Woodward v. Solomon , 7 Ga. 246 ( 1849 )

By the Court. —

Nisbet, J.

delivering the opinion,

[1.] The doctrine so forcibly urged by counsel for the defendants in error, touching creditors’ hills, is admitted. Although this is a bill filed by creditors, yet there are features in the case which distinguish it from such bills as are filed to reach a debtor's equitable interests in the hands of a third person. The rules of law, therefore, or some of them, which relate to creditors’ hills, do not apply in this case. In deciding upon it, we are to bear in mind that the questions come up upon demurrer. The facts stated in the bill are taken, therefore, as true. We are deciding the case made in the hill. I shall endeavor to simplify it as much as possible, and reduce it to its proper elements, leaving untouched some interesting questions discussed before us. Referring, then, to the reporter’s statement, which is full, I note that Lewis L. Griffin, some time in 1841, being then President of the Blonroe Rail Road and Banking Company, being insolvent, and a debtor to that Company, in the, amount of $200,000, and being pressed for a settlement, entered into an agreement with the Company, in writing, by which it was stipulated, in consideration of a full discharge and satisfaction of all its claims against him, that he ■would, forthwith, surrender to the Company all his property, real and personal, and all his rights of property ; out of which the Company was to pay certain confidential debts of his, and apply the balance to their own claims against him.

A short time previous to entering into this agreement with the Company, he being then insolvent, and indebted to it some $’200,000, with a view to defraud his creditors generally, and particularly -with a view to screen his property from the payment of his large indebtedness to the Company, being then its President, delivered a large amount of his property, consisting of slaves, mules and wagons, to his brother-in-law, Henry Solomon, who was then a Director in the Monroe R. R. & B’nk’g Company, and who is the defendant’s intestate, mthout any consideration being paid for the property, to be held in trustfor himself and his family.

The bill alleges that Solomon received this property, with full knowledge of Griffin’sfraudulent intentions. Also, that the Company complied with their agreement with Griffin, by executing a release for all his indebtedness; that Griffin delivered over to them property to the amount of some $30,000, which they supposed was, in good faith, all that he had, and that he did not turn over to them any part of that which had been delivered to Solomon.

The bill is brought by the judgment creditors of the Monroe Rail Road & Banking Company, against the administrators of Solomon and Lewis Griffin, stating the foregoing facts; and in addition, charging, that that Company is insolvent; that theirs are the oldest judgment liens against it; that executions have issued and returns made on them of nulla bona; that the officers and managers of the Company are disunited and scattered, and no longer attempt to do business — take no interest in the affairs of the institution, and are wholly indifferent to the interests and claims of its creditors. It asks for discovery, and prays that the administrators of Solomon account for the property delivered to him by Griffin, with its profits, and that it be applied to the payment of the debts against the Company, according to their dignity.

Upon demurrer, Judge Floyd dismissed the bill, on the ground, ■“that the complainants, by their bill, do not show such privity and interest in the subject of the suit, as to entitle them to the relief sought.”

The view which I take of this bill is, that it is a bill filed by judgment creditors of an insolvent institution, having exhausted all legal remedies against their debtor, to subject property in the hands of a third person, to the payment of their debts, which belongs to their debtor, and which cannot be reached by legal process. If these negroes, mules and wagons are the property of the Monroe Rail Road & Banking Company, and if that Comphny is insolvent, and the property cannot be reached and applied by levy and sale, it will not be questioned but that Equity will afford relief. The statement in the bill, of the insolvency of the Company, and the return of nulla bona, demonstrates their insolvency. That is therefore left out of any farther inquiry. My undertaking is first to show, that according to the facts of the bill, as I have detailed them, the property delivered to Solomon is the property of the Monroe Rail Road and Bankiug Company.

My first proposition is, that the agreement entered into between Griffin and the Company, is a contract of sale, and that under and by virtue of it, having complied fully with their obligations, by releasing him from all his liabilities to them, they are purchasers of all his property, real and personal, and of all his rights of property.

A sale is a transmutation of property from one man to another, in consideration of some price or recompense in value. Chitty on Contracts, 314. Shepherd’s Touchstone, 224. 4 B. & C. 246. 6 D. & R. 331. S. C. Three things are necessary to a sale: a subject to be sold, a price or recompense, and the mutual consent of the parties. Story on Contracts, ^iSO. All of these things concur in this contract between Griffin and the Monroe Rail Road & Banking Company. The parties agreed in writing, the subject-matter of the contract was property, personal and real, and rights of property, and the price or recompense was, the relinquishment of the vendor’s indebtedness to the vendee. It was a sale by a debtor to his creditor in payment of his debt. It was not an agreement to sell and convey, but a sale, by the terms of the contract, to take effect immediately. Upon the assent of the Company to the proposition, the rights of the parties under it vested. Griffin’s offer is, “ for a discharge, I will deliver and turn over all my property, real and personal” — the offer is accepted, and thereupon the rights of both parties are fixed, to-wit: the right of Griffin, upon delivery, to the discharge, and the title to the property in the Company. In this case, it is clear, that the title to the whole of Griffin’s property, passed by the contract to the Company ; at Law and in Equity it belonged to them; they assumed the risk of it, and could have maintained an action for it. They not only acquired the right of property, but having paid the ¡nice, they were also entitled to the possession. The rule, as .to the property vesting under contracts of sale, is this : if, by the contract, nothing is to be done by the vendor, the title passes to the vendee. He is, by the contract, vested with the right of property. If the contract is such, that something precedent to delivery is to be done by the vendor; for example, where a contract is for goods to be separated from the general mass, as so many bushels of grain to be delivered from a larger quantity, in the granary of the vendor, it is not a sale, but an agreement which will ground a personal action of assumpsit. “ When the terms of the sale are agreed on, (says Ch. Kent,) and the bargain is struck, and every thing which the seller has to do with the goods is complete, the contract of sale becomes absolute, as between the parties, without actual payment or delivery, and the property and risk of accident to the goods, vest in .the buyer.” 2 Kent’s Com. 491. Inst. 3, 24, 3. Hinde vs. Whitehouse, 7 East, 571. 6 B. & C. 360. Bell’s Contract of Sale, 12. 6 East, 614. 5 B. & C. 857. 1 Bell’s Illus. 90. The act to be done by the vendor, is not the act of delivery, but some material tiling, before delivery, either to distinguish. the goods or ascertain their price. Chitty on Contracts, 375, a. 15 Johns. R. 349. 3 Mason, 112. 6 Cow. 250. 3 Wend. 112. 1 Pick. 476. 13 Ib. 175. Pothier's Con. Sale, §§309, 311. 2 Shepley, 400. Hero the terms of the sale are agreed on, the bargain is struck, and there is nothing for Qrijjin to do. For a discharge, he is to deliver to the Company all his property, personal and real; it is impossible to make this plainer by illustration, argument or authority. It is plain, that when this bargain was struck, the vendee was vested with the right to all the vendor’s property. The property is ascertained ; it is not to be collected, separated or prepared for delivery. It is the property; all which the vendor owns. He makes an unconditional sale of the whole of his estate, to the Monroe Rail Road & Banking Company, and he invests them with the title to it. See Biggers vs. Pace, 5 Ga. R. 171. But they not only acquired the right to the property, but also the right to its immediate possession. When nothing is said in the contract of sale, about the time of the delivery, or the time of the payment, the payment or tender of the price, is a condition precedent to the right of possession; for although the vendee in such a case acquires the right of property, the right of possession does not follow from that. 2 Kent’s Com. 492. Langfoot vs. Tyler, Salk. 113. Hob. 41. 1 H. Black. 363. Blaxam vs. Sanders, 4 B. & C. 931. In this case, nothing is said about the time of payment or delivery. The obligation to do both is contemporaneous. When the payment is made, the right to possession in the vendee, and the obligation to deliver into possession, on the vendor, are both perfect. Now the record discloses, that in this case, the payment was made ; for the bill charges, that in pursuance of the agreement, the Company executed to Griffin, a full discharge. From all of which, it is clear that this was a contract of sale, by which the Monroe Rail Road & Banking Company became the owners of all the property of Lewis Griffin, vested, both with the right of property and the right to possession.

Having, I hope, demonstrated that, by the contract, the Monroe Rail Road & Banking Company became the owners of all the property which the vendor, Griffin, owned, at the time, I now assume, that he was, at that time, for the purposes of that contract, the owner of the property delivered to Solomon; and therefore, the title and entire ownership of that property, upon the principles already stated, passed to that Company.

[2.] It is argued that he was not, at. that lime, the owner of the property delivered to Solomon, because he had conveyed his title to him; that however a voluntary conveyance to defraud creditors or purchasers may be void, as against creditors and purchasers, yet, it is good against the grantor, and vests the legal title in the grantee ; and therefore, this property was not sold to the Company. If this view is untenable, there is no reason why this property should not belong to the Company. The bill.charges that it was delivered to Solomon to defraud the Company, and to make a trust for Griffin and his family; it does not state it was conveyed. This seems to make the transaction a naked bailment; a mere fraudulent dispossession of himself. In that view of it, the title did not pass to Solomon ; he was, being privy to the fraud, a wrong-doer, and his possession was the possession of Griffin. If so, the property was still Griffin’s, and passed hy the sale of all Ms property, personal and real. A sale of personal property is good, although the property be in the possession of a third person, and even although that person hold the possession tortiously. In the case of the Brig Sarah Ann, Mr. Story lays down this doctrine thus : “ I know of no principle of law, that establishes that a sale of personal goods is invalid, becaase they are not in the possession of the rightful owner, hut are withheld by a wrong doer. The sale is not, under such circumstances, the sale of a right of action; but it is the sale of the thing itself, and good to pass the title against every person not holding the same, under a bona fide title, for a valuable consideration, without notice, and a fortiori against a wrong-doer. 2 Sumner, 210, 211. The title, therefore, of the Company, is good against Solomon in this case. They derive it from Griffin. The bill charges, that he acquired the possession by collusion with Griffin, and wrongfully holds it. It is a stronger case than it would be, if he acquired'the possession wrongfully, as against Griffin. If the bailment was fraudulent, to defeat these very creditors, and Solomon was a participant in the fraud, what is to prevent a Court of Equity from considering the whole transaction as a mere nullity ? Her especial province is, to develop and annul all such fraudulent and grossly iniquitous transactions.

But I am willing that, under the statements made, this delivery sliall be Viewed in the light of a conveyance — a voluntary conveyance, by parol, to Solomon, for the use of Griffin and his family ; and perhaps this is the true view of the matter. I concede, too, the proposition, that such a conveyance, although void, as to creditors and purchasers, under Statutes XIII. and XXVII. Elizabeth ; and void, as against creditor’s under our own Act of 1818 ; (See Prince, 164. 2 Kent’s Gum. 439, 440. 4 Ib. 462 to 465.) yet it is good against the grantor, upon the principal, “ in pari delicto potior est conditio possidentis.” He cannot revoke it, and if not executed, the grantee cannot enforce it; if executed, the condition of things remains. See Adams vs. Barrett, 5 Ga. R. 404. Flemming vs. Townsend, 6 Ga. R. 103.

The Company were purchasers for value, bona fide, and without notice. The conveyance to Solomon was expressly made to defraud them, as purchasers; the allegations in the bill warrant this conclusion. It was made, moreover, expressly to defraud them, as creditors. Under the English Statutes, without question, it was void as to them. It is not necessary to refer again to the well settled doctrines under the Statutes of Elizabeth. How is this case affected by our own Statute of 1818 ? Let it stand or fall by that. This Court, in numerous decisions, have construed this Act, to which it is wholly unnecessary to refer, for the reason, that it is not questioned but that the conveyance from Griffin to Solomon is absolutely void under it. It is a conveyance reserving a trust for the benefit of the grantor and his family, and avowed to be, to defraud creditors generally, and the Monroe Rail Road & Banking Company, who were then creditors in particular. The question is this: The conveyance being void, by the express terms of the Statute, how does it affect the purchase subsequently made by the Company? Does it so affect it as to prevent the title from passing to them, of the property ?

The language of the Statute is very plain, so far as this case is concerned. It, declares that any assignment or transfer of real or personal property, stock in trade, debts, dues or demands, made by any person or persons unable to pay their debts, in trust to any person or persons, in satisfaction or payment of any debt or demand, or in part thereof, for the use or benefit of their creditors, or for the use and benefit of any other person or persons, by which any creditor shall be excluded from an equal share or portion of the estate so assigned or transferred, shall be null and void, and considered in law and equity as fraudulent against creditors. Here, with reckless boldness, the debtor pretends to no provision for creditors in any form, but conveys his property to a third person, to be held for Ids oion use. By this Act, it is null and void — . not voidable, but void. Now, conceding that as between him and the grantee, he has parted with the title; yet, as between him and his creditors, he has parted with no title. As to them, from the beginning, continuously forever, the conveyance is a nullity. It is as though it had never been. It is nothing by the fiat of the law; and all Courts wherein it comes in collision with the rights of creditors, are bound by the law, to consider it a nullity. Of course I mean, when before the Court, the fraudulent character of the deed is proven. Here it is proven in its most revolting form. If a mere nullity — if the Courts are bound so to consider it — what is .its effect in this case, when in a Court of Chancery, it comes in conflict with the title of a Iona fide purchaser for value, and that purchaser a creditor, whose purchase was’made in satisfaction of its claims % There can be, it seems to me, but one opinion about it, and that is, that their title stands unaffected by the conveyance to Solomon, and that the property conveyed to him belongs to them, and is liable to pay their debts.

[3.] But it may be said that the contract of sale was consummated by the Company receiving from Griffin a certain amount of property — that that receipt closed the whole transaction, and they are estopped from demanding any thing farther. From aught that appears, receipts and acquittances may have passed to this effect. If so, they possibly might be conclusive at Law upon the parties; but not in Equity. Equity, upon the ground of fraud, will open the whole settlement, and decree according to the justice of the case. It will give effect to the sale, in behalf of the Company, were it now in esse, and being practically dissolved and insolvent, it will do the same thing in behalf of these complainants, the judgment creditors of the Company.

Quae cum ita sint. Since these things are so, why not, it is said, proceed at Law, by a levy upon the property 1 For several reasons. First, because the complainants charge in their bill, that they do not know the names of the negroes, and the description of other property delivered to Solomon. They are unable to identify it, and ask discovery as to these things. Secondly, if they are entitled to the property, they are entitled to the rents, issues and profits, which they cannot get at Law. They have the right to go into Chancery to compel an account, and they accordingly ask an account. Thirdly, if there was a conveyance to Solomon, that ought to be cancelled, which a Court of Law cannot do. The property ought to be brought to sale for the benefit of both Griffin and the Company, and also of these creditors, fairly, unencumbered even with a legal cloud or shadow. And fourthly, the power of a Court of Law to open the settlement under the contract between Griffin and the Company, if conceded, does not afford to these complainants a completo remedy. The-case is clearly one for the ampler powers of Chancery.

Besides this, the whole bill makes a case of fraud against the rights of the M. R. R. & B. Co. and through them, against the rights of their creditors. The fraud gives jurisdiction to a Court of Equity. Whether, in some form, the Company ought not to have been a party to this bill, and whether Griffin ought not to be served, so as if out of the jurisdiction, to come in and plead, were questions argued before us, but not passed upon by the Court below. We, therefore, express no opinion upon them.

Let the judgment be reversed.