Court Opinion

ID: 6503506
Source: CourtListenerOpinion
Date Created: 2022-07-19 18:15:59.323805+00
Date Added: 2024-06-11T15:54:40.413621
License: Public Domain

ORMOND, J.
The admissibility of the decree, removing James McCown from his trusteeship, and appointing the plaintiffs in his stead, is resisted on two grounds, first, because the decree is interlocutory only, and secondly, because the defendant to this suit, is not a party to the .suit in chancery, in which the decree was made. Neither objection can prevail. This decree is to all intents final. It requires no further action of the court to give it validity, or sanction, but as it respects the appointment of the plaintiffs’ trustees, to recover the land, is final and conclusive.
*787Nor is it a matter of any moment, that the defendant was not a party to the suit, as by no possibility could he be prejudiced by it. Whether this suit is prosecuted by the original, or substituted trustees, his rights under the deed are the same. . The court of chancery never wants a trustee, and may appoint one on an ex parte application. In England, the usual course is, to refer it to a master, (Daniel’s Gh. P. 1446) and in this State, it may be done by the register in vacation. [Clay’s Dig. 350.]
The objection, that the deed does not appear to have been proved, and recorded, within the time prescribed by law, ■does not appear to have been raised in the court below, and therefore cannot be made in this court. If it had been made there, it might have been shown that although the date of the deed was left blank, it was in fact executed within sixty days of the time, when it was proved and recorded.
The objection to the deed as evidence, because as alledg-ed, there was no proof of consideration beyond the recitals in the deed, is entitled to more reflection. The purpose of the deed, as declared on its face, was to make provision for the future creditors of a firm, of which the grantor was a member. It appears from the deed, that the partners were to put in but a small cash capital. The land thus conveyed in trust by this, and the other partners, was in fact the capital stock of the company, relied upon £to give it credit, and upon which those willing to credit the firm, were invited to rely, as a fund for the payment of any debt the firm might incur. It was, in effect, putting the land into the partnership, as stock, upon which it was to deal, and in fact pledging it for any debt the company might create. It was proved that the firm went into operation, and transacted business as a mercantile company, and that there are judgment creditors of the firm, whose debts are unsatisfied. It appears to us very clear, that this is not a voluntary deed, but is one founded upon a valuable consideration. It has been held by this court, that a deed executed to secure a contingent liability, as for example, to secure the surety of an executor, or administrator, would be supported, and surely a conveyance of property for the payment of debts, about to be created, is not entitled to less favor.
*788Nor could the plaintiffs be called on to produce the articles of co-partnership, referred to in the deed of trust. They were not entitled to the custody, and cannot be presumed to have the possession of this paper, the private property of the partnership, and cannot therefore be required to produce it. Although as between the partners, the articles of co-partnership might be the highest evidence of the existence of the partnership, strangers cannot be held to this proof, but may prove its existence, when proof of that fact is necessary, by any other competent testimony. After what has been said, it is scarcely necessary to add, that there was no objection to the proof, that there were unsatisfisd judgment creditors of the firm. Indeed, without this proof, it might well be doubted, whether the trhstees could have maintained this action, it being shown that the defendant was a purchaser at sheriff’s sale, under ajudgment against the grantor individually.
The remaining question, is one of great novelty, and some difficulty. The defendant offered to prove the admissions of some of the company, whilst it was in process of formation, that its design was to defraud the public. This testimony was rejected, as it appears, because Oliver, the maker of the deed, was not present, when these admissions were made, but if the testimony was inadmissible, it is unimportant what reason was assigned for its rejection.
From the deed itself, and the evidence adduced in the court below, we are led to the conclusion, that what is called a “ fraud upon the public,” was, that the design of this, and the other deeds executed by the company, was to give it a delusive credit, and to enable it to circulate its own notes, as money, and in other mqdes to obtain a credit, utterly disproportionate to the means provided for their redemption, and payment — and that they did by various devices, contrive to circulate in the community, a large amount of paper as money, which has never been redeemed. This being the purpose and design of the deed, it is argued, renders it fraudulent and void.
The statute of frauds of this State, contains the substance of the provisions, both of the 13th and 27th of Elizabeth : the former being intended for the protection of creditors against fraudulent conveyances. The creditors here spoken *789of, are the creditors of the grantor, or donor, making such fraudulent conveyance, and as to them, if the intention was to hinder, delay, or defraud them, the statute declares the conveyance to be utterly void; and by a long series of decisions, the courts have held, that if the consideration is voluntary, the deed is fraudulent, and void, as against the existing creditors of the donor. We have seen by the previous examination of the question, that this deed, made for the protection of the future creditors of the firm, is not voluntary, but founded on a valuable consideration, and the question, whether it was made with intent to hinder, or delay creditors, was fairly left to the jury, and their verdict has ascertained, that it was made bonafidey that is, that it was not made, with intent to hinder, or delay the creditors of the grantor.
Conceding then, that the grantor meditated a fraud upon the public, by which must be understood that portion of the community, who could be understood that portion of the receive its notes as money, the deed is nevertheless a valid security for them, and cannot be impeached for fraud, by a purchaser from the grantor, with notice of the conveyance, either actual, or constructive, from the registration of the deed, pursuant to the statute. The case then, is that of a purchaser from the grantor, insisting that a deed is void as to him, because the maker of the deed contemplated a fraud upon other persons, in a conveyance professedly made to secure .them from loss, and which they are desirous to enforce according to its terms. In such a contest, the purchaser with notice of the deed, can be in no better condition than the grantor — --and as the latter could not controvert the deed, neither .can he. It is of no moment, that the defendant, by his purchase at sheriff’s sale, connects himself with the title of the creditor. The plaintiffs also represent the creditors of the grantor, and in acdition, are clothed with the elder legal title.
.Judgment affirmed.