia. Witness the following signatures and seals the day and year first above written. James Stealey. [Seal.] H. M. Bookman. [Seal.]" Also, as further and additional security, H. M. Bookman and R. P. Bookman, his wife, executed a deed of trust on certain real estate belonging to the husband, and certain real estate, the separate property of the wife; and James Stealey and Ella G. Stealey, his wife, executed a deed of trust on certain real estate, the separate property of Ella G. Stealey. The firm took possession of the goods, and carried on the business of merchandising, selling, and replenishing until the 11th day of January, 1889, when the following contract of dissolution was entered into, —Bookman to retire, and Stealey to continue the business: "This contract and sale agreement made and entered into this 11th day of January, 1889, by and between H. M. Bookman, of the one part, and James Stealey, of the other part, witnesseth that for and in consideration of the agreements, stipulations, and conditions hereinafter mentioned, H. M. Bookman, partner, and one of the firm of Stealey and Bookman, has this day sold and conveyed to his late partner, James Stealey, all of his right, title, and interest of whatsoever kind in and to the store known as the 'Joseph Porter Store' or 'Stealey and Bookman Store, ' to wit, all of my right and interest in all of the goods in said store at this time, or all that may hereafter come in in the firm name of Stealey and, Bookman, all my right, title, and interest in all of the staves, railroad cross-ties, and lumber of any kind and all kinds whatsoever that are now under the management, ownership, and control of the said firm of Stealey and Bookman, and all my right, title, and interest in and to all of the accounts, notes, or other things due and payable to the said store of Stealey and Bookman (or that may hereafter become due), and all of my right, title, and interest in and to all of the store furniture and fixtures of every and all kinds and descriptions. Yet upon the following conditions: In consideration of the sum of four hundred dollars, to be paid as follows: The sum of two hundred dollars on or before Feb. 20, 1889, and the sum of two hundred dollars on or before 11th day of July, 1889, all of which is evidenced by James Stealey's notes of even date herewith; and that said Bookman is to have free of charge a small pile of lumber up at the tie yard and a small lot on Stealey's lot; and upon the condition that James Stealey do right away, or as soon as may be possible, give to Joseph Porter such other and additional security that may be accepted and approved by the said Porter, and to have said Porter to release said Bookman from all liability of every kind, and have said Porter to release the trust deeds that he now holds against said Hugh M. Bookman and Rebecca P. Bookman, his wife's, property; also said Bookman is relieved and released from the payment of his family and cooper-shop account; and the further and last consideration that said James Stealey assumes, agrees, and binds himself to pay off and discharge all bills, notes, or other indebtedness of any and all kinds that are now due, or that may hereafter come due, of the late firm of Stealey and Bookman. In witness whereof, we hereto subscribe our names and seal this 11th day of January, 1889. H. M. Bookman. [Seal.] James Stealey. [Seal.]" On the 12th of March, 1889, Stealey paid $700 on the Porter note, and Porter released the separate property of R. P. Bookman, and to secure H. M. Bookman for his liability on said notes Stealey executed to Bookman a note for $803.93, with Ella G. Stealey as surety, the collection of which was conditional on failure of Stealey to pay the balance due Porter. Stealey continued the business in his own name until June, 1889, when he absconded. His individual creditors C. E. Sarber, Robert H. Browse, and Charles I. Conaway, now deceased, and represented by his administrators, levied on the stock of goods by virtue of attachments and executions. Other individual creditors also levied attachments on the same property. The creditors were all convened before the court, and on a final hearing of the cause, by the several decrees complained of, the court adjudged the deed of trust given on the stock of goods to secure the purchase money invalid, held the property covered thereby not subject to the partnership debts of the firm of Stealey & Bookman, and distributed the same among the individual creditors of James Stealey according to their attachments and executions, and decreed the sale of the property of H. M. Bookman and Ella G. Stealey to pay the debt of Joseph Porter. Ella G. Stealey is the sole appellant, and she here insists that the circuit court erred in holding the purchase-money trust deed invalid, and that the stock of goods was not first liable to the payment of the firm debts to the exclusion of the Individual...