Court Opinion

ID: 8503977
Source: CourtListenerOpinion
Date Created: 2022-11-23 01:25:19.37651+00
Date Added: 2024-06-11T16:50:48.235439
License: Public Domain

By the Court.

Parker J.
There can be no doubt that James Doughty, in this transaction intended a pah pable fraud upon his creditors, but we are not now called upon to hold the transfer void, as we mi edit ft ave done on such evidence had his creditors elected fo treat the conveyance as fraudulent, and attach the property. No one appears to have taken that course, but the plaintiff' in this case claims to charge the trustee, upon the ground that he is in fact indebted to James Doughty for the amount of the stock specified in the notes and agreed to be delivered as the consideration of the pure!)ase.
The trustee cannot object that he is not legally liable for the payment of the amount of these notes. As between him and James Doughty the conveyance was valid, and «pon a sufficient consideration. Neither can set up as a defence against the other, in any action founded upon this sale, that a fraud upon third persons might result from the transfer ; and there is no suggestion that the trustee has ever paid, or been ready to deliver the stock at the times specified in the contract.
Had the notes been made payable to James Doughty there could be no doubt.
The question then is whether the law is to be evaded *575by the mode adopted of making' the notes payable, nominally, to a third person.
Had they been passed into the hands of Jonas S. Doughty, upon some subsequent transaction between him and James, fora valuable consideration, without notice of the real transaction, but upon a representation that they were taken payable to him in contemplation of some contract to be made with him, by James, upon which he would receive them, we might perhaps hold that the trustee was, as between them, equitably the debtor of Jonas S. Doughty, and that the creditors must resort for their remedy, if any remained, to an attachment of the property transferred. But instead of this all the circumstances show that nothing of this kind has been done, or was intended, and we have the explicit declaration of Jonas, that he has no interest, and claims none, in the notes in question.
There is no reason to suppose that any person except James Doughty has the possession of them. They are all overdue, but no one has attempted to enforce payment.
No person can have an interest in them as assignee, which a court of justice should protect, and the trustee therefore cannot be subjected to pay them hereafter.— They are made payable to Jonas S. Doughty, or order, but it seems never came to his hands, and lie disclaims all interest in them. Upon the possible supposition that any one has heretofore taken them by assignment from James, no notice has been given of such assignment, and besides, such person must have received them relying upon the responsibility of James Doughty, as there could be nothing upon the notes themselves to indicate that he had any interest in them, or any authority to assign them. Should any one hereafter take them, by an assignment from Jonas S. Doughty, he could make no equitable claim upon them because they are not in law negotiable, and, moreover, having been long overdue, they carry ev*576idence of dishonor upon their face, and any one who should take them under these circumstances must be held chargeable with notice of all facts.
Justice requires that the fraud contemplated by the vendor should be defeated, and, under the circumstances as they bow appear, we see no necessity of turning the plaintiff round to an attachment of the property in another action.

Trustee charged.