Case Name: Richmond vs. Curdup
Court: Tennessee Supreme Court
Jurisdiction: Tennessee
Decision Date: 1838-02-04
Citations: 1 Meigs 581
Docket Number: 
Parties: Richmond vs. Curdup.
Judges: 
Reporter: Tennessee Reports
Volume: 19
Pages: 581–584

Head Matter:
Richmond vs. Curdup.
Febuary 1.
Distinction between absolute sale and assignment of consumable articles to secure debts. An assignment of articles consumable in the using to secure the payment of a debt is fraudulent per sc if the deed stipulate that ^the debtor shall retain the possession and use of them. But a reservation by the vendor with the purchaser’s consent, of the possession and U3fc of articles absolutely sold, though they are consumable in the use, is only a badge of fraud. 3 Yer. 502; 4 Id. 541; 8 Id. 419.
Trover in Wilson circuit court by Daniel Richmond against James Thomas for a horse and mare. The action was commenced on the 29th of August, 1836. At November term, the death of Thomas was suggested, and a scire facias awarded to revive the suit against John Crudup bis administrator, to whom the sci. fa. was made known on the 7th of February, 1837; and the cause was tried before his Honor Judge Dillahunty and a jury of Wilson at June term, 1838. The defendant had a verdict and the plaintiff’s motion for a new trial being overruled, and judgment rendered upon the verdict, the plaintiff tendered exceptions to the opinion of the court, which were signed, and the plaintiff appealed in error. The bill of exceptions does not set out the evidence but only so much of the opinion ofhis Honor, as the plaintiff considered erroneous; and that is recited in the opinion of this court.
Caruthers for the plaintiff in error
said that the only point for the consideration of the court was whether the charge of the circuit Judge declares the law correctly.
That vexed question upon which the discussions both in England and America have been so conflicting, that is, whether the possession of personal property by the vendor or person conveying in trust or by mortgage, is fraud in law, or only prima facie evidence of fraud? — was at length settled by this court in Callen vs. Thompson, 3 Yer. 475. In that case the law is declared to be that such remaining in possession by the vendor is only a sign or circumstance of fraud, liable to explanation by the vendee.
In the case of Darwin vs. Handley, 3 Yer. 502, it is decided that in a case where property is coveyed to a creditor for the purpose of securing his debt, and the same is left in the possession of the debtor it is fraudulent prima facie if the property be of a nature not consumable by its use, but if any of the articles contained in the deed be consumable in their use the court say Ciit would be a badge of fraud so strong as to be almost conclusive, not as a matter of lav>, but of fact with the jury that the deed was fraudulentpage 505. So in this case, even where the property was conveyed to indem" nify a surety agaiust a liability for his principal, the court did not go so far as to decide that the possession and use of consumable articles was a fraud per se or fraud in law.
February 4
In Sommenille & Crutcher vs. Horton, 4 Yer. 541, the court has gone so far as to declare that a deed of trust upon articles which are exhausted in their use, where the possession and use is by the face of the deed secured to the debtor, is fraudulent against creditors or purchasers; but I do not understand them to have decided in this or airy other case that such would be the law where the deed has no such provision let the facts turn out in the proof as they may.
In Simpson vs. MMchel, 8 Yer. 419, the doctrine laid down in Darwin vs. Handley, and Sommenille vs. Horton is again reiterated.
James Campbell, for defendant.

Opinion:
Reese, J.
delivered the opinion of the court.
In so much of the charge of the circuit court as is set forth in the bill of exceptions there are two propositions.
1. That upon the absolute sale of personal property, where possession neither accompanies, nor follows the sale, that circumstance does not constitute the transaction a fraud in law, but although strongly indicative of fraud, it is susceptible of explanation; and 2. Where there is an absolute sale of several articles, some of which are consumable in their nature, such as meat, corn, fodder &c., and possession in like manner neither accompanies nor follows the sale; but they remain in the possession of the vendor, upon an arrangement and understanding with the vendee, that the former might use such consumable article, such arrangement and understanding would make the entire sale fraudulent in law.
This latter proposition is alleged to be erroneous, and the counsel for the plaintiff below admits it to be so, if the court is to be understood as speaking of an agreement or understanding distinct from and subsequent to the sale. But they insist that the circuit court intended an agreement or understanding which constituted one of the terms of the very sale itself.
We do not understand the charge in this sense. Both propositions relate to an absolute sale, and to the effect of the possession continuing with the vendor.
In a case, where none of the articles are in their nature consumble, such possession is a badge of fraud, says the court; but when a portion of the articles are in their nature consumable, and the possession continues with the vendor, and the vendee agrees, or consents that the consumable articles may be used by the vendor, this makes the entire sale void in law.
If it were one of the terms of the contract of sale, that certain consumable articles should remain with the vendee, and be used by him, it would be a solecism in language to call such transaction an absolute sale; for even as between vendor and vendee themselves such articles would not in fact have been sold at all.
Understanding the charge, as we do, and as we think the jury must have understood it, we deem it erroneous. The cases of Darwin vs. Handley, 3 Yer. 502; Sommerville vs. Horton, 4 Yer. 541; Simpson vs. Mitchell, 8 Yer. 419, and a case at the present term of this court, Trabue vs. Willis, decide that where an assignment by deed is made to secure a creditor, and articles consumed by tbe use of them are included, and there is a reservation of the possession and use of the properly, such reservation of consumable articles, manifests the intention of the parties not to have been bona fide; and such deed is, on that ground, held to he fraudulent in law.
But if a party purchase property absolutely, at a fair and full price, and leave it in possession of the vendor, this, although a strong circumstance of fraud, is subject to be explained, even although some of the articles so left in the possession of the vendor were consumable in the use, and after the sale, the vendee agreed that they might remain and be used.
Let the judgment be reversed, and a new trial be had, and the law on such trial be charged as in this opinion.
Trabue vs. Willis.
FRAUD. Assignment of consumable articles to secure a debt. If it be stipu-r lated in an assignment to secure debts, that the assignor shall have the use and possession of consumable articles embraced in Ihe deed, the assignment is void, though lie do not in fact use those articles, but they are afterwards sold and the proceeds applied to the payment of his debts.
In this case, which was an appeal from the chancery court' at Winchester, a distinction was attempted between it and those cited by the court, upon the ground that the consumable articles, the useof which had been reserved to the debtor in the deed, had not, in point of fact, been used by him, but had been sold and ¡.he proceeds applied towards the payment of one of his debts. For the purpose of preserving the. answer given by the court to this [distinction, so much of the opinion of Judge GbjskN as relates to that point is here reported. After disposing* of several other questions which had been raised in the cause, his Honor proceeded.
The only remaining question is, whether the deed of trust is fraudulent? And we think it is. It conveys alargue amount of personal property, and among other things, a quantity of com and fodder-, and there isa stipulation that A. F. Willis is to have theuse and possession of the property until he should make default of payment. This stipulation for the use of such articles as corn and fodder,— (necessarily consumable in the use,) makes the deed fraudulent upon its face, by its very terms. Darwin vs. Handley, 3 Yer. 503; Crutcher vs. Horton 4 Yer. 541. It is true the fraud is denied in the answers, and it is said that these consumable articles, were not in fact consumed by A. F. Willis,but were sold and the proceeds applied to the payment of the debts mentioned in the deed. If this were true it could not restore the deed, and give itlegal vigor, when the law had pronounced it void. Ifil was made to hinder and delay creditors, it is void; — and that it may not have had this effect in fact, cannot make it valid. — Otherwise its validity or invalidity would depend, not upon the intention of the parties as proved to exist, or as shown by the terms of the deed, — but upon the manner in which the property should be afterwards treated.
Taül and Meigs for complainants.
James Campbell for defandant.