Court Opinion

ID: 6405651
Source: CourtListenerOpinion
Date Created: 2022-06-25 11:48:44.300101+00
Date Added: 2024-06-11T15:51:11.870960
License: Public Domain

The opinion of the Court was drawn up by
Parker C. J.
The property which is the subject of this suit, it is agreed, once belonged to the plaintiff; but it is supposed by the defendant, that it was either transferred by him to Scholfield the debtor, or that it was permitted by the plaintiff to be so used and possessed by Scholfield as to give his creditors the right to attach and hold it to satisfy their debts.
There is no evidence of any actual sale to Scholfield, but there was an agreement to sell, the consideration was fixed, and negotiable notes payable at future periods were given by Scholfield to the plaintiff, and Scholfield was put into possession of the whole subject of the contract, real estate and machinery, and used them as his own. The terms of the contract are expressed in the bond given by the plaintiff to Scholfield.
It is very clear that this transaction did not amount to a transfer of the property to Scholfield. It was merely a contract to sell and convey, and the title as between the two parties was retained in the plaintiff, and intended to be so, until the conditions should be performed by Scholfield.
This species of contract was probably chosen by the plaintiff as giving him the greatest security for the payment of the consideration, though without doubt a conveyance from him, with a mortgage from Scholfield, as real estate was the principal subject, and the machinery might well have been so secured, would have been more free from difficulty.
Had the bargain been completed by a conveyance and mortgage, it cannot be doubted that the plaintiff would have had a lien upon all the property, until all the consideration was paid. The creditors of Scholfield might then have resorted to the equity of redemption, and the rights of all would have been taken care of to the extent of the value of me property.
In the mode adopted the creditors are put to great disadvantage, there being no title in Scholfield of which they can *76avail themselves at law, even if the greater part of the consideration should have been paid by him. This renders such contracts objects of jealousy, and they certainly ought to be critically scrutinized, for they afford a most convenient screen for fraud between the parties to the bargain. But they are not per se fraudulent. We have been accustomed to seeing bonds for the conveyance of real estate, the obligee giving notes for the consideration, he entering into possession and occupying the land, making payments from time to time, and yet gaining no title to the land. These bargains have been upholden at law, and chancery has power over them to compel an execution of the contract. Proprietors of No. Six v. M'Farland, 12 Mass. R. 327. It is likely that creditors may step in and avail themselves of chancery jurisdiction, upon offering to complete the payments, and obtain a conveyance of the land to them. And perhaps in the case before us, if the plaintiff shall have received so much of the consideration as shall leave a valuable property to Scholfield, his creditors may avail themselves of it through the power of a court of chancery ; but certainly not without paying the sum that is due to the plaintiff. We have spoken only of the nature of the contract, to show, that though inconvenient and embarrassing, it is not necessarily fraudulent.
The action seems to have proceeded on the ground, that although there was not in fact or intention, any actual sale or transfer to Scholfield, yet that his possession and use of the property being such as to lead those who would trust him, to believe that he was the owner, it became liable for his debts.
No such principle has been adopted in our law, nor in the English except under the St. 21 Jac. c. 19, supplemental to the general bankrupt laws, and intended to give force and vigor to them. The provision is, that any goods &c. in the possession of the bankrupt, at the time of the act of bankruptcy, of which the order and disposition shall be m him, shall pass to the assignees as his property. This is a special provision malting property admitted to belong to others, liable to the bankrupt’s debts. It was enacted to avoid the litigation respecting property in possession of bankrupts, claimed by others under the common law principles, which were fre*77quently abused. The same principle was contained in the , bankrupt law of the United States which once existed. It was a harsh principle, but became innoxious when known to be the law, for people would be careful of so intrusting their property as to expose it.
It is only under the statute, and in case of bankruptcy, that the mere possession of another man’s goods subjects them to seizure for his debts ; and there is no principle of the common law, which will warrant it. If I lend my horse or other chattel to another to use as his own, neither he nor his creditors have a right to divest me of the property. Or if I should furnish the house of a friend for his convenience, with furniture purchased by myself, he never having had any property therein, his creditors could not take it from me, although from the use of it they supposed it belonged to him. Even where possession is considered as conclusive evidence of property, it is only where the person in possession had once been the owner. It is true that such acts are of a suspicious nature, and the possession and use may be strong evidence of property, but still it is only evidence, and the effect of it may be overcome by clear and decisive evidence of property in another.
It seems to us, that that part of the instruction to the jury, which authorized them to find for the defendant, “ if they were satisfied that the plaintiff had delivered the goods to Scholfield and permitted him to have them in such manner as induced the attaching creditors to give a false credit to Scholfield, and that they trusted him upon the belief which the plaintiff had caused them to have, that the machinery at the factory belonged to Scholfield,” was incorrect. If he did this with a fraudulent design to obtain credit for him, without doubt the creditors would hold the property ; but if he did nothing more than endeavour to keep the security in his own hands, he ought not to be prejudiced, although the creditors of Scholfield may have been deceived by the circumstances.
It appears to us therefore, that the true question in this cause is, whether the transactions between the plaintiff and Scholfield were bona fide or fraudulent. If there was in fact e sale, and the bond, instead of a transfer, was given to con*78ceal the property from Scholfield’s creditors, of course the attachment would hold : or if there was a design on the part of the plaintiff to make the property appear to belong to Scholfield, in order that he might obtain credit upon it — if his declarations were made with that view. But if he has conducted honestly in taking care of himself, and the declarations imputed to him were not fraudulently made, but were such as are natural and common to those who have agreed to sell, but have not actually legally transferred, all may be' consistent with the nature of the original contract, and so not fraudulent or void.
The case chiefly relied on to support the defence, and which was particularly adverted to by the judge as the ground of his charge to the jury, is Hussey et al. v. Thornton, 4 Mass. R. 405. This case, so far as any thing was decided by the Court, determines that a conditional sale, accompanied by a delivery, does not transfer the property so as to make it liable to attachment by the creditors of the vendee, provided the delivery were conditional as well as the sale. Thus far it supports the view we have taken of the present case. But in concluding the opinion of the Court, the chief justice said, “ Had the demands of these creditors originated while the goods were in the possession of Todd and Worthley (the vendees) so that it might be fairly presumed that a false credit was given to them, or had Todd and Worthley sold them bona fide for a valuable consideration, our opinion would have been otherwise.” It is this expression which was relied upon at the trial. It cannot be said to be a decision, because it was upon a supposititious case. If such case had in fact been before the Court, the arguments of counsel and authorities might have produced a different opinion. It no doubt was founded upon a recollection of the statute of James, which has been mentioned. It certainly is not true as a general proposition ; for it would contradict a series of determinations, that possession merely of a vendee may be explained.1 Many instances will suggest themselves, where the possession^ of one man of the goods of another, is perfectly consistent with good *79faith, .and with the right of property in the vendor, and it was for this reason that the statute of James, in aid of the bankrupt laws, was passed. A case in 3 T. R. 322, (Collins v. Forbes,) clearly illustrates the purposes and objects, and the true construction of that statute.
If the transaction is fraudulent, the vendor setting up a condition to the sale, yet suffering the vendee to be in possession exercising full rights over the property, with the intent and purpose of enabling him to obtain credit on the strength of the property, he will not be able to avail himself of such condition, but the sale will be held to be absolute in regard to the creditors. But if bond fide, and the object of the condition was merely security to the vendor, he shall not lose his property because some creditor of the vendee supposed it belonged to him.2
It is because the judge instructed the jury, that such possession in Scholfield, permitted by the plaintiff, as would induce the creditors of Scholfield to trust him on the strength of this property, would justify a verdict for the defendant, that we think there ought to be a new trial. Possibly it may be unavailing to the plaintiff, for if there was an absolute sale and only a pretended condition, or if there was an intention and design, on the part of the plaintiff, to enable Scholfield to get credit on this property, he will have no right to recover.
JVeio trial granted.

 See Wheeler v. Train¡ 3 Pick. (2nd ed.) 257, note 1.

 See Blood v. Palmer, 3 Fairfield, 414; Ayer v. Bartlett, 9 Pick. 159; Reed v. Upton, 10 Pick. 522; Whitwell v. Vincent, & Pick. (2d ed.) 452, note 1; 2 Kent’s Comm. (3d ed.) 497; Meldrum v. Snow, 9 Pick. 441; Sawyer v. Shaw, 9 Greenl. 47.