Speidel Grocery Co. v. Stark
| Decision Date | 02 November 1907 |
| Citation | 62 W.Va. 512 |
| Court | West Virginia Supreme Court |
| Parties | Speidel Grocery Co. v. Stark & Co. |
A bill of sale or assignment of a lease of real estate, giving an estate therein for a terra of three years, is not required to be recorded, in order to give title as against creditors of the vendor.
Such term is personal property, and, as regards such creditors, is governed by the rules of law relating to other kinds of personal property. (p. 515.)
Possession of such a lease by the vendor, after a sale thereof, raises a legal presumption that the sale is fraudulent as to his creditors, and casts upon the vendee the burden of proving the fairness and good faith of the sale. (p. 518.),
To establish his title in such case, against the creditors, the vendee must prove, by sufficient evidence, that the sale was for a fair and valuable consideration, and that the vendor did not continue to have an interest in the property by some secret understanding. (p. 519.)
The consideration of such a sale may be an antecedent debt, but the vendee, to repel the presumption of fraud so raised against him, must clearly and fully prove the debt and the amount thereof, or the payment of the consideration in money or other thing, if it be other than an antecedent debt. Mere proof of admission, by the vendor, of the antecedent indebtedness, alleged as the consideration, is not sufficient as against his creditors. (p. 519.)
A deed of trust duly executed by the vendee of a lease, possession whereof is retained by the vendor, conveying the same to a trustee to secure a debt, and duly recorded, is, as against the creditors of the vendor in possession, prima faeie valid, and the burden is upon them, in a suit to set it aside as fraudulent, to prove that the trust deed creditor had notice of the fraudulent intent of the vendee out of possession, the grantor in the deed of trust. (p. 521.)
Appeal from Circuit Court, Tyler County.
Bill by the Joseph Speidel Grocery Company and others against M. E. Stark & Co. and others, From the decree, defendants Atwood and Appel appeal.
Affirmed in Part. Reversed in Part.
F. L. Blackmarr, for appellants.
M. 1). Hanks, for appellees.
poffenbarger, judge:
Assigning as grounds of error the setting aside of a sale of a lease and a deed of trust, on the ground of fraud, M. J. Atwood and Ed Appel have appealed from a decree of the circuit court of Tyler county, in favor of the Joseph Speidel Grocery Company.
On August 8, 1899, Mrs. M. E. Stark took, from Martha J. Wells, a three year lease on a certain town lot, situate in a village called Garry Owen, adjoining the city of Sistersville, agreeing to pay, as annual rent therefor, the sum of twenty dollars, and erected thereon a two story frame building, a baker's oven, stable and other outbuildings. In said building, she resided and carried on a grocery and bakery business, in which her sister, Mrs. Atwood, the appellant, was a partner. At this time, Fred Appel, a young man, clerked for them, and later he married the daughter of Mrs. Stark. Mrs. Atwood retired from the copartnership, and Fred Appel succeeded her. By a writing under seal, and dated December 24, 1900, Mrs. Stark, in consideration of $1,600.00, the receipt whereof was acknowledged, sold, assigned and transferred the lease to Mrs. Atwood. On the 28th day of December, 1900, Mrs. Atwood executed a deed of trust, whereby she conveyed the lease to Fred Appel, trustee, to secure to Edward Appel, his brother, the payment of a negotiable promissory note for the sum of $800.00, bearing the same date as the trust deed. Mrs. Stark and Fred Appel continued the grocery and bakery business on the premises, in the firm name of M. E.Stark & Co., agreeing to pay Mrs. Atwood rent at the rate of $45.00 per month. In the month of September, 1902, more than a year and a half after the retirement of Mrs. Atwood from the firm and her purchase of the lease and execution of the deed of trust, the mercantile firm was overwhelmed with financial trouble, owing many debts it could not pay, and was threatened with many actions, if not. in some cases, already sued, when Mrs. Atwood, claiming unpaid rent, amounting to $540.00, sued out and caused to be levied on the stock of goods, a distress warrant. Thereupon, this suit in equity was instituted by the Joseph Speidel Grocery Co., a creditor of M. E. Stark & Co., in aid of an action of assumpsit with an attachment which had been levied upon the stock of goods. The bill alleged fraud and collusion among the parties to the mercantile firm, Mrs. Atwood and Edward Appel, the trust creditor, to hinder and delay the creditors of the firm and prevent the collection of their debts, denied that there was any rent due Mrs. Atwood, and prayed an injunction, restraining further proceedings under the distress warrant, and administration of the funds by the court. The injunction was granted, and subsequently, on the petition, of the plaintiff, a special receiver was appointed to take charge of the property and collect the debts due the firm. Afterwards an amended bill was filed attacking the sale of the lease to Mrs. Atwood and the deed of trust in favor of Edward Appel as fraudulent. Full defense to all the allegations of the bills was made in the several answers filed by the defendants. They denied all fraud and collusion and averred good faith in all the transactions and proceedings against which relief was sought by the plaintiff. The stock of goods and other property claimed by M. E. Stark & Co. were sold for $595.00 by the constable, by virtue of his levy under the distress warrant, Ed Appel, becoming the purchaser; but, in obedience to the injunction, the officer held the fund, subject to the order of the court. He was appointed special receiver and sold the buildings on the lease under an order of the court for $500.00. On final hearing, the court adjudged the assignment of the lease and the deed of trust fraudulent and decreed the funds to the creditors of M. E. Stark & Co., giving preference to the plaintiff, whose claim then amounted, with interest, to $1040.-47, many others having come into the suit by petition, so that the entire fund was taken by them.
The record discloses no evidence of any indebtedness at the time of the sale of the lease and execution of the deed of trust, nor can it be said that the assignment or transfer was voluntary, since that is negatived by positive testimony to the effect that it was made in consideration of indebtedness due from Mrs. Stark to Mrs. Atwood. All the claims presented against the firm in the bill and petitions seem to have accrued long after the assignment was made. The plaintiff does not show when its claim was acquired, ' but Fred Appel's testimony, not contradicted, shows that it was for goods sold in June, July and August, 1902, or possibly in July and August only, and certainly not for goods sold as early as within a year after the sale of the lease. There is no evidence showing when any of the other debts were contracted. It further appears, from the uncontradicted evidence of Fred Appel, that M. E. Stark & Co. paid Mrs. Atwood rent at the rate of $45.00 per month, after she had bought the lease, and that the note given to Ed Appel and secured by the deed of trust, represented money actually loaned to her. The decree seems to rest upon the close relationship of the defendants and the withholding* from record of the bill of sale, or written assignment of the lease, as badges of fraud, and this is the line of the argument found in the brief. The decree sets the sale aside, as to the creditors, ''because of never having been admitted to record nor recorded in the proper office of Tyler county," and the deed of trust is annulled because it is '' predicated on said unrecorded deed." As the lease was for a term of only three years, no recordation thereof was required. Sections 4 and 5 of chapters 74 do not require it. Their provisions do not apply to written contracts, made in respect to real estate or goods and chattels, unless they are made in consideration of marriage, or for conveyance thereof for a term therein of more than five years, or are deeds of trust or mortgages. An absolute deed of sale of chattels is not required to be recorded and its recordation has no legal effect. Ourtin v. Tsaacsen, 36 W. Va. 391; Poling v. Flanagan, 41 W. Va. 191. Section 3 of that chapter relates, except in the case of reservations of title, to goods and chattels, the possession whereof shall have remained with the party for a period of live years, a case not made out by the record. As the bill charges fraud and not a preference, and it does not appear that there were any debts existing at the time the sale was made and the deed of trust executed, the suit cannot be regarded as having been brought under section 2 of chapter 74 of the Code. It charges fraud in the sale and deed of trust for the purpose of hindering, delaying and defeating the rights of creditors. Hence, the suit must be regarded as having been brought under section 1 of said chapter.
As the subject matter of the bill of sale or assignment was a mere chattel real, a term less than live years in duration, created by an instrument not required to be recorded, a writing effecting a sale thereof, does not have to be recorded. Its status is, in that respect, the same as that of a bill of sale or any other personal property, which we have seen need, not, and cannot, be so recorded as to have any legal effect. The withholding of such an instrument from record cannot be regarded as evidence of fraud for the reason that it involves no breach of duty to any one. The vendor of this lease, Mrs. Stark, however, remained in possession thereof. If the rule applicable to...
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