Zell Guano Co. v. Heatherly
Zell Guano Co. v. Heatherly
Opinion of the Court
Samuel J. Heatherly, having- become involved in debt beyond his ability to pay out, on the 31'st day of January, 1889, executed a deed of trust conveying- all his lands and personal property to Melville Peck, in trust to secure the debts specifically set forth in the trust deed, among- which was a debt of eight thousand one hundred dollars to J. N. B. Crim, as third in order of priority; the first being- for taxes, and the second for purchase money on one of the tracts of land conveyed in the trust deed, for which there was also a vendor’s lien. On the 2d of February, 1889, the Zell Guano Company instituted suit in the Circuit Court of Barbour County to set aside the said deed of trust as fraudulent and void as to the said debt to Crim of eigfit thousand, one hundred dollars, because said debt was al-leg-ed to be fictitious, and that said trust was made with intent to hinder, delay and defraud the plaintiffs and other creditors of said Heatherly. Said debt of Crim was made up, among- other items, of six thousand five hundred dollars in cash loaned at time of execution of trust deed. At the hearing- of the cause, the court held that the said trust deed was made with intent to hinder, delay, and defraud plaintiffs and other creditors, and was therefore fraudulent and void, and that the trustee, Peck, had full knowl-edg-e thereof at the time it was executed, and the same was set aside and held for naught; and upon appeal to the Supreme Court the same was reversed, in so far as it held that the trustee had notice of the fraud, and set aside the trust in toto, but it was held that it was made with fraudulent intent, and was void, as to the said debt of eight thous- and one hundred dollars secured to Crim, which debt was remitted to the foot of the list of debts, and placed in a new class, No. 8, to be paid last in the order of priority. The Supreme Court found (38 W. Va., 409, 434, 18 S. E. 611) that the loan of six thousand five hundred dollars was fictitious, being only intended to help defendant Heatherly to put that much of his property beyond the reach of his
At the January rules, 1897, the Zell Guano Company and other creditors of Heatherly filed their bill, praying that it be treated as an amended bill in the original cause, setting forth the whole transaction and the proceedings thereon and alleging that said six thousand and twenty-five dollars was the property of Samuel J. Heatherly; that it was in custodia legis at the time it was received by Crim from Mrs. Heatherly, on January 8, 1891,- and that it was a trust fund, which the said Crim had no right to receive and apply upon a debt which was charged to be fraudulent, and was adjudged to be fraudulent and fictitious, and that the application thereof upon the said debt of eight thousand one hundred dollars was a flagrant disregard of the process of the court, and a contempt of its decrees and, in effect, allowed said Crim to have priority of pay ment upon the eight thousand one hundred dollar debt for six thousand and twenty-five dollars out of the estate of said Samuel J. Heatherly, and praying that said Crim be required to pay to plaintiffs so much of said sum of six thousand and twenty-five dollars, with interest thereon, as might be necessary to satisfy their several debts; that the said money so in his hands might be treated as a trust fund in the custody of the court, subject to its orders; and
On the 27th day of February, 1897, the defendants J. N. B. Crim, Samuel J. Heatherly, and Helen A. Heatherly entered their demurrer to said amended bill, in which plaintiffs joined, and the demurrer, being argued, was sustained by the court, and the said bill was dismissed, and judgment rendered for defendants for their costs. On the 28th of April, 1897, plaintiffs caused notice in writing to be served on the defendants S. J. Heatherly, J. N. B. Crim, Helen J. Heatherly, wife of S. J. Heatherly, James E. Heatherly and M. Peck, trustee, reciting the decree of June —, 1896, ascertaining the amounts due them, respectively, on their claims, after the application of the proceeds of the sale of all real and personal property owned by said two Heatherlys, and that it was contended by the plaintiffs that a certain fund of six thousand and twenty-five dollars, received by said Crim during the progress of the suit, from the wife of Samuel J. Heatherly, was the property of said Samuel J. Heatherly, and was received by said Crim in fraud of the rights of his creditors, and that said fund, with interest thereon from January 8, 1891, constituted a trust fund in the hands of Crim, justly applicable in equity to the payment of plaintiffs’ claims; and that by said decree of the 6th of June, 1895; and on the-day of June, 1896, the court reserved for future determination and decree all questions touching their right to compel Crim to pay said fund into court to he applied to the payment of their claims, as to which questions the said cause was still pending in said court, said questions undetermined, and their claims yet unpaid, although said fund in the hands of Crim was applicable to their relief, and they were notified that on the 29th of May, 1897, plaintiffs would move said circuit court of Barbour County, then in session, to decide and determine said reserved questions, and compel the said Crim, by a proper decree, to pay said fund, with interest, into court, to the relief of plaintiffs, together with costs in said suit. On the 4th day of June, 1897, the cause was heard upon the papers heretofore read; former orders and decrees; the amended bill and the decrees therein; upon the notice and motion of plaintiffs and as
It is earnestly contended by appellants that, when this money (.the six thousand and twenty-five dollai's)was sent to Mrs. Heatherly,'it became at once the property of Samuel J. Heatherly, and he could have used it as was contemplated by Crim when he let him have it. As stated in the opinion in 38 W. Va., 434 (18 S. E. 611): “He [Crim] contemplated that when it was loaned some of it should be
This case is different from any case cited by counsel for appellants (which I have carefully examined), or which I have been able to find, in that it is a contest over the thing itself, given in consideration of the execution of the fraudulent deed of trust, for its security, after the setting aside
In the case at bar it is insisted that not only the property fraudulently conveyed shall be restored to the pursuing- creditors, as has been done, and the proceeds all applied to their debts, and Crim adjudged to pay the costs of their proceeding to set aside the trust deed, but that the money loaned by Crim to Heatherly, and secured by the trust deed, shall be forfeited to their benefit; thus not only having the benefit of all the property they were ever entitled to, to satisfy their debts as far as it would, but having their security increased by this sum of six thousand and twenty-five dollars, which came to the possession of Heatherly without consideration, which he never converted to his own use, and which never entered into or became a part of his estate. Suppose the court had required this sum to be paid into court, how could it have been disposed of? Surely, it could not have been paid out to the creditors of Heatherly, for they had already received the benefit of all his property, and they had no claim against Crim, after defeating his claim, to any interest in Heath-erly’s property; and the money having been placed in the hands of Heatherly by Crim in their fraudulent effort to place the property of Heatherly out of the reach of his creditors, and Heatherly not having converted it to his own use, but kept it intact, it was hardly a subject-matter to be disposed of by decree of the court. I see no error in the decree, and the same is affirmed.
Affirmed.
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