Enders & Hynes v. Swayne

| Ky. Ct. App. | Apr 10, 1839

Lead Opinion

Chief Justice Robertson

delivered the Opinion of the Court.

Considerins the peculiar nature and great number of facts exhibited in this case, it seems to this Court, that they might have been presented in such a manner as to have left no difficulty in determining as to, either the alleged resulting trust, or fraud.

But, in the preparation of the case, some of the most important and characteristic facts have been permitted to appear in a very vague and indeterminate aspect, And therefore, this Court has been subjected to some embarrassment in deducing from the entire record before it, a proper and satisfactory judicial conclusion concerning the matters litigated.

After a careful analysis, however, of all the circumstances, we are strongly inclined to think, that they conduce decidedly to the conclusion' that, at least, some of the estate pursued by the bill, should be subjected to the execution of the complainants.

1. Though John Swayne had been doing business extensively, and had bought a large assortment of merchandize, and much real estate, his whole stock of goods and movable property appear to have suddenly vanished, without any account of the cause or manner of their disappearance; and, in the space of a few months after he had cause to apprehend a suit by one of his many creditors, an execution against him was returned “ no property.”

2. It would seem that the legal title to all the real estate bought by John Swayne, and which was various and apparently extensive, passed, within a few months, into the hands of his brother Doctor Joshua Swayne, a young and single man, then but recently settled at Columbus.

3. j\j0 title passed to Joshua Swayne until the 1st of March, 1834, when John Swayne, as we are bound to infer, had just ascertained that, in consequence of Gray-ham’s failure to remit to New York the funds deposited with him for paying the said John’s mercantile creditors in that city, his credit was so far impaired as to force him to wind up his business, and either appropriate his property to- the payment of his debts, or otherwise dispose of it. And though his answer claims credit for a peculiar anxiety to pay the debt due to the assignors of the complainants, and shows, we think, an undoubted ability to do so, yet it shows, also, that he ascribed to their refusal to indulge him longer, that eventful crisis in his affairs which eventuated in his ceasing to do business as a merchant, and his getting rid of all his estate, without either paying the complainants and other creditors, or being subjected to the perils of a sale of one particle of his property under execution.

4. It would seem that the first conveyance to Joshua Swayne (to wit, of the mill property) included all the real estate to which John Swayne then held a legal title. That conveyance was made at a suspicious and trying moment, and when the conveyee was in the city of New York; and it recites a consideration of five thousand six hundred dollars,, when the answers aver that the true consideration was only three thousand nine hundred dollars; and the strange fact, that the vendor, in the absence of the vendee, inserted and acknowledged a larger consideration than had been given, has not been explained; and moreover, the mills seemed to be considered unproductive property; and therefore, it is somewhat singular, that Doctor Joshua Swayne should desire to own them, and should select them in payment of a bona fide debt due to him, and which might have been otherwise paid or secured.

5. The answers insist that a portion of the alleged consideration of three thousand nine hundred dollars, (but what portion we are not told,) was an old debt said to have been due from John to Joshua, for money loaned to the former, by the guardian of the latter, about eighteen years before. But how much was thus due, where loaned, why it was never before paid, how Joshua became entitled to the money, where his guardian resided, whether John had given a bond for the money, or what had become of the bond, are all facts unestablished in the record. And John’s answer, not only does not intimate how much of that debt was included in the consideration of three thousand nine hundred dollars, but he leaves the amount of the debt itself a blank! In such a case, and under such circumstances as had appeared conducing to a strong suspicion of fraud, it would have been but natural that parties, insisting on such a consideration as the guardian’s old and indefinite loan, should have proved the facts necessary to establish the existence and amount of that alleged indebtedness; and the failure to do so, tends strongly to the impeachment of the deed of March, 1834.

6. Although the answers insist that John was largely indebted to Joshua, for money loaned at various times, and although- two witnesses testify to the same effect in general terms, yet no account has been exhibited, and the answers themselves do not even intimate the particular items or the aggregate amount; nor suggest how much of it was applied as the consideration of one single conveyance to Joshua. Can it be presumed that no account was kept, or that neither John nor Joshua knew the state of the account, or the precise manner in which it had been adjusted? Or must we believe that the omission to state or exhibit any account or even to suggest any particulars in the answers, was the result of ignorance, carelessness or accident? Such an omission in such a case, must be deemed very unfavorable to the defence relied on in the answers, and strongly indicative of collusion and fabrication.

7. John Swayne does not, in his answer, respond at all to the question whether he had not money enough to pay his debts, nor directly to the question whether moneys, said to have been advanced to him by Joshua, had not been refunded. And if he had money enough to pay his debts, that fact alone would tend, in some degree, to the conclusion that the conveyance from John to Joshua, was colorable, or under a secret trust.

The foregoing are the principal facts conducing to establish fraud or a general trust. And they are, in our opinion, too strong to be overruled, or even counterbalanced, by any allowable inference from the vague evidence as to advances made by Joshua to John Swayne, unexplained by the answers, and unapplied to any of the conveyances, either by the answers or by the proof.

"We are therefore of the opinion that, so far as the complainants, as judgment creditors of John Swayne, are concerned, the conveyance by the said John to Joshua Swayne, of March the 1st, 1834, should be deemed not to have exempted the estate so conveyed from execution upon the judgment against John.

We are also of the opinion, that the hundred and fifty acres of land bought from Cates by John Swayne, and paid for with his property, should be considered as held in trust for John, or for his creditors; for even if the conveyance of that hundred and fifty acres to Joshua was not fraudulent in fact, still as there is no proof that Joshua ever refunded to John the consideration which the latter had paid to Cates, the trust resulting to John from the payment by him, remains unrebutted.

But, as to the lots conveyed to Joshua Swayne by 'Tipton, by Brown, by Buckner, Cates and Taylor, by Gatlin, by Peak, by Curd, and by the trustees of Columbus, we are of the opinion that the bill and exhibits do not establish such facts as should subject any of those "lots in this case. As to many of them, the bill contains no definite or tangible allegation; and as to others, the proof is so slight as to the payment of the consideration "by John Swayne, and the amount which seems to have "been certainly paid by him, was so small, that we are disposed to think a.resulting trust is not sufficiently established, and that the general proof as to advances made by Joshua to John, should counteract any deduction of- trust or fraud, and leave the matter in great doubt at least.

We feel therefore indisposed to a reversal of the decree, so far as it dismissed the bill as to all the property except that contained in the deed from John to Joshua Swayne, of March the 1st, 1834, and in the conveyance from Cates to Joshua Swayne, of the hundred and fifty acres bought and paid for by John Swayne.

[By Messrs. Crittenden & Cates.]

Wherefore, the decree is reversed, and the cause remanded for another decree conformable with this opinion.

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Rehearing

Petition for a re-hearing.

April 27.

In the opinion rendered, the Court intimate, “ that in “ the preparation of this case, some of the most impor- “ tant and characteristic facts have been permitted to ap- “ pear in a very vague and indeterminate aspect; and therefore, this Court has been subjected to some embarrass- “ ment in deducing from the entire record, a proper and u satisfactory judicial conclusion concerning the matters “ litigated.” This intimation is fully concurred in by the counsel of defendants in error; and believing, as they sincerely do, that “ ignorance, carelessness or accident” in the management of the case in the Circuit Court has tended more, in the mind of this Court, to superinduce the assumption of “ seven facts or circumstances” of a fraudulent intent on the part of John Swayne, in the conveyance of the mill property, and the purchase of the one hundred and fifty acres of land from Cates, than any fact or circumstance in the record, have induced the counsel respectfully to ask a reconsideration of the opinion rendered. There appears in the mind of the Court, and which pervades the entire opinion rendered, that two facts are established: 1st. That John Swayne was, in a short time after he commenced the mercantile business at Columbus, possessed of a “ large, extensive and valuable real estate.” 2d. That this valuable real estate, together with an extensive stock of goods, “ suddenly vanished,” without being in any manner accounted for. The counsel, with great care and anxiety, have examined the record, and no where find any fact conducing to show that all the real estate in-eluded in the thirteen deeds exhibited, exceeded in value five thousand five hundred and eight dollars, (see the deeds, and depositions of Edrington and Basey;) and the only conveyances ever pretended to be attacked in the contest in the Circuit Court, were the conveyances of the mill property of 1st March, 1834, and the one from Cates to Joshua, of the 4th September, 1834. The land on which the mill property stands, was a donation by the trustees of Columbus, to Edrington and Swayne, for which they paid nothing. The value of the one hundred and fifty acres of land purchased by John, for Joshua, of Cates, was six hundred dollars, and the amount paid trustees for Joshua, for thirty eight lots, was only one hundred and seventy eight dollars. Here then, we have the sum of seven hundred and seventy eight dollars, as being the value of all the real estate ever bought or paid for by John, while in business at Columbus, and even this was bought and paid for, not for himself, but his brother.

Again: he has faithfully accounted for the disappearance of his stock of goods, not only by his answer, but the depositions of two persons, who were his clerks and agents while in business, speak positively to the fact. Much of the stock of goods was expended in building the mill: to wit, five thousand dollars. Graham of New Orleans, to whom John shipped produce, appropriated to his own use seven thousand dollars and upwards; and much of the stock of goods went to the payment of his debts, he being largely indebted at the' time he commenced business at Columbus.

The Court, in the opinion rendered, intimate that, as the conveyance from John to Joshua, of the mill property, was made at a “ suspicious and trying moment, and when conveyee was in city of New York,” &c. “ and the strange fact that the vendor, in the absence of the vendee, inserted and acknowledged a larger consideration than had been given;” all of which “has not been explained,” &c. The counsel, with due respect to this intimation of the Court, have been able to find a full, clear and honorable explanation, in the answers of John and Joshua, and also the depositions in the cause, of this transaction. It will be found in the record, uncoñtradicted and unimpeached, that in the month of November, 1833, John, in consideration of three thousand nine hundred dollars, sold to Joshua, the mill property, and executed to him a bond for a conveyance whenever a title thereto could be obtained from Edrington, who was the joint owner with John; and that immediately after the sale, Joshua took the entire control, management and possession of the mill property; and that, on the very day that the conveyance from Edrington to John was executed, the deed from John to Joshua was executed, and duly acknowledged and admitted to record. But, say the Court, the absence of Joshua, the date of the deed, and it purporting to be live thousand six hundred dollars, when in truth only three thousand nine hundred dollars, are facts and circumstances conducing to prove a fraudulent intent. How often is it the case that men capriciously name a consideration of one dollar, when hundreds passed? How often is it the fact, that vain ignorance and weakness cause men to swell the consideration in deeds to thousands, when in fact only hundreds, and perhaps nothing, has passed? But in this matter, it was either a mistake in the draftsman, or the object was that, as the mill property cost that sum, and had turned out unprofitable, a large consideration expressed in the deed, might aid his brother in a future sale of the property; as very many persons are weak enough to be induced to purchase an article, provided it cost a large sum, that otherwise would not purchase. But why are those slight and airy circumstances tortured into signs and badges of fraud, and thereby establish a fraudulent intent on John? Was not the sale of the mill property made long anterior to the institution of any suit by the creditors of John, or his failure in business? Was there not a good and valuable consideration paid and received by John? and did not the mill property pass instanter into the hands of Joshua, and so continue up to the commencement of this suit? Was not the deed made anterior to any suit against John, and duly acknowledged and recorded? And are all these ancient legal evidences of innocence, "fairness and honesty, to yield up their weight and influence on the mind of the Chancellor, and become as feathers in the scales of justice?

The Court remark — “ It would seem that the legal “ title to all the real estate bought by John Swayne, “ and which was various and apparently extensive, passed “within a few months into the hands of his brother, “Dr. Joshua Swayne, a young and single man, then but “ recently settled at Columbus.” With due respect to the Court, the counsel find nothing in the record that would justify the assumption of facts as intimated. The facts in the record are, that, in the fall of 1832, John purchased a large stock of goods in New York, and emigrated to Kentucky, and in the same year settled at Columbus, and commenced business as a merchant. That, in the spring of the year 1833, six months after John’s settlement, Joshua, a practicing physician, aged about twenty eight years, brought with him from the State of Tennessee nine thousand dollars in property and money, and also settled at Columbus; and there, besides the benefits of an extensive practice in his profession, made and-realized large sums of money by trading in the produce of the country to the South, and extensive speculations in real estate. The only “ various and extensive real estate” ever purchased by John, was the purchase made for the benefit of Joshua and others, of town lots, to the value of one hundred and seventy eight dollars, and the pui'chase of one hundred and fifty acres of Cates, to the value of six hundred dollars. And if youth, celibacy and brotherhood are deemed by the law of the land, disqualifications for one brother to purchase, buy or sell to the other, and that a combination of these three are evidence of a fraudulent intent, then will the counsel submit to the cruel, and harsh imputation of fraud thrown out by counsel in the argument -of this cause, and countenanced in the opinion rendered.

The counsel have conceived that the intention with which a deed is executed makes it fraudulent or otherwise, and that “ circumstances or facts” are material and important only in the degree in which they conduce to the establishment of the intention; and in this opinion of the law, we are fully supported by the adjudged cases upon the statute of frauds &c. both in England and this State. There is certainly nothing unlawful or dishonest in one brother buying or selling to a brother; or one brother paying to another brother, with property, a debt due in money. There is no fraud, unlawfulness or dishonesty, in one man paying one creditor before another; nor is there any wrong or dishonesty in securing the payment of the debt of one creditor in preference to others. See 3 Mon. 4.

But there appears to be none of the ancient shields of protection to the innocent allowed the Swaynes in their defence. They are called to answer, and every word they utter in defence, that can, by the workings of a fruitful imagination, be tortured into evidence of guilt, is brought in judgment against them; and all that they said in explanation or in justification of their conduct, has been passed over as unworthy of remark, notwithstanding each fact of explanation and justification in their answers, is fully established by proof.

But what is the operation and result of the opinion rendered? It is that, although the facts as proved, clearly show fairness and honesty and good faith on the part of the defendants — yet, as they had negligent and unskilful attorneys to prepare their defence; and as the Circuit Court led them into an error by passing judgment in favor of the soundness of their answers, Joshua Swayne is forced to yield up his property, for which he has paid a fair and valuable consideration, for the purpose of satisfying the hunger of a rapacious creditor of his brother John. If the present opinion stands unaltered, the reputation of two highminded and honorable men is rendered up as a sacrifice to the unskilfulness of their attorneys, and the errors of Circuit Courts.

In conclusion, the following cases adjudged, are referred to: 6 Mass. T. R. 339; 3 John. Ch. Ca. 458; 3 Cranch, 89; 5 John. 335.

Wherefore, a re-hearing is solicited &c.

Crittenden and Cates, for defendants.

[By the Chief Justice.]

May 6.

Response to the Petition.

The petition does not notice the most important facts shown by the pleadings, and which present a strong col- or; nor does it notice the fact that S wayne the elder frequently superintended the steam mill, as ostensible owner, after the conveyance to Swayne the younger; nor does it notice availably the fact, that all the visible estate of the debtor party passed from him, and not to his creditors, within a few months, and most of it into the hands of his brother.

We do not know, from the record, the precise value of the mill and land and numerous town lots. But we repeat that this property was not only very various, but apparently very extensive; and doubtless, it was, prospectively at least, deemed very valuable. And, as to the stock of goods, we also repeat, that there has been no satisfactory account; some of the goods may have been appropriated to the purchase of the produce consigned to the commission merchant at New Orleans; but how much was so used, or what disposition was made of the residue, the i-ecord does not satisfactorily show.

Now, considering the general facts grouped in the opinion, it does seem to us that, if this whole transaction between these brothers, should be permitted to defeat creditors altogether, but few creditors need ever incur the trouble and expense of prosecuting suits in Chancery for vacating colorable conveyances by their debtors, unless the latter and their conveyees will do, what was never done in such a case — that is, magnanimously acknowledge that the conveyance was ostensible only.

We have not imputed to the Swaynes corrupt, or even dishonorable, motives. They may have done only what they considered perfectly fair and moral, for the purpose of preventing sacrifice merely. But the code of legal ethics will not sanction any contrivance for either defeating or delaying bona fide creditors.

The most charitable construction we feel authorized to give to the transaction between the brothers, as to the mill, and the tract of land, is that its object, as well as its effect, was to delay the creditors of the elder Swayne. And, as long as the record remains as it is now, no argument could change this opinion.

Wherefore, the petition is overruled.