Estes v. Gunter (122 U.S. 450)

In March, 1882, one S. H. Gunter, a merchant who had been for many years engaged in business at Sardis, in Mississippi, was largely indebted to the complainants and others; and, being unable to pay them in full, made a general assignment of his property of every description, except such as was exempt from execution, to one S. G. Spain, as trustee, for their benefit, which was recorded the same day. The assignment preferred certain of the creditors, who are named in a schedule annexed. Among them were the complainants, Estes, Doan & Co., merchants at Memphis, in Tennessee. The sum due them was $13,587.68, but they were prf erred only to the amount of $10,000. Their claim grew out of advances of cash and supplies furnished to Gunter. There is no question as to its amount or justice. On the same day, and immediately preceding the execution of the assignment, Gunter executed a deed of a house and lot in Sardis to one J. G. Hall, as trustee, to secure the firm of Boothe, rice & Carleton, who were sureties upon his note, held by the Bank of Sardis, for $1,000, due on the first of December, 1882. This deed was to be void if the note was paid at maturity; otherwise the trustee was, on the written request of the sureties, to take possession of and sell the property at public auction, after due notice, and apply the proceeds to its payment. Any surplus was to be returned to the grantor. It the property should at any time 'become endangered' as a security, the trustee was at liberty to take possession of and hold it until the debt was discharged by payment or by sale of the property, but until demanded by the trustee the grantor was to hold the same subject to the deed of trust. This deed was also recorded on the same day, and a few minutes before the assignment. At the same time Gunter transferred and delivered to several of his clerks and employes certain notes and accounts in payment of his indebtedness to them. It was also in proof that Gunter was hopelessly insolvent; that for 12 days before he made the assignment he knew of his condition, and contemplated making the assignment; that during this time he gave to his wife the sum of $900 in payment of an alleged indebtedness to her, and she was permitted to take money from the drawer of the store; and that more goods than usual were carried from the store to his house.

Soon after the assignment and deed of trust were recorded the defendants Bickham & Moore, who were also creditors of Gunter, sued out an attachment against him in the circuit court of United States for the Northern district of Mississippi, which was levied on the property assigned by Gunter to Spain, as trustee. followed by attachments of other creditors, and the property was seized by the marshal. Spain, the assignee, thereupon renounced his trust and refused further to act. Thereupon the complainants, Estes & Doan, who were much the largest creditors of Gunter, filed their bill against Bickham & Moore and other attaching creditors, setting forth the assignment of Gunter to Spain, his debt to them, the several attachments levied, and the refusal of Spain, the assignee, to act; and praying the court to appoint a trustee in his place, to direct the enforcement of the trust, and to enjoin the attaching creditors from further proceeding with their suits. Bickham & Moore and other defendants answered, charging that the assignment was fraudulent and void, but admitting that Spain refused to act as trustee or assignee. Proofs were taken, and upon the hearing the court held that the assignment was fraudulent and void, and accordingly entered a decree dismissing the bill with costs. From this decree the complainants have appealed to this court.

Luke E. Wright, for appellants.

H. M. Sullivan, W. V. Sullivan, and Edward Mayes, for appellees.

[Argument of Counsel from pages 452-454 intentionally omitted]

Mr. Justice FIELD, after stating the case as above, delivered the opinion of the court, as follows: