Case ID: conn_28/html/0308-01.html
Source: Caselaw Access Project
Author: {"author": "*Stores, C. J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Charles Starr, Jr., Trustee vs. Amzi P. Plant and others.
    The firm of C & Co. was indebted in a large amount to the firm of C D & Go. The members of the former firm composed, with others, the latter firm, and both firms were located in the state of New York. C D & Co. owned stock of a manufacturing corporation in this state. Both firms being in failing circumstances, it was agreed between them that the stock should be sold by C D & Co. to C & Co., and charged on the books of the former, in part payment of the indebtedness of C D & Co. to 0 & Co., and that the stock should be transferred on the hooks of the manufacturing company to one P, for the purpose of keeping it from attachment by the creditors of C & Co., and of having it conveyed to such particular creditors of that firm, as they might afterwards designate. C, who was a member of both firms, arranged the whole business in behalf of both. Immediately after the transfer, - both fir-ms made general assignments for the benefit of their respective creditors, under the laws of the state of New York, the same person being made trustee of both estates. The schedule of as- [ *378 ] signed property anngxed to the assignment of *C & Co., embraced the stock in question, but that of C D & Co. did not. Neither assignment was ever recorded in any probate court of this state. The trustee soon after demanded of P a transfer of the stock, but P refused to transfer it. Some months after the stock was attached by creditors of C D & Co. as the property of that firm, they having knowledge of all the facts. On a bill in equity brought by the trustee against P and the attaching creditors, praying that P be ordered to transfer the stock to him as trustee, and asking the advice of the court as to the estate to which it was to be applied, it was held,
    1. That the conduct and intentions of 0, which were actually fraudulent, were to be imputed to both firms, as he was a member of and acted for both, and that therefore the sale of the stock by C D & Go. tc C & Co. was not to be considered as a mere preference of C & Go. as a creditor of the former firm, but, in connection with the arrangement for the holding of the stock by P, was to be considered as a fraud upon the creditors of both firms, and therefore void against them.
    2. That the creditors of 0 D & Co., who had attached the stock, had therefore acquired a lien upon it which was valid against C & Co. and against P.
    3. That the trustee had no title which could prevail against the lien of the attaching creditors, inasmuch as C & Co., whose assignment embraced the stock in question, had no title which was valid against the attaching creditors, and C D & Co., who might have conferred such a title, had not included the stock in their assignment.
    
      Bill in equity, brought by the plaintiff as trustee of the assigned estate of C. B. Conant, Dodge & Company.
    Samuel C. Demarest and Claudius B. Conant, on the 14th day of September, 1857, were, and for a long time had been, partners in business in the city of New York, under the name of C. B. Conant & Co. Demarest and Conant were at the same time partners in business, in the city of New York, with William A. Dodge and John R. Ward, under the name of C. B. Conant, Dodge Sa Co. Conant, Dodge & Co., on the 14th day of September, 1857, were the owners of one hundred and eighty shares of the capital stock of the Plant Manufacturing Company, a joint stock corporation located in the town of Southington in this state, which shares were of the nominal value of $4,500. Conant, Dodge & Co. were, at that time, indebted to the firm of C. B. Conant & Co., to an amount exceeding ten thousand dollars, and were also largely indebted to other persons, and were unable to pay their debts. C. B. Conant & Co. were also largely indebted, and were unable to pay their debts, and Both firms contemplated ^making as- [ *379 ] signments of their property in trust for the benefit of their respective creditors. Having these assignments in view, Conant, on the 14th of September, 1857, for the purpose of placing the stock above mentioned beyond the reach of attachment, and to have it stand in a position where it might be conveyed to some of the creditors of C. B. Conant & Co., to satisfy their debts, did, with the assent of the other members of the firm of Conant, Dodge & Co., charge the value of the stock on the books of Conant, Dodge & Co. to C. B. Conant & Co., in part satisfaction of the debt due from Conant, Dodge & Co. to C. B. Conant & Co., and took measures to have the stock transferred on the books of the Plant Manufacturing Company to Amzi P. Plant, one of the respondents, to hold for the above purposes, and such transfer was actually made on the 16th day of September, 1857. After the transfer of the stock to Plant, Conant, Dodge & Co., at the city of New York, on the 16th day of September, 1857, assigned all their property to the petitioner, in trust, for the benefit of their creditors; and C. B. Conant & Co. also, at the same time, made an assignment of all their property to the petitioner in trust, for the benefit of their creditors, each assignment giving a preference to certain creditors named therein, and both being executed according to the laws of the state of New York. A schedule referred to in the assignment of Conant, Dodge & Co., as embracing the property assigned, was made out by them in January, 1858, and did not mention the stock in the Plant Manufacturing Company. A schedule of the property assigned, referred to in the assignment of O. B, Conant & Có., was made out by Conant, in November, 1857, and mentioned the stock in question as a part of the assets of C. B. Conant & Co. The petitioner, soon after the assignments were made, called upon the respondent Plant, and requested him to convey the stock to him as trustee of the estate of C. B. Conant & Co., and was informed by Plant that he could not do so because Conant had forbidden it, and had desired him to transfer it to one Selden, for whom it was designed, who was a creditor of C. B. Conant & Co., [ *380 ] and who had been informed that he was *to receive . this stock in satisfaction of his claim. The petitioner afterwards called again upon Plant for the same purpose, but he declined to make the transfer for the same reasons as before, and also for the further reason that the Plant Manufacturing Company had a claim against Conant, Dodge & Co., amounting to §254, which they regarded as a lien upon the stock. The petitioner thereupon paid the debt to the Plant Manufacturing Company, but Plánt still declined to transfer the stock to him, and it was still standing on the books of the Plant Manufacturing Company in the name of Plant; but Plant had not, and did not claim to have, any other interest in the stock than simply as trustee for its real'owner.' Neither of the assignments to the petitioner was ever recorded in anf ' probate district in this state, nor were any proceedings had with regard to the stock under the insolvent laws of this' state. The Union Butt Company, a Rhode Island corporation, and Augustus P. Collins, of New Britain in this state, were, ori the 14th day of September, 185‘7, and still remained, creditors of Conant, Dodge & Co. to a large amount. The Union Butt Company, on the 22d, and Collins on the 26th' day of May, 1858, severally attached the stock as the property of Conant, Dodge ■& Co., to-secure their respective claims, and their actions' were still pending in court. Both, at the time of their attachments, had full knowledge of all the above facts.
    Plant, the Union Butt Company, and Collins, were' made respondents'.' The bill averred that the petitioner was in doubt to which of the two assigned estates the stock-belonged, and prayed the court to advise him in the matter, and to order the respondent Plant to transfer the stock to-' him as trustee, with a general 'prayer for'relief. Plant did not appear. The facts were specially found by the superior court; and the case reserved for the advice of this court.
    ' Hubbard, for the plaintiff.
    
      1. The sale by Conant, Dodge & Co. to Conant & Co., and the transfer to Plant, vested an equitable title to the stock in the latter firm. As the sale was in part payment of *an honest debt, it was not fraudulent as against the [ *381 ] creditors of Conant, Dodge & Co.
    2. The assignment of Conant & Co., for the benefit of their creditors, carried this equitable title to the plaintiff, and Plant •held thereafter as trustee for him. This assignment was valid by the laws of New York. It was also valid by the laws of this state. The act amendatory of our insolvent laws, passed in 1855, provides that such an assignment can be set aside only by moving the assignor into bankruptcy. Acts of 1855, p. 83. A transfer on the books of the company was not necessary for the purpose of conveying the equitable title. Sargent v. Franklin Ins. Co., 8 Pick., 97. Sabin v. Bank of Woodstock, 21 Verm., 353. Duke v. Cahawba Co., 10 Ala., 91. Union Bank v. Laird, 2 Wheat, 393. Black v. Zacharie, 3 Howard, 483. United States v. Cutts, 1 Sumner, 138. Dutton v. Connecticut Bank, 13 Conn., 498. Vansands v. Middlesex Co. Bank, 26 id., 152.
    3. The attaching creditors, having notice of the plaintiff’s equitable rights, can not be allowed to defeat them.
    4. But the attaching creditors have acquired no rights in the stock, because, at the time of the attachment, their debtors, Conant, Dodge & Co. had no interest in it, legal or equitable.
    
      T. C. Perkins and N. Shipman, for the defendants.
    1. The petitioner has no legal nor equitable title to the stock by virtue of any transfer to him by either firm. It was transferred to Plant for the purpose of placing it beyond the reach of the creditors of either firm. This fraudulent conveyance being good as against Conant, Dodge! & Co., there remained no title in them to convey to the petitioner, and Conant & Co. acquired no title which was good against the creditors of Conant, Dodge & Co.
    2. A trustee of a non-resident insolvent, made such by compulsory process in a foreign state, takes no title to property located in- this state, against an attaching creditor. 2 Kent Com., 406. Story Conflict of Laws, § 416. Ogden v. Saunders, 12 Wheat., 361, 4. Milne v. Moreton, 6 Binn., *353, 363. Holmes v. Remsen, 20 Johns., [ *382 ] 229, 264. Saunders v. Williams, 5 N. Hamp., 213. Upton v. Hubbard, 28 Conn., 274. The same rule prevails in regard to a-trustee under the voluntary assignment of the nonresident debtor, when the provisions of such assignment are contrary to the policy of this state. Brig Watchman, Ware, 232. Ingraham v. Geyer, 13 Mass., 146. Fox v. Adams, 5 Greenl., 245. Fall River Iron Works v. Croade, 15 Pick., 11. Belton v. Valentine, 1 Curtis, C. C., 168. Zipcey v. Thompson, 1 Gray, 243. This is a general principle, without reference to the non-compliance of the foreign assignment with the requirements of our statute.
    3. A non-resident debtor, in respect to stock located in this state, is subject to the provisions of our insolvent law, and the assignments to the petitioner are void unless cured by the act of 1855. Richmondville Manufacturing Co. v. Prall, 9 Conn., 487. Atwood v. Prot. Ins. Co., 14 id., 555.
    4. This defect is not cured by the act of 1855, because the assignment of the stock was void at common law, being conveyed for the purpose of placing the property beyond the reach of' attachment, and assignments so void are expressly excepted by the terms of the act. Beers v. Botsford, 13 Conn., 146, 154. Johnson v. Whitwell, 7 Pick., 71. Boardman v. Halliday, 10 Paige, 223. Further, that the act had no reference to the assignments of insolvents in other states, under a policy and laws antagonistic to our own.
    5. The petitioner has no equity superior to that of the attaching creditors. He seeks to recover what it was never intended that he should have. He represents one or two foreign creditors, against parties not citizens of the state of New York, who have a valid attachment upon the property. Creditors who have sought the aid of our courts can not be deprived of the remedies provided by our laws. The comity of nations does not require any state to do that which is inconsistent with its own interest and policy. Fox v. Adams, 5 Greenl., 254. Saunders v. Williams, 5 N. Hamp., 515. Ingraham v. Geyer, 13 Mass., 148. Lowrey v. Hale, 2 Watts. & Serg., 129.
   [ *383 ]

*Stores, C. J.

The only question on the merits of this case which has been presented to us is, whether the defendants, or either of them, by their attachments of the stock of the Plant Manufacturing Company, acquired a lien on it which should prevail, as well over the sale of it by the firm of Conant, Dodge & Co. to the firm of Conant & Co., and the transfer of it.to the defendant Plant, as over the subsequent assignments to the ■ plaintiff by those firms respectively, which are claimed to embrace that stock.

We are of the opinion, in the first place, that the sale of the stock by Conant, Dodge & Co., in connexion with the arrangement of which it was a part, and the execution of that arrangement, was clearly fraudulent as to tlieir creditors, as being intended and calculated to place the property beyond the reach of those creditors. Considering, for-the purposes of this question, the sale of the stock from Conant, Dodge & Co. to Conant & Co., which was not attended with a transfer of it on the books of the Plant Manufacturing Company, and which could therefore pass only an equitable title to the latter firm, to stand on as high ground, in regard to the creditors of Conant, Dodge & Co., as if a legal title to the stock had been transferred by them, that sale was fraudulent and void as to those creditors on the plainest and most familiar principles, since it is found that it was not only made with the intention of preventing the stock from being attached by them, but the legal title to it was, in pursuance of that intention, by one of the members of both firms subsequently caused to be transferred to Plant, one of the defendants, without any consideration, to be held by him merely in trust for Conant & Co., and for the purpose of his transferring it, not to any specified or particular creditors of that firm, or for the benefit of their creditors generally, but only to such of their creditors as they should thereafter designate. This, therefore, was a disposition of the stock, made with an intent to keep it from the creditors of Conant, Dodge ■& Co., expressly found, and not merely inferable from circumstances, and of such a character that, if sustained, it would place the property beyond the reach of those creditors *by any legal process. It was [ *384 ] therefore plainly fraudulent and void as to those of the respondents who attached the property, and who are found to be, and must therefore, for the purpose of this case, be deemed to be, such creditors. Camp v. Bates, 11 Conn., 51. It is equally clear for the same reasons, that the disposition of the stock by Conant & Co., after the sale to them by Conant, Dodge & Co., was also equally fraudulent as to the creditors of Conant & Co.

The plaintiff, however, claims that, although the disposition of the stock by Conant & Co. may have been fraudulent as to the creditors of that firm, the transfer of it to them by Conant, Dodge & Co., notwithstanding it was designed to protect it from attachment by the creditors of the latter firm, could not be fraudulent as to those creditors, because it was made and received in payment of an honest debt due from Conant, Dodge & Co. to Conant & Co.; on the ground that it was only a lawful preference of a particular creditor, of which fraud can not be predicated, and that the sale by Conant, Dodge & Co., being therefore valid as to their creditors, it is not competent for the defendants, who claim here, and who have attached the stock, as their creditors only, to dispute -the validity of the subsequent transfer of the stock to Plant, and that none except the creditors of Conant & Co. can question- that transfer. If the firm of Conant, Dodge & Co. had been composed of different persons entirely from those composing the other firm, it might be necéssary to consider whether a transfer of. property-by the' former firm, for the purpose of paying an honest debt due from them to the latter, could be impeached-by the creditors of the former firm on the' ground that it was made with an intention of defrauding those creditors, or of preventing- them from appropriating the property by legal process for the payment of their debts'; but when it is considered that' some of the persons who composed the firm of Conant, Dodge & Oo. were also members of that of Conant & Co., and that, as the whole arrangement respecting this stock was made by Conant, who acted for, and whose conduct and intention must- be imputed to both of these' firms, the members [ *385 ] of both must be held to have *combined together for the purpose of placing the stock beyond the - reach of the creditors of either, it is obvious that the general principle that a debtor may, in the disposition of liis property, lawfully prefer some of his creditors to others, is rendered inapplicable to the present case, and the question'suggested by the pláin'tíff need not therefore be examined'. The twu firms being composed in part of the same persons, the effect of the sale from one to the other of them was not to divest those members of the'firm by whom it was sold of their interest in the stock ; they not only retained their original interest in it before the sale, but that interest was increased. Those members, after the sale to Conant & Co., were still holden for the debts of Conant, Dodge & Co., as much as they were before that sale, and all their interest in the stock in question-, subject to-an adjustment of the concerns of Conant & Co., between its members, was- liable to attachment by the creditors of the firm of Conant, Dodge & Co. And it does not appear, nor is it therefore'to be taken, that the'interest in the stock of those members of the latter firm' who belonged to the other, would,.in a settlement of the concerns' of Conant & Co.* have-been impaired, when the stock was attached by the defendants,-who are the creditors of Conant, Dodge & Co. Therefore* as the case-appears- before ús, there was an interest in the stocki in the; members of the firm' of Conant & Co.', who had been members of the other firm* which was liable to that attachment. -Hence -it is obvious that tide’ disposition of' this stock, by which the title to it was-vested'in Plant, would, if successful, deprive the- defendants,- who áre creditors cif Conant^ Dodge & Co., of a fund to which they were entitled to resort; and being, as is found, made with that intent, it is, as to them, fraudulent and void. The attachment of the stock in question by those defendants is therefore valid, against the transfer of it to Plant the other defendant.

The plaintiff further relies on the assignments to him of the stock in question by the firms of Conant, Dodge & Co. and Conant & Co., as vesting in him a title to that stock prior to the attachment of it by those creditors. No such title *could pass to the plaintiff by the assignment of [ *386 J Conant, Dodge & Co.’, because that assignment did not embrace this stock, it not being included in the schedule annexed to the assignment. The only question therefore is, whether'it passed to him by the assignment from Conant &-Co., in the schedule annexed to which it was embraced. The only title which Conant & Co. ever had to that stock was that which was attempted to be transferred to them by Conant, Dodge & Co., and that transfer has already been shown to be invalid as against the defendants. The effect of setting aside that transfer was to leave the title to it in Conant, Dodge & Co., to whom it originally belonged, and who only could transfer it- to the plaintiff, but from whom it appears that the plaintiff has never received any assignment or transfer of it, it not being embraced in their assignment to the plaintiff. In " this view the plaintiff shows no title to the stock which can be good against the creditors of Conant, Dodge & Co.

The assignment from Conant & Co. to the plaintiff being invalid, independently of the provisions of the first section of the insolvent act of 1853, (Rev. Stat., ed. 1851, p. 512,) it is unnecessary to determine the construction of the act of 1855, in addition to that act, (Acts of 1855, ch. 68, p. 83,) by which the plaintiff has insisted that that assignment was made effectual to convey the stock in question to the plaintiff.

We are therefore of the opinion that the situation of the stock should hot be disturbed at' present; and that this bill should be dismissed; without prejudice, hotvever, to the right of the plaintiff to bring another Suit, if his position in regard to the stock should be changed by any change in its condition.

In this opinion the other judges concurred. -

Advice that bill be dismissed.