
    Alfred Ingraham v. John Grigg et al.
    A delivery to the trustees in a deed of assignment by a bank for the benefit of its creditors, is equivalent to a delivery to the cestui que trusts.
    
    So also the record of a deed of that nature amounts to prima fade evidence of delivery.
    It was held not to be sufficient proof, that a deed of assignment made by a bank in this state, in 1842, and which was recorded, was made to take effect upon a condition, that one of the directory testified that it was his understanding, that such was the fact; especially when the reasons urged for the execution of the deed tended to an opposite conclusion.
    A deed of assignment by a bank for the benefit of its creditors, which conveys all its assets and property, except certain specified portions, to trustees, is not void because of this reservation ; a debtor may convey part of his property in trust for his creditors, if he leave the residue open to their debts.
    A bank making an assignment of its effects for the benefit of its creditors, may stipulate that no interest shall be paid out of the assets and property conveyed, until the whole principal of all the debts is paid ; such a provision may give some advantage to a part of the creditors over others, but it secures no benefit to the bank ; and a bank may, in an assignment of that nature, make preferences among its creditors, even to the exclusion of some.
    Such a provision does not exclude the mode of computing interest according to our statute; for if there be funds enough to pay interest after the principal is paid, the interest may yet be computed according to the statute to ascertain the interest due ; and even if it did exclude that mode of computing interest, the creditors who assent to the deed may renounce the benefit of. a statute created in their behalf.
    Large salaries stipulated to be paid to trustees in a deed of assignment, for the benefit of creditors, do not necessarily vitiate the deed upon its face.
    A deed may delay creditors and not be void, when such delay is not its principal object.
    The certificate of an officer authorized to take acknowledgment of deeds, that the vendor in a deed made oath that he signed, sealed, and delivered the deed, &c., though in the form of a] jurat, is not thereby deprived of its character of an acknowledgment.
    
      On appeal from the superior court of chancery; Hon. Stephen Cocke, chancellor.
    John Lindsay and Alfred Ingraham allege in their bill, that on the 10th of Feb. 1842, the Grand Gulf Bank made an assignment to the complainants of all their estate and effects, excepting what was specified in a schedule annexed to the assignment, in trust for purposes therein named. That John Grigg and others obtained judgments against the bank after the date of the assignment, the dates and amounts of which are set out in the bill; that executions issuing on these judgments have been levied on real and personal estate embraced in the assignment by the bank to complainants, and they pray for an injunction.
    They exhibited with the bill a copy of the deed of assignment, which appears to have been in trust for the purpose of selling the real and personal estate and collecting the debts, and out of the proceeds to pay, — first, the expenses of the trus¡t, and $5000 to Lindsay and $4000 to Ingraham per annum ; second, to pay all judgments against the bank previously obtained; third, to indemnify all persons bound in any manner as surety for the bank; fourth, that the assignees from time to time, as often as they shall have moneys in hand of sufficient amount for a dividend, shall divide and distribute the same ratably and equally in and towards the payment of all the debts and the interest accrued thereon; fifth, after payment of the debts, the residue of the property to be re-transferred, conveyed and paid over to the bank.
    The assignment directs that public notice shall be given of each dividend, and that payments shall only be made to such creditors as shall bring forward and prove their claims, “it being understood, however, that no interest shall be paid until the final dividend.”
    The deed of assignment, with the schedule annexed, was executed by John Lindsay, as president under the corporate seal of the bank, and was dated on the 10th of February, 1842; the trusts were accepted by the trustees on the 25th of that month; on which day William Randolph, judge of probate court, certified on the deed that — “ Lindsay, as president of the bank, made oath that the seal attached to the deed was the corporate seal, was affixed by the authority of the board of directors, and that the indenture was sealed and delivered as the proper act of the president and directors.” The deed was filed for record on the same day of its acknowledgment.
    The answers of the defendants are substantially the same, and deny the validity of the deed of assignment, and assail it for fraud in law and fact.
    The transcript of judgments filed with the answers show that the suit, on which the judgment was founded, commenced on lpth of May, 1841.
    On the part of the defendants, E. A. McLean testified, that soon after the date of the assignment, he had with Lindsay, one of the assignees, several conversations, in all of which they spoke of said assignment, and of the object of the bank in making the same. Witness blamed the bank for making it, and Lindsay justified it, giving as the reasons which influenced the bank, 1st, because he said there were suits pending against the bank, in which judgments would be rendered, and the property of the bank would be sacrificed, to the injury of the bank, and of those creditors who had not sued; 2d, because there was a bill (known as Briscoe’s bill,) before the legislature, which, if passed, would clog the bank so that she could do nothing. Lindsay was president of the bank, and understood to be a director. He, as witness understood, fully concurred in the reasons stated, and always endeavored to convince witness that they were good and sufficient.
    George R. liizer was present on the street in Grand Gulf at one of the conversations between McLean and Lindsay, after the assignment. Lindsay said one of the objects the bank had, in making the assignment, was to prevent judgments from forcing the property of the bank up at sheriff’s, sale, and to be sold at a sacrifice.
    W. E. Muir testified, that Lindsay was a director and president of the bank; that witness had a conversation with him in the spring of 1842, relative to the assignment, &c. Witness remarked that he had understood, from several of the directors of the bank, that the assignment should not be put upon record unless the said directors should be convinced that Briscoe’s bill would pass the legislature and become a law, to which Lindsay-answered that there were other reasons why the said assignment should be made, and went on to give some other reasons, as follows: he said that there were judgments against them, and that others were suing the said bank, and that it was necessary for them to make some such assignment for the purpose of preventing the property of said bank being sacrificed.
    H. M. Coffee was a director of the bank when the assignment was made, and was present when it was proposed, discussed, and agreed to; Lindsay and Ingraham were present; Lindsay was president, and Ingraham cashier of the bank. The assignment had been proposed, and the draft of it read to the board before witness met the board; Lindsay appeared to be the mover and principal advocate of the assignment. Witness required the draft to be read, which was done, and witness objected to it, and gave his reasons ; after which, Lindsay and some of the directors, in reply, and as reasons for making the assignment, stated that a certain bill, known as Briscoe’s bill, was about passing the legislature, which bill would have the effect to sacrifice the property of the bank, and be ruinous to the stockholders, and break the bank; and it was further urged, .as a reason, that the property' of the bank would be sold at a sacrifice to pay their debts, unless the said assignment was made, and that the property of said bank being disposed of, the stockholders would have nothing left. So far as witness could under stand from the board, it was supposed that the Briscoe bill would have the tendency to stop all banking operations, and sacrifice the property of said bank for the payment of her debts. Witness does not recollect of any creditor requesting any such assignment, but it appeared to be the voluntary act of the said bank, or of the directors. j
    Coffee further states, that it was this understanding that the assignment was not absolute, but upon condition that Briscoe’s bill became a law, and provided the bill did not become a law the said assignment was not to be recorded, but to be null and void, and upon this understanding alone he consented to the assignment; and afterwards, to wit, after said bill had failed to become a law, witness requested Hamilton, one of the directors, to see the president of said bank, and notify him not to record the assignment-. The bank at the time of the assignment, as witness supposed from looking over the books, was owner of a large amount of land, and some few negroes.
    For the complainants, the depositions of J. G. Gordon, D. G. Humphreys, Alfred Ingraham, and. John Perkins were taken, and they prove the execution of the deed and its object; but they were objected to in the court below on the ground of their incompetency, the witnesses being stockholders in the bank, and they were ruled out by the chancellor. As the court decides the case without reference to them, and does not determine upon their admissibility, no abstract of them is given.
    The chancellor dissolved the injunction as to John Grigg and others, and they appealed.
    
      George S. Yerger, for appellant, insisted,
    1. That the deed of assignment was valid; and cited Mar-bury v. Brooks, 7 Wheat. 556 ; Arthur v. Rail Road and Com. Bank of Vicksburg, 9 S. & M. 394; Montgomery v. Cooper, II S. & M. 555-, Foster v. Saco Man. Co., 12 Pick. 451; Cunningham v. Freeborn, 11 Wend. 240 ; Russell v. Woodward, 10 Pick. 408; Wiclcersham v. Nicholson, 14 S. & R. 118; Stokes, Ex parte, 7 Yesey, 408 ; Angelí on Assignment, 23.
    2. Mr. Yerger reviewed at length the testimony of defendants, and urged that, while much of it was inadmissible, it did not in the least impair the validity of the deed, or prove its non-delivery as established by its record and being in the possession of the grantees.
    3. He also argued that the witnesses of complainants were competent, and cited many authorities to the point, which are omitted.
    
      H. T. Ellett, for appellees, assailed the deed of assignment,
    
      I. On the ground that it never was delivered; he reviewed the facts, and cited 1 Phil. Ev. 467; Part II. of Cow. & H. Notes to Phil. Ev., note 888, p. 1281, et. seq.; Ang. & Ames on Cor. 160, sec. 9.
    II. The deed is void, as to creditors, for fraud in fact.
    It was made pending the suits. No creditor was consulted about it, or requested it. It was made at the sole instance and solicitation of Lindsay, who by it secured himself an annual salary of $5000 for an indefinite time.
    III. The deed is void on its face, for fraud in law.
    1. Where a debtor assigns only part of his property, a stipulation in the assignment, that the creditors shall give a general release, as a condition to entitle them to receive a dividend, is fraudulent, and renders the assignment void. Armstrong v. Byrne, 1 Edw. C. R. 79; Wakeman v. Grover, 4 Paige, 23; Lentilhon v. Moffat, 1 Edw. 451; Mills v. Levy, 2 Edw. 183; 2 Story’s Eq. Jur. 356, sec. 1036; Halsey v. Whitney, 4 Mason, 206; Brashear v. West, 7 Peters, 608; 8 Wheaton, 268;, 4 Wash. C. C. R. 232 ; 4 Mason, 183; 14 Johns. 459; 20 lb. 442 ; 5 Johns. Ch. R. 329; 4 Paige, 23; 11 Wend. 187; 4 Conn. 277.
    2. In any assignment, general or partial, a provision that secures a permanent, lasting, and material benefit to the grantor, will vitiate the whole conveyance. Arthur v. Com. §' R. R. Bank, 9 S. & M. 394, 433-; Mackie v. Cairns, 5 Cowen, 547 ; Austin v. Bell, 20 Johns. 442; Seaming v. Brinkerhoff, 5 Johns. Ch. R., 329; 1 Iredell, 490; 6 Hill, N. Y. 438; l Denio, 197; 6 Conn. 277; 5 Ohio, 293; Wright, 606; 6 Missouri, 302, • 317; 4 Ala. 374; 6 lb. 179.
    In the case at bar the assignment is partial, certain “ estate and effects” contained in the schedule being excepted. The surplus, after payment of the debts, is to be re-transferred to the bank. Dividends are required to be paid from time to time, as often as there may be money collected for the purpose, and then follows this significant provision, to wit: “It being understood, however, that no interest shall be paid until the final dividend.” This provision, Mr. Ellett argued at length, violated the statute by which it is provided, that when partial payments are made, the interest that has then accrued shall be first credited, and the balance of such partial payment shall be placed to the payment of the principal. How. & H. Dig. 614, sec. 4.
    The residue of the property being reserved to the grantors, by thus compelling the creditors to accept a mode of payment which gives them less than their legal right, when there may be property enough to pay them the whole, the surplus is increased, and a permanent, lasting, and material benefit is secured to the grantors.
    IV. An assignment for creditors is void, unless assented to by the creditors. Such assent will be presumed, in most cases, but whenever a condition is imposed on the creditors, their assent must be proved, and will not be presumed. Wheeler v. Sumner, 4 Mason, 183; Halsey v. Whitney, lb. 215.
    The mode of payment in this assignment is a condition, and and there is no proof that any creditors have assented to it.
    V. Deeds of trust and mortgages only take effect as to creditors, under our statute, from the time of their delivery to the clerk to be recorded. Hutch. New Code, 606, s. 5.
    There is no allegation in the bill, that these creditors had any notice of the deed of trust, and the relief must be sought on the footing of the delivery of the deed for record on the 25th day of February, 1842.
    Deeds may be acknowledged by the grantor, or proved by one or more of the subscribing witnesses. New Code, 605, sec. 1. No deed shall be admitted to record, unless acknowledged or proved according to that act. Ib. 606, sec. 7.
    A deed recorded without the proper acknowledgment or proof, is improperly on record, and is not notice to creditors or purchasers. 5 Mason, 195.
    There is no acknowledgment of the deed of trust in question, but proof has been substituted, which is good for nothing, for two reasons.
    1. It is not made by a subscribing witness, but by' John Lindsay. There are no subscribing witnesses to the deed, and the law only admits of proof by subscribing witnesses.
    
      2. Lindsay, by whom the proof is made, is one of the grantees, and interested under it. The deed must be proved by a person competent to be a witness, to establish the deed; but Lindsay is not a competent witness to establish a deed made in his own favor. If he had subscribed it as a witness, it would not help the matter, for a party cannot be a witness. A witness must, ex vi termini, be a third person.
   Mr. Justice Clayton

delivered the opinion of the court.

In this suit the validity of the .deed of assignment, made by the Grand Gulf Bank of its effects, is in controversy. Its invalidity is asserted upon several grounds.

It is first urged that the deed was never delivered, or if delivered, that it was upon a condition, which did not occur. The evidence shows that the deed was delivered to the trustees, and this is equivalent to delivery to the cestui que trusts. It was also recorded, which amounts at least to prima facie evidence of delivery. In regard to the alleged condition, there is a failure of proof. One of the directors states that it was his understanding, that the deed was not to take effect or be recorded, unless the original Briscoe bill, which was at the time pending before the legislature, should become a law. At that session the bill was defeated. But this witness states the understanding of no one but himself. There is no other testimony in support of his view of the transaction. The reasons which the president of the bank itrged for the execution of the trust deed, tend to the opposite conclusion, and to show that it was the object to make an absolute assignment. Suits were pending, and it was his intention to prevent a forced sale of the property, either under the judgments, or under the operation of the Briscoe bill, the effect of which then seemed to be little understood.

It is again insisted, that the deed is void, on the ground, that if a debtor assigns only part of his property, and stipulates in the assignment, that the creditors shall give a general release, as a condition to entitle them to receive a dividend, such- stipulation is fraudulent, and renders the assignment void.” The New York cases certainly establish this doctrine, and, as we think, upon correct principles; though the courts of Pennsylvania seem to hold differently. Wakeman v. Grover, 4 Paige, 23; Brashear v. West, 7 Peters, 608. The principle is familiar. A debtor in failing circumstances, cannot devote a part of his property to the payment of his debts, reserve a part, and say to.his creditors they shall not touch the part so devoted, unless upon surrendering all claim to that which is reserved. In other words, a debtor cannot keep any part of his property from his creditors, except that which the law secures to him, and any attempt to do so, amounts to a fraud. But is this deed of that character? Is there any reservation for the benefit of the bank 1 It transfers, by a sweeping assignment, all the property and effects of the bank to trustees, except some claims reserved in a schedule annexed to and made part of the deed, and directs the trustees to dispose of the property, collect the debts, and pay over to its creditors rateably, as fast as the assets are realized. There is no stipulation, that if any of the creditors proceed against the effects reserved in the schedule, they shall be excluded from the benefits of the deed of trust. If a creditor were to pursue those particular debts, there is nothing in the deed, or in the nature of the transaction, which would prevent his coming in for a share of the dividends under the deed, in proportion to what might be due him, after deducting any amount realized from the debts contained in the schedule. There is no room, therefore, for the operation of the principle invoked.

Neither does this case fall within the principle of Arthur v. Commercial and Railroad Bank of Vicksburg, 9 S. & M. 394. In that case, there was a resulting trust to the assignors of the railroad and its incidents, after the profits should have paid the debts, excluding the creditors in the mean time? from all right to go against the road. That was placed beyond the reach of creditors, by the conveyance to the trustees. But here these debts are not conveyed to the trustees. They are reserved from the operation of the trust. They stand precisely as if no deed of assignment had been made. They are not embraced within it, and are as open to creditors as if there had been no conveyance.

Neither does the provision, that no interest was to be paid, until the whole principal of all the debts was paid, of necessity vitiate the deed. Perhaps it gives some advantage to a part of the creditors over others; but it secures no benefit to the bank. Such preferences may lawfully be given. Some creditors may be entirely postponed to others. It grows out of the ownership, and absolute right of disposition over property not incumbered. The whole debt, principal and interest, is at last to be paid. The provision does not necessarily preclude the mode of calculating interest, prescribed by the statute, because after all the principal is paid, if there be funds sufficient, the interest is to be paid, and it may then be computed according to the statute to ascertain the real amount due. But we do not see, if the creditors claiming under the deed, are satisfied with this, why those claiming against it should complain. If it has the effect they ascribe to it, it increases their chances of being paid, and operates against the other creditors. These last may surely renounce a law intended for their benefit.

A deed may delay creditors, and not be void, when such delay is not its principal object. Douglas v. Bank of Virginia, 11 S. & M. 469. The salaries of the assignees, though large, do not make the deed fraudulent upon its face, and there is no testimony on the subject. Arthur v. R. R. Bank, as above. As to the probate of the deed for record, it is in substance an acknowledgment by the party, though in form a probate. The jurat cannot take away its character of an acknowledgment. The decree dissolving the injunction, is reversed ; the injunction ordered to be reinstated, and the cause remanded.  