The Horner-Gaylord Co. v. Petitioner
| Decision Date | 14 December 1901 |
| Court | West Virginia Supreme Court |
| Parties | The Horner-Gaylord Company v. Fawcett et al. |
1. Deed of Trust After Acquired Property.
A deed of trust executed in good faith to secure a bona fide debt on a stock of goods and extending to cover after-acquired property, duly recorded, is not fraudulent per se or prima facte fraudulent, as to subsequent creditors with notice, in equity, (p. 491).
2. Execution Creditor Remedy at Law.
A subsequent execution creditor has a plain adequate remedy at law as to such after-acquired property, but equity will afford him no relief, as such deed as to such property is void at law but will be sustained in equity. (p. 492).
Appeal from Circuit Court, Harrison County.
Action by Horner-Gaylord Company against W. C. Fawcett and others. Decree for defendants and plaintiff appeals.
Affirmed.
Lewis C. Lawson, for appellant.
Davis & Davis and H. W. Harmer, for appellees.
The Horner-Gaylord Company appeals from a decree of the circuit court of Harison County in a suit in chancery wherein it was plaintiff, and W. C. Fawcett and others were defendants.
The first question presented by the record is the demurrer to the bill.
The bill alleges in substance that C. D. Robinson, the owner of a one-half interest in a bookstore at Clarksburg, Harrison County, on the 14th day of July, 1896, executed a deed of trust thereon to Sherman Denham, trustee, to secure Earnest B. Morris the payment of three certain obligations, bearing even date therewith, for the sum of three hundred and sixteen dollars and sixty-six and two-thirds cents, due and payable in six, twelve and eighteen months respectively, with interest from date; that on the 20th day of July, said Robinson executed to said Denham, trustee, another deed of trust on the other un- divided half interest in said store purchased by him on that day of J. H. Horner to secure said Horner the payment of four certain obligations for three' hundred dollars each, due and payable in six, twelve, sixteen and twenty months, with interest from date; that Earnest B. Morris assigned some of his said notes to S. 0. Davis, and J. H. Horner assigned some of his said notes to Lynn S. Horner. Some of said notes had upon them as surety F. E. Robinson and others I. N". Dean; that one of said notes was assigned to Flora E. Horner; that afterwards said Robinson sold said store to defendant W. C. Fawcett, or to Fawcett, Morris & Co.; that on the 3rd day of October, 1898, but not properly acknowledged until the 15th day of October, 1898, said Fawcett assigned said store to J. I. Alexander to secure his various creditors according to priority and his general unsecured creditors pro rata, plaintiff being included in the latter class, which assignment was not recorded until the 11th day of October, 1898; that said trustee sold the store and received therefor one thousand three hundred dollars, part of which he disbursed on the prior trust debts, and the remainder he still holds in his hands; that on the 3rd day of October, 1898, defendants Stuart Bros. & Co. obtained a judgment against C. W. Fawcett for the sum of fifty-five dollars and thirtyfour cents with interest, and two dollars and twenty-five cents costs, had an execution issued thereon and levied on a part of the store goods alleged to belong to Fawcett, Morris & Co.; that on the 8th day of October, 1898, complainant obtained a judgment against Fawcett, Morris & Co., for one hundred and six dollars and eighty-seven cents and three dollars and five cents costs on which execution was issued and levied on said day at 8:30 p. m., on the property of Fawcett, Morris & Co., to-wit: Books, stationery, show cases, fixtures, etc., being part of the property afterwards sold by said trustee Alexander, who took possession thereof on the 10th day of October, 1898; that after said executions were so levied a controversy arose as to whether the constables making the levy or the trustee should take possession of and sell such property and finally said trustee agreeing to pay such executions out of the proceeds of the sale of such propperty, he was permitted to take and sell the same. But after such sale was made such trustee refused, at the instance of the beneficiaries under such prior deeds of trust to pay off said execution. That Fawcett after his purchase put one thousand dollars additional in such store and the greater part of the goods sold accumulated by purchase after the execution of the deeds of trust given thereon by C. D. Robinson. Plaintiff further claims that said executions having been issued and levied before the acknowledgment and recordation of the general assignment are entitled to priority over the same. That the beneficiaries under the two first deeds of trust are claiming the whole of the funds arising from the sale of such store, and which is insufficient in amount to fully satisfy the same, and have directed the trustee not to pay said executions, but to pay the same on their prior claims. That said prior deeds of trust are void and ineffectual as against said execution liens as to the property levied on aforesaid. Plaintiff prays that a sufficient amount of the funds in the hands of said Alexander be applied to the satisfaction of its execution; that the rights and interest of the parties hereto be ascertained and determined and the proceeds of said property be administered under the direction of the court, that the Denham, trustee, deeds of trust be set aside and declared null and void 'or uncertainty and other reasons apparent upon the same, and for general relief. Afterwards the plaintiff was permitted to amend his bill at the bar of the court by making parties thereto I. N. Dean, F. E. Robinson and Flora E. Horner, with proper allegations touching their interests.
The demurrer being again interposed to the bill as amended, the court overruled it.
The bill taken as a whole amounts to simply this, that the plaintiff having an execution lien by levy on certain property prior in right to all other liens except the lien of two deeds of trust void on their face, and which did not cover the property levied on, permitted such property to be sold by the trustee Alexander, on condition that he would pay off such executions out of the proceeds of such sale, and which after making the sale he refused to do, and therefore plaintiff instituted this suit to compel him to do so. Plaintiff sues to enforce the lien of an execution on personal property and not as a beneficiary secured under the assignment for an accounting by the trustee. No accounting was necessary. The suit is hostile to the trust, for it seeks priority over the same and independent thereof. If the prior deeds of trust are valid liens on the property, they take the whole fund as conceded in the bill, and this suit would be wholly unnecessary, and unavailing. If, on the other hand,
they are void on their face and do not cover the property they are just as void at law as in equity, and they afford no justification for the interposition of a court of equity. In short, if the allegations of the plaintiff's bill are true, it had a plain, adequate remedy in a court of law, and there was no necessity for the intervention of a court of equity. Admitting all its pretexts, it merely demands the money on its execution lien, which the trustee had in hand and refused to pay because of a void claim upon him by other parties and the only reason given for this appeal is because the money was not so applied. No person can file a bill of interpleader but the stakeholder, and he cannot do so if he is fully advised of the claims of both parties, so that he is able to determine to which of the parties he should pay the funds in his hands. 11 Ency. Plead. & Prac, 4G1. A person claiming in opposition to a trust or trustee cannot call upon the trustee to account. 27 Am. & En. En. Law, 278. The whole claim of the plaintiff as set out in his bill is in opposition to the trust and not under it. It seeks to deprive the trustee of the property by a prior lien, and has no right to demand an accounting from him merely to get such priority settled. The plaintiff did not file this bill because it had a lien on the equity of redemption under the two prior Denham trusts, for the property had already been sold and the proceeds were insufficient to satisfy such trusts, thus establishing the equity of redemption to be wholly valueless. Nor did it file it as a beneficiary under the Alexander trust, for its whole claim is in opposition thereto, and such beneficiary cannot maintain a bill to interfere with a trustee in the proper discharge of his duties as such. Bighter v. Riley, 42 W. Va. 633; 2 En. Plead. & Prac. 885. Plaintiff's bill is peculiarly in its own interest, and not in behalf of the beneficiaries under the Alexander trust. Nor does it claim that the trustee has been derelict in administering such trust. It does claim that he has in his hands the proceeds of property not subject to such trust, but subject to its prior execution lien. 2 En. Plead. & Prac. 887. Its remedy at law for the real purpose and not fictitious pretexts of the bill is complete, full and adequate. 2 En. Plead. & Prac. 911; Id., 679; Freeman on Executions, 3 Ed., s. 426, pp. 2296, 2297.
Admitting, however, that the plaintiff had the right ordinarily as a beneficiary under the Alexander trust and not in opposition thereto to file its bill for an account of the funds thereunder, still it was demurrable. It shows on its face that the funds were insufficient to satisfy the two prior Denham deeds of trust, and that therefore as residuary beneficiaries there was no fund applicable to their debt in any event, and an appeal to equity was wholly useless and unnecessary. While the prior deeds might have been void per se as to existing creditors at the time of their execution they were good and valid as between the grantor and grantee, and all...
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