United States Bank v. Huth

• Decision Date: 27 April 1844
• Citation: 43 Ky. 423
• Parties: United States Bank, and Bacon, Symington and Robins, Trustees, v. Lewis Huth.
• Court: Kentucky Court of Appeals

43 Ky. 423

United States Bank, and Bacon, Symington and Robins, Trustees, v. Lewis Huth.

Court of Appeals of Kentucky.

April 27, 1844

Fraudulent conveyances. Preferred creditors.

APPEAL FROM THE LOUISVILLE CHANCERY COURT.

Pirtle for plaintiffs.

Duncan and Browne for defendant.

OPINION

EWING CHIEF JUSTICE.

The case as stated in the bill.

LEWIS HUTH, holding fifteen several bonds executed by the President, Directors & Co. of the Bank of the United States chartered by the Legislature of Pennsylvania, bearing date the 1st of April, 1837, payable on the 1st April, 1847, to bearer, at the office of F. Huth & Co., in London, for £ > > > > > > 1,000 sterling, each, with nine warrants or coupons of £ > > > > > > 25 each, attached to each bond, for interest at the rate of five per cent. per annum, payable semi-annually, on the 1st April and 1st of October, 1843, and on the same days in each year thereafter, down to the 1st April 1847, when the principal was made payable, making a debt of £ > > > > > > 15,000 sterling money of principal, and £ > 3,375 sterling money for interest, exhibited his bill in Chancery, in the Louisville Chancery Court, under the statute of 1838, to subject choses in action and in possession, which had been holden by the Bank in the County of Jefferson, to the satisfaction of his said demands, in which he charges that the Bank had become greatly deranged and embarrassed in its affairs, and was unable to pay its debts, and for the fraudulent purpose of hindering, delaying and obstructing its creditors in the collection of their debts, and especially the complainant, had made a fraudulent assignment of all of its said effects to John Bacon, Alex. Symington and Thomas Robins, in trust for certain favorite creditors, & c., & c., and asked and obtained an attachment seizing the choses in possession, and enjoining the debtors from paying to the Bank or the assignees the choses in action.

The Bank and assignees, under an order made against them as non-residents, appear and answer the bill, in which they admit the assignment of the effects in contest, with others, for the uses and trusts in the deed mentioned; that the trustees had accepted the trust and entered upon and were diligently discharging the duties imposed. They admit that the Bank had become embarrassed and unable to meet its engagements, and with the honest intention of securing the meritorious class of creditors provided for in said debt, the same was made, and not to hinder or delay creditors. They deny the fraud charged, and insist that the deed was duly and fairly made and recorded in the proper office in the City of Philadelphia, where all the parties resided and the greater part of the effects of the Bank were situated. The trustees charge that there are cestui que trusts claiming and asserting, and others who had heretofore claimed and asserted, and others again who, beyond question, will claim and assert rights under said assignment.

The statements of the assignor and assignee.

The trustees deny that the Bank was permitted to retain the possession and control of the effects, or any of them assigned, or the evidence of debts, but say that the agent of the Bank, at Louisville, held the possession and control of all of them at that place, and immediately upon the assignment they notified him of the fact and appointed him their agent, and he afterwards held the same for and under them, and until they were taken out of his possession by a special agent, despatched by them from Philadelphia, who received and delivered them to their attorneys for superintendance and collection. They state that by an act of the Legislature of Pennsylvania, passed the 4th day of May, 1841, they are compelled to receive, at par, the notes and other evidences of debt issued or created by said Bank in payment of the debts assigned to them; and, in conformity to said act, they had received notes of the Bank to the amount of $550,000, all of which they had cancelled in such manner as to prevent, by any possibility, their being again thrown into circulation. They exhibited the deed of assignment, with a schedule of the effects and choses in action assigned, duly executed and accepted by the trustees, by their signatures to the deed and schedule, bearing date the 7th day of June, 1841, and recorded in the proper office in the state of the residence of the grantors and grantees.

The deed recites " that the Bank, (the party of the first part,) was indebted to sundry persons, depositors in said Bank and branches thereof, and also to sundry persons, holders of notes of the late Bank of the United States, incorporated by Congress, and to sundry persons, holders of notes of the present Bank, being notes of the ordinary kind, payable on demand, and commonly used in circulation; and to sundry persons, holders of notes issued by the Bank, commonly called post notes, (other than post notes held by or issued to certain banks in the County and City of Philadelphia, for which security was provided and given by an indenture bearing date the 1st day of May, in the year 1841, and which are not intended to be provided for or embraced in the present indenture; ) and where the said party of the first part, (the Bank,) had resolved and agreed to provide an adequate security for the payment of said deposits and of said notes, and of said post notes, (save and except the post notes heretofore provided for as above said,) and of the interest to accrue upon them; " therefore the party of the first part, as well for the consideration aforesaid, as in consideration of one dollar to them in hand paid by the party of the second part, (said Bacon, Symington and Robins,) give, bargain, sell, & c., transfer, assign, and set over to the party of the second part, all and singular the lands, tenements, and hereditaments, goods, chattels, moneys, right and credits of the party of the first part, contained, described and set forth in the schedule annexed, together with all papers and evidences relating thereto, in trust, " in the first place to enter upon and sell the real estate in fee simple, or any less estate, by private or public sale, for cash or on credit, & c.," and in the mean time to receive the rents, & c., " and in the next place, in trust, to collect, receive and get, in all and singular, the moneys due and owing to the party of the first part, and hereby assigned, and the same, as well as the proceeds of the real estate, safely to keep and apply to the uses and purposes hereinafter directed, that is to say:"

The recitals of the deed of trust.

" Firstly. To pay and discharge all necessary costs, expenses and charges attending the execution of the trust, in which, however, it is expressly understood and agreed that the commission charged by or allowed to said trustees shall not exceed one per cent. upon the amount collected, nor amount to more than two thousand dollars in one year to each trustee."

" Secondly. From time to time, as often as they shall have moneys on hand of a sufficient amount for a dividend, to divide and distribute the same, rateably and equally, in and towards the payment of said deposits, notes and post notes, (except the post notes heretofore excepted,) and the interest accrued thereon, so that all and each may participate rateably and alike in every such demand, until the said deposits, notes and post notes shall be fully paid off and discharged."

" And in the farther trust, from and after the payment and discharge of the said deposits, notes and post notes, and interest in full, to re-transfer, convey, and pay over to the said party of the first part, their successors and assigns, whatever may remain of the premises hereby granted, and all money, credits, and effects which may have been raised therefrom, or from any part thereof, and not applied to the purposes of the trusts herein and hereby created, together with all deeds, papers, evidences and securities relating thereto."

" Provided always, nevertheless, and it is hereby expressly declared, understood and agreed, as the condition of this indenture, and of the trusts herein and hereby created, that before the said trustees, their successors or assigns, shall proceed to make or declare any dividend of the moneys raised or collected as aforesaid, they shall give thirty days notice of their intention to do so, in two or more of the daily newspapers of the City of Philadelphia, at least twice a week during the same period of thirty days, calling upon the claimants to come forward and prove their debts; and such dividends shall be declared and made only on the amounts so brought forward and proved; and no creditor shall be entitled to claim or receive such dividends, who shall not have brought forward and proved his debt before the time appointed for making and declaring the dividend. But if any farther demand or demands shall thereafter be made, such neglecting or defaulting creditor or creditors, bringing forward and proving his or their claim or claims, in time therefor, as aforesaid, shall be entitled to receive, in addition to such devidend, an amount equal to the rate of dividend or dividends which shall have been before made and paid; and so on, from time to time, until a final dividend shall be declared and made," which is to be made when the funds shall be exhausted or the creditors provided for are satisfied.

And to enable the trustees the better to discharge the trusts, they are constituted attorneys, in fact, for the first party, & c. " And it is understood that this indenture, or any thing therein contained, is not in any manner to impair or affect the liabilities of the Bank nor the rights of the depositors or holders of the said notes and post notes."

The schedule attached gives a...