Opinion
(December Term, 1831.)
1. An assignment made by an insolvent of all his estate, whereby some of his creditors are preferred, with a stipulation that the property shall remain in his possession, until a sale should be directed by a majority of the creditors named in the deed, is not in law fraudulent upon its face, so as to authorize the court to pronounce it void; but its validity must be submitted to a jury upon proof of the actual fraudulent intent.
2. Where a deed of trust was duly proved, but by reason of the death of the register was not registered within six months, but was registered as soon as a successor was appointed: It was held, RUFFIN, J., dissentiente, that the deed was available, as if duly registered.
3. Assignments made by insolvents, whereby a preference is given to one class of creditors, are not founded in morality; and were the question res integra, would be declared fraudulent.
4. Registration being required by law for the public benefit, and registers being officers of the public, if such officers are not provided, or if by their neglect a deed be not registered within the time prescribed, it is available without registration.
1. Per RUFFIN, J., dissentiente. A creditor may, in a general assignment of his property, prefer one debt to another; and although the effect of this preference may be to delay a creditor, yet if such delay was not the intent of the debtor, the deed is valid.
2. An assignment which conveys property for the purpose of paying specified debts, with an express resulting trust to the assignor, is not on that account fraudulent upon its face.
3. But if the resulting trust is more valuable than the debts secured, it is a circumstance from which the jury may infer a fraudulent intent.
4. An act required by law is not considered as performed, although the performance was prevented by the act of God. Hence, where a deed was not duly registered by reason of the death of the register, it passed no title to the vendee.
5. The case of Ridley v. McGehee, 13 N.C. 40, doubted.
THIS was an action of trover for a number of slaves, tried before Norwood, J., at CHOWAN, on the last spring circuit, and on not guilty pleaded, the case was that the plaintiff claimed title under James R. Creecy, by a deed dated 15 September, 1829, between the plaintiff Creecy and several of his creditors, whereby, after reciting sundry debts of Creecy all his property was assigned to the plaintiff upon the following trusts: "That the said Augustus Moore shall, as soon as may be convenient, or he be requested by the persons interested in the trust hereby created, or a majority of them, expose to public sale the whole of (127) the aforesaid real estate and negroes, and other articles of personal property to public sale at such place or places as the said Thomas Benbury, etc. (the cestui que trust) or a majority of them shall require, upon such terms as the majority may agree on, before or at the day of sale, he the said A. M. having first advertised the time and place of such sale for thirty days in the Edenton Gazette, and such other newspapers as he may deem necessary, and the funds arising from the sale of said property, and the money or securities which he the said A. M. may receive by virtue of the agency and attorneyship hereby created, after retaining for all necessary and proper expenditures, etc., shall be applied in the following manner, to wit: In the first place, towards the payment of the several bills of exchange hereinbefore described, upon which the said T. B. is endorser, together with all damages, interest, etc., the note given to the president and directors of the State Bank as aforesaid, to which the said T. B. is security, with all interest, etc." The deed then recited other debts of the same kind and proceeded as follows: "After having discharged and paid the said debts due and owing to, etc., should there be a surplus in the hands of the said A. M. by virtue of the trust by these presents created and established, the said A. M. shall in the second place apply such surplus or residue so remaining in his hands as aforesaid, in payment and discharge of the said bill due and owing to the said W. R. N., etc. (setting out sundry other debts of the same kind), and should there not remain in the hands of the said A. M. a sufficient sum, after paying off in the first instance, the debts due, etc. (the first class), and discharge the several debts due, etc. (the second class), the said balance, as aforesaid, shall be applied pro rata, etc. But should there remain a balance in the hands of the said A. M., after paying off, etc., in the order and upon the terms aforesaid, then the said A. M. shall apply the said balance to the payment of the debt due to the said Josiah Collins, as aforesaid, in the third place; and in the fourth place, should there remain a balance in the hands of the said A. M. after paying, etc., such balance shall be applied to the payment of the debt due to the said Thomas C. Whedbee by note as (128) aforesaid, and should there remain a balance after paying, etc., then the said A. M. shall apply such balance to the payment of all such demands due by contract or agreement against the said James R. Creecy, as may be made known to the said A. M. within six months after the sale of the said property hereby conveyed, the amount of said demands to be ascertained by two indifferent persons, one to be chosen by the said A. M. and the other by the claimant, etc. But should there not remain in the hands of the said A. M. a sufficient amount of funds after paying, etc., to pay off and discharge all the debts and demands due and owing by the said James R. Creecy, then the said A. M. shall make a pro rata application of the said funds to such debts as shall be made known to the said A. M. within the time, and ascertained in the manner aforesaid: And it is hereby expressly covenanted and agreed upon, by and between the several parties to these presents, their heirs, etc., that the said James R. Creecy, his heirs, etc., shall and may remain in the quiet and peaceable possession of the property hereby conveyed, until the same shall be required for the purpose of effecting a sale, for which said last mentioned purpose the said James R. Creecy doth for himself, his heirs, etc., covenant, promise and agree to and with the second and third parties to these presents, to surrender and deliver up the same, at such time and place as may be required. And the said A. M. doth for himself, etc., covenant and agree to and with the first and second parties to these presents, that he, the said A. M. shall and will execute the trusts hereby created according to the best of his skill and ability, and that he will execute such conveyances of the said property, etc. And it is hereby expressly agreed upon, by and between the parties to these presents, their heirs, etc., that the said A. M. shall not be held responsible for the loss, injury, or destruction of the said property, etc."
Iredell and Hogg for plaintiff.
Gaston and Badger contra.
To this deed there were two attesting witnesses, one of whom (129) only was examined by the plaintiff. He proved that at the date of the deed he saw it executed by Creecy; that Mr. Norcom, a cestui que trust, was present; that it was not then signed by the plaintiff, and that he knew nothing of its execution by the latter, who was not present when it was attested by the witness. The clerk of the county court of Chowan proved that during the term of the court which commenced on the third Monday of September, 1829, the plaintiff produced the deed in court, when it was proved by the oath of the same attesting witness, who was examined on the trial; that the plaintiff, upon its probate, took possession of the deed, promising to hand it himself to the register; that the register died in December following, and no successor was appointed until March, 1830; that the day after the register's death the deed was found among his papers. It was also proved that the deed was in the possession of the register within five or six weeks of its probate, and that while it was in the hands of the register, the defendant Collins took a copy of it. There was no evidence offered that the creditors named in the deed had ever required the plaintiff to take possession of the property, or to make a sale thereof; but an advertisement was proved by the plaintiff of an intended sale on 21 December, 1829. Creecy remained in possession of the property until it was seized by the defendant Rascoe, as hereafter mentioned.
The defendants produced the record of an attachment returnable to September Term, 1829, of Chowan County Court, at the instance of the defendant Collins, against the effects of Creecy, as an absconding debtor, which had been levied upon the slaves in dispute; from which it appeared that on 10 September, 1829, Creecy replevied the property levied on by giving a bail bond to the sheriff. At the ensuing term of the county court, the third Monday of that month, Creecy was surrendered in discharge of his bail, and judgment by confession was entered up in favor of the plaintiff. This judgment was obtained upon the bond mentioned in the assignment, as due the defendant Collins by Creecy. (130) Upon this judgment a fi. fa., tested the third Monday in September, issued to the defendant Rascoe, the sheriff of Chowan, and was levied upon the slaves in question, and subsequently they were bought by the defendant Collins. It was admitted that at the date of the assignment Creecy was indebted to an amount greater than the value of his property, and that several judgments against him must remain unsatisfied; that all the debts mentioned in the assignment were bona fide, and that the responsibilities therein mentioned had been incurred. There was no evidence that any of the creditors of Creecy accepted the deed of trust or participated in the making thereof, except that one of them, at the sale by the defendant Rascoe, requested a witness to value the slaves in order to subject the defendants to the full amount.
It was insisted for the plaintiff:
1. That the registration of the deed within six months being prevented by the negligence of the register, without the default of the plaintiff, and the registration having been completed as soon as possible after the appointment of a new register as to the plaintiff, it was to be taken as duly registered.
2. That the deed was delivered prior to the teste of the execution in favor of the defendant Collins, and thereby the title of the slaves in question vested in the plaintiff, so as to enable him to maintain this action.
3. That the deed was made bona fide, and upon a valuable consideration, and that this was a question of intent, and a matter of fact to be tried by the jury.
On the other hand it was urged:
1. That there was no evidence from which the jury could infer a delivery of the deed before the teste of the defendant Collins' execution.
2. That the deed not being registered within six months of its date, nor until after the teste of the execution and the levy and sale under it, could not prevail.
3. That the deed in its structure and provisions manifested an intent, which the law regarded as fraudulent against creditors not parties, nor assenting thereto, and that as this intent appeared upon the face of the deed, the judge ought to pronounce it fraudulent and void.
4. That the plaintiff could not maintain this action, because at (131) the time of the levy and sale the possession of Creecy and his right, by the terms of the deed, to hold the property had not ceased.
The presiding judge charged the jury that there was evidence from which they might infer that the deed was delivered prior to the teste of the execution. That although the registration of the deed, after the expiration of six months, might, under the circumstances of this case, have been deemed effectual, so as to cause it to inure from its delivery, had it, when proved, been left in the office of the county court, yet if it was not so left, but was taken out by the plaintiff, and not delivered by him to the register until five or six weeks after the term of the court, when it was proved, it would not in law avail against Collins' execution. That Creecy being insolvent, the deed was not bona fide against a creditor of his dissenting therefrom, and seeking by regular process to subject the property included in it to the payment of his debt, and that the intent to hinder, delay and defraud creditors appeared upon the face of the deed, and made it the duty of the court to pronounce it fraudulent in law.
A verdict was returned for the defendant, and the plaintiff appealed.
It appears from the evidence offered in this case that (133) at the time the subscribing witness attested the deed of trust, Creecy, who executed it, and Norcom, one of the creditors in whose favor the deed was given, were present. The deed must have been delivered to Norcom, or retained by Creecy. If it was retained by Creecy, until it was offered for probate, it was not executed by him until that time. Therefore it cannot prevail against Collins. But if it was delivered to Norcom, it must be understood that he received it as the agent of Moore. And if Moore has assented to such delivery, the deed must be taken to have been executed when the delivery was made to Norcom. Now which is most reasonable to presume did happen? If the deed was retained by Creecy, the signing and sealing of it by him, and having it attested by a subscribing witness, amounted to nothing. The parties afterwards were in the same situation as they were before the transaction took place. Is it credible that the parties intended this? Norcom was interested in the transfer of the property, more so than Moore, the trustee. Was it not more likely that the deed should be delivered to him for safe keeping, than that it should be left in the hands of Creecy? Why was a witness called, why was anything done at this time if a transfer of the property was not contemplated? I therefore coincide in opinion with the judge of the Superior Court, that the circumstantial evidence was of such a character that it was proper to submit the question to the jury (134) whether the deed had been delivered prior to the teste of Collins' fi. fa. If it was so delivered to Moore, there is an end of the question as to its execution. If it was delivered to Norcom as his agent, such delivery was also good. It is laid down in Whelpdale's case, 5 Rep., 119, that if an obligation be delivered to another to the use of the obligee, and the same is tendered to him, and he refuses, then the delivery has lost its force, and the obligee can never after agree to it. It follows, of course, that if the obligee assented to the delivery to the stranger, the delivery was good, and it must be considered the act and deed of the obligor. Newbern Bank v. Pugh, 1 Hawks, 198; 1 Starkie on Ev., 333; Johnson v. Baker 6 Eng. C. L., 479.
But the judge was also of opinion that the deed was void as to creditors dissenting therefrom, and seeking by regular process of law to subject the same property to the payment of their just demands, and that an intent to defraud such creditors was apparent on the face of the deed, and that it was the duty of the court to pronounce it fraudulent.
Deeds of trust are not often made by debtors that are quite solvent. They are commonly made with a view of better securing some creditors, and in preference of others. And were the question open, and of the first impression, I would probably coincide with the judge in this part of the case also. Because when a debtor has several equally meritorious creditors, and has not wherewith to satisfy them all, and he appropriates what he has to the satisfaction of some of them, to the exclusion of others, it is a step which may gratify his feelings, but it cannot satisfy the reasonable demands of justice, or be approved of by a correct sense of fair dealing. But the law on this subject has undergone too many editions, and taken too deep root, to admit of judicial remedy. It is a measure of justice, placed in the power of debtors, in all the States of the Union, as far as I am informed. No doubt, in the present case, the object of Creecy was to secure some creditors, and of course injure others. Still, the creditors secured had a right to be paid their debts, and a deed of trust made to effect that end the law will not consider (135) fraudulent. I see nothing in the deed of trust that distinguishes it from the common case of trusts. I am therefore not prepared to say that it carries on its face proof that it is fraudulent.
The next question that arises in this case is whether, as the deed of trust had not been registered in due time on account of the death of the register, it ought to be given in evidence. It will be admitted that where two individuals enter into a contract, and one of them is prevented, by the act of the other, from doing a thing which he stipulated to do for the benefit of the other, the latter can claim no advantage from the failure or omission. It will be admitted, also, that the Legislature may contract with an individual, and that the Legislature is represented by its laws, its officers, and its agents. And as far as such officers and agents act within the sphere of their official duty, they represent, and in fact are the legislative will. When they omit doing a thing which they ought to do, the Legislature, by its agent, has failed on its part. And if the failure was the cause why something stipulated to be done by an individual was not done, no advantage can be taken of the omission by the Legislature. Otherwise, it would do that itself which it will not countenance in an individual.
Generally speaking, when a contract is established each party is entitled to the benefit of it. But to some contracts (and the present deed of trust is one of them) policy has annexed another prerequisite — registration. In other words, a new contract is made between the grantee and the Legislature. The Legislature represents all other persons except the parties to the deed. All other persons are bound by their stipulations. What are the stipulations in this case? They are (in order that no person may be defrauded by the deed of trust, but all may have notice of it) that the Legislature shall appoint a register, whose duty it shall be to register the deed of trust, and the grantee shall in due time furnish the register with it for that purpose. Now as the Legislature has failed in providing an officer, the want of registration is not to be imputed to the grantee. Nor ought the defendant to derive any benefit from the failure, because the Legislature enacted the (136) provision of registration for his benefit. And if through its omission there was no register, he cannot complain. The grantee is entitled to the benefit of the deed, as if no law for registration had been made. To exact from an individual an impossibility, as the only terms on which he should be entitled to the benefit of a contract, would be to impair and destroy that contract.
I have read of a Roman emperor, who suspended his laws so high that it was with difficulty they could be read, for the purpose of entrapping his subjects and collecting penalties. It would have answered the same purpose to enact that the subject should do a particular thing, and then to have put it out of his power to do it, and claimed the penalty.
I think this action is sustainable. The plaintiff had under the deed of trust the legal title to the property in question, and the possession of Creecy was not adverse to it, but held under it for the trustee.
HENDERSON, C. J., concurred with HALL, J.