Court Opinion

ID: 6593640
Source: CourtListenerOpinion
Date Created: 2022-07-20 20:00:07.373094+00
Date Added: 2024-06-11T12:15:20.315023
License: Public Domain

Snyder, Judgjb,
dissenting;
It seems to me, that the views expressed and conclusion announced in the foregoing opinion, - are unsustained by 'either principle or authority. There can be no question that the provisions of a trust-deed muy be of such a character as of themselves to furnish evidence sufficient to justify the inference of a fraudulent intent and thus render the deed void in law, without reference to. extrinsic facts. Such is the oase where the grantor reserves, either to himself or some one else for his benefit, a power over the property conveyed incompatible with the professed purposes of the trust and adequate to its defeat. Deeds of this class appear in many cases, among which are the following: Lang v. Lee, 3 Hand. 410; Sheppards v. Turpin, 3 Gratt. 357; Quarles v. Kerr, 14 Id. 48; Kuhn v. Mack, 4 W. Va. 186; Claflin v. Foley, 22 Id. 434; Shattuck v. Knight,, 25 Id. 590.
While this principle is fully established by these and other decisions, it is equally well settled, at- least in this State $nd *723Virginia, that no conclusive inference of an intent to defraud is deducible from a provision in a trust-deed postponing a sale of the property conveyed for a reasonable length of time and reserving the use of it to the grantor until the sale, even although a portion of the property may be perishable in its nature and consumable in the use. In order to show the extent to which such conveyances have been sustained I will review some of the Virginia and West Virginia cases most analogous to the one at bar.
In Skipwith v. Cunningham, 8 Leigh 271, decided in 1837; an insolvent debtor by trust-deed conveyed certain real estate, sundry slaves, all his stock of horses, mules, cattle, sheep, hogs, crops and household and kitchen furniture, ten •gether with all debts due him, except $350 which he reserved for his individual use and disposition, upon trust to two trustees, with a provision that the trustees, so soon as they or the survivor might deem expedient and proper, should sell the trust-property, either publicly or privately; in whole or in part, as they might judge best; the lands in three equal annual instalments, and all the other property on a credit of 12 months, or such other terms as they or the survivor might deem most expedient, and collect the proceeds, as well as the debts, and pay the creditors in the classes they are secured upon their executing a full release and discharge of all claims against the grantor. The court held that this deed was not fraudulent, although it postponed the sale at the discretion of the trustees, required the creditors to exe^ cute a release, the sale to be made on a long credit, and in the meantime the property was retainéd for the use and in the possession of the debtor.
In Lewis v. Caperton, 8 Gratt. 148, decided in 1851, there were a number of trust-deeds. One of them conveyed household furniture, the various kinds of stock on a farm, bacon and lard, and was not to be enforced for 18 months. The court held this deed valid against unsecured creditors, though it was made without the knowledge of the eestui que trust and the grantor was insolvent at the time. Another trust-deed, by the same grantor conveyed land to secure a loan of money and not to be enforced for ten years, was held to be valid against creditors. The land and personal prop-' *724erty in both these deeds were left in the use and absolute-control of the debtor until the time fixed for the sale.
In Cochran v. Paris, 11 Gratt. 348, decided in 1854, it was held, that “A deed of trust, which among other things-conveys growing crops of wheat, rye and oats, and which is-not to be enforced for two years from its date, is not necessarily fraudulent as to creditors.” The property was by the terms of the deed to remain in the possession of the grantor for said two years and thereafter until a sale upon the request of the creditors secured.
In Dance v. Seaman, 11 Gratt. 778, decided also in 1854, the court held: “A deed of trust to secure bona hide creditors, conveying land, slaves and crops, cut and growing, not to be enforced lor two years, reserving the profits in the meantime to the grantor, and directing the surplus proceeds-of sale, alter payment of the debts- secured, to be paid to the grantor, is not fraudulent per se, though made without the knowledge-of the creditors.” This deed provided for a sale, after two years, upon the request of any preferred creditor, upon a credit of one and two years as to the land and cash as to the personalty. Allen, President, for the whole court, says : “If the questions presented by the record in this case were of the first impression in this- court, it would be a matter for grave consideration, whether deeds of trust,, such as those assailed by the bill of the appellees, did not contravene the spirit of the statute against fraudulent conveyances. * * * But these questions have been settled by a series of adjudications of this Court. It would disturb many titles if the principles heretofore established, and sanctioned by the practice of the country, were now to be questioned. If inconvenience results from the construction heretofore given to the statute against fraudulent conveyances, the remedy should be administered by the law-making power.” (11 Gratt. 780; Kevan v. Branch, 1 Gratt. 274; Janney v. Barnes, 11 Leigh 100.)
In Marks v. Hill, 15 Gratt. 400, decided in 1859, the deed! was executed by Hill & Nichols, a mercantile firm, and conveyed all their stock of goods, effects and credits, in trust, that the trustee, with the consent of two of the preferred •creditors, should permit Nichols, one of the grantors, as *725agent, to cany on the business, with authority to replenish the stock for the purpose of paying off the debts of the preferred creditors. It was also stipulated in the deed, that the agency of Nichols might be arrested whenever the two preferred creditors or the , trustee, or any other three of the creditors, should in writing give direction to the trustee to make sale of the stock of goods by auction in such way as the trustee might judge best for the benefit of all interested. Upon mature consideration 'the court unanimously held and decided, that this deed was not fraudulent per se.
All and each of the foregoing cases were decided by the Supreme Court of Appeals of Virginia before the division of the State, and therefore they are authorities and precedents just as obligatory and- binding upon us and the courts of this State as are the decisions of this Court.
Since the separation, these cases have been faithfully adhered to and carefully followed in the mother State, as binding precedents and settled law, in numerous cases — Gordon v. Cannon, 18 Gratt. 387; Sipe v. Earman, 26 Id. 563; Brockenbrough v. Brockenbrough, 31 Id. 580; Williams v. Lord, 75 Va. 390.
In none of the numerous cases, decided by our own Court, in relation to fraudulent conveyances, has any of these decisions been overruled or their authority and obligation been denied. In Harden v. Wagner, 22 W. Va. 356, the deed was made by the keeper of a livery stable and conveyed all his livery stock, consisting of horses, buggies, wagons &c., together with all his household and kitchen furniture, in trust, to secure two creditors. The grantor owed many other debts and was hopelessly insolvent. The deed provided, that “upon the demand of the secured creditors, or either of them, the trustee shall sell the trust property at public or private sale, and at retail of wholesale, and for cash or upon reasonable credit, as may best promote the i/nterest of the grantor and the secured creditors.” This deed was held to be not only not fraudulent on its face, but that it was valid notwithstanding the insolvency of the grantor and the circumstances existing at the time of its execution.
In Klee v. Reitzenberger, 23 W. Va. 749, this Court de*726cided that; “A trust-deed, made by an insolvent debtor, conveying his household and kitchen goods and furniture to secure a bona iMe debt due from him to his mother, and payable at six months, with a provision in the deed that the grantor shall retain the possession, use and enjoyment of the property until there is default in the payment .of the debt at its maturity, and the trustee shall be required by the creditor to sell the same, was under the circumstances a valid conveyance.”
This Court again in Kyle v. Harveys, 25 W. Va. 716, decided as follows : “A merchant, being insolvent, assigns his whole stock of goods for the benefit of his creditors, two of them being preferred, and by the assignment authorized the assignee to sell said goods at private sale as soon as possible, and after paying the expenses of sale to distribute the proceeds of sale as directed by the assignment among the creditors of the assignor, Heed — This assignment was not fraudulent on its face.” In this case most of the Virginia cases above mentioned are cited and relied on as law in this State. And Green, J., delivering the opinion of Court, says : “In Virginia and this State the courts have gone farther (in holding deeds valid, which provide for a private sale), and held, that a provision in a deed of trust to secure creditors, that the trustee may continue the business and replenish the stoolc, if intended merely as a means of realizing the trust fund and with a view of winding up the business, is not fraudulent per se so as to avoid the deed” — citing Marks v. Hill, 15 Gratt. 400, and other cases — 25 W. Va. 729.
If it is possible to settle any legal principle conclusively and beyond question by precedent, or if there is any such a thing in this State as the doctrine of stare diasis, then, it seems to me, incontrovertible that the repeated decisions hereinbefore mentioned, running through, at least, a half century, without a single break, have conclusively and un-ecpúvocally settled for Virginia and this State the following legal propositions: “First, That a provision in a trust-deed, made by an insolvent debtor, to secure a bona fide debt, postponing for a reasonable time a sale of the trust property, is not fraudulent per se, even though a portion of the property may be perishable in its nature and consumable in the use. *727Second, Nor is such deed fraudulent on its face-, because it provides, that the trustee may with the consent of one or more of the preferred creditors, carry on the business and replenish the stock when it can be inferred from the whole deed that such provision was intended merely as a means of winding up the business and realizing the trust fund. Third, Nor is such deed fraudulent per se, because it contains a provision that the trustee shall not sell until after default of payment and then only upon the demand of one or more of the preferred creditors, and that the trustee may sell the trust property at public or private sale, at retail or wholesale, and for cash or upon reasonable credit as may to him seem best for the interests of the secured creditors.
In Clarke v. Figgins, 27 W. Va. 663, this Court held, that,' S‘Where a decision has been rendered in the State of Yir-ginia and followed in two other cases in Virginia before the separation, the decisions will be followed by this Court without enquiring into the grounds on which said decisions are based.” In that case some of the decisions before recited were questioned in the argument; but this Court, without enquir-ing into the policy or reasons on which they were founded, sustained the principles decided by them. In delivering the opinion of the Court, Johnson, President, says: “The common law was only builded into a magnificent structure by our fathers laying a broad foundation, and the judges followed them, being careful that every successive stone placed upon the foundation should not be different from those already laid. Thus we see harmony in the building throughout. If a different course had been pursued, and hasty and ill-advised decisions made without regard to precedents, the common law instead of showing symmetry in its perfection would be one incongruous mass, and no one could form any idea how a matter would be decided, as in each case the judge would decide according to his own peculiar notion of what in that particular case might be right; and we know that it is often true, that what one would consider right in a particular case, another would regard as wrong. Nothing keeps a judge so strictly in the line of his duty, as the feeling and constant realization of the fact that he is bound by precedents. * * * It is only safe to know how the ques*728tion has been settled, if settled at all, and then not depart from the rule ; and if it has not been settled, to settle it after thorough examination of the principles upon which it must rest. We can not now disturb the Virginia decisions. According to those decisions the deed of trust in this cause is not fraudulent on its face.” (27 W. Va. 672.)
It thus appearing that the law on the question before us has been fully and finally settled by our own adjudications and those of Virginia, which are binding upon this Court, it is wholly unnecessary and irrelevant to consider or refer to the law or decisions of the courts of other States. I may, however, state in this connection, that if the question before us was one of first impression, I should hesitate long before I would go to the extent of some of the Virginia decisions in sustaining the validity of trust-deeds made by insolvent debtors. Some of these decisions it seems to me, hold valid provisions in such deeds which strongly contravene the spirit if not the very letter of the statute against fraudulent conveyances; and, therefore, I am unwilling to extend the doctrine of those decisions one iota beyond what has been clearly settled by them; but to the extent the decisions have gone, duty as well as sound policy and safety, requires, that they should be sustained as establishing a rule of property and adhered to in good faith. If any alteration or departure is deemed necessary it should be made by the Legislature and not by the courts.
It must not be forgotten that the sole question here presented is, whether the provisions of the trust-deed in this case are such as to render the deed fraudulent upon its face as a simple question of law; and not whether its provisions, taken in connection with extrinsic facts to be shown by evidence other than what appears on the face of the deed itself, were intended for an illegal purpose, and therefore fraudulent in fact. These are two very different questions. In the former case, if the provisions of the deed can be reconciled with an honest purpose, it must be sustained. The presumption of law is in favor of honestjr, and the Court cannot presume fraud unless the terms of the deed preclude any other inference.
But if the question before us were res integra, and we *729were untrammelled by precedents or authority, the doctrine and conclusion of the preceding opinion ought not to be adopted. Upon principle as well as authority, regardless of the decisions of Virginia and this State, the deed in this case ought not to be held invalid and fraudulent per se. It is not claimed or pretended, that the deed here is fraudulent or otherwise objectional in any respect, except the following provision : u And should the said trustee, W. T. Thompson, ■deem it to the best interests of the said creditors, he is hereby authorized either to rent out or run the mill property in the •city of Huntington, Cabell county, W. Va., hereby conveyed, known as the Biggs Mills, for the period of one or more years, or for a greater or less period of time, as shall seem to him advisable after having consulted with the said creditors and obtained their consent, or a majority thereof in interest herein. ”
The property and choses in action conveyed by this dee4 are shown by it to be over $45,000.00 in value, while the debts secured aggregate less than $24,000.00, leaving an excess of over $21,000.00 for the payment of unsecured creditors. The Biggs Mills, the only property embraced in the above recited provision, is valued in the conveyance at but $20,000.00, leaving $25,000.00 in value of the property conveyed to be at once and unconditionally applied by the trustee to the payment of the debts secured, and more than sufficient to pay the whole of said debts. This is what the conveyance shows upon its face ; and however fictitious the values, thus appearing, may be proven to b© by extrinsic evidence, they must be taken as absolutely correct in determining the question now presented, that is, whether or not said conveyance is fraudulent upop its face.
It will be observed that the provision of the deed above quoted does not restrain the action of the trustee by any prohibition or limitation upon his discretion. The qualifications of his discretion are simply permissive and none of them are absolute or- prohibitory. The trustee is to use his judgment and exercise it for “ the best interest of the creditors of the said Wilson & Beardsley, ” and in doing so, he may, with the consent of all or a majority in interest of said creditors, rent or rup said mill property for one or more . *730years, or for a greater or less time. There is nothing hereto prevent him from selling this property at once, if he thinks the interests of the creditors will be promoted thereby. The consent of the creditors need not be obtained and is not required to enable the trustee to make an immediate sale. Such consent is required only as authority to the trustee to-rent or run the mill property. It is a limitation upon his-discretion to rent or run the property and not a restraint or prohibition upon his authority to make an immediate sale.
It has cértainly never been held 'in any well considered decision, that an express grant to a trustee of authority to-ase his discretion in the control and disposition of the trust property so as best to promote the objects of the trust, would render the conveyance fraudulent per se, especially when no-prohibitory limitation is imposed and there is nothing in the deed postponing default or preventing an immediate sale. The vice in the deeds declared fraudulent in Quarles v. Kerr, 14 Gratt. 48, and Livesay v. Beard, 22 W. Va. 585, and other" eases of that class, was that by the stipulations of the deeds the sales were postponed and positively inhibited for an uncertain time, which might, by the terms and conditions of the deeds, with the connivance or consent of a portion of the secured creditors, be made indefinite. The deed before us is-very different from these. Here no inhibition is interposed and no consent to a sale is required. By the terms of the-deed no creditor can control the discretion of the trustee so as to prevent an immediate sale-. Whether or not such sale shall be made at once is, so far as the grantors and the ees-tuis que trusts are concerned, a matter entirely within the discretion of the-trustee. While this discretion of the trustee is thus absolute the deed expressly declares that it shall beso exercised as-to promote the best interests of the creditors of the grantors. If, therefore, the trustee should use his discretion i-n such manner as in the judgment of a court-of equity would be regarded as a breach of his trust, such court would, upon the application of any party interested,, whether such party be the grantor, or one or more of the secured creditors, or an unsecured creditor of the grantor, interpose its authority and 'compel the- trustee to execute the trust in good faith according to the expressed purposes and *731spirit of the deed. Harden v. Wagner, 22 W. Va. 356, 371-2; Shattuck v. Knight, 25 Id. 590, 597; Kyle v. Harveys, Id. 716, 729; Lewis v. Caperton, 8 Gratt. 148; Quarles v. Kerr, 14 Id. 48, 55; Sipe v. Earman, 26 Id. 563, 569; Rossett v. Fisher, 11 Id. 499.
If this deed is condemned as fraudulent per se, then I humbly and with deference submit, that no valid trust-deed can safely and with any certainty that it will not be set aside by the courts, be made to secure a bona hde debt by any debtor, however solvent he may be, or however small may be the debt secured in proportion to his property, if in such deed he confers upon the trustee any discretion as to the time and .terms upon which a sale of the trust property shall or may be made. According to the facts appearing upop the face of this conveyance, here is a debtor owning and possessed of property and credits of the value of $45,000.00, a part of which consists of a mill property worth $20,000.00, all of which he conveys to a trustee .to secure less than $24,-000.00 of debts, without airy conditions or suggestions to the trustee as to the disposition of $25,000,00 Worth of said property and credits, leaving the statute alone to control him entirely as to the disposition of that portion of the trust property, and nothing appearing upon the face of the conveyance or elsewhere of which we can take cognizance to show, that he owed a single farthing other than' the debts secured in this deed; with this deed before us, showing these facts, will this Court, at the' instance of an unsecured creditor of the grantor having a simple contract debt of less in amount than $800.00, declare and solemnly hold said conveyance fraudulentjner se, merely because and upon the sole ground, that it grants permission to the trustee to rent or operate the mill property for one or more years, or for a greater or less time if he shall deem it advisable to do so after having consulted and obtained the consent of all or a majority in interest of the creditors of the grantor ? With due deference to the opinion of this Court, I must say, that if it were not a fact, it would seem to me incredible.
For the foregoing reasons I dissent from the opinion of the majority of the Court, and am of the opinion, that the Circuit Court erred in refusing to allow the defendant, Thompson, to *732pead the trust-deed aforesaid in evidence to the jury, andthah for this reason the judgment of said court should be reversed.
And being thus of opinion, that the said trust-deed is not fraudulent per se, I am also of opipion, that the court should, have quashed the plaintiff’s attachment because the affidavit on which the same is founded is insufficient.
Affirmed.