Albee v. Webster

16 N.H. 362 | Superior Court of New Hampshire | 1844

Parker, C. J.

There are some circumstances attending the conveyances in this case, which might be urged upon the consideration of a jury as evidence that the transaction was intended by the parties to it as the means of securing the property of the vendor from his creditors, and appropriating it to the use of himself and his family; and if such were the fact, the amount which was paid, even if it was more than the full value of the property, would be wholly immaterial. The fraudulent design would vitiate the whole transaction, and the defence would be complete.

The case before us at this time however raises no question of that character. If the defendant raised the question of actual fraud at the trial, he did not rest his case upon that alone; and the evidence and instructions raise the question how far the case is fraudulent constructively, by operation of law from the circumstances of the sale to the plaintiff. It appeal’s that the plaintiff offered to prove that he was a creditor of his father, the vendor, and that this furnished a part of the consideration for the conveyance. A debtor may lawfully prefer one of his creditors to others. The' plaintiff also offered to prove that he at the time assumed the payment of certain debts due to others; and this, if done bond fide, would furnish thus far a good consideration.

It appears also that a part of the consideration of the conveyance consisted of an agreement on the part of the plaintiff to maintain his father, mother, and sister; and to pay a certain sum to another sister to whom no debt appears to have been due. This if it had been the entire consideration, would clearly have been constructively fraudulent as to existing creditors. A debtor has no right thus to appropriate and secure his property for the use of himself and his family, to the prejudice of those to whom he is indebted at the time, even if he suppose he has property enough left to pay them and his intentions are fair. It is a withdrawal of funds to which they have a right to resort for payment, upon a consideration which the law does not here acknowledge as one which is valid against creditors. Smith v. Smith, 11 N. H. 460. A quaere was suggested in that case whether, if the debtor retained property sufficient for the payment of his debts upon which his creditors might levy, the conveyance might not be valid. But however much he may have had left, it is evident that it might be lost or expended, and the creditors receive no benefit from it. It is sufficient in such case that the property to which the existing creditors resort, and which was once liable to pay the debts, has been sold upon a consideration which secures it in effect to the debtor’s use, and that such was the direct operation of the transaction as must have been well known to the parties. The vendee can not complain that the law'requires of him before he relies upon such a contract, to inquire and ascertain that .there aro no creditors to be prejudiced by the transfer.

If such an agreement to maintain the vendor or his family does not form the entire consideration of the sale and transfer, but if the other considerations connected with it are inadequate or insufficient, it is apparent that the same principle must apply and the whole transfer bo void as to creditors. The entire sale being founded on several considerations, one of which was bad and the others inadequate to sustain it, there could be no separation so that any part of the transfer could be held to bo upon a sufficient consideration. Thus far we regard the principles as plain and the result satisfactory.

But the question presented to us by the first part of the ease before us is not yet solved. On the supposition that the good part of the consideration is adequate and sufficient and to the full value of the property, so that if it stood alone the sale would be valid against creditors, is the sale vitiated and the whole avoided, because the parties without any intention to defraud, have connected with it another matter, which if it stood alone, or even if it formed a substantial part of the price without which the sale could not stand, would have been a fraud upon creditors ? This is a case which can very rarely occur, but it is the one presented by the offers of proof by the plaintiff

"We can not say that we have any doubt respecting the true principle which should govern cases of that description, if any exist. "We have certainly had no disposition to disregard the just rights of creditors to a satisfaction from the property of the debtor. But it is not sufficient that the transfer of the property by the debtor has been, upon its face, of a doubtful character, and under such circumstances as to require the creditor to make an examination whether it is valid or not, to inquire what was the consideration for the sale and transfer, and how far that consideration was to the full value of the property conveyed. ’ The principle that if there be two parts of a consideration and one of them be illegal the whole is bad, the consideration being entire, does not apply here. That is a rule by which the validity of the transaction as between the parties may be tested. But the whole transaction may be illegal as between the parties, and creditors have no right to interfere. Clark v. Gibson, 12 N. H. 386 ; Smith v. Bean, 15 N. H. 577.

A sale may be actually fraudulent as to creditor’s for want of sufficient consideration, and yet be made good if full consideration be subsequently paid before creditors interfere. Oriental Bank v. Haskins, 3 Met. 332; Verplank v. Sterry, 12 Johns. 536, 552. So a sale may be fraudulent as to creditors on account of a secret trust accompanying it, but if by a subsequent agreement before the creditors interfere this secret trust is discharged and the sale is otherwise made valid, the fact that the trust once existed will not operate longer to vitiate the sale, the fraud being purged. The principle may be found in Thomas v. Goodwin, 12 Mass. 140, and in Hutchins v. Sprague, 4 N. H. 469; the application of it m the latter case being somewhat doubtful, because there was no sub- ' sequent agreement. These are cases it is true where the transfer is rendered valid against creditors by subsequent transactions. The fraud is purged as it is termed. But they serve to show that the sale is not to be avoided because something has been coupled with it of an illegal character, if in fact it has no operation against creditors.

It was held in Winkley v. Hill, 9 N. H. 31, that a conveyance of land absolutely in fee, with a verbal agreement at the time that the grantor should have a reconveyance on the repayment of the purchase-money, was fraudulent, the grantor being indebted at the time. The agreement furnished evidence tending to show that there was a value beyond the amount of the sale, and a secret trust reserving that value for the benefit of the grantor. In the case itself there was nothing to rebut the presumption. Cases of that class differ somewhat from those where the debtor conveys the land by an absolute deed, but the real transaction is that the grantee is to hold it as security for a debt. Where the conveyance is upon a purchase, as in Winldey v. Mill, it is more nearly what it purports to be. There is a purchase of the fee and a payment, and thus far the deed expresses upon its face what has actually been done. There is no debt existing in favor of the grantee holding the absolute conveyance, upon which he may institute a suit and seize the property of the grantor to the prejudice of other creditors, as there is in eases where an absolute deed is taken instead of a mortgage, apparently withdrawing one portion of the property entirely from the reach of the creditors, at the same time that the grantee retains his debt, and thereby the rightful means of attaching and levying upon other portions of the property of his debtor. But the agreement or condition annexed to purchases of the description of that in Winldey v. Hill, furnishes evidence tending to show that the property is of greater value than the sum paid, and that there is a secret trust to that extent for the benefit of the grantor, the subject matter being held in such a manner that the creditors of the grantor can not reach it at law but by avoiding the conveyance. But we think it expedient to qualify the general terms in which the report of that decision is expressed. If there is a substantial interest reserved in this mode, it is very clear that there is a secret trust, and there are obvious reasons why this should render the conveyance fraudulent as to existing creditors. Towle v. Hoit, 14 N. H. 61. It must not however bo understood that evidence may not be received to show that the grantee paid the full value of the land, present and prospective, and thus to rebut the inference of a secret trust to the prejudice of creditors, because the reservation was of nothing which was of value to them. While we carefully protect the rights of creditors, we must not forget those of purchasers; and to defeat a sale and purchase ^hen fall value is fairly paid, because of a nominal or fanciful reservation, would be holding the rule too rigidly and inflexibly. If it should appear that the reservation has in fact been made merely on account of a desire to repossess himself of the premises, on account of family associations, or a fancy for that particular locality, or any other reason not involving a reservation of something which might be of value to the creditors, the trust would not seem to be of a character to defeat the conveyance.

We are clearly of opinion that the evidence to show a full payment of the value, and thus rebut the inference that the grantor had in fact appropriated and secured his property to his own use, should have been received in the case. If the full value was fairly paid by the plaintiff by the discharge of his own debts and the payment of debts honestly due to others, the creditors have not been defrauded, because in addition to this, and possibly for the purpose of thus securing a large debt due to the plaintiff, he furthermore agreed to support his father, mother, and sister, during their lives. The improbability that such a case exists in fact, does not change the principle. The full value having been paid in considerations that the law adjudges lawful, the creditors can not complain that the vendee has assumed burdens which are not to their prejudice. Slater v. Dudley, 18 Pick. 375.

The other exception to the ruling of the court can not be maintained. Personal property of the plaintiff, not derived through this sale from his father, was so intermingled with that purchased of the father, that the sheriff could not designate and separate it. Having a process against the father and directions to attach the property sold by him, upon the ground that the sale was fraudulent (which on that supposition it was lawful for him to do), he requested the plaintiff to enable him to make the separation, by pointing out the property included in that purchase. This the plaintiff refused to do, and thereby imposed upon the sheriff the necessity of abandoning the service of his precept, or seeking other sources of information, or taking the whole property for the purpose of securing what he had a right to attach. The sheriff could not lawfully abandon his process. It was his duty to attach. The plaintiff' of course had the necessary information, and no reason has been suggested or suggests itself to us, why he should be permitted to require the sheriff' to seek elsewhere the information he could so readily give, and to attach at the peril of being held a trespasser if he took more than ho desired to take. It seems to be a confusion of goods caused by the act of the plaintiff, and within the principle which governs such cases. Kingsbury v. Pond, 3 N. H. 513; Lewis v. Whittemore, 5 do. 364; Barron v. Cobleigh, 11 do. 557. The officer was not a trespasser under such circumstances, if in making his service upon the property he had the right to take, he took without designing so to do other articles to which the plaintiff had a good title. It was the fault of the plaintiff'. This fault however is not to be punished by an entire loss of the goods. It only excuses the officer for taking and holding them until he ascertains the fact. The plaintiff subsequently designated them, and it was the duty of the officer to deliver them. He seems to have entertained the mistaken opinion that the plaintiff' by his refusal to designate in the first instance had lost his right to the goods, and that he therefore had a right to sell them. But this mistake will not make him a trespasser ab initio, any more than the plaintiff’s previous mistake deprived him of his title to the goods. It is an unlawful conversion of goods of which he lawfully obtained possession, for which the plaintiff may have a remedy in trover but not in trespass. The authorities are explicit. Lewis v. Whittemore, 5 N. H. 366; Shumway v. Rutter, 8 Pick. 443; Bond v. Ward, 7 Mass. 123. Verdict set aside.