Court Opinion

ID: 8257940
Source: CourtListenerOpinion
Date Created: 2022-10-16 15:33:54.637162+00
Date Added: 2024-06-11T16:43:04.189265
License: Public Domain

Shackelford, C.J.,
delivered the opinion of the court.
On the 20th day of March, A.D. 1867, the defendants in error filed, in the Circuit Court of Lawrence county, their affidavits, in which it is alleged that ’William P. Baggett, of said county, is indebted to them in the sum of $5,370.06, and that said Baggett “ has property, and rights in action, which he converts, and unjustly refuses to apply to the payment of his debts; that he has assigned and disposed, or is about to assign or dispose of his property or rights in action, or some part thereof, with intent to defraud his creditors, or give an unfair preference to some of them; and that he has converted, or is about to convert, his property into money, or evidences of debt, with intent to place it beyond the reach of his creditors and thereupon, the usual attachment was sued out by the defendants in error, against the estate of said Baggett, and placed in the hands of the sheriff of said county, and by him it was levied upon certain real estate and personal property, as the property of the said Baggett, on the 20th day of March, 1867. . On the 30th day of March,. 1867, J. J. B. Hilliard made affidavit before the cleric of the Probate Court of said county, that the goods, wares, and merchandise attached as aforesaid by the sheriff, on the 20th day of March, A.D. 1867, under and by virtue of the attachment sued out by defendants in error, against the estate of said Baggett, belonged to him, and that he was the owner of said property as trustee under a deed in trust, executed on the 19th day of December, A.D. 1866, by the said William P. Baggett, to him as trustee, for the use of Summers & Brannin; and prayed for the possession of the property.
Claimant Hilliard executed bond, and the property so attached was delivered up to him by the sheriff.
About the same time, other creditors, who are named in the record, attached the same property as the property of Baggett in controversy in the case under consideration.
An issue was made up at the May Term, 1867, of said Circuit Court, to try the right of property, and the case submitted to a jury. ■ Before the trial of the right of property, judgment was obtained at the May Term, .1867, upon the debt of defendants *776in error, and upon the claims of the other attaching creditors of Baggett; all of which judgments were read at the trial.
The jury found a verdict for the plaintiff in attachment, and assessed the damages, or value of property attached, as $11,012.69.
A motion was made for a new trial by the claimant, which was overruled by the court, and exceptions taken to the ruling of the court, and brings the case here by writ of error.
The grounds for the motion for a new trial are:
1st. Because the verdict is against the evidence and instructions of the court.
2d. Because the court erred in refusing to grant the fifteenth and sixteenth instructions asked by the claimant.
3d. The court erred in modifying the instructions asked by the claimant.
4th. The court erred in giving the. first, second, and third instructions asked for by the plaintiff in attachment.
The first error assigned is the refusal of the court to grant a new trial to plaintiffs in error; which we shall now proceed to consider.
On the trial, the deed in trust executed on the 19th day of December, 1866, by "William P.‘Baggett, to J. J. B. Hilliard, trustee for the parties, was read to the jury with a paper of even date, signed by Summers & Brannin and William P. Baggett; dtpplicates having been signed, one delivered to Baggett, and the other retained by Summers & Brannin.
In this deed, certain real and personal estate is conveyed, transferred, and sold to the said J. J. B. Hilliard, to secure the payment of a note for the sum of forty thousand dollars, executed and delivered by Baggett on the 19th December, 1866, to Summers & Brannin, and due and payable ninety days from date, payable at the Canal Bank of New Orleans.
In this deed, conveying real and personal estate to ITilliard, is included the stock of goods, wares, and merchandise then in the store of the said Baggett, in the town of Brookhaven. It is further provided, that in case Baggett failed to pay the said note at maturity, then the said J. J. B. Hilliard is to take pos*777session of the personal estate, and sell that on ten days’ notice, and the real estate on thirty days’ notice; the cotton embraced in the deed in trust was to be immediately shipped by Baggett to Summers & Brannin.
The concurrent paper above referred to is in substance, that there was a large unsettled balance between said Baggett and Summers & Brannin, growing out of various assignments of cotton by Baggett to them, and various advances of money by them to Baggett; and that they contemplated a continuance of like transactions between them up to the maturity of said note, and it being uncertain what may be the balance due them by said Baggett to them; and that the object of the said note and of said deed in trust, is to secure the balance that may be due by Baggett to Summers & Brannin at the maturity of said note.
It is further provided therein, that Summers & Brannin are to advance to the said Baggett $70 peY bale, in cash and groceries for such cotton as he may, before the matv/rity of the said note, purchase or trade for, and consign to Summers & Brannin; it is further provided, that it was not to incliide any of the cotton embraced in the deed in trust, “ or any of the cotton expected of Larkin.” It is shown that Baggett owed Gartman & Strickland $1000 for cotton, and “which Baggett is to make all reasonable efforts to pay out of his own means;” if he could not, Summers & Brannin are to advance the amount on the receipt of the cotton.
Summers & Brannin obligated themselves to take up Baggett’s acceptances in favor of his New York creditors to the amount of $8000, about to fall due before the 1st of January, 1867, and Baggett’s draft in favor of J. Bloom & Go., of New Orleans, for $3500, and pay $500 or $1500 for groceries, Baggett’s purchases in December, 1866; all of which are to be placed to the debit of Baggett, on his account with Summers & Brannin.
On the maturity of the said note of $10,000, the said Summers & Brannin are to state the account, and the balance due by Baggett, if anything, to them, “ will be the amount due them on said note.”
*778Tlie deed in trust was not recorded until the 30th of January, A.D. 1867.
The contract explanatory of the deed in trust was not recorded.
Thé first objection urged by counsel for defendants in error against the validity of the deed in trust in the record, is, that it is fraudulent and void as to Baggett’s creditors, because the deed did not express on its face that it was “ to secure future advances.”
Counsel cite 4 Kent’s Com. pp. 176-7, for authority in support of this position. It is laid down in the text referred to “ that a mortgage or judgment may be taken and held as a security lov future advances and responsibilities, to the extenof it, when this is a constituent part of the original agreement ; and the future advances will be covered by the lien, in preference to the claim, under a junior intervening encumbradles, with notice of the agreement. The principle is, that subsequent advances cannot be taclced to a prior mortgage, to the prejudice of a boná-fide junior encumbrancer / but a mortgage is always good to secure future loans, when there is no intervening equity.
“It is necessary that the agreement, as contained in the record of the lien, should, however, give all the requisite information as to the extent and certainty of the contract; so that a junior creditor may, by inspection of the record, and by common prudence and ordinary diligence, ascertain the extent of the encumbrance.” “ This is requisite to secure good faith, and prevent error and imposition in dealing.”
In the case of Brinkerhoff v. Marvin, 5 John. Ch. Rep. 820, Chancellor Kent, deciding the case, says: “A judgment .or other security-may be taken and held for future responsibilities to the extent of it.” Referring to the case of Livingston v. McInlay, 16 John. Rep. p. 165, he says: “ The Superior Court observed that if it was part of the original agreement, a judgment may be entered as a security for future advances beyond the amount then actually due; in like manner, a mortgage may be held as a security for future advances. The limitation *779to this doctrino, I should think, ■would be, that when a subsequent judgment or mortgage intervened, further advances, after that period, would not be covered.” . In this case, the purposes of the judgments were expressly declared by concurrent receipts, and their validity (the judgments) sustained by the Chancellor.
In this opinion, Chancellor Kent cites the case of Shirras et al. v. Craig et al., 7 Cranch. p. 34, as authority, and uses this language in reference thereto: “ A mortgage should stand, to secure the real equitable claims of the mortgagee, whether .they existed at the date of the mortgage, or arose afterwards, and before notice of the defendants’ equity.”
In the case of Shirras et al. v. Craig et al., at the time of the execution of the mortgage, Gardiner, the mortgagor, was supposed to be solvent; and the mortgage was executed in part to secure the payment' of money actually due at the time and in part to secure sums tobe advanced, and to indemnify some of the mortgagees for liabilities to be imcu/rred.
The mortgage was dated the 1st of December, 1801, and recorded on the 14th of September, 1802, and purported, on its face, to secure £30,000 sterling, due to all the mortgagees; it was really intended to secure different sums due at the time from particular mortgages, and advances afterwards toba made, and liabilities tobe incurred, to a certain amount. Chief-Justice Marshall, delivering the opinion of the court, held the mortgage to be valid, and affirmed the decision of the Vice-Chancellor of Georgia, sustaining the mortgage.
There have been repeated adjudications upon the doctrine announced in these decisions, recognizing and approving it, by many of the most enlightened tribunals of last resort in the Union. Collins v. Castile, 13 Maine Rep. 254; Craig v. Tappin, 2 Sand. Ch. 78; Bank of Utica v. Finch, 3 Barb. Ch. 293; 15 Ohio, 253; 23 Hen. S. C. Rep. p. 14; 30 Barb. 268; Robinson v. Williams, 22 N. Y. C. A. 380; 23 Conn. Rep. 123; 20 Conn. Rep. 427; Ball v. Fleming, 1, 1 Beas. p. 13; 24 Pickering, p. 274; 8 Bentham, 287; Mix v. Coles, 20 Conn. Rep. 420; 36 Penn. State, 170.
*780These authorities, we think, are conclusive against the objeción, raised by counsel, against the validity of the deed in question; because it is not shown upon its face that it was intended to secure future advances, as well as advances already made.
We are, under this view of the law, unable to concur with counsel for the defendants in error, in his construction of the text above quoted from 4 Kent’s Com. pp. 176-7. This refers clearly to the agreement entered into between the mortgagor and mortgagee, at the time of the execution of the deed intended to secure future advances: in the use of the language, that “this agreement should give all the requisite information as to the extent and certainty of the contract.” The distinguished commentator only intended to show what it should contain, and not that it should be placed upon record with the deed, or that it should be embodied in the deed. If he intended to convey any such idea, he would not have said, “ that a junior' creditor may, by an inspection of the record, and by common prudence and ordinary diligence, ascertain the extent of the encwnbrance.” This language intimates plainly, that the party. wishing to deal with the mortgagor has to go farther than the record to ascertain the extent of the encumbrance.
The deed in trust, or mortgage, being on record, showing a lien for a definite amount, places a party upon his guard; “ and by ordinary diligence and common prudence ” he could readily have ascertained the extent of the encumbrance, by demanding an inspection of the concurrent contract, entered into at the time of its execution by the parties to the deed.
This view of the doctrine laid down in Kent was recognized and affirmed in 3 Barb. Ch. Hep. 293 ; where the court held that it was a sufficient compliance with the doctrine of notice to record a mortgage in form, and state a specific sum therein, because this warns the public to the extent of the lien.
Hilliard, in his work on Mortgages, also adopts this view as a sound rule. Yol. i., § 46, p. 318, and cases cited.
In the case under consideration, Baggett, as well as Summers & Brannin, had duplicates of the concurrent agreement *781explanatory of the lien in the deed in trust, which, is sufficiently explicit and certain to show the real extent of the lien created in the deed in trust; it is clearly within the rule laid down by Chancellor Kent, previously quoted.
The deed of trust in question was placed upon record on the 30th of January, A.D. 1867, and the defendants in error contracted their debts with Baggett on the 13th day of February, 1867, some fourteen days after the deed was placed upon record. The recording of the deed was notice to the world of the encumbrance upon the property conveyed therein by Baggett to the trustee.
The third instruction given by the court to the jury at the instance of the defendants in error, and excepted to by plaintiffs in error at the time, and made by'them one of the reasons why a new trial should have been granted, and one of the grounds of error, in plaintiffs in error’s second assignment, is in direct conflict with the doctrine of notice, and of the law relative to deeds and mortgages, to secure future advances to grantors, etc. It is in these words: “A mortgage or deed of trust made to secure future advances must make that fact distinctly appear on the face of the deed, or it is void, as between third parties who claim without actual notice of the intentions of the grantor and grantee, in the deed of trust.”
It was error to grant this instruction.
Another position assumed by counsel, in opposition to the enforcement of the deed in trust, is, that it was inoperative, because the amount mentioned in the note was paid off and discharged before the maturity of the same.
This position is solely maintained upon the assumption that Baggett had shipped sufficient cotton to Summers &■ Brannin, from the date of the deed in trust to the time of the surrender of the property to the trastee, to pay off the $10,000 note.
It was shown to the jury on the trial, by the testimony of Summers, one of the firm of Summers & Brannin, the cestui que trusts, and not denied by Baggett, that' the cotton in the hands of Summers & Brannins, at the time of the execution of the deed in trust, was encumbered with an advance of $70 per *782■bale, and the United States tax; and in addition to this, that Baggett .owed them $00,000 for cash advances previously made to Baggett. Summers & Brannins assumed and paid $8000 of Baggett’s acceptances in favor of his New York creditors, and the sum of $3500 to J*. Bloom & Co., of New Orleans, for groceries, and $500 more for balances due in New Orleans for groceries, etc.; and by the contract, Summers & Brannin advanced $70 per bale on all the cotton subsequently shipped by Baggett to them. The overplus arising above these advances only reduced the $40,000 note $9;139.60, leaving a balance due Messrs. Summers & Brannin, at the maturity of the note, of $30,860.46, on the 16th day of March, A.D. 1867.
The facts developed by this testimony do not warrant this assumption, as there was no agreement that this overplus should be applied in' the way contended for by counsel.'
If the deed in trust under consideration was made bona fide, and with no intention to hinder, delay, or defraud existing creditors, as. was stated by Mr. Summers and Mr. Baggett to the jury, one being a cestui que trust, and the other the grantor in the deed, 'and was valid at its creation, it cannot be affected by subsequent events; and no subsequent fraudulent or illegal act of the parties can invalidate it. Burrill on Assignments, p. 442.
But it is insisted by counsel that the deed in trust is void on its face, because the grantor, Baggett, was permitted to remain . in possession' of the personal property intended to be transferred by the deed, including .the stock of goods, etc., and to sell them, from the date of the deed to the maturity of the note, and cites us to the. case of Collins & McEvoy v. Myers et al., 16 Ohio Rep. 547. There is a material* difference between the mortgage in the Ohio case, and the deed under consideration: in.the first there was a power of.sale expressly given .to the mortgagor; in the other, the property was only permitted to remain in the possession- of Baggett ■ until the condition of the deed was broken, and contains no power of sale to Baggett, expressly or directly given.
In their adjudication upon the : mortgage in the Ohio-case, the court held that:
*783The power of sale contained in the deed was inconsistent with the declared purposes of the deed; that property stood as a security for the debt; which it could not be if the mortgagor was to sell it, and therefore void.
But as there is no power of sale in the deed under consideration given to Baggett, we do not consider it void upon its face; and to have it declared void it must be impeached for fraud, by extrinsic evidence, and can be avoided by showing it was given to hinder, delay, or defraud creditors.
This court has decided that the retention of personal property by the vendor in the case of an absolute sale, is not per se void, but only prima facie fraudulent. Comstock v. Rayford et al., 12 S. & M. p. 369. And such is the general rule in most of the courts of the Union.
But it has been repeatedly decided by this court, that in the case of a deed in trust or mortgage, a retention of personal property by the mortgagor or grantor, and a stipulation in it that he should retain possession until, by the terms of the deed, it should be surrendered for sale, for the satisfaction of the debt secured, is not prima, facie fraudulent, but, being consistent with the instrument, is entirely legitimate and proper. Bogard v. Gardly, 4 S. & M. 302; Harvey v. Park, 4 S. & M. p. 229. In the latter case, the grantor, Wall, executed a deed in trust to indemnify his securities, on an administration bond; and conveyed to Park & Clifton all his land and negroes, all his household and kitchen furniture, his horses and mules, and farming utensils, and crops of cotton to be after-wards raised, with a reservation to himself of possession of the property.
.But it is insisted by counsel, that inasmuch as the evidence showed that Summers & Brannin permitted Baggett to sell and dispose of the goods, wares, and merchandise in the deed, this fact of itself is per se fraudulent.
It may be a circumstance, from which a jury might infer fraud, and it may be prima facie fraudulent, or it may have been innocently or carelessly done- on the part of both contracting parties, without an intention to defraud any creditor; *784and the question, whether there was a fraudulent intent in the creation of the deed, was a question for a jury alone (where the deed was not fraudulent upon its face), and the court could not determine it.
Keeping in view the principle, that if there was no fraud in the creation of the deed, if the grantor Baggett had paid the proceeds of the goods sold .by him, embraced in the deed in trust, to the extinguishment of his indebtedness to Summers & Brannin, were they not legitimately applied ? If they were not applied to the payment of Baggett’s debts to Summers & Brannin, they were the only parties defrauded. Certainly, if Baggett had sold all the goods embraced in the deed, and applied the proceeds to the extinguishment of his indebtedness to Summers & Brannin, defendants in error could not complain, and they could not set up this fact to show a fraudulent intent to defraud them on the part of Baggett, or the cestui q%oe trusts in the' deed.
In the case in 16 Ohio, above referred to, the court says: “ That the mortgagee should permit the mortgagor to transact business for his own benefit, and not proceed to collect the mortgaged debt, would not be evidence of fraud which would authorize the mortgagee to be defeated, upon the ground that it hindered or delayed creditors; because the. mortgage may have been honestly executed, and simple generosity, or good nature, or carelessness in delaying the collection of a debt, could not be regarded as a fraud which would defeat an honest security.”
In the case at bar, there was no delay on the part of the cestui que trusts to have their deed enforced; they proceeded to have it executed by the consent of Baggett before the maturity of the $40,000 note, it having been shown that Baggett ceased to ship any cotton to Summers & Brannin after the 1st of February, A.D. 1867. Still, Summers & Brannin, carrying out their contingent obligation to pay the balances to be paid Gartman et al. in their contract, in the failure of Baggett to pay out of his own funds, transmitted $3000 for that purpose to Baggett, after Baggett ceased to ship cotton to them.
*785Shortly after this time, the cestui que trust opened negotiations with Baggett, to get his consent for the sale of the property embraced in the deed, previous to the maturity of the $40,000 note. This consent was not procured until the 16th of March, 1867, when Baggett made and executed, in the presence of witnesses, a transfer of all" the goods in his storehouse to <T. <J. B. Hilliard, the trustee, and with the transfer delivered . possession of the goods in the presence of witnesses. Delay cannot be urged as a ground of fraud, in connection with the permission of Summers & Brannin to Baggett to sell the goods, as was urged in the Ohio case.
As we have-before stated, the question arising out of the circumstances under which the deed in question was executed, is one of fraud or no fraud against the defendants in. error, and a question of fact for the jury, and not for the court.
This court, in the case of Gilliam v. Moore, 10 S. & M. 130, has held that it is erroneous for the court to assume that fraud in fact exists, and this error will not be cured because the record seems to make out a case of fraud; the jury have a right to pass upon the question, and it is neither for the court below nor the High Court of Errors and Appeals to preclude them from the inquiry. Ib. 130.
It will be observed that Hilliard, the trustee, had been in possession. of the goods, etc., four days before, they were attached by defendants in error as the property of .Baggett.
On this state of facts, if it were true, that deed contained a power of sale by the grantor, and was therefore. void as to creditors who might obtain a lien upon the goods while-in the possession of Baggett, and before the trustee took possession, yet Boos & Co., who only levied their attachment four days after the trastee took possession, and at that time being creditors at large, without a lien of any kind,' cannot maintain their right under their attachment levied after Hilliard, the trustee, had obtained possession, under the transfer executed by Baggett on the 16th day of March, 1867. ■
The identical question was decided in the case of Foster v. Saco Manufacturing Co., 12 Pickering, 451. In that case the *786deed in trust stipulated that tbe grantor should remain in possession of all the property, and sell and dispose of all the personal property, according to the usual course of their business, unless the trustee should be of the opinion that the safety of creditors required them to take immediate possession. Chief-Justice Shaw delivering the opinion of the court, said that “ the first obvious remark upon the facts of the case is, that the assignment, as to the personal property, was inoperative, .and void against any creditor who should home attached before the trustee toolc possession. The stipulation that the vendors should remain in possession, and have the use of the property, would have rendered it void as against creditors.
“ But it was a good executory contract, and when the property was actually taken in pursuance of its terms, the sale became complete.
“ The possession accompanied and followed the deed.” Bartelle v. Williams, 1 Pick. Rep. p. 288.
The deed also contained a provision that after-acquired property should be subject to its provisions, on a contingency and for certain purposes expressed in it. Speaking in reference .to such property, he says: “ The same principle applies to the property to bo acquired after the date of the deed.
“ It was a good executory contract between the parties for a future sale, by deed, to take effect and become executed upon a contingency. The possession was taken pursuant to the contract, and with-the consent of the vendors, the sale, as between the parties, was complete.”
. He then proceeds to declare that the attaching creditors had no right to interfere.
This case would bo decisive of the one now.under consideration against the defendants in error, even if .the deed contained an express stipulation that Baggett “ should continue to sell the goods embraced in the deed in trust.”
■ The doctrine announced’ in the cases in 1 and 12 Pick. Rep. 288 and 451, is clearly applicable to the state of facts existing at the date of the levy of the attachment of defendants in error, the sale having been complete to the trustee *787before that time. The deed is regular on its face, and if impeachable for fraud, it had to be done by testimony aliunde the deed.
What the jury might have found on an issue to that effect, this court cannot know. They are precluded from the privilege of determining that question by the first and third instructions given to them at the instance of the defendants in error. The first is in these words: “ If the jury believe from the evidence that the deed in trust in question was made with a view of protecting Baggett in anyway from his creditors, it is void, and the claimants acquired no right under it, and they should find for the plaintiffs.”
The rule announced in this instruction is too broad, and could do nothing less than mislead the jury. '
The court omitted to state in the instruction the fra/udulent intent, which is essential to avoid conveyances of this kindBaggett had a right to prefer his creditors. Summers & Brannin were his creditors to the extent of a cash balance due them of $60,000, and it was lawful to secure them for this indebtedness, and for that he was about to create with them, by conveying his property for that purpose; if the conveyance was made for this purpose, and not with the intent “ to hinder, delay, or defraud ” his other creditors, the conveyance is valid, although it was made to protect Baggett’s property from other creditors. That being the object and purpose for which assignments are made preferring creditors, any incidental protection the deed in question may have given Baggett from his creditors, until condition broken, certainly would not render it void as to subsequent creditors.
The old common-law rule, holding that a deed fraudulent as to existing creditors is fraudulent as to subsequent creditors, has to be considered in connection with our Statute of Fraiids, which modifies it. It declares, that such conveyances shall only be void as against those who are delayed, hindered, in the collection of their debts, etc.
This statute has been repeatedly construed to apply only to existing creditors by this court. In the case of Bullet, Mil*788ler & Co. et al., v. Taylor & Richardson et al., 34 Miss. Rep. 708, the judge delivering the opinion in that case says: “ If it were now an open question, the language would seem to be too cleár tó admit of construction. The conveyance is void as to all who are, at the time of its execution, in a situation to be injured by it, but valid as to all others. It operates to transfer the' property, but transfers it with the incumbrance of the grantor’s'debts then. existing.” ' This adjudication was made upon the statute in Hutch. Code, 638.
No subject has given rise to a greater number of decisions, nor to a greater variety and conflict.of judicial opinions, than the construction of the statute 13 Eliz., of which most of the Statutes of Frauds of the different States of the Union are substantial copies. The statute in Hutch. Code, p. 638, adjudicated upon by- this court in the case of Bullett, Miller & Co. v. Taylor et al., is nearly a transcript from that of 13 Eliz.
The'rulings of this court upon this statute, as to the effect of it upon the rights ■ of subsequent creditors, where the deed has been declared void as to existing creditors, have not been uniform. ' -
In the case of Henry v. Fullerton, 13 S. & M. 634, which was a case of a subsequent creditor, the court held “ that if a subsequent creditor can show actual fraud as to existing creditors, the deed would be void as to such subsequent creditor.”
In 14 S. & M. 142, the court, quoting Henry v. Fullerton, the above language, said, “ The language is very general,’ and it is difficult to extract any entirely definite rule. It seems, however, beyond doubt,' if the party is insolvent at the time of mahing the voluntary conveyance, it is void as to subsequent creditors.” In the case of Winn v. Barrett, 31 Miss. Rep. 657, this'rule is modified in this' case,, the court holding, that “if it do not appear that the debts existed at the time; the disposition of the' pi’operty was made, the transaction cannot, as a general rule, be said to be fraudulent as to creditors,” and giving the same construction to the statute as in the case of Bullett, Miller & Co. v. Taylor & Richardson et al. Judge Fisher, delivering the opinion of the court, goes on to say : “ It is true *789that it has been held in some eases that where a conveyance by a debtor was fraudulent in its inception, as to his.creditors, at the time, it will bo so treated as to subsequent creditors. But these cases must rest upon one of two principles: the property was either so situated that it enabled the debtor to obtain credit upon the faith of it; or the fraudulent vendee was regarded as trustee tender the secret arrangement between the parties, and in virtue of such secret understanding, bound, at least so far as his word or such contract could bind him, to account to the fraudulent vendor; and hence the creditor was allowed to be substituted, to what was treated as the substantial interest of his debtor, and subject the property to the payment of his debt.”
The statute in Hutch. Code, p. 638, quoted in the foregoing cases, is literally copied into the Bev. Code, p. 358, art 2. But it seems, with a view to settle for the future the construction of our Statute of Frauds relative to subsequent creditors, in art. 3, p. 359, Bev. Code, the legislature, after quoting the statute from Hutch. Code, further restricts the general rule, and declares : “Nor shall it in any case extend to creditors whose debts.were contracted after such fraudulent act, unless made with the intent to defraud them ; and though a conveyance or contract be decreed void as to prior creditors, it shall not on that account be void as to subsequent creditors or purchasers.”
There was no controversy between the cestui qu,e trusts in the deed under consideration, and prior creditors. It was attached on the ground that it was fraudulent as to subsequent creditors. Under the Statute of Frauds, unless defendants in error could show that the deed was executed by the parties to it, “ with the intent ” to hinder, delay," and defraud them, they had to fail in their attachment on that ground.
The grantor, Baggett, and Summers, one of the-cestúi que trusts, who had the deed prepared, testified before the jury, that the deed was made bona fide, and with “ no intent to defraud any one.” This testimony, taken in connection with all,the circumstances at the time of its execution.and subsequent thereto, having any legal bearing upon the case, or in any wise tending *790to show a fraudulent intent on the part of the parties to the same, to defraud the defendants in error, was for the consideration of the jury alone.
This instruction, we think, was clearly in conflict with the provisions of art. 3, Eev. Code, above referred to, and unwarranted by the testimony.
The second instruction does not announce the law correctly, and is indefinite, and in conflict with the provisions of art. 3, Eev. Code, above quoted.
We are therefore of the opinion that the second assignment is well taken.
We now come to the consideration of the third assignment of error. It is, that the court erred in refusing the fifteenth and sixteenth instructions asked by plaintiffs in error.
The fifteenth instruction is as follows: “ That the plaintiffs in execution, A. Eoss & Co., are bound to make out their case, and to show by testimony that the certain property levied upon is subject to the attachment; and if they shall believe from the evidence that only a portion of the property is so subject, and that the plaintiffs have failed to show by testimony what specific portion or articles are so subject, then they should find a verdict for the claimant.”
It is insisted in behalf of the defendants in error, that this instruction was properly refused, as the rule in claimant cases is, that it is sufficient for the plaintiff in execution or attachment to show that the goods were in the possession of the defendant when levied on; and that creates the presumption that the ownership is with the possession, and that the claimant must then show title, etc. This is a sound rule; but to make it applicable to the case under consideration, the plaintiffs in attachment or execution had to show that the goods attached were in the possession of Baggett at the time of the levy.
The proof was undisputed, that on the 16th of March, A.D. 1867, the entire stock of goods levied upon by defendants in error, under their attachments, had been transferred to Hilliard, the trustee, and that he had remained in undistui’bed pos*791session of them from that time up to the 20th of March, 1867,, the day of the levy.
To do away the effect of this testimony, counsel insist that the grantor Baggett’s statement, that Summers & Brannin were to pay him $3000 to pay balancés due Gartman et al., rescinded the contract of delivery to Hilliard.
Summers stated he had transmitted this amount about the 1st of February, 1867, to pay these balances, and explains the subsequent promise to Baggett to pay these balances, by stating that it was contemplated by the parties to sell the stock- of goods to one Millsaps. This sale fell through. If it had not fallen through, three thousand dollars’ worth of notes of Mill-saps were to be transferred for that purpose. This promise does not appear in the written transfer to Hilliard, the trustee. If it depended upon the condition stated by Summers, and was to be paid only in case the sale was made to Millsaps, this transfer could not be affected by the failure of Millsaps to purchase the goods. But if this sum was to be paid in any event, then Baggett can hold Summers & Brannin liable to pay the $3000 for the use and benefit of Gartman et al. It is a matter the defendants in error cannot avail themselves of to avoid the transfer to Hilliard, the trustee. It is a contract entirely between Summers & Brannin and Baggett, with which the defendants in error are not in any wise pecuniarily interested.
It was piuely a question of fact for the consideration of the jury, whether Hilliard was in possession of the goods, by virtue of the written transfer of the 16th of March, 1867, from Baggett to' him, on the 20th day of March, 1867; and if they believe that possession was complete in Hilliard, it was incumbent upon the plaintiffs in attachment to show what property levied upon was subject to their attachment. .
Bor these reasons, we think the proof in the case warranted the instruction, and it should have been given, and it was error to refuse it.
The giving or the refusal of the sixteenth insti’uction, in either event, could not have affected the verdict of the jury. *792The twelfth instruction'given for the claimant is in effect the same as the sixteenth instruction; in the absence of the twelfth, the sixteenth should have been given.
Wo have arrived at the fourth and last assignment of error, which is, “ that the court erred in modifying the sixth instruction asked by plaintiffs in error, and giving the same as modified, and refusing to give the same without modification.”
The modification complained of is in these words: “ If the note it was intended to secure was for debts then due.” We think this modification was erroneous, for the reasons given in our consideration and disposition of the question raised upon the third instruction given for the plaintiffs in attachment; the instruction should have been given without modification, and it was error to refuse it.
It necessarily follows, from these views of the questions considered, that the verdict must be set aside.
Let the judgment be reversed and a new trial awarded.