Smith & Keating Implement Co. v. Thurman

Philips, P. J. The question presented by this writ of error involves the validity of a deed of trust made by John A. Thurman, of date October 5, 1885, to one J. L. Wetzel, as trustee, for the benefit of certain named creditors. The property conveyed consists of certain real estate situated in Dade and Jasper counties, and a stock of dry goods, furniture, etc., in a certain storehouse in the town of Greenfield, and “one iron fellow and one Bain wagon.” The instrument sets out the names of the preferred creditors, and the sums respectively owing them by Thurman. The deed contains the provision that the trustee shall take immediate possession of the property, and proceed to sell the personal property for such sum, at retail, as his judgment may approve; and giving him the right, also, to sell the same in bulk with the assent of the grantor and a majority of the beneficiaries, at such price as may be specified in the written assent. It also provides for a sale of the real estate at public auction, at the court [190] house door in Greenfield, after giving fifteen days’ notice by publication, etc. The plaintiff being a creditor of said Thurman, not named as beneficiary in said deed, obtained judgment against Thurman, and on execution issued thereon, summoned James W. Thurman, a purchaser of a part of these goods under sale made by the trustee, as garnishee. The denial of the answer made by the garnishee to the interrogatories exhibited by plaintiff, charged fraud in the making of said deed, and denied its validity. There was no evidence of fraud in fact. Nor was there any question made at the trial as to the bona fides of the debts secured by the deed. Neither was there any proof tending to show that the purchase of part of the goods by the garnishee from the trustee was collusive between the garnishee and the debtor. The trustee took immediate possession of the property. I. The first contention of the plaintiff is, that the instrument is in law a deed of assignment. This is based upon the phraseology of the instrument itself, and the assumption that the property covered by the deed embraced all the property of the debtor. It is not essential to the disposition of this case to consider the question whether an instrument, in due form of a deed of trust or mortgage, which conveys all the property of the grantor for the benefit of only a part of the creditors of the debtor, operates under our statute as a deed of assignment. The deed on its face does not purport to convey all the property of the grantor; and there was no evidence offered at the trial to show that it contained all the property belonging to the debtor. On its face the instrument possesses the distinguishing qualities of a deed of trust or mortgage. A mortgage is a conveyance of an estate by way of pledge for the security of a debt, to become void upon payment of it, or a conditional conveyance of land designed as security for the payment of money, the fulfilment of some contract, or performance of some other act, and to be void upon such [191] payment or performance. 1 Hill on Mort. 3, 4. The distinction between a deed of assignment and a mortgag-e or deed of trust is, that the former is an absolute transfer, to sell and pay, at all events, by which the grantor finally parts with his property, and it is alienated as well from his creditors as from himself; while the latter is a mere pledge, which may be to a small amount, and the estate of the grantor is not divested. Burr on Assignments, 33, 34, 35; Worden v. Babcock, 2 Met. 104; Henshaw v. Sumner, 23 Pick. 446; Ridgeway v. Stewart, 4 Watts & Serg. 392; State to use v. Benoist, 37 Mo. 508. The distinction is, that an assignment “is a conveyance to a trustee for the purpose of raising funds to pay a debt, while a deed of trust in the nature of a mortgage is a conveyance in trust for the purpose of securing a debt subject to a condition of defeasance.” Crow v. Beardsley, 68 Mo. 438. Tested by these rules, the instrument in question is clearly a deed of trust. And even if it could be held to be a deed of assignment, the plaintiff’s action would fail, as his remedy would be to have the instrument executed as a deed of assignment for the benefit of all the creditors, and not to resort to the process of garnishment, by which plaintiff seeks to defeat the operation of the general assignment, by appropriating the fund to the payment of its debts to the exclusion, pari passu, of the other creditors. Crow v. Beardsley, 68 Mo. 437, 438; Douglass v. Cissna, 17 Mo. App. 45. II. It is next insisted, that if the instrument is to be construed as a deed of trust, it is void on its face (1) because it conveys more property than was necessary to satisfy the debts named, to-wit, all the debtor’s propperty; and (2) because it purports on it,5 face to be for the benefit of the grantor. (1) As to the first objection, it is enough to say, there is no evidence whatever to show the value of the property conveyed, whether greater or less than the amount of the debts specified. It appears from the deed itself that a part of the property was already [192] subject to a prior mortgage for a debt of fourteen hundred dollars. The amount of the sale made to het garnishee, or his vendor, was eleven hundred dollars, less than the amount of the debts named. (2) The principal objection to the deed is the clause which required the assent of the grantor, with that of two-thirds of the creditors named, to any sale in bulk of the goods. It is held in State ex rel. v. Cooper, 79 Mo. 464, that such a provision in a deed of trust did not vitiate it. III. It is further claimed that the deed is bad on its face, because it provides that, after satisfaction of the debts named, and the payment of the costs attending the administration of the trust, the trustee shall pay over the residue to the grantor. This does not invalidate the deed ; “for that is precisely what the law, in the absence of any such stipulation, would do.” Douglass v. Cissna, 17 Mo. App. 56; Richard v. Levins. 16 Mo. 598, 599; Johnson, v. McAllister, 30 Mo. 327; Wait on Fraud. Con., sec. 327. Discovering no error in this record, the judgment is, with the concurrence of the other judges, affirmed.