Price v. De Ford

Cochran, J., delivered the opinion of this court. This appeal was taken from a judgment of condemnation upon an attachment issued on a judgment, obtained by the appellees against Joseph C. Wilson, and laid in the hands of Augustus M. Price, to whom Wilson and one Robert W. Hyman had executed a deed of certain property belonging to them, as co-partners, in trust for the benefit of their creditors. Before the trial below, the parties entered into an agreement that the case should be tried for the purpose of testing the validity of the deed of trust, and admitting the respective amounts of the appellees’ claim, and of assetts in the hands of the garnishee. The record presents two exceptions, the first of which was taken to the rejection of a part of the evidence of B. M. Heighe, offered on behalf of the appellant; and the second, to the instruction granted upon the appellees’ prayer declaring the deed, as against them,.invalid and void. The agreement filed in the case renders the consideration of [494] the question raised on the first exception unnecessary. The effect of the evidence rejected would have been to show, from the knowledge of the witness, and from declarations made to him by both Wilson and Hyman, their relative interests in the property and assets in the hands of the garnishee, and the particular sources from which they were derived. In no aspect of the case, had the evidence been admitted, could it affect the appellees, as by the agreement, their rights must be determined by the character of the deed. ■The objections urged by the appellees, in support of the instruction against the vaiiditjr of the deed, were, 1st, because the*property and effects of three firms were assigned by it, in trust for the benefit of the creditors of one firm, without any provision for the payment of the debts of the other two; 2nd, because it contains a power to the trustee to compound doubtful debts due to the trust estate; and 3rd, because it declares that certain notes, pledged by the grantors, were made for their accommodation, and directs their return to the several makers, upon payment of the indebtedness for which they had been pledged. We shall consider these objections in the order stated. In the argument of the case it was not pretended, that Wilson was not entitled to the property mentioned in the deed, as having belonged to the firms of Wilson, Young & Company, and J. C. Wilson & Company, nor that such property did not, at the time of executing it, belong to the firm composed of Wilson and Robert W. Hyman. On the contrary, the appellees were obliged to assume, in accordance with the theory of their case, that the property so described was property of Wilson, and as such liable to condemnation on their attachment. The first of the objections to the deed was made to depend, not upon a want of title in Wilson to the property in question, but upon ,the devotion of it to the payment of the debts of the grantors, as co-partners, without; regard to the creditors of the antecedent firms, in which Wilson had been a partner, and in that form it presents the [495] single question, whether the preference of creditors thus declared avoids the deed ? We think it does not. The question, as to the right of the creditors of the antecedent firms to satisfaction of their claims, out of the assetts of those firms, does not arise upon the face of this deed, and if made at all, it could only be upon evidence dehors the deed, showing the existence of such creditors, and some understanding or contract by which the assets of those firms were charged with, or made liable for," their claims. The cases of Meannel vs. Murdock, 13 Md. Rep., 164, and Sanderson vs. Stockdale, 11 Md. Rep., 563, fully justify this conclusion.- The fact that no provision was' made for the creditors of the antecedent firms, in which Wilson hud been a partner, does not, in our opinion, avoid the deed.- The objection made to the deed because of the power given to the trustee to compound doubtful debts, we think is also un-' tenable. That pgweris notinconsistent with the interest of creditors entitled to the benefit of the deed, nor is it of such a char-' acter as to secure any improper advantage to the' grantors.The execution of the power would diminish the nominal as-' sets, and in that respect operate adversely to the grantors, and on the other hand, the interest of those entitled to claim under the deed would be subserved by avoiding the delay incident to the recovery of doubtful debts, and by effecting a more speedy realization and distribution of the assets. It cannot be construed as a reservation to the grantors of any power over, or control of, the property conveyed. In some States it has been held, that the power to a trustee, for the benefit, of creditors, to compound with them, would avoid the deed containing it, but upon that point, we express no opinion. We think the deed in this case is not rendered invalid by the power objected to. Dow vs. Platner, 16 N. Y. Rep., 562. It was contended, in support of the last objection to the deed, that the declaration contained in it that certain notes were made for the accommodation of the grantors, and directing their return to the makers, might operate as a fraudulent reservation to the grantors, and for that reason would avoid [496] the'deed. As th'te effect of that clause was to except the notes mentioned from the operation of the deed, and to bar the grantors of the right to recover upon them, we think it does not justify the inference of fraud. But conceding that the grantors did-by that clause reserve to themselves a property or interest in' the notes, the objection then presents the question whether a deed for the benefit of particular creditors, which does not exact releases, and does not upon its face profess to convey all of the grantors’ property, is valid? This point was affirmatively'decided in the case of Berry vs. Matthews, 13 Md. Rep., 537. There seems to be no reason why the deed in this case should be declared .void, and we shall therefore reverse the judgment. (Decided July 9th, 1862.) Judgment reversed, with leave to to take out aprocedendo.