Smith v Hurst
| Jurisdiction | England & Wales |
| Judgment Date | 28 May 1852 |
| Date | 28 May 1852 |
| Court | High Court of Chancery |
English Reports Citation: 68 E.R. 826
HIGH COURT OF CHANCERY
S. C. 22 L. J. Ch. 289; 17 Jur. 30. See In re Cowbridge Railway Company, 1868, L. R. 5 Eq. 417; New, Prance and Garrard's Trustee v. Hunting [1897], 2 Q. B. 25.
[30] smith v. hurst. July 29, 30, 1851; May 28, 1852. [S. C. 22 L. J. Ch. 289; 17 Jur. 30. See In re Cowbridge Railway Company, 1868, L. R. 5 Eq. 417; New, Prance and Garrard's Trustee v. Hunting [1897], 2 Q. B. 25.] A debtor executed a deed, expressed to be for the better management of his affairs and for the liquidation of his debts and engagements, and he thereby conveyed and assigned his real and personal estate and effects to one of his creditors,: leaving it to the discretion of the creditor in what order and in favour of what creditors the proceeds should be applied, and giving him powers of management and sale, and to negotiate and enter into arrangements and apply :the proceeds of the estate and property in carrying them into effect, such powers to terminate with his life or upon his resignation; and the debtor then went abroad, that the arrangement of his affairs might be facilitated by his absence. The Court, upon such circumstances, held that the deed was not framed to secure any debt due to the creditor to whom the conveyance and assignment was made; and that the deed (independently of the grantee being a creditor, and of any communications with other creditors) was a mere deed of management; that it was competent to the debtor to revoke it; and that it was fraudulent and void against other creditors. A creditor cannot vest his property in one of his creditors for the purpose of protecting himself against his other creditors. A deed executed for such a purpose is fraudulent and void against the latter, and the creditor taking such a conveyance is a party to the fraud, and cannot be in a better position than the debtor. In the case of a deed vesting property in trustees upon trust for the benefit of particular persons the deed cannot be revoked, altered or modified by the party who has created the trust; but, in cases of deeds purporting to be executed for the benefit of creditors, the question whether the trusts can be revoked, altered or modified depends on the circumstances of the case; and therefore, when it appeared that communications had taken place with creditors of the grantor not parties to the deed, the Court, in treating the deed as against the parties to it as fraudulent, directed inquiries as to the interests of the creditors not parties. A deed which a debtor has power to revoke, and which he attempts to use as a shield against his creditors, cannot be otherwise than fraudulent and void against them. The Court only interferes in aid of the legal right when the party has proceeded at law to the extent necessary to give him a complete title; and therefore, where the Plaintiff had obtained judgment, but had not sued out an elegit, it was held that he was not entitled to the aid of the Court as against the freehold estate of the debtor; that he did not under the statute 1 & 2 Viet. c. 110, s. 13, become entitled to such aid until the expiration of one year from the time of entering up his judgment; and that this, being an objection that the Plaintiffs title was incomplete, was therefore not removed by a resort to the jurisdiction of the Court to relieve against fraud in respect to the freehold estate. The Court will interpose to remove legal impediments out of the way of judgment creditors, or for the preservation of the property pending disputes at law as to the rights of judgment creditors; but the Court does not supply or extend legal rights. An original and a supplemental suit by Messrs. Smith, Payne & Smith against Robert Henry Hurst, Henry Pad-[31]-wick and F. 0. Byrne. The original bill was filed on the 1st of February 1845, and stated that in October 1844 the Defendant, Robert Henry Hurst, was tenant for life under the will of his father of considerable freehold, copyhold and leasehold estates, subject to incumbrances, and entitled absolutely to other freehold, copyhold and leasehold estates, subject to incumbrances, and was possessed of considerable personal estate; that, being then largely indebted to the Plaintiffs and to other persons, he determined to make a conveyance to Pad wick, 10 HAKE, 32. SMITH V. HURST 827 his solicitor and confidential agent, under the pretence of making provision thereby for the payment of his debts, but in .reality for his private convenience, and for the purpose of hindering, delaying and defeating his creditors, and particularly the Plaintiffs; and that, accordingly, a conveyance and assignment was made by him to Padwick, by a deed dated the 29th of October 1844; that the deed was kept secret from the Plaintiffs and the other creditors; that Hurst, notwithstanding the execution of the deed, continued in possession of the property; but that he soon afterwards went abroad; and that after he had gone abroad it was communicated to the Plaintiffs by Pad wick's agent, that the conveyance and assignment had been made to Padwick, in trust for creditors ; but that the deed was not produced; (1) that the Plaintiffs, on the 28th of November [32] 1844, brought an action against Hurst for 12,000 and upwards, the balance due to them on a banking account. The bill stated a correspondence which ensued pending the action, in the course of which an offer was made on the part of Padwick to give the Plaintiffs security on Hurst's life interest, and on a life interest in remainder, to which the son of that Defendant was entitled; and in one of these letters it was stated that no creditor was a party to the deed except Padwickj and that he was not a party in that character. The bill stated that a consent was given to judgment being signed in the action in default of the debt being paid on or before the 21st of January 1845; and that, the debt not having been paid, judg-[33]-ment was signed on the 22d of January, and a fi. fa. issued; but that the execution of the fi. fa. was prevented by Padwick, who was in possession of the property, and had produced the deed to the sheriffs officer, and told him that the sheriff must return nulla bona, and that under these circumstances the sheriff would make that return. The bill then contained allegations to the effect that the fi. fa. had not been returned, and that no writ of elegit could be issued until it was returned; and that, if (1) The deed, dated the 29th of October 1844, was made between Robert Henry Hurst of the one part, and Padwick of the other part. It recited the title of Hurst to the estates, or the equity of redemption thereof; and that Hurst had made and executed to divers persons various mortgages, grants of annuities, &c.; and that he was indebted to divers persons upon judgment, bond, simple contract, &c.; and that Hurst, in order to the better .arrangement of his affairs, and the adjustment and liquidation of his debts and engagements, was desirous of vesting all his property, real (other than copyhold) and personal, in Padwick, upon the trusts thereinafter expressed; and then followed the grant of the estates to which Hurst was entitled under the will of his father, for a term of 100 years, if Hurst should so long live; and the assignment of the leasehold estate to Pad wick, his executors, administrators and assigns, upon the trusts thereinafter declared; .and an appointment of the remainder in fee of Hurst under the will of his father, and all other his estates in fee, to Padwick, his heirs and assigns; and an assignment of all his household goods, books, pictures, &c., bills, securities for money, and all other his personal estate (excepting wearing apparel), with a power of attorney for getting in and realising the same, upon trust that Padwick should let, set and manage the freehold and leasehold estates, properties and premises, in such way and manner as he should, in his absolute and uncontrolled judgment and discretion, think fit and most conducive for the objects and purposes of the deed, with powers of sale, &c., and should pay and apply the surplus proceeds of sales, and the rents and profits, after satisfying the incum-brances and charges, in or towards the payment and discharge of the interest of all or any or either of the mortgage and other debts of Hurst, or in or towards payment of the principal: of such debts, whether with or without reference to this order of charge or priority, or any part or parts of such principal or interest, according to the absolute and uncontrolled discretion of Padwick, and as he might from time to time judge to be requisite or proper and most conducive to the objects and purposes of the deed; and, subject to such trusts and purposes, in trust for Hurst, his heirs, executors, administrators and assigns, respectively; and among other provisions was one that the trusts of the deed should be personal to Padwick, and should terminate with his death...
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