Peay v. Morrison's Ex'rs

• Decision Date: 20 July 1853
• Citation: 51 Va. 149
• Parties: PEAY v. MORRISON'S ex'ors.
• Court: Virginia Supreme Court

51 Va. 149

PEAY v. MORRISON'S ex'ors.

Supreme Court of Appeals of Virginia.

July 20, 1853

(Absent Moncure, J.)

1. In March 1836 C executed his bond to P for twelve thousand dollars payable on the 24th February 1841, with interest from the 1st of April 1836 payable semiannually; and executed a deed of trust to secure it, which might be enforced upon the failure of C to pay the principal when due, or to pay the semiannual interest. In June 1836 P purchased real estate from M, and paid in part cash, and for the balance assigned to M the bond of C, and executed a mortgage on the property with condition that if M failed to collect from C the bond and interest, or any part of it, and P paid it, then the deed to be void. The interest was regularly paid on C's bond until October 1839, and in September 1840 the interest was again paid. In February 1841 C was insolvent. The trust property was sold in February 1844; and soon after M proceeded to foreclose the mortgage, and the property was sold in July 1845, leaving a large balance still due M. HELD:

1. In absence of proof of an express agreement to the contrary, the assignment of P to M imports a guarantee that M shall receive the full amount of the bond of C; and the right of M to resort to P for any part thereof which he should fail to collect from C with the exercise of due diligence.

2. The sale of the trust and mortgaged property did not impair the right of M to hold P responsible for the balance of the debt.

3. The delay in the sale of the trust property not appearing to have been occasioned by the active agency of M, or that he can be regarded as assenting to it in any other sense than might equally be imputed to P, and it not appearing that the value of the security was diminished by the delay, that delay cannot discharge P from his liability upon his assignment.

4. C having become insolvent before the bond was due, a suit against him would have been unavailing, and was therefore unnecessary to establish the right of M to recover of P. And it does not appear from any circumstances in the case, that a sale of the trust property for the failure to pay the semiannual interest would have been judicious or expedient still less that it was necessary to entitle M to hold P liable on his assignment.

2. A creditor at large may maintain a suit in equity to set aside as fraudulent a deed conveying real estate, made by his debtor, both the debtor and his grantee living and being out of the commonwealth.

This was a suit instituted in the Circuit court of Ohio county, by the executors of Joseph Morrison deceased, claiming to be the creditor of Austin Peay, a free negro, to set aside a deed executed by said Peay to his son William A. Peay, on the ground of fraud. Both Austin and William A. Peay were residents in Upper Canada; and the suit was an attachment in equity to subject certain real and personal estate to the payment of the plaintiff's debt, for which no judgment had been recovered against Austin Peay.

On the 10th of March 1836 John M. Clarke and James A. Clarke as his surety executed to Austin Peay their bond in the penalty of twenty thousand dollars, with condition to be void if John M Clarke, his heirs, & c. should pay to Peay, his heirs & c. the sum of twelve thousand dollars on or before the 24th of February 1841, and interest thereon semiannually on the 1st days of April and October in each year; such interest to commence from the 1st of April 1836. To secure the payment of this bond, John M. Clarke and wife conveyed in trust to Alexander Wilson certain real estate in the city of Wheeling. This deed provided that upon the failure of Clarke to pay the principal when due, or to pay the semiannual interest as it fell due, the trustee might sell the trust subject upon terms specified in the deed.

In 1836 Austin Peay purchased from Joseph Morrison real estate in the city of Wheeling, for the sum of twelve thousand eight hundred dollars, for which he assigned to Morrison the bond of the Clarkes for twelve thousand dollars, and executed to him his note for eight hundred dollars, which he afterwards paid. At the same time Peay executed a deed bearing date the 9th of June 1836, by which he conveyed to Morrison the real estate purchased of him upon the condition that if Peay paid the note of eight hundred dollars, with interest from the 11th of April preceding, when it fell due; and further, if Morrison should fail to collect from the Clarkes the bond for twelve thousand dollars, or any part thereof, with its interest, then if Peay, his executors, & c. should pay the same, or any balance that should be due thereon, according to the terms thereof, to Morrison or his assigns, then the deed to be void. But it was expressly agreed between the parties, that if the said bond for twelve thousand dollars could not or should not be paid from the proceeds of any sale which might take place under the deed of trust by which it was secured, Morrison was not to be required to pursue the obligors in the bond personally; but might have immediate recourse to this mortgage for any balance either of principal or interest which might be due and unpaid on said bond.

The interest on the bond of the Clarkes seems to have been regularly paid up to the 1st of October 1839. A payment of seven hundred and forty-six dollars and sixty-five cents seems to have been made on the 30th of September 1840; and a further payment of thirty dollars was made by Clarke on the 24th of December 1840. It appears that John M. Clarke was insolvent in 1839; certainly both of the Clarkes were insolvent in February 1841.

In 1839 Austin Peay removed with his family to Toronto in Upper Canada. Payments upon the bond were made out of the rents of the subject mortgaged by Peay to Morrison, from February 1841 to January 1844, amounting, in the aggregate, to eleven hundred and ninety-five dollars and five cents. In February 1844 Wilson sold the property conveyed by John M. Clarke in trust to secure this bond, and the net proceeds of the sale amounted to four thousand one hundred and ninety-three dollars and fifty cents. Soon after this sale, Morrison's executors instituted a suit against Austin Peay to foreclose the mortgage given by Peay further to secure Clarke's bond; and under a decree made in that cause, the mortgage subject was sold, and produced the net sum of three thousand and thirty-seven dollars and...