Case ID: unrep-tenn-cas_1/html/0177-01.html
Source: Caselaw Access Project
Author: {"author": "Wright, J.,", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

JACKSON,
    APRIL TERM, 1859.
    Wood v. Moore.
    TRUST FRAUD. Securities. Creditors.
    
    Where a deed of trust is given to secure certain sureties and creditors, the discharge of one of the sureties will not affect the right of a creditor to a ratable distribution of the trust fund.
   Wright, J.,

delivered tbe opinion of tbe court:

The decree of tbe Chancellor is erroneous. There is a plain distinction between a conveyance to secure tbe payment of a debt, and one merely for tbe personal indemnity of a surety.

In. tbe former case tbe trust enures to tbe benefit of tbe creditor, and creates a fund in bis favor of which be may avail himself in order to obtain satisfaction of bis debt. And in that case, tbe discharge of tbe surety, though bis protection was also one of tbe objects of tbe conveyance — will have no effect upon tbe claim of tbe creditor to tbe fund.

It is true the deed of trust. executed by Samuel C.Simmons to tbe defendants, Moore and Harwood, was intended to secure said Moore and others as sureties and stayors of said Simmons in certain debts enumerated in said deed. But it is equally 'clear that it was also intendedj as security for the. payment of debts themselves.

. The deed recites that the said Simpson had procured said Moore to become his surety and stayor, as to certain debts, which are specifically set forth in said deed; and among them, is the debt to complainants of $666, 90.

He also mentions other debts which he owed, and in some of which other persons have become liable, as his sureties and stayors ; and then provides that in order to secure his said securities, stayors and other creditors— the said Moore and Harwood — the trustees should apply the assets in the deed of trust, first to the payments of the debts, on which he had given security, and procured stayors, and the debts for borrowed money, and certain other debts therein named; and next, to the payment of his other creditors.

This language is plain. The complainants have a right to require Moore and Hardwood — the trustees— to pay them their ratable part of the trust fund with the other creditors of the first class in the deed ; the assets being sufficient to pay all the creditors.

The fact that Moore succeeded — after the execution of the deed — in a litigation with complainants, in getting discharged from liability as to their debt, upon a plea of non estfactum or other defence, can in no way change or destroy their right. The principle settled in Jones v. Hamlet, 2 Sneed, 256, and Kennedy v. Pitts, et al., 5 Sneed, 91, is, it seems to us, decisive of the case. Roberston v. Sublett, 6 Humph. 313.

Decree reversed.