42 N.H. 510 | N.H. | 1861
The main question in this case is whether the conveyance by Charles Coolidge to the plaintiff was fraudulent and void in respect to subsequent creditors, and bearing upon this question are numerous decisions in this state, arising under the statute of 18 Eliz., ch. 5, in some of which, and especially in Coburn v. Pickering, the law has been discussed with signal ability. In order to make a correct application of the principles established to the case before us, it may be useful to review briefly these decisions.
In the case of Coburn v. Pickering, 3 N. H. 415, it was decided, upon great consideration, that any trust attending a sale of chattels, either express or implied, is a fraud with respect to creditors, and that if the vendor retain possession after an absolute sale, it is always prima fade, and if unexplained, conclusive evidence of a secret trust. In this case, an innkeeper, who was insolvent, sold his goods and household furniture to Delano, his brother-in-law, in part payment of a debt which he owed him, and after the sale, and before removal of the goods, it was agreed that they should remain and be used in the tavern ; but to secure them against attachment by other creditors of the vendor, the brother-in-law leased them to the plaintiff, who was the vendor’s hired man, for six mouths, the object being merely to give to the vendor and his family the use of the goods. In examining the question Richardson, O. J., assumes that the consideration was adequate, and that the only question was whether the sale was bond fide or not, in respect to creditors. At the trial, the court being of the opinion that the lease, to Coburn (the plaintiff) must be regarded as the same in fact as a lease to the vendor, and as part of the contract of sale, directed a verdict for the defendant; and this ruling, on full consideration, was sustained. The point directly established was, that the possession by the vendor, being inconsistent with an absolute sale, is, if unexplained, con-
In Smith v. Lowell, 6 N. H. 67, a debtor in embarrassed circumstances made an absolute conveyance of his real estate, and continued in possession for a long time. The court having ruled that a good consideration must be shown or the possession explained, the tenant offered evidence tending to show that the grantor was indebted to the grantee at the time of the conveyance, and requested the court to charge the jury, that if the conveyance was made in good faith to pay or to secure by way of pledge this indebtedness, it was valid. But the court declined so to instruct the jury, although the demandant became a creditor long after the conveyance by the debtor, but instructed them that as the conveyance was absolute on its face, they must be satisfied that it was made in payment and satisfaction of the debt. These instructions were sustained upon full consideration; the court (.Richardson, C. J.) holding that a secret understanding that on payment of the debt the land should be reeonveyed, would be a secret trust that would render the conveyance void, and it is expressly held that it would be void, as against those who became creditors after the conveyance. In deciding this point the judge places no stress upon the fact that the grantee was insolvent, but holds that the law does not permit debts to be secured in this manner, and urges that if courts should give the least countenance to it there would be no end to the embarrass
In Paul v. Crooker, 8 N. H. 288, the agreement that the vendor might retain possession of the goods so long as the vendee should see fit, paying interest on the price for their use, was held to be a secret trust that would avoid the sale as to subsequent creditors. Richardson, C. J., says that such a conveyance is quite as likely to defraud subsequent as existing creditors ; and this, we think, is obviously true, inasmuch as the apparent ownership which a debtor is thus enabled to assume, would be quite likely to give him a credit to which he was not entitled; and Richardson, O. J., says (page 290), that “it has been settled in this state that such a conveyance is void with respect to subsequent creditors,” and he cites Smith v. Lowell.
In Winkley v. Hill, 9 N. H. 31, an absolute conveyance by a person in debt, with an understanding that on repayment of the price the land should be reconveyed, is fraudulent and void as to creditors. Richardson, C. J., says: “ As such trusts are in their nature calculated to delay, hinder and defraud creditors, the law, without stopping to learn the real motives and intentions of the parties, denounces all such trusts as frauds that render void the .contracts under which they arise. Nor are the grounds and reasons, on which such trusts are thus denounced, at all unsatisfactory. It must be extremely rare that they can be necessary to answer any honest purpose. What fair and proper motives can any man who is in debt have to adopt a mode of conveyance that carries falsehood on the face of it, while truth lies hid and concealed beneath?” And he says, further, that “it is because such trusts are calculated to deceive and embarrass creditors, because they are not things to which honest debtors can have
In Tefft v. Walker, 10 N. H. 150, the obligation to reconvey was by bond executed at the same time, and no distinction was recognized between existing and future creditors.
In Smith v. Smith, 11 N. H. 459, it was held that a conveyance of a farm for half its value in money, and a bond for the support of the grantor and his wife during life, for the rest, was fraudulent and void as to existing creditors. Parker, C. J., says it comes very much within the reason and the principles that govern cases where there is a secret trust, though it is not technically a reservation or secret trust, but an attempt to secure to the grantor a support during life out of his property, to the prejudice of his creditors.
In McConihe v. Sawyer, 12 N. H. 403, it is held that subsequent creditors may avoid a conveyance for fraud.
In Page v. Carpenter, 10 N. H. 77, the doctrine of Coburn v. Pickering is fully recognized and sustained. Here the possession of goods was retained by the vendors after an absolute sale; and Parker, C. J., observes that this gave them an opportunity to treat the property as their own after the sale, and thereby obtain a false credit.
In Towle v. Hoit, 14 N. H. 61, it is held that a deed of land, with a secret trust, reserving a substantial interest to the grantor, is fraudulent as to creditors, and void.
In Ladd v. Wiggin, 35 N. H. 421-426, it is held that a conveyance of land, absolute on its face, with an understanding that it should be reconveyed, on payment of the sum for which it was conveyed, with interest, is void as to subsequent creditors.
By the law of New-Hampshire, as shown by these cases, all conveyances, with a secret trust reserved to the vendor,
In short, any secret trust whatever, either express or implied, by which the propei’ty is to be held in any way for the benefit of the vendor, is inconsistent with an absolute sale, and makes it, as matter of law, fraudulent and void as to creditors. And this is totally independent of any question concerning the adequacy of the consideration, but it stands upon the ground that such trusts are conclusive proof of the want of good faith in the conveyance ; the statute of 18 Eliz., ch. 5, which is adopted in this state, and under which these questions arise, requiring that conveyances of both lands and goods, to be valid against creditors, must be upon good consideration, and, also, bond jide.
The ground, then, upon which such conveyances are, as matter of law, denounced as fraudulent, is that they are made to delay, hinder and defraud creditors; and that, on establishing such trust, the fraudulent intent is conclusively presumed, and the parties who resort to it shall not be heard to deny such intent. Such conveyances, then, must be regarded as fraudulent within the provisions of the statute of 13 Eliz., and, therefore, void as to creditors.
"What, then, is the character of the conveyance in question, and the nature of Charles Coolidge’s interest in the Chester farm, with respect to his creditors.
Under the laws of New-Hampshire, such a conveyance, assuming the $500 to be a part only of the consideration, would be, with respect to creditors, fraudulent and void, inasmuch as it provides for holding the property for the use and benefit of the grantor. On this point the case of Smith v. Smith, 11 N. H. 459, is decisive, and it comes within the principles established in Coburn v. Pickering, 3 N. H. 411. It is true that part of the consideration is
In Slater v. Dudley, 18 Pick. 373, a debtor, for the consideration of $1,000, as expressed in the deed, conveyed a tract of land to his son, and the deed was on condition that the son should maintain his father and mother. The court held that it was prima fade fraudulent, but might be explained, by showing that the value of the estate was paid, and the agreement for support was, therefore, gratuitous.
The statute of 13 Eliz., ch. 5, is in force in Massachusetts, as it is in New-Hampshire, and under it, it is
In Taylor v. Jones, 2 Atk. 600, a bill was brought by creditors, to be paid their debts out of stock vested by the husband in trustees, for the benefit of himself for life, of his wife for life, and afterward for the benefit of children. Lord Hardwicke decreed the deed of trust to be void as against subsequent as well as existing creditors. In giving the opinion, Lord Hardwicke said: “ Here is a trust left to the husband, in the first place, under this deed, and his continuing in possession is fraudulent as to the creditors (the plaintiffs); and it is very probable that
In Fitzer v. Fitzer, 2 Atk. 511, the deed was set aside because it was made for the benefit of the husband; and the court say “it is certain that every conveyance of the husband that is voluntary, and for his own benefit, is fraudulent;” and, further, “we consider it as an assignment which the husband himself may make use of to fence against creditors, and, consequently, it is fraudulent.” In Peacock v. Monk, 1 Ves. 127, a deed containing a power of revocation was set aside ; see, also, Walker v. Burrows, 1 Atk. 93; Townsend v. Windham, 2 Ves. 1; Sexton v. Wheaton, 8 Wheat. 229; Howe v. Ward, 4 Greenl. 195, 204; Hinde’s Lessee v. Longworth, 11 Wheat. 199.
It being seen, then, that the conveyance of the Lynn property was fraudulent and void as to creditors, the next question is, whether the title to the Chester farm stands upon any different ground. It "appears that, under the power conferred by the indentures upon the plaintiff he sold the Lynn property, and with the avails of it purchased the Chester farm, which was conveyed to him by deed of December 13, 1845, to hold as trustee, pursuant to the indentures of September 1, 1841, which are referred to as recorded in the Essex registry, and stating that it was to be recorded in the registry of the county of Rockingham ; and stating also that the estate in Lynn had been sold, and the proceeds applied to the purchase of this property. By this arrangement the Chester farm, being paid for with the proceeds of property which, as respects the creditors of Charles Coolidge, must be regarded as belonging to him, was substituted for the Lynn property, and, for aught we can see, it was held in the same way. In fact, the Chester farm was paid for out of a fund, which, as respects the creditors of Charles Coolidge,
So far as respects the essential character of the trust, as shown in the papers, the agreement of April 9, 1846, makes no material change, although it enlarges and defines with more distinctness the extent of the trustee’s control over the farm and its proceeds, and recites the object of the indentures of September 1, 1841, to be to settle the property, and the proceeds thereof, upon the wife and children of said Charles. Yet it is distinctly provided that the said Charles Coolidge may occupy the farm, for the benefit and use of himself and family, and that the products of the farm and stock shall belong to the plaintiff, as trustee, but subject to the use and disposition of said Charles, for the support of his family, with the provision that the plaintiff may, at any time, take possession of all the property, to secure the same for the purposes set forth in said indentures; and especially giving him the right to take possession, if the said Charles shall attempt to apply the property to any use or purpose different from what is expressed in the agreement, or if the same shall be attached on any writ or execution against the said Charles. Upon the whole, it is quite apparent that the object of the conveyance and the subsequent agreement was to place the property of the debtor beyond the reach of his creditors, and still to give him the substantial use and income of it.
There is certainly nothing of the character of an actual purchase by the plaintiff, for he neither paid or professed to pay the full value of the property; but it was substantially a conveyance by a person in debt, without adequate consideration, to hold the property in trust for the grantor and his family. Such a conveyance is, we think, neither on good consideration, nor bond fide. Had it been of the character of a provision for a wife or child, and so for the
In this case the effort to give the arrangement the character of a provision for the wife and children is quite apparent ; but that is nevertheless clearly subordinate to the purpose of reserving the use to the debtor himself. The arrangement, both under the first and second indentures, very clearly contemplates that the said Charles Coolidge was to remain in possession of the property and to cultivate and carry it on, dispose of the products, and apply the avails to the support of his family. If, in doing so, he should anticipate those products, and buy necessaries for himself and family upon credit, and in due time pay therefor out of such products, it would hardly be contended that this would be such a misapplication of the products, even under the second indentures, as would call for the interference of the trustee. Should he, however, do so, and attempt to wrest from a creditor the fund .devoted to the support of the said Charles and Ms family, and upon the strength of which such creditor had trusted Mm for necessaries, it would be palpably unjust and dishonest. And yet such power is attempted to be put into the hands of this plaintiff by the second indenture, and for aught that appears may be that which is attempted to be exercised in this case. Such an arrangement is well
As to existing creditors, there can be no doubt that such a conveyance is void. This is distinctly settled in Smith v. Smith, 11 N. H., before cited, as well as in numerous other cases. Nor would it be otherwise, if, under the circumstances of this case, the conveyance had been for the consideration of love and affection, and as a provision for a wife or child. So, too, such a tenure as is attempted to be created here, by which it is sought to give a map the entire use of property during his life, and at the same time to exclude his creditors from all access to it, is contrary to sound policy and to the well established doctrines of the law. Even in the case of a grant or devise of property to be held in trust for another, to pay him the rents and profits for his support and maintenance, without being subject at any time to his debts, it is held that his creditors may nevertheless reach it, and upon his bankruptcy it will, in England, pass to his assignee. And in no way can such a restriction be made effectual but to provide that in case the cestui qu'e trust becomes insolvent, his interest shall cease and go to another. Eor so long as he is entitled to receive such rents and profits, they are liable, in case of his insolvency, to be taken by his creditors, that being an incident that no terms of restriction can take away. 2 Story’s Eq. 974, a, and cases cited, where it is said by Judge Story that the policy of the law does not permit property to be so limited that it shall continue in the enjoyment of the bankrupt, notwithstanding the bankruptcy. So is Brandon v. Robinson, 18 Ves. 429, and cases cited; also Hallett v. Thompson, 5 Paige Ch. 583,
Such being the law in respect to restrictions attempted to be imposed in the cases of gifts or conveyances of property, in which the cestui que trust had no previous interest, and for which he paid no consideration whatever, it would be difficult to find any ground to sustain such a restriction, where the cestui que trust himself undertakes to impose it upon his own property, or that for the conveyance of which he pays the consideration. Such an attempt might well be regarded as in fraud of the law, and as a conclusive proof of a fraudulent intent to defeat creditors.
In the light of these principles, the debtor, Charles Coolidge, must be regarded as the substantial owner of the farm and its profits, with respect to his creditors.
It is true, it is contended that provision was made for the payment of Charles Coolidge’s debts, and therefore he is not to be regarded as indebted, at the time of the conveyance, in any such sense as to affect it. Had this been a conveyance in consideration of love and affection, and as a provision for a wife or child, the suggestion would deserve serious consideration. But even in that case the court would hesitate to hold that the payment of the $500
In regard to voluntary settlements as against creditors, and to what extent a party must be indebted at the time, to defeat them, there is much confusion in the adjudged cases. The doctrine of Chancellor Kent, in Reade v. Livingston, 3 Johns. Ch. 481, is that such settlements are presumed to be fraudulent as to existing debts, without any regard to their amount, or the extent of the property settled, or the circumstances of the party, and that no circumstance wall permit those debts to be affected by the settlement, or repel the legal presumption of fraud. These views are sustained by numerous authorities cited in that opinion, and also by many others cited in 2 Kent’s Com. 441, 443, and notes.
On the other hand, numerous cases hold that to justify such a presumption it must appear that the party, in the language of the different cases, was “ insolvent,” ■“ embarrassed,” or “largely indebted.” The cases bearing in this direction are collected in Story’s Eq., secs. 352-365, and notes, and in 2 Kent’s Com. 441-443; Lush v. Wilkinson, 5 Ves. (Sumner’s Ed.) 384, and notes. And the tendeucy seems to be to hold this is a question for the jury to determine whether the indebtedness was of such a character and extent as to afford a reasonable inference of fraud.
It is not, however, necessary to settle this question ; because we do not regard this as a provision for a wife or child, but as a conveyance in trust for the use, substantially, of the grantor during his life, which stands upon a footing entirely different from a settlement in favor of a wife and children. In the latter case the consideration is
Upon the whole, we are of the opinion that the deeds disclose upon their face a trust to the debtor, Charles Coolidge, from which arises an inference of fraud, which the court is bound to pronounce. The trust, to be sure, is express, and appears in the instrument of conveyance, but is none the less effective on that account to defeat it. Such is the doctrine of many of the cases before cited; as Coburn v. Pickering; Harris v. Sumner, 2 Pick. 129; Slater v. Dudley, 18 Pick. 373; Mackie v. Cairns, 5 Cow. 547; Hyslop v. Clarke, 14 Johns. 458; 3 Co. 80, note a. In these cases, except Coburn v. Pickering, the trust appeared on the face of the instrument of conveyance, and they were held on that account to be fraudulent and void. So in Sturtevant v. Ballard, 9 Johns. 336. So in Twyne’s Case, 3 Co. 81, where it is said every trust is either express or implied ; — an express trust is where, in the gift or upon the gift, the trust byword or writing is expressed.
As has been before remarked, this conveyance, with respect to existing creditors, was clearly void, but it is contended that, as to subsequent creditors, it is valid. If, however, the actual purpose to defraud existing creditors be found, it will no where be denied that the conveyance would be void even as to future creditors.
The question, then, is whether such fraudulent purpose is found, or is to be conclusively presumed from the admitted facts. In the cases where fraud is conclusively presumed, as against existing creditors — as where a conveyance is made by a person in embarrassed circumstances,
Some confusion exists in the books as tó the effect of what is called fraud in law and fraud in fact upon the rights of future creditors, and some of it may have arisen from the fact that at common law, and before the statute of 13 Eliz., ch. 5, it was at least doubtful whether an after creditor could avoid a fraudulent conveyance in any way, or upon any ground. In 2 Bac. Abr., Tit. Fraud, C., it is distinctly laid down that he could not; and so in Fonbl. Eq., ch. 4, sec. 13, note a, citing Twyne’s Case, 3 Co. 83, a; Upton v. Bassett, Cro. El. 444; Dyer 294, 295. But under this statute, which Lord Coke (in Co. Litt. 290, b) calls “a right profitable statute,” there is now no distinction, in cases of actual fraud, between existing and subsequent creditors; although, so late as in 1824 in Massachusetts, the point was left undecided in Damon v. Bryant, 2 Pick. 411.
Now, however, the doctrine is well established, and applies even in cases of conveyances for love and affection,
In Twyne’s Case, it is laid down that fraud is “ always appareled and clad with a trust, and a trust is the cover of fraud.” So it was resolved, in that case, that “notwithstanding here was a true debt due to Twyne, and a good consideration of the gift, yet it was not within the proviso of the act of 13 Eliz., by which it was provided that the said act shall not extend to any estate or interest in lands, &c., goods and chattels, made on a good consideration and bond fide; for although it is on a true and good consideration, yet it is not bond fide, for no gift shall be deemed to be bond fide within the said proviso which is accompanied with any trust.” So it is said, again, “ every deed made on a trust is out of this proviso.”
If, then, the trust is made to appear, the fraud is a judgment of law, and must be pronounced; and there may well be a distinction between such cases and conveyances in consideration of blood, where there is no trust
It appears, by the case, that the defendant, being a judgment creditor of Charles Coolidge, on the 18th day of February, 1857, extended his execution upon a part of the Chester farm, and set it off; and that the com in question was raised by said Charles Coolidge upon the land so set off, in the following season, and when ready to harvest the defendant gathered it, and converted it to his own use. It does not distinctly appear that the said Charles Coolidge remained in possession of the land until the corn was grown; but, assuming it to be so, the question arises whether the tenant has a right to the crop as against the creditor.
By the Revised Statutes (eh. 196, secs. 12, 13), all the debtor’s interest passes by the levy to the creditor, subject only to redemption by paying the sum at which it was appraised, with interest, within one year from the return day of the execution.
The law of June, 1857 (ch. 1964), makes further provision for such redemption, and authorizes a deduction
If, then, the creditor, having obtained the legal title and actual seizin of the land, does not dispossess the debtor, but permits him to remain and cultivate the land; can he rightfully enter, and before severance by the tenant, gather and appropriate to his own use the annual crops raised by such debtor ? As the law now stands, the situation of such creditor, so far as this question is concerned, is much like that of mortgagors of real estate. Both have the legal title and the right of immediate possession. In both, the tenant has a right to redeem, by the payment of the debt and interest; and in case of such redemption, both the mortgagee and creditor must account for the rents and profits received by them. In the case of a mortgagor, his possession, so long as the mortgagee does not elect to enter, is regarded as permissive, and bearing, in many respects, a close analogy to a strict tenancy at will (Ang. on Lim. 489); and, therefore, he is not liable to the moi’tgagee for the rents and profits while in possession. Chellis v. Stearns, 22 N. H. 315; Tripe v. Marcy, 39 N. H. 439; Cavis v. McClary, 5 N. H. 525; Smith v. Moore, 11 N. H. 62; Fisher v. Giles, 5 Bing. 421. So it is held that while the mortgagor is permitted to remain in possession, and the mortgagee omits to enter, the mortgagor is, in contemplation of law, taking the rents and profits to his own account. Wilder v. Houghton, 1 Pick. 89, and cases cited; Mayo v. Fletcher, 14 Pick. 525. In this case it is held that the assignee of the mortgagor is not liable in trespass for mesne profits accruing between the commencement of the action to foreclose and the time of
The estates by statute merchant and statute staple, and also by recognizance in the nature of a statute staple, are all securities for debts acknowledged to be due before a magistrate, mayor of the staple, chief justice, &e., whereby the goods and lands of a person may be seized, and the lands delivered to and held by the creditor till he gets his pay out of the profits. 2 Bl. Com. 160.
So in Roshway v. Bradley, 2 Conn. 1-5, it is held that
In the case, then, of securities upon land, as by mortgage, statutes merchant and staple and recognizance, the persons holding them may enter into the lands and take the growing crops. But they must account for them upon the debts so secured, and, therefore, the labor of the debtor in sowing the crops is not lost to him.
As the law now stands, aúd since June, 1857, it is the same in respect to lands set off on execution, which is regarded as put in pledge for the security of the debt, to constrain the debtor to fulfill his legal and moral obligation'to pay in money, and in default of this, to give the creditor satisfaction in land. So it is expressly regarded in Fletcher v. State Capital Bank, 37 N. H. 404, and cases cited; and we can see no solid distinction between this case and the security obtained by statute merchant or staple or recognizance, or by way of mortgage. So mortgages and judgment-liens are held the same in this respect. Bittenger v. Baker, 29 Penn. 60-69, and cases cited.
¥e are, therefore, brought to the conclusion that the extent upon part of the Chester farm, as the property of Charles Coolidge, is valid as against this plaintiff"; and that upon entry by the defendant, under this extent, he would be entitled to the growing crops, and, consequently, that this action can not be maintained. In reaching this
Whether it would make any difference in the result, if the defendant entered merely to take the crops, and leaving Charles Coolidge still in possession, we have not considered.
There must, therefore, be
Judgment for the defendant.