221 Mass. 351 | Mass. | 1915
This is a suit brought by the trustee in bankruptcy of George E. Wallace, to reach and apply certain stocks alleged to have been transferred by him, more than four months before the adjudication, to his wife in fraud of creditors at common law or under the St. 13 Eliz. c. 5. The case was tried before a single justice
The first point to be determined is the precise meaning of this finding. That best can be ascertained by a recurrence to the governing principles of law touching conveyances and transfers in fraud of creditors.
The finding of the single justice does not quite go to the extent of bringing the wife within this rule. It falls just short of the essential facts to entitle the plaintiff to a decree in his favor. The finding is not in substance or effect that there was a secret trust or hidden advantage to the debtor arising out of the transaction. Something more is necessary than a simple knowledge on the creditor’s part that the debtor did not intend that his other creditors should be paid, or even that he intended to put his property where his other creditors could not reach it. Such knowledge by the creditor of the purpose of the debtor, provided it is accompanied by a real payment in good faith of an actual debt, is no fraud at common law. The creditor, notwithstanding, may hold the payment of his debt made under such circumstances, apart from statute. On the findings of the single justice the plaintiff is not entitled to a decree in his favor. Before he can recover, it would be necessary that the finding should go further
The somewhat narrow finding of facts made by the single justice was warranted by the evidence. The crucial evidence upon which the finding concerning the wife was based was the transcript of testimony given by the wife upon the trial of another case where the issue of fraudulent conveyance between the husband and wife was involved, the record of the judgment in that cause and other documentary evidence, and the effect of the failure of both George E. Wallace and his wife to testify at this trial.
There was received in evidence against the exception of the defendant the record of a writ of entry in the Land Court, whereby it appeared that in an action by other creditors of George E. Wallace it had been found that a conveyance of certain land by him to his wife was in fraud of creditors. It was not the record of a case between the same parties. The plaintiffs there were strangers to the present plaintiff. But if the mutual intent of the husband and wife in making and receiving that conveyance were fraudulent, being within a few months of the transaction here under investigation, it had some tendency to establish a general fraudulent purpose to put the property of George E. Wallace out of the reach of his creditors, and was admissible on that ground. The defendants’ exception to the admission of this evidence must be overruled. Lynde v. McGregor, 13 Allen, 172, 178. Brownell v. Briggs, 173 Mass. 529. Commonwealth v. Farmer, 218 Mass. 507, 512, 513.
No real doubt is thrown on the contention of the wife that there was due to her from an estate of which the husband was executor an unpaid legacy of $10,000, with its accrued interest. When other creditors began to press the husband and the possibility of a loss of fortune was imminent, it was not unnatural that this overdue legacy should be considered by him. While it would be difficult to obtain direct evidence of a secret trust reserved for the benefit of a husband out of the payment of a debt under such circumstances, ■—■ and its establishment commonly must rest upon inferences, — yet there hardly appears enough in this record to require a finding that the plaintiff has
But the further ruling of law that the conveyance was fraudulent against creditors was not warranted by the facts found, for reasons which already have been stated and on the authorities already cited. The motion that the bill should be dismissed ought to have been granted. The defendants’ exception, therefore, must be sustained.
The finding of fact made by the single justice covers the decisive issue between the parties, and the record is in condition to warrant a final disposition of the case. Hence a decree may be entered dismissing the bill. St. 1913, c. 716, § 2.
So ordered.
Hammond, J.