Shattuck v. Knight

• Decision Date: 11 April 1885
• Citation: 25 W.Va. 590
• Court: West Virginia Supreme Court
• Parties: Shattuck & Jackson v. Knight & Bros, ct al.

25 W.Va. 590

Shattuck & Jackson

v.Knight & Bros, ct al.

Supreme Court of Appeals of West Virginia.

Submitted January 22, 1885.

Decided April 11, 1885.

1. A trust-deed by insolvent debtors, partners, conveying their goods, wares and merchandise in their store-rooms and the goods, wares and merchandise, which they might thereafter purchase and put in said store-rooms to secure certain debts of the firm, and making no provisions as to the possession of said goods, wares and merchandise, but simply providing, that, if all said debts were not paid within thirty days, said property after being advertised for thirty days might-be sold by the trustee for cash, is ' perse fraudulent on its face and void as to all the creditors of the grantors, (p. 595-600.)

2. When a paper purporting to be a deed conveying land to secure debts of the grantors appears to have been executed not under the seals of the grantors, it does not create a lien, so as to defeat a subsequent attaching creditor of the grantors. Such a paper is in substance nothing more than a contract for a lieu upon the land to be created by a deed of trust, (p. 601,)

Green, Judge, furnishes the following statement of the case:

On February 2, 1884, C. II. Shattuck and J. M. Jackson Jr., partners in business as Shattuck & Jackson, sued out an attachment in the circuit court of Mason county against S. N. Knight and G. W. Knight, partners as S. N". Knight & Brother, for $366.19. This attachment was levied the same day on town-lots Nos. 164 and 165 in Clifton and lots Nos. 40 and 41, in Grantsburg, and also on the goods, &c, particularly specified in their store. The affidavit, on which this attachment was based, stated, that Shattuck & Jackson were about to institute a suit in equity in the circuit court of Mason county against S.N. Knight & Bro. for the recovery of debts due by a promissory note on February 10, 1884, and that they were entitled in this suit to recover this $366.19 with interest thereon. The grounds for issuing the attachment are stated to be: First, that the defendants had assigned and disposed of their property with intent to defraud their creditors; and secondly, that they had fraudulently concealed their property and choses in action. The facts relied on to sustain these grounds tor the attachment were, that they had executed a deed of trust to Thomas G. Hogg, trustee, dated January 9, 1884, conveying those lots in Clitton and Grantsburg in said county and all their goods, wares and merchandise then in their store-room in Clifton and the goods, wares and merchandise, which they might thereafter purchase and have in their said store-room, to secure certain alleged debts, a copy of which deed of trust is filed with the affidavit; that on January 12, 1884, they executed what was called a deed of trust but was not, because it was not a deed, being an unsealed paper, which pretended to convey to the said trustee the four lots aforesaid to secure a pretended debt to John W. Bates of $2,352.16, a copy of which paper is also filed with this affidavit. The affiant also asserts, that he is informed and believes, that they do not owe said Bates anything; that on January 15, 1884, they made another deed of trust to H. G. Nease, trustee, conveying their stock of goods to secure the payment of a certain promissory note to C. E. Hogg and others; copy of this deed of trust is also filed; and lastly, that on January 17, 1884, they executed to the last named trustee another deed of trust conveying the same stock of goods to secure three notes to W. E. Edwards, one for $200.00, due February 8, 1884; another for $350.00, due February 27, 1884, and the third for $200.00, due March 1, 1884, and a copy ot this deed was also filed, all of them having been Recorded.

The affiant alleges, that after the making of these deeds of trust the grantors continued in possession of this stock of goods carrying on their business, trading and selling their goods, wares and merchandise as before the making of the deeds; that they have many notes and accounts, which they refuse to disclose, and that, when called upon to secure the plaintiff's claim, they admitted, they had such notes and accounts, but said nobody could find where they were, and their books did not show who owed them nor in what amount.

The bill of the plaintiffs was filed at April rules, 1884. It sets out the facts stated in this affidavit and alleges, that said deeds of trust including the one, which was not sealed, were all fraudulent and void and were intended to delay, hinder and defraud the creditors of S. N". Knight & Bro. It files the affidavit, on which the attachment wras based, and copies of all the deeds of trust as exhibits. The following parties were made defendants by the bill: S. N. Knight, George W. Knight and the trustees and cestuis que trust in the different deeds of trust.

The defendants filed answers denying, that there was any traud in the deeds of trust, or that S. N. Knight & Bro. had continued in the possession of the goods, wares and merchandise after the execution of the deeds of trust, or were carrying on their business as merchants, trading and selling said goods as before the making of these deeds.

These answers were replied to; and depositions were taken, on both sides, which prove, that the first deed of trust written and dated January 9, 1884, was written by James L. Knight, a party secured in this deed of trust and a brother to the grantors S. N. Knight & Bro., except the last clause, which secures some $877.00 to Rebecca and Margaret Somerville to be paid out of any surplus, that might remain after paying all the other debts secured by this deed of trust; and this clause was written by A. L. Knight, another brother. It wras written late on the evening of Thursday, January 9, 1884, and was acknowdeged that evening before by A. L. Knight as a notary public and recorded the next morning at 11 o'clock. The trustee in this deed was Thomas G. Hogg, the son of James A. Hogg, who with James L. Knight, a brother of the grantor, was the preferred cestui que trust in the deed of trust. James A. Hogg was also a brother-in-law of the grantor in this deed of trust. The trustee, Thomas G. Hogg, was also the clerk in the store of S. N. Knight & Bro., the grantors in the deed of trust. After this trust-deed was made and recorded, the store wras kept open and goods were sold with the knowledge of the trustee, the grantors and the principle cestui que trust till the close of the week Saturday night, January 12, 1884. During this time there was sold out of the store to Matt S. Gibbons, a son-in-law of A. L. Knight and a nephew by marriage of the grantor in this deed, who kept a grocery store in Clifton, where S. N Knight & Bro. did business, $125.00 worth of groceries to put in his store; and the money arising from these sales was applied to the payment of debts not secured by the deed of trust. James L. Knight also, who drew this deed of trust and was secured in it, bought some $30.00 or $40.00 worth of goods, which were credited on his open account with S. N. Knight & Bro., which was not secured in this deed of trust.

All this was done with the knowledge of the trustee in this deed of trust, who was then acting as a clerk in the store in the employment of S. N". Knight & Brother, and, though that is not proven, doubtless with the knowledge of the other cestui que trust, James A. Hogg, who was the father of this trustee and clerk. He says that he heard of this deed of trust on Friday evening, when his son, the trusstee, told him, and, I think, it must be inferred told him that the store was still being kept open and goods being sold by S. N, Knight & Bro., as if the deed had not been given. For this was done with the knowledge and approbation of the grantors, the trustee and the principle cestui que trust and, I doubt not, with the knowledge and approval of James A. Hogg, wTho next to James L. Knight was principally secured in this deed of trust.

There were included in this deed of trust two lots, which were the property of George W. Knight individually, worth about $800.00; and the balance of the real estate conveyed by this deed of trust was worth about $975.00, and the store goods about $4,000.00.

The firm of S. N. Knight & Bro. owed about $10,000.00, which was not secured, and had about $10,000.00 of debts t due to them, of which about $2,000.00 had been collected or assigned since the giving of this deed of trust. There was no proof to show, that any of the debts secured by any of these deeds of trust were fraudulent or pretended debts. It was also proven, that the trustee in this deed of trust took possession of this stock of goods on January 14th or 15th, 1884; and it may be presumed, that after that time the store was kept open and goods sold by S. N". Knight & Bro., just as they had been before the making of this first deed of trust. There was no proof in reference to any other deeds of trust or ot the circumstances under which they were made. It was also proven, that when an agent of the plaintiff in the latter part of December, 1883, was urging S. N. Knight & Bro. to transfer to him accounts to pay the plaintiffs' debt, he was told that they intended to collect these debts themselves, and when told that somebody would attach the books of the firm, the reply was: "Let them go ahead and try it. If they do, they won't find them on the books."

This being the substance of the evidence, the court on September 16, 1884, rendered the following decree:

This cause came on this...