Perry & Co. v. Shenandoah Nat. Bank

• Decision Date: 28 September 1876
• Citation: 68 Va. 755
• Court: Virginia Supreme Court
• Parties: PERRY & Co. v. SHENANDOAH NATIONAL BANK & als.

68 Va. 755

PERRY & Co. v. SHENANDOAH NATIONAL BANK & als.

Supreme Court of Appeals of Virginia.

September 28, 1876

In November 1873, N conveyed to C, certain real and personal estate, and " all his stock in trade with all accretions to and replenishments of said stock," in trust to secure and indemnify certain endorsers upon negotiable notes due by said N. And if the said notes were not paid on demand, C upon the written request of either of the parties secured should sell the said property according to law. But C was not to be responsible for any of said property until he was ordered to sell the same as aforesaid. N continued in possession and carried on his store for two years, and until all the goods in the store at the time of the deed were sold and other goods bought with the proceeds. In November 1875 under an execution of P against N, the goods then in store were levied on. HELD: The deed is fraudulent per se, and P is entitled to the proceeds of the sale of said goods under his execucution.

This was a creditor's bill in the circuit court of Frederick county, brought by Joshua Persinger and others, creditors of James A. Nulton, to have the property mentioned in a number of deeds of trust disposed of under the direction of the court. The facts in relation to the only question involved in this appeal, are stated by Judge Christian in his opinion.

Barton & Boyd, for the appellants.

Williams & Williams and Holmes Conrad, for the appellees.

OPINION

CHRISTIAN, J.

The controversy in this case arises between creditors secured by a trust deed, and execution creditors whose claims are not provided for in said deed. By a deed of trust executed the 1st November 1873, and recorded on the 4th November 1873, the debtor Nulton conveyed to Holmes Conrad, trustee, certain real estate and other property named therein, " and also all of his stock in trade, with all accretions to, and replenishments of said stock, " in trust to secure and indemnify against loss certain endorsers upon negotiable notes drawn by Nulton, and payable at the Shenandoah Valley National Bank at Winchester, and also to secure the payment of certain debts to other creditors therein named. The deed contained the following provision: " Should said endorsers, or either of them, suffer any loss or damage by reason of said endorsement, or should either of the debts herein secured not be paid on demand, then it shall be the duty of the trustee upon the written directions of either of the parties secured, to sell the property herein conveyed as provided by law. But the trustee herein named shall not be held responsible for any of the property mentioned herein until he is ordered to sell the same as herein provided." This trust was never enforced; nor does it appear that any of the endorsers or creditors secured, ever directed the enforcement of the trust as prescribed by the deed. But the grantor remained in possession of this stock and carried on business as before, selling off the stock and replacing it as he chose with other like stock, purchased with the proceeds of that conveyed in the deed, and which was sold by him. No account of these sales were ever rendered to the trustee, nor does it appear that he exercised any supervision whatever over Nulton (the debtor) in these transactions.

This state of things continued until the 17th November 1875, when Perry & Co., (the appellants) who had not been secured on the deed of trust, levied their execution upon the stock in trade, then in the possession of Nulton in his storehouse. By an agreement, of all the parties interested, which appears in the record, signed by their respective counsel, it was agreed that the property levied on under this execution should be sold by the sheriff, and the proceeds distributed as the court should determine, according to the rights of the parties. The sale was accordingly made by the sheriff, and the proceeds amounting to $548.95, returned by him to the court.

The sheriff returned also a list of the property sold by him. Of this property only four items, consisting of...