Court Opinion

ID: 8046261
Source: CourtListenerOpinion
Date Created: 2022-09-09 03:59:43.854664+00
Date Added: 2024-06-11T16:37:25.643985
License: Public Domain

FowleR, J.
It is undoubtedly true, that trustees may be charged upon the ground of fraud, where they deny all liability, and there is no indebtedness which the principal defendants could enforce against them. But it is entirely clear, upon the *560authorities cited by the plaintiff, that this can be done only where there is an actual indebtedness and an actual fraud, as against creditors. Aldrich v. Brooks, 5 Foster 241, and other authorities, cited by the plaintiff in his argument.
In the case before us, if it were shown by the disclosure, or had been found by the verdict of a jury, that the arrangement made by the principal defendant and the trustees, in November, 1854, was an actual fraud, as against creditors; that it was attended with a secret trust, or entered into for the purpose or with the intent to defeat, hinder or delay creditors, by covering up the amount of the value of the personal property in the hands of the trustees, or otherwise, there can be no doubt the trustees might be chargeable on the original contract. But nothing of that kind appears from the disclosure, or has been found by a jury. The disclosure states, in substance, that upon a portion of the stockholders complaining that they had been deceived and imposed upon ; that they understood — whether from the representations of the principal defendant or otherwise, does not appear — when they purchased their stock, that the whole personal as well as real estate had been included in the price of $300,000, and threatening to back out from their position as stockholders, the principal defendant came forward and changed the contract to conform to their understanding of it. There was in effect a compromise between the parties. In order to satisfy the stockholders and adjust a controversy in which he was deeply interested, and in which his character and reputation were involved, the principal defendant gave up the notes for §50,000, and discharged the indebtedness of the company to that amount. There may have been fraud in this arrangement, or there may not. The disclosure does not show it, and it is not to be presumed. As between the parties, an adjustment of serious difficulties, a compromise of the controversy in relation to the sale and purchase of stock, was a good consideration for the surrender of the notes, and the contract must stand until impeached.
So too in regard to the claim that the trustees have in their *561possession $50,000 worth of personal property that once belonged to the principal defendant without having paid any consideration for it. If this were so, and it clearly appeared from the disclosure, even if the principal defendant had so relinquished his title to it that be himself could recover no compensation for it, the trustees might be charged, as there must have been some fraudulent collusion between the parties in covering up such an amount of property in the hands of the trustees. But the disclosure furnishes no evidence to sustain the plaintiff’s allegation. The value of either the real or personal estate is not stated. The $300,000 finally agreed upon as the price of both, may have been the actual and fair value of the whole. There is no evidence of any collusion between the parties. The presumption, from all the circumstances set forth in the disclosure, is strongly .against it.
It does not appear with whom the principal defendant made the original arrangement for the sale of the real and personal estate to the company for $350,000. But, if we are permitted to look at the charter of the corporation, it is quite manifest there must have been something wrong in the character or terms of that arrangement. By the charter, the capital stock was limited to $300,000, and the company could not hold real and personal estate to a greater amount than their capital stock. Laws of 1854, chap. 1615. The whole amount of the capital stock of the company was issued to the principal defendant in payment for the real estate, and then an indebtedness of $50,000 incurred for the personal property, in express violation of the provisions of the charter. It is evident that the purchasers of stock might have had good cause to complain that they had been deceived and imposed upon, when they found the company indebted for $50,000 worth of property which they could not legally hold.
It is sufficient for the decision of the question before us, that no fraudulent covering up of property in the hands of the trustees, no collusion whatever between the parties, is shown by the disclosure. Were we obliged to decide upon the probabilities of the case, we think it would be a very natural inference from the *562facts stated in the disclosure, that the actual value of all the property, real and personal, conveyed by the principal defendant to the trustees, did not exceed the sum of $300,000 ; so that in truth and in fact, there was no surrendering up of property, no relinquishment of actual bona fide indebtedness, by the principal defendant, when the terms of the original contract were changed. But we are not called upon to determine this question. It is sufficient that the change was made for a good consideration, in the absence of any evidence of fraud.
But it is insisted that the disclosure is to be disregarded, and the trustees charged upon the original contract, because it appears that some of the statements contained in the disclosure rest upon the information of the witness, and are not matters of personal knowledge. It is quite difficult to conceive what better knowledge the witness could have had of the motives to a transaction between other parties, than the statements of both of them. Besides, the disclosure states positively the fact of the arrangement entered into, by which the original contract was changed and the notes for $50,000 given up and cancelled, and the reasons for it, and unequivocally denies all indebtedness and liability of the trustees. That the reasons why the change was made were derived from the statements of the parties thereto, does not seem to us at all material. The force of the positive averment, that it was made in good faith as an adjustment of controversies, and that no indebtedness existed at the time of the service of the trustee writ, is not thereby affected.
Upon the disclosure,

The trustees must be discharged.