Case ID: sc-eq_14/html/0389-01.html
Source: Caselaw Access Project
Author: {"author": "Curia, per Johnson, Ch. Harper, Ch.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

The President and Directors of the Bank of the State of South-Carolina v. Jas. D. Mitchell & Amelia Dorothy V. Mitchell (his wife,) and William S. Smith, trustee; Robert Y. Hayne & William A. Hayne; Joseph P. M’Call & Zabdiel Rogers.
    Where marriage articles, executed in 1809, by the husband, previous to his marriage, covenanting to convey the real and personal property of the wife to a trustee, upon certain trusts in favor of the wife and children of the marriage, were void as to creditors, for want of recording, as required by the act of 1785, the court Held, a deed of marriage settlement of certain slaves, executed by the husband in 1824, in pursuance of the articles, though duly recorded, fraudulent and void as to creditors, the husband having become after the. execution of the articles of 1809, and being at the date of the deed of 1824, largely indebted to the complainants and other creditors. (Harper, Ch., and Richardson, J., dissenting.)
    Though in equity if a party has two funds, a person having an interest in one only, has a right to compel the former to resort to the other, yet general creditors, or those having posterior liens, can have, it seems, no claim on lands or slaves specifically mortgaged, as against the mortgagees.
    This case came up on an appeal from the decree of his honor Chancellor Harper, dismissing the complainants bill. The cause was heard at Charleston, May term, 1838.
    The bill was brought by complainants as creditors, to have certain personal property settled by the defendant, James D. Mitchell, upon certain trusts, subjected to the payment of their judgments against him at law; and for other purposés, which will sufficiently appear from the decree of his honor the chancellor. The several defendants answered, and the cause was heard upon the bill and answers, and evidence produced by the parties : and the facts and points of law involved are so fully stated in the decree, (a copy of which is annexed,) as to render any further statement unnecessary.
    “ The defendant, James D. Mitchell, previous to his marriage with Amelia Dorothy Y. Waring, to wit, on the 27th February, 1809; executed marriage articles, by which he covenanted with William S. Smith, as trustee, that he would after the solemnization of the marriage, convey and assure to the said William S. Smith, all the real estate and slaves, which the intended wife then possessed, or might thereafter become possessed of, in trust, for the use of husband and wife for life, to the survivor , for life, and to the children of the marriage. It is not necessary to state the trusts more specifically.
    At the time of the marriage, Mrs. Mitchell, according to the testimony, owned a house and lot in Wentworth-street, and several slaves, which went into the possession of her husband. She was also entitled to an undivided share of an estate, which, as I understand, had been conveyed to the separate use of her mother, Mrs. Mary Waring, for life, remainder to her children. Mrs. Mary Waring had died in 1808, previous to the marriage ; but by the consent of all their children and the husbands of the married females, the estate was permitted to remain in the possession of her husband, Thomas Waring, who survived her, for his own use, until 1824. At this time, the whole of the estate, consisting of lands, slaves, and some other personalty, was sold for division. It appears that the proceeds were received by the said William S. Smith, who paid over to James D. Mitchell, the proportion to which he was entitled in right of his wife, amounting to $¡3,081. After this payment, the said James D. Mitchell, executed to Wm. S. Smith, a conveyance, by which, referring to the marriage articles, and reciting, that at the time of the marriage, he had received with his wife, the house and lot in Wentworth-street, and several slaves named, as also the sum of $6,081, before mentioned, he conveys to the said Wm. S. Smith, 29 slaves, who are described by name, on the trusts declared by the marriage articles.
    The marriage articles executed on the 27th February, 1809, were not recorded in the secretary of state’s office, until the 9th day of June following, later than the time allowed by law, and were, therefore, void as to creditors. The conveyance of the first of March, 1824, was recorded on the 4th March.
    In 1825, the defendant James D. Mitchell, executed to Robert Y. Hayne and-William A. Hayne, executors of William Hayne, a mortgage of a plantation in St. Paul’s Parish, to secure the payment of $5000; and in 1829, executed to them a further mortgage of 9 slaves; for the purpose of securing the same debt. And immediately between these mortgages, he executed another mortgage of the same plantation to Joseph P. M’Call, to secure the payment of a sum amounting, as it is stated, to more than $6000.
    • The defendant James D. Mitchell, began dealing with the complainants in 1816, and became largely indebted to them by the discounting of notes, of which he was drawer and endorser, and so continued until 1832; when becoming embarrassed in his circumstances, his notes were protested, and judgments on them recovered against him. He became largely indebted, too, to other banks, and to individuals; and other judgments of a subsequent date were recovered against him. By an agreement between the said James D.'Mitchell and his creditors, it was arranged that his property should be placed in the hands of-Jervey, Waring & White, auctioneers, for the purpose of being sold;. and that they should pay the proceeds to his creditors. This was done, and about 50 slaves of the said defendant, were sold, including those mortgaged to Robert Y. and William A. Hayne, but not those conveyed to William S. Smith.
    The complainants claim that the conveyance to Smith is void, and the slaves included in it liable to satisfy Mitchell’s creditoi’s. They claim also, that Robert Y. and William A. Hayne, may be compelled to have recourse to the mortgage of the plantation, so that if that should not prove sufficient to satisfy both their mortgage and that of M’Call, the slaves may be left free for creditors generally.
    There was also a charge in the bill respecting a bond given by the said James D. Mitchell to Zabdiel Rogers, which is charged to have been voluntary and fraudulent as to creditors. But this, I understood, to be abandoned at the hearing, nor was any evidence offered to impugn the bond.
    The first question relates to the validity of the conveyance to Wm. S. Smith. If that be regarded as a marriage settlement, subject to the provisions of the acts of 1785 and 1792, as I assumed it to.be, it certainly is not void for want of either a schedule or of recording. The property conveyed is specifically described; a schedule of the estate of Mrs, Waring is annexed ; and it was recorded within three days of its execution. If it is to be impugned, it must be on other grounds, unconnected with these acts ; and this can only be, that the conveyance was voluntary, and fraudulent as to creditors. There can be no doubt, but that the marriage articles of 1809, were void as to creditors. Then the sole question is, whether, although void as to creditors, they do not afford a sufficient consideration to support the conveyance of 1824. The act expressly declares; that such contracts, although void as to creditors, shall be good as between the parties themselves. Then this constituted a debt, on the part of Mitchell, to the trustee of his wife. Is there any question but that the trustee might have sued on the covenant at law, or enforced performance of the articles in equity ? And how is it possible that .an act can be regarded as voluntary in a legal sense, of which, or of something equivalent, courts would have enforced the performance ? The articles were void as to creditors: and I have no doubt, but that the marital rights of the husband, attached on the personal property which was in Mrs. Mitchell's possession at the time of her marriage, and on her undivided share of such property in the hands of her father. Creditors might have taken it in execution, or if legal liens had attached on the slaves in question before the conveyance, that.could not have divested them. But Mrs. Mitchell was also a creditor, having equal equity; and she has obtained a legal priority, of which it is not in the power of the court to deprive her. If authority were needed, such is the conclusion of Chancellor Kent, in Reade v. Livingston, 3 Johns. C. C. 481, that although a post nuptial settlement, made by a person indebted, in pursuance of a parol agreement Before marriage, is voluntary, and void, yet if made in pursuance of a written agreement, it is good. I do -not doubt but that such a settlement might be regarded as fraudulent, although' it were not strictly voluntary; as if there were a great inadequacy of consideration. But nothing of this sort was alleged or appeared. So far as I could judge, the consideration seemed to be sufficiently adequate.
    I am equally clear, upon the other point made in the cause, that general creditors, or those having posterior liens, can have no claim on the land or the slaves mortgaged, as against the mortgagees. If the mortgage to the Haynes were out of the way, as if it were satisfied, they could not interfere with M’Call’s right to satisfaction out of the land; or if M’Call’s were out of the way, the Haynes might go, at their option, either upon the land or the slaves. The lien of the subsequent executions never attached upon the slaves, the legal title to which was transferred by the mortgage. It is clear, that if the Haynes should attempt to obtain satisfaction out of the land, and that should prove insufficient to satisfy both, they would be restrained by the court; on the familiar equity principle, stated by Lord Eldon, in Aldrich v. Cooper, 8 Yes. 388, “ that if a party has two funds, (not applying now to assets particularly,) a person having an interest in one only, has a right in equity to compel the former to resort to the other.” He speaks of the specific case, where A. has two mortgages and B. one, of the right of B. to throw A. on the security which B. cannot touch. See also Lanoy v. Duke & Dutchess of Athol, 2 Atk. 446, and Fowler & Adair v. Barksdale, State Rep. Eq. 164. This is commonly at the expense of general creditors. It is ordered and decreed, that the bill be dismissed.”
    (ARTICLES op 1809.)
    
      South- Carolina:'
    
    Articles of agreement made and executed the 27th day of February, in the year of our Lord 1809, between James D. Mitchell of the State aforesaid, attorney at law, of the first part, Amelia Dorothy Y. Waring, of the same State, daughter of Thomas Waring, sen’r., of the second part, and William Stevens Smith, of the third part: Whereas a marriage is intended shortly to be had and solemnized, between the said James D. Mitchell and the said Amelia Dorothy Y. Waring: and whereas the said Amelia Dorothy Y. Waring, is entitled to the real estate hereinafter mentioned, or to some part .thereof, more particularly to the whole, or part of a lot of land, situate in Wentworth-street, in the city of Charleston, in the State aforesaid; also to a proportion of several other lots or tracts of land, lately belonging to her mother Mary Waring, deceased-, as yet undivided between the children of the said Mary Waring, deceased; and also to several negroes: and it has been agreed between the said parties, that the said real and personal estate, or the right and title of the said Amelia to the same, shall be conveyed, transferred-and secured, firmly and effectually, to. the said Wm. S. Smith, his heirs, executors, administrators and assigns, in trust for the purposes hereinafter mentioned. Now, therefore, the said James D. Mitchell, in consideration of the said intended marriage, and in pursuance of the said agreement, and also in consideration of 5 shillings, to him in hand paid, by the said Wm. S. Smith, doth hereby for himself, his heirs, executors and administrators, article, covenant, promise and agree to and with the said Wm. S. Smith, his heirs, executors, administrators and assigns, in manner following, that is to say: that after the said marriage shall have taken effect, and as soon as the said Jas. D, Mitchell shall be thereunto required by the said Wm. S. Smith, his heirs, executors, administrators or assigns, he the said Jas. D. Mitchell, will join in conveying, with the said Amelia, and áecur-ing firmly and effectually, to the said Wm. S. Smith, his heirs and assigns, all right, title and interest, which she, the said Amelia, now has,"or hereafter may have, to any of the undivided real estate of her late mother Mary Waring, deceased ; also, to an undivided moiety, or half part-, of a piece or lot of land, situate on Went-worth-street, in the city aforesaid, onHarleston’s Green, and known as the lot No. 22, containing in front on Wentworth-street 106 feet 3 inches, then running in depth from south to north 121 feet 4 inches, butting and bounding to the westward on Richard Saltus’ land, to the northward on lot No. 21, to the eastward on lot No. 17, and to the southward on Wentworth-street aforesaid; together with the rights, members and appurtenances, to the said lots or tracts of land belonging. In trust, nevertheless, to and for the following uses and purposes, that is to say, in trust to and for the joint use, benefit and behoof of them, the said James D. Mitchell, and Amelia, his intended wife, during.their joint lives; and from and after the death of the said James D. Mitchell, should he die before the said Amelia, then in trust for the sole use, benefit and behoof of the said Amelia, during her natural life; and in case the said Amelia should die without leaving any child or children > grand child or grand children, or without making any disposition thereof by her last will and testament duly executed, then, in trust for the surviving brothers and sisters of the said Amelia, as tenants in common, and not as joint tenants; and the said Jas. D. Mitchell, for himself, his heirs, executors and administrators,-doth covenant, promise and agree, to and with the said W.m. S. Smith, his heirs, executors, administrators and assigns, that he will, at all times, after the execution of the said conveyance, and at the request of the said Wm. S. Smith, join with his said intended wife, in executing any such further deeds, or conveyances, as the said Wm. S. Smith, his heirs, or assigns, may think requisite for the better and more perfect securing and conveying the aforesaid several lots or tracts of land, to him, or his heirs, or assigns, in trust, for the uses and purposes aforesaid. And the said James D. Mitchell, in pursuance of the said agreement, and for the considerations aforesaid, doth hereby for himself, his heirs, executors and administrators, further article, covenant, promise and agree, to and with the said-Wm. S. Smith, his executors, administrators and assigns, in manner following: that is to say, that after the marriage shall have taken effect, he will bargain, sell and transfer, firmly and securely, to the said Wm. S. Smith, his executors, administrators and assigns, all such negroes as she, the said Amelia, may now or hereafter be entitled, or have a right to; in trust, nevertheless, to and for the following uses and purposes, that is to say, in trust to and for the joint use, benefit and behoof, of the said James D. Mitchell and Amelia, his intended wife, during their joint lives; and from and after the death of the said James D. Mitchell, should he die before the said Amelia, then in trust to and for the sole use, benefit and behoof of the said Amelia, during her life; and from and after the death of the said Amelia, in case she should leave any child or children, grand child or grand children, living at her death, then in trust to and for the use, benefit and behoof of such child or children, his, her or their executors, administrators and assigns, forever; if more than one, as tenants in common, such grand children taking between them only their parent’s share; and in case the said Amelia should die before the said James D. Mitchell, leaving at the time of her death any child or children, grand child or grand children, then in trust for the said child or children, grand child or grand children, as above limited; but should the said Amelia-die before the said James D. Mitchell, without leaving any child or children, grand child or grand children, and without her making her last will- and testament, then and in that case, in trust to and for the said James D. Mitchell, his executors and administrators.
    In witness whereof, the said parties have hereunto set their hands and seals, the daj and year first above written. .
    James D. Mitchell, [l. s.]
    Amelia D. V. Waring, [l. s.]
    Wm. S.' Smith, [l. s.]
    Signed, sealed and executed,
    in the presence of:
    
      1less M. Waring,
    
    
      Hofatio Smith Waring.
    
    Charleston, S. C.
    Horatio Smith Waring, being duly sworn, made oath that he was present and saw James D. Mitchell, Amelia D. Y. Waring and William S. Smith, sign, seal and deliver the foregoing instrument of writing, for the purposes therein mentioned, and that he, with Hess Mi Waring, witnessed the same.
    Sworn before me, this 9th day of June, 1809 :
    Stephen Lee, j. p.
    Recorded 9th June, 1809.
    
      Secretary of Stale’s Office, Charleston, 26 Sept. 1837.
    A true copy taken from record, in Marriage Settlement Book, No. 5, pages 467 to 469.
    Executed and certified by Jas. Kingman,
    
      Dep’ty Sec’ry of State.
    
    Settlement op 1824.
    
      State of South-Carolina:
    
    Whereas by articles of agreement made and executed on the 27th of February, in the year of our Lord 1809, and recorded in the secretary of state’s office, I did in contemplation of my marriage, agree and contract to convey, in trust to Wm. S. Smith, one-fourth part of the real and personal estate of Mrs. Mary Waring, deceased, to which my wife Amelia was entitled,: and whereas through filial regard to their venerated father Thomas Waring, Esq., the children of the said Mary Waring, forbore to urge any division of the same; but latterly his infirmities precluding his personal enjoyment thereof, a sale has been made of all the lands and negroes of the said estate, with a view to ascertain the value and make a final division between the respective heirs: and whereas, also, I received at the time of my marriage, the following slaves — Sambo, Celia, Bella, Rose, Louisa, Sophia, Beck, Harriet, (the latter sold, and two small girls, Nancy and Elsey, substituted,) together with the house and lot in Wentworth-street: and whereas, also, it appears by a schedule hereto annexed, that I have in addition thereto, received to the value of about $6081. — ■ Now, in order to secure a compliance with the before recited agreement, and at the request of the said Wm. S. Smith, trustee, named in the said deed, I do hereby convey and transfer unto the said Wm. S. Smith, his heirs and assigns, the following slaves: Doll, Hannah and her two children, Clarissa, John, Daniel, August, Diana, Lucy, Bess, Tenah, Doll, Fatima, Hetty, Nancy and her child, Charles, Ishmael, September, Susan and- her three children, Rosella and her five children — with the future issue and increase of the females — in trust, nevertheless, on the same trusts, and for the same purposes and uses, as are particularly and distinctly declared and set forth in the said marriage articles, which I hereby confirm and ratify in all respects.
    In witness whereof, I have hereunto set my hand and seal, this 1st day of March, in the year of our Lord 1824, and in the 48th year of the Independence of the United States of America.
    James D. Mitchell, [l. s.]
    Signed, sealed and delivered, in the presence of, (the word “Hannah” in the last line of the first page, being previously interlined)—
    if. 8. Waring.
    
    
      Frs. M. Waring.
    
    
      Schedule.
    One-fourth part of the estate, real and personal, of Mrs. Mary Waring, deceased, divided finally on the 10th day of February, 1824, by a sale of the remaining property:
    One-fourth value of Land, - - - $2005,75
    One-fourth value of Negroes, - - - 1275,25
    One-fourth value of Bank Stock, - ' ■ - 1400,00
    Bond of estate Thomas Waring, deceased, .1400,00
    
      South- Carolina:
    
    Horatio S. Waring, made oath that he was present and saw James D. Mitchell sign, seal, and as his act and deed, deliver the foregoing instrument of writing, to and for the uses and purposes therein mentioned ; and that he, with Frs. M. Waring, subscribed their names thereto, as witnesses to the execution of the sqme.
    Sworn before me; this 2d March, 1824:
    William Laval, N. P.
    
      Secretary’s Office, Charleston.
    
    I do hereby certify the foregoing deed to be duly recorded, in Miscellaneous Records, W. W. W. W., page 379, this 2d March, 1824, and examined by me.
    William Laval, Secretary of State.
    
    Recorded and examined, this 4th March, 1824:
    Charles S. Tucker, Register.
    
    The complainants appeal from so much of the said decree as dismissés the bill as to the defendants James D. Mitchell and Amelia D. Y. Mitchell, his wife, and William S. Smith, trustee ; and move that the same may be reversed, or modified, and the settled property specified in, the bill and answers, declared subject to the complainants’ demands — on the following grounds:
    1. That the marriage articles of 1809, being fraudulent and void as to creditors, by the acts of 1785 and 1792, could not furnish a sufficient consideration to support the settlement of 1824, as against existing creditors; and that the settlement of 1824, is therefore voluntary, and fraudulent and void as to the complainants, whose demands then existed and had originated long before. .
    2. That if the articles of 1809, although void as to creditors, could nevertheless avail to support, as against them-,- a settlement made long afterwards, and after the grantor had become deeply involved in debt, yet in fact the settlement of 1824, is not an execution of the articles; being of property of the defendant Mitchell, and not of the estate covenanted to be settled. ■ Nor is there any evidence, that the defendant Mitchell, did in fact receive property or funds of the estate covenanted to be settled, at all commensurate with the value of the property covered by the settlement of 1824: more especially as it appears both by the articles of 1809 and by the settlement of 1824, that the larger portion of the property covenanted to be settled, and which constitutes the consideration of the settlement of 1824, consisted of real estate, of which it does not appear, nor is it any where alleged that the wife’s inheritance therein has ever been divested, or that the defendant Mitchell, has acquired therein, any estate, or interest, which can furnish a sufficient consideration to support a settlement of his own property as against his creditors. And if the settlement is to be sustained at all, it is submitted, that there should be a reference to ascertain the true value of the consideration; and that the settlement should be restricted to that value and be treate'd as a mere security therefor; or that the defendant Mitchell, should be regarded as the purchaser of the real estate, which constitutes the consideration of the settlement; and the said estate be rendered subject to his debts.
    3. That all the property which the defendant Mitchell received or acquired a title to, in right of his wife, was reduced into his possession and vested in him jure mariti, before the settlement of 1824; and was subject to no covenant, or equity, which could avail to support a settlement as against his creditors: that the settlement of 1824 was therefore voluntary; was not made until the defendant Mitchell had become deeply involved in debt; and includes nearly all his property not covered by specific liens; and that it must, therefore, be unavailing to deprive the creditors of their right to the property for the satisfaction of their demands.
    4. That by the terms of the settlement, the use of the property is reserved to James D. Mitchell and wife, and to the survivor for life; and not to the separate use of the wife: that the defendant James D. Mitchell, is therefore entitled to an estate for his life, in the settled property ; and the same ought to have been declared liable to the complainants’ demands.
    The complainants likewise appealed from so much of the decree as dismisses the bill as to the defendants Robert Y. Hayne, Wm. A. Hayne and Joseph P. M’Call; and they moved that the same may be reversed, and the defendants Robert Y. Hayne and Wm. A. Hayne, decreed to exhaust the mortgage of the land, before having recourse to the mortgage of the slaves — on the following grounds:
    1. That the general creditors have a right to redeem; and therefore a right to refer the mortgagees to the fund, which it is most for the advantage of the general creditors should be first exhausted : and that the junior mortgagee of the land has no superior equity to restrain this right, in order to give him the benefit of a specific lien on a fund which he did not bargain for.
    2. That the mortgaged slaves were to be liable to the senior mortgagees of the land, only in the event of the latter proving insufficient to pay their debt; and they were therefore bound to exhaust the land, before they would have been permitted to proceed against the slaves : and the junior mortgagee of the land can have no equity, as against other creditors, to reverse the order of recourse to the two funds, and invest the senior mortgagees, for his benefit, with new powers, which they did not possess for their own.
    3. That the mortgaged slaves were bound by the lien of the complainants’ executions, subject only to the claims of the senior mortgagees of the land, if that fund should prove insufficient to discharge their debt; and the junior mortgagee of the land can have no equity to divest this legal lien of the complainants on the slaves.
    4. That even if the equities are equal, yet the equitable rule, in such case, should be to exhaust the several funds, in the original and legal order of their respective liabilities.
   Curia, per Johnson, Ch.

The decree of the circuit court, proceeds on the concession, that the settlement of 1824, standing alone, was void as to creditors, in consequence of the indebtedness of James D. Mitchell at the time, and that the marriage articles of 1809, are also void as to creditors, because they were not recorded within the time prescribed by the act of the Legislature, and the defence rests upon the naked ground, that the articles of 1809 were, notwithstanding, a valid consideration for the settlement of 1824. The act of 1785, (2 Brev. Dig. 45,) provides that all and every marriage contract, deed, or settlement,” if not recorded within the time and in the manner therein prescribed, should in respect to creditors, “be deemed, and is hereby declared to be fraudulent; and all and every part of the estate intended to be thereby secured to such person or persons, shall be subject and liable to the payment and satisfaction of the debts due and owing by such person or persons, in as full and ample a manner, to all intents and purposes whatsoever, as if no such deed, contract, or settlement, had ever been made or executed.”

Now let it be conceded, (and there is no question about its correctness,) that the articles of 1809, were valid between the parties, and that as between themselves they would constitute a sufficient consideration for the settlement of 1824. But what did the legislature intend by declaring, that they should be deemed fraudulent for want of recording, and that the property intended to be secured should be liable to debts in the same manner and to the same extent, as if they had never been made or entered into? Was it that the husband and wife should, by secret articles entered into before marriage, secure their estates, one or both, to the separate use of the wife and her issue, and hold out the husband to the world as the ostensible owner, that he might take his chance to improve his fortune, and when overwhelmed with ruin, to hold up the articles as a sufficient consideration for any settlement he might make ? Such seems to me inevitably the tendency of the doctrines relied on in support of the decree, but for myself I am constrained to conclude, that however valid they may be between the parties, the opposite conclusion was intended, and is clearly expressed in the act, that as to creditors, the unrecorded articles are of no more avail than if they had never existed, or had been “ blotted out forever.” If, as I conclude, the articles were valid between the parties, although not recorded within the time, then it follows that they were a sufficient consideration, as between themselves to support the subsequent settlement. — And if it had been entered into at a time when James D. Mitchell was unencumbered with debt, and had been duly recorded, there can hardly be a question that they would have been valid against subsequent creditors. But a settlement confessedly void as to creditors, can never be supported on a consideration equally void, as to them. In contemplation of the act, it is as though it never had existed.

The case of Stiles and the Attorney General, 2 Atk. 152, has been referred to in support of the decree, and I think it establishes that a voluntary bond, although void, is a sufficient consideration to support a subsequent bond for the amount due thereon ; but there were other circumstances in that case, on which I think the case turned. In that case, the Duke of Wharton had undertaken by bond, to pay an annuity to Dr. Young, for life, of £100, without any legal consideration; and subsequently by indenture, in which it was recited that he was in arrears, on account of this annuity, in the sum of £350, and that Dr. Young had quitted the service of the Earl of Exeter’s family, in whose employment he was, at the special instance of the Duke, by which he had lost an annuity of £100, he granted to Dr. Young an annuity of £100 for life, to be paid quarterly, in lieu of the said £350, and charged the same on his estate. Dr. Young, on his examination before the Master, stated that on the pressing solicitations of the Duke, and his assurances that he would provide for him more amply, he quitted the service of the Exeter family, and refused an annuity of £100, which had been offered him for life, provided he would continue tutor to Lord Burleigh; and the Lord Chancellor Hardwicke directed the annuity to be paid out of the sales of the estates, in opposition to the Duke’s bond creditors. Now in the loss which Dr. Young sustained by leaving the Exeter family and accepting the offer of the Duke, we have full, ample and valuable consideration for the second annuity, without resorting to the previous bond as a consideration to sustain it; there was no necessity for it, and it will be difficult to collect from the case itself, that it entered into the judgment of the court. So far as concerns creditors, to set up the naked bond as a consideration of the second annuity, would be in my judgment utterly irreconcilable with Lord Eldon’s judgment in Bury exparte, 19 Ves. 219. There, a voluntary bond, given by a bankrupt before the act of bankruptcy, was given up, and in consideration thereof, a new bond was substituted for the amount, and his Lordship remarks, that “the first bond was clearly good as between the parties, and had payment been enforced by process of law upon that security, it is very difficult to maintain that the money paid could have been recovered. The obligor, instead of payment, gives another bond, which was not voluntary, being given on cancelling the former security. If the transaction was tainted with mala fides — if the design was to substitute a bond upon consideration, in room of a voluntary bond, it would be effectual,” &c. But in the conclusion it was said, that there was an affidavit of the bankrupt’s insolvency, when he gave the second bond, and the Lord Chancellor said, “ if that could not be contradicted, he could do nothing.” It would seem, therefore, that the fact that the bankrupt was insolvent (for he had not committed an act of bankruptcy,) at the time the second bond was given, was regarded as sufficient evidence of mala fides to postpone it to other creditors. The obligor was bound by the first bond, to the whole extent that he would be by the second, and no other motive could have led to the execution of the second bond, but to substitute one which was valid, for that which was void as to creditors. In the language of Lord Eldon, “ that will not do.” Nor is there in Stiles and the Attorney General, any thing inconsistent with this conclusion. Direct proof of fraud is very rarely attainable — parties intending to perpetrate a fraud, never permit others to participate in the confidence, when it can be avoided; hence the necessity of inferring it from the attending circumstances. How, (let it be asked,) could it be expected that the creditors of the bankrupt, could prove that he had the secret intent to put his sister upon a footing of equality with his other creditors, by means of the second bond ? And on the other hand, would his most positive declarations that such was not his intention, satisfy one who reasoned about it ? The naked circumstance that the bond could have no other effect, furnishes the answer.

In the case cited, the first bond was good, between the parties and void as to creditors, for want of consideration. In the case at bar, the articles of 1809, were good between the parties, but void as to creditors, for want of recording. In that case, the court refused to set up the second bond, because the obligor was insolvent at the time ofits execution. In this, when James D. Mitchell executed the settlement in 1824, he was largely indebted to the complainants. He became, also, largely- indebted to other banks and individuals, and in the end surrendered all his estate not included in the settlement, which proved insufficient for the payment of his debts. In what do these cases differ.

• I have felt the full force of the argument in support of the decree founded on the nature of the consideration of the articles of 1809, and the settlement of 1824. There was not only the marriage, but the fortune of the wife. I have felt, therefore, the strongest inclination to support the settlement, if I could do so consistently with the law; but after the best consideration I have been able to give the subject, I am persuaded that it can not be supported on principle. I think I have before shown, that to do so would be in effect to write “repealed,” on the act requiring those contracts to be recorded. The motives leading to the execution of the settlement, however meritorious in themselves, furnish perhaps the most powerful inducement to give the claims under it, the precedence of other demands, and admits of no other proof than that which arises out of the circumstances. An attempt has been made to sustain the settlement, to the extent of Mrs. Mitchell’s interest in the proceeds of the sales of the real estate, to which she was entitled on the death of her mother Mrs. Waring, on the ground that her parting with her inheritance in that, constituted a new consideration for the settlement — from the facts stated in the circuit decree, it appears that' this estate had been, sold for partition, I suppose, under an order of the court, and had thus been converted into.money, which was paid over to the defendant Mitchell, by Wm. S. Smith. It had ceased to be realty, and the marital rights of the husband attached upon it as effectually as it would have done on any other chattel interest. I have looked through the circuit court decree, and the examination of Wm. S. Smith, taken before the Master, in the hope of finding something that would show, that the settlement was made on condition of his paying over the money to Mitchell; but on the contrary, Smith says that he does not “recollect that any thing was said about the settlement when the money was paid.” “ That after Mitchell received the share, he asked witness whether it would not be proper to make a settlement of it, and witness said it would be proper, as a compliance with the original settlement,” and he then made the settlement. There is, therefore, no support for this ground.

In other respects, I concur in the decree of the circuit court. It is therefore ordered and decreed, that so much of the decree of the circuit court, as dismisses the bill against the defendants James D. Mitchell and wife, and Wm. S. Smith, be reversed, and that the settlement of 1st March, 1824, in the pleadings mentioned, be and the same is hereby declared null and void, as against the complainants.

Johnston, Ch., Gantt, Evans, Butler, O’Neall and Eahle, Justices, concurred.

Harper, Ch.

I have not been able to see sufficient reason to change the opinion which I have expressed in this case. I would repeat that the question, and only question, is, whether the settlement of 1824 was fraudulent ? That was recorded in due time. There are various means by which fraud may be shown. In general, when fraud is spoken of with reference to creditors, it means some dishonest and unjustifiable contrivance to defeat creditors. Though a deed may be founded on full consideration, yet, if it were merely a contrivance to enable the grantor to defeat his creditors, by turning his property into money and escaping with it, this would be fraudulent, as in the case of Lowry v. Pinson, 2 Bail. 324, or in Twyne’s case. ' If a conveyance were made by a person greatly indebted to one of his family, on very inadequate consideration, this might be enough to satisfy the court of his fraudulent intention. There are a thousand dishonest schemes by which creditors might be defeated, but for the interference of the court. In all these cases however, the corrupt intention and dishonest device, must be established by proof. The court passing upon the transaction, must be satisfied that there existed what is called actual fraud.

If the conveyance be voluntary, however, and the grantor be indebted at the time, then without any express proof of fraudulent intention, or though the court may be perfectly satisfied that, in point of fact, there was no such fraudulent intention, yet by an artificial construction, the instrument is inferred to be fraudulent; such was the case of Izard v. Izard, Bail. Ch. R. (in press.) For this there are sufficient reasons. It would be difficult or impracticable to fix the degree of indebtedness, which should evidence the actual fraudulent intention, when a person makes a voluntary conveyance. Men are apt to be sanguine in their calculations; and a person even much indebted, making a gift, may still believe, in good faith, that he will be able still to pay his debts. A man is bound to be just before he is generous. According to the policy of the law, if some must suffer, it is proper that it should be those, even wife or children, whose claims on him are ex debito natures, rather than creditors whose claims are ex débito justitice. It can hardly be said that they suffer wrong in being deprived of that which they would not have had if their grantor had done justice to creditors, who may have trusted him on the faith of the property in his possession. But if there is any consideration, however inadequate, then the question is of bonafides or actual fraudulent intention. Union Bank v. Toomer, 2 Hill. Ch. 27.

It is no evidence of fraudulent intention, that a debtor should convey to one creditor in satisfaction of his debt, though both may know'that the effect of it will be to defeat other creditors. If authority were wanting for this, the subject is very fully considered in Niolon v. Douglass, 2 Hill. Ch. 443.

Then supposing this settlement to have been founded on a consideration: what is the evidence of actual fraudulent intention? The circumstances show conclusively the impossibility of any such intention. The articles of 1809, were not recorded within the time limited by the statute, and according to the strict letter of the law were void. They were recorded, however, within ten days afterwards. The defendant Mitchell, did every thing that was in his power to give notice to all'the world, of the claim which his wife had upon him. All of his debts, so far as appears, were contracted long subsequently to this period. .Creditors have lost no advantage which they could by possibility have had, if the articles had been recorded in due time. The property which was the consideration of the settlement of 1824, (not denied to be an adequate one,) had never been in the defendant Mitchell’s possession, and it is not to be supposed ’that creditors trusted him on the faith of it — unless, indeed, we suppose them to have found the articles on record, and thus to have ascertained his rights in it. But actual notice, as we have repeatedly decided, supplies the want of recording. It would be fraud in creditors to take advantage of the want of recording in due time, when they have had all the information which recording was intended to supply, and trusted the debtor with their eyes open. How idle would it then be to say, that finding the articles recorded after the proper time, creditors might be led to suppose the wife’s claim under them abandoned. The feme covert could not abandon them, and creditors must have known that the trustee could not abandon them without a gross violation of duty.

Then can the settlement of 1824, be regarded as voluntary? — . I confess that I hardly know how to argue this question. In addition to what I have said in the circuit decree, it seems to me, that the case exparte Bury, 19 Ves. 218, decided by Lord Eldon, is in point. In that case the bankrupt, had given a voluntary bond, and afterwards gave another bond in lieu of it and took it up, According io the rule of equity, a voluntary bond is void as to creditors, and will be postponed even to simple contract creditors.— Lechmere v. Earl of Carlyle, 3 P. W. 222; Lady Cox’s case, ib. 339; James v. Powell, 1 Eq. Ca. Ab. 84. The question in the case was, whether the second bond should have priority over simple contract creditors. Lord Eldon thought it might, inasmuch as the first bond might have been enforced at law against the obligor himself, provided that upon strict scrutiny it appeared that the second bond was not tainted with any degree of mala fides, as intending to substitute a valid security in place of one which could not have been enforced as against creditors. Accordingly, when it appeared that the second bond was given after the obligor had become insolvent, Lord Eldon said he could do nothing. Now, what was decided in that cáse ? Why that the first bond, though voluntary and void as to creditors, formed a valuable consideration for the second; but that the second bond was itself tainted with mala,fides, as intending to substitute a valid security in place of one that could not have been enforced against creditors ; and he decided against the second bond, not as being voluntary, but as being itself infected with actual fraud. But W’hat is that case, compared to the present. There the obligee was in truth and in fact, a mere beneficiary. She had paid no value — it could not be said that she suffered wrong, in being disappointed in a bounty which the obligor could not extend to her, consistently with justice to his creditors; there was no office for the registration of bonds, from which the creditors could obtain notice, and they must have been supposed to trust him on the faith of the property in his possession. Here, in addition to the marriage consideration, the defendant Mrs. Mitchell, has paid her money to the full value, so far as appears, of the benefit secured to her; the creditors have, in substance and effect, had all the notice which the law intended them to have, and they could hardly have trusted their debtor on the faith of property not in his possession.

This may serve to obviate the difficulties which are apprehended in relation to rendering nugatory the law for the registration of marriage contracts. If as suggested in argument, a man after marriage should make a voluntary agreement for a'settlement on his family, and keeping this private, should afterwards become indebted, and then should make the settlement, intending to substitute a valid security for one that was void as to creditors, this would make a case of actual fraud. In the present case, even if the articles had not been recorded at all, it would be 'difficult to say, that upon a fund of his wife’s, to which creditors could not have trusted, coming into his hands, the'husband was guilty of actual fraud in .making a settlement equivalent to it. It was no more than justice required of him. But as it is, the argument amounts to this, that an instrument, with respect to which the possibility of actual fraud is conclusively disproved, and which every consideration of justice, honour and conscience, required the grantor to make, must nevertheless be regarded as fraudulent, on account of its being voluntary, when it is plainly not voluntary, in any sense that it is possible to attribute to the term. I cannot but think the claim of the creditors utterly unconscientious.

Bailey & Dawson, for the motion.

Petigru; Mazyck, Perroneau & Finley, and Bentham & Holmes, contra.

Richardson, J., concurred with Harper, Ch.