Court Opinion

ID: 6574418
Source: CourtListenerOpinion
Date Created: 2022-07-20 19:32:54.527774+00
Date Added: 2024-06-11T15:57:01.877595
License: Public Domain

Hosmer, Ch. J.
The principle contained in the charge of the court, is, That a deed of land executed to all a person’s creditors, without any fraudulent intention, if not in satisfaction of their debts, but, by parol agreement, in security of them only, is fraudulent against subsequent bona fide creditors. To this charge two objections are made; first, that the parol evidence to prove the deed a mortgage, was inadmissible, as being incompetent; and secondly, that the deed, if voluntary, being without actual fraud, is valid against subsequent creditors.
1. In respect of the first objection, it was decided, by this Court, in Reading v. Weston, ante 117. that in a court of law, evidence of a parol condition to an absolute deed rendering it a mortgage, is inadmissible. The same point was determined, in a similar manner, by the supreme court of Massachusetts, in Flint v. Sheldon, 13 Mass. Rep. 443. And the statute of this state concerning lands, enacts, that all mortgages shall be in writing, and recorded at length. Stat. 301. tit. 56. s. 6. What a court of chancery may do, in the exercise of its peculiar jurisdiction, is not the present enquiry. But that parol evidence in a court of law, is incompetent to convert an absolute deeds into one that is conditional, is too well established to be made a question. The subject need not be further pursued; as the deed not having been delivered in satisfaction of the debts of the grantees, must be considered as voluntary.
2. This brings me to the remaining question; whether a voluntary deed, by a person not indebted, and where there is no actual fraud, is invalid in respect of subsequent creditors.
It must be borne in mind, that Norton was not indebted, except to the grantees in the deed, and had no intention of defrauding future creditors. Twelve years rolled away, for aught that appears, before he contracted any debt; and then the plaintiff’s demand accrued. Whether in contemplation of law, upon the preceding facts, the deed was fraudulent, is the question to be determined.
The statute against fraudulent conveyances, declares, that “ all fraudulent and deceitful conveyances of lands &c. made with intent to avoid any debt or duty, shall be utterly void as against those persons, whose debt or duty is endeavoured to be avoided.” Stat. 247. This act, in substance, is pursuant to the statute of the 13th of Elizabeth, chap. 5., and must receive a similar construction.
If the letter of the law were alone to be regarded, there *190could exist no question in the case. No actual fraud was meditated ; nor from the facts appearing, can any be implied. There was no existing debt to be hindered or delayed, and none intended to be contracted; nor was a debt actually contracted until after the lapse of twelve years.
Was it the object of the law, in suppression of fraud, to authorize a legal implication, that is, a mere artificial presumption, invalidating a voluntary deed in favour of subsequent creditors, lest, by possibility, fraud should exist? I know that such a principle is stated, by one able writer, (Roberts) and is deducible from some antient decisions; but it cannot now be made a question. It is incompatible with that jus disponendi, which property necessarily implies, when wrong to another is neither done nor meditated. The point does not require discussion, as it has been settled, by frequent adjudications, to which I will recur.
Both by the determinations in Westminster-Hall and in this country, it is well established, that a voluntary conveyance, made by a person not indebted, and without any fraudulent intent, is valid against subsequent creditors.
, Before the time of Lord Hardwicke, the determinations on the point in question did not harmonize. But from the year 1745 to the present time, the decisions in chancery, where the questions have generally arisen, have gone on the principle expressed by Lord Hardwicke in Walker & al. v. Burrows, 1 Atk. 94. that it was necessary to prove, that the person conveying was indebted at the time of making the settlement in question, or immediately afterwards, in order to avoid the deed. To specify the English cases, is unnecessary. The most of them may be found in Sexton v. Wheaton, 8 Wheat. 229. cited, and very ably commented on, by Ch. J. Marshall. They establish the principle stated by Lord Hardwicke, and in the last of them, that is, Bettersbee v. Farrington & al. 1 Swanst. 106., the court, speaking of a voluntary deed, sought to be established, affirms: “That a voluntary conveyance, by a person not indebted, is clearly good as to future creditors. Fraud, it is said, vitiates the transaction; but a settlement not fraudulent, by a party not indebted, is valid, though voluntary.” Undoubtedly, there are cases supposed to establish a different doctrine; but on attentive examination, it will be found, there were circumstances besides the deed’s being voluntary, that occasioned the determinations.
*191On the whole, there is no doubt that the construction I have advanced, is clearly settled, by the English decisions.
In the United States, the adjudications maintain similar doctrine.
In Howe v. Ward, 4 Greenl. 195., it was determined, by the supreme court of Maine, that a voluntary conveyance, made by a solvent man, and without any fraudulent intent, is good against subsequent creditors.
To the same effect was the determination of the supreme court of Massachusetts, in Parker v. Proctor, 9 Mass. Rep. 390. “If,” say the court, “a conveyance is not fraudulent, at the time of making it, it is not within the statute, although no money be paid.”
By the supreme court of the United States, in Sexton v. Wheaton, 8 Wheat. 229. it was decided, after an elaborate examination of the English cases, that the statute 13 Eliz. c. 5. avoids all conveyances riot made on a consideration deemed valuable in law, as against previous creditors ; but that it does not apply to subsequent creditors, if the conveyance is not made with a fraudulent intent. And in Hind’s lessee v. Longworth, 11 Wheat. 199. it was again determined, by the same court, that a voluntary deed is void as to antecedent, but not as to subsequent creditors, unless there is actual fraud.
This, in my opinion, is the correct doctrine, and not only pursuant to the letter, but to the spirit and intent of the statute. While it leaves a person to do what he will with his own, it subjoins this just and reasonable qualification, that he should so act as not to injure his creditors. At the same time, instead of embracing an artificial presumption, in prevention of remote and possible fraud, it subjects the actions of mankind only to the same reasonable proof, which is adopted in other cases.
The other Judges were of the same opinion.
New trial to be granted.