Baldwin v. Flash, Preston & Co.

Campbell, J., delivered the opinion of the court. The objections to the writ of attachment as issued by a justice of the peace in Jackson, and returnable and returned within less than five days after its issuance, are without merit. Treating the deed of trust executed by Parkman on the 5th of May, 1879, as having no validity as such with respect to third persons not parties to it, because of its non-registration, but regarding it as first made when it was filed for record, we discover nothing in the transaction by which Baldwin received a surrender of the goods for the benefit and security of Bickham & Moore, except the very frequent occurrence of a transfer of goods by a debtor to pay his creditor whom he prefers. The law permits this to be done ; and however reprehensible it may be in the view of some that a debtor should devote to the payment of his preferred creditor goods for which he owes another, the law does hot condemn it. When the attachment was levied on the goods they were in the possession of Baldwin, delivered to him for the benefit of Bickham & Moore by Parkman, who, before a lien was fastened on them, had the right to apply them, in good faith, to the payment of any of his creditors. Although the goods were surrendered, to be disposed of as provided by the deed of trust, or as it was modified by the terms of the written transfer, and although the deed of trust rmiy have been invalid, but may have been the inducing cause of the surrender of the goods, it is certain that the transaction was a delivery of the possession of the goods by Parkman to Baldwin, to be disposed of for Bickham & Moore. If the deed of trust conferred no right on Baldwin to the goods, their deliveiy to him did. The instruction given to the jury at the instance of the plaintiffs contravenes this view. It ignores the very important [600] transaction of the delivery of the goods by their owner to Baldwin, to pay Bickham & Moore, and announces that, notwithstanding'this, the jury should, upon the other facts in evidence, find for the plaintiffs. It recites all the facts in evidence except those decisive of the issue, and directs the jury, if they believe the facts recited, to find for plaintiffs. If Parkman had never made the deed of trust, and had, on January 28, 1880, delivered his goods to Baldwin, as trustee, to sell, and pay Bickham & Moore, as preferred creditors, the validity of the transaction would uot have been questioned. It would have been unassailable. The fact that he made a deed of trust, and had an understanding that it should be withheld from record until Bickham & Moore should decide to place it on record, and that it was withheld from record until about the time that ho delivered the goods to Baldwin, in no degree lessened his power to devote his goods to preferring Bickham & Moore. The fifth instruction asked by the appellant should have been given. It places the right of Baldwin to the goods on the delivery of them to him, in trust for Bickham & Moore, before the levy of the attachment, and according to our view this is the true ground on which his claim rests. It is not apparent that the case was litigated in the Circuit Court on this view, although the record presents it. The contention in the court below, as we infer from the instructions asked and the argument here, was as to the effect of the agreement not to record the deed of trust, and its being withheld from record, and the continuance of Parkman to sell the goods and replenish his stock of merchandise, and the effect of the deed and the surrender of the goods on it" on after-acquired goods. We treat the deed of trust as though uot executed until the day it was filed for record, and regard the right of Baldwin as having sprung from the transaction which invested him with the possession and ownership of the goods, as trustee, for the payment of Bickham & Moore. That invested him with title, [601] and the deed of trust and the writing executed by Parkman on surrendering the goods to Baldwin served to define the trust and his powers and duties. He properly asserted his claim as trustee under the deed of trust of the 5th of May, 1879 ; for, as we have shown, if it was inoperative as against those not parties to it, before it was recoi’ded, or even after-wards, it is properly referred to in connection with the delivery of the goods, with reference to it, as at least a written declaration of the powers and duties of the trustee. The writing executed by Parkman on the surrender of the goods should be admitted in evidence as part of the res gestee. Judgment reversed, new trial granted, and cause remanded. In response to a suggestion of error by S. M. Shelton, of counsel for the appellees, the court made this addendum to the foregoing opinion : — Per Ouriam. — The suggestion of error wrongly construes our opinion as indorsing and establishing the bona fieles of the dealings between Bickham & Moore and Parkman. We did not so desire to be understood. On the contrary, our position is that the bona fides of the transaction must be submitted to the jury with all the facts laid before them ; and, further, that the right of Parkman to prefer Bickham & Moore was not lost by reason of the void trust-deed previously executed. The rights of the parties and the validity of the surrender to Baldwin are to be tested by the facts and circumstances existing at the date of that surrender. What preceded it may be valuable as shedding light on the subject, but cannot operate to determine it as a matter of law, nor deprive the debtor of the right to make an honest preference among his creditors. The trust-deed, being void, neither gave the grantees any rights nor deprived the grantors of any. It is receivable in evidence as indicative of intention, but not as necessarily fixing the rights of the parties or the legal effect of the surrender to the trustee.