He began to negotiate for it in December, 1837. | alleged but not answered must be proven on He purchased it without any arrangement with final trial. See Young v. Grundy, 6 Cranch, or suggestion from Wheeler. He had heard of 52. If a more specific answer had been dethe prosecution by Winter, and of Wheeler's sired, exceptions should have been taken. All intention to assign his property for the benefit exceptions to insufficient answers are expressly of his other creditors, to prevent Winter from waived by agreement. recovering the amount of his judgments; and he therefore bought up this debt of the Sextons. The amount of principal and interest on this debt, calculating the interest at six per cent., from August, 1814, to November, 1837, is seven thousand four hundred and twenty-two dollars and forty cents; which this Mr. Porter receives, and for which he paid but three hundred and seven dollars and fifty cents.

The assignment purports to convey his property directly to the creditors named in it. There is no proof that it was delivered to any of them, and it is in proof that several of the creditors never knew of its existence.

Wheeler continued in possession of the property; it never was delivered over; this of itself is evidence of fraud. 1 Peters, 356; 4 Mason, 321; 3 Maule & Selw. 371; 15 Johns. 571; 4 Bibb, 445, Kentucky Reports.

The assignment gives the creditors power to name a trustee to take the property; no such trustee has ever been appointed. The sale of some property to Putnam was evidently made for the mere purpose of preventing the judg. ment creditor from recovering his demand; and is therefore void. Cowp. 434; 1 Burr. 474; 1 Campbell, 333.

In regard to delivery, it is well settled that if a deed be delivered to a stranger for the use of the grantee, without any condition annexed making it an escrow, it is a delivery to the grantee. Sheppard's Touchstone, 58. In this case the deed was delivered to the clerk of the Fayette County Court, for the use of the grantees, to be recorded in his office. It has also been decided, that if a deed of feoffment be made to four, but only delivered to three of them, and livery of seisin made to the three for the use of all, without the assent of the fourth, and when it comes to his knowledge, he disagrees to it, still the freehold is in him, and so remains, until disclaimer in court; and so if a deed be made of goods and [*111 chattels, and be delivered to a stranger for the use of donee, there the goods and chattels vest in donee before notice or agreement; but in this case donee may make refusal in pais, and by such refusal the interest is devested. See Butler and Baker's case, 3 Coke's Reports, 26, 27. See, also, the case of Doe, on dem, Garnons, v. Knight, 5 Barn. & Cress. 671, for a full ar gument on the effect of delivery to a stranger, and for a collation of all the authorities. Ac cording to these principles, so far as the vesting of legal title is concerned, it matters not whether the grantees were consulted or knew of the deed or not; the property embraced in it was vested in them by force of the delivery to the clerk for their use until their disagreement.

This assignment, the court will recollect, was made but four or five days before the time during which execution was to be stayed expired, and the negotiation which brought about the assignment of this debt of the Sextons was not entered upon by Porter until December, long In cases of deeds of trust, where the propafter the judgments were entered, and Porter erty is conveyed to a stranger, for the benefit of himself admits that he knew of the intended creditors, and these creditors not parties to the assignment by Winter, and that their debt was deed, it has been decided by this court, in to be provided for. It appears that a more Marbury v. Brooks, 7 Wheat. 556; and Brooks fraudulent attempt than this to give a prefer- v. Marbury, 11 Wheat. 78; Brashear v. West, 110*] ence *over a bona fide creditor rarely 7 Peters, 608; also, in the cases of Halsey v. occurs. 7 Peters, 605; 2 Gallis. 557; Picker-Whitney, 4 Mason's C. C. R. 206; and ing, 71.

Mr. Johnson, for the appellees:

The assignment of Wheeler to his creditors is charged to be fraudulent, because it was made by Wheeler without the knowledge or assent of the creditors therein named, and was never delivered to, or accepted by them.

It is contended that the fact is otherwise. None but F. L. Turner failed to give assent to it; and the mortgage funds can under no contingency pay his debt; and his interest in them amounts to nothing. As to all who do not admit that they did not assent, the presumption of law is, that they did assent, as the deed was beneficial and had no condition attached. See Halsey v. Whitney, 4 Mason C. C. R. 206; Wheeler v. Sumner, 4 Mason C. C. R. 183.

This presumption particularly applies to all the non-residents, as to whom the suit is dismissed. All others have answered, or by agreement are considered as having answered; assenting to the mortgage, or stating that they were paid before process was served.

It may not appear from the answers of some when the assent was given, but according to the practice in United States courts, a matter

Wheeler v. Sumner, 4 Mason's C. C. R. 183, that the assent of the creditors is not necessary to the validity of such a deed; and in the case of Marbury v. Brooks, supra, an assent after a creditor had attached the goods was decided to be sufficient to make the deed valid from its execution.

The rule that in absolute sales of chattels the possession remaining with the grantor is a fraud, per se, has been fully recognized in Kentucky; but it is equally well settled that this rule has no application to mortgages and deeds of trust. See 5 Littell's Reports, 243; 1 J. J. Marshall, 282; 3 J. J. Marshall, 453. In Snyder v. Hitt, 2 Dana, 204, the court say that the possession of the mortgageor is not fraudulent, and, in general, no evidence of fraud. This court, in the United States v. Hooe, etc. 3 Cranch, 73, decide, that where the deed provides for the grantor retaining possession, it is not fraudulent, and in 1 Peters, 449, the rule is held only to apply where the possession of the grantor is inconsistent with the deed.

The reason of this distinction in Kentucky is twofold. 1. The possession of the mortgageor is not inconsistent with the deed; and,

2. All deeds of mortgage and of trust are required to be recorded.

case of Halsey v. Whitney, 4 Mason C. C. R. 207, and the numerous authorities collated and ably commented on.

Mr. Justice Thompson delivered the opinion of the court:

112*] *The equity of redemption, or resulting trust of grantor, and his interest in freeing himself from debt, by making the property as available as possible for that purpose, are such actual and legal interests in the property as all courts will regard and protect, and are such in- This is an appeal from the Circuit Court of terests as render it not only consistent with the the United States for the District of Kentucky. transaction, but highly beneficial to all parties, The bill filed in the court below was for the that the debtor, if honest and capable, should re- purpose of setting aside a certain deed of asmain in the possession of the encumbered prop-signment, made and executed by the defenderty. He is the person best acquainted with ant, Wheeler, for the purpose of securing to the property and its capabilities, and his inter-certain enumerated creditors the avails of his est perfectly coincides with that of the cred- property, to the exclusion of the complainants; itors, in making it as valuable as possible.

and that the complainant may be decreed to have satisfaction of his judgments set out in the bill, out of the property conveyed by the deed. The bill sets out that at the November Term of the Circuit Court of the United States, in covered two judgments against Leonard Wheeler; one for the sum of four thousand dollars, with interest, from the 21st of February, 1814, and the other for eight hundred and ninety-one dollars and fifty-three cents, with interest for the same time; upon which judgments execu tions were not to issue until the 1st of Febru ary, 1838, at which time executions were duly issued, and put into the hands of the marshal of the district to be executed; upon which the marshal returned that he found no property of which to make the money on the executions.

There can be no doubt that the assignment in question is not an absolute sale, but a mortgage or deed of trust. The property is assigned for the purpose of paying the debts. Upon their payment, the property, by operation of Kentucky, in the year 1837, the complainant relaw, results to the grantor. But, by whatever name it may be called, it is, in substance and reality, a mortgage; and Wheeler has, in the property, all the interests which are above enumerated as appertaining to the mortgageor: and there is, consequently, the same consistency of his possession with the deed that there could be were it a mortgage, in the most nicely technical sense. In the deed it is provided, substantially, that he shall remain in posses sion, managing the fund, until the grantees, by agent or otherwise, take possession.

In Kentucky all mortgages and deeds of The bill further states, that on the 27th of trust, whether of real or personal estate, on January, 1838, the said Leonard Wheeler, by legal or equitable interests, are required to be deed of trust or assignment, made a conveyance recorded in offices of the county courts. to certain of his preferred and specified creditBrown and Morehead's Statute Law of Ken- ors (of which the complainant was not [114 tucky, Vol. I. pages 448, 449; also, see Session one) of certain property therein specified, to pay Acts of 1836, 1837, page 255; also, Session and discharge certain specified debts, which Acts of 1838, 1839, page 96. These statutes deed was duly acknowledged and recorded in would change the rule as to possession, even the proper county; and the bill charges, generalhad it previously existed, by destroying the reason of it. In regard to chattels, the only ownership the world can know is the continued possession. Being capable of transfer, by the most secret contracts, without the least solemnity or notoriety, purchasers and creditors could be deceived and defrauded without limit did not the law provide for their security some visible test of ownership. The continued possession is the test as to chattels, but it is not of real estate, the title deeds being the evidence, and, accordingly, we find the rule does not extend to real estate. In Kentucky, the notice of encumbrances is the record, and purchasers and creditors are completely guarded 113*] against being defrauded by mortgages, etc., by an easy reference to the office of the County Court.

The property is not, however, of the character to which the rule applies. Consisting of choses in action, they are incapable of visible possession, and pass by assignment. So this court held in the case of Spring v. The South Carolina Insurance Company, 8 Wheat. 268. If a debtor gives up all he has, to bona fide creditors, and such all he has provided for are admitted to be, and he reserves no right, power or benefit to himself, it is impossible that this can be fraudulent. The law not only does not condemn, but approves and sanctions it. See the luminous opinion of justice Story in the

ly, that this deed is fraudulent and void. It particularly charges that the deed was made without the knowledge, privity, or assent of the creditors named therein, and who are the parties to whom the deed is given. That the deed was never delivered to nor accepted by the grantees. That it was made with intent to deceive and defraud his just creditors, who were not included in its provisions. That the possession of the property conveyed by said deed was retained by the said Wheeler, and never delivered to the parties of the second part, or any one of them. That the deed was lodged in the clerk's office, for record after the rendition of the complainant's judgments, and but a short time before he was authorized to issue execution upon his judgments.

It further charges that the sale of the goods to Joseph Putnam, one of the creditors named in the deed of trust, was fraudulent, and without any valuable consideration; and that the business was afterwards conducted in the name of the said Putnam, but for the use in whole or in part of the said Wheeler.

It further charges that Joseph Swift, another defendant, has for several years past been employed in carrying on the grocery business, in which the said Wheeler was interested; and that the said Swift is now in possession of goods, or other property, belonging to the said Wheeler, or is indebted to him for the same.

It also charges that Norman Porter, another of the preferred creditors, had money in his hands belonging to the said Wheeler, and to be used for his benefit; and that the note mentioned in the said deed of three thousand one hundred and seventy dollars, was purchased by said Porter for Wheeler's benefit, and with his

money.

The bill likewise prays that Abel Wheeler, one of the preferred creditors, may answer and state particularly whether he has at any time lent and advanced to Wheeler money or other property, and whether he now holds any note, or memorandum, or other evidence of debt against him.

material questions which arise upon the merits of this case.

It is deemed unnecessary to notice the objections made to the jurisdiction of the court below, either on the ground that Elisha L Winter, the real party in interest, should have been made the party complainant in this suit; or that there is a want of proper parties, defendants, to enable the court to make the decree upon the merits. The conclusion to which we have arrived supersedes the necessity of considering these questions.

Although the right and power of a debtor to give a preference to some of his bona fide creditors, to the exclusion of others, has not been The bill prays that the said Leonard Wheeler, denied on the part of the complainant; yet, it 115*] and the above mentioned preferred has been urged, in argument, that such precreditors, may answer specially and particular-ferred creditors are no favorites in a court of chanly to the several interrogatories put in the bill, in reference to the transactions between them severally and respectively.

The several answers of Leonard Wheeler, Porter, Putnam, Swift, and Abel Wheeler, contain a full and explicit denial of all the charges contained in the bill, tending in the least manner to sustain the allegations of fraud or collusion, or any secret or unfair transactions between them, or either of them, with Leonard Wheeler. And there is no proof offered to sustain these allegations; they may therefore be dismissed as wholly unsupported.

cery, where it is said equality is equity; and that a court of chancery will look narrowly into all the circumstances, and if it is found that the deed is tainted in the smallest degree with fraud, it will be declared void. And it has been insisted, that in the present case there are strong circumstances to show that in making this deed of trust, the defendant Wheeler did not act in good faith towards the complainant. That he obtained from him an agreement to postpone issuing executions upon his judgments until after the first of February; and that a few days before that time he made the assignment in question, so as to put all his property out of the reach of the executions; and that this was in bad faith, which ought not to receive the sanc tion of a court of equity. It may be observed, in the first place, that there is no evidence of any deception practiced by Wheeler to lull him to sleep, or procure any delay in issuing executions on the judgments. It was done in the ordinary course of judicial proceedings. And if the principle be sound that a debtor may lawfully apply his property to the payment of the debt of such creditors as he may choose to prefer, he may certainly elect the time when it is to be done, so as to make it effectual. And such preference must necessarily operate to the prejudice of creditors, not provided for, and cannot furnish any evidence of a fraudulent intention. But the circumstances of the present case are such as not only to remove all ground for any charge of fraud, "but even of [*117 injustice or unfairness in the conduct of Wheeler. Although it may be admitted that John Tompkins is properly made complainant, yet it is man ifest from the record that he is a mere nominal party, and that Elisha I. Winter is the real party The answer of Wheeler with respect to the in interest. This is shown by the answer of delivery of the deed, and the possession and Wheeler, and proved by the testimony of Wilmanagement of the funds, is corroborated by liam Fellows, who swears that in the latter part the answers of a number of the creditors, who of 1836, or the beginning of 1837, Winter, are made parties, and called upon to answer on through his agent, applied to him, to purchase these points. They say that they were con- the claim of Tompkins, which had been sent to sulted before the deed was executed, and ap-him for collection. That he offered one thouproved of it then; and accepted it when made. That no trustee has been appointed, because they had full confidence in Wheeler, and desired him to continue in the management of the business.

The bill calls upon the said Leonard Wheeler to state how and to whom he delivered the deed of trust; in answer to which he states, that every creditor provided for by the deed, was a real and bona fide creditor. That he consulted with a number of his creditors, naming them, before making the deed; all of whom approved of it; and that he knows of none who disapproved of it, or rejected the benefit of its provisions; and some of them have accepted of it in writing, which appears by the exhibits annexed to the answer. That, being satisfied with the propriety of the measure, he made and executed the deed, and left it in the proper office, to be recorded for the use of his creditors. He admits that the funds, mentioned in the deed of trust, remained in his possession; and that the creditors have never availed themselves of the privilege of appointing a trustee; having confidence, as he presumes, in the correctness of his management of the business. And he further states, that he has gone on in collecting the choses in action, and paying over the proceeds to the creditors, according to the provisions of the deed of trust.

There are several amended bills, with the an116*] swers thereto, *bringing up some new matters, but not of sufficient importance to require any special notice. The above statement of the bill and answers presents all the

sand dollars for it, which was not at that time accepted. That in the summer of 1837, Winter himself made the same offer which his agent has made; and again, in the fall of 1837, he renewed the offer of one thousand dollars, and expressed his opinion of Wheeler's condition, when, with the opinion of some others, who he supposed knew Wheeler's circumstances, he, in the month of October, 1837, sold the claim to Winter for one thousand dollars, believing that he

was purchasing it for the benefit of Wheeler. I since that time have been paid their debts, in That, a few days after the sale, he received a full. And there is no evidence that anyone written request from Winter not to let it be dissented. F. S. Fuller says he was never conknown that he had the control over the claim. sulted with about making the deed, or informed Thus we see great anxiety in Winter to pur- of it before its execution, and that he has never chase a claim against a man embarrassed accepted of its provisions. But he does not and in failing circumstances; and the consid- say that he has ever refused to accept of the eration paid for it shows that the claim must provisions in his favor; and he may not, therehave been considered almost desperate. Only fore, have precluded himself from still acceptone thousand dollars given for a claim which, ing. This deed is absolute upon its face, withby the judgments stated in the complainant's out any condition whatever attached to it; and bill, including interest, amounted to between being for the benefit of the grantees, the preeleven and twelve thousand dollars. These sumption of law is, in the absence of [*119 circumstances, independent of the statements all evidence to the contrary, that the grantees in Wheeler's answer, are calculated to cast accepted the deed. In the case of Marbury v. some suspicion upon the conduct of Winter, Brooks, it is said by the court that an assignand to justify the inquiry, whether he comes ment for the benefit of preferred creditors is into court with clean hands, and can justly re- valid, although their assent is not given at the proach Wheeler with bad faith and unfairness time of its execution, if they subsequently actowards him. Wheeler's circumstances were cept in terms, or by actually receiving the benextremely embarrassed, if not desperate, and he efit of it. Deeds of trust, say the court (11 found impending over him two judgments Wheat. 96), are often made for the benefit of amounting to nearly twelve thousand dollars, persons who are absent, and even for persons in the hands and under the control of Winter, who are not in being; whether they are for the who he had certainly no reason to believe was payment of money or for any other purpose, friendly to him; and which judgments, if they and no expression of the assent of the persons could have been enforced to their full amount, for whose benefit they are made has been rewould have swallowed up a great porportion of quired, as preliminary to the vesting of the his property. Was he not, under such circum- legal estate in the trustee; such trusts have stances, authorized, by every principle of justice always been executed on the idea that the deed and honesty, to secure as far forth as he could was complete when executed by the parties to 118*] his bona fide creditors? That the debts it. The omission of creditors to assent to the of all the creditors preferred in the deed of trust deed, or to claim under it, may, under susare bona fide debts, is fully established, not only picious circumstances, afford some evidence of by the proofs, but is admitted on the record, by fraud. But real bona fide creditors are rarely an agreement which, among other things, states unwilling to receive their debts from any hand "that the genuineness of the debts provided that will pay them. It is not true that the deed for in Wheeler's assignment will not be con- remained in the possession of Wheeler; it was tested or called in question on the argument." sent to the clerk's office to be recorded. It was, That a debtor has a legal right to prefer one of course, placed in the hands of the clerk, to or more of his creditors over others, when the be recorded for the uses and purposes expressed transaction is bona fide, is not an open ques-in the deed, and of course for the benefit of the tion in this court. That point was settled in creditors named in it. It was put out of the the case of Marbury v. Brooks, which came possession and control of the grantor. The twice before the court under circumstances grantees in the deed are numerous, and all somewhat different, and is reported in 7 Wheat. could not have the actual possession of it. It 556, and in 11 Wheat. 78. That this assign- is laid down in Sheppard's Touchstone, 58, ment was a bona fide transaction between Wheeler and his preferred creditors, is clearly established by the proofs. Every allegation in the bill, suggesting fraud or collusion, is fully met and denied by the several answers, and is wholly unsupported by any proofs.

But several objections have been taken to the legal effect and operation of this deed, on other grounds than that of fraud.

That it was made by Wheeler without the knowledge or consent of the creditors therein named; that it was never delivered to or accepted by the creditors, that possession of the fund was retained by Wheeler, and no trustee appointed according to the provisions of the deed.

Some of these objections are not founded in fact. It is true that it does not appear that all the creditors had any knowledge of the deed before it was executed. But it does appear from the answer of a number of the creditors named in the deed, that they were advised of the necessity of Wheeler's securing them, and informed of his intention to secure them before the deed was executed, and approved of it, and accepted the benefits of its provisions; and

that if a deed be delivered to a stranger for the use of the grantee, without any condition annexed, making it an escrow, it is a delivery to the grantee. The delivery to the clerk to be recorded, may well be considered as falling within this rule. This principle is fully recog nized in the case of Doe v. Knight, 5 Barn. & Cress. 692, that a delivery of a deed to a third person, for the use of the party in whose favor it is made, where the grantor parts with all control over the deed, is effectual, and operates from the instant of such delivery.

If the fund had remained in the possession of Wheeler for his own benefit, it might have cast a suspicion upon the fairness of the transaction; but there is no proof of any such object or design, or of any fact from which an inference of mala fides can be drawn: but on the contrary the object of his continuing in the possession of the property is satisfactorily accounted for by the circumstances of the case. It [*120 consisted principally of unsettled accounts, and choses in action, which he was much more competent to settle than a stranger could have been. It was, therefore, for the benefit of the creditors that he continue to settle up these