Ratcliffe v. Sangston

• Decision Date: 11 June 1862
• Citation: 18 Md. 383
• Parties: FREDERICK E. RATCLIFFE, v. LAWRENCE SANGSTON, and others.
• Court: Maryland Court of Appeals

18 Md. 383

FREDERICK E. RATCLIFFE, v. LAWRENCE SANGSTON, and others.

Court of Appeals of Maryland.

June 11, 1862

In replevin for goods, by the vendor against trustees claiming under a deed of trust from the vendee, for the benefit of his creditors, the vendee, after mutual releases executed by him and the trustees, is a competent witness for the defendants.

A deed of trust for the benefit of creditors, to three trustees that they, " their executors, administrators and assigns, the survivors and survivor of them, his, her or their executors, administrators and assigns, or a majority of them, shall forthwith take possession and sell the goods," & c., implies that a majority of the trustees may execute the trust.

Where a deed of trust is made to several trustees, and a part disclaim the trust, the others will take both the legal estate, and the power to administer the trust, unless the intention, that all shall act, is expressed, or clearly implied from the conveyance.

An assignment of goods by a fraudulent vendee, for the benefit of his creditors, in consideration of a pre-existing indebtedness, confers no title as against the defrauded vendor, who may avoid the sale and recover the goods from the assignee, who has no notice of the fraud: such assignee is not a purchaser for a valuable consideration.

APPEAL from the Superior Court of Baltimore City.

Replevin, brought May 15th, 1854, by the appellant against the appellee. Pleas non cepit, and property in defendants.

1 st Exception: The plaintiff proved that the goods replevied, were purchased in March, April and May 1854, by George W. Yerby, of the firm of Yerby, Tebbs and Yerby, in Washington, by making false representations to the plaintiff in New York, and that the plaintiff sold the goods to him on credit, exclusively upon the faith of such representations that the goods so obtained and never paid for, were by that firm sent from Washington to Baltimore to the defendants, and placed in their charge, and were replevied by the writ in this case. The defendants, Hurst, Sangston and Hodges claimed them under a deed of trust from said firm, dated May 9th, 1854. By this deed said firm conveyed all their goods in their store, in Washington, and all debts, & c., due by them to the defendants, in trust that they, " their executors, administrators and assigns, the survivors and survivor of them, his or their executors, administrators and assigns, or a majority of them, shall forthwith take possession of said goods," & c., and proceed to sell, & c., and apply the proceeds, first, to pay the debts in schedule A, attached to the deed, (among which were debts due the grantees; ) secondly, those in schedule B; and thirdly, those in schedule C; and the balance, if any, to the grantors. By an endorsement on this deed, dated May 15th, 1854, Sangston, one of the parties, renounced the trust, and assigned his rights and powers as trustee to his co-trustees; but the proof shows he acted as trustee till this suit was brought. The defendants offered said George W. Yerby, as a witness, and his competency being objected to, mutual releases were executed between him and the defendant. The plaintiff still objected to his competency, but the court (LEE, J.) overruled the objection, and decided he was competent to testify for the defendants, and to this ruling the plaintiff excepted.

2 nd Exception: The defendants then examined said Yerby and he gave evidence tending to contradict the evidence offered by the plaintiff. The plaintiff then asked the court to instruct the jury:--

1st. That the deed of trust does not authorize any two, or any number less than the three joint trustees, to take possession of, and sell the goods for, the purpose of the trust.

2nd. That this deed is void on its face, for fraud, and conveys no title to the trustees.

3rd. That if the jury believe the goods replevied were sold by the plaintiff on credit, to the witness Yerby, by and through false and fraudulent representations made by him for the purpose of procuring such sale, then no title passed to him or the firm of Yerby, Tebbs and Yerby, and the plaintiff is entitled to recover said goods as against the defendants, if the jury find the defendants claim them under said deed of trust, and not otherwise.

4th. That the consideration of pre-existing indebtedness, is not sufficient in law to constitute a valuable consideration in said deed of trust, so as to invest the defendants claiming under it with a higher or better title than the grantors therein.

5th. That on the issue under the plea of non cepit, the plaintiff's are entitled to a verdict, if the jury find the defendants had possession of the goods as alleged in the nar., even though they may find the issue of property for the defendants.

The court rejected these prayers, and instructed the jury in effect, that if they find the goods were obtained by Yerby, by means of false and fraudulent representations, and that the defendants received them under the deed of trust, with notice of such fraud, the plaintiff is entitled to recover. The plaintiff excepted to the rejection of his prayers and to the instruction given by the court, and the verdict and judgment being against him appealed.

The cause was argued before BARTOL, GOLDSBOROUGH and COCHRAN, J.

Robert J. Brent and John P. Poe, for the appellant.

1st. Yerby was an incompetent witness. He was called to sustain the plea of property in defendants, under a title vested in them by a deed from him and his co-partners. The validity of this deed was one of the main questions in the case, and he, as one of the grantors, was directly interested in establishing it. The effect and object of his testimony were, to negative the fraud which underlay the plaintiff's whole case, and by setting up his own deed, to appropriate, to the payment of his debts, the goods he had fraudulently obtained from the plaintiff. Nor was his incompetency removed by the releases executed, for his interest to pay his debts with the plaintiff's property, was, from its nature, one that he could not release to the trustees, nor they to him, and there is no release on the part of his creditors. 11 Md. Rep., 228, Williams vs. Banks.

2nd. No title to the goods passed by this deed, but the false and fraudulent representations, by which, alone, they were acquired, rendered the sale voidable. Such a sale confers no title upon the vendee, except at the option of the vendor, and none on the assignee of the vendee, unless such assignee be one, who, on the faith of such assignment, has, bona fide, and without notice, became the creditor of such fraudulent vendee. No such case is here disclosed. These trustees did not become the creditors of this firm upon the faith of this transfer to them, but are simply trustees, having no superior equities, and clothed with no higher rights than their assignors. They are not looked upon as purchasers for valuable consideration without notice, nor will even an antecedent indebtedness support such a title as against the innocent and defrauded vendor. 9 G. & J., 278, Powell vs. Bradlee. 12 G. & J., 341, Repp vs. Repp. 2 Kent, 689, note. 13 Wend., 570, Root vs. French. 2 Barb., 475, Leger vs. Bonnaffe. 6 Johns. Ch. Rep., 437, Haggerty vs. Palmer. 4 Sandf, Ch. Rep., 498, Addison vs. Burckmyer. 17 New York Rep., 28, Griffin vs. Marquardt. 3 Gray, 550, Coghill vs. Railroad Company. 4 Whart., 500, Knowles vs. Lord. 2 Ired. Eq. Rep., 382, Woody vs. Litton. 16 Eng. Law & Eq. Rep., 408, Stevenson vs. Newnham. 34 Eng. Law & Eq. Rep., 607, Kingsford vs. Merry.

3rd. But even if a pre-existing indebtedness could support such an assignment, still the deed was inoperative, because of the renunciation of the trust by Sangston, one of the trustees. Hill on Trustees, 307, 308. Lewin on Trusts, 298, 398. 9 Sergt. & Rawle, 99, McCready vs. Guardians, & c. 1 Barn. & Ald., 608, Townsend vs. Wilson.

St. George W. Teackle and Wm. J. Ward, for the appellees.

1st. The releases restored the competency of Yerby if he was incompetent before. 2 G. & J., 132, Glenn vs. Von Kapff. 8 Gill, 139, Smith vs. Morgan. 7 Md. Rep., 582, Pegg vs. Warford. 10 Md. Rep., 269, Scaggs' Case. 16 Md. Rep., 260, Crane's Case. His liability under the implied warranty to his vendees, was terminated by the release of the parties holding the title, and to whom such liability was due, and his interest in the residue after the application of the trust fund in the manner designated, was extinguished by his release of all claim and interest in and to the entire property or estate conveyed, and in the residue thereof.

2nd. The deed specifically gives power, upon the renunciation by one to the two remaining trustees, constituting a majority to act. The words, " or a majority of them, " necessarily apply to the trustees, and not to their personal representative or assigns, for they are directed forthwith to take possession. But in the absence of any such power expressly given, the two were empowered to act; --to require the joint action of all, the deed must expressly so provide....