Case Name: Russell v. Randolph & als.
Court: Supreme Court of Appeals of Virginia
Jurisdiction: Virginia
Decision Date: 1875-09
Citations: 26 Gratt. 705
Docket Number: 
Parties: *Russell v. Randolph & als.
Judges: 
Reporter: Virginia Reports
Volume: 67
Pages: 236–240

Head Matter:
*Russell v. Randolph & als.
September Term, 1875,
Staunton.
Deeds—Unrecorded.—In April 1868 R conveyed land with general warranty to C, and C conveyed it in trust to secure four bonds for tbe purchase money. Tbe trust deed was recorded, but tbe deed to C was not, until March 1869. One of tbe bonds was paid by C. R assigned tbe other three to W, and B and J, J being tbe last assignee. In July 1868 D recovered a judgment against R, and afterwards filed bis bill to subject a small tract of land of R to satisfy it. In May 1873 C was declared a bankrupt, and upon petition by J tbe bankrupt court bad C’s land sold, and fixed tbe priorities of the creditors, making D tbe first and J tbe last, tbe proceeds of the land not being sufficient to pay all; but directing tbe fund should be retained until it was ascertained bow much D would get from the proceeds of tbe other tract.
Homestead Exemptions.—In March 1871R executed a declaration of homestead, which embraced ail bis personal property; and on the 10th of August 1871 be conveyed this property to P in trust for bis wife and children. In January 1874 J baying purchased D's judgment, be filed a bill against R and bis wife and children and P, in a state court, to subject this personal property to satisfy this judgment; and in April 1874 there was a decree In tbe bankrupt court, by which tbe proceeds of C’s land was distributed among the assignees of bis bonds, it not being enough to satisfy J. And it being suggested to tbe court, that beside tbe small tract of land aforesaid, there was personal property of R, which might be subjected to pay tbe said judgment, which was sufficient for that purpose, it was decreed that no part of tbe proceeds of C’s land should be applied to pay tbe judgment of D. Held:
1. Same—Effect as against a Prior Judgment Creditor. —Tbe declaration of homestead by R, having been after D bad recovered bis judgment, was null and void as to D’s debt.
2. Deeds—Consideration Not Valuable—Effect as to Judgment Creditors.—Tbe deed of R to P being not upon consideration deemed valuable in law, having been made after tbe judgment, was also null and void as to D’s debt.
*3. Same—Impeachment by Creditor.—Under § 2, cb. 179, of tbe Code of I860, D, without having sued out execution at law, might impeach by 'a suit in equity the deed of homestead and tbe deed of trust.
4. Decree of Bankrupt Court.—The decree of the bankrupt court directing, that D should not receive any of tbe proceeds of tbe sales of C’s land until be bad exhausted tbe other land of R, did not satisfy D’s judgment.
5. Same—Finality.—The decree of the bankrupt court of April 1874 was a final decree, and obligatory on all other courts; and it was a proper decree, as tbe judgment of D was a debt of R and not of C, and R’s property should be first applied to its payment.
6. Substitution—Warranty.—C’s land being only liable to satisfy D’s judgment because of bis failure to have bis deed recorded, if be bad paid that judgment, or if it bad been paid out of tbe proceeds of bis land, be would have been substituted, to all tbe rights and remedies of D against R; and be would also have bad a remedy against R upon tbe warranty in R’s deed.
7. Assignee—Equities—Rights against Assignor.— J being tbe assignee of R of one of tbe bonds given, for the purchase money of tbe land, and thus a creditor of C, and having a lien on tbe land to secure tbe bond, he has all tbe equities of C against R, and also an equity against R as assignor of tbe bond.
8. Marshaling. —As holder of tbe bond J bad but one fund upon which be can rely for payment, whilst D has two funds for tbe satisfaction of bis judgment, tbe land and the personal property embraced in the deed of homestead and deed of trust. And a court of equity will marshal tbe assets, and compel D to exhaust tbe fund upon which J bad no claim, that J may appropriate tbe only fund within bis reach.
9. Substitution.—D is tbe only person who can complain of being required to resort to R’s personal estate to the relief of tbe land fund, and that only upon showing that such a course would operate to his prejudice. And if D did show this, J might satisfy bis judgment and stand in bis place. In this case be has done better by taking an assignment of tbe judgment.
10. Same.—Clothed with tbe rights and remedies of D, J may properly proceed against the property of R to satisfy R’s debt, and against tbe land of C, to satisfy the debt chargeable upon it.
*By deed bearing- date the 18th day of April, 1868, Beverly Randolph and his wife, in consideration of the sum of $7,542.50, conveyed, with general warranty, to J. M. Cobb, a tract of land in the county of Clarke. And by deed of the same date Cobb and wife conveyed the same land to D. H. McGuire, to secure the payment of several sums of money, each for the sum of $1,385.62J¿, with interest payable annually from the 1st of March, 1868, and due respectively on the 1st of September in the years 1869, 1870, 1871 and 1872. Both of these deeds were acknowledged before the same justices of the peace on the 6th day of July 1868, and the deed of trust was admitted to record on the 8th of the same month; but the deed to Cobb, though de livered to him at the time of its acknowledgment, was not put on record until the 10th of March 1869.
At the July term 1868 of the County court of Clarke, Duval, Keigler & Co. recovered a judgment against Beverly Randolph for $631.77, with six per cent, interest thereon, from April 12th 1865 until paid, and $8.46 costs. This judgment was docketed on the 1st of September following; and though an execution of fieri facias was sued out on it, it was not taken from the office.
The bond of Cobb due in 1869 was assigned to James B. Russell, and was paid by Cobb. The second due in 1870, was assigned some time prior to March 1st 1869 to R. B. Wolfe, and considerable payments were made on it by Cobb, to the administratrix of Wolfe. The third bond payable in 1871, was assigned on the 1st of March 1869 to Baker & Co., and Cobb made some payments on it. And about the 21st of September 1869, the fourth bond due in 1872, was assigned by Randolph to James B. Russell; andón that there were only some payments of interest.
*This last bond not having been paid when it fell due, the trustee in the deed of trust advertised the land for sale; and thereupon Cobb obtained from the judge of the Circuit court of Clarke county an injunction. And he afterwards, in May 1873, upon his own application, was declared a bankrupt, in the District court of the Western District of Virginia, held at Harrisonburg.
In August 1873, James B. Russell filed his petition in Cobb’s proceeding in bankruptcy, in which he set out the foreg-oing facts, and also that Cobb, after he had been declared a bankrupt, had filed an amended bill, in which he stated that Duval, Keigler & Co. had instituted proceedings and had obtained a decree for the sale of twenty acres of land of Beverly Randolph; that their judgment constituted the first lien on his land which he would have a right to pay off out of his purchase money to Beverly Randolph remaining unpaid, and that no sale of his land could be properly made until the twenty acres of land was sold and the proceeds applied to the claim of Duval, Keigler & Co.
The prayer of the petition was that Cobb might be restrained from any further proceedings in the State court; that the court would settle the amounts and respective priorities of the lien and other debts of Cobb, whether said liens have been proved in bankruptcy or not; that the land of Cobb might be speedily sold, &c. Cobb and his assignee in bankruptcy, Wolfe’s administratrix, Baker & Co., and Duval, Keigler & Co. were made defendants to the petition.
Upon the filing of this petition the judge made an order restraining the proceedings in the State courts, and directing the assignee to take the necessary steps to sell the bankrupt’s lands.
In October 1873, the cause came on to be heard, '*When the court ascertained the liens on the lands of Cobb to be as follows: First, the judgment in favor of Duval, Keigler & Co. for $631.77, with interest, &c.; but there being an unsold tract of land of Beverly Randolph, which had been decreed by the Circuit court to be subject to the payment thereof, said claim was to be credited by whatever might be derived fr'om the sale of said tract of land; second, the claim of Wolfe’s administratrix ; third, the claim of Baker & Co.; and fourth, the claim of Russell. The amount of each of these claims was set out in the decree, and commissioners were appointed to sell the land of Cobb embraced in the deed of trust, upon terms stated in the decree.
In December 1873 the commissioners returned their report; in which they stated that the land had been sold, and purchased by James B. Russell, at the price of $3,100. And on the 12th of February the court made a decree confirming the report, and directed the commissioners, out of the cash payment for the land, to pay the expenses of sale, and to hold the remainder thereof until it shall be more definitely ascertained, the exact amount of this fund to which Duval, Keigler & Co. will be entitled, as indicated in the former decree; it being suggested to the court, that there has been a sale of the land which they were required to exhaust before they could share in this fund, but said sale has not been acted on by the Circuit court of Clarke county.
The commissioners made their final report, showing the collection of all the purchase money of the land, and the payment to Russell as assignee of Wolfe’s administratrix of $551.58, and as assignee of Baker & Co. of $1,241.69—these sums being the amount of their claims—and to Russell $1,094.75, in part of his claim. *And the cause came on to be finally heard on the 2nd of April 1874; and the court referring to its former decrees directing the purchase money to be retained until the court could determine whether Duval, Keigler & Co. or their assignees, by virtue of their judgment should be entitled to any portion of the proceeds of the sale of lands of James M. Cobb, sold under decree in this cause; and it now appearing to the court, that in addition to the land of Beverly Randolph, referred to in the former decrees in this cause, there is personal property of the said Beverly Randolph which may be subjected to the payment of said debt, one or both sources being sufficient for the payment of the same; and the said judgment being a debt of Beverly Randolph, and only binding upon the land of J. M. Cobb, in case it cannot be made out of the personal property of said Randolph, or of land sold by him since the sale to Cobb, it was decreed that no part of the fund derived from the sale of the land of J. M. Cobb, for distribution in this cause, should be applied to the satisfaction of the judgment of Duval, Keigler & Co. or their assignee; but the same should be applied, after paying the costs, to the satisfaction of the debts of Wolfe’s administratrix, Baker & Co. and James B. Russell, as ascertained by the decree of the lSth of October 1873; and the report of the commissioner was confirmed.
In January 1874 James B. Russell instituted his suit in equity in the Circuit court of Clarke county, against Beverly Randolph and Mary C. his • wife, and R. P. Page, trustee, and their fiveo children, four of whom were infants, and. Duval, Keigler & Co. In his bill he stated the judgment of Duval, Keigler & Co., and that on the 10th of December 1873 they assigned the said judgment to him. That on the 17th of March *1871 Beverly Randolph executed a declaration of homestead, and the same was admitted to record in the clerk’s office of the County court of Clarke on the 29th of August 1871. This declaration embraced certain personal property therein described as “being all the personal property of which I, the said Beverly Randolph, am possessed.” That on the 10th of August 1871 said Randolph, by deed recorded in the said clerk’s office on the 29th of the same month, conveyed to R. Powell Page, trustee, for the benefit of Mrs. Randolph and her children, certain personal property, described as being in part the same that was embraced in the deed of homestead exemption. That the consideration of this conveyance is, by its terms, “because of the fact recited, that Beverly Randolph had, by a declaration of homestead, set apart and consecrated as free from levy, &c., for or on account of any debt he might owe, and for the further consideration of one dollar.” Copies of these deeds were filed with the bill. He stated, that he was induced to purchase the judgment of Duval, Keigler & Co. by reason of its being complicated with other debts due to him, which rendered it very important that he should be able to control it.
The prayer of the bill was for an injunction to preserve the property, and that the said deeds might be set aside, and that the said personal property, being all the personal property of which Beverly Randolph was possessed, might be sold and applied to the payment of plaintiff’s debt, and for general relief.
In February 1874 Beverly Randolph answered the bill. He referred to the proceedings in the cases in the Circuit and the Bankrupt courts. And he referred to another case in the Circuit court of Clarke county, in which the tract of twenty acres of land, referred to *in the decree of the Bankrupt court, had been sold and purchased by Russell, and the proceeds of the sale had been decreed to be applied to the satisfaction of the judgment of Duval, Keigler & Co. And he submits whether the said judgment is not now, and was not at the date of the assignment thereof to the plaintiff, fully paid off and discharged; whether the actual sale of the several tracts of land upon which the said judgment was a lien, the confirmation of said sales, the judicial ascertainment of the liens of said judgment, and the decree applying the funds in the ■ hands of the court to the payment of said judgment, is not an actual legal satisfaction thereof; and whether, these lands having been sold for the purpose, this complainant can! now, or at any time, by execution upon said judgment, or otherwise, subject any other property to the satisfaction of said judgment.
It was agreed between Russell and Randolph, by their counsel, that the cause should be submitted upon the bill and answer; that the allegation of matters of record should be taken as true, except when, the same was contradicted by the records, themselves. The allegation of the bill, as to the assignment of the judgment to Russell, the conveyance of the personal property to Page, trustee, the consideration therefor, and the identity of the property conveyed, was admitted to be true.
The cause came on to be finally heard on the 3d of March 1874; when the court dissolved the injunction and dismissed the bill as to Beverly Randolph with costs. But upon the application of Russell,' and with the consent of Randolph, the cause was retained for a reconsideration and review of this decree by a decree to be made in vacation. And on the 30th of May 1874 the court dissolved the injunction and dismissed *the bill as to all the defendants, with costs. Russell thereupon applied to a judge of this court for an appeal : which was allowed.
Barton & Boyd, for the appellant.
Holmes Conrad, for the appellees.
Homestead Exemptions—As against Prior Judgment Creditors.—See V. C.,§3642; Rose v. Sharpless, 33 Gratt. 153; Holt v. Williams, 13 W. Va. 704 ; 2 Minor’s Inst. (4th Ed.) 912.
Marshaling.—Upon tbe doctrine of marshaling, see Watkins v. Dupuy, 87 Va. 92; Blakemore v. Wise, 95 Va. 272; Strange v. Strange, 76 Va. 244, all citing, but the last distinguishing from the principal case. See also, 3 Minor's Inst. (2d Ed.) 416, 584.

Opinion:
Staples, J.
delivered the opinion of the court.
The court is of opinion, that the declaration and claim of "homestead" made by Beverly Randolph on the 17th of March 1871, is void as against the judgment recovered bv Duval, Keigler & Co. at the July term of the County court of Clarke, 1868. That such declaration and claim are invalid as to antecedent debts is fully established by the decisions of this court, and of the Supreme Court of the United States. Homestead Cases, 22 Gratt. 266.
The deed of trust executed by Beverly Randolph on the 10th of August 1871, for the benefit of his wife and children, and embracing a part of the property claimed as a homestead, is also void as against said judgment. That deed not being upon consideration deemed valuable in law, must be regarded as merely voluntary, and therefore invalid as. against the claims of creditors whose debts were contracted prior to its execution.
Under the provisions of the second section¿ chapter 179, Code of 1860, it was competent for Duval, Keigler & Co., without having sued out an execution at law, to impeach by bill in equity, the deed of homestead and deed of trust upon the ground of fraud, actual or constructive. The appellant Russell being the bona fide assignee of said judgment recovered by Duval, *Keigler & Co., stands in their shoes; is substituted to all their rights and remedies, and entitled to enforce any security they may justly claim.
The court is further of opinion that although the tract of land conveyed by Randolph to Cobb was ordered to be sold under a decree of the circuit court of the United States, rendered on the 15th of October 1873, to satisfy the judgment aforesaid, as well as the claims of Cobb's creditors, it was nevertheless provided in that decree, that Duval, Keigler & Co. should not be entitled to recover any of the proceeds of sale until they shall have exhausted the lands of Beverly Randolph, decreed also to be sold; and shoiild by further proof show to the court that said land has proved insufficient to pay the claim, and the amount of said deficiency. ' '
There is no pretence for saying that this decree operated as a satisfaction of the judgment; for although its priority was recognized, yet the United States court was clearly of opinion, and very properly so, that Randolph's estate ought first to be applied to the judgment before any part of the land purchased by Cobb from Randolph was subjected: And this upon the obvious ground that the judgment was a debt of Randolph for which neither Cobb nor his estate was justly liable.
The same rule was adopted by the United States court in its decree of the 12th September 1874. By that decree the court refuses to order any distribution of the fund whatever, until it could be definitely ascertained what was the exact amount to which Duval, Keigler & Co. would be entitled from the lands of Randolph directed to be sold under previous decrees of the court. And none can fail to believe that if the attention of the United States court had then been called to the fact that Randolph was the owner of other ^property justly liable to the judgment, that court would have required the holders of that judgment to proceed against that property before subjecting the tract sold and conveyed by Randolph to Cobb. If the United States court was of opinion that a part of Randolph's estate should be applied to the payment of his individual liabilities, it would as a necessary consequence, have held that the whole, if needed, should be so applied.
The correctness of this view is conclusively shown by the decree of the same court rendered on the 2d of April 1874. That decree recites, "that it now appearing to the cotirt that in addition to the land of Beverly Randolph referred to in former decrees in this cause, there is personal property of the said Beverly Randolph which may be subjected to the payment of the judgment, and said judgment being a debt of Beverly Randolph, and only binding upon the land of J. N. Cobb in case it cannot be made out of the personalty of Beverly Randolph, or of land sold by him since the sale to J. N. Cobb; it was therefore directed that no part of the fund from the sale of the Cobb land should be applied to the satisfaction of the judgment in favor of Duval, Keigler & Co., or their assignee.
This was a final decree. It disposes of the whole matter in controversy. It deprives Duval, Keigler & Co., or their assignee, of the benefit of the judgment lien upon the Cobb land; it excludes them unconditionally from any participation in that fund, and requires them to resort to such estate as Randolph was entitled to for the satisfaction of the judgment.
It has been suggested, that this decree was obtained by the contrivance of Russell himself, who had then become the assignee of the debt. There is nothing in the record to show at whose instance it was rendered. *It is the decree of a court having jurisdiction of the parties and the subject matter. It must be held as absolutely conclusive in every other court, unless it is impeached for fraud; of which there is no pretence in this case. If in fact it was entered at the instance of Russell, the matter was easy to be proved by a discovery, or by extrinsic evidence. The record of the decree was filed as an exhibit in this case, and was read without objection in the court below. This court cannot disregard it upon any mere suspicion, or even a suggestion, that the United States court, in rendering this decree, was imposed upon by one of the parties.
But the court is further of opinion, that if the decree is attributable to the action of the appellant Russell, it was nevertheless a just and proper decree under all the circumstances, such as the appellant might well ask and the appellee cannot justly complain of.
As already stated, the judgment recovered by Duval, Keigler & Co. was against Randolph only; Cobb was in no way bound for that debt. The lien of the judgment upon the land of Cobb, purchased from Randolph, was owing to Cobb's failure to record his deed in due time. If the deed had been properly recorded, this controversy would never have arisen, and there would have been no pretence for charging the judgment upon the land purchased by Cobb. But notwithstanding Cobb's neglect in this particular, it was competent for him to insist that Randolph's creditors should exhaust all his real and personal estate before subjecting his (Cobb's) land. And if Cobb had satisfied the judgment, or it had been paid out of the proceeds of his land, he would have been substituted to all the rights and remedies'" of Duval, Keigler & *Co. against Randolph. Besides this right of substitution, Cobb had his remedy upon the warranty contained in Randolph's deed to him of the 18th April 1868—a contract entered into long anterior to the claim of homestead and the deed of trust.
Now it must be borne in mind that the appellant, Russell, is the holder of one of the bonds executed by Cobb to Randolph for the purchase money of the land. He is therefore assignee of Randolph, and a creditor of Cobb, having also a vendor's lien upon the land for unpaid purchase money. The appellant has therefore all the equities of Cobb, and a strong equity against Randolph, growing out of the assignment.
As the holder of the bond, he has, however, but one fund upon which he can rely for payment, and that is the land. On the other hand, Duval, Keigler & Co. have two funds for the satisfaction of their judgment, the land and the property embraced in the deed of homestead and the deed of trust. '
A court of equity will so marshal these securities as to compel Duval, Keigler & Co. to exhaust that fund upon which the appellant has no claim, in order that the latter may appropriate the only fund within his reach.
This is a familiar doctrine of the equity courts: the rule being that if one party has a lien or interest in two funds for his debt, and another party has a lien on or interest in one only of the funds for another debt, the latter has a right in equity to compel the former to resort to the other fund, in the first instance, for satisfaction, if that course is necessary for the satisfaction of the claims of both parties: provided always this course does not tre'nch upon the rights or operate to the prejudice of the creditor entitled to the double fund. In such cases, the equity of the creditor having *but one fund, is not against the double creditor, but only against the common debtor; that the accidental resort of the paramount creditor to the double fund shall not enable the debtor to get back the second fund discharged of both debts. When, therefore, the paramount creditor is satisfied out of the doubly charged fund, the other creditor has a right of substitution to all his rights against the remaining fund. 1 Story's Eq. Jur., i 633; Adams' Eq., mar. 272; Vance v. Monroe, 4 Gratt. 93; Jones et als. v. Phelan & Collander, 20 Gratt. 229.
According to these authorities, Duval. Keigler & Co. are the only persons who can complain of being required to resort to Randolph's personal estate to the relief of the land fund; and they can only object upon showing that such a course would operate to their prejudice. If they made that appear, the appellant would still have the right to satisfy their judgment, and to stand in their place. He has done what is better, he has taken an assignment of the judgment. Clothed with all their rights and remedies, he may very properly proceed against the property of Randolph to satisfy his debt, and against the land of Cobb to satisfy the debt chargeable upon that land. This satisfies all the equities, and attains substantial justice.
The court is therefore of opinion, that if the United States court had rendered no such decree as the one now under consideration, a court of equity having all the parties before it, and with a view to the adjustment of their rights, would now adjudicate these, questions precisely as that court has done. The appellee Randolph, and those claiming under him, cannot justly complain that his property is applied to the payment of debts contracted by him long before his right to a homestead accrued, and that his bona fide assignee is *thus permitted to collect his debt out of property liable for its payment.
For these reasons, the court is of opinion, that the decree of the Circuit court must be reversed, and the cause remanded for further proceedings in conformity with the views herein expressed.
The decree was as follows:
This day came again the parties by counsel, and the court having maturely considered the transcript of the record of the decree aforesaid, and the arguments of counsel, is of opinion, for reasons stated in writing, and filed with the record, that the Circuit court erred in dissolving the injunction and in dismissing the bill of the appellant, JamesB. Russell: wherefore, for the error aforesaid, it is ordered and decreed that the said decree of the Circuit court be reversed and annulled, and that the appellee, Beverly Randolph, pay to the appellant his costs by him expended in the prosecution of his appeal aforesaid here. And this court proceeding to render such decree as the said Circuit court ought to have rendered, it is adjudged, ordered and decreed, that the homestead of the defendant, Beverly Randolph, and the deed of trust executed by him on the 10th day of August 1871 be vacated and annulled, so far as they are in conflict with the debt due to the said James B. Russell, as assignee of the judgment in favor of Duval, Keigler & Co.; that it be referred to one of the commissioners of said court to ascertain and report the exact amount due said Russell as assignee as aforesaid, if the same cannot be agreed by the parties, and a decree to be rendered for the sale of so much of the property embraced in the deed of homestead and deed aforesaid as may be necessary to *satisfy the balance due the complainant; and in the meantime said Circuit court, or the judge thereof in vacation, may make such order touching the custody and disposition of the property aforesaid as may seem just and proper; which is ordered to be certified to the said Circuit court of Clarke county.
Decree reversed.