Johnston v. Zane's Trustees

• Decision Date: 26 August 1854
• Citation: 52 Va. 552
• Court: Virginia Supreme Court
• Parties: JOHNSTON v. ZANE'S trustees & als.

52 Va. 552

JOHNSTON v. ZANE'S trustees & als.

Supreme Court of Appeals of Virginia.

August 26, 1854

(Absent DANIEL, J.)

1. To avoid a deed at the suit of a subsequent creditor, actual fraud must be shown.

2. A deed which provides in the first place amply for all the then existing debts of the grantor; and then settles the balance of the property on the grantor's family, in the absence of actual fraud, is a valid deed.

3. A settlement which gives to the grantor a bare maintenance with his wife, for his life, and provides that the property shall not be subject to his debts thereafter contracted, does not vest him with such an interest in the property as can be subjected to satisfy such after contracted debts.

4. What provisions in a deed will not avoid it.

5. QUÆ RE: If a subsequent creditor can file a bill to set aside a deed on the ground that it is voluntary and therefore void as to prior creditors; no prior creditor complaining of it.

6. Upon a bill against a trustee and cestui que trust in a deed, the trustee answers and puts the allegations of the bill in issue, but the bill is taken for confessed as to the cestui que trust. The answer of the trustee protects the cestui que trust, and the plaintiff must prove his case as to both.

7. A note does not import a debt existing previous to the period of its execution; but its effect is to give the debt and the note a cotemporaneous origin.

In March 1848 James C. Johnston filed his bill in the Circuit court of Ohio county against Jacob S. and William W. Shriver trustees of Platoff Zane and Eliza Jane his wife and their children, and others, in which he alleged that Platoff Zane of Wheeling in his life time being indebted to A. J. Prentiss in the sum of one thousand two hundred and seventy-five dollars, on the 9th of March 1837 at Wheeling, executed to him his note payable on demand for that sum. That at the urgent request of said Zane, who was the brother of plaintiff's wife, the plaintiff bought the note; and that in October 1841 he recovered a judgment thereon against Platoff Zane.

He alleged further, that two days before the said note was made Zane executed two deeds of trust to Charles D. Knox and Samuel Sprigg, copies of which he exhibited with his bill, by one of which he conveyed a part of his property, with the professed purpose of securing the payment of his debts; and by the other, he conveyed all the residue of his property in trust for himself and his wife. These conveyances the plaintiff charged were made to delay, hinder and obstruct his creditors in the collection of their just debts. He insisted that his judgment was a lien on the lands conveyed in said deeds. That Platoff Zane retained an interest in said lands which ought to be subjected to the payment of the plaintiff's debt. He stated the death of Sprigg and the substitution of the Shrivers as trustees in the place of Knox; and that there was a large amount of the trust property in the hands of the trustees, much more than sufficient to pay his debt; and he prays that they may be subjected for that purpose; and for general relief.

The children of Platoff Zane, all of whom were infants, answered by a guardian ad litem; and the bill was taken for confessed as to Mrs. Zane. The acting trustee William W Shriver answered. He said that he could not admit or deny the existence of the note spoken of in the bill, as a valid debt of Platoff Zane, he having no personal knowledge of its existence, nor of the consideration for which it was given. Nor could he admit or deny that the plaintiff bought the note at the urgent request of Platoff Zane, he having no knowledge on the subject; and he called for full proof of the same.

The defendant admits the judgment and the execution of the deeds, and the substitution of himself and Jacob S. Shriver as trustees; but he denies that they were intended to delay, hinder or defraud his creditors; on the contrary, they were intended in good faith to provide for and secure the payment of all his just debts as then existing; and to provide for and secure a comfortable support for himself and wife and children out of the residue of his estate after the payment of all his just debts then existing, and to protect such as remained of his estate from his own improvident and reckless waste. That Noah Zane, the father of Platoff Zane, died in 1833, leaving to said Platoff, then a minor, a large estate. That Platoff Zane attained to the age of twenty-one years in February 1836, when he took possession of his estate, and between that time and the making of said deeds, a period little over a year, he contracted debts and liabilities to the amount of between fifty and seventy thousand dollars. His friends seeing this reckless waste of his estate, and foreseeing that unless it was secured beyond his control, in a very little time the whole would be squandered, and himself and his family reduced to want or dependence, procured him to execute the said two deeds of trust, for the purpose, first, of paying all his and his wife's debts then existing; and second, to provide for himself and his wife and family. He insisted that the deeds were valid against all subsequent creditors of Platoff Zane; and that no such creditor could claim from said trust subject any interest beyond what was reserved to said Platoff Zane out of the rents and profits, after the support of himself and wife and children: and he alleged that more than the whole rents and profits were so expended during the life of Platoff Zane, and upon his wife and children since his death.

The deeds which were assailed by the plaintiff, are dated the 6th day of March 1837; they were acknowledged by Platoff Zane and his wife before two justices on the next day; and were admitted to record, one on the 7th and the other to secure creditors on the 11th of the same month. The deed to secure creditors does not set out any specific debt due from the grantors, but recites that whereas the said Platoff Zane is largely indebted to sundry persons, and is desirous to provide a fund for the payment thereof; and then proceeds to convey a large amount of property, principally real estate; the personal property was his interest in the store and store concern kept in Wheeling by Zane & Pentoney, which had been bequeathed to him by his father Noah Zane. The trustees were authorized to proceed to sell the real estate and reduce to money the interest of Platoff Zane in the said store; and in selling the real estate, they were authorized to sell for cash or on a credit, and divide the lots or sell each as a whole, as they might think would best promote the interest of the fund. The trustees were to have immediate possession of the property, and to take the rents and profits until a sale, and these rents and profits were to be applied to the payment of debts and other objects and purposes contemplated by the deed. In collecting debts, the trustees were authorized to compound or compromise doubtful or disputed claims, if they thought it judicious. And it was further provided that the trustees should pay no debt before a judgment, to which Platoff Zane objected; nor should they be bound to pay a debt until after judgment which they might think Platoff Zane was not legally bound to pay; but if he should request a debt to be paid, and the trustees paid it, the payment thereof was not afterwards to be questioned. The trustees were to be allowed a fair and liberal compensation for their services, and to be authorized to employ, at the cost of the trust fund, agents, servants and clerks; they being responsible for the acts of the same; but in such case, the compensation was to be no more than what was reasonable, considering the employment of such agents, & c. And after all the debts then due of Platoff Zane and his wife, and all charges and expenses of the trust were paid, the moneys arising from the sale of the real property aforesaid, and from the said store concern, were to be applied, first, in purchasing a residence for Platoff Zane and his wife; and the balance was to be invested in bank stock or other good securities; and the residence was to be occupied by Zane and wife for their lives and the life of the survivor, and the interest and profits arising from the stocks and other securities were to be received by the trustees, and applied to the support of Zane and his wife during their lives and the life of the survivor of them. And it was further provided that if Platoff Zane should have children or descendants, in life at the death of the survivor of him and his wife, that said residence, stocks and securities should then go to them, the descendants taking per stirpes; and if there were no such children or descendants, then to his right heirs. But a power of appointment among his children was reserved to Platoff Zane.

The other deed conveyed to the same trustees other real estate, a part of which was the property of Mrs. Zane. The trustees were to manage the property, rent it out and receive the rents. The said rents and profits were not to be assigned or transferred by either Zane or his wife, and were not to be liable for any debt which either of them might contract. The trusts were in favor of Platoff Zane and wife, and the survivor of them, for their lives, except of so much of the property as belonged to Mrs. Zane, of which the trusts were for her separate use; and then for the children and descendants of Platoff Zane; and on failure of children, to his right heirs; with a power of appointment in him among his children, substantially the same in all these respects as were the trusts of the other deed.

It is stated in the answer of the trustee Shriver that Platoff Zane died in May 1846, leaving his wife surviving him, and leaving six infant...