Case Name: Stutson and The Bank of Utica against Brown and Brown
Court: New York Supreme Court
Jurisdiction: New York
Decision Date: 1827-10
Citations: 7 Cow. 732
Docket Number: 
Parties: *Stutson and The Bank of Utica against Brown and Brown.
Judges: 
Reporter: Cowen's Reports
Volume: 7
Pages: 731–735

Head Matter:
*Stutson and The Bank of Utica against Brown and Brown.
ALBANY,
Oct. 1827.
A man in GrnbflTrflssGd circumstances, for^ a*1 siderable debt notoriously pending against him, on wnich execution was shortly expected, conveyed, by bill of sale, absoluto on its face, 1-2 of a sloop; the vendee agreeing, by a memorandum in writing, executed at the same time, that if the vendor paid car tain indorsements for himself within twelve months, to secure which the sale was made, then the sale should be void; but if not, then to be valid; and that the vendee should then pay the indorsements within one year. The indorsers afterwards took the vendee’s notes; but did not know of the condition in the sale. A part of these notes were afterwards paid out of moneys furnished by the vendor, Judgment being obtained in the pending suit about a month after the sale, and the sloop sold under execution issued upon it; held, thatthe bill of sale was fraudulent as to creditors, in judgment of law; and there being no dispute about the facts ; held also, that in trover by the vendee against the purchasers under the execution, brought for a conversion of the sloop, that the plaintiff should be non-suited; there not being sufficient evidence of his right to go to the jury.
Trover for one half of the sloop Arcadia: tried at the ** ’ Jefferson circuit, August 28th, 1823, before Williams, 0 when the following facts appeared:
On the 5th of August, 1820, J. Y. Bacon, being owner of 1-2 the sloop, as tenant in common with the bank of Utica, executed a bill of sale of his share, dated on that day, to Stutson. At the same time Stutson and Bacon executed a memorandum, reciting the sale of the sloop then lying at Sackett’s Harbor; and that it was for securing the payment of two notes due the bank of Utica; one for 600 dollars, dated June 13th, 1820, indorsed by D. & L., payable at 90 days; and the other for 500 dollars, dated July 9th, 1819, indorsed by A. & 0., payable at 90 days ; and by which Stutson agreed, in consideration that Bacon should pay or settle the notes, the first signed by J. Y. Bacon and J. Bacon, junior, and the other by J. Y. Bacon & Co., without calling upon Stutson, within 12 months from the date of the bill of sale, Stutson would release and convey the share of J. Y. Bacon to Mm; but, in case of J. Y. Bacon’s failure to pay, the bill of sale to remain valid. Stutson thereby agreed to pay the notes in 12 months from the date of the bill of sale, if not previously paid by Bacon; or in case part should be paid, then to pay the part unpaid out of the proceeds of 1-2 the sloop. The transfer was immediately entered at the custom house, and new papers taken out in the name of Stutson and the bank of Utica. The indorsers were informed of the sale, and Stutson gave them his notes for the amount of their indorsements as an indemnity; but the indorsers of the 600 dollar note had since paid their indorsement; and Stutson -'had paid them but $255 60, furnished to him by Bacon, the vendor. He had paid about 70 dollars on the other indorsement. The sloop was in good order at the time of the sale, and would earn $1,200 a season ; and was worth rising of $2,000. Stutson was a sea captain, a good mariner, an economical and prudent man. His security was better than Bacon’s, the vendor, who was in embarrassed .circumstances at the time of the sale. Stutson was worth little, or nothing; but was solvent, and -might, by his earnings, have paid for bis interest in the sloop, had he not been dispossessed -by the defendants. He finally proved unable to pay; and the indorsers remained without indemnity. In the summer of 1820, it was generally said at Sackett’s Harbor, in the neighborhood of which the parties to the sale resided, that a large execution was shortly to issue in favor of the defendants against J, V. Bacon .& Co. Bacon’s share was incumbered to about $150 beside the indorsements, which Stutson agreed to pay. Bacon, the vendor, had charge and control of the sloop as agent of the owners after the sale to Stutson, till the sale by the defendants, and after that time. A suit was -pending, brought by the defendants, against J.'V. Bacon & Co., during the year 1820; and in September, 1820, the defendants having .obtained judgment, caused Bacon’s, the vendor’s, share ,to be levied on under their fi. fa. and sold; they becoming the purchasers. They had accordingly taken possession of, -and .converted the share of Bacon to their own use. On these facts, the judge refused to suffer the cause to go to the jury; but non-suited the plaintiffs.
J. Butterfield, for the plaintiffs,
now moved to set aside the non-suit, .and for a new trial. He said the sale was bona fide., .and for an honest and lawful -purpose. There is no doubt that a debtor in failing circumstances may prefer -.one creditor to another. (5 John. 344; 15 id. 583.)
At any rate, -the question should have gone to the jury, The bill of sale -and memorandum were not fraudulent on -their face. Taken together, they amount to a mortgage. (8 John. 95; 4 Cowen, 461.) The contract might have *been .enforced either by the indorsers or the bank, for -their own "benefit. (1 John. 139; 4 Cowen, 432.) A mortgage even fo secure future advancements is valid. (2 Cowen, 324; Pow. on Mortg. 3, 4.) Chattels mortgaged cannot be taken by-an execution against the mortgagor. (1 Pick. 389; 8 East, 467; 3 Cowen, 192, 193, in the note.) If the transaction was good in its inception, it cannot be avoided by matter ex post facto. (Shep. Touch. 67.) Bacon could not redeem without paying the indorsed notes. It was not, therefore, a revocable trust. His power was the. same with that of other mortgagors. The indorsers were satisfied; and recognized and acted Upon the mortgage^ Clearly the debtor might have sold or mortgaged to them; and it is equally clear he may do so to a third person &r their benefit. It was virtually an. assignment to them. If Stutson does' not recover, he loses the whole amount of the indorsements which he has assumed.
G. C. Bronson, contra.
True, the only question is, whether the bill of sale was fraudulent at the time of its execution. The suit against the defendant was then pending. Stutson was not worth a dollar; and the judgment must have been recovered by the defendants a few days after. The assignment was not for the benefit of the creditors ; but for the benefit of the vendor. It was not a sale to a trustee. That must be absolute. This is not a sale. Whether Stutson was to own it, was uncertain till after the 12. months. There was no dispute about the facts; and the fraud was, therefore, a question of law merely.

Opinion:
Curia, per Sutherland, J.
The transfer by Bacon to Stutson was clearly fraudulent; as being made for the purpose of putting his interest beyond the reach of the defendants' execution. The fraudulent intent, on the part of Bacon, is apparent on the face of the instruments, after the fact of his being embarrassed, if not insolvent, was established. He gave an absolute bill of sale to Stutson, who at the same time entered into an agreement by which, after reciting the sale, and that it was for the purpose of paying certain indorsements of third persons for Bacon, *he agreed, if Bacon should pay those notes himself within 12 months, to re-transfer the sloop to him. If Bacon should not pay the notes, then Stutson agreed to pay them within a year. How, one of these notes had been due more than a year at the time of this assignment; and the other was then about due; so that the effect of this arrangement, if it is upheld, would be to place the sloop beyond the reach of all Bacon's creditors; and to give him one year to make arrangements for redeeming her. The case is not varied by the circumstance of Stutson's giying his notes to the indorsers, and of their assenting to take them. It does not appear that they knew of the power of redemption; and the fact that Bacon furnished Stutson with 255 dollars 60 cents, which lie paid on one of these notes, shows conclusively that this whole arrangement was intended merely to cover the property - from the defendants' execution, which was issued about one month after. It is shown to have been matter of general notoriety at that time, that the defendants were about obtaining a heavy judgment against Bacon.
The plaintiffs were properly non-suited; and this motion must be denied. Motion denied.
See Waterman's Am. Ch. Dig. Vol. 2, tit. Fraudulent Conveyance.