Malcolm v. Hodges

Tuck, J., delivered the opinion of this court. The appellant, as trustee of Sprigg & Meseke, under the insolvent laws, filed a bill against the appellee to vacate a deed from Sprigg & Meseke to him, as trustee, for the benefit of their creditors, on the terms and conditions mentioned in the deed. The case was heard on bill, answer and replication, before the chancellor, who dismissed the bill, being of opinion, that as the conveyance transferred all the property of the grantors, and contained no reservation to them of any surplus, after paying the preferred or any class of creditors, it was not void. The validity of the deed must be determined without regard to the surrounding and other circumstances averred in the answer. If admissible for any purpose they are not proved. “ We are to look to the character with, which the law stamps the deed, without reference to extrinsic facts as to motive. If the law imputes to the grantor a design in making the deed, no evidence of intention can change the presumption. If the [426] law declares the deed to be void, it is no matter how the question of fraud in fact may stand.” 3 Md. Rep., 40, Green vs. Trieber. Upon consideration of the deed we are of opinion, with the' chancellor, that if good in other respects it would operate as a conveyance of all the grantors’ property, joint and separate.. The terms are not very clear; but, construing all its parts-together, the legal effect of the granting clause and the habendum is to vest in the grantee title to all their property and effects of every description. But we think the instrument is void as against the appellant, representing the creditors of the grantors,, because the necessary effect of the trusts declared therein is to-secure to the grantors any surplus that may remain, after paying the claims of those creditors who may come in under its terms within the time limited. The law is now too well settled to admit of dispute, that deeds of this description must not only convey all the property of the debtor, but they must, in terms, dedicate the whole for the benefit of the creditors, subject to such preferences as may be declared in the deed. There must be no reservation to the debtor, express or implied. We cannot look outside the assignment to ascertain whether there will be a surplus or not. That would make the efficacy of the instrument depend on extrinsic circumstances, when the law requires that its intent shall be gathered from its face. This deed, in express terms, restricts the benefits designed to be conferred to those creditors who may come in within a certain time and execute releases. Nothing is said of the surplus. Now suppose creditors, to a very small amount, assent, and that all the rest stand out, what becomes of the surplus of the property when tiróse few who may assent are fully paid? Does it not belong to the grantors as a resulting trust? Nothing, in our opinion, can be clearer. The refusing creditors could not claim it under the deed, and it would not belong to the grantee, as in cases of deeds where the grantee is not a trustee for others. It is true the other creditors might prosecute their claims against the-trustee, in respect of this surplus, but not in reliance upon the assignment, which they have repudiated. They would claim to be paid out of the fund, not as [427] theirs by the deed, but as the property of the grantors, their debtors, in the hands of the trustee for the use of the grantors; and this pretension, probably, could be asserted only by process of law, to which, as we have said in 3 Md. Rep., 52, the gra.n1ors have no right to compel them to resort. I’he view here expressed was affirmed in Dana vs. Lull, 17 Vermont, 390, referred to in 3 Md. Rep., 61. The case then before the court did not require us, in terms, to go as far as the Vermont doctrine, but we have no doubt of its correctness, upon principle, and so intimated. If such deeds, as the one before us, are valid, fraudulent transfers might easily be made by granting preferences to a few creditors, of small amount, and omitting all mention of the surplus. The operation would be, that after the property was sold and the preferences satisfied, the trustee would return the residue to the debtor before the other creditors could take measures (o arrest it in his bands for the payment of their claims. To prevent such devices the law requires that the deed, on its face, shall show that the debtor can get nothing for himself, so long as a creditor remains unpaid. This case is substantially the same as Dana vs. Lull, and satisfied that it was decided on proper grounds, we adopt the reasoning there employed as conclusive of the question arising on the assignment now in controversy. Decree reversed, and cause transmitted to the circuit court of Baltimore city.