Case Name: Daniel E. Corbitt v. Lewis M. Cutcheon and Loomis K. Bishop
Court: Michigan Supreme Court
Jurisdiction: Michigan
Decision Date: 1889-12-28
Citations: 79 Mich. 41
Docket Number: 
Parties: Daniel E. Corbitt v. Lewis M. Cutcheon and Loomis K. Bishop.
Judges: Morse and Long, JJ., concurred with Champlin, J.
Reporter: Michigan Reports
Volume: 79
Pages: 41–47

Head Matter:
Daniel E. Corbitt v. Lewis M. Cutcheon and Loomis K. Bishop.
Fraudulent conveyances — Trust—Estoppel,
1. In this case the sale under which plaintiff claims, although evidenced by a bill of sale absolute in form, and followed by a delivery of the property, is held not to have been in fact absolute, but to have been made upon a secret trust to pay certain secured creditors, and then reconvey and return to the vendors any property which should remain after such payment; that the intent of the parties in making said conveyance was a question which, under the testimony, was fairly submitted to the jury, whose verdict has settled it in favor of the defendants, who allege said sale to have been made with intent to hinder, delay, and defraud the creditors of plaintiff’s grantors.
2. In such a case the fact that a creditor of the grantor hired sawing done at a mill included in said conveyance, with knowledge of the terms of the alleged sale received soon after it was made, which sawing he paid for, — the grantee refusing to apply any part of the paw bill upon the creditor’s debt, — is not such an act as will preclude him from attacking the validity of the sale.
3. Mere notice without any action on the part of the creditor, and mere acquiescence by taking no present measures to set aside the conveyance or interfere with the transfer, does not amount to a confirmation. The creditor can be precluded' from assail- • ing the transfer only on the ground of estoppel or agreement. There must have been a benefit conferred upon him, or some disadvantage suffered by the vendee, such as ought to bind the conscience of the creditor, or clothe his act with the character of a contract. Bank v. Davis, 44 N. H. 548; Jenness v. Berry, 17 Id. 549; Knaufh v. Bassett, 34 Barb. 31; Annin v. Annin, 24 N. J. Eq. 184; Hays v. Heidelberg, 9 Penn. St. 203.
4. The following propositions are summarized from the opinion of Mr. Justice Champlin:
a — The intent of the parties to a conveyance, and its effect upon the grantor’s creditors, form the criterion by which to determine whether the conveyance is fraudulent. Pierce v. Hill, 35 Mich. 199.
b — If a conveyance is made with intent to hinder or delay or defraud creditors of the grantor in the collection of their demands, it will be fraudulent as to them. Oleland v. Taylor, 3 Mich. 201; Trask v. Green, 9 Id. 358; Maynard v. Hos-kins, Id. 485; Pierce v. Rehfuss, 35 Id. 53; Allen v. Kinyon, 41 Id. 281.
Error to superior court of Grand Rapids. (Burlingame, J.)
Argued November 8, 1889.
Decided December 28, 1889.
Trover. Plaintiff brings error.
Affirmed.
The facts are stated in the opinions.
Maher & Fellcer and D. B. Gorbitt, in fro per., for appellant, contended for the propositions stated in the dissenting opinion.
Tatem é Quinsey, for defendants, contended for the doctrine laid down in the main opinion.

Opinion:
Champlin, J.
Section 6203 of HowelFs Statutes enacts that—
"Every conveyance or assignment, in writing or otherwise, of any estate or interest in lands, or in goods, -or things in action made with the intent to hinder, delay, or defraud creditors of their lawful suits, damages, forfeitures, debts, or demands, shall be void."
The intent of the parties, and the effect of the con veyance upon the creditors of the grantor, form the criterion to determine whether such conveyance is fraudulent. Pierce v. Hill, 35 Mich. 199. If the conveyance is made with intent to hinder or delay or defraud creditors of the grantors in the collection of their demands, it will be fraudulent as to them. Cleland v. Taylor, 3 Mich. 201; Trash v. Green, 9 Id. 358; Maynard v. Hoskins, Id. 485; Smith v. Rumsey, 33 Id. 183; Pierce v. Rehfuss, 35 Id. 53; Allen v. Kinyon, 41 Id. 281 (1 N. W. Rep. 863).
Buchanan & Misner, by a bill of sale, conveyed all their property to the plaintiff in this suit, absolute in form, and the property was delivered to him. But it was not, in fact, an absolute sale. It was made upon a secret trust to pay certain secured creditors, and to reconvey and return to Buchanan & Misner any property which should remain after paying such secured creditors. There were other creditors than those the conveyance was intended to prefer, and among them was Lewis M. Cutcheon, the defendant in this suit. The intent of the parties in making the conveyance was a question which, under the testimony, was fairly submitted to the jury; and they, under the law as given them by the court, found a verdict for the defendants. The question of fact is, upon this record, settled by the verdict that the sale to Corbitt was made Avith intent to hinder, delay, and defraud the creditors of Buchanan & Misner.
The only question upon which I have entertained any doubt is whether defendant Cutcheon, by delay in not commencing suit sooner, or by any transaction with Corbitt, had acquiesced in or confirmed the transaction. The statute was made for the benefit of -creditors, and they may dispense with a provision of law which is made for tlieir benefit. Mr. Cutcheon was informed, a short time after the occurrence, of the terms of the alleged sale. But mere notice, Avithout any action on the part of the creditor, and mere acquiescence, by taking no present measures to set aside the conveyance or interfere with the transfer, does not amount to a confirmation. He can be precluded. from assailing the transfer only on the ground of estoppel or agreement. There must have been a benefit conferred upon him, or there must have been some disadvantage suffered by Mr. Corbitt, such as ought to bind the conscience of Mr. Cutcheon, or clothe his act with the character of a contract. Bank v. Davis, 44 N. H. 548; Knauth v. Bassett, 34 Barb. 31; Jenness v. Berry, 17 N. H. 549; Annin v. Annin, 24 N. J. Eq. 184; Hays v. Heidelberg, 9 Penn. St. 203.
Mr. Cutcheon hired sawing done at the mill, but paid for such sawing; and Mr. Corbitt refused to allow any part of the pay for such sawing to be applied upon his debt. We do not think that this was such an act as precludes Mr. Cutcheon from his remedy to attack the validity of the sale to Corbitt.
We are unable to perceive any error in the record, and the judgment is affirmed.
Morse and Long, JJ., concurred with Champlin, J.