Elmes v. Sutherland

GOLDTHWAITE, J. — 1. In the consideration of this case, it is important to bear in mind that, although the assignment upon its face appears to be the mere voluntary act of the debt- or and without any immediate consideration passing from the creditors named in it, yet there is nothing to show that the debtor at that time was in failing circumstances. In the first 'aspect, it differs from a mortgage executed concurrently with the creation or extension of a debt, and in the last, from an assignment by an insolvent debtor, in contemplation of his insolvency. This distinction between this case and that of an assignment by an insolvent debtor, in view of his insolvency, renders it unnecessary to consider what effect the actual or contemplated insolvency of the debtor would have upon this deed; because divested of this circumstance, the deed of trust [267] is not materially different from a mortgage executed under the same state of facts. We may then examine the case as if it was a mortgage executed by the debtor subsequently to the creation of his debt, but without any actual agreement with, or assent of all or any of the preferred creditors. The first question then is, as to the validity of the deed in consequence of its containing a stipulation that the debtor shall remain in possession of the property, to use it for his own advantage, but to apply the profits to the extinguishment of the named debts. It seems to us that this stipulation by a solvent debtor amount^ to nothing more than is found in every mortgage. The debtor clearly has the right until the law day to remain in possession, with the perception of the profits to his own use, and until the law day has passed his possession is neither fraudulentjoer se, nor evidence of fraud. Repeated decisions of this Court have settled however, that such a stipulation has not the effect to prevent any other creditor from making a levy upon the interest remaining with the mortgagor.. It is therefore clear that this stipulation, in the manner in which the case is presented, does not make the deed void. 2. The next question upon the deed itself, is, whether the reservation of a use in the perishable articles, such as the carriage and harness, wagon, cart, farming tools, household and kitchen furniture, cattle and hogs, is sufficient to disclose a fraudulent intention as to other creditors, and consequently to avoid the deed? This is more difficult of solution than the other, but we can perceive no reason why a mortgage by a debtor not in failing circumstances, and intended merely as a security, should be absolutely void by the reservation of such a use. The case of Robbins v. Parker, 3 Metcalf, goes only to the extent of declaring the mortgage void as to the particular perishable article. Considered as a mere security, and between the parties themselves, there is no just reason why a creditor may not be allowed to take a mortgage upon a perishable article, and yet permit the debtor to remain in the possession and use of it until the law day. It is possible that the reservation of such a use might have the effect to render the particular perishable article subject to levy and sale at the suit of another creditor, though as to this we express no opinion. [268] It is very obvious too, that the reservation of such a use by a debtor shown upon the face of the deed, or otherwise, to be in failing circumstances, might receive a very different construction. We are therefore of the opinion, that the reservation in this deed is not per se fraudulent, so as to avoid the deed. These are the only objections urged against the deed, as being apparent upon its face, and neither of them are sufficient to warrant a Court in declaring it void. 3. The remaining question is one quite novel in this Court. The defendant to the bill insists there is no equity in it, for the reason, that the creditors named as the third parties to the deed have never executed it; and it is not shown they ever have assented to its provisions, by binding themselves not to sue the debtor until after the expiration of the time fixed as the law day in it. This involves an inquiry, whether such execution or assent is necessary ? It has been decided that the assent of creditors will be presumed when the assignment is for their benefit. [Brooks v. Manbury, 11 Wheat. 78; Tompkins v. Wheeler, 16 Peter’s, 139.] But, conceding this as the general rule, it is insisted that this presumption only arises when the deed is absolute and unconditional; and that it is repelled whenever the conditions imposed are otherwise, or an obligation is cast on the creditor to do or omit any thing whatever. It is very evident that the debtor never intended the deed should be valid, unless-the time of payment of all the debts was extended by the creditors to the first April, 1S45. In order then for the deed to have any effect it was necessary, in our judgment, that all the creditors named in it should have signified their acceptance of the conditions imposed by it. We say all the creditors, because the deed contains no stipulation that less than all should receive any benefit from it, and it is apparent that no benefit would result to the debtor if it was refused by any of them. The cases are numerous to show that deeds of this nature are of no validity until assented to by the intended beneficiaries. [Story Eq. 236, § 972, and cases there cited. See also Russell v. Woodward, 10 Pick. 408; Dale v. Bodman, 3 Metcalf, 139.] Until then, the deed is considered as conveying a power only to the trustee's which is revocable by the debtor. If revocable by the debtor previous to assent being given by the creditors, it follows, that the levy of an exe [269] cution produces the same consequence. As the complainant’s title to the property levied on as against the execution creditor, depends upon the assent of the creditors named in the deed, this should have been shown affirmatively by the allegations of the bill. Without such allegations the bill is fatally defective, and ought to have been dismissed as containing no equity. 4. If in point of fact a decree had been rendered by the Chancellor for the relief prayed by the bill, in accordance with the agreement of the parties, it would present a question worthy of grave consideration, how far this Court could take cognizance of the cause under such circumstances, as it only has appellate and not original jurisdiction. It is quite possible that we might feel constrained to repudiate a case, where the parties had consented to a pro forma decree. It does not appear however, that there is any final decree in the case, and the consequence is, that the writ of error must be dismissed.