Austin v. Barrows

41 Conn. 287 | Conn. | 1874

Pabdee, J.

This is an action on the case for fraud; the defendants demurred to the declaration, and the Superior Court sustained the demurrer.

The material allegations in the declaration are — that Barrows, one of the defendants, was justly indebted to the plaintiffs; that he had property liable to attachment sufficient to pay all his debts; that he conspired with the other defendants to cheat and defraud the plaintiffs and his other creditors; that with this fraudulent intent the defendants agreed that Barrows should make a colorable and collusive sale to another of the defendants of property worth more than $10,000 for less than $6,000 ; that the defendants should by false and fraudulent statements and representations as to the financial condition of Barrows, induce the plaintiffs and his other creditors to refrain from taking any legal measures to collect their claims and to acquiesce in the fraudulent transfer of his property; that the plaintiffs relied on the truth of the statements and representations of the defendants and were deceived thereby and neglected to take any legal steps to enforce their claim against Barrows; that the defendants pursuant to this fraudulent agreement and conspiracy and with this fraudulent intent secretly and fraudulently conveyed away and converted to their own use all the property of Barrows, so that the plaintiffs were wholly unable to collect by legal process or otherwise any portion of their daim against Barrows; that when the fraudulent conspiracy was entered into by the defendants Barrows was the owner and possessor of property sufficient to pay all his creditors in full, and that the plaintiffs could and would have collected by suit or otherwise their claim against him but for the conspiracy and the fraudulent acts and representations done and made in pursuance of it; and that the defendants so completely consummated their. fraud that the plaintiffs did not discover it until the property had been scattered, secreted, and sold to innocent purchasers and the proceeds spent, so that the same could not be found" or secured by attachment or otherwise, or by a trustee in insolvency or bankruptcy had one been appointed.

Both principle and precedent compel us to 'Say that these allegations are unequal to the support of this action; and while it is true that courts uphold the general principle that wherever there is fraud or deceit by the one party, and injury to the other, there an action will lie, that principle must be understood with such limitations and qualifications as other principles of law, equally sound, impose upon it. Tire law does not undertake to redress all moral wrongs; and there may be also legal torts bringing great damage to individuals, but damage so remote, contingent or indefinite as to furnish no good ground of action.

To maintain an action for the deceit and fraud of another, it is indispensable that the plaintiff should show not only that he has sustained damage and that the defendant has committed a tort, but that the damage is the clear and necessary consequence of the tort, and can be clearly defined and ascertained. Lamb v. Stone, 11 Pick., 527.

So far as the declaration shows, at the time when the acts were performed and the representations were made, of which the plaintiffs complain, they had not obtained, or taken any steps to obtain, any lien upon the debtor’s property for the security of their debt by contract or negotiation with him, nor had they acquired any claim upon, or interest in, or right to, any part of it by operation of law. They had taken no steps and formed no plan to procure a writ of attachment whereby to obtain security thereon; and no person had moved in the matter of a division of the property among the creditors, by either bankrupt or insolvent laws. They there fore lost no lien of any kind in consequence of the acts and representations of the defendants.

The point of their complaint is this:—they now think that if no representations had been made to them they would have obtained a lien by attachment. They cannbt make legal proof of this., and we cannot say that such an intent would have ripened into action; the property might have been destroyed before they could place a lien upon it; the debtor might have sold it to innocent purchasers and disposed of the proceeds in many lawful ways; their attachment might' have been anticipated by others. The law does not undertake to grasp or measure such an uncertainty as the value of a mere possibility that a creditor may endeavor, at some future time, to obtain security from his debtor.

Again, what rule of damages shall the court apply to this action ?

In this form of a special action on the case the plaintiffs do not seek the property fraudulently conveyed, or its proceeds, but a judgment against one or all of the defendants for the damage they have suffered by reason of the fraudulent conveyance. If one creditor may maintain this action, then may every other; each one is entitled to compensation for the injuries suffered from the same cause, and may recover it for himself. Shall the fraudulent purchaser .pay all the debts, or a sum as damages equal to all the debts of the fraudulent debtor ? The effort to do justice, in tins way, might result in great injustice, for the value of the property purchased may be wholly unequal to the amount of those debts.

If the value of the property transferred be not sufficient for all, how shall it be divided among contending creditors seeking payment or damages simultaneously but by different methods? some, perhaps, by actions for fraud; some by trustee process; some, by attaching the property in the hands of the fraudulent vendee. Shall the first in time take his whole debt ? or shall one kind of process take precedence of another ? Can the plaintiffs resort to more than one of these remedies at the same time ? and would the judgment in one be a bar to the other.

As a rule, whenever in actions in form like the one before us individual creditors have been permitted to pursue a debtor alone, or in connection with those combining and conspiring with him, not for the recovery of the specific property sold, or the proceeds thex-eof, but for damages for fraudulently assigning, conveying away and concealing his px’operty for the purpose of placing it beyond the reach of legal process, the actioxx was authorized by statxxte and did not proceed upon common law principles.

In Cowles v. Day, 30 Conn., 410, which was an action upon our statute, by a creditor against his debtor, for the fraudulent removal axxd concealmexxt of property, so that it could not be found to be attached, the court said, “ It is of course axx action which could not have been sustained at common law.” And the Supx’exne Court of the United States, in Adler v. Fenton, 24 Howard, 413, says:—“ In the absexxce of special legislation we may safely affirxn that a gexxeral creditor canxxot bring an action oix the case against his debtor or agaixxst those combining and colluding with him to make dispositions of his property, although the object of those dispositions be to hinder, delay and defraud creditors.” In Smith v. Blake, 1 Day, 258, this court said that an action on the case will not lie ixx favor of the creditor of a pex’son who is insolvent, agaiixst a third person, charging him with having fraudulently taken axxd claimed the property of the insolvent, as his own, to defraud the creditors. In Lamb v. Stone, 11 Pick., 527, tlxc coux-t declared that an action oix the case for the fraud of the defexxdant in purchasing personal property of> the plaintiff’s debtor and aiding the debtor to abscond in order to prevent the plaintiff from enforcing payment of his debt by attaching the property or arresting the body of the debtor, caxxnot be sustained. In Wellington v. Small, 3 Cushing, 145, the court held that an action on the case brought against two defendants in which it was alleged that one of them was ixxdebted to the plaintiff, that the two confederated and conspired together to px’event the plaintiff from obtaining security for or payment of his debt, that in pursuance of such pux-pose and intention and in order to enable the plaintiff’s debtor to take the poor debtor’s oath, the defendants caused the property of the latter to be removed from his own custody and possession into the possession of the other defendant, by whom the same or the proceeds thereof were kept secreted and concealed from attachment, and that the plaintiff sued out a writ against his debtor to recover his debt and caused his body to be arrested thereon, and that the defendant in that suit took the poor debtor’s oath and was discharged from arrest, and the debt remained wholly unpaid, could not be sustained, even with the additional averments of a conspiracy between the plaintiff’s debtor and the other defendant to delay and defeat the plaintiff and other creditors, of the insolvency of the debtor at the commencement of the action, and of concealment of the debtor’s property by the other defendant; citing the cases above referred to, of Smith v. Blake and Lamb v. Stone. In Moody v. Burton, 27 Maine, 427, the court held that where a fraudulent conveyance of property is made for the 'purpose and with the intent to defraud creditors, an action on the case to recover damages for that cause, by one of those creditors against the parties to such fraudulent conveyance, cannot be sustained; and that the decision would have been the same if the declaration had contained an averment that an attachment of the property conveyed was prevented by the fraudulent representations of tlie defendants.

The allegations as to the fraudulent acts of the defendants, —acts performed in combination with a variety of false and fraudulent representations—acts and representations which the defendants combined and conspired tó do and to make, have each and all passed under judicial scrutiny and have been found insufficient to support this form of action. The allegation as to conspiracy brings no strength to the declaration, for it shows no additional cause of action. An act which, done by one alone, is no cause of action, is not rendered actionable by being done in pursuance of a conspiracy. The gist of this action is not the conspiracy, but the damage suffered by the plaintiffs. The allegation shows no additional right of the plaintiffs to tlie debtor’s property and does not diminish the remoteness and uncertainty of tlieir damage.

This is an action on the case at common law, brought by the plaintiffs against their debtor and other defendants for conspiring to conceal, remove, assign and convey away the debtor’s property with intent to prevent the same from being taken by legal process; and they say that if this form of action cannot be maintained against them all, yet there is a statute which authorizes a suit against the defendant debtor alone for such acts, of which the court was bound to take judicial notice, and upon it, under these pleadings, render a judgment against him. It was the privilege of the plaintiffs to select that form of action which in their opinion is best adapted to their case. If the action is misconceived it is not within the power of the court to substitute a different one founded upon the statute referred to, simply because the court is aware of the existence thereof. It is not the duty of the court to take judicial notice of statutes for any such purpose.

There is no error in the judgment of the Superior Court.

In this opinion the other judges concurred.