508 CASES EY THE SUPREME COURT Biscoe et al: vs. Royston et al: January BISCOE ET AL. VS. ROYSTON ET AL. After the execution of a deed of trust the grantor has no such interest in the trust property as is the subject of sale under execution at law. (Pettit et aL vs. Johnson et al:, 15 Ark 55. Cornish vs. Smith =et al. adr:, 17 Ib.) The purchaser of debts secured by a deed of trust, upon taking an assignment thereof, becomes subrogated to the rights of the cestui que trust under the provisions of the deed of trust. (Hannah ad, vs. Carrington ad., .17 Ark.) S. executed a deed of trust to R. upon all his property, consisting of a plantation, negroes, stock, etc:, to secure certain debts, the deed provided that the grantor should remain in possession, appropriating the crops, after paying expenses, to the payment of the trust debts; and if they were not paid in five years the trustee might sell; eight years after the execution of the deed, other judgment creditors of 5, whose debts were due when the tiust deed was made, file their bill to enforce a foreclosure, and a sale of the trust propert y ; it appeared that the trust debts had not been wholly paid, but that ihe trust property was more than sufficient to pay the balance: Decreed, that the property be sold, and after payment of the balance of the trust debts, the proceeds be applied to the paymeni of the complainants' judgments. Appeal from C (-nit t'out I of Hempstrod couaty Cho Ocery. The Hon. SuELTON WATsoN, (i!ircuit Judge_ Pike & Cummins, for the appellants. A debtor in failing uireinostancus may prefer one creditor to another; but if he conve y s to such creditor a much larger arnoimt of property than is sufficient to secure his debt, postponing the appropriation of it to that purpose for an unreasonable length of time, such conveyance hinders and delays his other creditors, and is void as to them. Bennett vs. Union Bank, :1 Rum P. 612. Ami tlui ugh a curt% uvariLas:, valid in its inception, made for the security of creditors, but becoming, by subsequent events, op-
OF THE STATE OF ARKANSAS. 509 Tef m 1857, Biseoe et al, vs. Royston et al, pressive and injurioug to other creditors, will not thereby become invalid; yet chancery will interfere to compel an immediate execution of the trust ; and after satisfying its purposes. apply the surplus to the payment of other debts. Pope vs. Wil-son, 7 Ala. 690. The general doctrine on these subjects is settled beyond cavil or dispute. It is an utter impossibility for a debtor to put his property, by deed of trust, in such a condition that be can remain in possession for years, receive the crops and rents, manage and cultivate the property, pay one or two preferred creditors at his leisure, and use as much of the receipts for other purposes as he likes, educating his children, and living in comfort, and at the same preventing his other creditors from subjecting hp: property to payment of tlieir eliums. It is an utter, sheer impossibility. SPO 0-alt vs_ Dibbrell, 10 Yerger 146. Ward vs. Trotter, 3 Monr. 1 Byrd vs. Bradley, 2 B. Mom-. 239. Lang vs..Lce, 3 Rand.. 410, Garland vs. Rives, 4 Ib. 281 Van Nest vs. Yoe, 1 Sandf. Ch. H. 4. Mackie vs. Cairns, 5 Cowen 547. 5 T. R. 420. 8 Ala. Rep, 104. 9 id. 305. 9 Sm. & Marsh. 394. 7 Humph. 179. ' Curran & Gallagher for the appellees. Mr. Chief Justice ENGLISH delivered the opinion of the Court This was a bill to compel the foreclosure of a deed of trust,: ete., filed by Henry L. Biscoe and others, Trustees of the Real Estate Bank, under the deed of assignment, against Grandison D. Roy ston and Robert IT. Scott and wife, Sarah, in the Hemp. stead Circuit Court, etc. The hill waq filed 20-th DepernhPr, 1851. It sets out and exhibits a deed of trust executed by Scott and wife to Royston as Trustee, bearing date 15th of May 1843, containing, substantially, the following provisions: In order to secure the payment of a bond made by Scott to Gasquett, Pa rish & Co., for $1,557, with ten per cent, interest ; and a bond to W. & J Gasquett & Co_, for $6,256.43, same in-
510 CASES IN THE SUPREME COURT Miscue et al: vs: Ropton et al: January terest; both bonds bearing even date with the deed of trust; and due one day after date ; Scott and wife conveyed to Roys-ton as Trustee, certain tracts of laud situated in Sevier county, containing together 913 acres and 52-100 of an acre ; twenty-one slaves ; seven mules ; one horse, sixty head of cattle ; one bun dred and fifty hogs ; and all the ploughs, wagons, carts and axes, hoes and all other tools and implements of husbandry and planting upon the plantation of Scott, made up of the lands aforesaid, upon the following trusts : If the trust debts, or either of them, or any part thereof, should remain unpaid at the expiration ot five years from the date of the deed, Royston, at his own discretion, or upon the request of either of the creditors secured by the deed, was empowered to make public sale of the trust property, or such part thereof as might be required for the payment of the debts, expenses of the trust, etc., and convey the same to the purchasers, etc. Scott was to remain in possession of the lands, slaves, ete,, and cultivate the plantation until the expiration of the five year allowed him for the payment of the debts, and after the year 1843, to deliver up and turn over to Royston the annual crops of cotton, corn and all other products arising from the cultiv ation of the plantation, aftei deducting and 1utaining bitch' part thereof as might be necessary to furnish supplies for, aml pay the expenses of the place ; and Royston was to sell the crops so turned over to him, and apply the proceeds, less costs and charges of sales, to the payment of the trust debts. If Scott failed at any time to employ the slaves, etc., in the cultivation of the lands, or turn over the crops as agreed in good faith, Royston was empowered to take possession of the trust property and make sale thereof for the payment of the debts, though the five years allowed by the deed for making payment might not have expired. He was also empowered to sell at any time, on request of Scott, if an advantageous sale could be made, etc., for the purposes of the trust, etc. If the debts were paid by Scott without sale, Royston was to re-convey the property to him, etc. The bill further alleges that one Thomas B. Haynie, the de-
Or TIIE SfAfr or AnhANSAS. 511 Tcrni: 1857: Blerlf- et al vs Itnyston et al fendant Robert IT. Scott, and one Leonard D. Scott, were jointly and severally indebted to the Real Estate Bank, by writing obligatory in the smo of $1,190, bearing interest at ten per cent. friam the 15th April, 1841, upon which the Trustees of the Hank obtained judgment in the Hempstead Circuit Court, on the 29th May, 184(1, for the debt, interest, etc. Said Thomas B. Haynie, Robert IL Scott, and one Joseph H. Shaw, were also indebted to the Bank by note due 17th March, 1841, upon which the Trustees obtained judgment, in the Hemp-stead Circuit Court, against Haynie and Scott, ( Shaw having died) on the 6th Morelli, 1849, for $420.87 debt, and $319.00 damages, etc. T_Tpcui_ the first judgment $69, and upon the second $1, had been made by execution of the property of Haynie. Repeated "executions had been issued upon both judgments and returned no property found, and they remained unpaid, etc. Transcripts of the ■udgments, executions and returns, are exhibited_ That on the 14th October, 1841, Tleamis and Littlefiehl, surviving forthevs of HIP firm of T. W. Bemis & Co., obtained a judgment in the Hempstead Circuit Court against defendant Robert H. Scott, as principal, and Isaac C. Perkins as his seell-rity in a forfeited delivery bond for $176.12 debt, etc. On tlw 9th of April, 1842, John Sappington recovered a judgment in the same Court against Seott as principal, and Abel B. Clemments as security, etc., for$701.80, debt, etc. In September, 1846, a fi. fa. was issued upon each of the last named judgments to the sheriff of Sevier county, under which the supposed equity of redemption of Scott in all of the trust property was levied upon, sold, and purchased by Royston for a nominal sum, who obtained the sheriff's deed therefor. etc: That ever since the execution of _the deed of trust, Scott had been permitted to remain in the possession, control and enjoy-lent of the trust property ; cultivating the lands with the slaves, etc., making crops, and using and dealing with all of said property as though it were his own. That RoYston had made no sal2 under the provisions of the deed, though the five years al-
512 CASES EN '11.1E SUPPEME COURT B seoe et al, vs. Royston et al: January lowed by it for the payment of the debts had long since elapsed. That large sums of moneT bad been annually received by him from the pioceeds of 'crops made by Scott, amounting to EftOre than enough to pay the trust debts, but complainants did not know how he had applied it. That be had permitted Scott to retain and use large amounts beyond the reservations provided for in the de?d; That the trust property was worth largely more than the olnount of the debts secured by the deed, and if the debts had net been paid, a sale should ham buun madu by Ruystun, luitg before the filing of the bill, to pay an y balance due upon them. Complainants submit that after the execution of the trust deed no interest in the trust property remained in Scott, which was the subject of execution at law; that Royston acquired no title by his purchase rinder the executions in favor of Beamis Sr Co., and Sappington, yet he bad been paying off their claims out of proceeds of the trust received by him. That, notwithstanding said sale undei executions and chase by Royston, the property in fact remained as before, being still as well understood between Royston and Scott, held by way of mortgage, and charged with said debts to enable Royston to' collect claims put in his hands as an attorney, in preference to other creditors; and at the same time to allow Scott to retain possession of the property; and after paying off the favored debts 'and defrauding all his othei creditors to secure to himself the whole of the property. And complainants expressly aver that it was distinctly understood between Roys-ton and Scott that the latter still bad the right of redemption in said property, and should have the same reconveyed to him, when the debts held by Royston were paid; of if it could be sold in the mean time, the surplus of proceeds, after paying the debts, should go to Scott: That Scott, well understanding himself to be the owner of the property, had lately advertised it for sale; but bad taunted complainants by informing them that they could not reach his property; and that unless they would take in full payment of their
OF THE STATE OF ARHANSAS. 51:1 Pero-1,1851, Biscoe et al s Royston et al debts some worthless lands, that once belonged to Haynie, it would be a bad case. That Scott had produced annually, since the year 1843, upon the trust plantation, at least 100 bales of eotton and 2,000 bushels of corn; and had, or should have paid over to Royston: every year, an average SIMI of $3,000. That, in fact, the trust debts had been paid off, and the deed of trust, and the sheriff's deed were field by Royston for the • purpose of shielding the property against other creditors, and especially complainants. That Scott refused to pay any part of p oropla wants' judgment, and relied for protection nu the trust and sheriff's deeds as rendering him law-proof. That Royston had known of the existence of complainants' judgments since they were rendered; yet he had neglected to make sale under the trust deed, and holding the deed as a shield between complainants and Scott, continued to receive from the latter such portion of the proceeds of the crops as he chose to pay him, appropriating them as he pleased and paying therewith claims not embraced in the trust deed, etc. Complainants insist that by placing executions in the hands of the sheriff, etc., they had acquii-ed a prior lien upon the property, and a right to have their claims satisfied out of it in pieference to all other creditors except those provided for in the trust deed, etc. That the trust creditors and Beamis & Co, and Sappirigton were non-residents, and Royston was the attorney of all of tliem That, as far as complainants knew, Scott had no property but what was covered by the deed of trust. That he embraced entire 2reperty in the deed for the purpose of securing eferred creditors, some of whom were named therein, and others not, and to secure himself the surplus after paying such debts: and so complainants aver that the dood was fraudulent anal void in its 171PPOlon. The complainants propounded to the defendants thirty-six speeial interrogatories: the 15th, 166, 17 and 18th of which were as follows: "15. What amounts of corn, cotton and all other products
514 CASES Ix THE SUPREME COLTRT Biseoe et al Royston et al_ January have been raised and made on said plantation in each year since the yLar 1843 ? State partieullarly and exactly the amounts of each gathered in each year, and the value of each at the 'Jog wr market, at the time when it was, or could have been sent to market. "16 What amounts have been annually, and each particular year since 1843, received and deducted out of said crops by the said Robert H. Scott, and to what particular purposes have the same been applied ? Set forth the whole pa rticalaily, -year by yeal, and item TJV item. "17. What quantity or amount of cotton, corn and other products has been annually turned over 'and delivered to said Roy-ston, since 1841, and what amount of money in each year ? State the whole particularly, year by year, and item by item. 18: How much money has been obtained in each year, or realized by said FLoyston from the produce so turned over to him? Mime did he sell it in each year, and to whom, and when were the proceeds in hand ? State the same partieularly, year by year, item by item, and shipment by shipment, and exhibit the account of sales of all cotton sold Other questions related to the appropriation of moneys received by Royston, the amount paid, and the amount due upon the trust debts, the value of the trust property, etc. The complainants ask that the bill may be considered as filed on behalf, not only of themselves, but for the benefit of any others of Scott's creditors, who might stand in such attitude as to entitle them to come in thereunder ; and pray that by decree, Royston, as trustee in the trust deed, or a commissioner in his stead, might be compelled to sell the trust property, and out of the proceeds of sale pay first any balance that might be due on the trust debts, and then the debts of complainants, and of any other creditor entitled to share with them. That Ro yston might be compelled to refund, and apply to the payment of the trast debs all moneys received by him from the proceeds of the trust property, and applied by him to the payment of debts not secured by the deed before resorting to the proceeds of the sale of the property, under the decree, etc.; and for general relief:
OF THE STATE OF ARKANSAS. 515 Term. 1857: Biseoe et al vs Royston et al Scott and wife filed a joint, and Royston a separate, answer to the bill. Scott and wife answer substantially as follows: Gasquett, Parish & Co., and W. & J. Gast] . heft & reeov-ered judgments in the ificinpad Circuit Court against Scott on debts upon which he had become the secmity of his son, etc. Executions were issued against him, his property was levied upon, and he was about to be sold out at a sacrifice, and utterly ruined. In order to obtain time upon the debts, and to secure their ultimate payment, he made this bnnds recited in the deed, and he and his wife executed and delivered to Royston, the attorney of the plaintiffs in the executions, the deed of trust exhibited with the bill. They admit that the complainants recoveied the judgments against respondent Scott and others, and issued executions thereon, etc., etc., as alleged in the bill; but aver tbat Haynie was the principal, and Scott merely a seenrity in the debts Admit also, that lieamis & Co , and Sappington obtained judgments, and issued executions thereon against Scott as alleged; :aid that, on the 1 Oth October, 1846, Royston purchased under these executions, all the title and interest of Scott in the whole of the trust property. Admit that Scott bad been permitted to remain in possession and control and manage the trust property ever since the exe-ention of the trust deed.; but dony that he uqpil and eontrolled it as his own; on the contrary, they aver that he held it under and subject to the direction of Royston. Admit that Scott had recently advertised the property for sale, but state that he aid it at the request, and as he agent of Royston, and not upon the understandim , that it belonged to Scott as alleged in the bill. He Lad not offered to use or sell any of ihe property,`or the products thereof, without the consent and approbation of Royston; after it was purchased by him under the executions, Scott had not considered that he had any interest in, or control over, the property, other than what he derived from the permission, and by the sufferance of Roy-ston,
516 CASES IN TIIE SUPRE -AIE COURT Biseoe et al: vs: Royston et al: January Respondents deny that all the property owned by Scott was included in the trust deed, as alleged in the bill; on the contrary, they state that at the time the deed was executed, Scott was tlip owner of 800 acres of land situated in Hempstead county, which was not embraced in the deed; and which, long after the deed was made, was sold under an execution in favor of the State Bank, and purchased by Royston That afterwards, iu ,Tanuary, 1851 Royston, of his own accord, and as a volimtary kindness ti Scott, sold the land, and appropriated the proceeds to the payment of two judgments in favor of Beamis & Co: and Sappington, against Scott, which, by agreement with Roy-ston they received in full satisfaction thereof. That it was in this manner that Ro y ston paid off these judgments, and not out of the proceeds of the trust property as supposed by the bill. That, about the 1st of May, 1849, Royston, without the knowledge of respondents, purchased of Gasquett, Parish & Co. and & Gasquett & Co., the debts secured by the deed of trust, and tool; an assignment thereof. And respondents submit that he, having purehasud the inteiest of Scott in the trust property under the executions, and afterwards paid off and took an assignment of the trust debts, thereby became the absolute owner of the property, as they are advised Notwithstanding which, Royston, on the 3d of May, 1851, voluntarily, and without obligation or previous agreement so to do, executed and delivery(' to Scott an instrument of writing by which, stating the balance due upon the trust debts to be $5,810.31, he agreed, that if Scott should well and truly pay said SIM with interest, from that date at the rate of eight per cent, per amium, without hti-gation, hinderance or delay, he would relinquish to him all his right, title and interest in and to the trust property; provided Scott would also pay two notes which were in the hands of Royston for collection, in favor of Smith,, Hubbard & Co., one for $330:27, and the other for $141134, etc., etc. Respondents furthe. r state that Scott bad procured from Hay-nie a eonveyance for some lands, which the complainants liad once proposed to take from Haynie in full payment of the debts upon which Scott was his security, but had afterwards declined.
OF THE STATE OF ARICANSA& 517 'rertn,1857, Biseoe et al vs Royston et al_ That the lands were not worthless, as alleged m tho bill, but really of more value than the debts; and that Scott had offered them to complainants in payment thereof, representing his inability to pay otherwise, but not tauntingly as alleged, etc. That ever since the ex e cutinn of the deed of trust, Scott had worked and used the trust property for the purpose of lignidat-ing the trust debts: and for supplying and keeping:up the plantation. He had made corn only for consumption, and none to sell; and sometimes he liad to purchase ,2orn to supply the place, with the proceeds of the ootton. The only produce raised on the plantation for sale had been cotton ; which was always sent to market as soon as it could be got ready. The crops raised in the years 1843, and 1844 were light, and amount-' od to very little more, if any, than was required to defray the necessary expenses of the plantation. The crops of 1845, after defraying expenses, paid $1,000 on the trust debts, which was applied 9th August, 1846. The crop of 1846 paid $2,075.85 July 24th. 1847. The crop of 1847 paid $1,929.28, June 23d 1848. The crop of 1848 paid $996:29, Tune Sth, 1849, The crop nf 1R 49 paid $8513.91, June Gth, 1850: Out of the crop of, 1850 a payment of $984.14 was made 3d May, 1851. No payments had been made on the trust debts other than the above \\T alker & Cheatham held a debt against Scott, in payment of which they offered to take cotton at 1:2 1 , cents per pound, when it was not selling for more than ten cents; and the offer beim! liberal, Scott, with the assent of Royston, let them have about seven bales—this was in 1849 or 1850. With the like Pm- I of Royston, Scott sold 20 bales of the crop of 1850, to one Black in payment of a debt incurred for supplies for the plantation, clothing for the negroes, overseer's wages, ete. That with the exceptions aforesaid, the proceeds of the sales of all the cotton produced on the plantation since the execution of the trUst deed, had been applied to the payment of the trust debts except what had been appropriated for expenses of the place, and the payment of a few small debts incurred by Scott for the support of his family, and the education of his children. As all his productive property was included in said deed; and
518 CASES IN TIIE SUPREME COURT Biseoe et al vs Royston et al January as his only means for mAing any thing was by raising cotton, it was absolutely necessary for him to use a portion of the proceeds of the crops for the support of bis family, and the education of his children; but he had been very economical, and the amounts so applied were inconsiderable. None of the trust property had been sold; none of the slaves had_ died, but nine children had been born, and the cattle hall also increased, etc., since thu execution of the trust deed. The respondents value the whole of the propeity at the aggregate Sum of $18,975,00. They positively deny that the deed was exeeuted, or was, or had been held by Royston, tor the purpose of hindering, delaying or defrauding the creditors of Scott, or tor the purpose of enabling Royston to collect claims in his hands as an attorney, other than the tnist debts, in preference to othet creditors, etc:: as alleged in the bat They aver that no nortion of the proceeds of the trust property had been appi:cci to the pinnient uf •lebts m the hands of Royston for collection, except the trust debts, and that there was tin agreement or imderstanding tint such irroceeds should be so applied, 0-, xept as to the debts due : to Smith, Hubbard & Co_ mentioned in the instrument above Idelied to: That Scott owed but very few debts except those held by Royston, and those due to complainants, and none of his other er-21litors were pressing ,him. And although he was but the security et Haynie upon the debts due to coMplainants, he had never attempted to avoid paying tbern, and still intended to pay them as SI-011 as he possibly could_ If Tioyston had_ pressed a sale under the executions in favor lif the ereditors provided for in the trust deed, the whole of Scott's property, owing to the hardness of the times, would not have sidd for half enough to pa y the debts; and he, in advanced life, would have been deprived of all means of paying any of his other debts; whereas, by the course adopted, and the indulgence cd Royston, be hoped to be able to pay all his debts including those due to complainants. Since the execution of the deed of trust, he had not only been as economical as possible.
OF THE STATE OF ARKANSAS 519 To=rm, l57 Risme et al: vs: Royston et al: but in many instances had denied himself and family of the necessaries and comforts of lite; and had managed the trust property to the best advantage, and made every effort in his power to pay his debts. That, when he settled with Royston on the ,7el „Ma y . 1851, there was r e ally due upon the trust debts. $6,441.03, but m consideration of his misfortunes, Ro yston dodueted $00.1-2, and required him to pa y but the sum of $5 , 810 , 31 , ;I s hefnr, stated, to obtain n relcaso of the trust property, etc. The answer was filed Ma y 18th, 1852. Tbe answer of Royston is substantially the same as that of Scott and wife: As to the amonnt of the several crops produced by Scott after the e2,:ecution of the trust deed. th2 disposition made theieof, the sums paid upon the trust L 1 e -1 a 1 . s , etc., he 1.1'- fers to, and endorses the truth of their answer. The complainants filed co,-eoptions to b o th answers, on the uTounds thnt nip answer of Scott and wife to the 15th, 111th, 17th , and 18th mterragatories propounded to the defendants by the bill, were loose, vague, uncertain and insufficient; and that Royston had made im othei answer thereto than by referring to the answer of Scott and wife, etc. The Court overruled the exceptions, and complainants excepted to the ilecisiem of Ow Court: Complainants filed repheniaon, to the answers, and the cause was finally hoard upon bill a ID I exhibits answers and exhibits, nnd ropl ic timis and the Court dismissed the bill for want of eiputy. Complainants appealed, Passing over the question as to the sufficiency of the responses made by the defendants to the interrogatories eopied abovo. WO think the complainants were entitlod, flllii tho admissions made by the answers, to robef, and that the Court erred in dismissing the bill for want of equity, After the execution of the deed of trust, Scott had no such iuti wst in the trust proptrty as was the subject of sale under execution at law; and eousequenth Roystorn acquired no titlo
520 CASES IN TEE SUPREME COURT Riseoe et al: VS: Royston et al. January to the property by his purchase there of under the executions in favor of Beamis Co_, and Sappington. See Pettit et al. vs, Johnson et al., 15 Arh. 55. Cornish vs. Smith et al. admrs., 17 itio; stun pinehased thc trnst debts, aml took JD assign-input thereof to himself, he thereby became subrogated to the rights of the cestai (pc tritsts inoler the provisions of the deed of trust, and from thenceforward occupied the position of both trustee and costa, Tie trus1 See Hannah intr. vs Carrimeton adr., 17 Ark. R. The admissions of the answers show that Scott's entire estate is eovered by the deed of trust. That the balance due to Roys-ton upon the trust debts. 3] May, 1,8 51 , " but $5,810.31. That the aggregate value of the trust propert y was $18,075, over three times the amount due upon the trust debts. That, not only the five years allowed for the payment of the trust debts, by the terms of the deed, had elapsed, but over three additional years had elTired before the bill was filed. The aggregate principal of the two debts secured by the deed amOluit-IA to $7,813143, arid aftei the lapse of over 12iglit years with all Seott's efforts and economy to discharge the amount, theie remained, it seems, as above stated, still unpaid on the 3d of May, 1851: $5,810 :11 At this pace, it would take him a long time to dishare the entire debt. Tt may have been very kind in Royston thus to have indulged an unfortunate debtor, but a continuation of siieh indulgence would be uniotit to coon plaithillts, whose demands arc admitted to have been long due and unpaid. See Hempstead vs. John-son et al ante Upon the alle■-, atiwis of the bill, and the admissions of the answers, the decree of the Court below must he reversed, and the cause remanded, with instructions to the Court to take an account of the balance still due to Royston upon the trust debts, and to decree a foieclosuie of the deed of trust and a sale of the trust property, or such portion thereof as may be iequiied. and that the proceeds of sale be first applied to the payment
OF 'IHE STATE OF ARKANSAS. 521 Term. 1S1" of the -balance due to Royston upon the trust: debts, and then to the satisfaction of complainants' judgments, etc. The decree should direct the trustee. (Royston) to make the sale, but if he decline to act, a-commissioner should be appointed by the Court to act in his stead, etc.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.