Anthony v. Boyd

The facts found by the court are stated in its opinion. The bill was demurred to, and, after argument, the demurrer was overruled. The case then came before the court for hearing on bill, answer, and proofs. This bill, brought by the executors of Alfred Anthony, a judgment creditor of William and *Page 498 Charles A. Boyd, and by the administrator of the estate of William Boyd, seeks to reach property standing in the name of Virginia J. Boyd, wife of Jonathan, as, in fact, the property of William Boyd. William, Charles, and Jonathan were brothers. William Boyd and Alfred Anthony, in renewal of previous notes, were indorsers upon a note of Charles for the sum of $17,000, given in March, 1879, which Anthony was obliged to pay in September, 1879. Charles gave a mortgage upon lots on Chalkstone Avenue, in Providence, to secure William and Anthony for their indorsement, and another to the Jackson Bank upon property on Laura Street to secure notes held by the bank, amounting to $23,250. In June, 1878, while these debts were outstanding, William was, and for some time had been, the owner of valuable property in Chicago, which he then transferred to Jonathan, who thereupon gave a mortgage on the same for $60,000 to one Bogle, a nephew, William holding the notes. The pretence was that this transfer was to secure debts due from William to Jonathan, amounting to more than $25,000. For some years before that William had received a salary of $10,000 a year, and Jonathan had received about $2,000 a year. In September, 1879, William, in the name of Jonathan, made a contract to sell the Chicago property to O.W. Clapp for the sum of $40,000. Suspecting that William could not owe Jonathan so large a sum, and that the transfer was made to keep the property from William's creditors, the Jackson Bank and Anthony brought suit against William for their respective claims, attaching the property as his. This obstructed the sale to Clapp; and finally, in October, 1880, all parties agreed that the sale might be consummated for about $45,000; of which sum $25,292.52 was to be paid to the Jackson Bank, a mortgage was to be given for $16,000, and the balance was for expenses, taxes, and cash already advanced. The attachments were released by the above payment to the Jackson Bank in full settlement of its claim, and $10,000 on account to Anthony, with a new note signed by Charles and indorsed by William for $8,059.25, the balance of the debt. It is alleged in the bill, and substantially so stated in the answer, that it was claimed and insisted by the Boyds that Jonathan was advancing the money to carry out this arrangement by waiving his right, as *Page 499 owner, to claim the portion of the purchase-money paid to the Jackson Bank, and by advancing in cash the $10,000 paid to Anthony. In consideration of this waiver and payment it was further arranged that the mortgages on the property of Charles in Providence should be transferred to Jonathan, or foreclosed under his direction. This was done, and, under the sales, the title passed to Virginia. The complainants allege that after the death of William Boyd they learned that the Chicago property belonged to William and not to Jonathan, and also that the property in Providence was held for William's benefit, and was in fact his. This bill was then brought to declare the conveyances of the property in Providence fraudulent and void as against the complainants. The defendants contend in the first place that there was no misrepresentation about the ownership of the Chicago property; that it was held by Jonathan as security for William's indebtedness to him, and that the $10,000 paid to Anthony was advanced by his wife from the proceeds of a loan upon property left by her as collateral. We are constrained to believe, from the testimony, that the property in Chicago belonged to William, and to him alone. The conduct of Jonathan was not consistent with one taking security for so large an amount, especially when it constituted the bulk of his property, and he knew, as he says, that William had no more. He knew nothing of the market value of the property, only that it had cost a large sum several years before; he had no examination of its title or condition; he took no part in its management or income; and, above all, he gave a confessedly fictitious mortgage for $60,000 upon the very estate he claimed to be taking as security, the mortgage notes being held by William and returned to Jonathan after the sale. Genuine business, even between brothers, is not done like this. Neither are we satisfied that William was indebted to Jonathan in any such sum as he claims. We do not say it was impossible for Jonathan to have saved so large an amount from the income he received; but we hardly expect to find, in one character, the persistent and patient frugality, which accumulates so much, combined with the unusual and lavish liberality which lets the bulk of it run so many years without a single payment of interest and without security. Furthermore, *Page 500 Jonathan's written statement to the assessors of taxes, whether under oath or not, was a solemn admission that he was not at that time worth enough to loan what he claimed to have loaned. True, he contradicts that statement now, and, if it stood by itself, we might think he is telling the truth now, and did not then. But in view of the other facts in the case we think we must give greater weight to his then statement than to his present assertions. Then, looking to the conduct of the parties after this transaction, we find it not in harmony with their present claims. A mortgage on the Chicago property, as a part of Clapp's purchase-money, was left in the hands of William, which he afterwards sold, paying $14,000 to Jonathan from the proceeds. Now the latter says that payment was upon a note for $10,000 given in 1866, upon which nothing had ever been paid and which had about doubled. Yet he says he surrendered that note upon payment of a little more than half of it, notwithstanding he had made a recent loan of $10,000 for which he had no note. It is much easier to believe that the payment was a return of the recent loan, with some other small sums which Jonathan says that William borrowed about that time. But, however this may be, from the time of the conveyances to Virginia Boyd until his death, William, who was supposed to be a single man, lived in one of the houses on Laura Street, not only paying no rent, but receiving all the rents of the other houses, amounting to $104 a month; while Jonathan and Virginia, claiming to be the owners, were, with their family, living upon $15 to $20 a week. Moreover, when some of the lots on Chalkstone Avenue were sold, $800, all that was paid in cash, went to William. Thus, from the beginning to the end of these transactions, the conduct of the parties constantly points to William as the owner of the property. We think from the testimony that it was his. There is not a particle of evidence to show that Virginia's money went into this matter, except the dubious answers of Jonathan Boyd about the $10,000: "I did; or my wife paid it." "I raised it: my wife left the collateral," etc. He says he gave her his property in 1878, but nothing appears to prove it. No note from William, no testimony from any bank, no evidence of the collateral, traces the details of the facts. In this view Mrs. Boyd does not stand as an innocent purchaser *Page 501 for value, but as a party to the scheme to cover William's property. She does not undertake, specifically, in the answer, and not at all in the testimony, to maintain her relation to the property as a purchaser for value. On the contrary, the transfer of the mortgage by Anthony ran to Jonathan, and the other was under his control. She acquired title from him without consideration, unless she proved that the original consideration moved from her; but this she does not do. The statements and admissions of Jonathan relating to the property are therefore admissible, and they abundantly confirm the conclusions which are quite apparent from the conduct of the parties. But, assuming the fraudulent representations as claimed in the bill, the defendants further contend that the arrangement was a compromise of this very fraud, which the complainants are not entitled now to disturb. We do not think this is so. To support a compromise there should be a doubtful bona fide claim, about which the parties stand on an equal footing as to knowledge or ignorance of facts, and in settling it there should be no imposition or deceit. That is no compromise where one party knows he has no claim, but deceives the other party into believing that he has one. 2 White Tudor Lead. Cas. Eq., Hare's Notes, 4th Am. ed. pp. 1708 et sq. and cases cited. It is the mutual concession, or the common risk in the event, which supports a compromise. If one has no claim, and he knows it, he is not conceding in a compromise: he is cheating. He has nothing to concede; and his only chance in the doubtful issue is that possibly his fraud may prevail. Headley v. Hackley, 50 Mich. 43. In this case the Boyds knew the actual facts; the creditors only suspected there was fraud. That suspicion, however, was disarmed by renewed statements, of which the creditors had no means of knowing the falsity, and upon the faith of which they treated. They did not thereby condone a fraud; the fraud was perpetrated then and there. The cases relied on by the defendant are those where a doubtful claim has been settled without deception and upon an equal knowledge of facts. In such cases the settlement will stand, even though it may turn out that the claim of one party could not have prevailed. In applying this rule the defendants assume that the creditors knew of the fraud, because the bill states that they, "knowing that said *Page 502 Jonathan Boyd, from his position in life, could never have been in possession of so large a sum, suspected that such mortgage, if any there was, was a fraudulent device," etc. The mortgage here referred to is one for $60,000 on the Chicago property, which William at first represented he had given to Jonathan. This does not show that they knew or could have ascertained the essential facts. They suspected fraud and attached the property. Mere suspicion, without knowledge of facts, will not estop a party from setting up fraud in a compromise. Baker v. Spencer, 47 N.Y. 562. The evidence shows that they did not know the real facts until after William's death. It was insisted, at the time of the settlement, that Jonathan was advancing money to the full value of the security he received. The agreement was made in belief that this was true. The creditor now finds that it was not true, and that the property held by Virginia was all along the property of William, and held for him by her. Here was the deception. But the creditor has never compromised this; nor, if he had, would he be estopped from setting up that he had been deceived in doing so. If the property belonged to William, and was only held for him by Virginia, the defendant's point, that the parties must be put in statu quo, does not arise. We think the complainants make a case for relief. After the foregoing opinion, the respondents filed their petition for a hearing.