Irving Browne Isaac Grant Thompson.

The American reports: containing all decisions of general ..., Volume 36 online

. (page 63 of 123)
Online LibraryIrving Browne Isaac Grant ThompsonThe American reports: containing all decisions of general ..., Volume 36 → online text (page 63 of 123)
Font size
QR-code for this ebook


the railroad company with its cars. Therefore it seems to me tliat
where it is a part of the scheme of a business to use in its prosecu-
tion the railroad track in preference to the other parts of the high-
way, the carrying out of such plan is a use of the railroad, and is
a violation of the exclusive franchise which I have said is, in that
respect, vested in the railroad company.

And this, I think, is what has been done in the present case.
The evidence has satisfied me that the use that has been made of
the road of this respondent by the vehicles of the appellant has
been the result, not of accident, but of design. It has been quite
clearly proved that there has been an understanding, either express
or tacit, between the managers of this coach company and their
employees, that the road of the respondent was to be converted into
one of theeflScient instruments of its business; and as was to be
expected, such understanding has been put into effect, utterly re-
gardless of the embarrassments which by such action were thrown
upon the respondent. The road of the respondent has not only
been used by this rival company to the greatest extent practicable,
but has been used in such a manner as seriously to obstruct the
convenient employment of it by its owner. Against the continu-



Digitized by



Google



556 ^'fiVV JERSEY,



Pillsbury v. Cingon.



ance of such condact the respondent had a right to appeal to the
law for protection.

And it is on the same ground that it appears to me that the re-
lief by injunction was admissible. These interferences with the
rights of the respondent being the outcome of an organized plan,
could not be sufficiently remedied except by the preventive power
of a court of equity. Occasional interruptions and invasions of
this franchise, not being parts of a general scheme, would not have
justified such interposition, as such wrongs, being both public and
private nuisances, could have been sufficiently repressed by actions
at law or by indictments. Under such conditions, these latter
methods of redress would have been the appropriate and sole reme-
dies. But such repressions would not be adequate where the
wrong-doing proceeds from a concerted plan of operations, because
as the remedy would bo aimed at the effects, and not at the cause,
the result would be the inefficiency, with respect to results, that in
general attends a great multiplicity of suits,

I have regarded these questions as of considerable importance,
and have on that account preferred to express my own views on
the subject; and it is in consequence of such views that I shall
vote to affirm the decree rendered in the court below.

Decree unanimously affirmed.



PiLLSBURT V. KiKGON.

(38 N. J. Bq. [6 Stew.] 287.)

AMiignmefU for ben^ of creditors — assignee — poioer to set aside firauduimU

trcmtfer.

An assigneA for the benefit of creditors may set aside a prior fraudulent trans*
fer by his assignor. {See note,p, 569.)



B



ILL to set aside a fraudulent conveyance. The opinion statei
the case. The relief was denied below. & 0., 4 Stew. 619.



Frederick Adams, for appellant.
/. H, Ackerman, for respondent



Digitized by



Google



NOVEMBER TEKM, 1880. 557

PilUbury v. Eiogon.

Depue, J. The complainant is the assignee of John C. Doremus
and William L. Doremus. The bill charges that on the 14th of
January, 1878, the said John C. Doremus and William lu Doremus,
who were partners, executed and delivered to the complainant an
assignment of all their partnership and individual property, for the
purpose of securing to the creditors of the firm and the individual
creditors of the assignors an equal distribution of the partnership
and separate property of the assignors, in accordance with the pro-
visions of the act entitled '^ An act to secure to creditors an equal
and just division of the estates of debtors who convey to assignees
for the benefit of creditors." Rev. 3G. It further charges that the
firm property embraced in the inventory does not exceed in value
the sum of $895.44, of which more than $700 are book accounts, a
portion of which is probably uncollectible; that the individual
estate of William L. Doremus is estimated at the sum of $654.10,
and the individual estate of John G. Doremus at the sum of $1,200;
that firm debts amounting to $4,345.51, and individual debts of
William L. Doremus amounting to $204.33, had been presented to
the complainant, and that the estate in the complainant's hands
and mentioned in the inventory is insufiicient to pay in full the
debts of the firm presented to the complainant.

The bill further charges that the said John G. Doremus, on the
16th of December, 1877, was seized of two ti'acts of land situate in
township of Montclair, valued at $7,000 above incumbrances, and
that on that day he conveyed the said lands to his daughter, Jane
A. Kingon, for a pretended consideration ; that at the time ot the
said conveyance the said firm was hopelessly insolvent, being in-
debted in the sum of $12,000, whereof the debts presented to the
complainant were parcel ; that the said conveyance was contrived
and intended in fraud of creditoi*s, and that the grantee took the
said conveyance with knowledge of the insolvency of the grantor,
and of the fraudulent purpose with which the conveyance was
made.

The prayer in the bill is that the said fraudulent conveyance may
be set aside, and that it may be decreed that the premises so fraud-
ulently conveyed away were the property of the said John G. Dore-
mus at the time of the execution of the said deed of assignment,
and became equitably vested in the complainant under the deed (A
assignment. To this bill a demurrer was filed.

Concisely stated, the case is this: A conveyance of property by



Digitized by



Google



555 NEW JERSEY,



Pillsbury v. Kingon.



an insolvent debtor, in fraud of his creditors; a subsequent assign-
ment by the debtor for the benefit of crcditors, pursuant to the
assignment act, under which creditors who were hindered, delayed
and defrauded by the conveyance, have presented their claims for
allowance, and the property in the hands of the assignee insufficient
to pay the claims of creditors in full, without resorting to the prop-
erty previously conveyed away by the debtor. The question on the
demurrer is whether under such circumstances the assignee has a
standing in court to set aside the fraudulent conveyance, and reach
the property conveyed away by the debtor in fraud of creditors, for
the pui'pose of applying it in satisfaction of the claims of creditors.

No rule of law is better settled than that a conveyance in fraud
of civditors is good as between the parties to it. The statute of
13 Elizabeth, ch. 5, which makes void grants and conveyances con-
trived in fraud, with intent to hinder, delay or defraud creditors,
is in express terms limited to those persons whose actions, debts,
damages or demands are or may be hindered or defeated by such
covmous or fmudulent devices and practices. Rev. 447, § 12. It
is equally clear that such conveyances are also unassailable by those
who hold a derivative title from the fmudulent grantor, and in
virtue of their title, become simply representatives of his interests.
An heir or devisee of the fraudulent grantor is exclusively the rej)-
resentative of the latter, and succeeds only to his rights. In no
sense can the heir or devisee be considered as representing those
whose interests are intended to be defrauded; and on the plain
construction of the statute he is disabled from taking advantage of
its provisions. The executor or administrator of a solvent estate
st-ands in the same position. As such, he is also the representative
of the fraudulent grantor, and has no power to recall a fraudulent
grant of chattels for the benefit of the grantor's estate. The same
disability will rest upon an assignee, who, in virtue of the instru-
;nent of transfer, becomes merely the representative of his grantor,
and succeeds only to the rights of the latter.

The material question for present consideration is, whether those
who hold by a title derived from the grantor, but who, in virtue of
that title, become the representatives of the creditors of the
grantor, as a class — as for instance, the executors or admin istra«
tors of an insolvent estate, or an assignee for the benefit of the
<yrantor^8 creditors — may not be allowed, in the interest of credit-



Digitized by



Google



NOVEMBER TERM, 1880. 559

Pillsbu nr v. KiDgOD.

ors, to have a standing in court, to avoid tho fraudulent grants and
conveyances of tbe debtor for the benefit of his creditors.

The leading case on this subject is Hawes v. Leader, Cro. Jac.
2T0. In that case tho defendant was the administrator of one
Thomas Cookson, The plaintiff averred, in his declaration, that
the said Cookson, for £20 paid by the plaintiff, granted all his
goods mentioned in the schedule, and covenanted that he, his
administrators, etc., should safely keep and quietly deliver them to
the plaintiff on demaud, and bound himself in £40 for the per-
formance of that covenant Cookson died, and the plaintiff de-
manded the goods of the defendant, who had become administra-
tor, and being refused, brought his action. The defendant pleaded
the statute of 13 Elizabeth, ch. 5, and further said that the intes-
tate, at the time of tlio grant, was indebted to divers persons in
several sums (naming both the persons and the sums), and that
the deed of gift was made of fraud and covin betwixt Cookson and
the plaintiff to deceive his creditors named; that Cookson used
and occupied all the goods during his life, and that administration,
after his death, was committed to the defendant. The plaintiff
demurred, and assigned as grounds of demurrer, (1) that it was not
averred that the debts due were unpaid to the creditors named;
(2) that the plea did not show that the said debts were due by
specialty, for an administrator was not liable to debts if they be not
upon specialty; (3) that the goods were liable to the creditors in
the plaintiff's hands, as an executor de son forty if the deed of gifc
be fraudulent; (4) that creditors might never sue for their debts,
and then the defendant might thereby justify the detainer of the
goods forever, and (5) that the defendant was not such a person as
is enabled by the statute to plead that plea, for the statute makes
the deed void as against creditors, but not against the party him-
self, his executor or administrator. On the argument of the
demurrer it was adjudged for the plaintiff.

It will be perceived, that in the case cited the action was at law,
and the pleading being entirely wanting in the averments necessary
to put the interests of creditors in the issue, the decision in princi-
ple went no further than holding that an administrator, as such,
cannot take advantage of the statute where the rights of creditors
do not appeal* to be involved. Certain it is, that by a long line ol
decisions, it has become settled law that a conveyance of chattels,
made by a debtor in fraud of his creditors, is void, and the property



Digitized by



Google



560 ^EW JERSEY,



Pillsbuiy ▼. Kingon.



conveyed is assets for the payment of debts. 3 Wms. on Ezra.
1679. At common law, creditors might consider the fraodulent
donee as an executor de son forty if he took the goods into his pos-
session after the death of the donor. But it was not considered
that the rights of creditors depended altogether on that mode of
proceeding ; for it was adjudged in BetlUl v. Stanhope, Oro. Eliz.
810, that if the gift of goods be in itself fraudulent, and the covin
is expressly found by the jury, then it is utterly void against the
creditors by 13 Elizabeth, ch. 5, and the intestate died possessed
of them ; and when the donee took them it was a trespass against
the administrator for which he hath his remedy, and they were al-
ways assets in his hands. Where A., being indebted to B., made
C. his executor, and died, and C, the executor, promised B., on good
consideration, that if ho could discover any goods, parcel of the
testator's estate at the time of his death, he should have his debt^
satisfied thereout, and the question was whether a lease for years
conveyed to a stranger by the testator in his life-time, fraudulently,
should in law be parcel of his estate at the time of his death or
not, it was by the whole court resolved to be parcel of the testa-
tor's estate at the time of his death, for the lease was void against
creditors. Ano)i,y 2 Roll. 173. Mr. Roberts, in his treatise on
Fraudulent Conveyances, says :

'* Wherever a man makes a fraudulent gift of his goods and chat-
tels, and dies indebted, the rule upon the statute of Elizabeth, ch.
5, has always been to construe the gift as utterly void against all
his creditors, and the debtor to have died in full possession with
respect to their claims, so that the effects are just as much assets in
the hands of the personal representatives, as to creditors, as if no
such attempt to alien them had been made." Roberts on Fraud.
Conv. 592.

In Shears v. Rogers, 3 B. & Ad. 362, the defendant was the per-
son to whom the lease had been assigned by the testator in his life-
time, in fraud of his creditors, and who afterward became his execu-
tor; but none of the judges mentioned the fact that the defendant
might have been held liable as executor de son tort, except Patti-
SON, J.; and Lord Tentebden, C. J., puts his decision on the
ground that *'the authorities show that whenever a man makes a
gift of goods which is fraudulent and void as against creditors and
dies, he is considered to have died in full possession, with respect to



Digitized by



Google



NOVEMBER TERM, 1880. 561

Pillsbaiy v. Eingon.

the olaiixis of creditors, and the goods are assets in the hands of his
executor.^

In Shears t. Rogers and Bethel v. Stanhope, the question arose
under pleas of pUne administravit. The issue on these pleas admit-
ted that the goods and chattels fraudulently conveyed by the de-
ceased were needed to pay debts. In this respect those cases are
distinguishable from Hatoes v. Leader, In Shears v. Rogers, the
lease had been assigned by the testator to the defendant, in trust
for the benefit of the testator during his life, after his death for the
benefit of one of the testator's daughters-in-law. The defendant,
after probate of the will, and before he had notice of the plaintiff's
debt, delivered the deed of assignment to the husband of the
daughter-in-law. He did not deliver the key of the leasehold prem-
ises, but the premises were let by the husband to a tenant. In
Bethel v. Stanhope, the testator made a gift of his goods to His
daughter by covin, to defraud his creditors, and died. The defend-
ant intermeddled with the goods, afterward the daughter, by this
gift, took possession of the goods, and after that the administration
was committed to the defendant as executor. These cases affirm
the power of the executor acting in behalf of creditors, under some
circumstances, to avoid conveyances by a testator in fraud of his
creditors. In both cases the goods so conveyed away were held to
be assets in the hands of the executor — a result which is not sup-
posable if the executor had no power to retain or recover them, in
avoidance of the conveyance of the testator, by setting up the fact
that they were granted away by the testator in fraud of his creditors.

At common law there could be no executor de son tort where
there was a rightful executor or administrator, and it was only to
give substantial effect to the statute of Elizabeth that a voluntary
donee of chattels was considered chargeable as an executor de son
tort if he took possession of them after the death of the donor.
Roberts on Fraud. Con. 593. Such a representative of a deceased,
where there is a rightful executor or administrator, is utterly out of
place in our system of administration upon an insolvent estate and
the distribution of its assets among creditors. In such a condition
of the estate of a decedent the rightful executor or administrator
is generally the representative in fact of creditors, and of creditors
only, and alone has the capacity to take the steps necessary under
the statute to effectuate an equal distribution among the creditors
of an insolvent estate of the assets which may be made available for
Vol. XXXVI — 71



Digitized by



Google



562 ^'^W JERSEY',



Pillsbuiy V. Kingoo.



the payment of debts. If creditors should sue the fraudulent donee
as executor (20 «on /or/, or should by virtue of an execution on a
judgment against the rightful executor or administrator levy ou
Lhe chattels so granted away, priorities would be obtained contrary
to the policy of the statute for the distribution of the assets among
the creditors. In Hollaiid v. Crttfty 20 Pick. 321, 328, the right
of the administrator of an insolvent estate to set aside a convey-
ance made by the intestate in fraud of creditors, was deduced from
the fact that in such a condition of the estate the administrator is
the trustee and representative of creditors, and as such may stand
upon their rights and assert claims which the intestate himself
could not have asserted, and that deduction was founded upon the
proceedings for the settlement of insolvent estates, in which the
executor or administrator is regarded in the first instance as
the trustee and representative of the creditors, and only secondarily
the trustee for heirs or personal representatives. Though one who
parts with his property for the purpose of defrauding creditors can-
not recover it back, his personal representatives may sue for it for
the benefit of his creditors if his estate be insuflBcient to pay his
debts. Stewart v. Kearney^ 6 Watts, 453 ; Buehler v. Gloninger^ 2
id. 226; Bouslough v. Bouslouffh, 68 Penn. St. 495, 499; Everett v.
Read, 3 N. H. 55; Abbott v. Tenney, 18 id. 109; Cross v. Browny 51
id. 486; Fletcher v. Holmes, 40 Me. 364; McLean v. Weeks, 61 id.
277; 65 id. 411; see, also, Andruss v. DooUttle, 11 Conn. 283;
Babcock v. Booth, 2 Hill, 181, 186; Flagler v. Blunt, 5 Stew. Eq.
518, and cases cited in Mr. Perkins* note to 3 Wms. on Exrs.
1679, 1782.

In a court of law in ordinary cases, by proof at the trial or by the
production of a decree of the Orphans' Court, and always in a
court of equity, the condition of the estate may be ascertained, and
if need be, a classification arrived at of the creditors who are and
who are not entitled to the benefit of the statute; and on the set-
tlement of the estate the assets may be so marshalled and adminis-
tered by withholding from heirs, legatees, and next of kin, all
advantages arising from the avoidance of the acts of the decedent,
as to give effect to the policy of the statute, which denies to such
representatives the power to avail themselves of its provisions for
setting aside the fraudulent grants and conveyances of the deceased*
The cases on this head in the courts of our sister States are not in
harmony, but I think on pnnciple and good policy the executor or



Digitized by



Google



NOVEMBER TERM, 1880. 563

Pillsbuiy V. Kiugon.

administrator may be considered as the representative of creditors
for the purpose of bringing suits to recover property fmudalently
conveyed away by the deceased, wlien such property appears to be
required for the payment of his debts, and that such property when
recovered will be treated as assets in the hands of the executor or
administrator only for the purpose of paying debts. Where the
property so illegally disposed of consists of lands on which debts
become liens by statute, and which may be subjected to the pay-
ment of debts by a creditor filing a bill in behalf of himself and
other creditors {Boston v. Castner, 4 Stew. Eq. 697), the executor
or administrator, before he can put himself in position to give him
a standing for the purpose of reaching such property, must obtain
an order of the proper court for the sale of lands for the payment
of debts. Kingsbury v. Wildy 3 N, II. 30; Drinkwaier v. DrinJc-
water, 4 Mass. 354.

Cases more directly in point with the case in hand are those de-
cided under the insolvent acts of 1 Geo. IV, ch. 119, and 7 Geo. FV,
ch. 57. In Butcher v. ffarrisouy 4B. & Ad. 129, the assignees of
an insolvent under the insolvent act were held to be parties grieved,
within the meaning of the statute 13 Eliz. ch. 5, so as to enable
them to recover of the insolvent and others, parties to a fraudulent
conveyance, the penalty given by the statute ; and in Doe, Grimsby
V. Ball, 11 M. & W. 531, the assignee of an insolvent was ad-
judged capable of recovering lands which the insolvent had previously
conveyed away in fraud of creditors. In both these cases, the
assignee was regarded, for the purposes of the suits, as the represen-
tative of the creditors of the insolvents. In the case last cited,
Parke, B., said: '^ I think that the assignee of an insolvent debtor
represents the creditors for all purposes, and if any fraud exists in
a transaction to which the insolvent was a party, that the assignee
may take advantage of it. A deed which is void as against cred-
itors is void also as against those who represent creditors." Alder-
son, B.,also declared that **if a deed be void as against creditors,
the assignee who represents creditors niay avoid it."

In Norcutt v. Dodd, 1 Cr. & Ph. 100, a bill by an assignee in insol-
vency was sustained, the object of which was to set aside a volun-
tary alienation of property, of the debtor, who, at the time of such
alienation, was insolvent. In the latter case of Holmes v. Penny^
3 K. & J. 90, the bill was filed by the plaintiff as a creditor and also
as an assignee in insolvency, to impeach a settlement by a debtor



Digitized by



Google



564 NEW JERSEY,



Pillsbarj Y. KingoD.



in fraud of creditors ; and in considering the question of parties.
Vice Chancellor Wood said : " I havq no doubt of the right of the
assignee in insolvency to sue in this case. In Doe, Grimsby v. Batt^
Baron Pabke and the present lord chancellor decided that an
assignee in insolvency might properly represent all the creditors in
proceedings to set aside an instrument which any of the creditors
might have instituted.*'

In the two cases first cited, the assignment was made under the
act of 1 Geo. IV, ch. 119 ; in the other two, under the act of 7 (Jeo.
lY, ch. 57. In none of the cases was the decision placed on any
language in the statute specially empowering the assignee to avoid
the fraudulent conveyance of the assignor. In fact, neither of those
statutes contained any express provision for setting aside convey-
ance of the assignor in fraud of creditors, and that fact was unsuc-
cessfully pressed upon the attention of the court by the counsel,
who argued against the authority of the assignee to exercise tiiat
power. The capacity of the assignee to appear in court for that
purpose was in express words, or inferentially, adjudged on the
ground that the assignee of an insolvent was the representative of
creditors, and as such was entitled to take, for their benefit, the
same advantage of the statute of Elizabeth as the creditors might
have taken. This view is conspicuously apparent in the remarks
of Baron Parke during the argument, and in his judgment in Doe^
Chritnsby v. Bdlh

A trustee or assignee in insolvency has been considered as the
representative of the creditors of the debtor and as such entitled
to avoid, in the interest of creditors, his grants and conveyances
made in fraud of creditors. Swift v. Thompson, 9 Conn. 63 ; 21
Am. Dec. 718; Palmer y. Thayer, 28 id. 237; Shipmany. jEina
Ins. Co., 29 id. 245; Moncure v. Hanson, 15 Penn. St 385.

In Bayard v. Hoffman, 4 Johns. Ch. 450, Chancellor Kent decided
that an assignment of all the debtor's estate, real and personal, in
trust for all his creditors, included stock which the debtor had be-
fore that voluntarily assigned, to the injury of his creditors, and
that the assignee might file a bill to set aside the fraudulent trans-
fer for the benefit of the creditors. That case has been considered
as overruled by the courts of New York, in Storm v. Davenport, 1
Sandf. Ch. 135, and BrowneTl v. Curtis, 10 Pai. 210 ; but its
weight as the opinion of an eminent equity judge is not impaired
by the overruling cases. Storm v. Davenport was rested on Jfachie



Digitized by



Google



NOVEMBER TERM, 1880. 565

Pillsbary v. Kiogoo.

▼. Gctims, 5 Cow. 647 — a case which bore upon the question very



Online LibraryIrving Browne Isaac Grant ThompsonThe American reports: containing all decisions of general ..., Volume 36 → online text (page 63 of 123)