Case Name: Peay v. Morrison's Ex'ors
Court: Supreme Court of Appeals of Virginia
Jurisdiction: Virginia
Decision Date: 1853-07
Citations: 10 Gratt. 149
Docket Number: 
Parties: *Peay v. Morrison’s Ex’ors.
Judges: (Absent Monctjke, J.)
Reporter: Virginia Reports
Volume: 51
Pages: 458–461

Head Matter:
*Peay v. Morrison’s Ex’ors.
July Term, 1853,
Lewisburg.
(Absent Monctjke, J.)
i. Bonds — Assignment of — Case at Bar. — In March 1836 C executed his bond to P for twelve thousand dollars payable on the 24th February 1841, with interest from the 1st of April 1836 payable semiannually; and executed a deed of trust to secure it, which might be enforced upon the failure of O to pay the principal when due, or to pay the semiannual interest. In June 1836 P purchased real estate from M, and paid in part cash, and for the balance assigned to M the bond of C, and executed a mortgage on the property, with condition that if M failed to collect from C the bond and interest, or any part of it, and P paid it, then the deed to be void. The interest was regularly paid on C’s bond until October 1839, and in September 1840 the interest was again paid. In February 1841 C was insolvent. The trust property was sold in February 1844; and soon after M proceeded to foreclose the mortgage, and the property was sold in July 1845, leaving a large balance still due M. Held ;
i. Same — Same—Liability of Assignor * — In absence of proof of an express agreement to the contrary, the assignment of P to M imports a guarantee that M shall receive the full amount of the bond of C; and the right of M to resort to P for any part thereof which he should fail to collect from C with the exercise of due diligence.
2. Same — Same—Same.—The sale of the trust and mortgaged property did not impair the right of M to hold P responsible for the balance of the debt.
3. Same — Same—Same —The delay in the sale of the trust property not appearing to have been occasioned by the active agency of M, or that he can be regarded as assenting to it in any other sense than might egually be imputed to P, and it not appearing that the value of the security was diminished by the delay, that delay cannot-discharge P from his liability upon his assignment.
4. Same — Same—Same,—o having become insolvent before the bond was due, a suit against him would have been unavailing, and was therefore unnecessary to establish the right of M to recover of P. And it does, not appear from any circumstances in the case, that a sale of the trust property for the failure to pay the semiannual interest would have been judicious or expedient; still less that it was necessary to entitle M to hold P liable on his assignment.
2. Fraudulent Conveyances — Foreign Debtor — Bill to Set Aside by Creditor at Large. — A creditor at large may maintain a suit in eguity to set aside as fraudulent a deed conveying real estate, made by his debtor, both the debtor and his grantee living and being out of the commonwealth.
This was a suit instituted in the Circuit court of Ohio county, by the executors of Joseph Morrison deceased, claiming to be the creditor of Austin Peay, a free negro, to set aside a deed executed by said Peay to his son William A. Peay, on the ground of fraud. Both Austin and William A. Peay were residents in Upper Canada; and the suit was an attachment in equity to subject certain real and personal estate to the payment of the plaintiff’s debt, for which no judgment had been recovered against Austin Peay.
On the 10th of March 1836 John M. Clarke and James A. Clarke as his surety executed to Austin Peay their bond in the penalty of twenty thousand dollars, with condition to be void if John M. Clarke, his heirs, &c., should pay to Peay, his heirs, &c., the sum of twelve thousand dollars on or before the 24th of February 1841, and interest thereon semiannually on the 1st days of April and October in each year; such interest to commence from the 1st of April 1836. To secure the payment of this bond, John M. Clarke and wife conveyed in trust to Alexander Wilson certain real estate in the city of Wheeling. This deed provided that upon the failure of Clarke to pay the principal when due, or to pay the semiannual interest as it fell due, the trustee might sell the trust subject upon terms specified in the deed.
In 1836 Austin Peay purchased from Joseph Morrison real estate in the city of Wheeling, for the sum of twelve thousand eight hundred dollars, for which he assigned to Morrison the bond of the Clarkes for ^twelve thousand dollars, and executed to him his note for eight hundred dollars, which he afterwards paid. At the same time Peay executed a deed bearing date the 9th of June 1836, by which he convejed to Morrison the real estate purchased of him upon the condition that if Peay paid the note of eight hundred dollars, with interest from the 11th of April preceding, when it fell due; and further, if Morrison should fail to collect from the Clarkes the bond for twelve thousand dollars, or any part thereof, with its interest, then if Peay, his executors, &c., should pay the same, or any balance that should be due thereon, according to the terms thereof, to Morrison or his assigns, then the deed to be void. But it was expressly agreed between the parties, that if the said bond for twelve thousand dollars could not or should not be paid from the proceeds of any sale which might take place under the deed of trust by which it was secured, Morrison was not to be required to pursue the obligors in the bond personally; but might have immediate recourse to this mortgage for any balance either of principal or interest which might be due and unpaid on said bond.
The interest on the bond of the Clarkes seems to have been regularly paid up to the 1st of October 1839. A payment of seven hundred and forty-six dollars and sixty-five cents seems to have been made on the 30th of September 1840; and a further payment of thirty dollars was made by Clarke on the 24th of December 1840. It appears that John M. Clarke was insolvent in 1839; certainly both of the Clarkes were insolvent in February 1841.
In 1839 Austin Peay removed with his family to Toronto in Upper Canada. Payments upon the bond were made out of the rents of the subject mortgaged by Peay to Morrison, from February 1841 to January 1844, amounting, in the aggregate, to eleven hundred and ninety-five dollars and five cents. In February 1844 ^Wilson sold the property conveyed by John M. Clarke in trust to secure this bond, and the net proceeds of the sale amounted to four thousand one hundred and ninety-three dollars and fifty cents. Soon after this sale, Morrison’s executors instituted a suit against Austin Peay to foreclose the mortgage given by Peay further to secure Clarke’s bond; and under a decree made in that cause, the mortgage subject was sold, and produced the net sum of three thousand and thirty-seven dollars and twenty-six cents, which was credited on the bond; leaving due thereon on the 1st of July 1845, six thousand six hundred and ninety-one dollars and seventy-one cents.
By deed bearing date the 27th of Januarj 1843, Austin Peay, for the consideration as expressed in the deed, of five thousand one hundred dollars, in hand paid, conveyed to his son William A. Peay, several lots of land in the city of Wheeling, and also his interest in several other lots which he held jointly with William W. Ross, his brother in law. There had been several conveyances of these lots by Austin Peay and Ross to Henry Moore, and a reconveyance of Ihe lots to them by Moore, so that Austin Peay held in this joint property an interest of thirty-seven forty-ninths, and Ross held an interest of twelve forty-ninths. One of the lots conveyed by Austin Peay to William A. Peay, had been sold by Moore to Eukus and McClaskey; and three of these lots had been sold under a decree in a suit by the Northwestern Bank of Virginia against Peay and Ross, to satisfy a debt due by them to the bank.
In December 1845 this suit was instituted. The bill, after setting out substantially the foregoing facts, and stating the various conveyances from Peay and Ross to Moore, and the reconveyance to them, charged that the conveyance from Austin Peay to William A. Peay was fraudulent, and intended to hinder and delay *the creditors of Austin Peay. That the price pretended to be given for the property was wholly inadequate, and that in fact no consideration was paid for it. The prayer of the bill was that the conveyance might be declared null and void as to the plaintiffs; that Austin Peay’s interest in the property might be ascertained, and that it might be sold for the payment of the balance due to the plaintiffs as executors of Joseph Morrison deceased.
Austin and William A. Peay filed their answers to the bill. They admit the facts as to the execution of the bond by the Clarkes, and its assignment by Austin Peay to Morrison; and William A. Peay admits that the Clarkes were insolvent in 1840, and so continued, though Austin Peay denies they were insolvent before 1844, when they obtained their discharge as bankrupts. They both deny that the deed from Austin to William A. Peay was intended to defraud the creditors of Austin Peay; and state that the whole consideration money was paid by William A. Peay. Austin Peay denies that he is indebted to Morrison ; and insists that the only contract between them was contained in the mortgage deed; and it was not intended that he should be personally liable as assignor of Clarke’s bond. That Morrison was bound to proceed upon the deed of trust of Clarke, but that he neglected to do so until February 1844, although the semiannual interest from October 1839 was unpaid ; and the defendant, upon being informed thereof, wrote to the trustee Wilson to take such steps as he should deem advisable; and he urged Morrison to have the said trust property sold. That it was by the delay from 1839 to 1844 that a large portion of the interest upon Clarke’s bond had been lost by Morrison, which he was endeavoring to chargé upon respondent.
It appeared that about the time of the conveyance from Austin to William A. Peay, the latter paid to the ^former a large sum of money, probably about five thousand dollars; and there was some evidence that William A. Peay’s mother derived from her father, who was a white man, a considerable estate; but there was no evidence that William A. Peay received any part of it; and there was evidence that when at school in New England his supplies of money were derived from his father; and he was quite a young man scarcely of age, when the conveyance was made to him bj his father.
This cause came on to be heard in June 1850, together with another suit by French’s ex’ors against the same parties, claiming to subject the same property, when the court held that the plaintiffs were creditors of Austin Peay, and that the deed of the 27th of January 1843 from Austin to William A. Peay, was fraudulent and void as to the plaintiffs; and a commissioner of the court was directed to ascertain and report the amount due to the plaintiffs; and other commissioners were directed to divide the property mentioned in said deed between Austin Peay and William W. Ross, according to their interest therein; and to value that part allotted to Austin Peay. These commissioners made their report estimating the property allotted to Austin Peay at ten thousand seven hundred and ninety-one dollars and sixty-six cents. The commissioner directed to ascertain the amount due to the plaintiffs, reported that there was due to French’s executors the sum of eleven hundred and fourteen dollars and fourteen cents, with interest on seven hundred and sixty-nine dollars and eighty-two cents, a part thereof, from the 6th day of August 1850 until paid; and that there was due to Morrison’s executors eight thousand and fifty-one dollars and seventy-one cents, wi.th interest on six thousand two hundred and four dollars and four cents from the same date.
The causes, with two others, came on to be heard ^together in November 1850, when the court confirmed the reports, and made a decree, that unless the sums decreed to the respective plaintiffs were fully paid within sixty days from the date of the decree, that a commissioner appointed by the court should proceed to sell the real estate set apart to Austin Peaj, or so much thereof as should be sufficient for the purpose of paying said debts, interest and costs, in the manner and upon the terms therein stated, and should apply the proceeds of sale to the payment of said debts in the order directed in the decree. From the decree in favor of Morrison’s executors, William A. Peay applied to this court for an appeal, which was allowed.
Patton, for the appellant.
Russell, for the appellees.
Bonds — Assignment of — Liability of the Assignor— In Welsh v. Ebersole, 75 Va. 657, it was said: “Assignments relate only to nonnegotiable securities, † The assignor in effect agrees that the assignee shall reqover the full amount of the bond from the debtor, and if, after the exercise of due diligence, he is unable to do so, he, the assignor, will make good the amount received-by him upon the assignment. Peay v. Morrison's Ex'ors, 10 Gratt. 155. The assignee’s right of recourse upon the assignor rests upon the ground that there was a valuable consideration for the assignment. In all cases, however, the actual consideration may be shown, and this constitutes the measure of recovery by the assignee against the assignor, whereas in a case of guaranty the guarantor is liable, whether he has or has not received any consideration.”
See also, monographic note on “Assignments” appended to Ragsdale v. Hagy, 9 Gratt. 409. See an article on the contract relation, “The Contract Relation between Assignor and Assignee of Nonnegotiable Ohoses in Action, and the Rights Arising Therefrom.”
See monographic note on "Fraudulent and Voluntary Conveyances” appended to Cochran v. Paris, 11 Gratt. 348.

Opinion:
EEE, J.,
delivered the opinion of the court.
The court is of opinion, that notwithstanding Joseph Morrison, at the time of taking the assignment of the bond of John M. Clarke and James A. Clarke from Austin Peay, took from the said Peay a mortgage upon other real estate, by way of further and additional security to that afforded by the deed of trust executed by the said John M. Clarke upon the property for the purchase money of which said bond was given, yet the said assignment by the said Peay being for value received by him of the said Morrison, in the absence of proof of an express agreement to the contrary, must be regarded as importing a guarantee that the said Morrison should receive the full amount due upon the bond; and the right on the part of Morrison to resort to the said Peay for any part thereof which he might be unable to collect from the said Clarkes, if no want of due and proper diligence in pursuing his remedies against them could justly be imputed to him. *And the court is further of opinion, that the subsequent sale by the trustee of the property conveyed in trust to secure the payment of the said debt by the said John M. Clarke, and the sale of the property mortgaged by the said Peay for the same purpose, and the application of the proceeds of both in discharge of so much of the debt, did not impair or affect the right of the said Morrison to hold the said Peay responsible for any balance of the same that might still remain unsatisfied.
And the court is further of opinion, that if the delay on the part of the trustee in the deed of trust executed by Clarke, to make sale of the property thereby conveyed, might under different circumstances, occasion a forfeiture of the right of Morrison to hold the said Peay personally responsible on his assignment, yet it not appearing that said delay was occasioned by the active agency of the said Morrison, nor that he can be regarded as assenting to it in any other sense than might be justly imputed to Peay, to whom the right to hasten the action of the trustee by a proper proceeding for that purpose, if danger were apprehended from delay, was equally open and available; and it further not appearing that the value of the security was in any degree affected or dismissed by the delay, it cannot serve to discharge the said Peay from liability upon his assignment.
And the court is further of opinion, that ' whether due diligence on the part of the said Morrison in the prosecution of his remedies against the said Clarkes was or was not consistent with the delay that was suffered to take place before the sale was made under the trust executed by the said John M. Clarke, is a question not very material to be decided in this cause; because the court is of opinion, that from the answer of the appellant and the evidence in the case, it sufficiently appears that on the 24th of February 1841, when the principal of the bond of the said Clarkes became due and payable ^according to its terms, both the said Clarkes had become insolvent, and that a suit against them would have been unavailing, and was therefore unnecessary to establish the right of the said Morrison to maintain his action against the said Peay upon his assignment of the said bond. And as it respects the interest accruing semiannually upon the principal secured by the said bond, anterior to the period when said principal itself became due, the court is of opinion that although by the terms of the deed of trust executed by Clarke, a sale of the property was authorized to be made by the trustee in default of payment of such interest as the same accrued and fell due, yet from the circumstances disclosed in the cause, it does not feel authorized to say that such a sale of the property for interest in arrear would have been a judicious and expedient measure ; still less that it was a necessary one to preserve the right of the said Morrison to hold the said Peay personally responsible upon his assignment for the principal of the said debt or any part thereof, or the interest thereon accruing after the said principal became due and payable according to the terms of the said bond.
And the court is further of opinion, that the deed from the said Austin Peay to the appellant of the 27th of January 1843, was made as disclosed by the evidence in the cause, under such circumstances of fraud and covin, and with such intent to hinder, delay and defraud the creditors of the said Austin Peay, that the same was, and was properly held to be, utterly void and of no effect as to the said appellees and other creditors of the said Austin Peay; and should not have been suffered to stand in their way in the prosecution of their remedies for the recovery of their respective debts.
And the court is further of opinion, that the said Austin Peay being at the time of the institution of this *suit no inhabitant of this commonwealth, but a citizen of a foreign state, sufficient ground was shown for the jurisdiction of the court in this cause, and to authorize the appellees to assail the said deed from the said Austin Peay to the said William A. Peay as fraudulent, notwithstanding they had prosecuted no previous suit, nor recovered a judgment against the said Austin Peay for the amount claimed by them to be due upon his assignment of the bond of the said Clarkes.
The court is therefore of opinion, that there is no error in the said decree, and that the same be affirmed with costs to the appellees.
Decree affirmed.