M. Millhiser & Co. v. Pleasants

Montgomery, J.: The only question raised by the appeal is, was the failure of the defendant to take into his posses- . sion for the benefit of the plaintiffs the one-half interest of Thomas in the partnership goods of Pippin & Thomas, under the deed from Thomas to the defendant, a breach of duty which the defendant owed to the plaintiffs? and this *241 question will find its solution in the proper legal construction of the deed itself. That instrument, which is the foundation of this action, embraced the whole contract between the defendant and his debtor, Thomas, and as there was no allegation in the complaint that there was either fraud or mistake in its execution, the court below held properly that the nature and eifectof the contract was a matter of judicial construction and intimated that the plaintiffs could not recover. Whether a paper-writing be a deed of trust or, whether it be a mortgage, depends not upon what it may be styled, but upon the powers, the rights and the duties conferred upon the parties named in the deed, and especially upon those conferred on the grantee, these powers and duties and rights being the subject of legal construction upon an inspection of the whole instrument. In this case if the deed be simply a mortgage made to secure the debts which the grantor owed the defendant, the plaintiffs cannot recover, and there was no error in the ruling made by his Honor. If, on the other hand, it appears that any duty was imposed on the defendant in the deed to act for or to protect any interests of the plaintiffs, the defendant having undertaken the execution of the deed as to those parts which were for his benefit, he will be held a trustee and accountable to the plaintiffs for any damages which they may have sustained by reason of his’failure to fully execute the trust. A mortgage is a security for debt with the right in the debtor to pay the debt and thus redeem his property. In a deed of trust for creditors there is a security for debt, and at the same time duties and powers are conferred upon the trustee for the benefit of all the creditors which he can neglect to perform only at his peril _ The plaintiffs contend that the instrument is a deed of trust and that by its provisions the defendant was required to take into his possession the goods conveyed to him and *242 to hold and dispose of the same for their benefit; and that, having executed the trust upon other property conveyed in the deed for his own benefit, he could not refuse to execute that part of the trust which was of benefit to them. The debtor, Thomas, if he had intended and desired' to confer upon the defendant such power would have had no right, in law, to do so. If under the deed the defendant had demanded of the other partner, Pippin, possession of the goods conveyed to him by Thomas for the purpose of controlling and disposing of them for the plaintiffs’ benefit the partnership would have been dissolved, and the surviving partner, Pippin, himself, entitled to settle the partnership affairs, dispose of its assets and pay its debts. The rights of Pippin, iu all the partnership matters, both in its continuance and after its dissolution, accrued on the formation of the partnership with Thomas, and no assignment by Thomas of his interest in the goods of the partnership could abridge or destroy those rights. Jones on Chattel Mortgages, Sec. 45. But no such purpose or intimation on the part of Thomas appears in the deed, either in its language or by any proper construction that may be put upon it. Cnly the net interest of Thomas in the stock of goods, after the partnership debts had been discharged as by law required, was conveyed to the defendant (for the benefit of the defendant's debts alone) and the net amount to be ascertained by the oLher partner, Pippin, and paid over to the defendant by Pippin, as the plain and clear words of the deed declare: “ The stock of goods herein convoyed, or the interest in the same herein conveyed, shall be and remain in the store or place of business of the firm, and the said W. H. Pleasants is simply put into possession of said stock of goods as a partner of- said Pippin in lieu of the said Thomas, subject to all the rights of the said Pippin in the premises, and with the express declara *243 tion that the partnership debts and liabilities are first to be discharged as by law required, and only the net interest of the said Jacob Thomas shall be and is hereby made subject to the debts herein attempted to be secured, and the said Pippin is hereby directed to pay over to the said W. H. Pleasants the net amount ascertained to be dnethe said Thomas.” In onr opinion the deed is only a mortgage, and was executed to secure only the debts of the defendant; and of course he had the right to enforce his rights in whole or in part as he saw fit. If he by any means, with the consent of Pippin, had taken possession of the goods conveyed.to him by Thomas, he would have been responsible to the plaintiffs for their value upon the principle decided in the case of Brassfield v. Powell, decided at the last term of this Court (117 N. C., 140). The recitals in the deed declare expressly that the purpose of the grantor was to secure his indeb.edness to the defendant. The plaintiffs, including all other partnership creditors of Pippin & Thomas, have no cause of complaint against the defendant, for he did not have the right in law to take from the possession of Pippin the interest of Thomas in the partnership goods under the deed, if he had been disposed so to do. There was no error in the ruling of his Honor, and the judgment is affirmed. No Error.