Gardner v. Johnston
| Decision Date | 09 September 1876 |
| Citation | 9 W.Va. 403 |
| Parties | GARDNER ET AL. v. JOHNSTON ET AL. |
| Court | West Virginia Supreme Court |
A deed of trust held to be fraudulent and void, as to creditors upon the facts stated in the opinion of the Court.
Appeal from a decree of the circuit court of Jefferson county pronounced on the thirteenth day of April, 1874, in a cause therein pending, wherein John W. Gardner, John Urton, and Francis Gardner were plaintiffs, and George W. Johnston William H. Travers, T. W. Porterfield, David Johnston, Thomas Brown, John Roland, Randolph Custer, William Rissler, Hezekiah Colbert, Solomon Fleming, David Henderson, Joseph Duncan, and William Shaffer were defendants.
Appeal granted on the petition of said plaintiffs.
The facts of the case are set forth in the opinion of this Court.
Hon. John Blair Hoge, Judge of said circuit court, presided at the hearing below.
Conveyance to trustee to secure certain debts, but reserving right to carry on business in usual way, held void.
D. B. Lucas for appellants.
W. H. Travers for appellees.
This is an appeal from a decree of the circuit court of Jefferson county, dismissing the bill of the plaintiffs, filed for the purpose of setting aside a deed of trust executed by the defendant, George W. Johnston, upon certain property, to secure the debts due from him to certain creditors named in said trust deed.
On the tenth day of February, 1869, the defendant, George W. Johnston, conveyed to William H. Travers, trustee, the following property: About twelve hundred bushels of wheat, red and white, about three hundred bushels of offal, forty bushels of corn, one hundred and sixty flour barrels, ten barrels of flour, seventy-five bags, one pair platform scales, two tons of plaster; all of said articles being now in the mill at Halltown, Jefferson county, W.Va. Also, one dark brown horse named " Bill," saddle and bridle, one red and white spotted cow and calf; also, eight shoats; also, all my household and kitchen furniture, all of said property, being also at my residence, on the above-mentioned mill property, at Halltown, Jefferson county, West Va.; also, all my outstanding unpaid mill book accounts, for wheat, flour, or money yet due me in said milling business, at the above described mill. In trust to secure the payment to my creditors hereinafter named, the amounts respectively due them, to be paid in the order in which they are herein mentioned, before the first day of July, 1870 (Here follows the debts); being amounts due said parties for wheat delivered and money used in said milling business, and for the benefit of whom, my mill assets and property are herein conveyed. And if said debts are not all paid and satisfied on or before the first day of July, 1870, the said trustee is hereby authorized to sell, according to law, and apply the proceeds to the payment of said debts.
The deed was admitted to record on the day of its date, and was not known either to the trustee or any of the creditors, until after it was recorded.
On the fifth day of April, 1869, the plaintiffs and appellants instituted a suit in chancery, claiming that said deed of trust was fraudulent as to creditors. They sued out an attachment and caused it to be levied upon all the property that could be found, that was embraced in said deed. The plaintiffs charge in their bill, " that the trustee had no right to take possession of said property, or in any way to interfere with it, for more than sixteen months, but the same was to remain all that time in the possession of Johnston, and subject to his control; that almost all of said property, such as twelve hundred bushels of wheat, three hundred and fifty bushels of offal, is obviously of such a character that the said Johnston, when he executed said deed, could not have contemplated keeping such property in his possession for more than sixteen months, but that he must have designed selling the same; and that the pretense that it was to go into the hands of the trustee, after the expiration of more than sixteen months, for the payment of his debts, is palpably a scheme to delay, hinder and defraud his creditors, by continuing his milling business, disposing of the property conveyed in said deed according to his own will and pleasure, and contriving to use the proceeds in his business, while his creditors would be delayed and defrauded by the existence of said deed of trust."
The said Johnston and the trustee filed a joint answer, denying each and every allegation of fraud in the bill. The creditors answered, and denied any knowledge of any fraudulent purposes of the grantor, and asserted that their debts provided for in the trust, were just and honest.
David Johnston, the father of George W., had a debt of $650 provided for, and John Roland, the father-in-law, had a debt of $1,100 also provided for.
When the attachment was levied there were but 480 bushels of the wheat in the mill, but there were five hundred and fourteen bushels of offal, which was in excess of the amount in trust, a small deficiency in the corn, and no flour in the barrels. But the evidence showed that four hnudred bushels of wheat had been ground into flour, and sent to Baltimore, and the money paid to the trustee, which was effected through the interposition of the trustee, but which had not been contemplated by the said Johnston, but to which he willingly assented when the trustee required it to be so, as he would have nothing to do with the trust, unless the grantor would consent to apply the property to the payment of the debts.
This conversation occurred between the grantor and trustee next day after the execution of the trust. One hundred bushels of wheat had been paid upon the rent that Johnston owed upon the mill; leaving two hundred and twenty bushels of the wheat unaccounted for. Johnston had agreed to pay the plaintiffs a short time before the execution of the trust, over two dollars a bushel for wheat, and it was for wheat that he owed them the debts for which they sued.
The plaintiffs proved, by an expert, " that there would have been great danger of loss and damage in keeping 1,200 bushels of wheat in a mill, unground, from the tenth of February, 1869, to the first of July, 1870; " weevil would be apt to get in it, and it would become musty. Corn and flour, with great care, might be kept possibly for that time, but it would be with great difficulty. Offal would must in that time. That it is advisable to close out wheat, on hand in February, by the following August or September. After that time, the flour made from such wheat would, most likely, be musty; some might not be.
Upon this state of facts, the circuit court dismissed the plaintiff's bill, and from that decree they appealed to this court.
The case has been elaborately and ably argued here by both parties to the controversy. For the appellants, it is claimed, that from the character of the major part of the property, the circumstances attending the transaction, the conveyance should be declared void as to creditors. It is not denied but a debtor, in embarrassed circumstances, may execute a security by which he prefers creditors, if done bona fide. This doctrine has been carried so far in Virginia, and that before our separation, with the right to make terms and reservations, that the court of appeals seem to concede that it should not be extended further, but think that the evil would justify legislative redress. See opinion of Allen, Judge, Dance v. Seaman et als., 11 Gratt. 778. The question whether a deed shall be fraudulent per se has been presented to the court of appeals in many cases under different circumstances, but in no one under the circumstances attending this case.
In the same case, at page 781, Judge Allen says: " That the reservation of an interest in the property, by postponing the time of sale, or directing a sale on a credit, or providing for the payment of the surplus, after satisfying the creditors secured, do not, of themselves, furnish evidence of fraudulent intent, has been affirmed by the repeated decisions of this Court. Skipwith v. Cunningham, 8 Leigh 271; Kevan v. Branch, 1 Gratt. 274; Lewis v. Caperton's exors. 8 Gratt. 148; Cochran v. Paris, 11 Gratt. 348; Janney v. Barnes, 11 Leigh 100.
Another class of cases are found, where the provisions contained in the deed are sufficient to enable the grantor to defeat the provisions, or the expressed object of the deed, in which the deed is held to be fraudulent per se. Lang v. Lee, 3 Ran. 431; Sheppard v. Turpin, 3 Gratt. 373; Spence v. Bagwell, 6 Gratt. 444; Addington v. Etheridge, 12 Gratt. This principle was acted upon, and approved by, this Court, in a case decided at the last term of this Court in Wheeling.
Many of the cases referred to above are such, as the deed conveys real estate, and valuable and substantial personal property, or both, with some that is perishable, or destructible, or consumable in the use, in which case it has been claimed that, as the latter class of property was in the deed, with the reservation of the use of such property for a time sufficient to insure is destruction, or consumption by the grantor, therefore the deed should be held void per se, but it will be found, in the class of cases first cited, that the court of appeals has overruled such pretensions, and sustained the deeds. This is, however, evidently upon the ground that the major part of the property is real and substantial, and the consumable property is the minor part.
No case has been presented to that court, where the major part of the property is such as can be consumed in the regular course of business, and will...
To continue reading
Request your trial