49 Conn. 282 | Conn. | 1881
The plaintiff brought a suit by writ of attachment against the A. & W. Sprague Manufacturing Company, and on the 18th of October, 1879, caused the
The statute declares that such judgment, from the time of filing such certificate, shall constitute a lien upon the real estate described in the certificate, and that such lien may be foreclosed or redeemed in the same manner as mortgages upon the same estate.
The present suit is brought to foreclose the lien thus acquired, if a lien was thus acquired upon the lands described in the certificate filed, and also to set aside two deeds of the same property—one executed by the said A. & W. Sprague Manufacturing Co., Wm. Sprague, Amasa Sprague, Mary Sprague, Fanny Sprague, and A. & W. Sprague, to the defendant Chaffee, on the first day of November, 1873, and recorded December 2,1873; the other executed- by the said A. & W. Sprague Manufacturing Co. to said Chaffee, on the 6th day of April, 1874, and recorded the same day—on the alleged ground that both deeds are, as against the plaintiff, fraudulent and void. The plaintiff also demands possession of the premises sought to be foreclosed, and for other specific relief. The defendants severally demur to the plaintiff’s complaint, and to the relief sought, and assign several causes of demurrer, one of which is that the complaint is multifarious.
The first question to be considered, therefore, is, whether the complaint is bad for multifariousness. The authorities bearing upon this question are very numerous, but there is deducible from them all no positive, inflexible rule as to what in the sense of courts of equity constitutes multifa
These definitions are borrowed from the opinion of Lord ’ Cottenham in the case of Campbell v. Mackay, 1 Mylne & Craig, 617. That was a case where there were two settlements vesting different funds in two sets of trustees, and a will bequeathing other moneys to the trustees of the two settlements. The trusts, both of the will and the two settlements, were for the benefit of the wife and children of the settler, who was also the testator. A bill filed by the wife and children, after the husband’s death, against all the trustees, for the administration of the property comprised in the two settlements and the will, was demurred to on the ground of multifariousness. It was argued in support of the demurrer, that with one of the settlements two of the defendants had no concern whatever, and that the same might be said of two other defendants with respect to the other settlement, while under the will three of the defendants were executors and trustees, and another del'ondant was an absolute stranger;
“ The first observation that occurs is that, although the ' defendants are not all trustees of the same deeds, the suit seeks some relief against all of them, and there is a common interest in all the plaintiffs under all the instruments. “The proposition contended for on behalf of the demurring parties is that, as a general rule (and the rule is supposed to be supported by the dicta of Sir John Leach, in Salvidge v. Hyde, 5 Madd., 138), it never can be permitted that distinct matters should be united in the same record. The propósi- ' tion, of course, if carried to its full extent, would go to prevent the uniting several instruments in one bill, although the same parties were liable in respect to each, and the same parties were interested in the property which was the subject of each. So that if, for instance, a father executed three deeds, all vesting property in the same trustees, and upon similar trusts for the benefit of his children, although 'the instruments and the parties beneficially interested under all of them were the same, it would be necessary to have as many suits as there were instruments. That is a proposition to which I do not assent. It vrould indeed be extremely mischievous if such a rule were established in point of law; no possible advantage could be gained by it; and it would lead to a multiplication of suits in cases where it could answer no purpose to have the subject-matter of the contest split up into a variety of separate bills. To lay down any rule applicable universally, or to say what constitutes multifariousness as an abstract proposition, is upon the authorities utterly impossible. The cases upon the subject are extremely various; and the court in deciding them seems to*295 have considered what was convenient in particular circumstances, rather than to have attempted to lay down any absolute rule.
' “The language of Sir Johh Leach,in Salvidge v. Hyde, is of course to be understood with reference to the particular case before him, and, considered in that point of view, it was perfectly correct, although, stated as a general proposition, it would run counter to a numerous class of cases. The only way of reconciling the authorities upon the subject is by adverting to the fact that, although the books speak generally of demurrers for multifariousness, yet in truth such demurrers may be divided into two distinct kinds. Frequently the objection raised, though termed multifariousness, is in fact more properly misjoinder; that is to say, the cases or claims united in the bill are of so different a character that the court will not permit them to be litigated in one record. It may be that the plaintiffs and defendants are parties to the whole of the transactions which form the subject of the suit, and nevertheless the transactions may be so dissimilar that the court will not allow them to be joined together, but will require distinct records. But what is more familiarly understood by the term multifariousness, as applied to a bill, is where a party is able to say he is brought as a defendant upon a record with a large portion of which, and of the case made by which, he has no connection whatever.
“The form of demurrers for multifariousness strongly illustrates this distinction, at least as it used to be understood; for the old form of the demurrer upon the last-mentioned ground went on to state the evil of uniting distinct matters in one record, whereby parties were put to great and useless expense, an objection which has no application in a case of misjoinder. * * * What would be required in order to support the defendants’ proposition would be some case in which, there being a common interest in the plaintiffs, and the defendants representing and being interested in all the different questions raised on the record, and the suit having a common object, a demurrer for multifariousness had been successful. No case has been produced*296 to show that the court will not permit such a suit to be instituted. But, in the course of the argument, cases were referred to which prove, when examined, that the court has not gone that length, and that it has always exercised a discretion in determining whether the subject matters of the suit are properly joined or not. It is not very easy a priori to say exactly what is, or ought to be, the line regulating the course of pleading upon this point. All that can be done is, in each particular case as it arises, to consider whethér it comes nearer to one class of decisions or the other.”
In the case of The Attorney General v. Cradock, 3 Mylne & Craig, 85, an information was filed against the trustees of certain charities and against a person who, in concert with one of the trustees, had fraudulently effected the exchange of a farm, in which he and the trustee were jointly interested, for a portion of the charity lands; praying a general account of the charity estates, an apportionment of the rents among the different charitable objects, and a scheme, and praying also that the exelrange might be declared void, and that a new trustee might be appointed in the place of the trustee who had so acted. The defendant, who had colluded with one of the trustees in the exchange referred to, demurred to the information for multifariousness, and the demurrer was sustained by the Vice-Chancellor; but, on appeal to the Chancellor, Lord Cottenham, it was overruled. In giving his opinion in this case, the Lord-Chancellor said “ that the object of the rule against multifariousness was to protect a defendant from unnecessary expense; but it would be a great perversion of that rule if it were to impose upon the plaintiff and all the other defendants the expense of two suits instead of one.” He then observed “ that the object . of the suit was to establish that the defendant Cradock had, by means of the transaction stated in the information, become a trustee of a part of the charity estate. Suppose he had been an actual instead of a constructive trustee, and the object was to have accounts taken and an administration made of the whole charity property, could he object on that
In the case of Knye v. Moore, 1 Sim. & Stu., 61, a mother, who claimed an annuity for herself, joined her children with her as co-plaintiffs in a bill, the object of which was to establish two distinct claims, arising under separate instruments, the mother claiming an annuity under one, and the mother and children claiming the benefit of a settlement under the otlier; and that was held not to be multifarious.
In Kensington v. White, 3 Price, 164, a bill was filed by seventy-two underwriters to restrain several actions on different policies effected upon different ships. The defendants, indeed, had a common interest in all, because they were the owners of the ships and plaintiffs in all the actions; but there were seventy-two individuals, all not only liable to separate actions, but actually defendants in separate actions, united together against the parties who were plaintiffs in all the actions, for the purpose of obtaining, by one bill, a discovery in aid of the defence against all the actions; and that was held in the Court of Exchequer not to be multifarious.
These cases are sufficient to show how little disposed the
Among them may be mentioned the eases of Troup v. Ricardo, 4 De Gex. J. & S., 489; Hamp v. Robinson, 3 id., 97; Wolsham v. Stainton, 1 id., 678. Lord Justice Turner, ¡ip. giving his opinion in Hamp v. Robinson, said:—“ I think hh® cases, especially Campbell v. Mackey, go to this extent, th# if a plaintiff has against one party a common case in respe.et to several matters, such that as against that party those matters might properly be all joined in one bill, he is not to he compelled to -file more than one bill in respect to them, because some third person who has such an interest in respect of one of those matters as to make him a necessary party to .any proceeding in respect of it, has no interest in any of the other matters, but the plaintiff may combine all the matters £n one suit, making that third person a party, and that party cannot object on the ground of his want of interest in some of the matters.”
The same disposition is exhibited and the same doctrine is sustained in numerous decisions of the courts of this country, including the decisions of this court in the cases of Cornwall v. Lee, 14 Conn., 524; Robinson v. Cross, 22 id., 176; and Middletown Savings Bank v. Bacharach, 46 id., 522.
In Gaines v. Chew, 2 How. (U. S.), 619, and Oliver v. Piatt, 3 How. (U. S.), 333, it is impossible, say the court, to lay down a general rule as to what constitutes multifariousness ; every case must be governed by its own circumstances, and the court must exercise a sound discretion on the subject. The correctness of this position is .expressly recognized in the cases of McLean v. LaPayette Bank, 3 McLean, 415; Abbott v. Johnson, 32 N. H., 26; Carter v.
In Richards v. Pierce, 52 Maine,. 560, a creditor caused his debtor’s right to redeem a prior mortgage to be sold on execution, and after the time for redemption expired, commenced a suit in equity against the assignee of the mortgage to redeem it, making the execution debtor a party defendant. It was alleged among other things in the bill that a certain other mortgage therein described given by the debtor to the other defendant was fraudulent and void- as against .the complainant, and the relief prayed for was permission to redeem the former mortgage, and that the latter might be declared void,, etc. The bill was demurred to for multifariousness, it being claimed that, it sought to redeem two distinct mortgages of different dates, originally between different parties, founded on different transactions in no wise dependent on each other, and also sought to redeem upon distinct - and independent grounds, raising separate and distinct issues. The bill was also demurred to for a misjoinder of parties, one of the defendants’ interest in the property having ceased when his right to redeem the officer’s sale of his right in equity expired. But the court overruled the demurrer and held that, the bill should not be dismissed on the ground either of multifariousness or of misjoinder of parties. The same action was taken by the same court in the cases of Kennebec & Portland R. R. Co. et. al. v. Portland & Kennebec R. R. Co. et. al., 52 Maine, 173; Warren v. Warren, 56 Maine, 360, and Weston v. Blake, 61 Maine, 452.
In Chase v. Searles, 45 N. H., 519, it was held that it was not multifarious to join in a creditor’s bill, as parties defen
In Morton v. Weil, 33 Barb., 30, creditors by different judgments united in bringing a suit against the executors of the will of a person then deceased, alleging the fraud of that person in the contracting of the debts, and joined, as defendants, various parties having. liens or titles to the property in question, by reason of judgments or assignments, alleging that such liens or titles were fraudulently obtained, and prayed that the same might be vacated and the defendants be held to account for and pay over the property. On demurrer to the bill it was held that the parties thereto and the causes of action therein stated were properly joined, and that it was in other respects sufficient.
In Way v. Bragaw, 1 C. E. Green, 213, the purpose of the bill was to enable the complainant to obtain satisfaction of a judgment at law out of the property of his debtor, one of the defendants; and to this end the complainant sought to re
In Williams v. Neil, 10 Rich. Eq., 338, a creditor’s bill filed against the debtor and his grantees, for the purpose of setting aside a number of voluntary conveyances severally made to each of the parties, was demurred to for multifariousness, but the demurrer was overruled. And in Harrison v. Hallam, 5 Coldw. (Tenn.), 525, the court say that it is proper, where there are several judgment debtors in the same judgment, and one of them has made a fraudulent conveyance to one grantee and another has made a similar conveyance to another grantee and a third has made a like conveyance to. another grantee, to unite all the debtors and their several fraudulent grantees in one common bill for the relief of the judgment creditors.
Two of four defendants in a suit in equity demurred to the plaintiff’s bill because several independent causes were alleged therein, in which they averred that they had no interest or concern; but one of the demurring defendants being charged in the bill with being concerned in all the causes assigned, and the other being charged with having combined and confederated with all the other defendants to defraud the plaintiff in relation to the subject matter of the controversy, the court overruled the demurrer. The other two defendants demurred because the bill was exhibited for distinct causes, having no relation to or dependence on each other, concerning divers and distinct persons having no common interest therein; but it appearing to the court that the specifications in the bill related to one subject matter in which all the defendants were alleged to have been combined and concerned to the prejudice of the plaintiff, the cause of demurrer was adjudged insufficient and it was overruled. Brown v. Haven, 12 Maine, 164.
The rule in relation to multifariousness, say the Supreme Court in Iowa, is one of convenience; and though the matters are distinct, yet if justice can be administered between the parties without a multiplicity of suits the objection will not prevail. Bowers v. Keesecher, 9 Iowa, 422. And in Marshall v. Means, 12 Geo., 61, the court say that the objection of multifariousness is always discouraged by courts when, instead of advancing, it will defeat the ends of justice.
These authorities, with the statutes of 1875, chapter 54, and-the Practice Act, fully sustain the entire frame work of
, But the defendants insist that the plaintiff occupies the position of a mortgagee whose mortgage was executed at the date of his attachment, or of the filing in the town clerk’s office of the certificate of his judgment; and that, therefore, he had no right to make the defendant Chaffee, whom they style an “ adverse claimant,” a party to this suit, as the latter’s title to the property sought to be foreclosed, by deed from the judgment debtors, was prior in point of time to the plaintiff’s lien. And they also insist that the only proper parties defendant are the judgment debtors and such other persons, if any there are, who have acquired interests from them since the date of the lien; that the defendant Chaffee’s interests can in no way be affected by the suit, and that he has no interest in it; that there being no privity between him and the plaintiff, the latter could not make him a party for the purpose of litigating his claims of title; and that the making him a party defendant with the judgment debtors, renders the plaintiff’s bill bad for misjoinder as well as multifariousness. And in support of these claims they refer us to several reported cases, and make the following quotation from the second volume of Jones’s Treatise on the Law of Mortgages, section 1440: “ Adverse claimants cannot be made parties to a foreclosure suit for the purpose of litigating their titles. The only proper parties are the mortgagor and mortgagee, and those who have acquired any interests from them subsequently to the mortgage. An adverse claimant is a stranger to the mortgage and the estate. His interests can be in no way affected by the suit, and he has no interest in it. Thére being no privity between him and the mortgagee, the latter cannot make him a party defen
It was, however, held by this court in Broome v. Beers, 6 Conn., 207, and in Palmer v. Mead, 7 Conn., 149, that in a suit for foreclosure the title to the mortgaged premises could not be investigated. But in the latter case the doctrine was vigorously controverted by Judge Daggett in a dissenting opinion in which Peters,' J., conmirred; and in Woodruff v. Cowles, 8 Conn., 35, it was decided that to a bill of foreclosure usury might be shown as a defence. The next case in which the question arose was that of Frink v. Branch, 16 Conn., 260. In that case it was decided that in a bill of foreclosure it was incumbent upon the plaintiff to allege a title in himself, either legal or equitable, to the mortgaged premises, and to establish such title, at least prima, facie, by proof; and that the defendant had the corresponding right to attack it. Judge Church, in giving the reasons of the court for this decision, said: “It was once supposed that upon a bill to foreclose a mortgage, the title of the mortgagee would not be investigated, and that the parties, in such a case, would be left to litigate that matter in an action
It being thus established that the title to mortgaged premises may be investigated in suits for foreclosure generally, why may not the title to the premises sought to be
The question then arises, whether the deeds under which the defendant Chaffee claims title to the premises sought to be foreclosed by the plaintiff are valid instruments of conveyance. The deed of November 1, 1873, is, as already stated, a deed from the A. & W. Sprague Manufacturing Company, William Sprague, Amasa Sprague, Mary Sprague,
“ To have and to hold said granted and bargained premises, with all the rights, privileges and appurtenances thereof, unto and to the use of him, the said party of the second part, his heirs, executors, administrators and assigns, in trust for the intents and purposes, and with, under, and subject to the powers and provisions hereinafter contained, but subject, nevertheless, to the following condition, that is to say: Upon condition, that if said parties of the first part, or any or either of them, their heirs, executors, administrators, or assigns, or any person for them or in their behalf, shall well and truly pay or cause to be paid all and singular the debts and liabilities aforesaid which shall be brought in under these presents and remain outstanding as hereinbefore provided, and all expenses and liabilities of every kind incurred in the execution of the trust hereinafter created or declared, and all the notes aforesaid that shall be issued by the trustee aforesaid, together with the interest thereon according to the tenor thereof, then this deed shall be and become void, otherwise shall remain in force. And subject to the condition aforesaid, in trust for said party of the second part, an<jl other .the trustees or trustee under these presents for the time being, to stand seized and possessed of the said granted estates and premises, and until default shall be made in the performance of the conditions aforesaid or any part thereof, or breach shall be made of any of the covenants or agreements hereinafter contained on the part of said parties of the first part to be kept or performed,, or until sale' under the trusts hereinafter declared, or until entry under the power in that behalf hereinafter contained, to permit and suffer said parties of the first part to retain the possession and use of said granted premises. Provided, and it shall be lawful for said trustees or trustee for the time being at any time, or from time to time before such default
“ And it is further declared that no purchaser under any or either of the foregoing trusts shall.be under any obligation to inquire into the necessity or regularity of any sale thereunder, nor see to the application of any of the purchase money thereof, but that the receipt of the trustees or trustee for the time being to such purchaser or purchasers for such purchase money shall be his or their full and effectual acquittance and discharge thereof. And if at any time said trustee, or any trustee to be appointed under these presents,
“And the said parties of the first part, for themselves and for their respective heirs, executors, administrators and assigns, do hereby covenant with the said party of the second part, his heirs, executors, administrators and assigns, at any time, or from time to time during the continuance of this security, to execute and deliver to the party of the second part, or other trustees or trustee under these presents for the time being, or to any purchaser under any of the foregoing trusts, such further conveyances or assurances of the estates or property hereby conveyed or intended to be conveyed, or any part or parts thereof, as said trustees or trustee for the time being may reasonably require; and at
The complaint alleges that this deed, as respects the premises demanded and sought to be foreclosed by the plaintiff, is fraudulent and void as against him, because there are no descri^lions or boundaries of the premises given, and no teference is made in the deed to any book or document describing the boundaries, and the premises are only described as “all the property, real, personal and mixed, not exempt from attachment by law, which the parties of the first part or any or either of them have and hold in the following towns of the state of Connecticut, viz.: Sterling, Sprague, Scotland, and Windham.” Such a description has long been used in general assignments by debtors to trustees for the benefit of their creditors, and in conveyances of that kind is undoubtedly sufficient; but in mortgages a greater decree of certainty and particularity has been adjudged to be necessary. In the case of Herman v. Deming, 44 Conn., 124, which was a suit for foreclosure of a mortgage of real estate situated in the town of Canaan,
The deed of the A. & W. Sprague Manufacturing Company and others of November 1, 1873, tested by the rule thus established, does not contain a sufficient description to convey to the defendant Chaffee any title to or interest in the premises sought to be foreclosed by the plaintiff, unless it is to be regarded as an assignment and not as a mortgage or a deed of trust in the nature of a mortgage. But the insufficiency of the description does not render the deed fraudulent. It becomes then an important inquiry whether the deed should be regarded as an assignment, or only a •mortgage or a deed of trust in the nature of a' mortgage. “ A mortgage,” says Chancellor Kent, “ is the conveyance of an estate by way of pledge for the security of a debt, and to become void on payment of it. The legal ownership is vested in the creditor; but in equity the mortgagor remains the actual owner, until he is debarred by his own
A deed conveying land to a trustee as security for the payment of a debt and conditioned to be void if the debt be paid when due, or at some other specified time, but in default of payment empowering the trustee to sell the land and apply the proceeds to the extinguishment of the debt, and pay over the surplus to the grantor, is sometimes called a deed of trust in the nature of a mortgage; but it contains all the elements necessary to constitute a mortgage, and is in legal effect a mortgage. 1 Jones on Mortg., § 62, and cases there cited; 2 Perry on Trusts, § 602 d. The power of sale contained in the deed does not take -from the instrument its character as a mortgage, or deprive-it 'of any of
The deed under consideration comes clearly within the description of-a deed of trust in the nature of a mortgagé. It is a conveyance to a trustee for the purpose of securing the payment of certain notes, which it describes, of one of the grantors; it is conditioned to be void if the grantors, or any or either of them, shall pay the notes according to their tenor, and the expenses and liabilities incurred in the execution of the trust; and it empowers the. trustee to sell the property conveyed to him, and apply the proceeds of the sale to the payment of the notes, and to pay over the surplus to the grantors. It must, therefore, he considered and treated in this case as a mortgage.
But the complaint alleges, and the plaintiff insists, that the deed, even if its description of the premises is sufficient, is fraudulent and void as against the non-assenting creditors of the A. & W. Sprague Manufacturing Company, for the following reasons:—
2. Because the deed contains provisions that the grantors and Chaffee should carry on the business theretofore carried on by the grantors.
3. Because the deed provides, first, for the payment of all the costs and charges in connection with the management of the trust estate and of all preferred claims, and secondly, of those creditors who should accept the terms of the deed, that is, waive and discharge their original claims and accept the new notes provided for in the deed and extending beyond the maturity of the original claims; and that the residue of the money and property should be returned to the grantors.
4. Because the deed diverted the property of the A. &. W. Sprague Manufacturing Company to pay the claims of other companies and parties, to the injury of their own creditors.
5. Because the defendant Chaffee, as trustee, has given the use,and control of a large amount of the trust estate to the said Amasa Sprague, William' Sprague, Mary Sprague and Fanny Sprague, and has paid them out of the funds of that estate large sums of money for no legal or sufficient consideration.
6. Because a large number of the creditors never accepted the terms of the deed.
7. Because the deed provides that said Chaffee, as trustee, should not be answerable for any loss which might happen to the trust estate, unless the same should happen by his own default or neglect.
8. Because said Chaffee, as trustee, has paid large sums of money out of the funds of said estate to apply as prinei
9. Because the plaintiff was never a party to the deed and never assented to the same.
10. Because, as it was found impracticable and impossible to carry out the terms of the deed, all the parties thereto, on or about the first day of April, 1874, abandoned all attempts to comply with its provisions and surrendered and waived all claims under it, and adopted an entirely different and distinct course of procedure, under and by means of the deed of April 6, 1874.
We have carefully considered the reasons thus assigned by the plaintiff for alleging the deed of November 1, 1873, to be fraudulent, and- are of opinion that the matters upon which- some of them are founded abundantly justify and sustain the allegation.
The demurrer admits that at the time the deed was executed and delivered, the A. & W. Sprague Manufacturing Company were hopelessly insolvent; and the recitals in the deed show that they had no expectation or hope of being able to pay the claims then outstanding against them, at maturity or within three years thereafter; and they were desiring and seeking to obtain an extension of the time of payment for the period of three years from the first of the following January. In this condition and under these circumstances they assumed, or made themselves primarily liable for, the debts of the firm of A. & W. Sprague, and the individual debts of Amasa Sprague and William Sprague, without the consent of the plaintiff and other creditors, added them to their own-indebtedness, and made their notes, payable in three years, for the whole amount ($14,000,000), and then joined the other grantors in the execution of the deed, and thereby pledged their property for the payment of those notes or such of them as should be accepted by their creditors and the creditors of A. & W. Sprague, Amasa Sprague, and William Sprague in discharge of their respective claims.
The obvious effect of these proceedings, if they should be
The Manufacturing Company, being insolvent and hopelessly so, had no right, legal or moral, to pledge their property for the payment or security of the debts of the Spragues or any other debts than their own. They could do so only by imperilling the rights of their own creditors, or exposing them to sacrifice or injury. The amount of the debts of A. & W. Sprague, Amasa Sprague and William Sprague,, assumed by the company, and intended to be secured by the deed, is nowhere in the deed disclosed. The deed is also silent in respect to the amount of debts due to the creditors of the company; and the amount of the fund which the property of the Spragues and of the company, respectively, will produce, cannot be known until the several properties shall be sold. But if the debts due to the assenting creditors of A. & W. Sprague, Amasa Sprague and William Sprague, should exceed in amount the fund produced by
But the deed contains other features Which impart to it a fraudulent character, and render it void as a mortgage of real estate in this state, as against non-assenting creditors. It empowers the defendant Chaffee, as trustee, and any other person who may succeed him in the trust under its provisions, to run and operate the mills and print-works of the A. & W. Sprague Manufacturing Company, at the expense of the trust estate, and for the benefit of A & W. Sprague, Amasa Sprague and William Sprague and of their creditors, as well as of the Manufacturing Company and their creditors, for a period of time limited only by the trustee’s discretion, unless one-fifth in amount of the holders of the notes issued and outstanding under the deed intervene, and request him in writing to dispose, by sale, of the estate. The effect, therefore, of this power, if executed, and losses be sustained in its execution, would be to enlarge the encumbrance upon the trust estates and diminish the value of the only property or interest to which the non-assenting creditors could resort to obtain satisfaction of their claims—that is, the equity of redemption in the mortgaged premises. If profits should be made in the execution of the power, they would inure to the benefit of the assenting creditors of the Spragues as well as of the assenting
These conclusions render it unnecessary to express an opinion upon the other reasons assigned by the plaintiff in his complaint for alleging the deed to be fraudulent.
We pass, therefore, to the consideration of the question whether the deed of April 6, 1874, is sustainable as a conveyance of the real estate of the grantors in this state. This deed is, in form and effect, a general assignment by the A. & W. Sprague Manufacturing Company of all their property in this state and elsewhere not exempted from attachment by law, to the defendant Chaffee in trust for the benefit of all their creditors, but preferring those creditors who at the time of the execution of the deed had assented or within nine months after the 1st day of January, 1874, should assent to the terms of the deed already considered, to their other creditors. By one of its provisions the trustee is authorized to run the mills and print-works, which constitute a part of the property assigned, or to allow the assignors to run them, if for the best interest of the creditors, the profits being receivable by the trustee for the purposes specified in the deed. The effect of this, provision, considered in connection with other provisions in this deed and the provisions in the deed of November 1, 1873, is to empower the trustee or the assignors with his permission to run the mills and print-works at the expense and risk of the creditors of the assignors, but free from restraint, interference or control on their part, for so long a time as he shall deem it to be for the best interest of those creditors so to do. No debtor has a right thus to postpone or put in peril the rights of his creditors without their consent, and a conveyance which attempts so to do, or which is executed for the purpose of depriving creditors of their right to enforce their just claims against the property of their debtor by placing it beyond their reach or control for' an unlimited, indefinite, or uncertain period, is in conscience as well as in law fraudulent. There are numerous' cases reported in which assignments in trust for the benefit of creditors have been sustained, al
In the case of Owen v. Body, 5 Ad. & El. 28, (31 Eng. Com. Law, 254,) the deed in question, which was an assignment to trustees for the benefit of creditors with preferences, contained provisions investing the trastees with power to carry on the trade of the debtor, and for that purpose to lay out money in payment of rent and keeping up the stock in trade. And the court held the deed to be void, as it was an instrument to which creditors could not reasonably be expected to assent. Lord Wensleydale, in giving his opinion in the House of Lords, in the case of Cox v. Hickman, 9 Com. Bench, N. S., 101, referred to that deed and said that the provision it contained that the effects of the debtor, which ought to have been divided equally amongst his creditors, should be put in peril by being employed in trade, prevented the deed from being a fair deed and good against creditors.
In the case of American Exchange Bank v. Inloes, 7 Md., 380, the deed in controversy contained a provision empowering the trustee at his discretion to sell the property
The same court in the case of Jones v. Syer, 52 Md., 211, held that an assignment in trust for the benefit of creditors, .which authorized the trustee to carry on and conduct the business which had been carried on and conducted by the assignor, “ for such time as in his judgment it shall be beneficial so to do,” or to sell all the goods and stock in trade mentioned in the assignment, “ at such times, in such manner, and for such prices as he may deem proper,” was, as against the creditors of the assignor, void. In giving their opinion in this case the court say: “ It is obvious that the certain effect of this clause would be to hinder and delay creditors; and as against them such provision renders the , deed utterly void. It is an attempt on the part of the debtor to place his property for an uncertain and indefinite period beyond the reach of his creditors, ar.d to make their
In the cases of Dunham v. Waterman, 17 N. Y., 9; Gardner v. Commercial National Bank of Providence, 13 R. I., (not yet published;) Same v. Same, 95 Ill., 298, the same doctrine was recognized and enforced.
The only remaining clause in the assignment deserving of consideration is the clause immediately following the one authorizing the trustee to run the mills and print-works or allow the assignors to run them. That clause provides that “ in case the’same are thus run by him or otherwise he shall not be liable personally for the expenses or losses arising therefrom, but the same shall be chargeable to the trust fund vested in him,” and it furnishes additional evidence of the fraudulent purposes for which the assignment was executed. The law upon this subject is correctly laid down in the opinion of Ruggles, C. J., in the case of Litchfield v. White, 3 Seld., 438. He says: “A failing debtor by an assignment puts his property where it cannot be reached by ordinary legal process. He puts it into the hands of a trustee of his own selection—often his particular friend, sometimes a man to whom the creditors would not have been willing to confide such a trust. The debtor has an interest in the application of the trust funds to the payment of his debts, but' the creditors have usually a far greater interest therein, and that interest depends in many cases on the competency and diligence of the assignee. The debtor cannot be permitted, by creating a trust for his creditors, to place his property where it cannot be reached by ordinary legal remedy, and at the same time exempt the trustee from his proper responsibility to his creditors. What degree of diligence, then, would the assignee have been bound to exercise in the business of his trust if the clause in question had been omitted? That question is answered by one elementary writer in these words: ‘ A trustee is bound to manage the
■ The assignment before us wholly exempts the trustee from any liability for losses arising from the running of the mills and print-works by him, or by the assignor with his permission, even if the losses should be occasioned by his own gross neglect or misconduct, and it might happen that a great portion of the trust property would from these causes be lost or destroyed. The assignment must, therefore, be pronounced fraudulent as against non-assenting creditors upon that ground.
The Superior Court, for these reasons', is advised that the plaintiff’s complaint is sufficient, and that the demurrer thereto should be overruled.
In this opinion the other judges concurred.