Evans v. Greenhow
| Decision Date | 17 May 1859 |
| Citation | 56 Va. 153 |
| Court | Virginia Supreme Court |
| Parties | EVANS, trustee, v. GREENHOW & als. |
The trustee and beneficiaries in a deed to secure bona fide debts, without notice, are purchasers for valuable consideration, within the meaning of the exception in the statute, Code, ch. 188, § 3, p. 717; and will be preferred to an execution creditor of the grantor in the deed, as to a chose in action thereby conveyed.[a1]
Thomas Crouch, claiming to be the creditor of George Ives deceased for money paid as a joint surety with him, in March 1854 filed his bill in the Circuit court of the city of Richmond against the administrator and heirs of Ives, and a former guardian of the heirs, seeking to subject a lot in the city which was a part of Ives' estate, and also to have any money in the hands of the former guardian applied to the payment of the debt. In February 1855 there was a decree ascertaining the amount of the plaintiff's claim at nine hundred dollars, as of the 1st day of October 1850; and a commissioner was directed to sell the lot, and report to the court.
On the 27th of February Samuel C. Greenhow filed his petition in the cause, claiming the proceeds of the sale of the lot, as an execution creditor of Thomas Crouch. It appears that in May 1852 Greenhow recovered a judgment in the Circuit court of Henrico county, against Thomas Crouch and two others for the sum of one thousand one hundred and fifty-four dollars and ninety cents; on which sundry executions had been sued out but only the sum of four hundred dollars had been made upon them. On the 17th of February 1855 a new execution was issued on the judgment, which went into the hands of the sheriff of Henrico at 12 M. of that day; and on the 19th of the same month another execution was issued, and went into the hands of the sheriff of the city of Richmond on the same day.
On the 5th of March Thomas J. Evans was admitted a party defendant in the suit, and contested the right of Greenhow to the fund in the suit. He claimed it under a deed dated on the 15th of February 1855, and recorded on the 17th of the same month, at 2 o'clock P. M., on the acknowledgment of the grantors by which Thomas and Richard Crouch conveyed to Evans their interest in the claim involved in the suit of Crouch against Ives, in trust to secure certain creditors named in the deed. Evans had no knowledge of the existence of this deed until it was recorded; and in his answer to the petition he insists that he and the beneficiaries in the deed were assignees for valuable consideration without notice of the petitioner's execution, and therefore that they came within the exception in the 3d section of chapter 188 of the Code of 1849; and were entitled to the subject.
On the same day on which Greenhow filed his petition the commissioner reported his sale of the lot. And the proceeds of that sale not being sufficient to pay the plaintiff's debt, the former guardian of the heirs admitting that he had in his hands a fund belonging to them, an order was made directing him to pay into bank, to the credit of the cause, a sum sufficient to discharge the balance of the debt. And then the cause coming on to be heard on the 13th of June 1856, the court decreed in favor of Greenhow for the fund. And from this decree Evans applied to this court for an appeal; which was allowed.
Nance & Williams, for the appellant.
Claiborne, for the appellees.
The Code, ch. 188, § 3, p. 717, provides, that
The controversy in this case arises under this section of the Code. The subject in controversy is a chose in action, which belonged to Thomas and Richard Crouch. The appellee, Samuel C. Greenhow, claims a lien upon it under the said section, by virtue of sundry writs of fieri facias, issued after the Code took effect, upon a judgment obtained by him against Edwin Farrar and the said Thomas and Richard Crouch. The appellant claims a lien upon it by virtue of a deed of trust executed by said Thomas and Richard Crouch, and duly recorded, whereby they assigned the subject to him, in trust to secure the payment, as therein mentioned, of certain debts of theirs, named in a schedule annexed to the deed. And though the said Greenhow's execution lien is prior in time to the appellant's deed of trust lien, yet the appellant insists that the latter is prior in right, inasmuch as he is an assignee for valuable consideration and without notice, within the meaning of one of the exceptions contained in the section giving the execution lien as aforesaid. The question is, therefore, narrowed down to this, whether he is such an assignee or not?
The deed of trust is certainly an assignment of the subject in controversy, and the appellant is therefore an assignee thereof. He is also an assignee without notice. He denies notice in his petition and answer, and there is no proof or even averment of such notice in the record. Is he an assignee for valuable consideration?
A pre-existing debt is, of itself, a valuable consideration for a deed of trust executed for its security; which deed, if it be duly recorded, and was not executed with a fraudulent intent, known to the trustee or the beneficiaries therein, will be valid against all prior secret liens and equities and all subsequent alienations and incumbrances. It is not necessary to the validity of the deed, that it should be executed by the trustee or the beneficiaries, or even that they should know of its existence before the intervention of subsequent claims. The deed being apparently for the benefit of the creditors thereby secured, their acceptance of it will be presumed until the contrary appears. If any of them refuse it, their refusal will relate back to the date of the deed, and avoid it ab initio as to them. A debtor, even though he be in failing circumstances, may lawfully prefer one creditor to another, and make a valid deed of trust for that purpose. These principles are now well settled in this state, as the following cases sufficiently show: Garland v. Rives, 4 Rand. 282; Skipwith's ex'or v. Cunningham, & c. 8 Leigh 271; McCullough, & c. v. Sommerville, Id. 415; Lewis v. Caperton's ex'or, & c. 8 Gratt. 148; Phippen v. Durham, & c. Id. 457; Dance, & c. v. Seaman, & c. 11 Id. 778; and Wickham, & c. v. Lewis Martin & Co. 13 Id. 427. In the last case Judge DANIEL said (and in this part of his opinion all the other judges substantially concurred), " I think it has been the constant course of the courts in this state to regard the creditors in a deed of trust, made by their debtor bona fide for their indemnity, in the light of purchasers for value." Id. 437.
It is not proved, nor even intimated, that the debts secured by the deed of trust in this case, are not all bona fide debts; nor that the trustee or any of the creditors participated in, or had notice of any fraudulent intent on the part of the grantors; nor, indeed, that there was any such intent, other than may be implied by the existence of the execution lien, which was unknown to the trustee and beneficiaries until after the recordation of the deed. No such intent appears on the face of the deed.
The appellant is therefore an assignee for valuable consideration and without notice, in the general sense of the terms. Why is he not such an assignee, within the meaning of the exception aforesaid? The terms are therein used without qualification or limitation; and the presumption is, they were intended to be used in their general and well understood sense. There is nothing in the nature of the case which requires that they should be construed in a different...
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