Case ID: va_29/html/0378-01.html
Source: Caselaw Access Project
Author: {"author": "GREEN, J.,", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

*Bell v. Hammond and Others.
    November, 1830.
    (Absent Coauter, J.)
    General Deed of Assignment — Rights of Lien Creditor Therein. — A. mortgages lands to B. to secure a debt due to him; and then, by a general deed of trust, conveys the equity of redemption of the same lands, together with sundry personal property, to a trustee, to raise a fund to pay all his debts, including debts due B. other than that specifically secured by the mortgage: Bmld. I!. is entitled to receive the whole of the debt specifically secured to him by the mortgage, out of the proceeds of the mortgaged lands, and then to come in for distribution of the fund in the hands of the trustee under the general deed of trust, for satisfaction of the other debts due him, pro rata with the other creditors.
    Upon a bill exhibited by Hammond and others, creditors of Beckwith, against Beckwith, and Bell, the appellant, and others, in the superior court of chancery of Winchester, the case was thus :
    Beckwith, by deed, dated the 9th October 181S, and duly recorded the same day, con-vej’ed two tracts of land to Powell, in trust, to secure a debt to Bell of 3S00 dollars, with interest from the date.
    By an agreement under seal, indorsed on the deed, dated the 3d June 1816, and duly recorded the same day, Beckwith agreed, that a further debt of 250 dollars, due by him to Bell, should be charged on the trust subject, and that the trustee might sell the same for the satisfaction of this debt also.
    Then, by deed dated the 6th March 1817, and duly recorded on the 8th of the same month, Beckwith conveyed the same lands with sundry slaves and other personal estate, to Hite, upon trust, to sell the same, and to apply the proceeds to the payment of all the debts at that time due from Beck-with ; and, secondly, that Hite should be and was thereby authorised to- indemnify Bell, for any moneys which he might advance to Hite for the use of Beckwith, or which Bell might pay in satisfaction of outstanding legal obligations of Beckwith, in the hands of others, and that Bell as to all moneys then due him, should be entitled to equal justice with any other creditor, for payment out of the trust subject thereby conveyed.
    ^'Afterwards, by a second agreement under seal, also indorsed on the first mentioned deed of trust of Beckwith to Powell, dated the 13th April 1817, and duly recorded the next day, Beckwith agreed, that the further sum of 1850 dollars advanced by Bell for him, and also the sum of 900 dollars for which Bell yet stood bound as surety for Beckwith, should be charged on the trust subject by that deed mortgaged, and that the trustee Powell might sell the same for the satisfaction and indemnity of Bell as to these sums also.
    And, finally, by another instrument under seal, also indorsed on the first mentioned deed of trust to Powell, dated the 21sl April 1817, Hite, the trustee in the second deed of trust above mentioned, reciting, that Bell had been compelled to pay 2750 dollars as surety to Beckwith, and that Beckwith had agreed to extend the lien of the first deed of trust to Powell, so as to secure this additional sum due to Bell, declared his willingness, that the lien of the first deed of trust should be extended so as to secure that additional sum to Bell, notwithstanding the second deed of trust conveying the same subject to him, Hite, in trust &c.
    It appeared, that this sum of 2750 dollars was advanced by Bell as surety for Beck-with, upon engagements incurred before the execution of the general deed of trust to Hite, of the 6th March 1817.
    The lands mortgaged by both the deeds of trust, having been sold, and the proceeds being more than enough to satisfy the debt of 3500 dollars secured to Bell by the first deed of trust of October 1815, and the 250 dollars, secured to him by the first agreement indorsed on that deed, of June 1816, with interest on both sums, and there being a surplus arising from the lands, and other funds arising out of the other trust subject conveyed to Hite, by the general deed of trust of the 6th March 1817, but the fund being insufficient to satisfy all the creditors, the question arose, Whether Bell, claiming to come into partition of this fund with the other creditors of Beckwith, for satisfaction of his claims x'against him for advances made after the execution of the general deed of trust to Hite, was entitled to receive out of the proceeds of the mortgaged lands, the full amount of the debts specifically secured to him, by the deed of trust of the 9th October 1815, and the agreement indorsed thereon of the 3d June 1816, and then to come, pari passu with the other creditors, in respect to the residue of his claims, into distribution of the residue of the fund?
    The chancellor was of opinion, that he was not, and decreed accordingly; and Bell appealed to this court.
    The cause was argued by Stanard for the appellant, and Nicholas for the appellees,
    upon the single point above stated.
    
      
      Deeds of Assignment — Rights of Lien Creditor Therein. — See monographic note on “Assignments for the Benefit of Creditors” appended to French v. Townes, 10 Gratt 513.
      Deeds — Recordation—Effect as Notice. — Our law, unquestionably in its present state, avoids deeds and conveyances, if unregistered, to tile prejudice 'of subsequent purchasers and incumbrancers in good faith; and when duly registered, makes them effectual as notice to all the world. But the notice is of the contents of the instrument, and of nothing more ; not of any secret condition, or trust, or equity, between the parties. McClanachan v. Siter, 2 Gratt. 309, citing, among others, the principal case: Davison v. Waite, 2 Munf. 527; Colquhoun v. Atkinsons, 6 Munf. 550. To the same effect the principal case was cited in Houston v. McCluney, 8 W. Va. 150.
    
   GREEN, J.,

delivered the opinion of the court. The counsel for the appellant very properly waved any claim to priority over the other creditors, in respect to the additional sums advanced by him to and for Beckwith, after the execution of the general deed of trust to Hite. And the counsel for the appellees, with equal propriety, waved any objection to the appellant’s priority, as to the 250 dollars advanced by him, and agreed to be charged on the mortgaged lands, by the indorsement on the deed of trust to Powell for his peculiar security, before the general deed of trust to Hite was executed.

The appellant was entitled to receive out of the proceeds of the mortgaged lands, the full amount of the debt originally secured to him by the deed of trust to Powell of the 9th October 1815, and the additional sum of 250 dollars charged upon the lands, by the indorsement on that deed, of the 3d June 1816, for which those instruments gave him a specific lien; and then to come, pari passu with the other creditors, in respect to the residue of his claims, into distribution of the residue of the fund. In the case of Heams v. Bance, 3 Atk. 630, lord Hardwicke held, that a mortgagee who had lent a further sum to the mortgagor on bond, the mortgagor having created a trust by will for the payment *of debts, could not tack the bond, but as to that must come in pro rata with the other creditors, upon the equitable fund; and in an anonymous case, 2 Ves. sen. 662, that, in a similar case, when the debtor had conveyed the mortgaged property in trust for other creditors, the mortgagee as to the amount of his mortgage and two judgments which he was entitled to tack, had a priority over the creditors under the deed of trust; but that the bond was only a charge upon the general assets of the debtor who was dead.

The decree is, therefore, to be reversed, and a decree entered according to the principle here declared.