Den on demise of Moore v. M'Duffy, 10 N.C. 578, 3 Hawks 578 (1825)

June 1825 · Supreme Court of North Carolina

10 N.C. 578, 3 Hawks 578

Den on demise of Moore v. M'Duffy et al. administrators of P. M'Rca.

From Cumberlandb

It seems that a trust may be created for the benefit of creditors by a deed, of the existence of which they are ignorant, and that their assent to it may be presumed.

Yet where the trust is created expressly on the condition that they shall execute the deed by a certain day, and upon such execution certain obligations are imposed on them; they cannot incur the obligation without a performance of the condition.

If the creditors never signed the deed, the trust, if it arose at all, was for the benefit of the bargainors, and was such an interest as, under the act of 1812, ch. 830. might be reached by execution.

This was an action of ejectment, in which title to tbe premises in question was regularly deduced to David Hay. David Hay conveyed by deed to “ Elisha R. Whiting and Company,” without naming the persons who composed the company. Whiting alone conveyed to Frederick J. Redfield, Redfield to William Lownes, and Lownes reconveyed to Redfield, who, together with Lnron Whiting, describing themselves as the firm of Frederick J. Redfield <f Co. then conveyed to William Moore, the lessor of the plaintiff.

The defendants exhibited a judgment and execution ■thereon from Cumberland County Court, against Frederick J. Redfield f Co. in favour of Durkin Henderson <f Co. and a sheriff’s deed to Philip M‘Rae (who afterwards conveyed a part to the other defendants,) for the premises in dispute. The suit of Durkin Henderson <f Co. commenced by attachment, June 11th, 1817.

On the trial of the cause, it appeared that one Wallace tf Whiting composed the firm of Elisha R. Whiling <f Co. and it was objected by the defendants that the deed to Whiting f Co. conveyed to Wallace as well as Whiting: the objection was overruled, and on this point the jury was instructed that the deed conveyed no interest to any one but Whiting.

The deed from Redfield L. Whiting to Moore was dated May 26, 1817, and purported to have been made for the benefit of certain creditors therein named, and of others who should subscribe the deed, and contained, among other things, this clause:

It is farther covenanted, understood and agreed, that this instrument shall remain open to the execution and signatures of all those creditors of the said Redfield and Whiting as shall choose to come in and sign and execute the same previous to the first day of August next; and all creditors of the said Redfield and Whiting, under the firm aforesaid, who shall fail to come in and annex their signatures to this instrument, either by themselves or by attorney duly authorized, before the said 1st day of August next, shall be entirely excluded and utterly barred from any participation in the dividend or dividends of the property conveyed by this deed, &c.

It did not appear from the case that any one of the creditors of Redjield Co. had at any time assented to the deed to Moore or signed it; and it was objected by the defendants, that as to them the deed was fraudulent and void. The point was reserved on the trial, and a verdict was found for the plaintiff, subject to the opinion of the Court on the question whether the deed to Moore was fraudulent in law as to defendants or those under whom they claimed, no fraud in fact appearing. The Court held, that there was nothing on the face of the deed to authorize it to pronounce it fraudulent, and gave judgment for the plaintiff, from w'hich defendant appealed.

Taylor, Chief Justice,

delivered the opinion of the Court

The trusts declared in the deed to the plaintiff are, that he shall pay all the creditors of Redjield and Whiting who shall sign the deed by the first of August 1817; and there are certain covenants in the deed binding those creditors to divers acts, as soon as they have executed the same. Admitting that a trust may be created for the benefit of creditors, by a deed, of the existence of which they are ignorant, and that their assent to it may be presumed, yet this case is subject to a very different construction; for the trust is created expressly on the condition that they shall execute the deed by a certain day, and then certain obligations are imposed upon them; which surely they never can incur, without a performance of the condition. Now it does not judicially appear that the creditors ever executed the deed, and of course William Moore did not become a trustee for them. There are signatures and seals to the deed, but whose they are we have, no means of ascertaining.

It results from this view of the case, that the trust, if it ever arose, existed only for the benefit of the bargain-ors, and that the property in the hands of the trustee was liable to their creditors, as they could entitle themselves by legal process; it being such property as is made liable to execution by the act of 1812, eh. 830. There must be a new trial.

Judgment reversed.