Yoder v. Atterburn

Judge Mills delivered the Opinion of the Court. Thomas Philips obtained' four judg-. ments and executions, against Elisha Standiford;. and Samuel Churchill obtained two against the same person. These six executions were all in the hands of the sheriff at the same time, and were levied by him, on one tract of 1500 acres of land, also another tract of about 300 acres, being the mansion farm of said Standiford, also a third tract of fifty acres, a fourth tract of 108 acres, ten slaves, four feather beds .and furniture, a wagon and team of five horses with their harness, three other riding horses, forty head of cattle, fifty sheep, fifty hogs, one press, [479] one secretary, one desk, three tables, and a clock; all of the estate of said Standiford, and given up by himto satisfy said executions, which were all endorsed, that paper of the bank of the commonwealth would be accepted in payment. Sheriff’s sa!e, and conveyance to Yoder; and property left in debtor’s possession. Bill of D. Standiford, and of Massie and Atterburn, other creditors, alleging the sheriff’s sale fraudulent, and' praying the estate to be subject to their judgments. Answers.. Decree of the circuit court. Yoder and 3£. Standiford’s writ of error. The estate was sold on the 15th June, 1823, for the sum of 3,708 dollars, and Jacob Yoder became the purchaser, and all was conveyed to him by the sheriff in one inclusive deed, which was acknowledged and recorded on the 7th of November, 1823. The estate all remained in the possession of the debtor, and was not removed. On the 13th of July, 1Ó24, David Standiford, another creditor, who also had a judgment and execution, and in the month of September following, Henry Massie, and Harrison Atterburn, who were also creditors by judgment and execution, each filed their separate bills in equity, charging that this sale and purchase of the property by Yoder, were made with intent to delay, hinder, and defraud -creditors, and to the great sacrifice of the estate, which was of far greater value; and that it was designed to save the estate for the benefit of Standiford, and was therefore fraudulent and void; and praying that the said sale might be set aside, and tire estate be again exposed to sale, in discharge of their respective demands. Yoder, and Elisha Standiford, answered each bill, and contested tbe fraud, and contended that the sale was fair and bona Jidc. The cases were ordered to be tried together. The court below decreed, that the estate should be re-sold, under the direction of the court, by commissioners; and that Yoder should have the preference in having his claim satisfied; that is, the price which he gave for the property at the sheriff’s sale; and that each of the others should follow in succession, giving the preference to the one which had his execution first endorsed by the sheriff. To reverse these three decrees, Yoder and E. Standiford have prosecuted their three writs of error. A tterburn’s, D. Standiford’s and Massie’s writs of error. Ground of complaint by Yoder and E. Standiford against the decree. ■Grounds relied cm by D. Standiford, Massie, and Atterburn. Fair purchaser, at sheriff’s sale, under a contract with the defendant that he may redeem, holds vis in mortgage, and another credit- or may maintain his bill to redeem, or have a sale' and appropriation of the proceeds. where the chancellor fraudulent conveyance, on the comPJ®int of a ^editor \ie ouscht to’ order the sale, effected'Vnd not torn the party back to p^°£mm°a tion. [480] And the three creditors, David Standiford, Massie, and Atterburn, have each prosecuted their several writs of error, against Yoder and E. Standiford. All t!iese cases have been heard together in this court. 1. Yoder, and E. Standiford now contend that the sale was fair, and not made to defraud creditors, in any way; and that, therefore, the decree selling the estate is erroneous. 2. That if a sale is to take place on any terms, it ought not to be made by a commissioner or master •in chancery, under the direction ofThe court; but that all the chancellor could do, would be to remove the incumbrance on the estate, and let loose the executions at law. On the contrary, D. Standiford, Massie, and Atterburn, contend that the sale, and deed made by the sheriff, in pursuance thereof, is fraudulent, and ought to have been held for nought, and that the court erred in settling the question of precedence between the parties; and that Yoder ought to be postponed to the whole. The most favorable light in which this transaction between Yoder and E. Standiford, whereby the title through the sale by the sheriff was acquired in all E. Standiford’s property, can be viewed, is to construe it into a mortgage. For however fair the sale might have been, it is in proof that by previous arrangement E. Standiford was to be allowed to redeem the estate, and a writing shewn by the defendants themselves, entered into after the sale, which will be hereafter more particularly noticed, also proves that E. Standiford was to be allowed to redeem or take the estate again at the end of four years. If then the arrangement is construed into a ■mortgage, it was competent for creditors by judgment and execution, to bring their bill to be let in to redeem or to compel the mortgagee to foreclose, or that the estate should be sold and the proceeds be applied, first to extinguish the claim of the mortgagee, and the residue to go to the creditors so suing. Indeed the decree rendered by the court below. [481] goes no further in its operation than a decree of this character. The title of Yoder is ordered to staiid as an indemnity in his favor; or rathgr, he has the preference given him, in the distribution of the proceeds of the sale, for all the money which he had actually expended in making the purchase. Main question .Rated, Facts relied on to prove the sheriff’s sale fraudulenti We will not detain to discuss the question of power in the chancellor to set up this estate at auction, under his own order, and in the hands of his own officer. For we deny that his power, when he has fair possession of a subject, stops short of complete justice, and that he is bound to drop the subject just at the very point of relief, and call to his aid the process or functionaries of a court of common law, to help him,out of the dilemma. . On the contrary, he can generally complete what he begins, and particularly if a sale is necessary fori the ends of justice, he will direct and superintend it. Toa sale thus directed, under his immediate direction, and subject to his immediate revision, there is generally, and ought to be, greater confidence given, than is to those of a court of common law, which are conducted by ministerial officers only, and afterwards do not receive judicial confirmation or approbation on the heaving of the parties, unless one of them shall move to set it aside. The main question, therefore, in this cause, must be, is this title acquired by Yoder, fraudulent, and made with intent to delay, hinder, and defraud creditors? The following is a summary of the facts relied upon by the creditors now contesting it. ' s ' At the time the sale was made, E. Standiford was much indebted, not only to those creditors whose executions had actually seized, and were about to sell the property, but there was another train in ■their rear, well known to both himself and Yoder. Indeed, at least one of those creditors, who how attack this sale, had his execution in the sheriff’s hands at the sale, but not in time to.act its part with those which sold the estate, and the others were pressing on to judgment. Áccoúntof the sales. Property left-in defendant’s possession. Yoder lived in another county, and was an intltiinate friend of the family of the wife of E. Stanr diford, and was known to have the means to relieve the distresses of E. Standiford. Two or three days before the sale, E. Standiford paid him a visit, to get money from him, or to make some arrangements to save the estate. Yoder, according to his own account of the matter, would not furnish the money, hut agreed to let the estate be sold, and to become the purchaser with the avowed design of favoring Standiford, or his family, supposing, that when he got the estate in this way, all conveyed to him, it would be more secure. To effectuate this object, Yoder came to the neigh-hood a day or two before the sale, and purchased up at least two of the executions, and thus got the control of them. On the day of sale, Yoder, as well as E. Standiford, and his connexions, persuaded the creditors not to bid, assuring them that their money was secure, and their debts would be paid. On the day of sale, by the procurement of both Yoder and *E. Standiford, the estate was put up in •large lots, so as to compel purchasers to take all or none. For instance, three tracts of land, 1500, 50, and 108 acres, were together sold for $2,100; desk and book case at one dollar and fifty cents; a settee and a dozen of chairs' at one dollar; four beds and. bedding at $4; three slaves in'one lot, $201; a negro woman and three children, $401; wagon and five horses, with their harness, $151; forty head of cattle, at $165; of the hogs and sheep, there is no account. But it is remarkable, that these lots were so managed as to amount with great precision to $3,708, the exact amount of all the executions then operating on the estate. Not an atom of the estate was removed, or taken into the possession or use of Yoder, but all remained in E. Standiford’s possession, as before. The intention was thus effectuated, and E. Standiford was favored and benefited by continuing the use and results of the estate. between purdefendant, as-to ihe disp’o. sition of the ProPertf • On -what terms E. Standiford was to retain it, we are not told, except in the answers of Yoder and E. Standiford. They exhibit a writing, or lease of the estate, between themselves, dated on the of sale. It purports to lease the whole to E. diford and his brother-in-law, Joseph A. Brooks, .from the first of July, 1824, to the end of three years; the lease to be forfeited if the rent was not paid annually, and Yoder to have the right to enter and dispossess the tenants for a failure; also, reserving to himself the right at all times to withdraw any of the slaves or personal estate, on making a proportionate deduction, or compensation, or substituting. othei’s in their place. The tenants, or lessees, are to keep the premises in good repair; to pay taxes and physicians bills; to feed and nourish the slaves and their increase; to keep up the stock of cattle and horses; to commit no waste, and to surrender the possession in good order and repair, natural wear excepted; yielding and paying as hire and rent $275, in gold or silver per annum. Yoder agrees to accept the sum of $207 85, in gold or silver, and 90 bushels of salt, annually, in lieu of the $275, at the election of the tenants. Then this stipulation follows: “Said Yoder, in consideration of esteem for said Joseph A. Brooks, and Nancy Standiford, wife of Elisha Standiford, who are children of his old friends, Joseph Brooks and Nancy his wife, agrees, further, that if the said Joseph A. Brooks and Elisha Standiford or the survivor of them or their legal representatives, shall wish to purchase the property at the end of the lease, and shall tender and pay unto him or his legal representatives $3,500 in gold or silver, between the 31st day of May, 1827, and the 1st of July, 1827, and shall have paid up all taxes, debts, dues, and demands, that shall have accrued against said Yoder, by cause of his owning said possession, so as to save him harmless from all liability; and to give him the consignment of the said ¡$3,500 aforesaid, free from all deductions and draw back, then the said Yoder shall sell the said property now leased or what shall be of said property, either by decrease or increase, unto them the said E. Standi [484] ford and Brooks, or the survivor of them, or their legal representatives, and will convey the same, by deed of quit claim, with special warranty only, at expense. But the said Yoder does not bind himself to convey in case of tender and payment, except only during the month of June 1827, and will not sell and convey after the 30th of June, 1827.” Evidence insufficient of the ngreedcIhndanT6611 and purchaser exhibited 3wers6ir an" Manner of the payment of the Sur"ff chase money, & the source whence it came. This writing appears to have been signed by Yoder and E. Standiford alone. Brooks has not signed it. There is no proof when it was executed, or that it was executed at all. There is one subscribing witness, whose testimony is not taken, Whether it really existed from its date, or is manufactored to suit this cause, does not appear, except the answer of the defendants, one of whom admits its execution after its date. It is further remarkable, that there is no provision ' in it for the rent of the first year after the sale. Thus long, E. Standiford seems to have been entitled to the premises rent free. The defendant, Yoder, however, in his answer, says that the rent of that year was omitted by mistake. The mode in which the price at the sale was paid, must not be omitted. Yoder receipted to the sheriff' for the two executions, of which he had the contr0^ IN gave his sale bond, with Joseph A. Brooks security, to another creditor, for $418. This bond, when it became due, was paid and discharged by the debtor, E. Standiford. Yoder also paid to the sheriff, on the day of sale, $2,513, in notes on the bank of the commonwealth, or rather, this money was advanced on the day of sale, by Joseph A. Brooks, the brother-in-law, and was counted by Solomon Neill, another brother-in-law of Standiford, and passed by him directly to the sheriff, without going through the hands of Yoder. The mode in which this is accounted for by the defendants, Yoder and E. Standiford, is this. Joseph Brooks, the ancient friend of Yoder, alluded to in the lease, was indebted to Yoder at his death, about this sum, the payment of which he imposed by his will on his son, Joseph A. Brooks, and the will of Joseph Brooks, produced, thus far verifies this [485] statement. It is alleged by Yoder, that this sum Joseph A. Brooks secured to him, by his own bond, and that the money, on the day of sale, was paid by Joseph A. Brooks to the sheriff for Yoder, in charge of this debt. Such was the color given to the transaction on the day of sale. But no bond from Joseph A. Brooks to Yoder was produced, or surrendered; nor is any shown in the cause, nor does it appear that he is released from this debt. He produced the paper on the bank of the commonwealth, to the nominal amount of .this debt in specie, ostensibly for the purpose of paying this debt. Another of the family counted and gave it to the sheriff, and Yoder seems in this transaction to have been passive; so that a suspicion may be excited, that this was a family arrangement to save the estate' of E. Standiford, in the name of Yoder. Saies toJ} valid’agaiust creditors, uabie°co1nsidI eration, but t>°nafidc. Purchaserunder the execat‘onsof*«t-rs, is not pu teclcd by-he makes in combination Y’fl1 the bi-dor] delay otbercreditors. Such are some of the prominent facts, relied on by the complainant below, to vitiate this sale, and we cannot help concluding from them, that this sale is fraudulent and void. If it be admitted, that Yoder really' paid down and secured a valuable consideration for this estate, it is not enough to enable the arrangement to escape the effects of the statute. Every such arrangement must be not only founded on a “good,” which is construed to mean a valuable consideration; but it must also be “bona fide.” If it wants the latter requisite, it is as clearly fraudulent as if it wanted the former also. It is true, that this sale was effectuated in satisfaction of real debts, and in the fraud the creditors seem not to have participated, but only remained passive. 1 heir object was to get then’ money without concurring with any arrangements between the debtor and the purchaser. It .may therefore be urged, that Yoder is clothed with the rights of those creditors, and that the sale is clothed with the sanetions of the law and therefore.it cannot be attacked as fraudulent. The act to prevent frauds and perjuries was designed to le,ave property naked to the free course of [486] the law, and to keep impediments out of the road oí honest creditors. It was foreseen by the legislature, that these provisions against fraud, might be made the shelter of fraud; and that a debtor knowing that the cause of the creditor and the means afforded him for the recovery of debt were held sacred, might, and probably would, endeavor to take protection under it, and to surround himself with the formalities of law and the rights of the creditor, and thus be placed in a fortification impregnable. To guard against this, and to prevent the law, made to prevent frauds, becoming the shield of fraud, the-legislature expressly extended the provisions of the Statute to every judgment, or execution, as well as every other mode of transfer, if it was not bona fide. We need not then talk of legal solemnities as a shield, if they were acquired or applied with intent to injure creditors; nor need we bring up the rights of creditors, acquired by Yoder, if they have been used by him to fix this estate of E. Stimdiford beyond the reach of other creditors, while the debtor should enjoy it securely. Certainly, it never could have been intended, that the advantages and preference obtained, even by anlionest creditor, should be used as an obstacle to others, by so fixing it to the estate as to become a perpetual shield. If, therefore, the debts which sold this estate were honest, and the preference acquired by these creditors, in their fair and honest pursuit of their debts, has been used by the present owner thereof, to secure the estate to the debtor secure from another host of creditors, yet in the rear, but in ardent and legal pursuit, he must be stripped of the advantage, and stand as any other fraudulent grantee. For neither the words of the statute, or principles of equity, recognize any distinction in his favor. Facts which are badges and evi 'enees of fraudulent calcs— —Contri vanees to protect the estate aS3™?4 other crei:lli:orii‘ [486] The different facts on which the complainants rely to prove fraud in this sale and conveyance, are such as have ever been held by all chancellors, and courts of common law, as badges and evidences of fraud. The previous arrangement proves, that something more was intended than barely relieving the pres [487] ■sure of debt then pressing upon E. Standii’ord. That was not the only easement intended. Security against a future group of creditors was designed. If present relief was the object, advancing the ey on loan, secured by mortgage, would have done it. In this arrangement, he was to favor the debtor. How was this to be done? By bidding off the estate and acquiring a title in legal form, and the favor was to consist in permitting the debtor still to enjoy, and in keeping off the hands of the remaining cred-tors. Saleconductedso as to aj'OKl comPc' prevent the estate selling for its value' Possession of sheriff’s sale remaining withtbedebt dencVoff an arrangement in fr.aud of creci ors' To effectuate this object, every arrangement was to be made, by setting up the estate en masse, so that it was exactly to extinguish the active executions and no more, and yet be acquired at an enormous sacnfice, as the proof in the cause abundantly shews, Another circumstance not hitherto noticed, is ealeufated, to -induce this belief. Atterburn, one of the present complainants, was present, and his execution was endorsed. On its being suggested, that by bidding, the estate might extend far enough to cover his debt, he bid for one of the slaves, and the mother-in-law of E. Standiford appeared against him as a competitor in bidding, and spoke with some warmth to him for attempting to bid. His ardour was damped, by this competition with the mother of the -wife of the sinking debtor. The slave was striken off to Mrs. Brooks, InU was afterwards placed among the purchases of Yoder, and was gotten by him, through her instrumentality. But if there was no other circumstance, the possession of this estate, being all the debtor owned, remaining with the debtor, is one which cannot be overlooked. This possession, even according t;o the lease produced, was to be gratis for one year, and the debtor was, during that time at least, the absolute possessor, and Yoder on record the absolute owner. This is strong evidence to shew the previous arrangement, or secret understanding, that the beneficial interest in the property was still to be E. Standiford’s. We well know that this is not the mode in which men, ordinarily prudent, manage their money. They do not usually lay out their money to [488] purchase estates, to he enjoyed by others -without affording to them the least return on the capital; and some extraordinary reason must exist for such an occurrence. Indeed, seeing a person in possession of an estate, enjoying all its benefits, when it is mortgaged, and the condition of the mortgage, long forfeited, and the mortgagee lying supinely by, not wishing to enjoy or use his money, and many creditors of the mortgagor remaining unpaid, does create in the mind of every one, a suspicion, that it is a secret arrangement to secure the mortgagor against disturbance from creditors. The weight of such a circumstance, is sufficient to repel the presumption of fairness; and to induce a belief of a secret and unexplained understanding between the parties. Indeed, possession in the grantor, while title is in the grantee of an absolute conveyance, has been often held, by the settled law of this court, to be conclusive evidence of fraud. Effect of the mortgagor remaining ia possession. Secret arrangement between the debtor and the purchaser of his estate at sheriff’s sale, contrived to defraud other creditors, shall not be construed a mortgage to give it effect. [488] The same doctrine has been applied, by many of the American courts, as well as those of Great Britain, to mortgagees, even when it is stipulated on the face, that possession shall remain with tbe mortgagor, as is shewn by Mr Kent in his commentaries, vol. 2, p. 405, et seq. But we need not enquire into the soundness of this doctrine, on principle. For if we admit the true doctrine to be, that in the case of a mortgage, possession of the mortgagee is consistent with the deed; at all events continuing that possession after the condition is forfeited, without disturbance from the mortgagor, is calculated to induce a belief, that the mortgage is one of an amicable character, to answer the particular purposes of the debtor, rather than a real security for the debt named on its face. But the present case is not a mortgage. The right of redemption no where appeared on the face of the deed. That was a secret arrangement between the debtor and grantee. It is true, this was not a deed executed directly from the debtor to the grantee; on its face it shewed the forms, solemnities, and energies of the law, forcing the estate from the debtor, and, fixing it in the grantee. But yet, if this was [489] done by a secret arrangement between the debtor and purchaser, clothed with forms, but not the substance of the law, in order that the debtor might enjoy W'hile the grantor before the world had the absolute estate, it cannot substantially differ from an absolute deed executed by the debtor himself, and possession therefore must be high evidence of fraud. Evidence of the fraudulent intent. Benevolence exercised towards debtors, to protect their property from their just creditors, denounced. Wjth this conclusion every attending circumstance concurs. The money is gotten from the family. They all concur in the arrangement, and the debtor afterwards discharges and satisfies the only sale bond ■which is given. The money paid, is ostensibly in discharge of a debt coming from a brother-in-law. His security is not surrendered, and no receipt is given. The money is carefully passed through the hands of another brother-in-law, now used as a witness, and conveyed by him safely to the sheriff, without being suffered to touch the hands of Yoder; and the estate is sacrificed for less than half its value, being the whole the debtor had, and he still in debt. Can it be believed that Yoder intended to make a speculation merely, and that he should afterwards forget to enjoy it? Can it be supposed that he was so generous as to pay such a sum, and lie out of the use of it for one year, without any remuneration, or with a bad prospect of rent or interest for three years more, and that to do a kind action to Sfandiford, without including in that kindness a protection against creditors? Is not the belief more plausible, that the arrangement was to secure the debtor in the estate under color of a sheriff’s sale and that the lease now produced is an after-thought, framed to meet the demand of creditors? We conclude that it is, and that this sale and deed is within the letter, as well as the spirit of the act; they were made with intent to delay, hinder and defraud creditors, and are not bom fide. It may be said, that this conclusion is severe, and against those fine feelings of the heart, displayed in an act of benevolence, and that Yoder ought to have been permitted to extend his kindness to his friend. Not so. The exercise of pure benevolence is not cramped by the conclusion; but only that which is [490] impure. The creditors of Standiford had a moral right to his estate, and if the benevolence of Yoder has been exercised with an eye to obstruct that right, benevolence is converted into corrupt design, loses all its merit, and is not entitled to the name. Judges Ows^nou\stoS the proof of the fraud, chief justice Bibb dissent-inS- Judge Owsley’s opinion, that though Yoder’s purchase was fraudulent, he is entitled to the preference which the owners of the executions had, which he thereby satis*fied. Judge Mills thiTcontrary. ‘ Affirmance oí all tho dec’s inconsequenceofdifions among J'uclses‘ [490] Thus far there is a concurrence of opinion, in the majority of the court; while the chief justice conce*ves that there is no fraud established, and- that the decree ought to be reversed at the prayer of Yoder, and all the bills dismissed. But as to the consequences winch must follow from the fraud, a difference of opinion between the two judges who agree in the existence of fraud, arises. Judge Owsley conceives, that although the conveyance, or title of Yoder, is fraudulent, yet, as he came in under creditors whose executions had a pri- or lien, and were clear of fraud, Yoder ought not, as a defendant in a court of equity, to be placed in a worse situation than the creditors were; that, stript of his own title, on account of the fraud, he must be left in possession of theirs; and therefore, while he is of opinion there ought to he no reversal at Yoder’s instance, he also thinks that the decrees ought not to be reversed at the prayer of the creditors to grant them more, because the decrees have only left Yoder in possession of the rights of the •creditors under whom he acquired the estate. Judge Mills conceives, that if Yoder is guilty of a fraud, and if his title comes within the act to preyent frauds and perjuries, it is, according to the letter of the act, absolutely void, and can have no force for any purpose, and that no regard is to be paid to its inception, or the purity or impurity of the executions under which it arose; and that, consequently, Yoder ought to stand as a general creditor, and be allowed to come in only after the creditors, who have acquired a legal preference, are satisfied; and that for this purpose the decree, at - the instance of the creditors, ought to be reversed.. On this point, as the chief justice does not admit that the decrees against Yoder are correct, he will [491] not concur in the reversal, for the purpose of maleing Yoder’s case more unfavorable. It follows, therefore, from this division of sentiment, that in all the writs of error there must be an affirmance. those of Yoder, the chief justice dissenting, and in those of the creditors judge Mills dissenting. Judgment orsi'orwhom fraudulent entitled to6> the preferenceinequi- ^ .they had a a’7' dissent of oh-Jus-BlB?- We shall barely add, that as between the creditors themselves there can be no doubt that the tion among themselves is right; that though equity generally prefers equality, and directs debts to be paid proportionably, yet the rule does not hold good, when a preference has been obtained at law. There equity follows the law, and leaves the ad-advantage with him who has gained it, especially where the fraud is of a legal and not of an equitable character: Codwise vs. Gelston, 10 John. 507; Messonier vs. Gomperts, &c. 3 John. chy. rep. 3; M’Dermutt vs. Strong, 4 John. chy. rep. 687. In all the cases the decrees are affirmed, with-Gosts.