Hughes v. Epling

• Decision Date: 16 July 1896
• Citation: 93 Va. 424,25 S.E. 105
• Parties: HUGHES et al. v. EPLING et al.
• Court: Virginia Supreme Court

93 Va. 424

25 S.E. 105

HUGHES et al.

v.EPLING et al.

Supreme Court of Appeals of Virginia.

July 16, 1896.

Convbyance for the Benefit of Debtor— Validity.

A deed of trust conveying a stock of goods to secure the payment of a debt, and to secure the creditor as an indorser on certain notes, provided that the grantor should remain in the possession and enjoyment of the stock until default in payment of the notes, or any renewals thereof, or in the payment of the debt secured, and until the indorser and creditor named should demand a sale. Held, that the conveyance, being on its face given for the benefit of the debtor, was fraudulent per se.

Appeal from hustings court of Roanoke; George E. Cassell, Judge.

Bill by Hughes, Effinger & Co. against C. R. Epling and others to set aside a certain conveyance as fraudulent. There was a decree for defendants, and plaintiffs appeal. Reversed.

Hoge & Hoge, for appellants.

Heflin & Dunlap, for appellees.

BUCHANAN, J. The only question to be decided in this case is whether or not the deed of trust whose validity is attacked by the appellants is fraudulent per se.

The grantor was engaged in the business of a retail merchant, having one store in East Radford, and another in West Radford. He conveyed his stock of goods or merchandise at each place, together with all the fixtures In both storehouses, such as show cases, stoves, and safes, and also a horse and buggy, to Heflin & Dunlap, trustees, to secure the payment of a debt due by him to G. W Epling, and also to secure him as Indorser upon two negotiable notes.

The deed provided that the grantor should "be suffered to remain in possession and enjoyment of the said stocks of goods or merchandise until default" should be made by the grantor in the payment of the negotiable notes, or of any renewals or continuations of the same, or any part thereof, or in the payment of the debt secured, and until G. W. Epling, the indorser and creditor, should require the trustees to sell. Until there had been both a failure to pay, and a demand to sell, the grantor retained the possession and the right of disposition. There Is not only no provision in the deed that he is to account to the trustees for the proceeds of sales made by him while in possession, nor any recognition that such sales are for their benefit, but the terms of the trust exclude any such-idea, and necessarily imply that he had the right to dispose of the goods in his business for his own benefit, and to continue to do so as long as the negotiable notes could be renewed, and the party secured was content not to require a sale.

The law does not authorize such agreement. A creditor, in securing himself, must be careful that the contract by...