Court Opinion

ID: 6574566
Source: CourtListenerOpinion
Date Created: 2022-07-20 19:33:02.111815+00
Date Added: 2024-06-11T15:57:02.290725
License: Public Domain

Daggett, J.
There were two principal questions raised and discussed at the bar, and decided by the judge at the circuit, and which are now to be examined.
1. Was the property described personal or real ? The judge 'declared it to be personal. If any part of it be real, it is very clear, that no recovery can be had for such part. I think the decision of the judge thus far correct. It consisted of various ' articles of machinery belonging to a manufactory of cotton doth; which, with their connexion with the building, are particularly described in the motion. Beyond a doubt these articles are in no-respect real estate, except as they are attached to the freehold. It is material here to observe, that an important part of the description is, that they were thus attached to the building to render them stable, but that they might be removed to any other part of the building, or to any other place; without any injury to the freehold. To operate successfully, they must be fixed, like clocks, and many other articles, which are clearly personal and moveable. We resort, then, to the criterion established by the rules of the common law : could this property be removed without injury to the freehold ? The case finds this fact. This then should satisfy us.
But we will look at it more closely. This question has arisen and been decided in three classes of cases. 1. Between the executor and heir ; and there it is considered favourably to the latter, upon a familiar principle of the common law, viz. that the heir is to faé favoured. 2. Between the executor of the tenant for life and the remainder-man or reversioner. 3. Between landlord and tenant; and here the greatest indulgence is shewn to the tenant, especially where the annexations are *76for the support of trade and manufactures. Elwes v. Maw, 3 East 38. 2 Kents Comm. 279, 80. But in Cresson & al. v. Stout, 17 Johns. Rep. 116. and in Gale v. Ward, 14 Mass. Rep„ 352. articles of this description were declared to be personal property. The same principle is necessarily implied in Bostwick v. Leach, 3 Day 476. In no court, within my knowledge, have they been deemed otherwise. The argument ah inconvenienti may also be entitled to some consideration, both as it respects debtor and creditor. If a spinning machine be real estate, a part of it might be set off, by metes and bounds, in satisfaction of a small debt. I entertain no doubt on this point.
2. The great point remains to be considered. Was this bill of sale valid, possession not accompanying or following it ? The judge at the circuit charged the jury, that though this property was fraudulently conveyed, by Lee to the defendant, yet the conveyance was good against the plaintiffs claiming under the deed from Lee, and therefore, their verdict ought to be for the defendant. This part of the charge I think erroneous. It might seem, that this charge presents a very narrow enquiry; but as the cause is again to be tried, the broad question whether a sale of personal property by a deed, either absolute or by way of mortgage, be good, unlessspossession accompany the sale, will be considered and disposed of.} In my opinion, if the vendee of personal property suffer the vendor to remain in possession, this is evidence of fraud, as against the creditor of the vendor, or a bona fide purchaser, be the sale absolute or conditional; and unless there be a sufficient excuse shown to and approved by the court, that evidence is conclusive. In Edwards v. Harhen, 2 Term Rep. 587., it was declared, by the court of King’s Bench, that an absolute bill of sale was a fraud in law, unless possession accompanies and follows the deed. This principle was recognized, in express terms, by the supreme court of the United States, in Hamilton v. Russell, 1 Cranch 309.
The facts in this case, so far as they regard this point, are these. On the 7th of August 1829, Lee made a deed of the building and machinery, in which the articles in question were then, and had been, for years before, used. This deed was executed at New-London, about twenty-five miles from Wind-ham, the place where the manufactory was situated. The defendant then delivered the deed back to Lee, under an agree*77ment that he should, immediately on his return to Windham, • i T ¶ _ '¶* * * procure it to be recorded. Lee remained in possession, using the machinery as his own, until the 15th of August, when he conveyed it to the plaintiffs, and delivered immediate possession, having lodged the deed to the defendant for record, on the 14th. The deed was made to the plaintiffs, as trustees for the creditors of the grantor, with full power to sell the property and apply the avails in discharge of his debts. The deed to the plaintiffs counted upon a mortgage made to the defendant, and declared it subject “ to such claims as the mortgagee can legally have to the ,same.” There was no doubt as to the validity of the debts of the defendant; but there was no pretence of any possession by him other than what arose out of the delivery of the deed. Lee, at the date of these deeds, was insolvent.
The condition of the plaintiffs, then, is that of creditors and bona fide purchasers. They profess to be, and in truth are, the creditors of Lee; for they represent his creditors; and the deed is, therefore, of the same force as though made to the creditors respectively by name. They have the same rights, then, as they would have, if they had obtained executions, and executions had been levied on this property. They are, therefore, entitled to all the rights, which Lee could transfer to them and whatever could be taken by execution, that is, to his interest in those chattels. They are also bona fide purchasers, by all the rules which apply to this subject. They receive this property to sell, and apply the avails in payment of his debts. They are, then, creditors, and bona fide purchasers. Minor v. Mead & al. 3 Conn. Rep. 289. Kimball v. Hutchins, 3 Conn. Hep. 450. James v. Johnson, 6 Johns. Chan. Rep. 417.
The simple and intelligible rule of law laid down in Edwards v. Harben, and Hamilton v. Russell above cited, would seem to settle this case. But it is admitted, that this rule has been repeatedly broken in upon, in Great-Britain and in this country. The exceptions have become so numerous (by one respectable court they are declared to be no less than twenty-seven in number) that they seem rather to abrogate than establish the rule. It may be doubted whether the principle is not sound, and whether many of its modifications do not tend to promote, rather than to suppress, fraud.
The doctrine of this court, as established in Patten, v. Smith, 5 Conn. Rep. 196. is, that a sale of goods and chattels, either *78absolute or by way of mortgage, with an agreement either in ou). o(-(|tü c|ee(j) that the mortgagor shall remain in possess-bn, except in special cases and for special reasons, to be shewn to at!<^ approved by the court, is fraudulent and void against creditors and bona fide purchasers. This has been the law of Connecticut for the last forty years, if not from the beginning. It is not according to the course of the court to call this a fraud per .se, and to direct the jury to find the sale void, but the question is submitted to the jury as a question of fact, with instruction that if they find none of the established exceptions, they will find the transaction fraudulent. I see no good reasons to depart from these principles.^
Let us now attend to the objections urged against the claim of the plaintiffs.
First, it is urged, that the plaintiffs had notice of the mortgage to the defendant, and that too of the specific claim of the defendant. This notice, however, could have no effect; for if they knew of the prior conveyance, they knew also, that the vendor remained in possession, using the property a§ his own, and as he had been using it years before; and they therefore knew, that the sale to the defendant, so far as it related to the personal property, was void. All the authorities are one way on this point. Doe d. Otley v. Manning, 9 East 59. Doe d. Watson & al. v. Routledge, Cowp. 705. 711, 2. Chapman d. Staverton v. Emery, Cowp. 278. 280. Gooch’s case, 5 Rep. 60. Reed v. Blades & al. 5 Taun. 212. Waterhouse v. Renton, 5 Day 136. There is no difference as to this question, whether it is a fraud in fact, or whether the fraudulent intent be inferred, and therefore a fraud in law. If a creditor knows, that personal property has been attached or taken by execution, or sold and paid for, and is in possession of the debtor by design, he may attach the property, levy his execution and sell it, or take a bill of sale of it in discharge of his debt ; or even a person not a creditor may safely buy it; for the transaction, there being nothing more in the case, is fraudulent and void.
Secondly, the nature of this property, it is urged, forbids the taking of possession by the vendee. Why? it may be asked. The case finds, that it can be removed without injury to it or the building. It may be employed in another building occupied as a cotton manufactory, or it may be sold.
It is again said, that the owner of the building will find it useless, without machinery. Nor can a hotel be successfully *79occupied without furniture; nor a farm, without utensils and stock; nor a theatre, without dresses and scenery; but who_ would contend, that all such property might be sold, and the vendor retain possession consistent with the rule of law. In Reed v. Blades & al. 5 Taun. 212. a conveyance was made by mortgage of a leasehold building occupied as an opera house ; and in the same instrument, the dresses, scenery and decorations were conveyed. The conveyance of the leasehold property was holden good ; but of the chattels, no possession accompanying it, the deed was holden void. I entertain no doubt on this point.
Thirdly, it is insisted, that this conveyance to Lee is by-way of mortgage, and that in such case, it is consistent with the deed that the property shall remain with the vendor. It is no part of the deed that possession should remain; nor is there any suggestion of any such agreement out of the deed. If this deed, then, be good because conditional, then it is so in all cases where it is conditional; but there can be no authority for such a position. In Ryall & al. v. Rolle, 1 Atk. 165. and in Worseley & al. v. De Mallos & al. 1 Burr. 467. it was declared, that there was no difference between an absolute deed and a mortgage, where the vendor remained in possession; they are equally fraudulent. It may be said, that these cases were under the bankrupt act of 21 Jac.; but the whole reasoning of the court was in opposition to such conveyances as fraudulent and void, by the statute of 13 Eliz. and by the common law. The mortgagee can take possession of mortgaged goods ; and there is no reason why he should not, except in special cases, unless to procure a collusive credit. No special reason is assign'ed, in this case, why the mortgagor appears and acts as owner. He may impose upon mankind, by false appearances, obtain new credit, and mortgage the property a hundred times over. Bills of sale are never recorded, unless where goods or chattels are embraced in the same deed with the land : nor can they, in such case, be constructive notice; for this is true only of deeds required to be recorded, as was decided recently in Middlesex county, in the case of Carter v. Champion & al., 8 Conn. Rep. 550.
In the case of Cadogan v. Kennett, Cowp. 432. it was part of the trust on the face of the deed, that goods conveyed to trustees for the use of the husband, and then to his wife, in consideration of marriage and the marriage portion, should remain in possession of the husband ; and the transaction being fair, the *80court held, that they were not 1 rabie to an execution of a creditor existing at the time of the deed. It was part of the trust, that the goods should remain in the house.
The doctrine of Ryall & al. v. Rolle and Worseley & al. v. De Mattos & al. was recognized, by the supreme court of Massachusetts, in The Portland Bank v. Stubbs, 6 Mass. Rep. 422. That was a pledge of personal property. Parsons, Ch. J. calls it a mortgage, and says, that a delivery of the chattel is essential. The same principle was established in Reed v. Blades & al. 5 Taun. 212. above cited.
But I forbear to cite authorities. As late as 1824, in the case of Patten v. Smith & al. 5 Conn. Rep. 196. this Court declared, that in a mortgage or in an absolute sale, if the possession remained in the vendor, it is fraudulent, unless explained. It will not be said, that this case is within any exception ever-recognized by this Court; (and I am not aware by any other,) and therefore, it is within the rule. The doctrine is illustrated, and all the cases reviewed with great ability, and in a satisfactory manner, in 2 Kents Comm. 406 to 419.
Fourthly, it only remains to consider an objection arising out of the fact, that Lee could convey only what remained in him; and as his deed to the defendant was upon a good and sufficient consideration, it is said, nothing remained in him to assign to the plaintiffs'. This has been already adverted to, under another head. 1 would further observe, that the only cases cited in support of this objection bear not at all on the point. In Bean v. Smith & al. 2 Mason 252. and Aslor v. Wells & al. 4 Wheat. 466. it was decided, that a bona fide purchaser without notice, from a grantee to whom property had been conveyed to defraud creditors, is entitled to hold the same against the creditors of the grantor. These decisions are opposed to the doctrine of this Court, in the ease of Preston v. Crofut, 1 Conn. Rep. 527. It was holden, in that case, that the first deed being void under our statute, gave no title; for there was nothing in the grantee to convey. But, it is not easy to see any application of either of these principles to this case.
The plaintiffs took this deed knowing of the prior mortgage ; and they also knew, that it was-void, because Lee remained in possession using it as his own, and as he had used it for years. The deed to the defendant, then, was fraudulent. The law will not stop to enquire whether there was actual fraud or not; but will infer it, at all events ; for it is aganist sound policy to *81iffer the vendor to remain in possession, whether an agreement to that effect be, or be not, expressed in the deed. 2 tent's Comm.. 412. The same doctrine is established in Doe Dtley v. Manning, 9 East 59, and in Rob. Fraud. Con. 39, 40. Had this deed to the defendant been made with an express intent to defraud the creditors of Lee, it could not stand in the way of the plaintiffs’ deed ; nor can it, being fraudulent inlaw. There is no difference.
Let there be a new trial.
Hosmer, Ch. J. and Peters and Bissell, Js. were of the trae opinion ; the latter having expressed some doubt as to me condition in which the plaintiffs stood.