Case ID: va_27/html/0854-01.html
Source: Caselaw Access Project
Author: {"author": "JUDGE GREEN", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

*Cole’s Administrator v. M’Rae.
    December, 1828.
    Chancery Practice — Decree to Sell Land — Priority of Liens. — If there be several parties who claim to be paid their debts, and to be indemnified for securitysbip out of a debtor’s land and chattels, conveyed by Deeds, and there be an adversary creditor by Judgment, who claims to have the Deeds set aside for fraud, and the property sold to-pay his Judgment-debt, an interlocutory Decree, which, without deciding on the validity of the Deeds, or the extent to which, and in what order the said several debts are chargeable on the property. yet directs that the lands conveyed shall be sold for cash, and the proceeds to be paid into Bank to the credit of the cause, is premature and erroneous, because it has a tendency to sacrifice the property’, by discouraging the creditors from bidding, as they probably would, if their right to-satisfaction of their debts, &c. had been previously ascertained.
    Same — Decree for Sale of Personalty — Priority of Liens. — Such a Decree maybe proper as it regards the sale of chattels, because they are perishable, liable to be wasted, and no sacrifice need be apprehended, because they may be sold in detail.
    Same — Conflicting Claims to Land — Disposal of Land Until Rights Ascertained. — As to the lands, they should in such case, be put into the hands of a receiver, to be rented out, until the rights of the parties, in respect to that subject, are determined, having a due regard to the rights of the widow of the debtor,
    John M’Rae of Petersburg, filed his Bill on the 4th February, 1822, in the Richmond Chancery, against William Cole and others, which states, that he obtained a Judgment in the Superior Court of Law of Peters-burg, in October, 1820, for $9,120, with interest from 30th June, 1820, till paid and costs, subject to a credit of $4,153, from the 23d October, 1820: that a Ca. Sa. was issued, Cole was arrested, and took the insolvent oath on the 30th December, of the same year, giving in a schedule of his estate, consisting only of three bonds, executed to him by one Thomas P. Cocke, for $166 67 each. He charges that' Cole, aware that Judgment would be rendered against him, prepared to rpnder it unavailing, by a succession of fraudulent conveyances, and that he still lives on a farm in genteel style, enjoying many luxuries as well as comforts. The first of those conveyances was made in July’, 1820, to Benjamin Harrison as Trustee, (whom he makes a Defendant,) to whom he conveyed personal property', consisting of twenty slaves, his stock of horses, mules, cattle, and hogs, his plantation utensils, household furniture, of which much was of an expensive character, and kitchen furniture, for the purpose *of securing the payment of six or seven thousand dollars, for which the uncles of his wife, Benjamin Cocke, and Thomas Cocke, were his sureties, or creditors: that of these debts $3,385 were due for a tract of land then recently purchased by Cole from Byrnes’s Executors, which land was under no incumbrance, and would have constituted a more certain indemnity than personal estate, if fraud against creditors had not been intended: that $1,354 were due to Benjamin Cocke by Bond of that date, and that the balance was due on delivery Bonds, against any danger from which no indemnity ought to have been required, unless the debtor was suspected of the vilest fraud. The second Deed was executed on the 13th October, 1820, by Cole and Wife, by which they conveyed to Benjamin Cocke, as Trustee, three tracts of land containing nine hundred acres, more or less, near Petersburg, on the extraordinary trust, the Trustee should at the end of one year, sell the land on a credit of one, two, three, and four years, and out of the proceeds of such sale, should pay those of Cole’s creditors who should, within thirty days, sign the Deed, and thus become parties thereto: but, he avers that no one creditor did sign it, and therefore it became of no effect. The third Deed was executed by the said William Cole on the 29th December, 1820, by which he conveyed to Thomas P„ Cocke, his wife’s brother, absolutely, all his interest in the lands and slaves before-mentioned, and all his wife’s interest in the dower slaves held by her mother, for the paltry consideration of $500, which were paid in the three Bonds mentioned in the schedule aforesaid. He charges that this Deed was executed by Cole, with full knowledge that the Execution was in the hands of the (Sheriff, and after he had promised to surrender himself on the 30th, and for the sole purpose of enabling him to take the insolvent oath. He offers to allow $5,000 instead of $500, for the lands and slaves so conveyed, and will consent that the Court shall Decree an immediate sale of them for cash : that all debts then legally *chargeable on them under the Deeds aforesaid, shall first be prid out of the proceeds of the sale, and that the $5,000 shall be allowed as a credit to Cole in part of the Plaintiff’s Judgment. He calls on Cole to say, whether he will accept the offer: if not, he calls on Cole, and Thomas and Benjamin Cocke, who are made Defendants, to say whether they did not design by the first Deed to protect the property against his debt, and especially whether the personal property was included with any other view, and whether the said Thomas and Benjamin entertained any apprehension of loss, when they professed to take a Deed of indemnity: he requires also Cole, and Benjamin Cocke, to state what debts were intended to be secured by the second Deed, and whether it was not intended to drive the Plaintiff into a compromise, or sale of his claim, upon terms which he had rejected: and he requires Thomas P. Cocke, who is also made a Defendant, to say what was the inducement to the execution of the last Deed, whether he did not promise to cancel it; whether he did really intend to force his brother-in-law to abide by so ruinous a sale, and whether it was not designed to defeat the Plaintiff’s demand. He prays, that the Sheriff of Prince George County, in whom the property vests by operation of the Statute, and whom he makes a Defendant, may be decreed to sell the property, or that it may be sold in some other way, and that his Judgment debt may be paid.
    The Deeds arc filed as exhibits, and they are truly set out, except that the last Deed conveys to Thomas P. Cocke, all of Cole’s interest in the lands and negroes conveyed by the two Deeds of Trust, “after the payment of the said debts,” &c.
    The Defendant Cole, in his Answer, admits the Judgment against him, but denies that it is a just debt; says, it was founded on an award, which he is endeavouring' by a Bill in Equity against M’Rae, to set aside. He denies, that there is any fraud in the conveyances, or any intention of fraud, either on his part, or on the part of the other ^parties to those Deeds; he denies that he is living in comfort and luxury. He says, that the whole amount of the property conveyed by the Deeds, will not sell for more than $500, if so much, over and above the debts they were intended to secure. He denies, that the land he purchased of Byrnes’s Executors is unincumbered; on the contrary, he avers that it is under an incumbrance to a former owner of it, although the Defendant did not know it when he purchased, but that being so incumbered, Thomas Cocke, his surety, thought it prudent to take a Deed on slaves, and other personal property', as an indemnity. He admits the execution of the conveyances to Thomas P. Cocke, for the consideration of $500; says, that he had only' an equity of redemption in that property, and that the price agreed on is a full consideration . for it. He denies, that there was any agreement between himself and the said Thomas P., to have the interest restored, or re-conveyed, or released to the Defendant. He says, that the second Deed expresses truly on its face the true intention of the parties. As to the offer of the Plaintiff to give $5,000, he considers it an artful attempt to seduce the Defendants into an admission that the Deed was fraudulent, and therefore repels the offer with indignation. He hopes to be able to set aside the Judgment of the Plaintiff, but if he should fail in that, he expresses his willingness that the property may all be sold in any manner the Court may direct.
    Thomas Cocke, in his Answer, repels with indignation, the imputation of fraud against him. He says, when he consented to become Cole’s surety for the purchase of Byrnes’s land, he was not apprised of Cole’s embarrassment :■ that he executed the Bond as surety, for Cole, to Byrnes’s Executors, under a conviction that a mortgage of the laud had been previously executed by Cole, as had been stipulated, and he knows not Why the Executors failed to require a mortgage, and thereby undertook to augment the responsibility of the sureties: that, when the Defendant obtained a lien on personal property from Cole, *his inducement was, not only to secure himself against loss, in consequence of the depressed value of the land, but as a protection against other large sums for which he had been security for Cole. He says, that he has reason to believe, that the property conveyed by the said Deed will be inadequate to discharge the debts intended to be secured by it, and that the reason why the property has not been sold tc pay that debt, is, because the last Bond has recently fallen due, and that further proceedings on the part of Byrnes’s representatives have been iujoined by the Chancellor: that the Defendant is perfectly willing that a sale be made of all of Cole’s property, being assured that the Chancellor will save the Defendant harmless, and direct the purchase money due to Byrnes’s Executors, to be paid out of the lands, if the personal subject should be inadequate.
    Benjamin Cocke in his Answer denies fraud, and says, that he had a just claim against Cole for the amount stated in the Deed to Harrison : that the Defendant proposed to the Complainant to compromise his controversy with Cole, because he believed that the Plaintiff, in the exchange of lands, had obtained a very great advantage over Cole: that the Plaintiff rejected the proposal, whereupon the Defendant advised Cole to execute a Deed for the benefit of all his creditors, so that ail might come in for a distributable share. He declares his willingness that a Decree should be pronounced, directing a sale of the property.
    Thomas P. Cocke in his Answer admits, that he became a purchaser of the residue of Cole’s estate, for $500: that, at the time of the purchase, it was believed not to be worth more after the payment of all Cole’s debts, and the Defendant is still of that opinion. He denies, that he contemplated any fraud in this transaction : that it was his wish to preserve for his sister and her children the remnant of the estate. He says, he does not know how it can be considered fraudulent, when he was not to be entitled to any part of the estate, till all the debts were paid. If *he had intended to ha.ve covered Cole’s estate, and protected it from the payment of his debts, he might have been justly charged with fraud, but his interest was not to accrue till after the payment of the debts, and that the payment of Cole’s debts was the inducement to the execution of the Deed. He expresses his willingness that a Decree should be made, to sell Cole’s whole estate to pay all of his debts, and the Defendant is willing to surrender all his interest under the Deed, after being paid the money already advanced by him.
    So much for the Bill and Answers in the suit of M’Rae against Cole and others.
    The Record also contains the proceedings in a cross suit in Chancery, brought by Cole against M’Rae. In that suit, Cole represents that the debt on which M’Rae had obtained a Judgment against him, arose out of a contract for an exchange of lands. He had purchased M’Rae’s lots in Petersburg, and land adjacent, of which the price was fixed, and had given in exchange several valuable tracts in Tennessee, of which the price was kept open. Pending the action at Law, brought by M’Rae against him, on the contract, the parties referred their dispute to arbitrators, who decided that he should receive only $2 per acre for his Tennessee land, Cole claiming $4. The sum awarded, constituted the credit on M’Rae’s Judgment. The object of Cole’s Bill was.to set aside the award, and the Judgment consequent thereon. He objected to the award, not on account of the want of integrity or ability in the arbitrators, but because they were misled and deceived by the testimony of the only witness who was examined before them, and because great injustice had been done to him in ascertaining the value of the land, which he endeavoured to support by proof. At the hearing on the Bill, Answers and Depositions, Cole’s Biii was dismissed by the Chancellor, and is supposed to have been finalljT disposed of. It is not necessary to say more here as to that case, because it is not referred to in the Decree either of *the Chancellor, or of the Court of Appeals, in the suit which forms the subject of this Report.
    During the progress of this suit, about March, 1824, Cole died, leaving a widow. The suit was revived in the name of Benjamin Cocke, jr., the Aministrator, but the widow does not appear to have been made a party.
    At the Term in March, 1827, the Chancellor entered and interlocutory Decree in this case, of M'Rae against Cole’s Administrator and others, to the following effect:
    “The Court, not deciding on the priority of any of the creditors before it, doth order, that one of its Commissioners do state an account of the several claims and debts which may be chargeable upon the estate in the proceedings mentioned: that the Defendants, Benjamin Harrison and Thomas Cocke, do render before the same Commissioner an account of the trust property disposed of by them: that the Commissioner make report, &c., and that unless the Defendants, or one of them, do within six months pay the Plaintiff the amount of his Judgment, (specifying it,) and the costs of this suit, the Marshal of this Court, or one of his Deputies, after giving six weeks previous notice of the time and place of sale, &c. &c., do sell to the highest bidder, for cash, on the premises, the tract of land in that County, (Prince George,) in the proceedings mentioned, whereof William Cole died possessed, and pay the proceeds of sale into the Bank of Virginia at Petersburg, to the credit of this cause, subject to the future order of the Court, and report his proceedings to the Court.”
    In February, 1828, the Court of Appeals granted a Supersedeas to so much of the above Decree as related to the sale of the land.
    Allison, for the Appellants.
    May and Spooner, for the Appellees.
    
      
      Chancery Practice— Decree to Sell Land — Priority of, Liens. — It is a well-settled rule that where there are conflicting claims to priority out of the proceeds of land about to be sold to satisfy the liens upon it, the. court in order to prevent the danger of sacrificing the property by discouraging the creditors from bidding as they probably might if their right to satisfaction of their debts and the order in which they were to be paid out of the property, were previously ascertained, should declare the order of payment before it decrees the sale to be made, Iaege v. Boissieux, 15 Gratt. 103. citing the principal-case. and Buchanan v. Clark, 10 Gratt. 164, as its authority. And in Bristol Iron, etc., Co. v. Caldwell, 95 Va. 48, 27 S. E. Rep. 838, it is said: “There is no better settled rule of equity practice in this state than that which declares it to be premature and erroneous to decree a sale of land to satisfy encumbrances thereon before ascertaining the liens binding the land, and their amounts and priorities. This principle was established at an early day in the leading case of Gole v. McRae. 6 Rand. 644, where it was held that such a decree was premature and erroneous, because a sale, without previously ascertaining and determining the liens and incum-brances. and the order in which they are chargeable. has a tendency to sacrifice the property sold, by discouraging the creditors from bidding, as they probably would, if their right to the satisfaction of their debts, etc., bad been previously ascertained. This case has been followed by numerous decisions. of this court to the same effect. Many of them are cited In Horton v. Bond, 28 Gratt, 815; Schultz v. Bansbrough, 33 'Gratt. 587, and Fidelity Loan, etc,, Co. v. Dennis, 93 Va. 504. 25 S. E. Rep. 548.” To the same effect, the principal case is cited with approval in Wash , etc., R. Ca v. Alex , etc.. R. Co., 19 Gratt. 817: Lipscombe v. Rogers, 20 Gratt. 880: Moran v. Brent, 25 Gratt. 106: Horton v. Bond, 2? Gratt. 822; Schultz v. Hansbrough, 33 Gratt. 567. 577, and .footnote: Hoge v. Junkin,78 Va. 231; Alexander v. Howe. 85 Va. 202. 7 S. E. Rep. 218: Stevens v. McCormick, 90 Va. 736. 19 S. E. Rep. 742; Marling v. Robrecht, 13 W. Va. 461; Tracey v. Shumate. 22 W. Va. 500; Hartman v. Evans. 88 W. Va. 679. 18 S E. Rep 814; Sandusky v. Varis, 49 W. Va. 150, 38 S. Hi. Rep 572.
      See further, monographic note on ‘ .Judicial Sales” appended to Walker v. Page. 21 Grail. 836.
      The principal case is also cited in Beard v. Ar-burkle, 19 W. Va 148.
    
    
      
       Chancery Practice--Appointment of Receiver. — See principal case cited in Moran v Johnston, .26 Gratt. 111.
      See generally, monographic note on “Receivers” appended to Gibson v. Randolph, 2 Muni. 310.
    
    
      
      Absent, tile Pkesidknt.
    
   ^December 18.

JUDGE GREEN

prepared the following Decree, which was concurred in by

JUDGES CABELL, COALTER and CARR, and entered as the Decree of the Court.

“The Decree in this case not having decided upon the validity of any of the Deeds mentioned in the proceedings, and impeached by the Plaintiff as fraudulent, nor as to the extent to which, and in what order, the debts due from the Defendant, Cole, to the Plaintiff, and the other Defendants, are chargeable upon the property professedly conveyed by those Deeds, it is not thought proper in this stage of the proceedings to decide those questions here. And although it is clear that the whole property conveyed by those Deeds, or so much thereof as may be necessary to pay all the debts aforesaid, must be sold for that purpose in the progress of this cause, yet the Court doubting whether it was proper to direct the real property in question to be sold for cash to be deposited in the Bank to the credit of the cause before these questions were decided, since that course had a tendency to sacrifice the property, by discouraging the creditors from bidding, as they probably would, if their right to satisfaction of their debts, and the order in which they were to be paid out of the property, were previously ascertained, awarded a Supersedeas in respect to the land only, leaving the Decree as to the personal property to be executed, inasmuch as that was perishable, and liable to be wasted, and no such sacrifice was to be apprehended in respect thereto from the causes aforesaid, since it could be sold in detail. And the Court is now of opinion that the Decree, so far as it directed the lands, in the proceedings mentioned, to be sold, was premature, and therefore erroneous: and that the said lands should have been put into the hands of a receiver, to be by him rented out until the rights of the parties, in respect to that subject, «were determined, having a due regard to the rights also of the widow of Cole, if any she has.”

The Decree was therefore reversed, so far as it conflicts with this opinion, and affirmed as to the residue, and the cause remanded to be further proceeded in accordingly.