White v. Monsarrat
White v. Monsarrat
Opinion of the Court
Wheat delivered the opinion of the court.
Monsarrat conveyed all of his estate to Joseph Mitchell and Oliver I. Harrison, in trust for the benefit of his creditors.
The appellants brought an action in the Louisville chancery court against Monsarrat and the trustees, to vacate and set aside the deed on the alleged ground that it was made and contrived to defraud the creditors of Monsarrat & Monsarrat & Co.
Upon hearing, the Louisville chancery court, being of opinion, that the appellees had failed to make out their case, dismissed their petition so far as it sought to set aside the deed, and they have appealed to this court.
It is now insisted that the judgment of the court below ought to be reversed—because: 1st. Actual fraud is shown by the facts and circumstances proved in the cause; and 2d. Because the deed is fraudulent upon its face.
Upon the first ground, we deem it sufficient to remark, that the evidence of actual fraud is so slight as not calculated to raise anything more than a suspicion as to the fairness of the conveyance and the intent upon which it was executed. Indeed, the appellants counsel have not insisted with much earnestness that actual fraud is made out against the grantor and grantees in the deed.
But upon the second ground, it is insisted with some zeal, that the deed is fraudulent upon its face. In support of that position, these words in the deed are relied upon: “The trustees aforesaid shall have the 1 full right and authority to collect and sue for, and ‘ settle, and compromise, all debts due to said Mon- ‘ sarrat, or owing by him.”
It is admitted by the learned counsel for the appellants that the power given in the deed to compropromise debts due to Monsarrat does not invalidate it.
We are not able to perceive why a power given to compromise a debt due to Monsarrat might not be as prejudicial to his creditors as the power to compromise a debt owing by him.
A power to compromise with any one of his creditors does not necessarily carry with it the right or the power, under the deed in question, to pay any debt in a deferred class before paying one in a preferred class. Under this deed the trustees bind themselves to Monsarrat and the cestui que's trusts, for the faithful execution of the trusts imposed by
Although the words compromise and compound are often used interchangeably in legal parlance, yet, the grant of the power in a deed of trust to compromise with the creditors of an insolvent debtor, does not impart a right to pay debts in any order different from that prescribed in the deed.
The subject of a compromise must be something uncertain, for if it be certain, the payment of a part will not discharge the rest for want of consideration. (Bouvier's Institutes, page 309.)
How the right to compromise can have any influence in forcing one of Monsarrat’s creditors to take less than is due to them so far as the trust property is sufficient to pay them, we are at á loss to comprehend. Nothing is easier than for them to get their shares; nothing more natural than for them to insist upon getting all they, are entitled to.
Without going into an examination of the authorities cited, we content ourselves with remarking that the reasoning of the courts, in the cases cited by appellants counsel, where they have held that the power to a trustee, in a deed of trust, to compromise debts owing by the grantor in the deed, renders the conveyances fraudulent, does not strike our minds with much force, and is not at all satisfactory as establishing any such conclusion.
This court has never concurred with the courts of several of the states of this union, in much of their reasoning upon the subjects of conveyances in trust for the benefit of creditors. On the contrary, this court has never gone any 'unreasonable length to set aside assignments upon fanciful or overstrained presumptions of fraud, but have adopted the more rational course of requiring evidence sufficient to satisfy the mind that there was actual fraud, or constructive fraud, when the law clearly made it such.
The views and reasoning of the chancellor in the court below, is to our minds, much more, satisfactory, and we adopt and approve that reasoning so far as it legitimately leads to the same conclusion to which we have come. Concurring as we do, with the court below, in the conclusion, that the appellants have failed to show that the deed in question is fraudulent, the judgment of said court is affirmed.
Case-law data current through December 31, 2025. Source: CourtListener bulk data.