Ferrall v. Farnen

8 A. 819, 67 Md. 76, 1887 Md. LEXIS 75
CourtCourt of Appeals of Maryland
DecidedMarch 16, 1887
StatusPublished
Cited by12 cases

This text of 8 A. 819 (Ferrall v. Farnen) is published on Counsel Stack Legal Research, covering Court of Appeals of Maryland primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Ferrall v. Farnen, 8 A. 819, 67 Md. 76, 1887 Md. LEXIS 75 (Md. 1887).

Opinion

Stone, J.,

delivered the opinion of the Court.

This was an attachment case, and the issue, upon which the case was tried before a jury, was whether the deed under which the garnishee and claimant, Earnen claimed title, was in fact fraudulent and void. The deed itself was a general assignment of all the property of the grantor, a certain Ferdinand H. Sieward to Earnen as trustee for the benefit of all the creditors of the grantor.

The deed is good upon its face, and the issue tried 'was fraud in fact vel non.

[80]*80This case has been twice argued before this Court, and carefully considered. Upon the re-argument the Court has changed its opinion upon the point that it desired re-argued, and the former opinion will be withdrawn and this substituted. *

The deed in this case is a deed of trust or general assignment for the benefit of all the creditors of the grantor. It does not exact releases and it does not create any pi-eferences, and is valid upon its face.

The question presented by the first and third prayers of the appellant is whether such a deed can he set aside by proof of the fraudulent intent on the part of the grantor alone ; that is to say, whether in order to set aside a deed of this character there must not only be a fraudulent intent on the' part-of the grantor, but also a knowledge and participation of the trustee in such fraudulent intent.

There have been conflicting decisions upon this point-in the Courts of this country, and these decisions we will not review or attempt to reconcile, as, in fact, they are irreconcilable; but we will base our decision upon the more recent opinions of this Court, and what we think the general conclusion the legal profession has drawn from them.

The leading case in this State on this subject, is the case of Horwitz vs. Ellinger, 31 Md., 492. The deed in that case was a general assignment for the benefit of creditors and without preferences, (except such as the law made,) and without exacting releases. A creditor of the assignor laid an attachment in the hands of the trustee, claiming that the assignor had fraudulently obtained his money and then executed the deed. The instruction granted by the lower Court, was, that if from all the evidence the jury found, “that the execution and delivery of said deed were, and were meant to he, a consummation of the fraud committed by receiving the plaintiff’s money, and if they so [81]*81find, the plaintiff is entitled to recover.” This instruction presented the question of the fraudulent intent on the part of the grantor, but the action of the Court below in granting it, was reversed by this Court, and in the opinion the Court said: “But a general assignment for the benefit of all creditors, such as the one before us, is not denounced by the law as fraudulent, but, on the contrary, sanctioned and approved. That being so, is it competent for the appellee to'vacate this assignment as to himself, while it may be good as to everybody else, by showing some particular motive in the assignors in making it? Clearly not. We are dealing with the act of the parties, and if that be such as the law authorizes and approves, the secret motives that prompted it are wholly immaterial.”

In the case of Foley vs. Bitter, 34 Md., 646, the deed made preferences and exacted releases, and in the opinion the Court said: “If the assignment be made with the fraudulent intent to delay, hinder and defraud creditors, and at the time of its execution be intended to be, and by its terms may operate as, an instrument in aid of the fraud, then it falls ‘within the words as well as the mischief of the Statute,’ and is void as fraudulent in fact;” and further on the Court says: — “We place our judgment in setting aside this deed, upon the distinct ground that it was found to have been fraudulent in fact, and contained stipulations for releases which were intended to operate, and in fact did, operate, in aid of the fraudulent acts of the grantors.”

In this case the Court rests its decision very distinctly upon two grounds, first, the fraudulent intent of the grantor, and secondly, upon the terms of the deed which might and did in that case, operate in aid of the fraud. It did not rest on the fraudulent intent of the grantor only. Something more is required. If, in addition to the fraudulent intent of the grantor, the deed may by its [82]*82terms, and does in fact, aid in the fraud, then it is invalid. But the deed in this case, like that in Horvitz vs. Ellinger, cannot operate by its terms in aid of a fraud. It is a general assignment of all the property of the debtor for the benefit of all his creditors, without any terms or conditions. If the debtor purposely conceals a portion of his property, the title, nevertheless, passes to the trustee, and it becomes his duty, and is to his interest, to take possession of it.. It is to the interest of the creditors to aid him in so doing. The title vesting in the trustee, in fact facilitates the creditors in the recovery of the property. That the property rests in a trustee for his benefit, cannot hinder and delay the creditor, either in law or in fact. If he, the trustee, performs his duty, such deed expedites and hastens the settlement of the claims of the creditors. It is only where the trustee becomes implicated in the fraud that such a deed can be made to hinder and delay creditors, and in such case the deed is void.

The Statute of Elizabeth only applies to such conveyances as may hinder, delay or defraud the creditor. If a conveyance like the one before us, cannot, without fraud on the part of the trustee, so operate, then the Statute does not apply. Erom what we have said, the deed in this case, even if there he a fraudulent intent on the part of the grantor, cannot hinder, defraud or delay the creditors of the grantor, without fraud on the part of the trustee, and is, therefore, not within the Statute.

There are many other cases referred to in the very exhaustive briefs filed in this case, and the greater part of which we have examined, but which we do not think it necessary to refer to. The two cases we have selected, furnish, we think, sufficient illustration for our decision.

On this part of the case, we are of opinion, that where there is a general assignment of all the property of the grantor, for the benefit of all his creditors, without any preference, (except such as the law may make,) and without exacting releases or imposing conditions, such con[83]*83veyance is valid without reference to the fraudulent intent of the grantor, — provided the trustee is not implicated in such fraud.

It follows from what we have said, that the first and third prayers of the defendant are substantially correct.

As to the objection raised by the appellant, that he was entitled to a jury trial, it is no longer an open question in this Court, since the case of Wilhelm vs. Roloson, 37 Md., (Unreported,) and the cases there cited, where the right of the Court to hear and determine, on a motion to quash an attachment case for matters dehors the record, without the intervention of a jury, was distinctly recognized.

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Bluebook (online)
8 A. 819, 67 Md. 76, 1887 Md. LEXIS 75, Counsel Stack Legal Research, https://law.counselstack.com/opinion/ferrall-v-farnen-md-1887.