Case Name: Bumpas et als. vs. Dotson et als.
Court: Tennessee Supreme Court
Jurisdiction: Tennessee
Decision Date: 1846-12
Citations: 7 Hum. 310
Docket Number: 
Parties: Bumpas et als. vs. Dotson et als.
Judges: 
Reporter: Tennessee Reports
Volume: 26
Pages: 310–319

Head Matter:
Bumpas et als. vs. Dotson et als.
1. Where the surety in a guardian bond took a moitgage on the guardian’s estate, and the mortgage specified the liability of the surely “at about $2,000,” when in fact it amounted to only about half that sum; It is held, that this mis-statement of the consideration was not conclusive evidence of fraud; the mortgage not professing to state with accuracy the amount of the liability, and the actual amount having been unascertained.
2. An admission of the mortgagee, that the property mortgaged was left in the p ossession of the mortgagor, with the intent that he should make money thereby, ■will not be evidence of a fraudulent purpose in the execution of the deed.
3. The relationship of parties, though calculated to awaken suspicion, is of itself no evidence of a fraud in a conveyance of property.
4. Where a guardian bond contained no penalty, this would prevent a recovery at law, yet in equity, on proof that the guardian obtained his ward’s estate on the faith oí the bond, the beneficiaifies in the bond would be entitled to a decree for an account against guardian and suieties.
Lucas was the guardian of the heirs of Johnson, deceased, and gave bond for the performance of the trust, which bond was without a penalty and in blank. Lucas being embarrassed and having creditors, conveyed by deed of mortgage several slaves to Dotson, to indemnify him against loss as his surety in his guardian bond.- He conveyed the slaves afterward? to Dotson by absolute bill of sale.
The judgment creditors of Lucas filed this bill in the Chancery Court at Lawrenceburgh, against Lucas and Dotson and others, to set aside the deeds above mentioned as fraudulent. The Chancellor, Bramlett, refused to declare them fraudulent, but directed the sale of the slaves and an account to be taken. From this decree the complainants appealed.
Wright, for complainant.
We say the two deeds executed by Lucas to Dotson on the 5th and 8th of January, 1842, were fraudulent and void, and of no validity or effect whatever. How are the facts? On the 5th he mortgaged to Dotson, the slaves Frank, Ben, Green, Polly, Mima, George and Mary, reciting upon its face as its object, to secure him as the security of Lucas to certain creditors, and among others, to the children of Samuel Johnson, in a debt of $2,000, as their guardian; and to secure Dotson certain debts due him, which debts and liabilities are there put at $3,200. It turns out that the debt to Johnson’s children, instead of $2,000, was not $1,000, and that the whole debt really did not exceed $2,400, though put at $3,200. But though the recitals in this deed were false and fictitious, and known to be so, what else is done? Why on the 8th of January, only three days after, this mortgage is turned into an absolute deed, and given the appearance of a sale, at the price of $4,000, actually paid, when, in fact, one-third of it had not been paid, and was made up of liabilities chiefly, and all, both debts and liabilities, did not exceed $2,500. The negroes are worth from $3,400 to $4,000, and when in fact too, this latter deed was really intended, and was a mortgage in secret between Lucas and Dotson. Dotson took possession for a few days, and then let Lucas have them to make money to pay his debts, and he used them ever afterwards. All these facts appear in the answer of Dotson and Lucas. Dotson is son-in-law to Lucas, and takes notes for the hire of the negroes, and surrenders them without payment. He, in fact, was not able to buy so many slaves. These false and deceptive recitals vitiate both these deeds. The express purpose no doubt, was (in changing an avowed, open mortgage to a secret one) to keep creditors from a knowledge of the real debt and liabilities, that they might be deceived and file no bills for the surplus, and thus Lucas would enjoy the estate. Why else make the change? And why recite debts that were only liabilities, and liabilities, as such, that really did not exist? And why recite the actual payment of $4,000, when one-third of it had not been paid? Peacock vs. Tompkins, Meigs Rep. 317; Hyslop vs. Clarke, 14 Johns. Rep. 465; Gregory vs. Perkins, 4 Dev. Law Rep. 53. .
The admission in the answer, that a secret mortgage was in tended, and that Lucas was to use the properly to pay debts, &c., makes the deed void. It was a secret trust for the benefit of Lucas. Besides Lucas’possession, relationship, &c., were •prima, facie evidence of fraud, and the onus of debts and fairness was upon Dotson. But there was no such proof, nor can be. 3 Yerg. Rep. 504.
2. The guardian bond executed by Lucas for Johnson’s children, was in blank — had no penalty, and was therefore void, and created no liability on Dotson. Hurlstone on Bonds, 9 Law Library 1: Dodson vs. Keys, Yel. Reports, 193; 193: 5 Comyn’s Dig. (A Title Obligation,) 191: do. (B 5) 193. How then could these assets be retained by him or any other, to pay or secure the debt to them? The conveyance was merely to secure Dotson from harm for his liability, and to secure the payment of certain debts due Dotson. These are the words of the deeds, and extent of the contract, and it goes no further. It was not to secure the debt to these wards, but intended as a personal indemnity to Dotson. It is claimed as a liability. If it were a liability, then the deed covers it. But it is said if Dotson cannot claim the fund, the children themselves can. If so, it must be in consequence of some implied equity or rule, and not because of any contract or engagement on the part of Lucas. In fact, such claims will have'to be in opposition to the very terms of the deed, which is to be void, upon its face, if Dotson is indemnified. How then can it be said to be the intention of the parties, that the deed is to have a further effect than Dotson’s safety? Can they create further trusts and equities not intended, and that too in opposition to and in the very face and terms of the deeds? Is there not a .distinction between a conveyance to secure the payment of a debt, and one to indemnify a surety? What is it that creates the trust? Is it not the contract of Lucas? Could it exist without the contract? And can it exist in terms beyond the contract? If a deed were to provide for the payment of a debt in a certain event, though made ostensibly for the surety and to him. Yet in such a case, the fund would inure to the use of the creditor. But if the conveyance is not for the payment of the debt, but only the surety’s indemnity, how can the creditor ever reach the fund under the deed? If the deed is to be void if the surety never suffers, whether the debt is paid or not, how can the creditor claim in such a case? 1 Devereaux Equity Reports, 205; Horner vs. Savings Bank,, 2 Con. Rep. 478, (Second Series.) The Bank vs. Grundy and Bass, Meigs Rep. 256.
Johnson’s children could only reach the fund through a judgment and ji. fa. with a return of nulla lona. Until then they could have no lien. Meigs, 256.
N. S. Brown, for defendants.
Rose, for defendants.
The complainant filed his bill to subject certain negroes and other property to .the satisfaction of a judgment at law, against the defendants, Wm. Lucas, J. H. Bumpas, and J. H. Lucas. The defendant, E. B. Dotson, purchased the negroes of Wm. Lucas, and this bill is filed to set aside the sale for fraud, and subject the negroes to the judgment of the complainants.
1. To enable the complainants to obtain the relief prayed for, they must show that they have exhausted their remedy at law. 3 Atk. 300; 2 John. Rep. 296; 1 Paige’s Ch. Rep. 637; 10 Yerg. Rep. 212; 3 Hump. Rep. 81 and 662.
2. The charge of fraud in the bill, is denied by the answers of the defendants, and this denial is sustained by the proof. The answer is responsive to the bill in this particular, and must be taken as true, unless overturned by two witnesses, or one witness with strong corroborating circumstances.
The proof shows, that no fraud was intended in fact, that deed of trust or mortgage, and the bill of sale were executed in good faith, and to secure Iona fide existing debts and liabilities on the part of the defendant, Dotson, for Wm. Lucas.
3. There being no fraud in fact, is there any fraud by ‘‘legal construction.”
It is said, that the deed of trust, and the bill of sale to Dotson, are both fraudulent as to the creditors of William Lucas. Because it is said, that they announce to the creditors of Wm. Lucas, that the sum $3,200 is due from him to the defendant, Dotson, when in fact the amount actually due to Dotson, is only about $2,700, and that, therefore, the deed and bill of sale are void by operation of law, and that it is a legal fraud upon the creditors of Wm. Lucas. This may be true, where it is the intention of parties to “hinder and delay” creditors, but in this case there is a struggle between two creditors, and one obtains a conveyance from the debtor to secure his debt, and a mistake is made as to the amount of liabilities, or sum due- to the heirs of Johnson. This is not like the case of Peacock vs. Tompkins, Meigs 317. In that case two notes (one for $200 and the other for $300) were attempted to be secured by a trust deed, the proof showing that these notes were executed without consideration, and the court said that the attempt to secure these notes was a fraud upon the creditors of Turner, because Turner was made to acknowledge an indebtedness to the extent of $500 more than was actually due, for the purpose of keeping off other creditors from resorting to the surplus of the property conveyed. But in this case no debt is mentioned of the character of the debts in the deed to Tompkins, all the debts and liabilities mentioned in the deed and mortgage were bona fide existing debts, and the mistake as to amount, was as to the sum due to minor heirs of Johnson, a thing that Dotson could not be expected to know. In the deed the amount is stated to be $2,000, but upon subsequent investigation it was found to be $1,045, after deducting expenses, &c.
4. When a deed or conveyance is sought to be set aside by-creditors, and the proof discloses only suspicious circumstances, either as to the consideration, or as to the fairness of the transaction, a Court of Chancery will not set aside such conveyance, but permit it to stand as a security for the amount actually due. 1 John. Rep. 473, and the authorities cited. This was the view the Chancellor seems to have taken of this case, and it cannot be a hardship upon the complainants; they are creditors, and, as such, should not be permitted to occupy higher ground than Dotson, who is also a creditor of the defendant, Wm. Lucas.
5. The deed, and sale to Dotson, were made in part to secure the heirs of Johnson, and being before the court, the court should protect their interest; they are minors, and specially under the protection of a Court of Chancery, even if the guardian bond executed by Wm, Lucas, as their guardian, with Dotson as security, should be defective. The bond being in blank as to the penalty, can make no difference; such an omission does not make void the bond, and if the omission does make the bond void, the creditors of guardian could not take advantage of the irregularity. 1 Story’s Eq. 165 and 167; 1 Cond. Eng. Ch. Rep. 106; 2 John. Ch. Rep. 585.

Opinion:
Gkeen, J.
delivered the opinion of the court.
The only question in this case, which it becomes material to consider, is as to the validity and effect of the mortgage executed by Lucas to Dotson on the 3d of January, 1842, for the negroes Frank, Ben, Green, Polly, Mima, George and Mary. It is insisted by the complainants, who are creditors of Lucas, that the deed is fraudulent and void, and cannot stand as a security for debts really due from Lucas to Dotson.
The deed recites that it is made to secure various debts due Dotson and liabilities which he was under as the security for Lucas — among which latter, the deed recites, that Dotson was bound for Lucas, and liable to pay as his security, as the guardian of the heirs of Samuel Johnson, about $2,000; and the entire sum for which the said deed was made to save Dotson harmless, is stated to be $3,200. The negroes were worth about $3,500.
Upon investigation, the debts and liabilities recited in the deed actually amount to only about $2,700. The amount due from Lucas, as guardian of the ihildren of Samuel Johnson upon taking the account, amounted to $1,040 instead of $2,000 as recited in the deed. It also appears that the guardian's bond executed by Lucas and by Dotson as his surety, is blank as to the penalty.
It also appears that on the 8th of January, 1842, Lucas conveyed the same negroes to Dotson by an absolute bill of sale for the consideration expressed in the deed of $4,000: but no other or further consideration actually passed between the par- lies, iban is expressed in ihe deed of mortgage; — nor was the said deed intended by the parties to be anything but a security for the debts and liabilities mentioned in the mortage.
The defendant Dotson is the son-in-law of Lucas, and had purchased during the year 1841, two other negroes for which he took bills of sale; which purchases are also attacked in this bill for fraud; but it is not now urged in argument that they were fraudulent.
Upon the above facts it is insisted that the deeds of the 3d and 8th of January, 1842, are fraudulent, and should be set aside.
The principle ground relied on, is the statement in the deed of mortgage that the liability of Lucas as the guardian of Johnson's children was $2,000 dollars, when in truth it turns out to be half that sum; and the case of Peacock vs. Tompkins, Meigs R. 317, is relied on as decisive upon this point.
In the case of Peacock vs. Tompkins, the deed recited two notes, amounting to $500, which it asserted were due, and were intended to be secured by conveyance — when in fact, no such sums were due; and the notes were only given to cover advances that were to be made afterwards. This court held these facts to be conclusive of an intention to hinder and delay creditors; and that the deed being fraudulent for that reason, could not stand as a security for the sums actually due.
But we think the question is a very different one here. It is true, the deed states that the liability to Johnson's heirs, amount to about $2,000: but it does not profess to state with precision the existence and amount of the debt — as in the case of Peacock vs. Tompkins. Here Lucas was guardian, and it does not appear that any settlement had been made, by which he could have accurate knowledge of the amount he would owe his ward. It was a subject about which he might well be mistaken — and there is no evidence that he knew what the indebtedness actually was. In this state of uncertainty, when the deed does not assume to state the amount with accuracy; we think the statement, that it was about $2,000, when only half that sum is actually due, does not furnish evidence of intentional fraud.
The complainant's counsel insists, that the statement in Dotson's answer, that the negroes mortgaged, were left in the possession of Lucas, with the intention that he might make money thereby and pay his debts, is an admission that it is fraudulent.
We do not so construe this statement. If a deed be otherwise fair and bona fide, the intention of the vendee to benefit the vendor, cannot make it fraudulent. Tf there be a secret trust for the benefit of the vendor, or if the stipulations be intended to hinder and delay creditors, it is fraudulent. But if none of these exist, and the mortgagee is induced to advance his money, and take the mortgage, leaving the property in possession of the mortgagor, from kind feelings, believing the mortgagor will be benefitted thereby, and be better enabled to pay his debts, certainly the existence of such feeling is no evidence of fraud. And this is the sense in which the admission is made.
The relationship between the parties, though a circumstance to awaken suspicion, seeing fraudulent conveyances are most usually made to kindred, is, of itself, no evidence of fraud. The previous purchases, which are not seriously attacked as fraudulent, have no tendency to establish that this mortgage is fraudulent, unless the evidences bad made it doubtful whether the defendant had means at command sufficient to make all the advances these deeds purport that he has made. But the proof shows that the various descriptions of business in which Dotson has been engaged has been profitable, and that he has realized profits sufficient to have made all the advances he alleges.
But it is said the absolute bill of sale of the 8th of January was fraudulent, and that it reflects upon the mortgage of the 3d of that month, and is evidence that the mortgage was also fraudulent. The parties do not rely on this bill of sale, and if they did, it unquestionably could not stand. It is absolute on its face, and the negroes were left in the possession of Lucas; and an additional consideration to that exjrressed in the mortgage is stated, no part of which was paid.
And this circumstance of the bill of sale, thus executed, so soon after the mortgage was made, it must be owned, casts sus picion upon the fairness of the mortgage. But as the liabilities mentioned in the mortgage, are shown to be really due, and there is no evidence that Dotson received any money or effects from Lucas, by which to aid him in making these advances, while his own means are shown to have been ample for that purpose, we can only say that the bill of sale is a suspicious circumstance; it is not proof that the mortgage was fraudulent. We are therefore of opinion, that the deed of mortgage is a valid security for the debts really due, and the liabilities actually existing.
2. The complainants insist, that as the guardian's bond is blank as to the penalty, it is void, and creates no liability on Dotson, and that the claim of Johnson's heirs should not be taken into the account.
Although it be true, that the omission to insert a penalty in the bond, would prevent a recovery at law, 9 Law, Lib. 1, yet it does not follow that there is no remedy in equity. The parties signed and sealed this instrument as a bond, stipulating for the performance by Lucas, of the duties of guardian; and in thus signing and sealing this instrument, they intended to execute a lawful bond foi the guardianship of these wards; but by mistake or oversight, the clerk failed to insert the penalty.
By reason of the execution of this bond, Lucas obtained possession of the estate of his wards, and has acted under his appointment as their guardian — himself and his sureties, considering themselves bound by this bond; and the one has given and the other has accepted an indemnity in the execution of this mortgage, upon the assumption of its obligatory force.'
Under all these circumstances, Dotson, as surety for this guardian, would not be heard in a Court of Chancery, were he now urging the objection made by the complainants, against his liability upon the bond; and much less, will the complainants be heard against the claim of these infants, coupled as it is with the admission of Dotson, that he is liable.
This is a much stronger case for holding that the security is liable, than the case of Weisner vs. Blaikley, 1 Jh. ch. Rep. 60 7, or the case of Armistead vs. Bozman, 1 Ird. Eq. Rep. 117, which were cited at the bar. In both those cases the guardian's bond was made payable to different persons, than those, who by the statute, should have been the payee. In the former case, the court said, "that when the intention is manifest, it will always relieve against mistakes in agreements, and that as well in a case of surety, as in any other case. It would be intolerable that such a mistake should prejudice or destroy the rights of infants.
Both those cases were suits against the sureties for the guardian, and were resisted by them; and in the case of Armistead vs. Bozman, it had been determined that the parties were not liable at law; nevertheless in both cases, the bonds were held to be obligatory in equity. But here, the surety does not resist, but acknowledges his liability, and with these infants, now insists on the existence of that liability, and asks that they may have the benefit of the indemnity provided in this mortgage.
The case is much stronger therefore, than either of the cases referred to: and we think, in the language of the case of Weisner vs. Baily, "it would be intolerable that such a mistake should prejudice or destroy the rights of these infants."
Let the decree be affirmed.