Case Name: Spence v. Bagwell & als.
Court: Supreme Court of Appeals of Virginia
Jurisdiction: Virginia
Decision Date: 1849-10
Citations: 6 Gratt. 444
Docket Number: 
Parties: Spence v. Bagwell & als.
Judges: 
Reporter: Virginia Reports
Volume: 47
Pages: 444–451

Head Matter:
Richmond.
Spence v. Bagwell & als.
1849. October Term.
(Absent Cabell, P. and Daniel, J.)
A deed of trust held to be fraudulent on its face, though executed to indemnify a bona fide surety.
This was an action upon an indemnifying bond brought in the Circuit court of Lynchburg, in the name of Pawlett Clarke, sheriff of Campbell county, at the relation of David E. Spence, against John W. Bag-well and others, the obligors in the bond. The plaintiff sought to recover damages for the seizure and sale of two slaves under an execution in the name of Bagwell, Smith of Jones against William B. Jones.
Upon the trial of the cause the defendants demurred to the evidence, and the Court compelled the plaintiff to join in the demurrer: And there was a verdict for the plaintiff subject to the demurrer to evidence.
The relator claimed the property as trustee in a deed of trust executed to him by William B. Jones; and the only question upon the demurrer was, whether the deed was or was not fraudulent upon its face. If it was not, the evidence fully made out the plaintiff’s case.
The deed bears date the 1st day of November 1841, and is between William B. Jones of the first part, David E. Spence of the second part, and David P. Reese and all the creditors of Jones, who at the date of the deed, resided in the town of Lynchburg. It recites that Reese is bound as endorser of Jones on various negotiable notes, amounting in the aggregate to about the sum of 2600 dollars, which notes are payable either at the Virginia or Farmers Bank in Lynchburg; and that it was agreed between them he would endorse other • notes for the purpose of renewing those already in existence; and that it may be that Reese will endorse other negotiable notes for said Jones, besides those to be endorsed for the renewal of the notes aforesaid; and that Reese is the security of said Jones in various bonds executed by Jones to divers persons whose names are not now remembered, and that said Jones is indebted to various persons then residing in the town of Lynch-burg, in divers amounts not now remembered, and it is the purpose of said Jones to indemnify said Reese in the first place, and then to secure the payment of the other debts referred to. And it was further declared that any creditor intended to be secured by the deed, who should, on or before the 1st of March 1843, proceed by suit or by any legal process whatever, against the said Jones for the recovery of their respective debts, should be debarred from any right or benefit under the deed.
The deed then proceeded to convey to Spence a tract of land in the county of Campbell, certain slaves, and among them the two sold under the execution of Bagwell, Smith & Jones, one shot gun, one mantel clock, the tobacco factory of the said Jones, with the fixtures, one hundred and fifty-eight boxes of tobacco then in the possession of Fisher & Co. of Boston, and about two thousand pounds of bacon. The trusts were that Jones should be permitted to remain in possession of the property, and to use the same and enjoy the profits thereof until the 1st of March 1843. That he should be considered the agent of the trustee, with full power and authority to sell or dispose of any of the property conveyed, at private or public sale for cash, and to give title thereto, and to collect the proceeds of sale. But upon the condition that he should immediately pay over to the trustee all moneys received by him from said sales, which the trustee should apply to the payment or curtailment of any of the said notes or bonds on which Reese was bound, as the said Reese might direct.
And it was expressly provided, that should the said Jones pay off in whole or in part any or either of the negotiable notes upon which said Reese was bound as his endorser, by moneys not raised by a sale of the trust property, then the said Jones should be considered as a creditor of the trust fund, and might retain for his own use and benefit, of moneys which he might receive on a sale as aforesaid, an amount of money corresponding with that so paid by him.
And it was further provided', that if the debts secured by the deed were not paid by the 1st of March 1843, then the trustee, when required by Reese or the said Jones, should proceed to sell at auction, as prescribed in the deed, and should first pay off the debts for which Reese was bound, and then all others secured by the deed, which Jones should certify .as correct and a proper charge upon the fund; and the balance of the trust fund should restore to Jones. This deed was admitted to record in the clerk’s office of the Hustings court of Lynchburg, on the acknowledgment of Jones, on the 4th day of April 1842.
There was a judgment for the defendants on the demurrer to evidence. Whereupon the plaintiff applied to this Court for a supersedeas, which was awarded.
Garland, for the appellant.
The demurrer to evidence concedes the credibility of all the evidence, all the inferences which could have been fairly deduced by a jury, in favour of the appellant, and the bona fide intention with which the deed was executed.
The simple question then is, is the deed of trust of the first of November 1841, void per se 1 The only provision in the deed to which the slightest exception can be taken, or the slightest inference to the prejudice of the deed be drawn, is the following: “ And upon this further trust, that the said Jones shall be considered the agent of the said trustee Spence, and shall have full power and authority to sell or dispose of any of the property herein before mentioned, at private or public sale, for cash, and to collect the proceeds of such sale or sales, but upon the following condition: The said Jones shall immediately pay over to the said trustee Spence, all moneys which he may raise, receive or collect from or by the sale of any of the property herein before mentioned, and such moneys shall, by the said Spence, be applied to the payment or curtailment of any or either of the said notes or bonds upon which the said Reese is bound as the endorser or security of the said Jones, as the said Reese may direct.” When it is considered that this deed was executed on the 1st of November 1841, and if the vendor is in default, authority is reserved to the trustee to close it after the 1st of March 1843; that Jones the vendor, was constituted a mere agent ad interim, to sell, receive and pay over the money received, to the trustee, for the purposes of the trust, and that, as conceded by the demurrer, it was done in good faith, 1 cannot perceive how this provision can vitiate the deed.
The power of a trustee to appoint an agent, when his own commission authorizes him to do so, I imagine cannot be doubted, and the exercise of the power is valid, unless coupled with a fraudulent design. In this case the deed of trust created the agency of Jones, and was certainly valid, unless coupled with a fraudulent design, which is not only not pretended, but admitted not to have existed. If the agent had betrayed the confidence of the trustee and cestuis que trust, the loss would have fallen on the cestuis que trust.
The object of the statute of frauds was to punish fraudulent design, and the object of the Courts has been to protect against fraudulent design. In this case this object cannot be achieved, because it is conceded , that there was no fraudulent design. This Court, in Skipwith’s ex'or v. Cunningham, 8 Leigh 271, decided , , ' that “the statute to prevent fraudulent conveyances applies to no conveyance made bona fide, for valuable consideration, and does not prevent a debtor in failing circumstances, from preferring one class of creditors to another.” In the cases of Jackson v. Timmerman, 7 Wend. R. 436; Seward v. Jackson, 8 Cow. R. 405 ; Jackson v. Peck, 4 Wend. R. 300, the Supreme court of New York established the doctrine, “that there is no such thing as fraud in law distinguished from fraud in fact; what was formerly conclusive evidence of fraud is now held to be but prima facie evidence, to be submitted to the jury;” and this I understand to be the doctrine of this Court established in the recent case of Davis v. Turner, 4 Gratt. 422. The bona fide intention in this case being admitted, these cases conclusively overrule the judgment of the Court below, sustaining the defendants’ demurrer.
It may be, and I doubt not will be, attempted to sustain the judgment of the Court below, by the authority of this Court in the case of Lang v. Lee, 3 Rand. 410. The Court is invited to compare the provisions of the deed in the case of Lang v. Lee, with the provisions of this deed, and it will perceive that the powers reserved to the vendor over the trust property in that case, were very different from those reserved to the vendor in this case; indeed there is scarcely any similitude. In that case the whole deed is beset with fraudulent circumstances ; in this there is not one. In that case there is no satisfactory proof of bona fide intention ; in this it is conceded and the case put, solely, upon the ground of fraud per se. But if the provisions of the two deeds were similar, I consider the case of Lang v. Lee, so far as it established the doctrine of fraud per se, as overruled by the case of Davis v. Turner, and no presumption of fraud can attach to this deed, because the demurrer concedes the bona fide intention : and if it did not, it is proved. The case of Lang v. Lee, however, is no authority in this or any other case, even if it applied. It was decided, so far as the question of fraud per se was concerned, by only two Judges.
Fraud, according to the established doctrines of this Court, being a question of fact, ought to be determined by a jury. In this case the question of fraud was made one of law and not of fact, while it was conceded that in fact there was no fraud. It seems to me, from these views, that the judgment of the Court below is erroneous, and ought to be reversed and a judgment rendered for the appellant according to the verdict of the jury.
Stanard & Bouldin, for the appellees.
The only question is, whether the deed upon its face is or is not fraudulent. The counsel for the appellant seems to suppose that the demurrer to evidence concedes the bona fides of the deed: But this we submit is a mistake. The utmost extent to which it can go is to concede the facts which the parol proof tends to establish, and the fair inferences of fact which may be deduced from it, and from the deed. Tutt v. Slaughter, 5 Gratt. 364; Green v. Judith, 5 Rand. 1.
The parol proofs shew that Reese was bound as endorser for the grantor in the deed. Then if the deed provides for benefits to the grantor, and Reese consented to this provision either willingly or unwillingly, the deed is fraudulent. Garland v. Rives, 4 Rand. 282. In that case there was no fraud in Garland, and yet he having taken the deed, though unwillingly, with the fraudulent provision in favour of another, the deed was held to be fraudulent. In Twine’s Case, 3 Coke’s R. 80, the deed was for value, yet because of other provisions in the deed it was held to be fraudulent.
In this deed we insist that there was a reservation inconsistent with the deed, and that it was therefore fraudulent. Sheppards v. Turpin, 3 Gratt. 373; Lang v. Lee, 3 Rand. 410. The first badge of fraud in this deed is, that it bears date on the 1st of November 1841, and was not admitted to record until the 4th of April 1840, That was one badge of fraud in Lang v. Lee. A second badge of fraud is, that not one debt is specified. This was also the case in Lang v. Lee. These two with another condemned the deed in that case. That other was that the grantor was allowed to remain in possession of the property for nine months with power to sell, and with the duty to account to the trustee for his sales. Here Jones was allowed to have possession for sixteen months, with power to sell, and as agent to account to the trustee. So that this case is stronger than Lang v. Lee.
A fourth badge of fraud is, that the grantor reserves a power of indefinite future charge. In this it is like Sheppards v. Turpin. A fifth is the provision reserving to Jones an interest in the property, and constituting him a creditor on his own trust fund. This is condemned by Garland v. Rives, supra; and Twine’s Case. A sixth is, that no person but Reese or Jones is authorized even after the 1st of March 1843, to require a sale of the trust property. And a seventh badge of fraud is, that after Reese is indemnified, the trustee is not allowed to pay any debt unless Jones certifies it.
We know but one case which can be relied on to sustain this deed against any one of the foregoing objections: that is Janney v. Barnes, 11 Leigh 100. In that deed the grantors were authorized to act as agents of the trustee for a short period. But the deed provided that the trustee should assume the debts of the creditors to a greater amount than the value of the goods conveyed. There, too, the possession of the grantors only continued about four months; and before the suit was brought the trustee had taken possession of the property: And then the deed was only sustained so far as to indemnify the trustee.
Judge Daniel had been counsel in the cause in the Court below.

Opinion:
By the Court.
The judgment is affirmed.