
    Janney &c. v. Barnes and Others.
    April, 1840.
    Richmond.
    (Absent Brooke and Parker, J.)
    Fraudulent Conveyances — What Conveyance Providing for Debts Is Valid as to Other Creditor oí Grantor- —Case at Bar. — The members of a mercantile partnership. In failing- circumstances, make a deed conveying to A. their storehouse, all their stock of goods therein, and all debts due or to become due to the Arm, subject to the following conditions and agreements: 1. that A, should (and he thereby bound himself so to do) pay certain debts of the firm, specified in a schedule annexed to the deed, within twelve months next succeeding ; 2. that the grantors should be, and they were thereby, appointed the joint agents of A, to remain in the store, to sell the stock of goods until the whole should be disposed of, and to collect all the debts due and to become due to the firm ; 3. that if the proceeds of the property conveyed should be more than sufficient to pay the debts specified, A. should apply the surplus to the ratable payment of such other debts as were then due from the firm. The deed is executed as well by A, as the grantors ; but being mislaid or kept back by one of the grantors, in whose possession it was left on his undertaking to have it recorded. A. procures the grantors to execute another deed for his indemnity ; which, reciting that the grantors are justly indebted to A. in the sum of 3000 dollars, and also "to various other creditors,” conveys to a trustee “all the goods, bonds, debts and accounts, and all the property of every kind now in their possession ” (without other description), and stipulates that they shall be permitted to remain in quiet possession of the goods, and sell the same, or such part as can be sold for ready money, paying over to the trustee from time to time the proceeds of such sales ; and at the expiration of three months it is made the trustee’s duty to sell the whole residue of the property at public auction, and pay 3000 dollars of the proceeds to A. and the residue to the other creditors in ratable proportions. This second deed is duly recorded ; and a few days afterwards the first deed being-found and surrendered to A. is also recorded. A. pays the debts specified in the schedule annexed to the first deed, but not until the twelve months have expired. The de bts assumed and paid by A. are just debts of the grantors, and as to him the whole transaction is fair in point of fact. On a bill filed by other creditors of the grantors, who obtained judgments after the execution and registry of the deeds, though for debts contracted before, insisting that the deeds are void, and praying that they may be set aside, Heed, A. is entitled to full indemnity out of the property thereby conveyed, for the liabilities assumed and paid by him.
    By a deed dated the 6th of February 1837, H. B. Barnes and W. A. Dandridge, of the county of King William, merchants and partners trading under the firm of Barnes & Dandridge, for and in consideration of certain liabilities thereinafter assumed by James P. Corbin, sold and conveyed to the said Corbin “all their entire stock of dry goods, groceries, hardware &c. contained in their store at Aylett’s in the county of King William, all the fixtures and furniture belonging to the said store, all the debts due or to become due to the said firm of 'xBarnes & Dandridge, whether by bond, note, due bill, open account or otherwise, together with the house and lot now occupied by the said firm as a store and counting house; the whole of which stock of dry goods &c. and the said house and lot with the appurtenances &c. are to be held by the said James P. Corbin, his heirs, executors &c. forever; subject nevertheless to the following conditions, covenants and agreements —First, That the said James P. Corbin shall (and he doth hereby bind himself, his heirs, executors &c. so to do) pay unto certain creditors hereinafter named the full amount of their respective claims against the said Barnes & Dandridge, the said payment to be made within twelve months next succeeding the execution of this indenture. Second, That the said H. B. Barnes and W. A. Dandridge shall be and they are hereby appointed the joint agents of the said James P. Corbin, to remain in the said store at Aylett’s, to sell the stock of dry goods, groceries, hardware &c. therein contained, until the whole shall have been disposed of, and to collect all the debts now due to the said firm of Barnes & Dandridge, and also all debts which shall hereafter become due to the said firm. Thirdly, That if the proceeds of the sale of the said stock of dry goods, groceries, hardware &c. with the debts as above referred to, and also the proceeds of the sale of the said house and lot, shall amount to more than enough to pay the debts hereinafter named, and as above assumed to be paid by the said James P. Corbin, then and in that case the residue shall be held by the said James P. Corbin, upon trust that he shall pay to such other persons as the said firm of Barnes & Dandridge may now be indebted to, the full amount of their respective demands, provided there shall be enough to answer this purpose, otherwise the said residue shall be divided pari passu among the said creditors. Fourthly, That after all the debts of the said firm of Barnes & Dandridge shall have been paid in the manner and form ^herein provided for, then and in that event the residue, if any residue there be, shall be paid over by the said James P. Corbin, his heirs, executors &c. to the said firm of Barnes & Dandridge.”
    Subjoined to the deed was a ‘ ‘list of creditors, with the amount of their respective debts, as above referred to, and assumed to be paid by the said James P. Corbin within twelve months next succeeding the execution of this indenture.” These debts amounted to 3262 dollars 46 cents.
    Both the deed and the schedule were signed and sealed by Barnes, Dandridge, and Corbin; and, on the 19th of May 1837, being acknowledged by the said parties in the clerk’s office of King William county court, were admitted to record.
    By another deed, dated the 13th of May 1837, between Barnes & Dandridge of the first part, Walker Hawes of the second part, and James P. Corbin of the third part, reciting that the parties of the first part “are justly indebted to the said Corbin in the sum of three thousand dollars, by the indorsements of said Corbin on the notes of Barnes & Dandridge, and also bj' other liabilities which said Corbin has incurred for said Barnes & Dandridge, and the said Barnes & Dandridge are indebted to various other creditors, all of which debts, with legal interest thereon, they are willing and desirous to secure,” — the said Barnes & Dandridge, in consideration of the premises, and of one dollar to them paid by Walker Hawes, bargained and sold to the said Hawes, his heirs and assigns forever, “all the goods, bonds, debts and accounts, and all the property of every kind and description, now in possession of the said Barnes & Dandridge; upon trust that the said Walker Hawes, his heirs and assigns, shall permit the said Barnes & Dandridge to remain in quiet possession of the said goods, and sell the same or such part thereof as can be sold for ready money, paying over from time to time to the *said Walker Hawes, his heirs or assigns, the proceeds of such sales; and at the expiration of three months, it shall be the duty of the said Walker Hawes, his heirs or assigns, giving twenty days notice in one of the newspapers of Richmond, to sell for ready money all the goods and other property of the said Barnes & Dandridge, and out of the money arising from the sales of such goods and from the accounts, bonds and debts due the said Barnes & Dandridge, after paying the expenses thereof and for the collection of said debts, to pay James P. Corbin, his heirs or assigns, three thousand dollars; and the residue of the money arising from the sales of such goods, and the accounts, bonds and debts, to be paid to the creditors of Barnes & Dandridge in equal or ratable portions.”
    This second deed was admitted to record on the ISth of Ma3r 1837, upon the acknowledgment of Barnes & Dandridge.
    On the 4th of September 1837, Janney, Hopkins & Hall filed a bill in chancery in the circuit superior court of King William county, against Barnes & Dandridge the grantors, Hawes the trustee, and Corbin the cestui que trust, in the deed of the 13th of May; stating, that on the 16th of September 1836, Barnes & Dandridge became indebted to the plaintiffs in the sum of 710 dollars 64 cents, by their promissory note of that date, payable six months after date, on which the plaintiffs, about the time of the execution of the said deed of trust, instituted a suit against Barnes & Dandridge in the county court of King William, and at the August term 1837 recovered a judgment (of which they exhibited a copy); setting forth the provisions of the said deed; charging, that when the same was executed, Barnes & Dandridge were not indebted to Corbin in the sum of 3000 dollars, as therein recited, nor do the plaintiffs believe they were then indebted to him at all, —that the provision permitting the grantors to dispose of the goods *by sale, and to receive the proceeds, is illegal, fraudulent and void, — and that the said deed is altogether fraudulent, and should be annulled; and praying that the deed may be set aside, and that the property and debts thereby conveyed which yet remained unsold or uncollected, together with the proceeds of sales and collections already made, (of which accounts were asked) or sufficient thereof to discharge the plaintiffs’ demand, may be applied in satisfaction of the same.
    And on the 25th of November 1837, another bill was filed in the same circuit court, against the same defendants, by Archibald Hart, F. & R. Voss, and Turner & Voss, (all of whom were merchants trading in Baltimore). This bill set forth, that Barnes & Dandridge became indebted to the complainants in September 1836, for the price of goods purchased of them respectively, for which they executed their ' promissory notes, payable six months after date; namely, a note to A. Hart for 1642 dollars 46 cents, dated the 15th of September 1836; a note to F. & R. Voss for 200 dollars, dated the 20th of September 1836; and a note to Turner & Voss for 1811 dollars 20 cents, dated the 16th of September 1836: on which notes the corn-plainants had respectively recovered judgments in the county court of King William at the August term 1837. (Copies of the judgments were exhibited with the bill.) That the goods so purchased of the complainants were taken into possession by Barnes & Dandridge, and placed in a store at Aylett’s in the said county, and there exposed to sale; and before the said notes became due, these very goods, or such of them as remained unsold, were conveyed to James P. Corbin by the deed of the 6th of February 1837. After setting forth the provisions of that deed, the bill charged that the same was fraudulent and void as to the complainants, and was designed to delay', hinder and defeat them in the recovery of their debts; that it is void on its face, as it vests in Barnes & Dan-dridge, “as debtors, rights entirely inconsistent with those of the trustee, and of the creditors intended to be secured thereby; that no debt was due to Corbin when the deed was made, and none had since arisen, as he had never discharged the liabilities therein said to be assumed by him; and that the property conveyred was much more than sufficient to pay the debts which were specifically provided for. That, in order more fully' to effect the fraudulent objects of the first deed, the said Barnes & Dandridge, on the 13th of May 1837, executed another deed to Walker Hawes as trustee, embracing the same property as that conveyed by the first (or at least that part of it which then remained). The bill set forth the provisions of this second deed ; and then proceeded to allege that after the grantors had for some time remained in possession, selling the goods and collecting the debts, an auction sale was held by authority of the trustee Hawes, who had received a considerable sum of money the proceeds of that sale, and had since permitted Dandridge to act in collecting debts embraced by the deed. That Corbin, the complainants believe and charge, had never paid any thing out of his own pocket on account of the liabilities assumed by him, and if any such had been discharged at all (which they do not believe), it was with money arising from sales of goods and collections of debts embraced in the said deeds. The bill prayed a discovery' of the property and debts embraced by the deeds, of the sales and collections made by Barnes & Dandridge and the other defendants respectively, and of the sums paid by Corbin on account of the liabilities assumed by him as aforesaid; that Barnes & Dandridge be injoined from any further collection of the debts embraced in the deeds, and a receiver appointed to collect the same; that Hawes be restrained from paying over or disposing of the fund in his hands; that the deeds be declared fraudulent and void, and all the debts and effects embraced *in them be applied to satisfy the claims of complainants and other just creditors of Barnes & Dandridge who may come in and contribute to the expenses of the suit; and general relief.
    The injunction prayed by this bill was awarded.
    At May term 1838, by consent of all the parties in the two suits, it was ordered that the same be consolidated, and that a commissioner of the court take and report an account of the value of the goods and debts embraced in the said deeds, of the goods, moneys and evidences of debt which had come to the hands of the defendant Hawes as trustee, and of the sales and collections made by Barnes & Dandridge or either of them.
    The defendants Barnes and Dandridge failed to answer the bills; which, as to them, were taken pro confesso.
    Hawes answered, that he knew nothing of the debts alleged by the complainants to be due to them; that, in the execution of the deed to him as trustee, he had no reason to suspect, nor does he believe, that any fraud was intended or perpetrated; that he has understood and believes the deed was made to secure a just debt to Corbin ; that the grantors were permitted to remain in possession for the limited time mentioned in the deed, with a view to enable them to arrange their books and business, and place their affairs in a proper train for settlement; that during this period they sold goods to the amount of about 400 dollars, which this respondent believed they had honestly accounted for and paid over to him; that the remainder of the goods was then sold at auction, and brought about 2000 dollars; and that he is ready to account and to pay over the balance in his hands as the court may direct.
    The defendant Corbin, in his answer, gave a full and minute detail of the circumstances respecting the execution of the two deeds of the 6th of February and the 13th of May. He said, that early in 1837, Barnes and ^'Dandridge (with whom he had been acquainted for several years) came to him, and represented that they w'ere in embarrassed circumstances, daily expecting to be sued; that they believed their property would not be sufficient to pay all their just debts, and though they were anxious to pay them all as far as their means would enable them, they yet particularly desired to secure certain favoured creditors by giving them a preference; to effect both of which objects, as well as to obviate the loss and vexation attending suits, they proposed to this respondent to assume the payment of their debts to certain creditors whom they would designate, to the probable amount and value of their whole property, which they would convey to him as an indemnity for his liabilities so to be assumed, the assumption of the liabilities and the execution of the deed to be concurrent, and the deed to be recorded immediately. That, actuated by a friendly feeling towards Barnes and Dandridge, this respondent agreed to make-himself liable to the extent proposed, in consideration that they would secure him by a direct conveyance and transfer of their property real and personal, including debts due; he to make sale of and collect the same, and from the proceeds thereof, first to satisfy himself on account of his said liabilities, and should there be an overplus, to hold the same upon trust generally for the remaining creditors of the said Barnes & Dandridge. That, being himself ignorant of the business of a dry goods merchant,. and confiding' in the skill and capacity of the said Barnes and Dandridge, he contracted with them, and they, as a further inducement to him to assume the liabilities aforesaid, engaged with him, to remain in the store at Aylett’s as his agents, and in that character to sell the goods and collect the debts due. That in pursuance and on the faith of this agreement, this respondent, on the 6th of February 1837, executed his obligations to sundry creditors of Barnes & Dandridge, for various *sums, amounting in the whole to 3262 dollars 46 cents, and at the same time received the deed of that date, duly executed by the defendant Barnes, who was then in Richmond; which obligations were executed to the creditors and for the amounts specified in the schedule annexed to the said deed. That the amount so assumed was considered by the parties at the time of the transaction a fair price for the whole property conveyed, and respondent now believes and charges that it exceeded the value of that propertj^. That on the execution of the said deed by Barnes, this respondent entrusted it to him, for the purpose of procuring it to be executed by his partner Dandridge (who was then at Aylett’s in King William), which Barnes promised to do, and also to have it immediately recorded. That some months afterwards, this respondent, who resides in King & Queen county, went to Aylett’s for the purpose of ascertaining what progress had been made by his agents in selling the goods; when, finding that the deed had not been recorded, receiving no satisfactory account of it from Barnes & Dandridge, and believing that Barnes had destroyed it, he insisted that they, should immediately execute another deed to secure him for the liabilities he had assumed. This they were persuaded to do, and the deed of the 13th of May was accordingly executed and recorded. That shortly afterwards respondent got information that the first deed, duly executed by Dandridge, was in existence, and in the possession of Barnes; whereupon he insisted that it should be delivered up to him ; which at last was done, and that deed admitted to record on the 19th of May. Respondent expressly denies that there was any fraudulent intent whatever connected with either of the said deeds, and insists that they were executed for the purpose of effecting a fair and legal object. He contends that the deed of the 6th of February ought to be considered as an absolute conveyance of the, property to *him, for a full and fair consideration ; that, as the absolute purchaser, he had a right to constitute Barnes & Dandridge, or any other persons, his agents to manage and take charge of the property; and that the character of their possession, as his agents and not as owners, appears on the face of the deed itself, which is notice to all the world. He admits that at the execution of the deed, there was no debt due to him from Barnes & Dandridge, except on account of the liabilities which he then assumed for them; the whole amount of which he avers that he has since paid out of his own pocket, and not with moneys arising from sales and collections under the deed, from which source he has never received a single farthing. But even if it should be considered that he is not entitled to the full benefit of the property conveyed by the first deed, as the absolute purchaser thereof, he insists that that conveyance ought to be considered as a mortgage in fee to him, with power to make sale of the property, and out of the proceeds first reimburse himself to the extent of the liabilities assumed and paid for Barnes & Dandridge: and to that extent he claims the benefit of all the provisions for his indemnity contained in both the said deeds.
    By exhibits filed with the answer of the defendant Corbin, it appeared that Barnes & Dandridge, on the 6th of February 1837, executed their promissory notes to Corbin himself for amounts specified in the schedule annexed to the deed of that date, all of them payable twelve months after date; that these notes were assigned by Corbin to creditors of Barnes & Dandridge named in the schedule; and that actions having been brought against Corbin by the assignees, and judgments recovered therein, he satisfied and paid those judgments (amounting in the whole to 3172 dollars 14 cents) in the month of June 1838.
    Several depositions were taken and filed in the progress of the controversy; but the evidence, so far as it ^related to the nature and purpose of the transactions between Barnes & Dandridge and Corbin, did not conflict with the account thereof given by Corbin in his answer, except perhaps in one particularthe scrivener who wrote the deed of the 6th of February, being examined as a witness, deposed, that in a conversation with Corbin immediately before that deed was prepared, Corbin told him he was satisfied that Barnes & Dandridge “had property enough to pay all their debts, if they could be allowed to wind up without disturbance.”
    The commissioner reported that Hawes, the trustee in the second deed, had in his hands the sum of 2133 dollars 39 cents in cash, and bonds amounting to 430 dollars more, the proceeds of sales and collections made by authority of that deed.
    The causes came on to be heard the 24th of May 1839: when the court, being of opinion that the two deeds which the bills sought to set aside were not fraudulent as to the defendant Corbin, but were fair and bona fide, decreed, that the trustee Hawes pay the money and assign the bonds appearing by the commissioner’s report to be in his hands, to the defendant Corbin, towards the discharge of the debt due him by Barnes & Dandridge; that the bills of the plaintiffs be dismissed; and that the said plaintiffs pay to the defendant Corbin his costs of suit.
    From this decree an appeal was allowed, on a petition of the plaintiffs assigning for error—
    1. That, upon the supposition that both deeds are bona fide, the other creditors of Barnes & Dandridge are provided for after indemnifying Corbin, and it was wrong to dismiss their bills with costs, instead of decreeing to subject the real property conveyed by the deeds and not disposed of by the trustee.
    
      
      2. That, upon the same supposition (that the deeds are fair), the first conveyed the property to Corbin, and the second passed nothing to the trustee, who had therefore no ^authority to sell. But if it be said that both deeds were made for the same object, to indemnify Corbin in case he should pay the assumed debts m twelve months, and that therefore the proceeds must be applied as if the sale were regular, then it is answered, he has failed to comply with the terms, and has lost his security; for the notes fell due the 6th of February 1838, and were paid under execution some time afterwards.
    3. That the deeds are void, on the authority of Bang v. Lee &c., 3 Rand. 410, 423,— substituting a mere personal accountability by the debtor, instead of a security in rem.
    4. That the evidence convicts the defendants of fraud in fact.
    R. T. Daniel for appellants.
    C. S. Carter for appellees.
    
      
       Fraudulent Conveyances — Postponement of Sale.— In Dance v. Seaman, 11 Gratt. 782. it is said: "The reservation of an interest-in the property, by postponing the time of sale, or directing a sale on credit, or providing for the payment of the surplus after satisfying the creditors secured, do not of themselves furnish evidence of fraudulent intent, has beenai'flrmed by the repeated decisions oí this court. Skipwith v. Cunningham, 8 Leigh 271 ; Kevan v. Branch, 1 Gratt. 274 ; Lewis v. Caperton, 8 Gratt. 148 : Cochran v. Paris, 11 Gratt. 348 ; Junney v. Barnes, 11 Leigh 100.”
      See also, on this subject, citing the principal case, foot-note to Sheppards v. Turpin, 3 Gratt 379; foot-note to Cochran v. Paris, 11 Gratt. 348 ; Marks v. Hill. 15 Gratt. 420 (see footnote) ; Henderson v. Hunton, 26 Gratt. 936 (see footnote); Young v. Willis, 82 Va. 296 ; Gardner v. Johnston, 9 W. Va. 407 ; Harden v. Wagner. 22 W. Va. 371 ; Claflin v. Foley. 23 W. Va. 441 ; Livesay v. Beard, 22 W. Va. 590 ; Klee v. Reilzenber, ger, 23 W. Va. 755 ; Shattuck v. Knight, 25 W. Va. 597. 598; dissenting opinion in Landeman v. Wilson, 29 W. Va. 724, 2 S. E. Rep. 203, 215. See generally, mono-graphic note on" Fraudulent and Voluntary Conveyances” appended to Cochran v. Paris, 11 Gratt. 348.
    
   The decree of the court of appeal was as follows:

“The court is of opinion that the said decree, so far as it sustains the right of the appellee Corbin to indemnity out of the proceeds of the effects and debts of Barnes & Dandridge, surrendered by them to the trustee Hawes, and directs the application of those proceeds and the outstanding debts to that object, is correct. The court is also of opinion that the appellants are entitled to any surplus, after Corbin is indemnified, of the debts and effects so surrendered, and of the proceeds of the house and lot mentioned in the deed from Barnes and Dan-dridge to Corbin, of the 6th day of February 1837, and that the court below ought not to have dismissed their bills, until the whole subject, including the house and lot and the outstanding debts, had been administered, so as to ascertain whether or no there be any surplus; and if there be, then, instead of dismissing the bills, that surplus should be decreed to the appellants. Therefore it is decreed and ordered that the x'said decree, so far as it directs the application of the funds in the hands of the trustee Hawes to the indemnitj' or reimbursement of Corbin, be affirmed, and that so far as it dismisses the bills with costs, it be reversed and annulled,” with costs to the appellants. And cause remanded for further proceedings in conformity with the principles of the foregoing opinion and decree.  