Dance v. Seaman

• Decision Date: 23 November 1854
• Citation: 52 Va. 778
• Court: Virginia Supreme Court
• Parties: DANCE & als. v. SEAMAN & als.

52 Va. 778

DANCE & als. v. SEAMAN & als.

Supreme Court of Appeals of Virginia.

November 23, 1854

A deed of trust to secure bona fide creditors, conveying land, slaves, and crops cut and growing, not to be enforced for two years, reserving the profits in the mean time to the grantor, and directing the surplus proceeds of sale, after payment of the debts secured, to be paid to the grantor, is not fraudulent per se, though made without the knowledge of the creditors.

This was a bill by Seaman and others, creditors of Benjamin L Belt and Humphrey S. Belt, to set aside two deeds executed by these parties, on the ground that they were fraudulent, and intended to hinder and delay their creditors. The trustee answered, denying any knowledge of a fraudulent intent, and the Belts denied all fraud: And the only question in the cause was, whether the deeds were fraudulent on their face. Both the deeds were dated on the 4th day of August 1848, and each conveyed one moiety of the same property; and their provisions were substantially the same. One of them, executed by Benjamin L. Belt, conveyed to Willis J. Dance a moiety of a tract of land in the county of Powhatan, the grantor's interest in three slaves, and in the crops on hand made the then present year, and those then growing. And it provided that Belt should be permitted to remain in possession of the property, and receive the profits thereof until the 4th of August 1850, unless he should give his written consent to a sale before that time. And after that time the trustee was authorized upon the request of any one of the preferred creditors, to proceed to sell the property on a credit, as to the land, of one and two years; and the personal property for cash, and apply the proceeds to the payment of the debts intended to be secured thereby, in the order therein prescribed. The deed of Humphrey S. Belt conveyed the other moiety of the same land, slaves and crops, and also the plantation utensils, to the same trustee, reserving the profits for the same time; and then upon trust, first to pay certain debts of his own, and then other debts for which he was security as endorser for B. L. Belt.

The trustee did not sign the first of these deeds, though he did the second. Nor were any of the creditors present when they were executed, though some of them afterwards assented to them. At the time the deeds were executed, both the Belts were insolvent.

The plaintiffs were provided for in both deeds; in that of B. L Belt they were in the first class, in that of H. S. Belt, so far as he was bound for their debts, in the second class; but they declined to claim under the deeds, and sued and recovered judgments, which were docketed in the clerk's office of the County court of Powhatan.

The plaintiffs Seaman and Muir alleged and proved that B. L. Belt had contracted with them, that if their debts were not paid by a certain time, he would give them a deed of trust upon the goods in his store; and that he failed to do it.

When the cause came on to be heard, the court below held that the deeds were fraudulent as to the creditors; and proceeded to decree in their favor. And the trustee, and the creditors claiming under the deed of H. S. Belt, applied to this court for an appeal, which was allowed.

Steger, for the appellants.

Griswold and Claiborne, for the appellees.

ALLEN P.

If the questions presented by the record in this case were of the first impression in this court, it would be matter for grave consideration, whether deeds of trust, such as those assailed by the bill of the appellees, did not contravene the spirit of the statute against fraudulent conveyances: Whether a deed of trust executed by a debtor on the verge of insolvency, creating preferences amongst his creditors, postponing the time of sale, the possession in the mean time remaining with the grantor, and the profits to be received by him, and executed without the knowledge of or consultation with the creditors, should not be treated as made with a fraudulent intent, because the reservations and conditions may tend to hinder and delay creditors, in the prosecution of their legal remedies to enforce the payment of their debts. But these questions have been settled by a series of adjudications in this court. It would disturb many titles, if the principles heretofore established, and sanctioned by the practice of the country, were now to be questioned. If inconvenience results from the construction heretofore given to the statute against fraudulent conveyances, the remedy should be administered by the law making power. An act of the legislature would operate prospectively, and men could regulate their transactions so as to conform to its provisions. But a decision of this court, giving a new and different rule of construction, would have a retrospective and therefore an unjust operation.

Preference of favored creditors is forbidden by the bankrupt law in England. But where that law does not apply, the right to make such preferences is admitted. In Estwick v Caillaud, 5 T. R. 420, Lord Kenyon says, It is neither illegal or immoral to prefer one set of creditors to another. The same doctrine was avowed in Nunn v. Wilsmore, 8 T. R. 521. The same rule has been sanctioned in courts of equity. Small v. Oudley, 2 P. Wms. 427. The right results from the ownership of personal property, and the unrestricted power of alienation. The debtor, if no lien has attached, can sell it or transfer it to any creditor or purchaser, and apply the proceeds to the payment of any creditor he pleases. And if he may do so with the property or its price, there would seem to be no good reason why he should not have the right to cover it by a deed of...