Cawthorn v. McCraw

COLLIER, C. J. The material question in the case is this, can personal property which has been sold under exe^ cution at the suit of infant wards, by their guardian, where the levy and consequent proceedings indicate the purpose of the guardian, (who became the purchaser at the sale,) and the defendant in execution, to defraud the creditors of the latter, be levied on in the hands of the same defendant, and sold under an execution issued on a judgment subsequently obtained against him? By the second section of the statute of frauds, it is among other things enacted, that “every bond, suit, judgment, or [524] execution, had or made and contrived, of malice, fraud, covin, collusion or guile, to the intent or purpose to delay, hinder or defraud creditors of their just and lawful actions, suits, debts, accounts, damages, penalties or forfeitures,” &c. “shall be from henceforth deemed and taken only as against the person or persons, his, her or their heirs, successors, executors, administrators, or assigns, and every of them, whose debts, suits, demands, estates, interests, by such guileful and covinous devices and practices as is aforesaid, shall or might be in any wise disturbed, hindered, delayed or defrauded, to be clearly and utterly void; any pretence, color, feigned consideration, expressing of use, or any other matter or thing to the contrary notwithstadding.”' [Clay’s Dig. 254, § 2.] In Gardenier v. Tubbs, et al. 21 Wend. Rep. 169, it was held, that where property is bought at a sheriff’s sale, by the plaintiff in an execution, and left in the ¡possession of the defendant, without any good excuse shown, the sale is void as against other creditors of the. defendant, notwithstanding the plaintiff subsequently and before the levying of an execution on the part of other creditors, reduce the property to his actual possession. This case is more stringent than the English adjudications upon the same point. In that of the earliest date, which has come under our notice, it was determined, that where the goods of A are sold under a fi. fa. to B, bona fide, and for a valuable consideration, and the latter permit A to remain in possession, on condition that he will deliver over to him the product from the sale of the goods, the possession will not render the execution fraudulent; and on a subsequent bankruptcy, the goods will not pass to the assignees of A. [Cole v. Davis, 1 Lord Raym. Rep. 724.] So where K, (not being a creditor,) bought the goods of A, at a public sale by the sheriff under s,fi.fa. and afterwards allowed A to remain in possession, and the latter áfterwards made a bill of sale of the goods to R, who took them into possession ; upon, action brought by K' against R, the jury negatived any fraudulent intention, on the part of K, and the court maintained his right to recover. [Kidd v. Rawlinson, 2 Bos. & P. Rep. 59.] It has also been decided, .that- where, the goods of a debtor who had confessed a judgment were taken in execution, and purchased at public .auction by the plaintiff [525] who let to the debtor, for rent actually paid, his purchase cannot be defeated for fraud. [Watkins v. Birch, 4 Taunt. Rep. 823; see also, Brandon v. Snow & Cunningham, 2 Stew. Rep. 255.] We have cited these cases, not so much for their importance in the condition in which the record comes before us, but as furnishing principles to guide the judgment of the court, in the ulterior progress of the cause. There can be no question of the rule stated at the bar, that the guardian’s trust is one of obligation and duty, and not of speculation and profit. He can derive no benefit from the use of'the ward’s-money, and if he employ it in the purchase of property, the ward may elect to have the property, or the money with interest] and a court of equity will, in a proper case, make the guardian a trustee for his ward, in respect to property thus-purchased. But this will only be done, where the purchase is made under such circumstances as invest the guardian with a valid estate at law. If mala Jides is attribu- - table to him, so that the sale under execution passes no title as against the creditors of the defendant, equity cannot consistently with its own principles, uphold it, merely for the purpose of declaring a trust in favor of infants. Such a course of procedure would be exceedingly unjust to the creditors who were prejudiced by the fraud, and directly violative of the provision of the statute of frauds which we have cited. The question of fraud vel non, where its solution depends upon evidence, addresses itself to the consideration of a jury, and if found affirmatively, it is .the duty of the court to declare all transactions-arising out of, or tainted with it, inoperative and void ; and this whether reference be had for the rule of decision to the common, law or a statute. [2 Starkie’s Ev. 586; see the cases cited in Walker, Giller & Mabry v. Herndon, at this term.] It c'annot be questioned that the bill of exceptions recites such a state of facts, as warranted the plaintiff in praying the .charge of-the court, touching, the good faith of the cláimant and the defendant in execution, in the several transactions which' were drawn in question ; and the v-iew we have taken of the law may suffice to show, that fraud woukl be utterly destructive of the title set up by the claimant. [526] The fact that the levy of the execution was made on the slaves, when they were not present and under the control of the sheriff, and that they were afterwards sold elsewhere than at the court house, is not, under the facts of the case, conclusive evidence of fraud. It may be conceded, that in order to make a valid levy on personal property, the sheriff must have it within his power and control, or at least within his view, unless the defendant acknowledges a levy by executing a delivery bond. [Cobb v. Cage, 7 Ala. Rep. 619; see also, 16 Johns. Rep. 287; 14 Wend. Rep. 123; 3 Wend. Rep. 446; 2 South. Rep. 479; 11 Wend. Rep. 548; 14 Johns. Rep. 222 and 352.] The property in the present case, was forthcoming on the day of sale, and though sold at a place which the statute does not prescribe, the circumstances could not, if there was no intention to defraud, defeat the purchase. It does not appear that there were any liens upon the property of the defendant in execution; assuming such to be the fact, and it would,have been competent for the defendant to have made a private sale to the claimant or any one else. If he could thus have sold his property, it is difficult to conceive of any objection to his making a public sale, either personally or through the agency of another. Assuming the sale to have been fraudulent as it respects the defendant in execution and the claimant, will the infant wards of the claimant lose the priority to which the executions in their favor are entitled? The fraud of the guardian, while it cannot transmit, will not be allowed to defeat the rights of his ward. If the claimant’s purchase should be found fraudulent,'it must be adjudged invalid at law ; but the plaintiffs in the executions, who were his wards, might assert their pre-existing lien in a court of equity, and would be preferred, if their judgments and executions were regular up to the time of the levies and sales; if not for the full amount thereof, at least to the extent of the sums at which the property was bid off. That court would direct a re-sale of the property, and after paying what the wards of the claimant were entitled to, would then order the execution of the plaintiff to be satisfied. We have thought it proper to say [527] thus much, that the rights of the parties may be adjusted without again resorting to this court. We have only to add, that the judgment of the Circuit ■ Court is reversed, and the cause remanded.