Case ID: sc-eq_22/html/0055-01.html
Source: Caselaw Access Project
Author: {"author": "DunkiN, Ch.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

J. I. Gracey et al. v. B. F. Davis et al.
    
    Columbia,
    Nov. 1849.
    Where a deed is set aside as interfering with the rights of creditors, it is as to those creditors as if it had never existed.
    The effect of setting aside a deed which interferes with the’rights of creditors, is to leave the creditors to enforce their claims and obtain satisfaction according to then- legal priorities, or for the Court, if it take charge of the fund, to direct them to be paid according to their legal rank.
    The Court will not disturb legal liens.
    
      Before Johnston, Oh. at Columbia, June, 1849.
    The facts of this case will be sufficiently understood from the following decree of Chancellor Dunkin, pronounced at Columbia, June sittings, 1848.
    
      BILL FOR RELIEF, &c.
    ' Dtjnkin, Oh. — This case having been heard upon the bill and answer, and it appearing to the satisfaction of the Court that, although in executing the deeds mentioned in the pleadings, the defendants intended no fraud whatever against the creditors of the defendant, B. F. Davis; but, on the contrary, made in said deeds what they supposed at the time ample provision for the payment of all his debts; and that the leading object in executing said deeds was to make an equitable division of the property between the defendants, B. F. Davis and Mrs. Gracey W. Davis; yet as it has turned out that the debts against the defendant, B. F. Davis, were much greater than was estimated, and to an amount exceeding in all probability the entire value of the property, it would effect injustice to said creditors to allow said deeds to remain in force; nor do the defendants resist the sale of said property for the purpose of paying said debts — the defendant and trustee, Dr. Joel R. Adams, contends that out of the sales thereof, he should be first indemnified for the amounts heretofore paid by him, according to the provisions of said deeds, and intended to be more fully secured by the said confession of judgment to him by the defendant, B. F. Davis; which appears to be altogether just and equitable.
    It is, therefore, ordered and decreed that the said deeds of trust be set aside in favor of the creditors of the defendant, B. F. Davis, existing at the date of the last mentioned deed; that the interest of the defendant, B. F. Davis, in the said tract of land, containing sixteen hundred and ninety-eight and a half acres, allotted to him in right of his wife, the defendant, Mrs. Gracey W. Davis, out of the landed estate of her father, James Adams, deceased, described in the said first mentioned deed, and the slaves named in said deeds of trust, together with the other personal property therein mentioned, and in the name of the defendant, Dr. Joel R. Adams, as trustee of the defendant, Mrs. Gracey W. Davis, (except her piano,) be sold for cash by the Commissioner of this Court, at public auction, upon the usual and legal notice of sale— the land and slaves before the Court House in Columbia, on the first Monday in February next, or on some public sale-day thereafter, and the remaining personal property on the premises, on the day after the sale of the land and slaves ; that said Commissioner do pay out of the proceeds of said sales the costs of suit of both complainants and defendants, and also pay to the defendant and trustee, Dr. Joel R. Adams, the said amounts advanced and paid by him on account of the debts against the defendant, B. F. Davis, as set forth in his answer and exhibit therewith marked W, together with interest thereon, and retain in his hands the balance of the proceeds of said sales, subject to the future order of this Court.
    It is further ordered and decreed that the defendant, Dr. Joel It. Adams, trustee as aforesaid, do account to the Commissioner for the rents and profits of said land, the hire of said negroes, and the proceeds of the crops which he has received, or may hereafter receive, together with the interest thereon, and that the said account be carried up to the time of the sales of the property under this decree; in which accounting the Commissioner will ascertain and report what shall be a reasonable allowance for the support and maintenance of the defendant, Mrs. Gracey W. Davis, up to the time of said sales.
    It is further ordered and decreed that the Commissioner do ascertain and report upon the amount of indebtedness of the defendant, B. F. Davis, previous to the date of the said last mentioned deed ; and upon the amount of said‘debts secured by liens of judgment, or otherwise'secured, and the dates respectively of such liens and securities, as well those which are omitted, as those which are mentioned in the bill; and that he advertise for the creditors of the defendant, B. F. Davis, previous to the 10th of January, 1846, to appear and establish their demands before him before the first day of January next.
    On the coming in of the Commissioner’s report, the following decretal order was made :
    Johnston, Ch. — The Commissioner having reported, amongst other things, a balance in his hands in this case of ten thousand five hundred and fifty-four dollars and seventy-six cents, and upon hearing argument in behalf of the judgment creditors of B. F. Davis on one. side, and of his obligation and simple contract creditors on the other, and it appearing from the pleadings in the cause, as well as from the decretal order made in June last, that no fraud whatever was intended by any of the parties m executing the said deeds of January, 1846 ; and it further-appearing that said judgments have been obtained since that period, the Court is of opinion that the said funds in the hands of the Commissioner are equitable assets, and must be distributed accordingly:
    Thereupon, it is ordered and decreed that the Commissioner do pay the said fund in his hands, as specified in his report, after paying the costs that have remained unpaid, and that have accrued since the said decretal order, and after paying a proper fee to the solicitor or solicitors who brought the general bill on behalf of the creditors, the amount of which fee shall be determined by the Commissioner on satisfactory evidence, to the said judgment creditors, obligation creditors, and simple contract creditors, of said B. F. Davis, whose debts have been established before him, including the claims t of David R. Evans, B. D. Boyd, assignee, David English ' an(I John J. Kinsler, assignee; provided the said David Eng-jjsh sfja]i establish his claim before the Commissioner to his satisfaction, on or before the tenth day of August next; and provided also, that the order relative to the claim of B. D. Boyd, assignee, shall not be overruled by the Appeal Court.
    Bail. Eq. 328.
    20 J. R. 442. 10 do. 508.
    4J C R 687 ‘
    1 Hill C. R. 293; 1M'Mul. Eq. R. 34. Rich. Eq. R. 220.
    The Court, as before stated, being satisfied that the above funds are equitable assets, and distributable accordingly:
    It is further ordered and decreed that they be paid over to the above specified creditors of B. F. Davis pari passu, or in proportion to the amounts of their respective debts.
    Inasmuch as there is an appeal from the order of the Court in reference to the claim of B. D. Boyd, assignee:
    
      It is further ordered, That the proportion of the aforesaid fund to which the said B. D. Boyd, assignee, may be entitled, shall be invested in some safe security by the Commissioner, till the further order of this Court.
    The judgment creditors of B. F. Davis appealed from so much of the decree as directs thq,t the creditors shall be paid pro rata, and submitted that the decree be so modified that the judgment creditors shall be paid before the simple contract and bond creditors, and according to the priority of their liens.
    
      W. F. DeSaussure, for the motion.
    
      Tradewell and Gregg, contra.
   Curia, per

DunkiN, Ch.

Where a deed is set aside as interfering with the rights of creditors, it is, as to those creditors, as if it had never existed. A party may honestly conceive himself able to make a settlement, and yet reserve an abundant estate to satisfy his creditors, as in Izard v. Izard; or, as in this case, he may, by the deed, provide a fund for the payment of debts, and settle the residue. In neither case is there any moral fraud. But, in both, the deeds were set aside, because the fund, supposed to be abundant, proved insufficient. The effect of setting aside the deeds is to leave the creditors to enforce their claims and obtain satisfaction according to their legal priorities; or, if this Court takes charge of the fund, to direct them to be paid according to their legal rank. This rule has been well established from an early period; see Austen v. Bell and Codwise v. Golston; nor js the Court aware of any decision to the contrary. The PriuciPle is ^Hy recognized by the Court in McDermott v. Strong, and has been uniformly regarded by our own Courts, as may be seen by reference to the cases of McMeekin v. Edmonds and Fuller v. Anderson. The principle is, that this. Court will not disturb legal liens. If, as in Le Prince v. Guillemot, the assigned estate has been sold, and only the fund was in the hands of the assignee when judgment was rendered, the judgment created no lien, and the judgment creditor was held entitled to no priority. But, in the case before the Court, the property was subject to a lien until the sale by the Commissioner, the voluntary deed of the debtor being regarded as a nullity.

It is ordered and decreed that the appeal of the execution creditors be sustained, and that the decretal order be reformed according to the principles herein declared.

The whole Court concurred.

Decretal order reformed.