Case ID: va_46/html/0031-01.html
Source: Caselaw Access Project
Author: {"author": "Daniel, J.\n    ", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Richmond.
    Billups v. Sears & als.
    
    1. A deed of trust executed in part to secure fraudulent debts, but in part to secure a bona fide debt, the bona fide creditor having no notice of the dishonest purpose on the part of the grantor, is a valid security for the bona fide debt.
    2. A part of the property conveyed in a deed of trust is taken in execution by a creditor of the grantor, and sold, the creditor giving an indemnifying bond to the sheriff. Afterwards suit is brought upon the bond in the name of the sheriff, for the benefit of the trustee in the deed. Quaere: If plaintiff is not entitled to recover, though some of the debts secured by the deed are proved to be fraudulent, if other debts secured by it are bona fide ?
    3. In an action on an indemnifying bond for the benefit of a trustee in a deed of trust, in which the property sold under the execution is embraced, the defence is that the deed was fraudulent, but a verdict and judgment is for the plaintiff The defendant afterwards comes into equity on the ground of after-discovered evidence establishing the fraud as to some of the debts secured, but not questioning the bona fides of others, and asks for an injunction to the judgment, for a new trial, and general relief. Held:
    1. The ground of equity jurisdiction being satisfactorily made out, the Court will not direct the new trial, because it would not probably afford the proper relief, but will retain the cause, and will allow the plaintiff to impeach the deed, notwithstanding his unsuccessful effort to do so at law.
    2. The cause being properly in the Court of Chancery, the plaintiff is entitled to have an account of the trust subject, and have it properly disposed of among all the parties interested in it, according to their respective rights.
    3. The deed of trust purporting to indemnify one of the parties, as to whom the deed is charged to be fraudulent, as surety of the grantor for certain debts due to specified creditors, these creditors, as well as those secured directly, and whose debts are not assailed by the bill, are necessary parties.
    
      Kemp Dillard of the county of Gloucester, executed to William C. Booker a deed bearing date the 7th day of October 1840, which, reciting that Dillard was indebted to James C. Sears the sum of 670 dollars, as by bond of that date, to Henry Sears the sum of 235 dollars, as by bond of same date, and that Henry Sears was bound as his surety to William H. Rowe Sfi Co., J. Sp S. Medlicott, William Anderson and Jasper C. Hughes, in sums of money amounting in the aggregate to 107 dollars 23 cents, and that Dillard was indebted to George Booth in the sum of 50 dollars, due by bond, conveyed to Booker a tract of land of three hundred and eighteen acres, two negro men, two women and five children, horses, cattle, sheep, hogs, corn and fodder in the field, household and kitchen furniture, farming utensils, and a gig and harness, in trust, that if Dillard paid to James C. and Henry Sears, and to George Booth, the sums aforesaid, by the first of the next January, the deed should be void ; but if these debts were not paid by that time, then the trustee, at the request of either of these parties, should proceed to sell the property, and pay the debts ; and the remainder of the proceeds of sale was to be paid to Dillard. This deed was admitted to record in the clerk’s office of the County Court of Gloucester, on the 10th of October 1840, on the acknowledgment of Kemp Dillard.
    
    In the same month of October, but subsequent to the recording of the deed, Thomas B. Cooke, as the assignee of Billups and Sears, recovered two judgments against Kemp Dillard, on which executions were issued, and were levied on the two women and four of the children conveyed by Dillard to Booker. The property was not sold by the sheriff until executions of venditioni exponas, which bore date the first day of February 1841, were issued, when Peter W. Billups, one of the assignors, having executed an indemnifying bond, a sale was made, the proceeds of which amounted to 679 dollars.
    Soon after the sale an action was instituted on the indemnifying bond in the name of Robert C. Curtis, the high sheriff, for the benefit of Booker, the trustee in Dillard's deed. This action was tried at the ensuing April term of the Circuit Court of Gloucester, when the jury gave the plaintiff a verdict for 700 dollars, with interest from the 17th of December 1840 till paid; and there was a judgment accordingly.
    In October 1841, Peter W. Billups applied to the Judge of the Circuit Court of Gloucester for an injunction to the judgment against him. In his bill he charged that the bonds executed by Dillard to James C. and Henry Sears, and the deed of trust to secure them, were fraudulent and without consideration, and were made with intent to hinder and defraud the complainant and other creditors of Dillard. He stated that he had endeavoured to prove the fraud on the trial of the action on the indemnifying bond, but that the transaction was then so recent that the parties had let out nothing that complainant had heard, which would enable him to shew the fraud conclusively; but that since the trial he had discovered evidence ample to shew that these bonds to James C. and Henry Sears, and the deed of trust made to secure them, were made without consideration, and were fraudulent; and that the deed was intended to cover the said Dillard’s property from his creditors.
    The bill further state'd that Booker, the trustee, had sold some of the trust property, amounting, as complainant believed, to several hundred dollars, of which he claimed to have an account, and to have the amount credited upon the judgment against him. And making Curtis, the sheriff, Booker, James C. and Henry Sears and Kemp Dillard, parties defendants, he called upon the Searses and Dillard to disclose the consideration of the bonds executed to the Searses, and upon Booker to exhibit an account of his sales of the trust property and of that which remained unsold. The prayer of the bill was for an injunction to the judgment, that the Court would set it aside and grant him a new trial, that all proper accounts might be taken, and for general relief.
    The Circuit Judge refused the injunction, but it was granted by a Judge of this Court, “ not upon the ground of the after-discovered evidence, the allegation being too uncertain and indefinite to warrant the interference of the Court on that ground, but to enable the complainant to have an account of the trust fund, and to shew, if he can, that the creditors named in the deed have been satisfied in whole or in part by the sale of the other property conveyed.”
    
      James C. and Henry Sears answered the bill. They objected to the jurisdiction of the Court, so far as the bill sought to set aside the deed to Booker, on the ground that the question of fraud had been tried in the action at law. They denied that the deed was fraudulent. They objected to the account asked of Booker’s sale of the trust property, for the purpose of crediting the proceeds of that sale upon the judgment against the complainant, because the action at law was one sounding in damages, in which the jury might take into their estimate of the damages other things beside the amount of their debts; and because the amount of the sale and the judgment was not more than sufficient to satisfy the debts secured by the deed to Booker.
    
    
      James C. Sears stated that Dillard had married his sister, and being embarrassed, Sears was obliged to purchase or otherwise provide various articles of absolute necessity for Mrs. Dillard and her family,• that on this account Dillard was indebted to him 171 dollars; and that he had lent him 500 dollars to pay a debt to the complainant; and these debts were the consideration of the bond executed by Dillard to him.
    
      Henry Sears stated that his claim against Dillard was for articles furnished for the use of Dillard’s family for some years before 1840, and for claims which he had paid off as Dillard’s security, or for which he was bound when the deed was executed, and had since paid.
    
      Booker answered that he knew nothing of the circumstances stated in the complainant’s bill; that being asked by Dillard to act as trustee in a deed he was about to execute, to secure the Searses and Booth, and being under no apprehension of difficulty in the matter, he had consented to act; and that he was not present when the deed was executed. He said he had sold some of the trust property, the proceeds of which were about 340 dollars, but that the property was of such a character as to be necessary for Mrs. Dillard’s family, and was bought by her brothers, who had been permitted by him to retain the purchase money, as it was coming to them.
    With his answer, Booker filed an account of the sale which he made. Prom this account it appears that he ^ not se^ ^and, or the two negro men, or.the gig and harness conveyed in the deed from Dillard to him; nor does the record give any information as to what has become of this property: The only evidence in relation to the trust property, is, that Booker sold to the amount of 340 dollars, and that after this sale, Dillard had in his possession articles valued by the witness at about 93 dollars.
    The point to which the evidence generally related, was the bonafides of the bonds to James C. and Henry Bears, and the deed; and on this point the evidence was conflicting, and in some parts of it, contradictory; and an attempt was made to impeach the credibility of one important witness: but it did appear that the complainant had discovered very important evidence after the trial at law, to which he had no means of access before.
    At the April term of the Court 1842, the complainant asked leave to file an amended bill, in which he set out particularly some of the facts which he had discovered since the trial at law, and the names of the witnesses by whom he expected to prove them; one of whom had been examined on that trial: and the relief prayed was the same as in the original bill. At the same time the defendants moved the Court to dissolve the injunction; and both motions coming on to be heard together, the Court overruled the complainant’s motion, and dissolved the injunction. The complainant then moved the Court to reinstate the injunction, and tendered the bill which he had asked leave to file, with the evidence in the cause; but the Court again overruled his motion; whereupon he applied to this Court for an appeal, which was allowed.
    
      
      Robinson, for the appellant.
    
      Lyons, for the appellees.
   Daniel, J.

delivered the opinion of the Court.

It appears to the Court, that since the trial of the action upon the indemnifying bond, the appellant has discovered material evidence tending to prove that the deed of trust of the 7th October 1840, is, so far as the same purports to have been made for the security and indemnity of the appellees James C. Sears and Henry Sears, fraudulent and void ; and that the failure to procure and furnish said evidence at said trial, is not to be attributed to any want of diligence on the part of the appellant. If, therefore, the questions involved in the defence to said action were cognizable only at law, and could be there fully and fairly presented and tried, this Court would feel no hesitation in deciding that the Court below ought to have granted the appellant a new trial. The said deed, however, purports to have been made not only for the benefit of the said James C. and Henry Sears, but also to secure to George Booth the payment of a debt, as to which there is no proof or allegation that said deed is not a valid security. In this state of things the Court is not satisfied that to grant a new trial to the appellant, would be to extend to him the proper relief, inasmuch as his defence founded on the alleged fraud in the deed of trust might be successfully met or greatly embarrassed by the objection that the plaintiff ought not to be wholly defeated of his action, unless the deed were void in toto ; and that it would be improper so to pronounce a conveyance made in part, for the indemnity of a fair and bona fide creditor, having no notice of any dishonest purpose on the part of the grantor. The Court is also of opinion, that the appellaut, apart from his right, under the circumstances of this case, to impeach said deed in a Court of Chancery, notwithstanding his unsuccessful effort to do so at law, had a right to call for an account of the trust subject; and that the Court below having thus before it a case proper for the exercise of its jurisdiction, ought to have overruled the motion to dissolve the injunction, and to have proceeded, a^ter ^ie ProPer stePs)t0 dispose of the trust subject, and to do complete justice among all the parties according to their respective rights. The Court is further of opinion, that in consideration of the conflict of evidence touching the character of' the deed of trust, it would have been proper in the Court below, in order satisfactorily to ascertain the same, to have directed an issue to try whether the said deed was made by the grantor, Kemp Dillard, with intent or purpose to delay, hinder or defraud his creditors; and if so, whether the said James C. and Henry Sears, and George Booth, or any or either of them participated in, or had notice at the time of the execution of the deed, of such intent or purpose. It seems also to the Court that the said Booth ought to have been made a party, and that William H. Rowe <Sf Co., J. Sf S. Medlicott, William Anderson and Jasper C. Hughes, the creditors, to whom the said Henry Sears is recited in said deed to be bound as the security of the said Kemp Dillard, and the payment of whose debts the said deed purports to secure, ought also to h'ave been made parties. This Court is therefore of opinion to reverse the order dissolving the injunction, and refusing to the plaintiff in the Court below permission to amend his bill, with costs. And this Court proceeding, &c., the injunction is reinstated, and the cause remanded to the Court below, with instructions to receive the amended bill, to have the proper parties made, to direct an issue, such as is above indicated ; also an account of the trust fund, if desired by the appellant, or found necessary by the Court, in order to do justice among all the parties interested, and for such other proceedings as may be proper, in order to render a final decree in accordance with the principles above declared.