4:20 HAMILTON,
FEDERAL REPORTER.
Trustee,
'V. WALSH
and others.
(Oir()'Uit Court, D. RhOde I8land.
April 16, 1885.)
INcTDNCTION TO STAY PROCEEDINGS IN STATE COURT-REV. ST. § 720.
While an action of replevin, instituted by H., was pending in the state court, he filed a bill in equity in the United tltates court to reform the chattel mortgage under which he claimed the property. Judgment was rendered him in the state court, and suit brought on the replevin bond, whereupon he filed a supplemental bill in the United States court, praying an injunction. On motion for a preliminary injunction to stay proceedings in the suit on the bond until fihal decree on the bill, held, the injunct.ion could not be granted.
On Motion for Preliminary Injunction. Wilson d; Jenckes, for complainant. Wm. H. Baker, for respondent. CARPENTER, J. The complainant commenced an action of replevin in the state court of Rhode Island, wherein he based his title to the property replevied on a certain chattel mortgage. The respondent denied that the mortgage had the effect to convey the property in dispute, and the decision of the suit depended on the interpretation which should be given to the terms of the mortgage. While that suit was pending, the complainant filed his bill in this court, in which he prays a reformation of tbe terms of the mortgage. The suit in the state court then proceeded to final judgment for the defendant, and he thereupon commenced suit on the replevin bond in the state court. The complainant now files his supplementary bill in this court, in which he alleges the commencement and prosecution of the suit on the replevin bond, and prays an injunction; and he now moves for a preliminary injunction to restrain tberespondent from prose· cuting the suit on the bond until final decree on the bill for reforming the mortgage. The statute, in terms, prohibits the granting of an injunction to stay .proceedings in a state court, except when authorized in bankruptcy proceedings. Rev. St. § 720. This statute has been held, however, to apply only to cases where the proceedings are first commenced in the state court. Fisk v. Union Pac. B. Co. 10 Blatchf. 518; Flrench v. Hay, 22 Wall. 250; Dietzsch v. Huidekoper, 103 U. S. 494. The complainant points out tbat tbe suit on the bond has been commenced since his original bill was filed in this court; and he claims that, upon the rendering of final judgment on the replevin writ, the state court ceased to have jurisdiction of the subject-matter, and that the proceed. in that court was at an end. I cannot agree with this view of the case. The action on the bond is for the purpose of enforcing, or perhaps more properly of securing, the fruits of the judgment in the replevin suit, and is the appropriate process for tbat purpose. It takes the place of the levy of a writ of execution in an action on the case; and it must for this purpose be taken to be part of the original proceeding in the state court. The motion is denied.
IlBANS 11. MONTGOMERY.
421 and others.
'MEANS,
Assignee, v.
MONTGOMERY
(OircuitCourt, W. D. North Carolina.
December Term, 1884.)
1.
FBAUDULENT CONVEYANOES-PBEFEBRING CERTAIN CREDITORS IN ASSIGNMENT.
At the common law an insolvent debtor has the right to make an assignment in trust for the benefit of his creditors, and he may give a preference to bona fide creditors to whom he feels under special and honest obligations for previous favors conferred, or for any other honest and meritorious. consideration. SAME-RuLE IN NORTH CAROLINA-EvIDENCE-QUESTION FOR JURY.
2.
The courts in North Carolina have always been very cautious in finding fraud in a written instrument as a matter of taw, and where presumptions of fraud arise upon the face of the deed they have uniformly held that the parties are entitled to introduce evidence to explain transactions and rebut presumptions of fraud; and in cases at Jaw such que:ltions must be determined by the jury. SAME-DEED OF TRus'r FRAUDULENT AS MATTER OF LAW, WHEN.
3.
To render a deed of trust fraudulent as matter of law, there must appear upon its face some plain and express provision for the personal benefit of the grantor, or some stipulation which is wholly irreconcilable with an honest and legal purpose of paying, within a reasonable time, the debts of the grantor. SA,lE-RETENTION OF POSSESSION WITH POWER OF DISPOSITION RENDERS DEED VOID, WHEN.
4.
If there is a provision in a duly-registered deed Of trust that the property conveyed shall remain in the possession of the grantor, and that he shall have the control and disposition of the same, the questions whether the deed is fraudulent on its face, or is presumptively fraudulent, depend upon the purposes and facts that clearly appear from a fair construction of thEl express terms of the deed. If provisions are made in the deed for the continuance of the possession of the. property in the grantor for an unreasonable time, or for the express benefit of the maker or his family, or for any otber purpose which is manifestly wrong or inconsistent with the honest exercise of his legal right of makin!!; preferences among his creditors, then the deed is fraudulelH in law on its face. Where the dishonest purposes of the grantor are not expressly declared in the deed, or cannot be clearly inferred from the terms and acts set forth, but the terms and acts afford reasonable ground to suspect an evil and unlawful intent, then the parties interested in sustaining the deed must rebut the presumptious of fraud which arise from a fair construction of the instrument, If the provisions of the deed manifest a real purpose of making satisfaction to bona fide creditors, in the order mentioned, in a reasonable time, in a convenient manlier, with no unlawful intent towards other creditors, and without an)' substantial benefit to the grantor, then no presumption of fraud can arise on the face of the deed. 5. SAMR-CHAHACTEI{ OF BUSINESS.
There is nothing suspicious or inconsistent with honesty and fair dealing, or pt'ejudicial to the legal rights of creditors, in a provision in a deed of trust allowing the grantor of a of miscellaneous merChandise, which is not consumable in the use, to remain in possession and continue to sell t,he goods for cash, and deposit the proceects under tlw supervision and control of the trustee, with a view to wind up the business in a convenient time, to the best advantage of the creditors. A provision in a deed directing the surplus, after payment of debts, to be paid over to the grantor, is not fraUdulent, and does not g'ive rise to a legal presumption of fraud. as such rights would arise to the grantor by implIcation of law.
6. SAME-SURPLUS TO BE PAID GRANTORS,
7, SA)!E-PREFERENCE.
An insolvent debtor, or one so greatly emharrassed that an immediate sale under execution would necessarily result in injury to many of his creditors. who executes a deed of trust for the benefit of all of his creditors, or to give a preference to his sureties, to prevent one creditor by legal process from obtaining full satisfaction of his debt, to the injury of other creditors, commits no fraud.