Renton v. Kelly

By the Court, Leonard, P. J.. The judge was right at the circuit, I think, in holding that the • plaintiff had no valid title to the property in question, as against a judgment creditor of Campbell. The plaintiff, by his complaint, claims title as trustee for the benefit of the creditors of Andrew Campbell. The only evidence of title is derived from the written instrument of May 24, 1860, between Merritt of the first part, Campbell of the second part, and Benton, the plaintiff, of the third part. The interests of Merritt and Campbell. can be there ascertained, as they claim them to have existed ; and .that claim is affirmed by the plaintiff as a party thereto, and also by his introduction of the instrument in evidence. By the recitals thereof Merritt claims to own only the property mentioned in schedule A and to have liens by way of mortgage on other personal property of Campbell. The property mentioned in schedule A consisted of presses, and is not affected by this action; while that covered by the mortgage liens'embraces the subject of this controversy. By the first article of the instrument Merritt relinquishes and quit-claims to Benton all the property embraced under the liens of the mortgages, “ except such as are mentioned in schedule B.” That schedule appears to contain many similar articles to those mentioned in the schedule attached to the answer—the complaint describes the property only in a very general manner. Their identity appears not to be in dispute. [541] The instrument, so far as Merritt is a party, states no title in him to the machinery, tools, &c. (which are the subject of the controversy) except that of mortgagee. He relinquishes his lien, except as to a particular part, mentioned in schedule B, as to which he retains the lien of a mortgagee. The same right and title of mortgagee is again recognized by Campbell in the second article, and the property there is declared to be subject to the liens of the said mortgages, except so far as it has been released. It appears to be entirely clear that the title of Merritt, as recognized and declared by the said instrument, was that of a mortgagee only, notwithstanding the technical title of owner which had accrued by his demand of payment, and taking possession of the mortgaged property upon the neglect or refusal of Campbell, the mortgagor, to make payment on demand, according to the terms of the mortgage. Merritt must therefore, by the admission of the parties to that instrument, be regarded as having only the title of a mortgagee, and was not, of course, capable of creating any trust in respect to the title of the property in question. It may be observed, also, that no actual change of the possession of the property appears to have taken place, at any time. The legal title, subject to the lien of the mortgages to Merritt, was in Campbell at the time of the execution of the said instrument, and the trusts therein mentioned must be regarded as having been created or granted by him. There was no occasion for Campbell to be united as a party to the instrument, except for the purpose of conveying to the plaintiff Benton, the legal title to the property, and vesting in him the trusts therein contained for the benefit of creditors, with a resulting interest in himself upon their payment. The provisions of the trust are clearly void as against the creditors of Campbell. The learned counsel for the plaintiff has not attempted to vindicate them, but places the right of Benton to recover upon a title supposed to be derived from Merritt as the owner of the property at the time [542] the said instrument was executed. The fallacy of his claim is fully shown by the said instrument, which he produced in evidence as the foundation of his title. There is no other evidence tending in the smallest degree to give any title to Eenton, the plaintiff, as trustee for the benefit of the creditors of Campbell, in conformity with the allegations-of the complaint. As that instrument shows the title to the property in question to have proceeded from the debtor, Campbell, and the trusts thereby created, to he contrary to law, and fraudulent as to his creditors, the plaintiff has no cause of action to recover its value. [New York General Term, June 3, 1867. The judgment must be affirmed, with costs. Leanard, Geo. G. Barnard and Clerke, Justices.]