Taylor v. Mahoney.1

• Decision Date: 08 April 1897
• Citation: 27 S.E. 107,94 Va. 508
• Parties: TAYLOR et al. v. MAHONEY.1
• Court: Virginia Supreme Court

27 S.E. 107

94 Va. 508

TAYLOR et al.

v.MAHONEY.¹

Supreme Court of Appeals of Virginia.

April 8, 1897.

Assignment for Benefit of Creditors—Fraud —Removal of Trustee.

1. A trust deed for the benefit of creditors is not fraudulent on its face, merely because it authorizes the trustee to carry on the grantor's business, and does not in terms direct him to sell when required by the creditors secured by the deed, since the trustee is required by Code, § 2442, to sed at the instance of such creditors.

2. A trust deed for the benefit of creditors is not fraudulent because of the unfaithfulness of the trustee, Unless such unfaithfulness resulted from the carrying out of its provisions according to their apparent intent.

3. On application to set aside as void for fraud a trust deed for the benefit of creditors, it is in the discretion of the court to remove the trustee, though the deed be sustained.

Appeal from corporation court of Norfolk.

Creditors' bill by John Mahoney against S. J. Taylor and others. From decrees setting aside a deed of trust and granting other relief, defendants appeal. Reversed.

Borland & Willcox, for appellants.

G. M. Dillard and Geo. Mcintosh, for appellee.

CARDWELL, J. This case is as follows: S. J. Taylor, conducting a barroom and liquor business in the city of Norfolk, under the style and firm name of S. J. Taylor & Co., being insolvent, on the 18th day of December, 1893, executed a deed of trust to S. Marx, trustee, conveying certain real estate in Virginia and in North Carolina, and his stock of liquors, cigars, etc., in his place of business, 129 and 131 Church street, in the city of Norfolk, to secure certain creditors named therein, making a preference as to six classes, and in the seventh securing all other creditors of the grantor ratably. The deed contains this clause: "And for the more perfect carrying out and execution of this trust, and the provisions thereof, the said trustee, hereinbefore named, shall have the power, at his election, to dispose of said property by public auction, after reasonable notice, or private sale, and he shall also be at liberty to dispose of the goods and property contained in and upon the premises Nos. 129 and 131 Church street, by retail, and in the ordinary course of trade, and for that purpose may employ such clerkor clerks and other employes as he may think necessary, and allow them, as compensation for their services, such sum or sums of money, out of the proceeds of sale, as shall be reasonable and just."

The deed does not provide for a sale by the trustee of the property conveyed therein when required so to do by the creditors secured, and the trustee took charge of the business conducted by his grantor at Nos. 129 and 131 Church street, and conducted the same, employing the grantor as clerk or salesman in the conduct of the business until some time in November, 1894, replenishing the stock from time to time.

On the 24th day of November, 1894, the appellee, John Mahoney, plaintiff in the court below, who, as a wholesale liquor dealer, had been selling liquors and other supplies to Marx, trustee, from the time the latter took charge under the deed from S. J. Taylor, and a creditor secured in the seventh clause of the deed, filed his bill for himself and such other creditors of Taylor as might make themselves parties to the suit, alleging that the deed to Marx, trustee, was made for the benefit of S. J. Taylor himself, and not for his creditors; that it was made with intent to delay, hinder, and defraud complainant and other creditors of Taylor; that this fraudulent intent appears both on the face of the instrument and from the lapse of time and manner of...