Court Opinion

ID: 5550190
Source: CourtListenerOpinion
Date Created: 2022-01-10 21:33:26.363517+00
Date Added: 2024-06-11T08:35:03.284387
License: Public Domain

The cause stood over for consideration until this day, when the following opinion was delivered by
This Court ands juda‘Be‘“ creditor, by d°s™ovéryff and account,against íí'frd6bl°pe?son who has posses- or°s ° p^opertyj and placed it reach of exemtion; but the h^cáíímvíthe aid of the Court, "«texecutionat law.
One creditor ¡”aybfhala ba¡himself andaii }ors°midwhere one' judgment
The Chancellor.
The plaintiff files his bill as a judgment creditor of W. T. Robinson, and of Abraham and John Franklin, to set aside, as fraudulent, certain conveyances of the real estate of Abraham John F. to Henry Franklin. The object of the bill is also to set aside certain assignments of their personal estate to the defendants Minturn fy Champlin, and Jacob Sf Thomas Walden, or that those assignees of the personal estate may account for the proceeds, and that the same may be applied towards the satisfaction of the judgments of the plaintiff.
[ * 296 ]
The detail of these transactions, and the number of parties whom they necessarily affected, and who were called before the Court, have rendered the pleadings uncommonly complicated and voluminous. A great variety of facts, and many of them very remotely connected, have been brought into the history of the case, and to bear upon the points which have arisen. Several of these points are extremely important, not only in consequence of the amount of the property in question in this case, but as they bring into discussion the relative rights, generally, *of creditor and insolvent debtor, in respect to the control and disposition of the estate of the latter.
I shall proceed to examine each point in its order, and shall endeavor to do it with all possible brevity and simplicity.
1. The first objection to the suit is, that the plaintiff, as a judgment creditor, cannot, singly, and without uniting the other judgment creditors with him, sustain the bill.
*296[ * 297 ]
*295I have no doubt that this Court can and ought to lend its aid, whenever that aid becomes requisite, to enforce a judgment at law, by compelling a discovery and account, either as against the debtor, or as against any third person, who may have possessed himself of the debtor’s property, and placed it beyond the reach of an execution at law. The preliminary step which seems to be required is, that the judgment creditor should have made an experiment at law, and bound the property, by actually suing out execution, (Angell v. Draper, 1 Vern. 399.; and see a decision by Lord Nottingham, cited in 1 P. Wms. 445. Stileman v. Ashdown, 2 Atk. 476. Shirley v. Watts, 3 Atk. 200.) The objection, however, in this case, is not to want of power in the Court, but that the plaintiff is not entitled to its aid, because he comes here for himself alone, and does not allege that he is suing in behalf of himself and the other creditors. One creditor may undoubtedly file a bill,.in many cases, in behalf of himself and all the others. (18 Vesey, 78. 82.) But how does it appear that the plaintiff knew, when he filed his bill, that there were any other judgment creditors? There are *296none admitted by his bill. The doctrine in Leigh v. Thomas, (2 Vesey, 312.) and to which I have been referred, is not applicable. In that case, the plaintiffs sued in behalf of themselves and part of the crew of a vessel, for prize money j and by the bill itself, it appeared, there was another part of the crew equally entitled to receive from the defendant a share of the money, though they were no parties to the bill. It *was accordingly ruled, upon demurrer> that the residue of the crew must be joined, to have a general account, for otherwise the defendant might be °hhged to account to all the other creditors in succession, The bill here was not only silent, but there was no plea or answer in the original suit, setting up any other subsisting judgment. There was only a disclosure incidentally, and for other purposes, that there were, or had been, judgments in favor of J. 8f N. Heard, and of ,/. Moioatt; and, in the supplementary answer, the defendants, against whom the judgments were rendered, aver that they were satisfied by agenb -H. F., who purchased them. It is only the assignees of H. F. who now say that they were assigned over to them as part of his estate, and as being in full force. It . , r ° , , does not, however, appear, that executions were ever taken out upon those judgments ; and that step seems to have been held necessary, by the cases already referred to, before this Court can aid the execution of a judgment at law. If, however, those judgments were to be considered as unsatisfied, and the party not too late with this objection, it is not necessary to be made in this case; for all the parties that can have any concern in those judgments are now before the Court, and as far as those judgments may be entitled to a preference, or to a ratable distribution of the assets to be procured by this suit, that preference can be given, or that distribution made. I am, however, inclined to think, for reasons which will be disclosed hereafter, that these judgments are not now to be regarded.
bin forrh?mself it aUStearin;‘that tifere were other therel°rs’ were" there was real son. w believe wereJUsáisfiedÍ or if not satishad’not taken any steps at hnv by issuing exei an4'0"ratnd’aií partiesronccmed in them were beforetheCourt.
Conveyances hn; retuéstate declared fraudíena°ainst''°lds creditors.
2. The first important point, on the merits, relates to the vaMity of the sale of the real estate of Abraham &/■ John Franklin, to Henry Franklin.
[ * 298 ]
The house of Franklin Robinson, and John Franklin, had stopped payment on the 30th of December, 1807. They were seised, at that time, of a real estate, worth, according to their own valuation and subsequent sale, *721,663 dollars, subject to mortgages to 219,000 dollars. On the 8th of January following, they sold to H. F. lands in the state of Connecticut for 10,000 dollars, and which sum he passed in his accounts to their credit. Shortly after that sale, but how soon after does not appear precisely, they entered into an agreement with him for the sale of the whole of their real *298estate; and in. the latter part of February the parties proceeded to carry that agreement into effect, by fixing the price of the lands, which was deemed, on each side, a fair and adequate one, and which amounted to above the sum of 721,663 dollars. On the 20th March, deeds were executed for several parcels of the land, and on the 29th of March, the agreement received its entire consummation by the conveyance of the residue of the lands. The conveyances are all quit-claim deeds, without any general covenant or warranty of title; and between the first agreement to sell and its final execution, tlie Franklins had executed several mortgages upon part of these lands to their creditors, to the amount of 70,674 dollars and 51 cents, which encumbrances were assumed by JJ. F., and the amount deducted from the consideration. The net price, after deducting the amount of all the encumbrances, including those created pending the execution of the contract, was 431,988 dollars, 49 cents, and, according to the answers of the parties concerned, (for they have not given us any other proof on the subject,) this price was paid or secured in the following manner:
[ * 299 ]
(1.) The account of Henry against Abraham and John Franklin was admitted, which amounted to 143,805 dollars, 43 cents. The account is contained in the schedule (A.) annexed to his answer, and consists of endorsements, of bills of exchange, of notes lent, of the guaranty of debts, of acceptances of drafts, of the charge of being surety in an administration bond, of due bills of the grantors, &c. Some of these charges appear, from the account, to have been then due, some not due ; some of them to have been *then in suit, and several of them to have arisen during the course of the negotiation for the sale of the lands. The grantors state in their answer, that when they stopped payment, the actual and contingent demands of II. F. amounted to 120,000 dollars. This long account in the schedule (A.) is quite loose and confused, without satisfactory' precision as to dates and circumstances, and without any testimony whatever to support any one item. Not a paper is produced which H. F. may have been obliged to take up, nor a voucher-exhibited of any one payment. The contingent responsibilities were considered and liquidated as so much actual debt, though there is no proof that any responsibility was ever incurred. Thus, for instance, one item in the account is 7,000 dollars, the amount of an administration bond, in which Henry was surety for J. F., but we have no evidence that there was any breach of the condition of that bond.
(2.) The next head of the payment of the consideration, consists of a naked promise of H. F. to pay the grantors, in four years, 66,400 dollars, to be appropriated to the pay*299ment of the debts of certain confidential creditors, whose names and debts are mentioned in the agreement. There was no promise to pay interest on that sum, and this amount °f the consideration was, consequently, on a credit of four years without interest. Nor is there any other evidence than this agreement, and the answer of A. &f J. F., of the existence of such confidential debts, or that notice was ever given to those creditors of this provision in their favor.
[ * 300 ]
(3.) The remainder of the consideration, amounting to 221,783 dollars, 6 cents, was settled, by the giving of five notes, payable in one, two, three, four and five years, with interest, but no part of either of these notes has been paid, and a small part only of the sum intended for the confidential creditors. The whole of this immense debt, created by the sale of the real estate, at its fair value, was thus left *to rest upon the personal promise of H. F., without any other security, real or personal.
*300[ * 301 ]
*299I cannot resist the impression that this sale carries, on the very face of it, strong indications of fraud, or, in the words of the statute, of a “ purpose and intent to delay, hinder or defraud creditors.” It was made by a mercantile house, after it had become insolvent, and was pressed by the plaintiff for his debt, and had refused to give him any satisfactory statement of their affairs, and had, accordingly, been sued. It was not necessary to place that property immediately in other hands to manage it and to meet the growing demands upon it. The real estate was not immediately expensive to keep, and did not require those prompt and heavy expenditures incident to the possession of their mercantile capital. It was not a sale safe for themselves or the creditors, or calculated to be soon, and extensively, useful to either. The necessary inference seems to be, that it was a sale in trust, and for the purpose of placing the property beyond the reach of creditors. It is contrary to the ordinary course of dealing, and repugnant to the maxims of common prudence, to alienate such an immense real estate, without payment or security. A case of such a sale on such terms, and at the same time absolute and dona fide, is without example. Admitting the account exhibited by the purchaser to be just and true, (and this is a concession which he is"not entitled to ask without having made some effort to prove his account.) is it probable that a vendor, selling his real property in good faith, and for a fair price, would be content with a naked promise to pay in four years, and without interest, such an amount of the consideration as 66,400 dollars ? Or if he might acquiesce in this, because he was acting only as a trustee for certain favorite creditors, when the absence of self-interest might leave him to be more *300indulgent, can we suppose that he would submit voluntarily, and without any pressing necessity, *to leave another part of the consideration amounting to 221,783 dollars, without any other security than simple promissory notes, payable on long credit ? And all this extravagant credit was given to a merchant, in most precarious times, who was in the habit (as appears from his own accounts) of almost daily lending and sporting with his responsibilities and credit, to an unlimited extent, and who was, afterwards, involved in bankruptcy, without ever paying a single cent upon these notes ! I am induced to conclude that it would violate the dictates of common sense, and equally offend the most popular, as well as the most enlightened sense of justice, to admit such a transaction, under all its attending circumstances, to hold the character of a fair, honest, absolute sale, without any secret trust, or without any views hostile to the rights of the creditor.
It is, indeed, true, that the purchaser and the vendors say, that this was an honest and bona fide sale ; but do not the facts, which they all admit, outweigh the declaration ? And can a mere assertion be compared to the unequivocal language of the facts, and the necessary inference of law ?
The conduct of the parties, in other transactions, concerning the disposition of their property, seems to show, that H.F. was a mere agent or trustee of the grantors, for the security and deposit of their property. On these questions of fraud, all the circumstances, in respect to the dealings of the parties, are to be considered, and will assist in forming a just and accurate conclusion, especially if those dealings are connected with the complicated movements of one entire concern. Qua úngula non prosunt juncta juvant.
[ * 302 ]
*302[ * 303 ]
*300The grantors admit, that they, afterwards, agreed with H. F. that he should have credit on his notes, for debts due from them on judgments, in proportion as he might obtain or extinguish them; and he made some unsuccessful *efforts with the plaintiff to settle his debt. It is further admitted, that after the purchase and the creation of this enormous debt of H. F., resting on his naked promise, and after the extinguishment of all his demands and responsibilities, actual and contingent, the grantors, on the 26th of April, 1808, gave him four notes against Mint-urn &f Champlin, to the amount of 7,532 dollars and 38 cents, and which sum, when received, (as it was subsequently,) he was to give them credit for on account. But on what account was he to credit this money, when, only a few weeks before, all his demands had been satisfied, and he had become a debtor to them, to near 300,000 dollars ? So, again, the grantors, as well as H. F., admit, that on the 7th of June, 1808, be received of N. if. 851 dollars of their property, for whic'h he gave them credit. *302One would naturally suppose, from these facts, that, instead of being the debtor to such an enormous amount, after all possible demands of his had been silenced, that he continued realty a creditor, and was under constant alarm, and induced to exercise uncommon vigilance for the security of himself. There are several other very unaccountable facts in this case. The grantors say, and H. F. agrees with them in the fact, that since they stopped payment, he had been making advances and payments to them to the amount of 33,000 dollars, and was constantly supplying their necessary wants, and that this amount of charge was distinct from the consideration of the sale ; that is, it was distinct from every kind of demand, down to the 29th of March, 1808, which demands went to swell the account of H. F. to 143,803 dollars and 43 cents, and which were all absorbed in the consideration of the sale. But it is further admitted, that on the 3d of April, only jive days after the completion of the sale, the grantors gave H. F. an order on Minium &f Champlin, for the unascertained balance that might be coming from the assignment of the *ships and cargoes, which had been made to them; and for that sale of that balance, they were content to receive, and did receive, his notes, payable in one, two and three years, for 45,000 dollars. This was an astonishing instance of accumulated credit. The sale was, however, rescinded, by mutual consent, a year afterwards, when the grantors found it to be an obstacle in the way of their arrangements with M. &f C. respecting that residuary interest, over which they still acted as owners. The grantors did, also, on the same 3d of April, 1808, sell to H. F. the unascertained balance that might be coming to them, under their assignments of ships and cargoes to J. T. W. Here, also, they took in payment his notes, for this computed balance, to 21 $00 dollars, payable in one, two, and three years. These notes were without interest, and so probably were those given for the balance in the hands of M. C., though it could not have been known but that those balances might speedily be paid. Here were, then, new sales to H. F. following close upon the other, and new credit given to him, to 66,000 dollars, in a very heedless and extraordinary manner, by his single notes, payable at distant periods, without interest!
Henry F. claims, through his assignees, the judgments of the Heards, and of Mowatt, and of the Millers, against the grantors; but here the grantors avow his agency in buying in those judgments, and declare that they were satisfied by him as their agent. How can we possibly conclude otherwise, from a combined view of all these circumstances, than that Henry F. acted, throughout, as the agent, or trustee, of the grantors; and that the sale of the whole real estate *303was made purposely to cover the property, and protect it from the process of creditors ?
Assignments persmiaíproperty to a parcumstances vai,d-
I am, therefore, of opinion, that these conveyances ought to be declared fraudulent and void.
[ * 304 ]
3. The next point is, whether the assignment of the ships Manhattan and Milwood, and their cargoes, by A. & *J. F. to M. & C. were fraudulent, or valid assignments; and if valid, then upon what principles shall the assignees be held to account?
These assignments were made on the day that the FrankHns stopped payment. The avowed object was security and indemnity for advances and responsibilities, which had been made, or which might thereafter be incurred. The deeds stated that M. &f C. had made sundry advances and engagements for the grantors; and this is so declared in the answers of all the parties to the assignments, and proved by Stansbury and the other witnesses for these defendants, who, taken together, prove the whole substance of the answer. The answer of M. fy C. states, that the notes in schedule (A.) were given for, or in consequence of responsibilities incurred before the assignment; but I do not find that the proof explicitly establishes this. The clear existing responsibilities, when the assignments were made, were the contingent security to one of the banks for 40,000 dollars; the respondentia bond for a loan of 80,000 dollars, borrowed jointly with the grantors, on the cargo of the Manhattan, then on a voyage to and from Batana; the engagement to meet the drafts of the supercargo on that voyage, which, as it afterwards appeared, amounted to 72,575 dollars, 50 cents; and the engagement to pay, on behalf of the grantors, the bills of Brown Co., of Bordeaux, one of which they after-wards accepted to the amount of 6,477 dollars, 87 cents.
[ * 305 ]
These existing engagements were sufficient to justify the call upon the falling house of the Franklins, for the assignment of property in pledge; and under the peculiar situation of affairs at that time, it would have been difficult to have measured, with much precision, the necessary extent of the pledge. The circumstances under which these assignments were made, are not to be overlooked when we are considering their character and effect. One of the ships and cargoes was owned by M. &/• C. jointly *with the Franklins. That house had, at the time, stopped payment. A general embargo had just been laid, which was indefinite in point of time, and the reasons upon which it was understood to be supported, gave the public ground to presume, that the foreign commerce of the country was to undergo a long suspension. The event justified the anticipation, for the embargo was continued with unrelaxed severity for near eighteen *305months. What were the Franklins to do, in such a new and distressing state of things, with their East India ships and cargoes daily expected ? By stopping payment, they had avowed, if not an irredeemable insolvency, yet, at least, an absolute disability to prosecute business, and their credit was prostrate. They were not, therefore, able to meet the growing and heavy expenses which such arrivals, under the pressure of the embargo, would necessarily call for. The property must have been abandoned and sacrificed, or confided to the hands of other houses which had funds and credit adequate to the exigency of the case. The state of business arising from foreign commerce was excessively perplexed and alarming, and expedients were then allowable, which, perhaps, no other state of things could require, and which ought to be regarded with an indulgent eye, in reference to that crisis. I have no doubt that the assignment of the Manhattan and her cargo was justified under the then state of things, without any other existing responsibilities than what must necessarily have fallen upon M. fy C., in consequence of their joint interest in that property. It would equally have been the dictate of necessity and a sound discretion, without reference to the extent of their demands upon the Franklins, to have assigned the Milwood and her cargo to M. If C., or to some other house equally competent, by its credit and resources, to hold and manage the property, as trustees, for whomsoever it might eventually concern.
[ * 306 ]
*It is not necessary, however, to place the case on this ground, for the existing responsibilities were, of themselves, a valid consideration for the assignments; but it appears to me, that if there had been no existing engagement or debt whatever, the Franklins had a right to have assigned over the ships and cargoes to M. Of C. in trust, and, upon terms that were honest and fair, to sell the same, and, as agents or factors, to indemnify themselves for the general balance of their account, or for advances and responsibilities thereafter to arise. We have no bankrupt system to control the acts of the insolvent merchant, and in the absence of all legal liens, he may make such an assignment as I have suggested, provided it bears the marks of a reasonable discretion, and there is perfect candor and honesty in the intention. The creditor cannot interfere and control the disposition of the property, until he has created a lien by process of law, or without application to this Court, which will make the trustee duly account for the surplus, which may be stayed in his hands; this Court will also make him, as well as the debtor, answerable for any want of integrity in the whole proceeding.
Assignments of personal property bjr a debt- or in insolvent circumstances, and who has stopped payment, to secure a particular creditor for existing claims and engagements, as well as for future advances and responsibilities, if made bona Jide, and under circumstances which leave no doubt of the honesty and fairness of the transaction, will be deemed valid.
[ * 307 ]
I cannot entertain a doubt that the assignments in question were well and bona fide made. There were large existing responsibilities, affording sufficient aliment to support the assignments. Those responsibilities were changing every day, by reason of the rapidity and busy circulation of commercial paper. Nor do I doubt, from the fact of the admissions of all parties, and from the testimony of their clerk, that the notes of M. &f C., of a date immediately subsequent to the assignments, were only a continuance, under new shapes and renewals, of the prior engagements. Indemnity is a good consideration within the statute of frauds; (1 Burr. 474.) and I consider it to be a principle clearly settled, that a debtor, in failing circumstances, may prefer one creditor to another, and assign to *him part of his property in trust to pay the debt. An examination of a few cases will leave no doubt of the existence of this rule. Lord Holt, in Hopkins v. Grey, (7 Mod. 139.) recognized the right of a debtor in insolvent circumstances to prefer one creditor to another, as a right then well known, and in daily use; and the modern cases frequently take notice of it.
[ * 308 ]
It was decided by the K. B., in Estwick v. Cailland, (5 Term, 420.) that if a person, having several creditors, convey, by deed, the legal interest in part of his real and personal estate to a trustee, in trust, (after deducting the expenses of the trust,) out of the rents and profits to pay half the surplus to the grantor for his own use, and the residue among certain creditors named in a schedule, without any intention of fraudulently delaying the creditors not named, in obtaining their demand, the deed is valid in law. The debt of the creditor who called the deed in question existed long before the deed, but no suit had then been commenced. The only question raised at the trial was, whether the deed was void under the 13th Eliz., as being made to delay, hinder and defraud creditors. It was decided, that there was no fraud in the case; and Lord Kenyon said, and the other judges concurred in the opinion, that it was neither illegal nor immoral to prefer one set of creditors to another. The deed was good as far as the creditors in the schedule were concerned; and it was intimated, that after the schedule debts were satisfied, equity would probably direct the surplus towards satisfying the other creditors. So, in Nunn v. Willsmore, (8 Term, 521.) the grantor conveyed the lease of a farm, and all his effects and debts, to trustees, in consideration of a sum to be paid by one of them, in trust, to dispose of the property, and out of the proceeds to reimburse the trustee the sum advanced, and the other demands of the trustee, and then to pay such of his debts as the trustees should, in their discretion, think proper, and the surplus to be held *for the use of his wife. This deed was *308held good within the 13th of Eliz.; that it was neither fraudulent in fact, nor voluntary, from which the law infers fraud, and that, putting the bankrupt laws out of the case, a debtor may assign all his effects for the benefit of particular creditors. So, again, in Meux v. Howell, (4 East, 1.) after a creditor had distrained for rent, the debtor confessed judgment to another creditor, with a view to cover, and make a ratable distribution of his property among all his creditors. This judgment being in fact bona fide, and upon good consideration, was held not to be fraudulent within the statute; and Lord Ellenborough said, that it was not every feoffment, judgment, &c., that may have the effect of delaying or hindering creditors, that is fraudulent within the statute. This is the effect, pro tanto, of every assignment that could be made by one who has creditors. Every assignment of a man’s property, however good and honest the consideration, must diminish the fund out of which satisfaction is to be made to his creditors. But the feoffment, &c. must be devised of malice and fraud, to bring it within the statute-The object of the statute was to prevent deeds, &c., fraudulent in their inception and.intention, and not merely such as, in their effect, might delay or hinder other creditors.
[ * 309 ]
*309[ * 310 ]
*308The same doctrine has been frequently recognized by the Supreme Court of this state; (3 Johns. Rep. 84. 5 Johns. Rep. 344.) it is also admitted in the Courts of equity. (Small v. Oudley, 2 P. Wms. 427. Cock v. Goodfellow, 10 Mod. 489. Phænix v. Assignees of Ingraham, 5 Johns. Rep. 412. 426, 427.) Nor is an assignment, if honestly made, bad, though made to secure against future, as well as present, responsibilities. It is altogether a question of intention, and if that be free from fraud, the assignment is not void within the statute. It was accordingly said, by the Supreme Court of the United States, in the case of the United States v. Hooe, (3 Crunch, 73.) that *“ it is not in itself exceptionable that property should be bound for future advances. It may, indeed, be converted to improper purposes, but it is not positively inadmissible. It is frequent for a person who expects to become more considerably indebted, to mortgage property to his creditor, as a security for debts to be contracted, as well as for that which is already due.” The same doctrine was afterwards established by the same Court, in Chirras v. Caig, (7 Crunch, 34.) and a mortgage was held to secure debts contracted afterwards, on account of prior advances or liabilities. This is not a new doctrine. It depends upon the circumstances of the case, how far a subject pledged for a debt may be considered as a security for further loans. This is the amount of the language of the master of the rolls, in Jones v. Smith; (2 *309Vesey,jun. 372.) and in Demainbray v. Metcalfe, (2 Vern. 698.) this extension of the security was admitted. The plaintiff, in that case, pawned jewels to K. for 110/., to be redeemed in one year. K. delivered them to the defendant as a pledge for 200/., and afterwards borrowed 88/. of the defendant, on notes. The chancellor held, that as the defendant lent, as well the 88/. as the 200/., on the security of the pledge, though he took notes for the last loan, the plaintiff could not redeem, without paying all that was due to the defendant. Without meaning to sanction this case, in all its extent, it is sufficient to show the existence of a rule which the Court is competent to tolerate. We cannot but perceive the fitness of its application to this case, in which the debtor had the most powerful and justifiable inducements, in the then state of things, to assign his East India ships and cargoes, not merely to indemnify against present, but to provide against future advances, and to give the assignees a lien for the general balance of their account. It was admitted, in Green v. Farmer, (4 Burr. 2214. 1 Black. Rep. 651.) that a factor has a lien for his general balance. When the present assignments were made, no legal lien existed, *nor was a suit commenced; and it is not true, as our law now stands, that the debtor who stops payment, is thereby absolutely disabled from making a disposition of personal property upon the terms of these assignments. There is no such absolute disability going to every assignment, however honest the motive, or provident the act, or cogent the necessity.
I am, accordingly, of opinion, that these were fair and valid assignments, for purposes authorized by law; and the next and only inquiry is, whether there is any surplus which this Court ought to direct towards the satisfaction of plaintiff’s debt.
*310[ * 311 ]
[ * 312 ]
*3094. M. & C. took possession of the ships and cargoes when they arrived, and the same not being redeemed within three months, according to the proviso in the deeds of assignment, the legal title to the property became absolute. The assignees continued to bear all the expenses, and make all the disbursements which the entry and safe keeping of the property required. These charges were exceedingly heavy, amounting to upwards of 167,000 dollars. The difficulties, with regard to this property, were great and increasing, owing to the interdiction of commerce. The cargoes were principally intended, not for home consumption, where the demand was not sufficient, but for the European market. At last, in March, 1809, the grantees sold the ship Manhattan, with the approbation of the Franklins, and in April following, they became, themselves, the purchasers of what may *310be termed the equity of redemption in the other ship, and in the cargoes, by an arrangement between them and the Franklins as to the price. M. 8f C., and the Franklins, say, that the time of the agreement for the sale of the cargoes was in June, but the witnesses say it was in April, 1809. I am entirely satisfied that the true time was April, and that the parties have named June by mistake, though it does not strike me as very material which was, in fact, the true date. The merits *do not turn upon such a circumstance. As the grantors had become confessedly insolvent, without any hope of being able to redeem the property, and as the prices agreed on between the Franklins and M. C. were undoubtedly a fair and reasonable valuation of the Milwood and the cargoes, I see no objection to the arrangement which was made. The small, trifling retail of, comparatively, a very small part of the cargoes, at something of an advance price, I do not think deserving of much weight, in forming an opinion of the reasonableness and integrity of the sale of the whole cargoes. M. &/■ C. had an undoubted right to sell the cargoes, for the purpose of indemnity and payment. That right was given them by the deeds of assignment, and the only question that can be made is, whether they could not themselves become the purchasers, by accepting a release for a valuable consideration, or, what is the same thing, in this case, by the subsequent assent of the grantors, founded on a fair and adequate valuation. I see no objection to this measure, provided it does not interfere with any legal or equitable lien belonging to others, and provided it be done in good faith, without any views injurious to the claims of creditors. The only question that can arise is, Was the release of this residuary interest honest, and for a fair price? The Franklins, who were the cestui que trusts, are not calling in question the purchase from them by their own trustee, and even if they were plaintiffs, it would not necessarily follow that they could set aside the purchase; for it is well settled, (as I had occasion lately to examine in the case of Davoue v. Fanning,†) that a trustee may, under certain circumstances, purchase from his cestui que trust. There was no trust created by the assignments in favor of any third person. The plaintiff, as a creditor, is not entitled to interfere with the purchase, except upon the ground of fraud, or because he had acquired some legal or equitable *title to the property, prior to the sale. We will now see whether any such pretension to title be well founded.
A creditor to whom his debt- or has assigned property as security for advances and responsibilities, with an agreement that if the property was not redeemed within a certain time, the assignee might sell to pay and indemnify himself, may, after the expiration of the time limited, sell the property for indemnity; and may, with the assent of the debtor, become the purchaser thereof, and of all the equitable, or residuary, interest of the debtor, at a fair and adequate valuation; and such purchase, if made bona fide, and without intent to injure or defraud other creditors, will be valid, not only against the debtor, or cestui que trust, but against all other persons.
The plaintiff had issued execution on his judgments at law, the 6th of February, 1809, and, on the day following, the sheriff called on M. &f C., and showed the executions, *312and asked for the property of the Franklins in their posses- ■ sion. I cannot see upon what principle the executions affected or touched the residuary equitable interest of the Franklins, in the property which had been assigned. The legal title had become absolute in M. C., and a mere equity is not within the reach of process at law. I do not know of any case in which a Court of equity has considered an execution at law as binding an equitable right. The idea is altogether inadmissible. If the execution cannot sell, there is no reason why it should affect or bind a mere equity, and the doctrine would be equally inconvenient and absurd. The party’s only remedy, if he wishes to prevent the assignment or release of a chose in action, is by application to this Court; and without such aid, the validity of the transfer will depend entirely upon the question of consideration and fraud.
The mere equitable interest of a debtor in property assigned as security cannot be reached by process at law, or bound by execution.
The mere suing out of an execution does not create a lien on goods and chattels 5 but there must be an actual levying of the execution, to create a bar to a subsequent bona jide sale.
The property in gooas is not changed until the execution executed.
[ * 313 ]
The suing out of an execution is not, perhaps, sufficient, of itself, and without some further act, to stop the alienation of even a legal interest, or of the goods and chattels of the debtor, for a valuable consideration, to a stranger to the execution. A seizure, a taking into possession, an inventory, or some other act, amounting to what is understood by an actual levying of the execution, is requisite, as I am inclined to think, to create a bar to a subsequent bona fide sale. The words of the statute are, that no execution shall bind the property of the goods but from the delivery to the sheriff, and it does not appear to have fixed upon that period as absolutely binding the goods under all circumstances, but only that the lien shall not be carried further hack than that period. In the case of Lowthal v. Tonkins, (1740. 2 Eq. Cas. Abr. 380. pl. 14.) *the question came before Lord Hardwicke, how far an alienation of goods, by the debtor, subsequent to the delivery of the execution to the sheriff, was valid, and his opinion clearly was, that it was not necessarily void. He observed, that neither before nor since the statute of frauds, was the property of the goods altered, but continued in the defendant, until execution executed. The meaning of the statute was, that after the writ was delivered to the sheriff, if the defendant made an assignment of his goods, unless in market overt, the sheriff might take them.
It appears to me, therefore, upon a consideration of all the facts, that M. C. are accountable only for the proceeds of the property assigned, according to the price of sale agreed upon between the parties; and, for the same reason, they are entitled to the commissions which were agreed to be allowed them. This was a question entirely between the parties to the assignments; they were competent to settle the compensation upon fair and reasonable terms; the cred*313itors of the Franklins have nothing to do with that allowanee, any further than to see that it was honestly allowed, and not for colorable and fraudulent purposes. If the allowance had been unusually and extravagantly high, it might then have been evidence of a fraudulent appropriation of property. But the case does not warrant that inference, and we have no evidence to prove that the commissions allowed were more than a just and adequate compensation. If there be no inference of fraud, the quantum of the allowance cannot be called in question.
[ * 314 ]
Upon the whole, I am of opinion, that the defendants M. C. are to account for the property assigned, according to the sales and charges contained in the account current annexed to their answers. This account has been examined and ratified by the Franklins; and it appears to *me to be sufficiently proved by the witnesses adduced on the part of M. &f C., all of whom appear to be competent for that purpose, and to have no interest in the controversy between • the plaintiff and those defendants. By that account, the defendants M. &/• C. have duly accounted, and there is a small balance in their favor. If, however, the plaintiff wishes to have that account further investigated before a master, he must do it at the peril of costs, and upon the admission of the principles of this decree; but I do not, at present, see any reasonable cause why the defendants M. C. should be subjected to that burden.
5. The next branch of this complicated cause relates to the proceeds of the assignment of certain vessels and cargoes to J. T. Walden.
These assignments were made to procure a loan of money, and for the security of existing responsibilities. The Franklins, when they stopped payment, applied to the Waldens for a loan of 30,000 dollars, and the loan was effected, upon receiving an assignment of two thirds of the ship Savage, and the ship Huntress, and the schooner Hope, and their cargoes, by way of security for the loan, and for pre-existing engagements. The deposit may seem large, being property estimated at 120,000 dollars, for debts and advances to 44,000 dollars, and a remotely contingent security to the bank for 15,000 dollars. But, as has been already observed, the times were disastrous, and full of peril to all commercial speculation and dealing, and the expenses incident to the entry, storage and security of foreign cargoes, necessarily great. The Franklins had no means of their own ; they, therefore, acted discreetly in borrowing money upon that property, and in consigning it, by way of indemnity, to be sold upon commission. The only real question that can arise in respect to this transaction is, Have these trustees duly accounted ?
Where F., a debtor in embarrassed circumstanceSj made an assignment (on the face of it absolute) of property to W., a creditor, as security for a new loan of money, and for existing claims, and, also, for indemnity against existing and future engagements, especially all such as should arise in the management of the trust 5 and W., for the purposes of the assignment,effected a loan of money of P., on condition of guarantying to him a debt due to him from F., to be paid out of the proceeds of the property so assigned 5 it was held that P., by lending his money to TV. on this guaranty, acquired an equitable lien on the proceeds of the properly,
and was entitled to be paid his debt out of the proceeds in the hands of TV. in preference to other creditors.
Both parties agree as to the terms of the trust, notwithstanding the assignments were absolute.
[ * 315 ]
[ * 316 ]
*One principal point in the case is, whether the claimant, Under the guaranty of the 2d of March, 1808, (and who appears to be now the assignee of Coffin & Pell,) is entitled to be paid out of the surplus, in preference to the plaintiff. I am of opinion that he is entitled to that preference, provided the engagement was fairly and bona fide made at the time. The Waldens were in possession of the property by an assignment absolute on its face; and by their agreement with the Franklins, they were to receive indemnity from the property against all their existing and future engagements on behalf of the grantors, and especially against such as should necessarily arise in the management of the property. They effected a loan of money for the purposes of their trust from Benjamin Pell, upon the condition of giving him a guaranty of the debt he held against the Franklins, to be paid out of the proceeds of the assignments. This was considered as an advantageous loan upon that condition; and the question is, Shall this Court divert the proceeds from the fulfilment of that guaranty to the payment of the plaintiff’s debt ? The plaintiff, at the time of this guaranty, had commenced his suit, but had done nothing more. The debt of Benjamin Pell stood upon equal pretensions, and the debtors might have elected to have given a preference to either. The plaintiff is not entitled to the aid of this Court in pursuit of those proceeds, until all prior legal and equitable liens are satisfied. It may be that the Waldens had no right, under the agreement, to bind the Franklins by such a guaranty. Suppose this were to be admitted, yet the plaintiff does not stand here as the representative of the Franklins, to litigate every charge against them upon strict legal principles. The inquiry is, whether Pell did not acquire, by that guaranty, an equitable lien, which the plaintiff ought not to be permitted to question. He lent his money on the express condition of such a guaranty. It was a condition which he had a right to prescribe. The loan *was deemed beneficial for the interest of the Franklins, even upon that condition, and they have never complained of it. It was the appropriation of so much of their property towards the discharge of a just and bona fide debt. The Waldens, who made this guaranty, or pledge, of these proceeds, had, at the time, the absolute legal title to the property; and the loan thus procured, went to answer the purposes for which the trust was created. The claim of Pell has, accordingly, an equity, in respect to these proceeds, which the plaintiff has not, and it ought to be preferred.
The next disputable item in the account of the Waldens, *316the charge of commissions, which was a matter of agreement at the creation of the trust, and if made in good faith, as we have no reason to doubt, the agreement is not now to *3e disturbed. The parties were competent to judge for themselves at the time of the original agreement, what would be a suitable compensation under the then existing circumstances ; and a third person can have no right to interfere, unless the allowance be so disproportionate to usage and the nature of the service, as to be evidently a colorable disposition of property to defraud creditors.
There is a question also before me, as to the competency of the proof offered by the Waldens in support of their answer. But after settling the principles in all the disputed points arising on stating their accounts, they can, if necessary, be put to the proof of their account in the examination before the master. I presume, however, that after this opinion, the plaintiff will not think it necessary to pursue an jnquiry before the master, as it is understood that there will be no surplus remaining to which he would be entitled.
[ * 317 ]
I shall, accordingly, decree that the several conveyances of real estate from Abraham &f John Franklin to Henry Franklin, as stated in the pleadings, and made in *the months of February and March, 1808, be declared fraudulent and void ; and I shall reserve the question of costs, and all further questions, until the plaintiff shall have had an opportunity of applying, if he shall so elect, for a reference to a master to take and state, upon the principles of this opinion, the accounts of Minium 8f Champlin, and of Jacob &f Thomas Walden, as assignees of the vessels and cargoes in the plead ings mentioned.
Decree accordingly.

 Ante, p. 252.