Case Name: William Widgery and Others versus Eli Haskell
Court: Massachusetts Supreme Judicial Court
Jurisdiction: Massachusetts
Decision Date: 1809-03
Citations: 4 Tyng 144
Docket Number: 
Parties: William Widgery and Others versus Eli Haskell.
Judges: 
Reporter: Massachusetts Reports
Volume: 5
Pages: 108–118

Head Matter:
William Widgery and Others versus Eli Haskell.
An assignment of effects by an insolvent debtor in trust for certain of his creditors, made by a conveyance to which they are not parties nor assenting, is void as to the other creditors.
This was an action of replevin, pending in the county of Bristol, in which the defendant is charged with having wrongfully taken and detained the ship Mac, her tackle, apparel, and furniture, and also her cargo, consisting of 422 tons of salt, and-tons of coal, the property of the plaintiffs.
The defendant pleaded that at the time of taking, the ship, &c. were the property of John Taber &f Son, of * Portland, [ * 145 ] and traversed the property of the plaintiffs, and on the traverse issue was taken and joined.
This issue was tried before Parker, J., at the sittings after the last October term at Taunton, and a verdict found for the plaintiffs, subject to the opinion of the Court upon the facts appearing at the trial, as the same should be reported by the judge.
It appeared that the defendant was a deputy-sheriff of the county of Bristol, and having a writ of attachment committed to him, in favor of Jacob Barker of New York, against said Taber Son, he attached and took possession of the ship and cargo, by order of said Barker, as the property of said Taber Son.
It was insisted by the plaintiff’s counsel in the outset, that the defendant should be held to prove the debt on which said writ was instituted; but it was otherwise determined by the judge.
It was agreed that before, and until the 11th day of April, 1807, the ship and cargo were the property of Taber Son, the ship being duly registered as such.
The principal question in the case was, whether, by means of the agreements, conveyances and transactions hereafter mentioned between said Taber fy Son on their failure, and sundry of their creditors living at or near Portland, to which the said Jacob Barker was not party, the property in said ship and cargo was, by law, vested in the plaintiffs, so that the said Barker cannot hold the same upon his attachment.
The transactions referred to appear from the answer of the plaintiff Widgery to interrogatories put to him in a suit wherein the same Barker is plaintiff, and the said Widgery and others, the now plaintiffs, are summoned as trustees of said Taber fy Son, which suit is pending in the S. J. Court for the county of Suffolk, and from the several deeds and papers annexed to said answer.
It was agreed, that when the bill of sale of Taber &f Son to the plaintiffs was executed, there was no delivery t'of the ship and cargo, the ship being then at sea or in [ * 146 ] remote parts, and that on her arrival in the United States in October, 1807, being about to put into Portland, which was her intended port of discharge, in pursuance of advice or instructions from Jacob Barker, the captain carried her into New Bedford, where she was immediately attached by the defendant in this action, and replevied by the plaintiffs without any negligence or delay.
Robert Swain
the master of the ship, was affirmed as a witness for the defendant; but it appearing that he had commenced a suit for his wages, and had caused the same ship and cargo to be attached by the same officer, the defendant in this action, he was rejected as incompetent. It did not appear, however, in the statement of the testimony expected to be given by him, that any other facts would be proved by it, than those which appear in the papers referred to.
If, upon consideration, the facts appearing as aforesaid, the Court should be of opinion that the said ship and cargo was duly and legally assigned and transferred to the plaintiffs, and that the property thereof was vested in them, according to the terms of the agreement between the said Taber fy Son, and those of their creditors who were parties or assented thereto, it was agreed that judgment should be entered according to the verdict; but if the Court should otherwise determine, then the verdict was to be set aside, and such verdict entered as the Court should direct,' and judgment accordingly.
The answer of Widgery
referred to in the foregoing report, disclosed a conveyance executed on the 10th of April, 1807, by Ta ber Son to the plaintiffs and several others of their creditors [sixteen in number] in which the grantors state their insolvency, and their desire to place their property in a situation to be [ * 14*7 ] most productive to their creditors, *and to be capable of a fair and proper distribution among them, except such as are their endorsers, and sureties on custom-house bonds, whom they believe they have secured, and their being indebted to the grantees in the sum of 11,333 dollars [in different proportions], in consideration whereof they grant, convey, assign and set over unto the grantees all their property, both real and personal, of every kind and description, wherever it may be, including all debts due them, an imperfect schedule of which [so far as then ascertained or recollected] is stated to be annexed to the conveyance; except such parts as they have mortgaged or conveyed to sundry of their creditors, who were their endorsers, but the right to redeem was to pass to the grantees. [The conveyance was made] upon the condition that the grantees should, out of the net proceeds, pay and indemnify all their sureties at the custom-house and endorsers, unless they were otherwise indemnified and secured; to hold the estates and property granted in fee, subject to the condition aforesaid, the grantees to take possession thereof under the agency of the present plaintiffs, who are five of the grantees, and who, or the major part of whom, are constituted attorneys, with power of substitution, and with all the powers necessary to carry the grant into effect. [The deed contained, also, a covenant for further assurance.]
Widgery
further states in his answer, that the grantees accepted this conveyance, and to fulfil the condition assumed upon themselves to pay and indemnify the grantors’ endorsers and sureties at the custom-house, who, in consideration thereof, released to the grantees the property the grantors had mortgaged to them as security. He states also, that, when the action in which he was summoned as trustee, was commenced, which was on the 23d of September, 1807, the whole balance of cash which the said attorneys had received was not more than sufficient to pay the amount remaining due to certain of the endorsers and sureties of the grantors, which the grantees were liable to pay pursuant to the aforesaid condition, and their own assumption made * thereupon, [ * 148 ] with the amount remaining due to the grantees themselves ; and that if the ship Mac and her cargo, now in controversy, should be recovered by the said attorneys, the proceeds thereof would be added thereto.
A release of all demands [bearing the same date] was executed, on the same day [and at the same time] with the assignment, by the grantees and four other creditors of the grantors, in consideration of the grant, but upon the condition that the grantors make a full and complete disclosure and delivery of all their property, except such part of their household furniture as the law exempts from attachment or execution.
On the 11th of April, 1807, a letter of attorney was made to the same creditors, whom the grantors had constituted their attorneys [reciting that they had that day received the assignment and conveyance of Taber Son aforesaid, and referring to the deed, and bearing even date therewith], and was executed by all the grantees, except the attorneys, and by several others of the creditors, authorizing the attorneys to receive, sell and convey the property assigned, to pay the endorsers and sureties in full [to admit any other credit oi not named in the assignment to the benefit thereof equally u ith them, upon the conditions after mentioned], and to distribute the remainder pro rata among all the grantees, and all other creditors of the grantors who would agree to take a distributive share, on four conditions, viz. to release every species of legal process which they might have commenced against the grantors — to have their demands adjusted by the greater part of the agents or attorneys — to release, on admission, all their demands against the grantors — and to give notice in writing within six months of their consent to be thus admitted. [This was proposed by the grantees. There was no previous bargain or contract to this effect with Taber Son.]
The said Jacob Barker for whose use the attachment was made, was not a party to any of the deeds or instruments aforesaid, nor did he ever assent to them.
There was a bill of lading of the homeward cargo, signed at Liverpool by Swain, the master of the ship, by which it appears that the salt and coals were shipped on the account and risk of the plaintiffs, and consigned to them.
*The action was continued nisi, and was argued at [*149] this term by Jackson and E. Whitman for the plaintiffs, and Dexter and B. Whitman for the defendant.
For the defendant it was insisted that the conveyance from Taber Sf Son to the plaintiffs and others was fraudulent and void against creditors not parties thereto, as being made without any, or at best for a grossly inadequate consideration. There was no release of the grantees’ demands at the time of the grant, and that which was afterwards made was upon several conditions which were future and executory; nor did it appear that those conditions had been executed, without which the release was yet without any operation. The very loose form of the conveyance, and the want of an ascertained amount of debts to be paid, and of the value of the proper ty intended to be conveyed, were, in themselves, also, strong indica tians of fraud.
As the conveyance was fraudulent, so it was not made bond fide, as being conformable neither to positive rules of law, nor to correct moral principles. If a conveyance of this kind is void in England, as being against the policy of their bankrupt system, so is it equally void here, as being opposed to the whole policy of our laws providing a remedy for creditors by attachment. Not only was there intended a distribution wholly inconsistent with our laws respecting attachments, but even that’distribution was not to be fair and equal: certain favored creditors were to receive the full amount of their demands, while the others were to take up with a composition, such as the residue might furnish.
Here was also a trust for the benefit of the grantors. The whole debts due the grantees was 11,333 dollars, while it is apparent that the property assigned was six or eight times that amount. This surplus was to be held for the benefit of the grantors, unless their other creditors would accept it in discharge of their whole [ * 150 ] * demands, and until they should so do, the trust was for the grantors, and they had the control of the property.
For the plaintiffs it was argued that fraud was not to be presumed, and it lies with the other side to show it. There is certainly no fraud in soliciting and obtaining security for just debts, nor in giving such security, if done in good faith, and not colorably, or with a design to defeat other creditors. But here it was originally understood and agreed that all the creditors should be admitted to an equal pro rata distribution, upon certain fair and reasonable conditions.
By our law, which has no bankrupt system, and of course is not controlled by the policy of that system, an insolvent debtor may give all his property to one or more of his creditors, and it is not necessary to be very accurate in the estimate of the value of the property conveyed, if it be bona fide, and without any resulting trust for the grantor. In this case, more than 80,000 dollars were to be raised out of the funds conveyed, and it was very uncertain how much they would produce. Part was in debts due the gran tors, and the debtors might become insolvent; part consisted of vessels and cargoes abroad, which might never arrive. So that these is no such want of consideration apparent, as should invalidate the transaction.
If this deed was fraudulent, it would follow that the grantees can hold nothing under it; yet they have paid or assumed to pay more than 70,000 dollars besides the amount of their own demands.
As there was a sufficient consideration for the deed, so it was bona fide. These persons had a right to limit the distribution to such of their creditors as would agree to discharge them: there was nothing immoral or contrary to legal principles in the condition. Much confusion has arisen in the discussion of questions of this kind, from not distinguishing the English decisions * which have arisen under the bankrupt laws from [ * 151 ] those under the statute of 13 Eliz. c. 5. .
Kidd vs. Rawlinson, 2 B. & P. 59. — Estwick vs. Caillaud, 5 D. & E. 429. — Holbird, vs. Anderson & al. 5 D. & E. 238. — Nunn vs. Wilsmore, 8 D. & E. 525. — Dewey vs. Bayntum, 6 East. 257. — Cadogan vs. Kennett, Cowp. 434. — Twyne’s Case, 3 Co. 81. —Newland on Contracts, 358. 375. Roberts on Fraudulent Conveyances, 46. 51.

Opinion:
The opinion of the Court was delivered by
Parsons, C. J.
[After stating the facts from the report of the judge who sat in the trial, and the papers referred to therein.] At the trial, the plaintiffs insisted that the defendant should be holden to prove Barker's debt, and the judge directed otherwise . The defendants also offered a witness whom the judge rejected as interested. These points are not before the Court, for it is agreed that a verdict shall be entered for either of the parties, according to the opinion of the Court on this question, whether the plaintiffs have, from the facts stated, proved their property in the ship and cargo or not.
As to the return cargo, which was replevied, that may deserve some further consideration. But the merits of this cause, as to the ship, depend on the validity of the transaction, as it relates to the creditor Barker, who was not a party, nor assenting to it; for if the bill of sale relied on by the plaintiffs is in law fraudulent as to creditors not parties nor assenting to it, the plaintiffs must fail in their action.
That the deed of conveyance should be valid in this case, it must have been made for a valuable consideration, and with good faith. Let us first look at the consideration. The grantors make the deed with honest intentions, but they receive no consideration for it; they have parted with all their estate of every description, without any estimate of its value, and they do not even obtain in consideration the discharge of a single debt. It is true that a conditional release is executed on the same day ; but it depends upon the further conduct of * the grantors themselves, to ob- [ * 153 ] tain any benefit from this release.
In a case of this kind it is incumbent on the grantees to show a valuable consideration, and they have failed. But from the facts agreed, the presumption is, that the property conveyed was of much more value than the debts due to the grantees, and to the endorsers and sureties of the grantors. For the admission is, that the plaintiffs have not received more than enough in cash for the payment of these debts; whence we ought to conclude that they have already received enough for these purposes; and there is a surplus property conveyed to the value of the ship Mac and her outward-bound cargo of cotton,
To have established a valuable consideration, there ought to have been proved a fair and just value of the property conveyed, so that its adequacy might be apparent.
But was this conveyance bond fide 1 Was it made with honest intentions expressed in the contract, of at least not intentionally omitted, and for purposes for which the law will authorize an insolvent debtor to convey all his effects ? It purports to be made for the benefit of the endorsers and sureties of the grantors, and for the grantees, to secure their debts. But it is evident that the intent of the parties went much further, to compel the discharge of the grantors from all their debts by locking up from every creditor, who would not discharge them, every part of the estate of the grantors, And it was not enough for a creditor to entitle himself to a part, to release his debtors; but he must be content to have his demands settled, not by a jury or impartial arbitrators, but by the plaintiffs themselves, who have an interest to lessen the amount of all the debts due but their own.
Does the law allow an insolvent debtor to make this bankrupt law for himself? By our law a debtor's property * is liable [ * 153 ] to attachment by any creditor; and, on the other hand, a debtor may prefer any one creditor to another, by paying his debt, either in cash, or by conveying so much of his estate as will be adequate to the payment. But the creditor must be a party, or assenting to this payment or conveyance. If he be not, nothing passes to him, and nothing passes from the debtor, and his estate, intended to be conveyed, remains liable to attachment by any other creditor,
But it has been argued that a creditor, to whom the conveyance is made, must be presumed to assent, or he may afterwards assent. We cannot always presume that he will assent, and especially on the condition of releasing the whole debt on receiving a part; and the present case proves that one creditor did not assent. A creditor may afterwards assent, and then he may be bound by his assent; but until his assent, the property remains the debtor's, so far as to be liable to the attachment of another creditor; and if the property does not pass by the conveyance when executed, it can never after pass by virtue of such conveyance, so as to defeat an intervening attachment by another creditor. If this were not law, great mischiefs would arise. The conveyance may be made to the use of a creditor beyond sea; and how long must another creditor wait, to learn whether or not an assent is given ? And the insolvent grantor may in the mean time dispose at his pleasure of the property so conveyed to any person ignorant of the prior conveyance.
It is, however, argued, with much ingenuity, that the deed, in the present case, conveys, according to the intent of the parties, a trust estate which immediately vests the property in the trustees, so that no legal interest remains in the grantors liable to attachment.
We admit that an insolvent debtor may, with the assent of his creditors, convey an estate in trust for the * pay- [ * 154 ] ment of their debts bond fide, and for a valuable consideration. But we do not admit that an insolvent debtor can convey his estate in trust to pay his creditors without their assent.
Let it be remembered that in this state we have no Court, which can compel a discovery, or an execution of a trust. If such a trust estate were allowed, the creditors would be without remedy. They could not attach, because the estate passed to the trustees; they could not compel an execution of the trust, if they had evidence of of it; and what action could they maintain at law, not being in possession of, or parties to the deed of trust ?
But if they had evidence of the trust, and, deviating from the rules of the common law, we should allow the creditors to maintain a special action of the case against the trustees, it would be inconvenient, if practicable, to make out their claim to any ascertained portion of the property conveyed before a jury. It is, therefore, our opinion that the policy of the law providing for attachments, and not providing any remedy in equity against the trustees, prohibits the establishment of a trust estate created by an insolvent debtor for the benefit of his creditors not parties to it. We would not be understood as giving an opinion that an insolvent debtor cannot convey an estate in trust to pay particular creditors who are assenting and parties to the conveyance; for we perceive no difference, as to the effect on other creditors, whether the estate be conveyed directly to the particular creditors, or with their assent to others in trust for them. And if they have no convenient remedy to compel an execution of the trust, yet volentibus non Jit injuria,
It has been further argued that, as an insolvent debtor may collect his effects within his dwelling-house, either reduced to money or not, and pay any portion of them to any of his creditors, [ * 155 ] and on what terms he pleases, *so he may invest these effects in others for the same purposes.
But it should be considered that this protection of his effects from attachment, is not the design of the law, but an incidental protection resulting from the provision of the law that every man's house is his castle. And if his effects are found without his castle, they may be attached ; and even in his castle an attachment would be good, although the party might be punished as a trespasser for invading the castle. This protection cannot, therefore, be extended to a conveyance in trust of goods not within the debtor's dwelling-house.
It has also been argu.ed that it does not appear that the clear and unencumbered value of the property conveyed exceeded the amount of the debts due to the grantees, and that the moneys raised to pay the endorsers and sureties were the proceeds of the estates previously mortgaged to them; and therefore the conveyance may be good to the grantees, who, if they admitted other creditors, would pay them out of their own funds.
There are two objections to this argument. The intent of the parties, apparent from the deed, was not the true intent, which was the pro rata payment of the other creditors on their discharging the grantors; the deed therefore was on a confidence not expressed, for their own benefit, reposed by the grantors in the grantees. We say, for the benefit of the grantors, because they expected in this manner to obtain a discharge from their debts, on paying a part of them, Another objection is, that it does not appear, but that the value of the property conveyed did exceed the amount of the debts due to the grantees; and it lies with the plaintiffs to show that it did not. But the presumption is the other way. For the plaintiffs have received cash enough to pay the endorsers, sureties, .and grantees, without crediting the ship Mac and her cargo, which were included in the conveyance. This cargo was cotton, as appears *by the statement of the factors [ * 156 ] of the grantors in Liverpool, and was by them appropriated to pay them their debts due them from the grantors. If the ship had put into Portland in distress, or for any cause, after the conveyance, the plaintiffs would have received this cargo; and it does not appear that those factors, who had the benefit of it, were either endorsers or sureties, and certainly they were not among the grantees.
Upon the whole, we are satisfied that the title-deed set up by the plaintiffs to the ship Mac, is fraudulent and void as against Barker. This opinion is agreeable to the course of decisions on this subject in the Courts of this state.
The return cargo comes under a different consideration. It appears that it was not purchased with the proceeds of the outward cargo, nor on the credit of the grantors, but on the credit of the plaintiffs, to whom it was shipped. The plaintiffs must, therefore, pay for it. If they pay for it out of their own moneys, they ought to have the benefit of it. If they pay for it out of the moneys of the grantors received from the effects conveyed, for those moneys must they account as trustees, if, as is our opinion, the conveyance was void; and they ought not to account for those moneys, and for the cargo purchased with them; for then they would substantially be held to account twice. It is, therefore, our opinion that the salt and coal composing the return cargo, are the property of the plaintiffs.
The verdict must be amended conformably to the agreement of the parties; so that the property of the ship Mac may be found not to be the plaintiffs', and nominal damages must be assessed for the defendants; and that the property of the cargo may be found to be the plaintiffs', and nominal damages be assessed for them,
Vide Damon vs. Bryant, 2 Pick. 411.
It is no objection to the release that it contains the clause referred to, which in itself is extremely reasonable; and none but the grantor could have any right to object to it. There certainly was, therefore, a consideration for the conveyance.
а) The only questions that could arise in the case were, whether the just value of the property conveyed at the time of the conveyance exceeded the amount of the debts owing to the grantees, and what they had thereupon assumed to pay; and if so, whether this excess was such as, under the circumstances, to amount to evidence of an intent, on the part of the grantors, thereby to defraud their creditors.
This is not apparent from the deeds, and there is no other evidence of such intent, unless it may be inferred, from the amount of the property conveyed, if any over and above what was sufficient to pay the debts mentioned or referred to in the deed of assignment to be paid.
This does not apply to the deed of transfer or release, but only to the instrument voluntarily executed by the grantees, without any agreement with the grantors tq that effect. But if it were otherwise, the objection is one which no creditor could make who assented to the arrangement, for volenti non jit injuria ; and certainly no others could object that any were willing to dischai ge their debts on these conditions.
These remarks seem to be inapplicable, if no other creditors than those referred to in the conveyance were originally intended to be secured ; for here these creditors were parties, and assenting to the payments and conveyance.
This argument seems to go on the ground that the letter of attorney, of April 11 th, was a part of the deed of grant, and originally contemplated by the grantors, and that they were parties thereto, which is denied in the trustees' answers. If it had been so, it could not, per se, have rendered the conveyance void. The property would have passed from the debtor immediately, and vested in the trustees for the benefit of such creditors as might elect to comply with the conditions, unless, from the terms of the 'deed and the amount of property conveyed, actual fraud might have been inferred.
This objection, if it were valid, will not hold now, since our Courts have jurisdiction in equity in cases of trusts arising under deeds. If there be no fraud, the property passes effectually, and assent of the creditor afterwards is sufficient.
This is not so. See note 1. to Semaine vs. Gresham. — Mr. Metcalf s edition o* Yelverton, page 2a.
If the property conveyed to the grantees was not more than enough to pay them, and what they, with the assent of the other creditors, had agreed to pay, and the grantees had given a release of their whole demands, it could hardly be an objection, even if it was tacitly understood, between the grantors and grantees, that the grantees, in consideration of the conveyance, should admit as many creditors to participate with them as might be willing to comply with the terms referred to. This is nut such a confidence not expressed as would constitute fraud.
Quaere. Does not the burden lie upon the party who alleges fraud, which is not 6o be presumed lo show that by reason of such excess the conveyance was fraudulent ?
Vide Halsey vs. Whitney, 4 Mason, Rep. 206., and the cases there cited.