Court Opinion

ID: 6502394
Source: CourtListenerOpinion
Date Created: 2022-07-19 18:15:03.371809+00
Date Added: 2024-06-11T15:54:38.754884
License: Public Domain

GOLDTHWAITE, J.
— 1. We shall consider the charge asked for by the defendant as intended to elicit from the Court the opinion, that this deed, for matters apparent on its face, is fraudulent and void as against the creditor of the grantor ; but stating it even in this manner, we think its refusal was correct.
The object of this conveyance, as expressed on its face, is, that the grantor being “ willing and anxious fully and completely to secure, indemnify and protect the said James H. Du-bose, and the several parties of the third part, in the payment of the specified debts, and to relieve the said securities from any and all loss, risk, cost, charge, or liability, arising from the said liabilities upon the said debts; and the more certainly to provide a fund for that purpose,” therefore conveys the property therein described, to the debtor’s principal surety, upon the trusts of which an abstract is presented in the statement prefixed to this opinion.
If the expressed intention of the grantor is carried into effect, it is difficult to conceive the idea of a legal fraud; for no creditor is hindered or delayed, any further than that a preference is given to those named. The trustee is required to sell the trust property forthwith j or so soon as it may be necessary to protect himself or either of the parties to the deed, from injury: and then, as if fearful of confiding to him the discretion to judge of the time when injury might happen, he is directed, upon the request of either of the parties of the *240third part, to sell such part of the trust property, as may be necessary to protect them from loss or injury.
2. It is argued however that their request may be indefi-" nitely postponed, or even never made; and that thus, the trust property may be preserved for the use of the grantor against the attacks of other creditors. If this proposition could be maintained it would almost be conclusive against the validity of such a transaction. But, independent of the statutory right# which is given to any execution creditor to pay the indebtedness disclosed by the trust deed, and thus render the estate subject to his execution, (Clay’s Digest, 256, § 6,) we think that any execution creditor can, by suit in equity, compel the preferred creditors to close the trust and distribute the surplus. This seems to be the result of certain other propositions, and was put as a quere in the recent case of Graham v. Lockart, supra, without any particular examination of the principles involved in it. We propose now briefly to consider them.
In England, from whence we derive our geueral ideas of mortgages, real property has a fixed value, to a great extent, and is not subject to the fluctuations incident to our own country, where land is so abundant and where personal prorperty is often more productive. This difference in the condition of the two countries has introduced into this a modification of many of the rules which formerly applied to conveyances, intended as securities merely. Thus, in our Courts, although the complainant proceeds for a strict foreclosure, the defendants may, in general, insist on a sale. We say in general, because it may not always be the rule, as there seems to be no sufficient reason to tax the property with the costs of a sale, where it clearly is insufficient to pay the debt, for which it is mortgaged, and the creditor is willing to extinguish the debt by a foreclosure. However the exception may be, it seems clear that the general rule is as stated, [2 Story Eq. 292, § 1025, 1026; 4 Kent, 1 ed. 156; Hitchcock’s heirs v. Bank U. S Mss.]
As then the defendants to a mortgage bill may insist on a sale,instead of a strict foreclosure, it seems to follow, that any one entitled to redeem may insist upon a sale: in the same manner. The mortgagor may be enabled to redeem the premises by a payment of the debt, even where that and a surplus *241beyond, would be realized from a sale ; and yet, if the credit* or has the right to refuse a sale without payment, the risk of destruction and depreciation in Value would remain with the debtor. On the other hand, conceding the estate not to realize the debt and costs, the latter only would be hazarded by a sale; for the mortgagee would always be a privileged pur-* chaser to the amount of his debt. The risk of the costs of the sale could generally be ascertained by a reference to the master, and the sale refused, if indemnity for these was not given. [See cases before cited, and also Story on Bailments, 219* § 320.]
There is another cogent reason why ah unprefeired creditor should be allowed to compel one secured by mortgage to close it at once, immediately connected with the risk of destruction and depreciation of value of the mortgaged estate. The debt would remain as a charge against the debtor, notwithstanding the depreciation or destruction of the property 5 and as the mortgage creditor, in the event of the debtor’s death, and possibly in some other instances also, would be let into distribution-with other creditors for the sum remaining due after exhausting his security, the' risk is thus in effect thrown upon those other creditors.
The remarks we have made as to mortgages apply with equal force to conveyances in trust, and perhaps with greater 5 as the beneficiary in such has no estate in the trust property, and the resulting trust is with the mortgagor. The right to ascertain and subject this resulting trust pertains to any execution creditor, who otherwise can not obtain the fruit of his execution. [Park v. Clinton, 12 Vesey, 59. See also Desha, Sheppard & Co. v. Wilson, et als. at the present term.]
We thus answer the principal objection to this deed, and have endeavored to show that no estate, whether real or personal, by mortgage or deed of trust, can be plhced’beyond the reach of an execution creditor, if a surplus beyond the secured debt Will be the probable result of closing the trust j and that it may be closed by any such creditor, whenever there is no such probability, upon indemnifying the other party against the costs of suit and sale.
We do not think the inference of a fraudulent intention can be drawn from the discretion which is given to the trustee to *242first pay either of the named creditors. He is1 the surety for both the debts, and the deed is made chiefly for his indemnity; the trust, in the first instance, is to pay the debt to the Bank,, and for this the trustee is the only one of the beneficiaries liable. When, therefore, a discretion is given him to pay the other debt first, it amounts to nothing more than he would have the right to do, without the expression of the power,., unless, as contended, the Bank is by the deed, invested with, an absolute equitable right to priority.
3. Conceding the proposition asserted in this connection, that a creditor is entitled to the benefit of all the funds or property assigned to his debtor’s surety, pt cannot be said that the creditor is entitled beyond the condition of the assignment. Here, the condition is, that the surety liable for both debts, shall elect which shall first be paid. We deem it too clear to admit of illustration, that such a discretion involves-no intention of fraud.
4. Another argument against the deed is, that the trustee is-permitted to cultivate the land until sold, with the slaves-which may be upon it, or such others as he may procure. This, it is said, involves the trust estate with the expenses of the slaves so procured, and therefore the property is not fairly appropriated for the indemnity of the sureties or creditors. This is answered, to some extent, by showing that all trusts of this nature may be closed at the instance of any execution creditor; and therefore no delay, prejudicial to him, can arise out of it. But independent of this, there is no reason why a debtor who is not insolvent, or in failing circumstances, should not provide for such an employment of his property. Until other rights intervene, he may do as he pleases with his estate, and it is no lawful prejudice to any one. Here we never hear of any other creditor than those named in the deed, until the levy of Maywood’s execution; and that does not affect the conveyance made at a time when he was without a legal, right to coerce payment.
We can see no error in the record.
Judgment affirmed.