Case Name: Eacho v. Cosby
Court: Supreme Court of Appeals of Virginia
Jurisdiction: Virginia
Decision Date: 1875-03
Citations: 26 Gratt. 112
Docket Number: 
Parties: *Eacho v. Cosby.
Judges: The other judges concurred in the opinion of Staples, J.
Reporter: Virginia Reports
Volume: 67
Pages: 48–53

Head Matter:
*Eacho v. Cosby.
March Term, 1875,
Bichmond.
1. Court of Appeals—Jurisdiction—Amount in Controversy. —E flies his hill against the administratrix of 0, to obtain possession and sale of property conveyed by 0 in trust to secure a debt to E of $1000. E charges that there is still due to him $610. The answer denies that there is any debt due from C to B. The property was not worth $500. As the existence of the debt is involved in the decision of the case, the Court of Appeals, has jurisdiction of the case upon appeal by E.
2. Equity Jurisdiction—In'the progress of the suit in the court below a part of the property is sold under a decree by consent, and the proceeds deposited in bank to the credit of the cause, and the rest of the property is by like consent, decreed to the defendant upon her giving bond with security to pay $300, upon a decision in favor of the plaintiff. If the case was not one of which equity had jurisdiction originally, yet the court having taken jurisdiction and taken possession of the property and disposed of it, must proceed to decide the case.
,3. Deeds of Trust—Validity as Security.—The deed of trust purports to he given to secure a note for $1000 given for the loan of that sum by E to 0. Though the note may not have been delivered by CtoHt yetsif he owed E a debt for which the note was to be given the deed is a valid security for it.
4. Same—Same—Appeal—Reversal.—The enquiry before the commissioner being as to the execution and delivery of the note spoken of in the deed, and the commissioner reporting that there was no satisfactory evidence of the delivery, and the court haying dismissed the hill, the decree will be reversed and the cause sent back for an enquiry whether O was indebted to E in a debt intended to be secured by the deed.
g. Witnesses—Competency.—The trustee in the deed is made a party plaintiff with E, in the original bill, but his name is omitted in the amended and supplemental bill. He Is under the statute a competent witness to prove what passed between O and E and himself as to the preparation of the deed and note; he under the circumstances not being • liable for the costs.
6. Same—Same.—The deed provides that upon a sale of the property by the trustee he *shall receive five per cent, upon the amount of the sales. As all the property has been disposed of by the court, and the trustee therefore can never sell it, even if his right to commissions on a sale by him would render him an incompetent witness, it cannot affect his competency under the circumstances of this case.
In November 1870 Andrew Jenkins and Edward D. Bacho filed their bill in the Chancery court of the city of Richmond against Eliza Cosby in her own right and as administratrix of A. J. Cosby, in which they set out that on the 29th of March 1869 one Andrew J. Cosby, of the city of Richmond, applied to said Bacho for a loan of $1000, which said Bacho loaned to him in good and legal currency of the United States; and that on the same day said Cosby executed a note payable to Bacho for the sum of one thousand dollars, payable eleven months after date, at the Planters National Bank of Richmond. That at the same time Cosby made and executed a deed of trust dated the 25th of March 1869, by which he conveyed to said Jenkins, the following personal property viz: one close carriage and harness, one open buggy and harness, two bay horses, one brown horse, one bay horse with one eye, one bay mare and colt and one cow, then in the use and possession of the said Cosby at his stable in the city of Richmond, in trust to secure the said note from Cosby to the said Bacho; and upon the failure to pay the said note when it fell due, the trustee, upon the request of said Bacho, should sell the said property; and upon such sale the trustee should have a commission of five per cent, on the whole amount of sale, &c.
■ The bill further states that the note was not paid when it fell due; but at various j I times during the life of Cosby, he before and after it fell due, paid Bacho sundry small sums on account of the note, by which *the amount due was reduced to $640; and this amount was due when Cosby died on the — day of- 1870. That Eliza Cosby qualified as administratrix of said Cosby in 1870; and that she failed when applied to, to pay the debt. That he thereupon directed Jenkins, the trustee, to sell the property under the deed of trust, and he accordingly advertised it for sale; but when they went to the place of sale, the said Eliza Cosby and her counsel warned them from the premises, and violently and peremptorily drove them off, and prevented the sale of the property.
They further say that the property is wholly and completely in the possession of said Eliza Cosby; that she is insolvent in her own right; so that any remedy at law would be fruitless; and plaintiffs apprehend from her past conduct, that she will eloign the property and secrete it or dispose of it so that plaintiffs will be defrauded of their rights thereto. And said A. J. Cosby left no other property out of which the plaintiffs could obtain satisfaction of their debt.
The prayer of the bill was for an injunction to restrain the said Eliza Cosby, either in her own right or as administratrix, from interfering with the property mentioned in the deed of trust; and that the court would appoint a receiver to take possession of it; that all proper questions touching the rights of the plaintiffs to the property might be tried and decided by the court; and for general relief.
The court granted the injunction as prayed for, and directed the officer of the court to take possession of the property and to preserve and keep it safely until the further order of the court.
The officer reported to the court that he had taken possession of one horse, one carriage and harness, and one buggy and harness. And it was agreed between *Bacho and Eliza Cosby that the officer should sell the horse, and deposit the proceeds of the sale in bank to the credit of the cause; that he should deliver the carriage and harness to her upon her giving security which was satisfactory to the officer, for the sum of $300, to be paid to Bacho with interest, if the court should decree that the carriage and harness was embraced in the deed of trust; and that he should deliver to her the buggy and harness, Bacho laying no claim thereto.
The cause came on to be heard on the 13th of December 1870, upon the bill and exhibits, and the report and agreement aforesaid; and the court not at that time adjudicating any question touching the title to any of the property in controversy, decreed that the officer should sell the horse and deliver the carriage and harness as agreed by the parties, Eliza Cosby having given the bond, and also deliver to her the buggy and harness.
In January 1871 the defendant filed her answer. She admitted that she as administratrix came into the possession of the carriage, horse and buggy, and had them appraised as a part of her intestate’s estate. She denies the right of Hacho to interfere with her possession of the property, because she does not believe there is any such note as is described in the bill in existence, and she calls for its production, if any such there be. That the carriage seized under the authority of the court is not the carriage referred to in the deed filed with the bill: that the deed describes the carriage therein mentioned as a close carriage, and this is an open carriage:—that said A. J. Cosby did have a close carriage at the time of the execution of the deed, which he afterwards sold, after as she supposes, he considered the deed satisfied; as indeed he *did sell all other property mentioned in said deed, except the horse and buggy in possession of the officer. And that A. J. Cosby lived nearly nine months after the maturity of the note aforesaid, and never did she hear one word of complaint from plaintiff about her husband’s disposing of the property mentioned in the deed, or of any effort on his part to enforce the provisions of said deed until since his death. On the 25th of February 1871 the court made an order referring the cause to a commissioner with instructions to ascertain and report:
1st. Whether the note in controversy was actually given as alleged in the bill; and if given, whether the same, or any part thereof, has been paid; and if any amount has been paid thereon, what amount, and what is s.till due; and all the evidence produced before him touching the existence of said note.
2d. Whether the property taken by the sheriff under the restraining order in this cause, is, in reality, a portion of the identical property embraced in the deed of trust; and any other matter deemed pertinent to the issue, or demanded to be reported by either of the parties.
In May 1831 the commissioner returned his report, and with it the evidence before him. A part of this evidence was the depositions of the plaintiffs Hacho and Jenkins; which were excepted to by the defendant.
The commissioner in his report refers to this exception, and considers it well founded: the parties testifying to matters relating to the note and deed of trust, and Cosby' the other party to these transactions being dead. And rejecting that testimony he reports that upon the first enquiry, the evidence in the cause is not sufficient to show that the note in controversy was actually given as alleged in the bill. And upon the *second enquiry, the carriage and harness being the only portions of property in controversy, the evidence was not sufficient to show that the carriage and harness taken by the sheriff, is in reality a portion of the identical property embraced in the deed of trust. The plaintiff Hacho excepted to the report of the commissioner so far as it excluded the evidence of Jenkins. He also asked that the report might be recommitted on the ground of after discovered evidence. And he filed his affidavit stating that he had discovered evidence as to the identity of the property, and giving the names of the witnesses.
In January 1872 the cause came on to be heard upon the papers formerly read and the report of the commissioner, with the exception thereto, and upon the affidavit of Eacho; and thereupon'the plaintiff asked leave to file his amended and supplemental bill; which application was opposed by the defendant; and the court allowed him to file the bill upon his paying the costs of the reference to the commissioner; which was done. And thereupon the defendant filed her demurrer and answer to the same; and the plaintiff replied generally to the answer, and joined in the demurrer. And by consent the cause came on again to be heard, when the court overruled the demurrer, and recommitted the report to the commissioner, and directed him to report all the facts and circumstances attending the making the contract, the note and deed of trust mentioned in the original and amended bill, and whether the note in controversy was ever executed by A. J. Cosby, and if executed what has become of the same; and whether the property taken by the receiver is the same, or a portion of the same conveyed in the said deed of trust, and other matters, &c.
The amended and supplemental bill is by Hacho *alone. In this bill he states that when he loaned the money to Cosby, he employed Andrew Jenkins, a real estate agent in Richmond, to act as trustee and take the said note. Jenkins drew said deed and note, and reported the transaction with Cosby as complete; and as he said nothing about the note plaintiff supposed he as his agent had kept it. And thus supposing when it became necessary to apply for the injunction, plaintiff supposing that Jenkins had the note, charged the existence of it in the bill. He says by way of amendment and supplement of said bill, that he was mistaken in supposing that the said note was delivered. He now charges that the note was not delivered to him or to said Jenkins, through the inadvertence of said Cosby; plaintiff being unwilling to think that the same was fraudulently withheld. Plaintiff nevertheless charges that the debt was contracted as alleged in the bill for borrowed money; and that it is unpaid except as admitted in the original bill, and is now a valid and subsisting demand against Cosby’s estate, fully evidenced and secured by said deed of trust. He believes the note was among Cosby’s papers when he died, and since then has been and may be now in the possession of his administratrix^ And he calls upon her to say whether of not the note has been or is now in her possession, and if so to produce it.
In her answer the defendant says she does not believe that said Eacho loaned to her said husband A. J. Cosby, on the 25th of March 1869, or at any other time, one thousand dollars, or any other-sum of money, as alleged in said original and amended bills, and she calls for proof of any indebtedness of her late husband to said complainant. That no such note as that described in complainant’s bill has ever been seen by her among her said husband’s papers, or ever came *into her possession; and she cannot believe that complainant would have loaned her husband one thousand dollars without taking from him a note acknowledging his obligation for the same.
The commissioner returned his report with the additional evidence taken, and says that the pleadings and°evidence in the cause since his former report, were not sufficient to induce him to come to a different conclusion from that before reported, and therefore he reports:
1st. That the note in controversy was not executed by said A. J. Cosby deceased.
2d. That the carriage and harness now in controversy, and which were taken into custody by the receiver in this cause, was not a portion of the same property which was conveyed by. the said A. J. Cosby to Andrew Jenkins, trustee, by the deed filed with the bill.
This report was excepted to by the plaintiff.
The cause came on to be finally heard on the 27th of February 1872, when the court overruled the plaintiffs exception to the commissioner’s report, and confirmed the same, and after authorizing the defendant to check for the sum of $74.47 deposited in bank by the receiver as the proceeds of the sale of the horse, dismissed the bill with costs. And from this decree Bacho applied to this court for an appeal; which was allowed.
Bxcluding the testimony of Bacho and Jenkins, there was little evidence of the indebtedness of Cosby to Bacho, except that furnished by the deed of trust. That states the trust to be—“to secure to Bdward D. Bacho, of the city of Richmond, the payment of the sum of one thousand dollars due by note drawn by the said Andrew J. Cosby, and payable eleven months *after date, and negotiable and payable at the Planters National Bank of Richmond.” The deed was admitted to record on the 23d of April 1869 upon the acknowledgment of Cosby in the office. Jenkins proves his preparation of the deed and note at the request of Cosby, who stated that he owed Mr. Bacho some money, and that he had purchased a new carriage, and Mr. Bacho was going to let him have some more money to pay for it, upon condition that he Cosby was to execute a deed of trust upon that and some other property for the sum of one thousand dollars.
The most of the other testimony related to the identity of the carriage taken by the officer of the court with that mentioned in the deed; and as to that the evidence was unsatisfactory. It seemed to be strongly probable, if not certain, that the carriage in the possession of the officer was purchased in May 1868.
H. A. & J. S. Wise, for the appellant.
Guy & Gilliam and Spilman, for the appellee.
Court of Appeals—Jurisdiction—Amount in Controversy—See Campbell v. Smith, 32 Gratt. 288, and note, citing the principal case; 1 Min. Inst. (3rd Ed.) 1063, and cases cited.
Trust Deeds—Insufficiency of Trust Property to Pay the Debt—Personal Liability of Grantor.—In Watkins v. Dupuy, 87 Va. 87, the principal caséis cited, for the proposition that where property upon which a deed of trust is given to secure a debt is insufficient to pay it, in the absence of stipulation to the contrary, the beneficiary is a creditor of the grantor for the deficiency.

Opinion:
Staples, J.
The first question which is
presented at the threshold is the objection to the jurisdiction of this court. It is insisted that the only matter in controversy is in reference to the property in dispute, which is of less value than five hundred dollars. But this is an entire misconception. It is true that the main object of the bill is to recover the property embraced in the deed of trust, and to subject the same to the appellant's lien; but the claim asserted by him amounts to six hundred and forty dollars. The justice of this claim is controverted by the appellee, and was the subject of adjudication in the Chancery court. That court was of opinion the claim was not sustained *by the evidence, and entered a decree dismissing the bill, without passing upon the questions arising in respect to the property. If we affirm that decree, the appellant is forever barred of recovering his debt. If we reverse upon the merits, a decree will be rendered in his favor for the amount claimed by him, or for such further inquiry as may ultimately lead to such a decree. So that in fact the principal matter in controversy here does not relate to the identity of the property, but to the validity of a claim greatly exceeding the amount necessary to the jurisdiction of this court. It would be difficult to imagine a case coining more directly within the principle governing the jurisdiction of this court.
The next ground of objection is, that the appellant has a plain and adequate remedy at law. The bill is filed by a creditor in a deed of trust against the personal representative of the debtor or grantor in the deed. The bill avers that the trustee attempted to take possession of the property with a view to a sale, but was forcibly prevented from so doing by the appellee and others combining with her; that the appellee is insolvent; that her securities upon her official bond are not responsible for the torts of the appellee in illegally detaining the trust property; and that strong reasons exist for believing that she will eloign or so dispose of it as to place it beyond the reach of the process of the court. None of these allegations are denied in the answer, though the justice of the debt is strongly controverted. They may, therefore, be taken as true for all the purposes of the question of equity jurisdiction. These facts taken in connection with the loss or absence of the note referred to in the bill, I am inclined to think would have justified the jurisdiction of equity, if nothing else had occurred, however this may be, it appears that no objection was made in the court below upon this ground. In the progress of the cause an order was entered by consent for the sale of a part of the property, and another part was taken by the appellee under an agreement to account for its value in the event of an adverse decision; so that it is simply impossible for the appellant or the trustee now to maintain an action for the property. In this state of things to dismiss the bill for the want of jurisdiction, would be to deny the appellant redress in any form. This court having control of the fund, ought to go on and administer it according to the fights of the parties. Upon this point Henly's adm'r v. Perkins, 6 Graft. 615, is a direct authority.
The next question is as to the correctness of the decree upon its merits. The learned judge of the Chancery court was of opinion, that "as the deed of trust refers to a negotiable note a's the direct evidence of the debt, in order to complete that evidence it is incumbent upon the appellant to show that the note was not only executed by Cosby but delivered also; for although the deed of trust'was recorded, the transaction was not consummated and complete until the note was delivered. ' ' The learned judge is certainly correct in stating that delivery is essential to the validity of a negotiable note. But the question of delivery is only important when the action is on the note, or it is sought to charge one who is only liable by reason of ¿bfeing a party to the instrument. When 'a debt exists independent of the note, the action'is often upon 'the original Consideration. If oné is indebted to another fot ¿bods sold or money loaned, and executes therefor an instrument which 'is invalid, Or'which is never delivered, I imagine there cari be- no question as to the creditor's right ' ' - Of recovery upon the original cause of ^action. If in such case the debtor executes a deed of trust or mortgage to secure thé debt, and in the deed refers to' a note', it will scarce be maintained that the d'eed is a nullity because there is a failure,''fraudulently or negligently, to execute and deliver the note.' The true inquiry is doe's the debt exist? 'is it due? When this is satisfactorily ascertained the form of the security is important so far only as it affects the remedy. It is not essential there shall be ariy bond or note whatever. The deed of trust-or mortgage will be valid without any ótllfe'rífe'vidéncfe of the debt than is furnished by it's" 'ówri 'recitáis. As was said by Mr. Justice Story in Rlagg v. Mann, 2 Sum. R. 94, the true question is whether there is still á debt subsisting between the parties capable Of being enforced in any way in rem or in personam.' 2 Nash on Real Prop. 48, 49.
In this case the non-delivery of the note is a material circumstance proper to be considered in determining whether a debt is due. It may more or less tend to thrbw discredit upon the appellant's claim;' 'but it cannot invalidate the deed if that claim be a just one. Whether it is or not is the only subject of inquiry. Upon this point the learned judge was of opinion that the deed of trust is not conclusive': that it is not even a direct, distinct affirmation that the sum named in the deed is due. Ret this be conceded.' It is certainly an acknowledgment of an existing indebtedness. Such an acknowledgment would furnish sufficient evidence of the loan, in the absence of any countervailing or explanatory evidence. It must be admitted that such evidence does exist in this case. Whilst, however, it was not sufficient to justify a dismissal of the bill, it was sufficient to throw upon the appellant the onus of showing the amount of his advancements to or for the appellee's intestate. The *cause was not ready for a hearing when the decree was rendered in the then existing condition of the pleading's and evidence. The inquiry directed by the chancellor was in reference to the delivery of the note. It is apparent that he was of opinion, as was the commissioner, that proof of such delivery was essential to the maintenance of the appellant's claim. This form of inquiry was well calculated to direct the attention of the parties from the real issue and proper subject of investigation. As before stated, that issue is not whether the note was actually delivered, but whether there was an actual loan of money, and the amount of such loan.
Ror these reasons I think the decree of the Chancery court must be reversed, and the cause remanded for further proceedings in conformity with these views. In that court the case must be recommitted to a commissioner, with instructions to state such legal testimony as the parties adduce, to require any discovery, and the production of .any books and papers pertinent to the issue which either party may require of the other, and finally to report all the facts and circumstances bearing upon the question of the alleged loan.
Before concluding this opinion it is proper to notice the objection made to the evidence of Jenkins, the trustee. The commissioner was of opinion that he is incompetent, and refused to consider his testimony. The chancellor in his opinion says Jenkins' evidence is perhaps admissible. I must confess my inability to understand the grounds of this supposed incompetency. The statute declares "that no trustee or executor or other fiduciary shall be incompetent in any case by reason of being a party thereto, or of his being liable to costs in respect thereof, but if liable to costs, he shall not be cornpetent unless some person ^undertake to pay the same." The trustee was a party plaintiff in the original bill; but it is apparent he was a mere formal party, and the suit was substantially that of the creditor or cestui que trust. The name of the trustee was omitted in the amended bill filed by the leave of the court, and no longer appears in the proceedings as a party. Under these circumstances I do not think he is responsible for costs. The only remaining objection that can be urged is, that the trustee is entitled to commissioners. By the express provisions of the deed he only receives these upon a sale made by him. This cannot be done now or hereafter inasmuch as the property has been sold under the orders of the Chancery court, or by agreement of the parties placed beyond any control of the trustee. If therefore the trustee's right to commissions creates a valid objection to his competency (as to which no opinion is expressed), that objection has been removed by the circumstances just adverted to. I cannot perceive therefore that the trustee has even a contingent interest in the result.
In regard to the identity ol the property I do not deem it proper or necessary to express any opinion, as the case is to be remanded and the parties may produce additional evidence upon the question.
The other judges concurred in the opinion of Staples, J.
The decree was as follows:
The court is of opinion, for reasons stated in writing and filed with the record, that the decree of the Chancery court is erroneous ; wherefore it is adjudged, ordered and decreed, that the same be reversed and annulled, and that the appellee, out of the assets in *her hands to be administered, do pay to the appellant his costs by him expended in the prosecution of his appeal aforesaid here. And the court being of opinion that further investigation is essential to the justice of the case, doth order and direct that the report of commissioner Dvans be recommitted to him, with instructions to inquire and report what sum or sums of money, if any, were advanced by the appellant to the appellee's intestate prior to or subsequent to the deed of the 25th of March 1869, and intended to be secured thereby, and the dates of such advancements respectively, and also any credits to which the appellee is' entitled. To that end the commissioner shall take any legal evidence adduced before him, shall examine either of the parties on oath, if desired by the other, and require the production of any documents or papers pertinent to the issue. The said commissioner is also required to report specially any facts and circumstances which he may deem proper, or which may be required by either of the parties. The said commissioner is also authorized if desired, to make the like inquiries, and report in regard to the identity of the property, which is the subject of controversy, and claimed to be included in the said deed of trust.
Decree reversed.