1 Binn. 502 | Pa. | 1809
Upon this day the judges delivered their opinions.
These causes come before the court on a special verdict, found in the action in which Wilt is the plaintiff. In the action by Berthon and son, it is agreed, that it shall be decided on the facts found in the verdict in Wilds suit.
Two points were made by the counsel for the plaintiff. 1. That under the circumstances stated in the verdict, the deed from Matthias Keely to John Bartholomew is to be considered as fraudulent and void. 2. That supposing it to be good, it had no operation till the 7th of March, when it was first made known to Bartholomew, and received his assent.
In support of the first point, it was contended that the deed was void by the stat. 13 Eliz. c. 3., and by the principles of the common law; because it was made with an intent to defeat the action of Wilt, who had obtained a verdict against Keely the same day the deed was executed; because it was not attended with delivery of possession of the property conveyed; because it vested the management of Keely's whole estate in a trustee of his own choosing; because there was no schedule of the property; and because no money was paid by Bartholomew to Keely.
I will consider this subject under two points of view, which will include the different positions taken by the plaintiff’s counsel.
1. What was the intent of the parties?
2. In what manner has their intent been carried into effect?
1. As to Bartholomew the grantee, there is no intimation of his having entered into any improper collusion with Keely. He knew nothing of the deed till after its execution; and it does not appear that he was any way interested in it. The manifest intent of Keely was to prevent Wilt from obtaining any preference by his judgment, and to put all his creditors, without exception, on an equal footing. There appears to be nothing immoral or unfair in such intent. On the contrary, it is the object of well regulated societies, where commerce flourishes, .to obtain an equal division of the property of insolvent traders.
For the reasons which I have given, and many others which might be given, I conclude that the intent of Keely, so far as it appears by the verdict, was fair and lawful.
2. Let us next consider the means by which he carried his purpose into effect. He executed a conveyance of all his property, without specifying it, to a trustee of his own choosing; with power to the said trustee to convey part, or the whole of the said property to another trustee or trustees, under the control and direction of his creditors. Keely and his wife immediately acknowledged the deed before a judge of the court of common pleas of Philadelphia county. This was on Saturday night. On Monday following he confessed judgment to Berthon and son, who immediately took out a fi. fa. and levied on his goods, still remaining in his possession. On Tuesday night the deed was given by Keely to a messenger, to be carried next morning to Bartholomew, who lived twenty-three miles off; and on Wednesday it was delivered to Bartholomeiv, who then for the first time was made acquainted with it, and who consented to act as trustee.
By the execution of the deed, Keely irrevocably parted with all power over his estate. And it is to be remarked, that the transaction was not secret. The judge who took the acknowledgment must have been privy to the contents of the deed, because the law required him to make the contents known to Mrs. Keely when he took her acknowledgment.
As the counsel for the plaintiff relied a good deal on the case of Burd v. Fitzsimmons &c., decided in the high court of errors and appeals in this state, in support of some of their objections, under the head which I am now considering, I think it proper to mention that the point, decided there, is very little to the present purpose, because the two cases are essentially different. In that case a time was fixed, within which the creditors were required to give their assent to all the conditions of the deed. The shares, of those who did not express their assent, were to be paid over to Mr. M'Clenachan, the person
I will now consider the particular objections urged by the plaintiff’s counsel in the case before us.
1- The trustee was chosen by the debtor himself.
Although it is most prudent and proper to consult the creditors, as to the choice of a trustee, when it can be done without great inconvenience, yet where there is no bankrupt law existing, (which is our present situation) I know of no law which forbids the debtor to make the choice himself. There is no occasion now to decide, whether, under certain circumstances, the choice made by the debtor would not be conclusive proof of fraud; as where the trustee should be an intimate friend or near relation of the debtor, desperate in his fortune, and of notoriously bad character. No imputation whatever is thrown on the trustee here; and it is of some weight that the deed contained an opening for a choice to be made by the creditors, which in fact afterwards took place. It is to be remarked too, that had Keely waited to consult his creditors after Wilt obtained his verdict, the judgment would have been entered, and the preference of Wilt, as to the real estate, been established. Under the bankrupt system in England, an attempt by an insolvent trader to throw the management of his affairs into the hands of a trustee of his own choice, is in direct violation of the whole spirit and system of the laws, and therefore amounts in itself to an act of bankruptcy. Many cases of that kind were cited; but they are inapplicable, being founded wholly on the English statute law.
2. As to the want of a schedule. It is very desirable that conveyances of property should be accompanied with schedules. They are a great convenience to creditors, and a check upon fraud in the debtor. But they are more necessary, where part of a man’s property is conveyed to particular creditors, than, where the whole is conveyed for the benefit of all; and I am sa- ■ tisfied that many conveyances of the latter description have been made without schedules, and proved very beneficial to the
3. The next objection is the nondelivery of possession; this applies only to the goods. I agree, that in general, the continuance of possession in the grantor is one of the strongest marks of fraud, especially if such possession continues a considerable length of time. I agree too, that in many cases possession has been adjudged to make a conveyance fraudulent, where no actualfraud, no criminal intent, was supposed to exist. Although the statute 13 Eliz., as I mentioned before, is bottomed on the supposition of an immoral intention, yet it has been judged necessary to determine, that certain circumstances, which, in their nature, tend to deceive and injure creditors, shall be considered as sufficient evidence of fraud. Such was Txvyne’s case, (the leading case on possession) where the creditor, to whom a general conveyance of the debtor's -whole property■ was made, in satisfaction of a just debt amounting to more than the whole property, suffered the debtor to retain the possession, to use the property as his own, to dispose of what he pleased of it, and to' put his oxvn mark on the sheep. There is no searching the heart of man; but a possession of this kind tends so directly to deceive the world, that it was fair to conclude, that the conveyance in Txvyne’s case was attended with some secret trust for the benefit of the debtor. Possession is not always in itself conclusive evidence of fraud, but is open to explanation. In the case before us, the deed was executed late on Saturday night. Sunday is not a day of business. The trustee lived twenty three miles off. On Monday the goods of the debtor were levied on by Berthon and son. Being in custody of the law, the necessity of a delivery to the trustee was less urgent. Indeed I do not see how a delivery could then have been made. All that could be done, was to inform the trustee what the goods were; and that they had been taken in execution. Under these circumstances, I think the nondelivery of possession is sufficiently accounted for.
4. The last objection, to the validity of the deed, is that no money was paid by the grantee. I do not think this objection can be supported. The bargainee undertakes to pay the whole proceeds of the estate to the creditors of the bargainor, for his benefit. But independent of that, as the objection is merely
Having thus considered the principal objections to the deed, my opinion on the whole is, that it is valid. It only remains to determine at what time it took effect; whether on its execution, or on the Wednesday following, when the assent of the grantee was expressly given.
This does not appear to me to be a point of much difficulty. The plaintiff’s coupsel concede, that where the deed is for the benefit of the grantee, it is reasonable that his assent should be presumed. They were right in this concession. I think it reasonable to make the same presumption, where the grantee is required by the deed to do an act useful to his neighbour, and not injurious to himself. This presumption is liable to be rebutted by shewing an express dissent. A man cannot be forced to accept a conveyance against his will. But, in the present instance, the presumption is confirmed by the assent of the grantee, the moment he was informed of the conveyance. I am therefore of opinion that it took effect from the execution on Saturday night; of course it is not subject to the lien of the judgment of the plaintiff Wilt.
Upon the whole of the special verdict; my opinion is in favour of the defendant.
If the assignment made by Matthias Keely to John Bartholomew, in trust for all his creditors, “ in just and “ equal proportions according to their respective demands, “ without any preference or advantage to one more than “ another,” can be sustained at law, to take effect from its date, the necessary consequence will be, that judgment must be entered for the defendant; because the assignment is prior in point of date to the judgments under which the plaintiffs severally claim. But the assignment is attempted to be impeached on several grounds, which I shall separately consider.
1. It has been objected, that there is no good consideration
2. It has been urged that the assignment took no effect until the 7th March, when Bartholomew assented thereto, and therefore the judgments, entered on the 5th March, have their full operation. To this it is answered, that the assent, of the pax-ty that takes, is implied in all conveyances, by intendment of law, till the contraxy appears; and that this is as strong as the expression of thé party. Stabit prcesumptio donee probetur in contrarium.
3. It is objected that Bartholomew was no creditor, nor elected by the creditors in general to take the assignment. I do not see how his not being a creditor can detract from the validity of the instrument. If, indeed, the assignee had been insolvent, or was incompetent to the execution of the trust, it would afford strong evidence of meditated fraud; but neither of these facts is found by the special verdict; and they cannot be presumed. Besides, this assignment contained a proviso, that Bartholomezv should “ grant and assign the premises, or “ any part thereof with the appurtenances, to one or more “ trustees, under the control and direction of the creditors.” And it is found by the special verdict, that in pursuance thereof, the said John Bartholomew assigned the premises to Thomas Allibone and Caleb North, on the 10th March following, who had been authorized by a meeting of the creditors to take the said assignment. This brings the case within the law maxim, omnis ratihabitio retro trahitur et mandato cequiparatur.
5. It has been further insisted, that the goods of Keely, and his real estate with the title deeds, did not pass into the hands of the assignee; and that the debtor’s continuance in possession is a mark of trust if not of fraud. I agree the general rule to be, that in the transfer of chattels,
6. Lastly, it has been objected, that no schedule accompanied the assignment. Much stress has been placed on the decision of the case of Burd, plaintiff in error, v. Fitzsimmons et al. in the high court of errors and appeals.
It cannot be denied, that this assignment was made for the express purpose of preventing a preference to the plaintiffs in these suits; or, in other phrase, of putting the creditors in general on one common footing, without any kind of priority. That this was an immoral act, will not be asserted. Was it then illegal, and prohibited by the words and spirit of the stat. 13 Eliz. c. 5.1
That act, as well as the stat. 27 Eliz. c. 4. is in affirmance of the common law, whose principles and rules, as they are now universally known and understood, would, according to lord Mansfield.,
My opinion is, that judgment should be entered for the defendant, in both suits.
The first thing that strikes me in this case, is, that it was not until the last moment, that the debt- or thought of making an arrangement for the distribution of his property, with a view to a pro rata payment of his debts. It was not until after a verdict on which judgment was about to be entered, and execution to issue. It may be said that the verdict was unexpected, and that there may have been a defence in fact, to the action, though he had not been able to make it out. But we find that he confesses judgment in another case, to which he had set up a defence, and which lessens the presumption that he honestly thought in this case
The second thing that strikes me, is, that the trustee selected is not an indifferent person; but one who acknowledged in the words of the case stated, “ that he was a friend of the family, and was willing to oblige him (the debtor) in this respect; that he was very willing to serve, but that his illness would, prevent him from coming to the city.” Was there no creditor at hand, who could have been consulted in the constituting a trustee? Or was there no indifferent person who could have been prevailed upon to be made a trustee? One near at hand, into whose possession the property could have been delivered for the use of the creditors. As the case is, there is no substantial difference from the debtor being his own trustee, and having it in his power to do what he pleased with the property*
it is to be remarked, that the creditors are in the power of the debtor, with respect to the debts due; and might he not say to a particular creditor, how much do I owe thee? 500 dollars. Take thy bill and write down 1000 dollars. Is there no danger of such unjust stewardship, where a person is about to be insolvent; and where the liquidation of the debts, is with a trustee of his own nomination?
The third thing that strikes me is, the not delivering a schedule or list of the property, which is the next thing to the delivering possession of the property itself; and which might be done, where the property, itself could not be delivered; books, papers, &c. An inventory of the property is the next best thing to the possession of the property itself. If the debtor had made a sale directly to any one, for a valuable consideration, would he not be likely to give possession? Would it not be a badge of fraud if he did not? Where that could not be done, would we not expect that he would come as near it as possible, by delivering :an inventory of the property transferred? Where the possession is not changed, the property remains in the power of the. debtor, and may be disposed of by him. Btjt an inventory may be a check upon the embezzlement.
It will be said the exigency was pressing in this case; and that it ought to be a sufficient answer, that the time did not serve to call the creditors together, and make an assignment, and deliver the property to them; or to get a trustee of their nomination, and to deliver ;the property to him- for their use; orto make out a schedule of debts and credits, or an inventory of the effects, and to deliver this to the creditors or trustee: that it was impracticable before the judgment would have been alien, and the execution attached, and the estate taken by particular creditors: that equality is equity: that it was the part of an honest debtor to endeavour to provide for a pro rata distribution of his property; and that having done all that could be done, in the short space of time he had to act, it ought to be supported. But I think it of equal, or of more importance, that no opportunity be given to a debtor to arrange for himself at the expense of his creditors; and which opportunity he will have, if such a disposition can be supported. We shall have instances enough of this kind of last will and testament of a debtor about to be insolvent. If it is meant to provide for the payment of debts honestly, and to let the whole go to that purpose, why begin so late? Why not sooner look out, and make distribution? -Insolvency in itself carries xvithit the presumption of dishonesty; for it is oftener the result of imprudence, than of misfortune; and I cannot call the man who makes use of the property of others, even imprudently, a perfectly honest man; and the man, who runs in debt, makes use of the property of others. The scripture tells us, that “ he who maketh haste to be rich; shall not be innocent;” and it is usually such as make haste to be rich, that run in debt, and become insolvent. I believe I might say, with great safety, that they are seldom innocent. The law treats the man who is about to take the benefit of the insolvent act, as a person somewhat to be suspected; he is examined on oath, and undergoes a purgation. We lay hold of his conscience, and superadd the fear of a prosecution for pel
Where the debtor undertakes to make an equal provision for the payment of his debts, and professes good motives, he presents himself with a better appearance somewhat; nevertheless, we are justified in distrusting his motives.
I think it reasonable to require of him every thing that will rebut the presumption of an interest for himself.
It may be, that the oldest creditor has not sued first, or first recovered judgment. But the presumption is, that the patience of the oldest creditor has been first exhausted, and that he has sued first; and on the principles of natural justice, the oldest debt should be first paid, The law cannot carry the administration of justice to such extent, as to take notice of the oldest debt. It could not be conveniently practicable. But it will take notice of the suit first instituted; and the maxim will apply,; prior in tempore potior in jure. In cases where the order of paying debts is left to the law, it will give a preference to a judgment; and between judgments themselves, it will respect the priority. Here the debtor has undertaken to cut out judgments, and to put them on a footing with other debts. It is true, he may have thought some of them of more meritorious consideration; but with me the more natural presumption is, that he was irritated at the process that had been instituted, and the recovery against him; and that, for that reason, he wished to defeat the recovery, and give it no other advantage than other creditors had; which I think unfair, having put them to the expense and delay of legal proceedings. And though the conclusion may not be inevitable, that he was combining an interest for himself, or that it was the dominant and ruling motive, yet I cannot see but that he had it in his power to conceal, and save property for his own use, where the trustee was of his own nomination, and where a number of the creditors were rendered favourable by the race made to get ahead of the judgment and the execution, and to put them, all on a footing.
But it has been argued also, that fraud not being found by the jury, the presumption cannot be weighed and the conclusion drawn by the court. But on a special vei-dict the conclusion must be drawn by the court; for it is the nature of the special verdict, that it be left to the court to infer from the facts what the jury might have done had they taken upon themselves to infer, and give a general verdict, which contains the conclusion of fact from the evidence, and the conclusion of law from the fact. The jury, in this case, have found the facts from the evidence; and, as in the case of every other special ■verdict, it remains with the court to draw the conclusion of fraud, whether it be a conclusion of fact, or of law. Doubtless the conclusion of fact must be in the minds of the court, before they can draw the conclusion of law.
Under the circumstances of this case, if I am to draw the conclusion, it will be, that the debtor had an interest in the arrangement; but, even supposing that he had not, the disposition in the hands of a trustee of his own nomination, and the property remaining with himself for a time, and no inventory of the effects in the hands of a creditor, leave it in his power to make use of the property after the assignment, and before it comes to the hands of the trustee; and, for this reason, I must think such disposition against good policy, and not to be supported. I think it better, that a judgment creditor should take the whole, or the greater part, of a debtor’s property, than that a door to fraud should be opened by sanctioning such a disposition. The truth is, I do not much like the idea of cutting out the judgment creditor, and taking the disposition out of the hands of the law, when it is just about to take the property. A sense of wrong arises in my mind. I think it unfair; the heart revolts; and the only difficulty with me is, to analyse and give good reasons for feelings which I think must be just.
But it is not necessary, in this case, to draw the conclusion of fraudulent intention, or of legal fraud, so as to avoid
But let it be supposed that in the case of a conveyance immediately to the creditors, an assent to take may be presumed,
Judgment for defendant.
1 Atk. 463, 4.
8 T. R. 529.
Dyer. 90. SheJ,. Touch. 222, 3.
2 Ventr. 202-
2 Ventr. 198.1 Show. 296. 3 Lev 284.
3 Mod. 296.
2 Ventr. 208.1 Shorn. Par. Ca. 150.
4 East 9.
1 St. Law 690.
2 T. R. 594. 2 Bro. Cha. Ca. 650.
1 Burr. 484.
4 Ball. 76.
Comp. 434.
1 Burr. 476.