Court Opinion

ID: 9711615
Source: CourtListenerOpinion
Date Created: 2023-08-26 04:35:21.06711+00
Date Added: 2024-06-11T18:23:05.088764
License: Public Domain

Hennessey, C. J.
(dissenting). Whatever the merits of the rule established in Modin v. Hanron, 346 Mass. 629 (1964), the application or extension of the rule to sanction the defendant’s conduct in the present case is unwarranted.
Several factors readily distinguish this case from Modin. In Modin, the transferee accepted cash withdrawn from a bank by a transferor seeking to hinder creditors. The transferee knew that the sole purpose of the transfer was to place the funds beyond the reach of creditors, but nevertheless accepted the funds “for safekeeping.” Before the creditor’s action against the transferor went to judgment, however, the transferee returned the funds to the transferor. We decided in that case that the transferee’s liability was to be determined by the amount of participation by the transferee in the transferor’s fraudulent scheme and, applying that measure, concluded that “bare custodianship” was not sufficient to render the transferee liable. Id. at 630, 631. Cf. Hickson v. Thielman, 147 Cal. App. 2d 11, 15 (1956) (where evidence supported conclusion that transferee con*352spired with transferor to defraud plaintiffs, return of money to transferor from transferee would not relieve transferee of liability. “It is immaterial whether [transferee] entered into the scheme for the benefit of herself or for the benefit of [the transferor]”).
The defendant in the case at bar was more than a mere custodian or stakeholder. He accepted a transfer of real property — by its nature susceptible of attachment by creditors and subject to a system whereby its sale or transfer was easily inhibited — and transformed it into a check, indorsed in blank. Prior to the sale of the real property to a bona fide purchaser, the defendant was aware that there was a creditor after the transferor and that that creditor was trying to attach the property in question. Under Modin, supra at 631, this involvement of the defendant is sufficiently “active participation” to render him liable, but the majority denies this in a single conclusory sentence.
The record suggests that when the defendant accepted the transfer from his sister-in-law he was unaware of her intent to hinder creditors, and that it was not until a short while before he subsequently sold the property to a bona fide purchaser that the defendant knew he was frustrating creditors. Assuming this to be so, there remains an obvious way out of the dilemma. It is succinctly presented in a case cited by the majority. “An honest man will not take a fraudulent conveyance. If a man holds property fraudulently conveyed, as soon as he comes to a sense of his moral duty, he will restore it to those to whom it belongs: — he ought to give it back to him from whom he received it, that it may be applied to his debts if wanted, or to his benefit if not necessary for this purpose. The Law, to discourage frauds, does not compel him to restore it to the fraudulent grantor; yet no man will retain it for a moment who desires the reputation of honesty, or possesses the sense of justice.” Swift v. Holdridge, 10 Ohio 230, 231 (1840). Cf. Damazo v. Wahby, 269 Md. 252, 256 (1973).
Consistent with the standard that I believe was established in Modin, I would affirm the judgment for the plaintiff.