« ZurückWeiter »
administration; that the proceedings in said cause cannot be evidence against any of the parties to this cause, except said Weeks; that the other defendants are entitled to have their day in court to controvert the issue (that of a devastavit by Hall) on which their liability depends, and the bill, by.its averments, did not afford them that opportunity.
From what has been said, it will sufficiently appear in what the learned chancellor mistook the real issue in the cause, and wherein he erred. The real issue was, whether the complainant's intestate was a creditor of said Weeks, 347 either before or after the execution of said conveyances; and whether the same were constructively or actually fraudulent. These issues, as tendered by the complainant, the grantee had ample opportunities to contest.
The question of exemptions was not passed on; and, if properly presented, is one which is not likely to be of difficult solution.
12. The application to the chancellor, pending the submission to set it aside, did not state that the evidence proposed to be taken could be made and by whom, nor any reason why it was not done before the submission of the cause, or any fact showing diligence, nor was it verified. It was within the discretion of the court to either grant or deny the application, but for the reasons stated, it was properly disallowed: Magruder v. Campbell, 40 Ala. 611; Ex parte Ashurst, 100 Ala 573.
Reversed and remanded.
FRAUDULENT CONVEYANCES–SURETY AS CREDITORCONTRIBUTION.-A voluntary conveyance is presumed to be fraudulent and void as against existing creditors, though not as against subsequent creditors: Severs v. Dodson, 53 N. J. Eq. 633; 51 Am, St, Rep. 641; Riley v. Carter, 76 Md. 581; 35 Am. St. Rep. 443; Stumbaugh V. Anderson, 46 Kan. 541; 26 Am. St. Rep. 121. But If a conveyance is made with a fraudulent intent, which is participated in by the grantee, it may be avoided by subsequent creditors as well as by previous creditors, although it is founded on a good and valuable cousideration: See monographic note to State v. Mason, 34 Am. St. Rep. 399, on fraudulent conveyances. All deeds, convey. ances, contracts, and transactions entered into in fraud of creditors are, however, valid between the parties: See cases collected in the monographic note to Whitworth v. Thomas, 3 Am. St. Rep. 728, on recriminatory fraud; Gilbert v. Stockman, 81 Wis, 602; 29 Am. St. Rep. 922. Creditors only of grantor can attack a transfer of property to a third person on the ground of fraud: McClenney v. McClenney, 3 Tex. 192; 49 Am. Dec. 738; but to constitute one a (reditor, it is not necessary that money be due to him from the debtor at the time of the transfer. It is sufficient that the debtor has entered into some obligation or done some act which may result in his lia bility to the creditor. When the liability is ascertained, it relates back to the inception of the original agreement or obligation, and entitles the creditor to proceed as though there had been a debt due and payable to him at that time: See monographic note to Hagerman v. Buchanan, 14 Am. St. Rep. 743, on voluntary convey. ances. The term "creditors," as employed in the statutes and decisions concerning fraudulent and voluntary conveyances, is not used in any narrow or technical signitication, but includes all persons whose interests might be defrauded by the transfer. Wherever there exists a right or obligation for the invasion or disregard of which a judgment may be entered, a transfer made with the view of rendering such judgment ineffectual is doubtless fraudulent, and therefore void as against the interest sought to be defrauded: Note to Hagerman v. Buchanan, 14 Am. St. Rep. 743. Such a transfer cannot be supported by showing that, when it was made, the claim of the judgment creditor was contingent, and it could not then have been known that any cause of action would ever result from the contract. Therefore, if a bond be given, a fraudulent transfer made subsequently, but before breach of its condition, may be avoided as well as if executed after such breach. The same rule prevails where the liability of the fraudulent grantor, at the date of the grant, was contingent; as, where he was a surety or indorser, and it was not krown that he would ever be called upon to pay the debt: Note to Hagerman v. Buchanan, 14 Am. St. Rep. 744; Hutchison v. Kelly, 1 Rob. (Va.) 123; 39 Am, Dec. 250. A surety is a “creditor" of his principal, who may impeach a voluntary conveyance made by the latter, where he is bound as surety at the date of the conveyance, though he did not pay until afterward: Choteau v. Jones, 11 Ill. 300; 50 Am, Dec. 460. Compare Williams v. Tipton, 5 Humph. 66; 42 Am. Dec. 420. A surety will be protected, eren by injunction, against bis principal's fraudulent disposition of property: Bowen v. Hoskins, 45 Miss. 183; 7 Am. Rep. 728. A surety who pays the debt of his principal is entitled to be subrogated to the rights of the creditor as against his principal and a cosurety: Peebles v. Gay, 115 N. C. 38; 44 Am. St. Rep. 429; Nettleton v. Ramsey County etc. Loan Co., 64 Minn. 395; 40 Am. St. Rep. 342; and he may enforce contribution from his cosurety without first obtaining a judgment at law against him: See monographic note to Gross v. Davis, 10 Am. St. Rep. 640, 645, on the right of one surety to enforce contribution from another, and the remedies for its enforcement.
FRAUDULENT CONVEYANCES–JUDGMENT AS EVIDENCE OF DEBT.-If a creditor seeks the aid of a court of equity for the satisfaction of a judgment out of the property of his debtor, the title to which has been in the debtor, but has been fraudulently transferred, it is sufficient for the creditor to show a judgment at law and execution to entitle him to resort to equity to vacate such fraudulent conveyance: Logan v. Logan, 22 Fla. 561; 1 Am. St. Rep. 212. But if the judgment creditor brings an action to set aside, as fraudulent as to creditors, a conveyance of real estate made by the debtor prior to the judgment, he must show that the debt for which the judgment was rendered existed at the time of the convey. ance. The judgment, as against the grantee, does not prove such existence: Bloom v. Moy, 43 Minn. 397; 19 Am. St. Rep. 243. A creditor's bill to reach property which the judgment debtor has conveyed without consideration, for the purpose of defrauding his creditors, cannot be sustained, when such conveyance antedates the judgment on which the plaintiff relies, and no execution has ever issued thereon: Gilbert v. Stockman, 81 Wis. 602; 29 Am. St. Rep. 922. Com. pare Henderson v. Henderson, 133 Pa. St. 399; 19 Am. St. Rep. 650.
FRAUDULENT CONVEYANCES—BURDEN OF PROOF.-One claiming to be a bona fide purchaser from a fraudulent grantor has the burden of proof to establish his claim: Connecticut etc. Ins. Co. v. Smith, 117 Mo. 261; 38 Am. St. Rep. 656, and note; Mobile Sav. Bank v. McDonnell, 89 Ala. 434; 18 Am. St. Rep. 137. But a subsequent creditor who attacks and seeks to avoid a voluntary conveyance made by his debtor must assume the burden of proving an actual fraudulent intent on the part of the grantor to defraud some creditor: Hagerman v. Buchanan, 45 N. J. Eg. 292; 14 Am. St. Rep. 782
RANDOLPH V. EAST BIRMINGHAM LAND COMPANY,
(104 ALABAMA, 355.) POWERS OR TRUSTS must, in all cases, be construed accord. ing to the intention of the parties, to be gathered from the wbole Instrument.
TRUSTS—WHAT WORDS WILL CREATE.-A gift in a deed, expressed to be for the "use and benefit” of another, is sufficient to fasten a trust upon the conscience of the trust donee.
POWERS COUPLED WITH TRUST.-Mere powers are discretionary with the donee, and courts cannot exercise them, but it 18 different with powers coupled with a trust. In this class of cases, the power is so given that it is considered a trust for the benefit of other parties, and becomes imperative.
TRUSTS-FAILURE OF.-COURTS WILL NOT ALLOW & clear trust to fail for want of a trustee; nor will they allow a trust to fail by reason of any act or omission of the trustee.
TRUSTS-CONSTRUCTION OF, AS TO POWERS.-A court of equity will never favor a construction that confers upon a trustee absolute and uncontrollable powers.
TRUSTS – DISCRETIONARY POWERS.- COURTS WILL NOT INTERFERE with the exercise of discretionary powers by trustees, where they are acting in good faith, without fraud or collu. sion, and without selfish, corrupt, or improper motives; but they will interfere where the exercise of discretion by trustees is infected with fraud or misbehavior, or is mischievously and ruinously exercised, or where they decline to undertake the duty of exercising discretion.
TRUSTS-INVESTMENTS.-If there are no directions in an Instrument of trust, or rules of court, or statutory provisions in relation to investments, they must be governed by sound discretion and good faith. In the absence of statutory direction, or specific authority, trustees are not permitted to invest trust funds in the stock or shares of any private corporation, although the stock is cousidered good by discreet business men who evince their confidence by invest. ing their own funds therein; and no court can sanction such inrest. ments where they are against the policy of the state and expressly forbidden by its laws.
TRUSTS-DEED TO FATHER IN TRUST FOR HIS SON.If a father purchases land for the "use and benefit" of his minor son, and joins in the execution of a conveyance of the property, made to himself as trustee for his son, which conveyance gives the father power to manage and control the trust estate until the son is twenty-one years old, and, in the meantime, to use and appropriate the rents, profits, and income therefrom; to lease, mortgage, or sell the same; and to reinvest the proceeds in such a manner as he may think best for his son's use and benefit, the father becomes a trustee for the son, assuming the same responsibilities and obligations that a third person would, if the land were conveyed to him by a deed creating the same trust. The powers so conferred are not purely, discretionary, but create a trust, coupled with an interest, requiring the trustee to perform active duties, and a court of equity wiú Interfere to prevent a wrongful exercise of such duties.
TRUSTS-INVALID SALE OF LAND-INVESTMENT.-A trustee having authority to lease, mortgage, or sell land held in trust, and to reinvest the proceeds, but who is not authorized by the trust deed to invest the trust funds in stock or shares of private corporations, cannot sell the land so held in trust to a land company and take in payment therefor stock of such compaug, especially where such investments, by trustees, are forbidden by the laws of the state. Such a sale is a violation of good faith on the part of the trustee, and is void.
TRUSTS-INVALID SALE OF LAND-TITLE-BONA FIDE PURCHASERS WITHOUT NOTICE.-If a trustee sells land to a private corporation in violation of his trust, and such land is afterward sold at a judicial sale to persons who had knowledge of the conditions of the trust and of the illegal sale to their vendor, such parties are not bona fide purchasers for value without notice, and, as against the cestui que trust, acquire no right to ibe land.
Bill in equity to set aside a deed to lands, and to enforce a trust therein. The bill was filed by Ryland Randolph, Jr., by his next friend, against the East Birmingham Land Company, Ryland Randolph, Sr., James E. Webb, H. C. Tompkins, and D. H. Sumner. The trust land, mentioned in the opinion, was, after being held about twelve years, sold and conveyed by Ryland Randolph, Sr., to the East Birmingham Land Company. The land was paid for in stock of the company, to the amount of eighty thousand dollars. This was the sole consideration for the execution of the deed. A few years after such purchase by the company, it made a general assignment of its property, including the trust land mentioned, to D. H. Sumner, for the purpose of securing the payment of its past indebtedness. Sumner had notice of the trust. Sumner, as trustee and assignee, sold the lands, under the power contained in the deed of assignment, to the defendants Webb and Tompkins. The company and Ryland Randolph, Sr., were both insolvent. The bill prayed that the deed made by Ryland Randolph, Sr., to the company, the company's deed of assignment to Sumner, and Sumner's deed to Webb and Tompkins, so far as they purported to convey the lands conveyed in trust for Ryland Randolph, Jr., be set aside and annulled; and that the trust be enforced against the land in the hands of the defendants Webb and Tompkins. The chancellor sustained a demurrer to the bill which alleged the above facts, and those referred to in the opinion, and the plaintiff appealed.
White & Howze and Carmichael & Thatch, for the appellant. James E. Webb, for the appellees.
. Sr. REP., Vol. LIII.45
863 HARALSON, J. 1. Ryland Randolph, Sr., purchased the land in question from J. W. Briggs, for which he paid him seventeen hundred and sixty dollars. The purchase was made by him for the use and benefit of his son, Ryland Randolph, Jr. The deed recites that he was desirous, in making the purchase, to invest that amount of money in this land for the use and benefit of his said son, and make a donation of it to him and his use. By his own directions, the conveyance was made to him, as trustee for his son. He ingrafted upon the trust the provision that he should control, manage, and direct the property, until the termination of the trust—which was provided to be when his son should arrive at the age of twenty-one years, if he should live so long-and, until that time, use and appropriate the rent, profits, and income of the same, as he might see proper, for the use and benefit of the cestui que trust, and to lease, mortgage, or sell the same, and reinvest the proceeds in such manner as he might think best for his said son's use and benefit. He joined said Briggs in the execution of the conveyance.
The transaction, in its legal effect, is the same as if said Randolph, Sr., had taken the conveyance directly to himself, and had then executed a deed to a third person, in whose honesty and judgment he had confidence, ingrafting upon the trust the same power and discretion he reserved in this deed to himself. He occupies in this deed the same relations, responsibilities, and obligations as a trustee to his said son, as a trustee, in the person of a third person, in the case we have supposed, would have sustained to the son.
2. What obligations, then, did the trustee in this deed sustain to the cestui que trust? The deed itself describes him as a trustee. It gave him the power to manage and control the trust estate until the son arrived at the age of twenty-one years, and, meantime, to lease, mortgage, or sell the same, and reinvest the proceeds; but whatever he did was repeatedly stipulated to be for the use and benefit of his son. It was not imperative on him to lease, mortgage, or sell. He had the discretion to 364 do either. He was not a mere naked or dry trustee, but one with active duties to perform, such as are referred to in section 1832 of the code: You v. Flinn, 34 Ala. 409. The power reserved by the donor in this instance, who was also the donee in trust to bell, was not a mere power, purely discretionary with him; but it was a trust, coupled with an interest, obligatory on the conscience of the donee: Hill on Trustees, *67; 1 Perry on Trusts, Bec. 248; 18 Am. & Eng. Ency. of Law, 882, 887, 888.