Court Opinion

ID: 6423411
Source: CourtListenerOpinion
Date Created: 2022-06-25 12:01:52.847528+00
Date Added: 2024-06-11T15:51:36.114482
License: Public Domain

C, Allen, J.
It was contended on behalf of the defendants, at the argument before us, that this court should look at the evidence independently of the findings by the judge of the Superior Court, inasmuch as only one witness, namely, the defendant Chamberlayne, appeared personally before him, and the case was decided almost wholly upon certain facts which were agreed, and upon a stenographic report of testimony taken before another judge. Upon an examination of the testimony and agreed facts, we are brought to the conclusion that the decree entered in the Superior Court was right.
The plaintiff was a creditor of Mrs. Hammond. He held three notes signed by herself and by her husband. She was the owner of the real estate now in controversy. The record title stood in her, and the circumstances under which she took that title negative any resulting trust in her husband. Whitten v. Whitten, 3 Cush. 191. Edgerly v. Edgerly, 112 Mass. 175. Cormerais v. Wesselhoeft, 114 Mass. 550. It is stated in the answer of Mr. and Mrs. Hammond, that she took the title upon a secret trust in his favor, but the evidence does not support this averment. Moreover, so far as the plaintiff is concerned, the husband could assert no right or claim, because he expressly assured the plaiátiff that she owned the property, and thereby induced the plaintiff to lend his money upon Mrs. Hammond’s credit as such owner. At first, the plaintiff was to have a mortgage from her; but he contented himself with taking into his *138possession her title deeds, with, as he testified, an assurance by-Hammond that he “ would not give another mortgage of the place.” These assurances were given before the plaintiff took his first note; and upon the testimony there can be no doubt that at the time of taking the two later notes he relied on the same assurances and understanding, and that it was intended by Mr. and Mrs. Hammond that he should do so.
Soon afterwards, Mr. and Mrs. Hammond gave to one Smith a note for eight hundred dollars secured by a chattel mortgage executed by Hammond, and a mortgage of the real estate executed by Mrs. Hammond. Soon after doing this, Hammond, being insolvent, made a voluntary assignment of his property for the benefit of his creditors to the defendant Chamberlayne. A few days after this, Mrs. Hammond, knowing the facts, conveyed the real estate to Chamberlayne, without any valuable consideration. It abundantly appears by the evidence, that both she and Chamberlayne intended by this means to prevent the property from being reached by the plaintiff, who, with the exception of Smith, was perhaps her sole creditor, she however being unacquainted with business, and not fully appreciating the nature of what she was doing.
It was contended at the argument, in behalf of the defendants, that Chamberlayne in reality took this deed for the benefit of Hammond’s creditors, though no mention of this was made in the deed itself. There was no evidence in direct support of this contention. Chamberlayne himself testified that he stated to Hammond’s creditors at their second meeting, which was nine days after the deed to him was given, that he held a deed of Mrs. Hammond's real estate, subject to legal claims, and that he would make a declaration of trust in the same if the creditors wished it. There was other evidence which led the judge of the Superior Court to find that this disclosure was made at a later date. But if we assume, as we are content to do, that the disclosure was made at the earliest practicable time, and that the deed was taken at the outset by Chamberlayne with the purpose of holding it in trust* for the benefit of Hammond’s creditors, this does not relieve the stress of the situation. Mrs. Hammond was not liable for her husband’s debts to his general creditors, and she was liable to the plain*139tiff, and she had no right to divert her property from her own creditor in order that it might go to her husband’s creditors.
The purpose with which her deed was given and received was to hinder, delay, and defraud her creditor, the plaintiff, by putting it out of his power to reach her property by legal process. It was done under the advice of counsel; one note of the plaintiff would fall due within seven days, and another within twelve days; she had no other property; and upon the evidence there is no doubt that such was the object of the transaction. It is á question of fact; but upon the clear facts, the transaction was one which the law stamps as a fraudulent conveyance; that is, a conveyance made with intent to hinder, delay, and defraud creditors. Winchester v. Charter, 12 Allen, 606. Cook v. Holbrook, 146 Mass. 66. Bernard v. Barney Myroleum Co. 147 Mass. 356, 359.
The attachment by the plaintiff was therefore valid, under the Pub. Sts. c. 161, § 66, and gave to him a lien upon the property, and entitled him as an attaching creditor to redeem the land from the mortgage to Smith. Briggs v. Davis, 108 Mass. 322. May v. Gates, 137 Mass. 389. Smith held security upon the personal property covered by his chattel mortgage, as well as upon the real estate. It was found by the judge as a fact, that the property included in the chattel mortgage was more than sufficient to pay the debt secured by the two mortgages. The plaintiff under his attachment could resort only to the real estate. He was thus entitled in equity to require Smith to exhaust the personal security first, or, upon payment by him to Smith of the amount of his debt, to be subrogated to his right to enforce the security in the first instance upon the personal property. King v. Nichols, 138 Mass. 18, 21. And see numerous cases cited in Sheldon on Subrogation, § 61.
The defendant Warren, the present holder of Smith’s mortgages, is bound by the same equity.' He certainly in this respect stands no stronger than his assignor.
It is now contended, however, that Warren has another and a distinct equity, growing out of the fact that he holds by assignment from Smith another note of Hammond, for one thousand dollars, secured by a separate mortgage of personal property, consisting of a planing-mill and machinery placed upon the *140real estafe in question. It is urged that he would be embarrassed and put to inconvenience in enforcing this mortgage, if the plaintiff should be put in control of the mortgage of the real estate. The situation of affairs will be better understood by a recurrence to the dates and order of events. The first note of Mr. and Mrs. Hammond to the plaintiff was dated February 13, 1888. The one thousand dollar note . of Mr. Hammond alone to Smith, secured by the mortgage of personal property above referred to, was dated March 19. The second and third notes of Mr. and Mrs. Hammond to the plaintiff, for twelve hundred dollars, were dated Maye8. The eight hundred dollar note of Mr. and Mrs. Hammond to Smith, secured by two mortgages, one of personal property from Mr. Hammond, the other of real estate from Mrs. Hammond, was dated May 16; Hammond’s assignment for the benefit of his creditors, May 29; Mrs. Hammond’s deed of real estate to Chamberlayne, June 4. On June 21 Smith gave and recorded the statutory notice of his intent to foreclose the mortgage of personal property which he held to secure the eight hundred dollar note. On the same day, two notes having fallen due, the plaintiff made his special attachment of the real estate conveyed by Mrs. Hammond to Chamberlayne. On July 19 Smith assigned to Warren the two mortgages given to secure the eight hundred dollar note, and presumably the note itself, though this is not expressly stated, and on the same day Warren published notice of his intention to sell the real estate under the power of sale contained in the mortgage of real estate. On July 23 Smith assigned to Warren the mortgage of personal property given to secure the one thousand dollar note. Warren’s part in the transaction appears to have been conducted by Chamberlayne, and it is not pretended but that he either actually had, or at least is bound by, the knowledge which Chamberlayne had, so far as that may be material. Paisler, one of Hammond’s assignees, and one of the defendants, testified on cross-examination that the object of Warren’s taking the mortgages “ was to handle those mortgages as the assignees wanted them handled, providing Be got his money back ”; and this appears to have been the fact.
It thus becomes very plain that Warren has acquired no equity superior to that of the plaintiff. The mortgage to *141secure the note of one thousand dollars was considered and treated as a mortgage of personal property. Hammond had no title to the real estate. Mrs. Hammond, who had the title, did not join in the mortgage. This mortgage could not in any way affect her real estate, and it was not designed or understood to do so. When she afterwards gave to Smith the mortgage upon her real estate, to secure another note signed by herself, the mortgage was subject to redemption upon the payment of the note which it was given to secure, without any reference to the effect of such redemption upon her husband’s earlier mortgage of personal property. When Warren, on July 19, took an assignment of the two mortgages given to secure the eight hundred dollar note, and on the same day instituted proceedings to foreclose the mortgage upon the real estate, the proceedings by Smith- to foreclose the personal mortgage were already well advanced, and the foreclosure must soon have become absolute, unless there was something to the contrary in the arrangement between Warren and the assignees; and the personal property, as already stated, was more than enough to pay the note. The equity now relied upon to defeat the plaintiff’s equity grows out of Smith’s assignment to Warren, four days later, of Hammond’s earlier mortgage upon his personal property to secure the one thousand dollar note. Upon comparing the equity of the plaintiff with that of Warren, it is apparent that the former is superior. The debt secured by the mortgage upon the real estate would have been satisfied by the foreclosure of the mortgage upon the personal property, but for the interference of the defendants. The object of that interference was to divert the property, so that the creditors of Hammond should receive the benefit of it. Indeed, the defendants concede upon their brief, that, “ while a loss to the plaintiff was probably regarded as a necessary result of the plan proposed, there was no primary desire to injure the plaintiff.” The purpose was to secure the property for Hammond’s creditors by depriving the plaintiff of the power to avail himself of his lien upon it. Under such circumstances, foreseeing the consequence and intending it amount to ■ the same thing. Goodnow v. Shattuck, 136 Mass. 223, 225. Commonwealth v. Pierce, 138 Mass. 165, 179. W-v. W-, 141 Mass. 495. Whether under any *142circumstances the protection of a defendant’s collateral right growing out of another transaction would of itself alone furnish a sufficient reason for refusing to allow to a plaintiff an equitable right of subrogation to which he would otherwise be entitled, need not be considered. We need only to pay regard to the circumstances of the case before us. The protection of Warren in the situation in which he voluntarily placed himself, with his eyes open, seems to be but an incidental purpose of the defence; the main object being to carry out the original plan, and to secure to Hammond’s creditors a benefit to which they are not entitled. The rights of the assignees are subject to the same equities that Hammond himself was subject to. 2 Story, Eq.Jur.§§ 1228, 1229. Pierce v. O’Brien, 129 Mass. 814. Chace v. Chapin, 130 Mass. 128, 131. The entry must be,

Decree affirmed.