Court Opinion

ID: 6229991
Source: CourtListenerOpinion
Date Created: 2022-02-17 20:19:41.65654+00
Date Added: 2024-06-11T08:57:49.576008
License: Public Domain

The opinion of the Court was delivered by
Lowrie, J.
A balance of purchase-money of about $4000 being due by Horner & Eaton to McGuire & Fetzer, on a sale of the Hemlock Furnace, they assigned it to Breading, Arnold & Hogg to collect, and apply to certain specified debts due to themselves and others. Afterwards, on the 10th of September, 1852, F. & W. M. Faber acquired the equitable title of Horner & Eaton at sheriff’s sale, and on this ejectment being brought to enforce the payment of the balance of the purchase-money, they attempt to show payment thereof by Horner.
It is a little strange that their effort to show this starts from the assumption that there was a fraudulent conspiracy between Breading & Horner to cheat Horner’s creditors, by getting all his personal property transferred to Breading by means of judgments and executions, and that, in this way, Breading got funds enough in his hands to pay this whole claim. Suppose it so, does that pay it ?
Be it remembered that all that transaction, being a fraud upon creditors, is good for nothing against them, and therefore they cannot suffer by it. If anybody suffers it must only be the sup- • posed fraudulent conspirators, Breading and Horner. Even the creditors of Horner, who were intended to be favoured by it, if there were any, cannot be injured by it unless they were parties to it. McGuire & Fetzer had no hand in it, and cannot be charged with such a fraud concocted by one of their assignees. They want this money collected so that the debts, to which they have appropriated it, may be paid. If the transaction was fraudulent, then Breading stands as trustee for all the creditors for such amount of Horner’s effects as he thus got into his hands, or for such creditors as may pursue it by due course of law.
Certainly when Fabers bought the furnace, they acquired no title to this money in the hands of Breading, and, whatever they may do as creditors, they have no sort of right, as purchasers, to interfere with Breading’s disposal of it. The decision that has been made of the case, however, takes the money of the creditors and gives it to an entire stranger, and thus the law is made to turn the fraud on them to his profit, and leaves them in a worse condition than they would have occupied if no cry of fraud had been raised on their behalf.
Suppose, however, as it was assumed below, that McGuire & Fetzer and their creditors are chargeable with the fraud of their *440assignee, Breading, in combining with Horner to cheat his creditors ; if, in such a case, we treat the money as being in Breading’s hands for the use of McGuire & Fetzer, as was done here, then we give the fraudulent parties the benefit of their fraud, and cast the crumbs to the honest creditors, for the law does not require even defrauders to do more than disgorge, and it will do no more with Breading. These views show plainly enough that there was error in every step of this trial.
We may now say that we discover no evidence in the cause that can at all justify the charge of fraud; and, as the plaintiff did not make it, and the defendants have no longer any interest in insisting on it, we may pass by all else that has been said on that subject, and notice the other questions, which must, so far as relevant, relate to the fact of payment of the balance of the purchase-money.
Fabers do not stand in the very shoes of Horner, for he might set off independent debts, so as to have the effect of payment, whereas they can show no more than what was directly or indirectly given and received with the intention of payment; for, in buying the land, they acquired no title to any debts due to Horner, or Horner & Eaton. On this principle it appears plain to us that, so far as any money was made upon the executions of Breading against Horner, it must be applied pro rata to the several interests represented by those judgments, unless there was an agreement to the contrary. If these judgments included an instalment of the purchase-money, then this principle applies to it. Breading having a right to collect the money, could do it in this way provided McGuire & Fetzer should not suffer by the arrangement.
If beyond this there was an arrangement between Breading and Horner, by which Horner was to have the profits of running the furnace, then those profits cannot be applied to the purchase- ' money, unless there was an agreement for that purpose, and they were actually so applied by Breading or Horner. The law will not apply it to relieve the purchaser at the sheriff’s sale, and to the prejudice of creditors. It would be a monstrous result if it should be applied so as to give this furnace property for $50, while most of the creditors remain unpaid. A mere agreement so to apply it would give Horner a right of action to enforce it, or his rights under it might be attached by creditors; but it is merely executory until actual application.
This is a suit of McGuire & Fetzer against Horner and Eaton, and we cannot enforce it so as to settle the account of the speculation entered into by Breading and Horner. Breading, as assignee of McGuire & Fetzer, has no power to draw them and their creditors into his plans for setting up Horner in business, and he did not intend to. And the purchaser of Horner and Eaton’s land is not entitled, when sued for the purchase-money, *441to claim an account of what Breading owes Horner, and to turn that over as payment.
These views seem to us to meet all the points insisted on in the argument, except the one relative to the letters written by Douglas in the name of Breading, and that seems to be unimportant now. We may say, however, that they must be considered as containing merely the declarations of a third person, until it is proved that they were written under the direction of Breading.
Judgment reversed and a new trial awarded.