Richmond. ALEXANDRIA SAVINGS INST. & als v. THOMAS & als. December 6. Absent, Moncure, P., and Anderson, J. In January, 1856, by deed which was duly recorded, T and wife 1. Though W was under no liabilities for T when the deed. 2. The savings bank had no lien on the house and lot until 3. Though the acceptances were in the name of W & Co., This was a foreign attachment in chancery in the corporation court of the city of Alexandria, brought in November, 1871, by the Alexandria Savings Institution, to attach a house and lot in said city, and subject it to 1877. Novem'r Term. Novem'r 1877. the payment of a debt evidenced by three notes amountTerm. ing to $375, executed by George J. Thomas. The bill and amended bill after setting out the indebtedness of Savings Thomas, his residence out of the state, and his ownership Institut'n of the house and lot, set out a deed bearing date the Alexan'a &als. Thomas &als. V. 21st of January, 1856, and admitted to record on the same day, by which Thomas and wife conveyed the said house and lot to Henry Dangerfield, in trust, "to secure and indemnify S. Morris Waln, of the city of Philadel phia, against any and all loss or damage which he may sustain by reason of his acceptance of any draft or drafts, bill or bills which may hereafter be drawn by said Thomas upon said Waln; which acceptances the said Waln has agreed to make or come under for the accommodation of said Thomas." The plaintiff charges that there was no sufficient consideration for the said deed of trust, and that it was null and void, and fraudulent as to creditors. And making Thomas and Waln's administrator parties defendants, prayed for a sale of the property, &c. Thomas answered the bill. He admitted the plaintiff's debt; and said the deed to secure Waln was executed in good faith, and with no intent to hinder or delay or defraud his creditors; and that on the security of that deed of trust Waln accepted his bills at different times from the year 1856 to 1860, for large sums of money; and that he (Thomas) is in fact indebted to Waln's estate by reason of said acceptances; and though he cannot then state the exact amount, he believes they would amount to more than $6,000, and that the highest valuation of the house and lot could not exceed $4,000. In the progress of the cause, Lewis McKenzie and P. C. Claughton, receiver, who claimed to be creditors of Thomas, were upon their petition made parties plaintiff's in the cause, and a commissioner was directed to report the liens upon the property and their priorities. And by Novem'r consent of all the parties the house and lot was sold 1877. under the decree of the court, bringing the sum of Term. $2,725. Alexan'a & als. V. The commissioner reported the deed of trust as the Savings first lien; that the acceptances by Waln for Thomas Institut n commenced in April, 1855, and continued until January 23d, 1861, and afterwards in the shape of interest until the 31st of December, 1872, at which day there was a balance due Waln of $14,029.88. The commissioner reported two judgments recovered, one in February and the other in July, 1857, by persons who did not join in this appeal, and a judgment in favor of P. C. Claughton, receiver, on the 9th of August, 1871, for $764.71, and another in favor of Lewis McKenzie, on the 7th of March, 1873, for $2,702. And it was proved that though the notes exhibited with the bill bore date since the date of the deed, they were given in renewal of notes which were given before that date. The complainants excepted to the report of the commissioner, for that it treats the deed from Thomas and wife to Dangerfield as a valid deed, and reports the same as the first lien on the property mentioned in it; whereas complainants deny the validity of the deed with respect to the creditors of said Thomas, and maintain it is of no force or effect against creditors. The cause came on to be heard on the 14th of October, 1873, when the court overruled the exception and confirmed the report, and directed the proceeds of the property, after deducting the expenses of sale, to be paid to the administrator of Waln. And thereupon the complainants applied to this court for an appeal; which was allowed. H. A. Claughton, for the appellants. Thomas &als. 1877. Novem'r Term. Alexan'a Savings Institut'n & als. V. Thomas &als. C. W. Wattles, for the appellees. STAPLES, J., delivered the opinion of the court. The deed of trust, which is the subject of controversy here, was executed by George Thomas for the benefit of the appellee, S. Morris Waln, on the 21st of January, 1856, and was admitted to record the same day. It contains the following provision: "To secure and indemnify S. Morris Waln, of the city of Philadelphia, against any and all loss or damage which he may sustain by reason of his acceptance of any draft or drafts, bill or bills which may hereafter be drawn by said Thomas upon the said Waln, which said acceptances the said Waln has agreed to make or come under for the accommodation of said Thomas." Between the date of this deed and the 21st of January, 1861, Waln made advances and assumed liabilities for the benefit of Thomas, which, with the accruing interest, greatly exceed the value of the property conveyed in trust. The deed is assailed by the appellants, who are creditors of Thomas, upon various grounds, which will now be considered. And first, it is claimed that there was no consideration to support the deed, Waln not having made any advances at the time, nor assumed any obligation to do so. The learned counsel for the appellants concedes that a deed to secure future advances is good provided there is an existing indebtedness. But he insists that where the object is merely to provide for future advances or liabilities, without any other consideration, the deed is void as to the creditors whose debts were contracted at the time. The fact of an existing indebtedness (he claims) is the key to a proper understanding of all the cases which sustain this class of securities. One of the Novem'r Term. Alexan'a & als. V. Thomas & als. authorities relied on to support this position is an obser- 1877. vation of Chancellor Kent's in Kendricks v. Robinson, 2 John. Ch. R., 283, 300, where it is said: "There were large existing responsibilities affording sufficient aliment to Savings support the assignment." It is not very clear what Institut n Chancellor Kent meant by this remark. He certainly did not mean to say that an existing indebtedness is essential to the validity of a provision to cover a future indebtedness. Elsewhere in the same opinion he declares, "that if there was no existing engagement or debt whatever, the property might have been assigned in trust to indemnify the parties for advances and responsibilities thereafter to arise. There is no bankrupt system in this country to control the acts of an insolvent merchant, and in the absence of all legal liens he might make such an assignment, provided it bears the marks of a reasonable discretion, and there is perfect candor and honesty in the intention;" and in his commentaries, 4th vol. 175, the same learned judge says: "The principle is that subsequent advances cannot be tacked to a prior mortgage to the prejudice of a bona fide junior encumbrance, but a mortgage is always good to secure future loans when there is no intervening equity." In the case of Commercial Bank v. Cunningham, 24 Pick. R. 270, the supreme court of Massachusetts say, we think it is clear that a mortgage made bona fide for the purpose of securing debts expected to be contracted in the course of future dealings between the parties, is a just and valid security; and so are the authorities. And in Syle v. Ducomb, 5 Binn. R. 585, 590, Chief Justice Tilghman said: "It was asserted by defendant's counsel, though not much insisted on, that a mortgage intended as an indemnity against acts to be performed at a subsequent time, ought not to have any effect against third persons. This point was very properly abandoned. |