Howell v. Bell

Napton,-Judge, delivered the opinion of the court. The only question in this case is whether a deed of trust conveying certain lands and slaves to a trustee to secure the payment of a debt due the cestui que trust, with a power in the trustee to sell upon the maturity of the debt, is void upon its face by reason of a. stipulation _in it that the grantor should retain possession of the property conveyed until the expiration of the credit agreed on; and our opinion is, that such a reservation does not vitiate the deed. The cases decided by this court upon the construction of the first section of the statute concerning fraudulent conveyances do not lead to the conclusion that the mere retention of possession in the grantor of property conveyed in trust, whether expressly authorized by the terms of the deed or not, is in itself a fraud. Much less is- it to be inferred that an express -'stipulation in the deed to this effect makes the deed fraudulent on its face. Although this privilege of retaining possession is to some extent beneficial to the grantor, it is not such a benefit as makes the deed a trust to the use of the grantor. The distinction between this privilege and the reservation of a power to sell or dispose of all the. property embraced in the conveyance is obvious enough. Where a stock of goods is conveyed, and the grantor reserves, not only the posses [138] sion, but tbe right to dispose of them all; or, where the property conveyed is of a character which would be consumed in the use, the deeds may well be said to be in trust to the use of the persons making them. But the retention of the possession of a tract of land and a number of slaves, conveyed to a trustee to secure a debt, is altogether consistent with actual good faith, and entirely promotive in any contingency of the substantial interests of the grantee. The creditor may be really benefited by such an arrangement, and can not be injured, whilst the debtor is better enabled to pay off his debt. But we do not consider this question as open to argument or authority, for it seems to us that the statute itself has settled it. The eighth section of the act provides that, where possession does not accompany a mortgage or a deed of trust, the deed must be recorded in order to be valid. This section is a legislative interpretation of the first section, and amounts to a declaration that retention of possession by the grantor in a deed of trust or mortgage is not a trust in the grantor within the first section of the act; for all deeds which fall within the first section are void as against creditors, whether recorded or not. But as the deeds of trust, where possession is left in the grantor, may be valid if recorded, it follows that the mere circumstance of retaining possession is not understood to be a decisive mark of fraud such as to render a deed void upon its face as a matter of law. Judge Ewing concurring, judgment reversed and cause remanded. Judge Scott absent.