Case Name: Wager against Miller
Court: Supreme Court of Pennsylvania
Jurisdiction: Pennsylvania
Decision Date: 1818-07-13
Citations: 4 Serg. & Rawle 117
Docket Number: 
Parties: Wager against Miller.
Judges: 
Reporter: Reports of cases adjudged in the Supreme Court of Pennsylvania (Sergeant & Rawle)
Volume: 4
Pages: 117–124

Head Matter:
Wager against Miller.
Monday, July 13.
CASE stated for the opinion of the Court.
Where goods had been assigned ^enTdebtor under the act ísos^m're-’ mained. in his. with the perm°'<; chan 5eW,ltiíát ‘h?y T** not fiable to an execution, for a e| /jra’orto'tho creditor, who totter£onta censai ex-debtor from property from exeoutions, during the term of charge,
length of pos. would be fraudulent, with respect to a debt contracted after the discharge.
On the 30th June, 1808, William Miller, the defendant, assigned to James Ash and Abraham Garrigues, all his estate, real, personal, and mixed, for the use of his creditors.
In this assignment was included, a quantity of household furniture, of which the assignees never took possession, but the same remained m tne possession oí the said William1^ Müller, and was used by him in his dwelling-house, as his own goods, until the levying of the execution hereinafter mentioned.
• At the Term of March, 1816, Peter Wager and William J. Baker, executors of Philip Wager, deceased, obtained a judgment in this Court, for 667 dollars 59 cents, against the said William Miller and James Miller. A fieri facias was issued upon the said judgment, returnable to March Term, 1817, under which the household furniture above-mentioned, was levied upon, and taken in execution, by the sheriff of Philadelphia county, on the 24th day of March, Anno Domini 1817, but at the instance of the defendant, no sale took . place.
On the 3d April, 1817, the said William Miller, gave notice to the sheriff, that the said goods were included in his assignment to James Ash and Abraham Garrigues, that they were not his property, otherwise than for safe keeping ... , , . , . ' , and delivery to his said assignees, and cautioned the sheriff against any further proceedings in relation to them.
It was, therefore, agreed, that the goods should be ap- “ ’ ° r praised, and an amicable action instituted, to try the validity of the levy, under the said execution.
The question for the opinion of the Court was, whether on the preceding circumstances, the execution issued by Peter Wager and others, could be supported against the assignment above-mentioned.
Rawle, jun. for the plaintiffs.
Though none of 'the cases in the books, in which conveyances to trustees have been deemed fraudulent and void against creditors, in consequence of the debtor’s retaining possession of the property assigned, exactly resemble this, yet the principles they establish, clearly apply. The rule is now well settled, subject, however, to some exceptions, that where an absolute, unconditional assignment is made, of a chattel, possession must accompany and follow the deed; otherwise it is fraudulent and void, both at common law and under the statute of 13th Eliz. c. 5. Possession is not merely a badge of fraud, but per se,-vitiates the whole transaction, and renders it void. Whatever title, therefore, vested in the assignees of William Miller, it is contended, was destroyed by their suffering him to remain in possession of the property assigned. In England, the rule of inferring fraud from the possession of a chattel by a debtor, is carried much further than in Pennsylvania. An execution levied upon goods which are suffered to remain in the defendant’s hands, is deemed fraudulent, and will not protect them from a subsequent execution. Rice v. Sergeant, Bradley v. Wyndham. From sentiments of humanity, and the peculiar necessities of the country, our law does not view the mere possession of the debtor, after his goods have been levied upon, unaccompanied by any other circumstance in the same light, Levy v. Wallis, Water’s executors v. M‘C'lellan, Chancellor v. Phillips. The propriety of these decisions, has, however, been doubted, even in Pennsylvania, and in the Circuit Court of the United States, for this district, the English rule was,, after great deliberation, adopted, United States v. Conyng■ham. The same law governs the Courts of New York, Storm v. Woods. The case of an assignment differs very materially from that of an execution, and whatever may be the law in relation to the latter, it cannot be controverted, that in the former, a transfer, unsupported by possession, is generally fraudulent and void, Wilt v. Franklin, Dawes v. Cope, M'-Callister v. Marshalle, Hamilton v. RusselL These cases, without referring to many others which might be adduced, conclusively shew, how far for the suppression of fraud, the law requires possession to attend the assignment of a chattel; and unless there is something in the insolvent law, which precludes their application, they are conclusive on the present question. The assignment was made, under the act of 26t'h March, 1808, which revived, with some additions, the act of 4th April, 1798, for a limited time.
The object of that law, was, to exempt from imprisonment an honest debtor, who had fairly and fully surrendered his estate for the use of his creditors, not to protect him in the enjoyment of it. The monstrous system of iniquity, which has been built on the basis of conveyances to friends, ostensibly for the benefit of creditors, but really for the use of the debtor, even under the sanction of the insolvent laws, is ah evil of extensive prevalence, and the most injurious consequences, and Courts should lay a strong hand upon every attempt to elude the intention of the law. It is not pretended, that the conduct of the parties to the present assignment, is tainted with moral fraud ; but the rule established in one case, must be that by which every analogous case is governed, and if fraud in the legal acceptation of the term, be shewn, it is no less incumbent on the Court to prevent the mischievous consequences which would flow from it. By -the assignment, an incipient.title was vested in the assignees of the defendant, but instead of perfecting it by taking- possession of the property assigned, and converting it into money, for the use of the creditors, they permit the assignor to retain possession nearly nine years, without exercising any act of ownership over it, or in any manner interfering with the defendant’s enjoyment of it. By thus neglecting to act in pursuance of their trust, it is contended, that the assignees lost the title they once possessed. The 19th section of the act declares, that any property, real or personal, which such debtor, or any other person in trust for him, at the time of his assignment, hath, or thereafter shall or may be, in any way seised or possessed of, interested in, or entitled to, in law or equity, shall be liable for his debts, and may be taken in execution, notwithstanding his discharge. Though the title to the property in question, passed to the assignees, the use and beneficial ownership remained in the assignor. The 8th section requires the assignees to close their accounts,, in one year from the date of the assignment, unless the time be enlarged by the Court, or a suit be depending, or any part of the estate remain undisposed of, or any future estate or effects of the debtor, shall come into their hands, in which case, the trustees are, as soon as possible, to convert the estate or effects into money, and within three months afterwards, to distribute the same among the creditors. The trustees in the present case, came within none of these exceptions. Their controul, therefore, over these goods, ceased at the expiration of the year, and their title was lost by their having never reduced them into possession. The defendant, it is true, does not claim the goods as his own, but to every intent, they are so beneficially, and it is idle for him, to interpose on behalf of assignees, who never did, and at this moment, do not assert any claim to the property. The circumstance of the assignment having taken place under the insolvent law, cannot alter its character.
But if the transaction ought not to be viewed in this light, the property may be considered as having been acquired by the defendant, subsequent to his discharge. By the assignment, it passed to the trustees, who are accountable to the creditors generally for the value of it. It may be considered as having been sold, and purchased by the trustees, and their permitting the defendant to enjoy it, amounts to a gift. Whether the property be acquired by the bounty of the trustees, or the industry of the debtor, it is equally subject to execution. Unless an execution be sustained under such circumstances as exist in this case, it is evident, that the intention of the law may be evaded by collusion between the insolvent and his truste.es, and the creditor have no effectual remedy. It is fruitless to refer him to the security which the law requires the trustees to give, for it is noto nous, that in many instances, no bonds are entered into, and the trustees and sureties are in many instances themselves insolvent. Nor does the penal section of the law afford any redress, because it merely punishes the breach of morals, It is manifest, that the effect of this transaction, has been to delay and hinder the creditors in the recovery of their debts, and whatever has that tendency, where the benefit accrues to the debtor, is fraudulent and void.
Chauncey, for the defendant.
The proceedings under the insolvent law, by virtue of which, the defendant was discharged, were fair and regular, and no fraud of a moral kind is imputed to him. Two questions arise, 1. In whom is the title to the property vested ? 2. If not in Miller, does his possession amount to a fraud, in law ? The assignment was not a voluntary one; it was compelled by the insolvent law, and the proceedings shew, that it was a good assignment. The trustees were not chosen by the debtor, but by the •creditors themselves, or by the Court, if the creditors did not think proper to attend. By the assignment, the whole of the defendant’s property, real, personal, and mixed, passed to these trustees, for the benefit of his creditors, and he was discharged. Philip Wager was a creditor before the discharge ; had an opportunity of objecting to the assignees who were appointed, and actually signed a letter of license, by which the defendant was exempted from all suits, and the property he might afterwards acquire from executions, for any debt contracted, or cause of action, created previous to his discharge. He, therefore, was a party to the proceedings, under the insolvent law. What were the rights acquired by the parties in consequence of these proceedings ? After having taken the preliminary steps pointed out by the act of assembly, the petitioner is compelled to execute an assignment of all his estate, to trustees nominated by the creditors, if they think proper to exercise that privilege, in whom the title immediately vests, for the benefit of the creditors. At the moment the assignment is made, the title passes out of the debtor and vests in the assignees, whether they accept the trust or not; he no longer possesses any controul over the property, Cooper v. Henderson. If the trus tees refuse to act, the Court are authorised by the 3d section of the law, to appoint others in their room, and with a view to secure the interests of the creditors, every trustee, before he can act as such, is obliged, by the same section, to give bond for the faithful performance of his duties. If, therefore, the property once passed out of the debtor, it could never revest; it has been once appropriated to the satisfaction of his debts, and to the trustees must the creditors look for a faithful application of it. To . them the trustees are liable to account, and they may compel them to take possession of the property, and distribute the proceeds among them, by pursuing the modes pointed out by the act of assembly. They are the trustees of Philip Wager, and the other creditors of the defendant, and if he has improperly remained in possession of the goods, it was through their own negligence, in not compelling the trustees to do their duty. They are accountable for their value.
2. There is nothing fraudulent in the defendant’s possession. It is a matter between him and his trustees, who have permitted it without any impropriety on his part. That fraud is generally to be presumed, where the possession of a chattel remains in the assignor after assignment, is not denied ; but the rule is not invariable, possession may be explained. Where an insolvent executes a bona fide assignment, for the benefit of all his creditors, and delivers a single article, for example a silver cup, in the name of the whole, and remains in possession of the remainder, at the request and for the benefit of his assignees, such possession is not fraudulent, Vredenburg v. White, for there the possession accords with the intent of the assignment. Possession is only prima facie evidence of fraud, therefore, where it is consistent with the face of the deed, and the object is not to defeat creditors, it affords no evidence of fraud, Beals v. Guernsey, M‘Ins try v. Tanner. In the present instance, the possession of Miller is not inconsistent with his conveyance; it is with the permission of his trustees, and for their use, and the use of the plaintiff and the other creditors. The trustees are entitled, at any moment they please, to take the property out of his hands, and if they have been ■guilty of an impropriety, in suffering him to retain it so long, it is in the power of the creditors to compel them to do their duty, and if they still neglect to do so, the' Court will appoint others in their place.
7 Mod. 37.
1 Wits. 44.
4 Ball. 167.
4 Ball. 208.
4 Dali. 213.
4 Dali 358.
11 Johns. 113.
1 Sinn 502.
4j Minn* 258,
6 Sinn. S38.
1 Cranch, 300.
8 Siorsn’s Latos, W *
6 ISinn. 189.
1 Johns. Ca. 156.
8 Johns. Hep. 4-18.
9 Johns. Hep. 135,

Opinion:
The opinion of the Court was delivered by
Tjxghman C. J.
The plaintiffs, who are the executors of Philip Wager, deceased, levied on a quantity of household furniture in. possession of the defendant, by virtue of a fieri facias issued upon a judgment obtained against him for a debt due to the said Philip Wager. The defendant does not claim the property as his own, but says, that he holds it for those persons to whom-he assigned it in trust for his creditors, when he was discharged by virtue of an insolvent act passed the 26th March, 1808, so that the dispute is in fact between those assignees and the plaintiff. Philip Wager was a creditor of the defendant at the time of his discharge, and the debt on which the plaintiff obtained judgment was then due to him. The assignment was therefore in trust for Philip Wager and the other creditors. There is something peculiar in the act of 26th March, 1808. It revives an expired act passed 4th April, 1798, for one year, with this addition, that the Court who discharged the insolvent debtor might, with the consent expressed in writing of a majority in number and value of his creditors residing in the United States, or having a known attorney therein, make or order, that the debtor should be released from all suits, and his property acquired after his discharge be exempted from all executions for debts contracted before his discharge, for the term of seven years next succeeding his discharge. Such consent was given, and such an order made, in the present instance. And Philip Wager was one of the creditors who consented, so that he was immediately a party to the proceedings under the insolvent law. The cases cited by the plaintiff's counsel establish the well known principle, that a transfer of chattels should be accompanied with and followed by possession, otherwise there is presumption of fraud under the statute 13 Eliz. This is the general principle, but if the possession remains in the grantor, it is not such undeniable evidence of fraud as admits of no explanation. A stranger purchasing household goods sold by the sheriff on an execution against A, may leave them in the possession of A, on loan, and it will not be fraudulent. But if a creditor of A, had received a bill of sale from A, and left the goods in his possession, it would have been a fraud. This distinction will be found in the cases of Putnam v. Wylie, 8 Johns. 337, and M'Instry v. Tanner, 9 Johns. 135. There are many other instances in which the presumption arising from possession may be rebutted. If the dispute had been between a creditor of the defendant, for a debt contracted after his discharge by the insolvent law, and his assignees under that law, I should think that the length of time for which the defendant has been suffered to keep possession of his goods would be sufficient evidence of fraud. But the case between Philip Wager's executors and the assignees is very different. Those assignees are the trustees of Philip Wager and the other creditors, and received a conveyance of all the defendant's effects for the benefit of all. The defendant, therefore, when he holds for his assignees holds for all his creditors. If those assignees have done wrong in suffering the goods to remain in the defendants possession they are accountable to the creditors. But no one creditor can avail himself of that wrong, to the injury of the others. So far as concerns Philip Wager no presumption of fraud arises from the defendant's possession, because that possession was by the permission of Wager's own trustee. The case is distinguishable, therefore, from all those which have been cited for the plaintiff, and does not fall within the principle established by them. I am of opinion, that the property vested in the assignees at the time of the defendant's discharge, remains in them for the benefit of all the creditors entitled to claim under the' assignment; and that with respect to all those creditors the possession of the defendant is fair. That being the case, the goods, not being the property of the defendant, were not subject tp the plaintiff's execution.