Austin v. A. & W. Sprague Manufacturing Co.

StINESS, J. The main question raised by the pleadings is whether the conveyance to Chafee is in fraud of creditors. The complainant contends that it is necessarily so from its character, recitals, and provisions, and that no extrinsic evidence can be admitted to explain the circumstances and intent of its execution. If a conveyance be fraudulent as to creditors it is quite immaterial what form it may take, whether deed, lease, or mortgage ; it will be set aside. Nevertheless the form of conveyance may be very material in determining whether it is in fraud of creditors. For example, the deed by a solvent debtor of all his property to pay one of his creditors must be fraudulent; a mortgage of it to pay a single debt would not be. The former, in the case assumed, would undertake to put all the debtor’s estate beyond process of law, for an inadequate consideration, to the detriment of his re *476 maining creditors ; the latter would simply give security for payment pro tanto, leaving the balance open to them. The instrument before us is a mortgage. It is a conveyance as security for a debt; conditional and defeasible upon payment at a fixed time; with power of sale in case of default; with equity of redemption in the grantors, and account to them for surplus. The only provision which is urged as giving to it the character of a deed is that which empowers the trustee, before default, in “ his discretion to sell at public or private sale any part or parts of said granted estate or property.” While this is an unusual provision in a mortgage, we do not think it is sufficient to change its character. It is not a direction to sell, nor an authority to sell the whole, but “ part or parts; ” and the extent and variety of the estate mortgaged, as disclosed by the description, suggests that the clause has reference to the sale of parts which it may be found imprudent or inexpedient to keep during the term of the mortgage. But, however this may be, the proceeds of such a sale are to be held subject to the mortgage, so that the provisions amounts only to a permission to substitute one form of property for another of equal value; a provision not uncommon in mortgages of personal property. The instrument was recognized as a mortgage in Chafee v. Fourth National Bank, 71 Me. 514, and decided to be a mortgage in De Wolf v. Sprague Manufacturing Co. 49 Conn. 283; in Stafford National Bank v. Sprague, 17 Fed. Reporter, 784; and in Union Company v. Sprague, ante, p. 452. Under our statute, Pub. Stat. R. I. cap. 178, § 1, as under the 13th Eliz. cap. 5, a conveyance made with the intent or purpose to delay, hinder, or defraud creditors of their just and lawful actions, debts, &c., is void as to a non assenting creditor. In administering these statutes three rules have been recognized: First. The purpose of a deed may be so written into it that it can neither be read nor carried into effect without disclosing a fraud incapable of explanation or defence; its provisions may be so inconsistent with real honesty as to be referable only to a fraudulent intent. Second. Provisions not thus radically, but only apparently or primá facie, dishonest may be explained by the circumstances of *477 the execution of tbe deed tending to remove tbe inference of fraud. Boone v. Hardie, 83 N. C. 470; Cheatham v. Hawkins, 76 N. C. 335; Jones v. Huggeford, 3 Met. 515, 519; Briggs v. Parkman, 2 Met. 258; Sleeper v. Chapman, 121 Mass. 404; Finch v. Holmes, 67 Me. 186; Hapgood v. Fisher, 34 Me. 407; Alton v. Harrison, L. R. 4 Ch. App. 622; In re Johnson, L. R. 20 Ch. Div. 389. Third. A deed unimpeachable on its face may be shown to be contrived of fraud by the facts which induced it. In' other words, fraud is the gist of an inquiry under the statute, and it must appear either from the nature of tbe transaction or intent of the parties. In ascertaining it, however, a court is not tied to the words of a deed, and because of them compelled to say that a transaction is fraudulent which is not so in fact. The words may be so plain as to betray their illegal purpose or effect, or so questionable as only to arouse suspicions which may be dispelled upon knowledge of surrounding facts; but if through them, by the light either of circumstances or necessary results, the court can see that there was or was not fraud, it will judge accordingly. In the forcible language of Chief Justice Ames in Nightingale v. Harris & Lippitt, 6 R. I. 321, 329: “ Without doubt an assignment for the benefit of creditors may contain a clause so plainly indicative of the fraudulent intent pointed at by the statute as to carry its death wound upon its face ; such as a gratuitous provision out of the assigned property for the insolvent assignor or his family. Except, however, in such glaring cases, incapable of any just or honest explanation, we should be departing far from the usage of well instructed courts of any sort, and especially courts of equity, if we should attempt to pronounce upon the intent of the maker of any instrument without the aid of all those facts relating to the subjects and objects of his conveyance, which, by placing us in the precise point of view from which he contemplated his act, will enable us to ascertain what he intended by the language he used, and, consistently with that language, why he intended it.” In accordance with the rule thus expressed this court, in the recent case of Gardner v. Commercial National Bank, 13 R. I. 155, sustained the demurrer to a bill brought by assignees against *478 attaching creditors, upon the ground that under tbe demurrer the question was simply whether the assignment taken by itself, without explanatory allegations or proofs, should be regarded as valid. A second bill was filed by the same assignees, the assignors joining with them, setting forth the condition of the business and property in explanation of the provisions of the deed, to which the attaching creditors also demurred. There is no reported opinion upon this demurrer, but the following rescript is entered in the minute book of the clerk of the court: “ The court are of the opinion that the complainants, Sackett, Davis & Co., are entitled to prove that the discretionary powers contained in the trust deed made by them were consistent with an honest intent, and were not inserted in the deed for the purpose of hindering, delaying, or defrauding creditors.” There is no question about the rules stated above, excepting the second, i. e. that the provisions of a deed, not necessarily fraudulent, may be explained by extrinsic evidence, and in respect to this, we regard the cases just referred to as settling the law for this State. But most of the cases in other states to which we have been referred by the complainant are, after all, in apparent rather than in real conflict with our own and those which we have cited. In the former the courts first find that certain provisions in deeds are necessarily fraudulent, and then sa,y that such provisions cannot be explained by parol. But that is what we have already said. For example, in the elaborately considered case of Pierson v. Manning, 2 Mich. 445, the court found, “ by legal implication, a resulting trust ” in favor of the assignor. Of course no evidence could be received in such a case, for the trust would remain the same whether explained or unexplained. In Abercrombie v. Bradford, 16 Ala. 560, the court says: “ The construction of a deed is a question of law, and if by the terms of the instrument it is void, no other judgment can be pronounced than that it is null and void. To sustain a deed void on its face by resorting to parol proof would be to create a new instrument and then to give effect to its validity.” True enough; but this shows that the primary question is whether the deed is void on its face ; for we venture to say there can be found no case of a deed not held to be necessarily fraudulent by its terms, to which extrinsic evidence is not applicable. *479 The rule is well stated in Gere v. Murray, 6 Minn. 305, cited by complainant. “ The question of fraudulent intent is a mixed question of law and fact; that is, the question of the existence of a certain intent is a question of fact for the jury, when not disclosed by the papers, and for the court to declare whether such intent be fraudulent or otherwise.” In Alton v. Harrison, L. R. 4 Ch. App. 622, Giffard, L. J., approves the following language of Vice Chancellor Stewart: “ In this, as in all other cases of the same kind, the question is as to the bona fides of the transaction. If the deed of mortgage and bill of sale was executed by Harrison honestly, for the purpose of giving a security to the five creditors, and was not a contrivance resorted to for his own personal benefit, it is not void but must have effect.” Lord Abinger in Gale v. Williamson, 8 M. & W. 405, 409, says: “ The evidence is used to explain away fraud; and even in the case of a deed, fraud may be proved or disproved aliunde.” So in Bump on Fraudulent Conveyances, 3d ed. p. 24: “ In the construction of written instruments, the existence of fraud is a question of fact whenever their terms and stipulations are by possibility compatible with good faith, and have upon their face the essential elements of a legal contract.” In the present case, therefore, the question is, are the provisions of the mortgage manifestly fraudulent or do they disclose a fraudulent intent; if not, are they to be regarded as fraudulent in the light of the circumstances under which they were made. The complainant claims that whether the A. & W. Sprague Manufacturing Company was solvent or insolvent the deed is void because it placed the property beyond reach of the process of law, securing to them possession for a period of three years. But the instrument being a mortgage, this is not so. If solvent, the grantors simply gave security to those creditors who were willing to extend their claims, and this with the debt would be a valid consideration, leaving the balance of their estate, and enough to satisfy other creditors, open to attachment and sale. If insolvent, it amounted to a preference of these creditors; which at that time was not only lawful in this State, but which, by itself, has never been regarded as a violation of the statute of Elizabeth. Bump on Fraudulent Conveyances, 3d ed. pp. 183, 184, and cases cited. *480 Tbe mortgage became operative only as creditors came in under it, and only to tbe extent of tbeir claims. All could accept its terms if they chose to do so, but, if none accepted, then all the property was open to the process of law. The estate was incumbered just to the extent that creditors accepted the mortgage and thus secured a preference, and all the balance was subject to distribution among non assenting creditors. There is no reservation whatever for the benefit of the grantors, except that of possession until default, which follows every mortgage, and the usual clause relating to an account for surplus, which is nothing more than what the law would imply, and which, therefore, is not fraudulent. In no event could they secure any of the estate for themselves until their debts were paid, for if creditors to the full value of the property accepted the mortgage, then the whole of it was devoted to their payment; if creditors to a less amount came in, then the equity of redemption could be attached and sold by other creditors ; nothing would be left for the grantors, for they could be immediately dispossessed. This is the test of a fraudulent conveyance under the statute of Elizabeth. No deed of a debtor can be held to be fraudulent which unreservedly devotes his whole estate to his creditors. But in this case there was not even a delay that was not voluntary. Creditors who chose to do so could give an extension of three years upon their debts, and receive security therefor as preferred claims. The mortgage held only to the extent of the debts thus lawfully preferred, and the remaining interest in the property could be levied upon at once by those who were unwilling to wait. Neither class of creditors therefore was hindered. Those willing to wait and secure a preference might lawfully do so, and those unwilling to do this were free to seize the debtors’ interest, the equity of redemption, in the ordinary course of law. There is a marked difference in this respect 'between this case and Gardner v. Commercial National Bank, 13 R. I. 155. The deed in that case was an assignment to trustees, not simply for the purpose of distribution as soon as it could reasonably be done, but with “ free, full, and uncontrolled power in their discretion to carry on the said jewelry business of the said parties of the first part, for such time as the said trustees may deem for the best in *481 terests of the creditors, and necessary for the purpose of preventing shrinkage and loss, and of closing out and liquidating the same to the best advantage.” Under such a deed non assenting creditors would be kept off indefinitely, as long as the trustees might think it proper to run the business ; while in the case before us non assenting creditors had the immediate right to take all the property there was over and above the preferred and secured claims. Thus also this case differs from Green & Trammell v. Trieber, 3 Md. 11, where the deed was held by the court to be in fact an assignment and not a mortgage, under which the debtor reserved to his own possession all the property, real and personal, with all rents and profits, and without paying rent, “ for six and perhaps twenty four months, and for so long a time as the trustees may deem proper, provided none of the assenting creditors require the sale to be made.” It is not to be wondered at that some, without right discrimination, should think that a deed which gives a preference to certain creditors is a fraud upon others; for-since the federal bankrupt act and statutes, in our own and other states, to prevent preferences, many have come to think that they are inherently fraudulent. But in this matter we have nothing to do with the bankrupt act, nor with our statute against preferences, which was not passed until nearly five years after the date of this deed. We have to do with a pure question under the statute of Elizabeth, and at that time the law of this State was by no means peculiar in holding that the statute did not forbid an assignment with preferences, much less a mortgage to secure debts. It does not appear that the Spragues knew whether they were solvent or insolvent when the deed was executed. They knew that they were unable to meet their indebtedness as it matured, but, as appears by the report of the committee of creditors, it was supposed that they could ultimately pay their liabilities. The first step in these proceedings was taken, at the request of the A. & W. Sprague Manufacturing Company, by banks in the city of Providence holding its paper, who appointed' a committee to investigate its affairs, and to “ express their recommendation of the best course to be taken under the circumstances.” The committee recommended that the corporation and its individual stock *482 holders “ mortgage all their property to three trustees, who shall practically have all control and management of the entire property,” to secure notes covering the indebtedness. They expressed their belief that “ if the trustees have the full authority asked for them, they will be able to avert a great calamity to thousands of operatives, make the mill properties valuable, prevent an immense further shrinkage of values, and pay in full the indebtedness.” A mortgage was prepared pursuant to this advice, submitted to a large and general meeting of creditors, by them referred to a committee, who employed eminent counsel to examine the instrument critically and to suggest amendments, and, as a result, the mortgage was agreed to in its present form. The three trustees named by the creditors having declined to serve, the respondent Chafee was substituted as sole trustee, and tbe mortgage executed without further change. Under these circumstances the deed might as well be called the act of the creditors as of the debtors and if any of its provisions betray in fact, or as a result, an intent “ to delay, hinder, or defraud creditors,” it must be that they themselves were inconceivably blind to their own interests, or bent upon contriving an instrument for their own hurt. It would indeed be a severe commentary upon the intelligence of the business men who composed and represented the creditors of this estate to find that, to an amount of nearly nine million dollars as against one hundred and fourteen thousand, they assented to a deed the necessary effect of which was to defraud themselves. Still, even though proper in form, this may have been so, and we must therefore look to its details in the light of the facts as they stood at the time of its execution. And first the complainant urges that the preamble avows a fraudulent purpose in these words : “ And whereas the preservation of the manufacturing properties of said A. & W. Sprague Manufacturing Company and the best interests of the creditors require, to prevent great loss and shrinkage, that the business of the mills and print works shall in the' mean time be continued.” With this may be considered another objection that the deed allows the continuance of the business at the trustee’s discretion and at the expense of the estate. Without doubt if the deed put the entire estate into the hands of a trustee to be run for three years *483 for tbe benefit of tbe grantors, whether by him or them, it would be void. Without doubt, also, if it was put into his hands to be run until better times might come, so as to prevent an ultimate “ loss and shrinkage ” to the debtors, it would be void. But as we have already seen this deed did neither of these things. If the debtors retained possession of the property, as debtors generally do under a mortgage, there would be no liability to the trustee for the expense of the business; but more, the debtors were to pay insurance and taxes, and if there were any profits in the business, those, too, were to be paid over to the trustee. Beyond a bare possession, which the trustee or any non assenting creditor could terminate at any time, and a possible permission to run the mills for three years, not for their own but for the creditors’ benefit if profit accrued, there is no sort of reservation for the debtors. What, then, do the phrases “ the preservation of the manufacturing properties” and “to prevent great loss and shrinkage” mean ? Evidently not a preservation to the debtors, nor a prevention of loss to them, but to the creditors. It is a matter of common knowledge that idle mills depreciate very rapidly; and it is also in testimony before us that it is better to run a mill at considerable loss than to stop it. Not only is a going concern far more salable than an idle one, but the choice is between certain depreciation and possible loss. In a mortgage time would follow before default, and if the mills should run, it might be that the business would be such in three years as to aid materially in paying the debts : but if not, the trustee, seeing it, under the power of the deed could sell parts, from time to time, as active instead of dead property, and arrange to sell the whole advantageously at the expiration of the time. In view of the amount, variety, and character of the property, scattered through many towns and states, we do not consider three years an unreasonable time for liquidation and sale. Heed must be given to the nature of the assets. A single shop and a combination of farms, merchandise, and factories cannot be placed under precisely the same limitations. The question then is whether, during such a reasonable time, the trustee could, if he thought it best, be allowed to run the mills, or whether, as a matter of law, they must, of-necessity, be closed, to stand in rust and hazard, in shrinkage and waste. In the recent case of Boldero v. *484 London & Westminster Loan & Discount Company, L. R. 5 Exch. Div. 47, tbe deed authorized the trustee to carry on the trade if thought expedient, and it was sustained upon the ground that the primary object was a transfer for purposes of sale as a going concern and not for the purpose of carrying on the business. Pollock, B., says, page 52 : “ In Spencer v. Slater, L. R. 4 Q. B. Div. 13, there were special circumstances. In the first place, the deed contained not merely the ordinary resulting trusts as to the surplus, which would be found in every deed, but a resulting trust, under which, at the expiration of twelve months, the debtor might apply to the trustees to be paid the dividends of creditors who neglected or refused to assent to or execute the deed, and then, if the creditors did not within seven days assent or execute, the money was to be paid to the debtor; this was clearly much beyond the ordinary resulting trust: then again, in that case, the primary trust was to carry on the business ; here the principal object is to sell the business, and it is subsidiary to that object that power should be given to carry it on till the sale.” Among the English cases that of Owen v. Body, 5 A. & E. 28, has been much relied on to establish the rule that any provision in a deed which authorizes a trustee to carry on business is fraudulent. But, like Spencer v. Slater, this case has been held to lay down this rule only in cases where the carrying on of the business was the main and not the subsidiary object. It was discussed, and thus explained, Janes v. Whitbread, 11 C. B. 406, a case in which a similar deed, allowing the trustee to carry on the debtor’s trade “ if thought expedient by him,” was sustained. Among American cases one of the strongest in favor of such a rule is that of Dunham v. Waterman, 17 N. Y. 9. It is to be observed of this case, however, that the decision rests solely on the ground that a discretionary power conferred on the trustee by the debtor cannot be controlled by the court. Hence it is said : “ If an assignee should err in the exercise of that legal discretion which is incident to his trust, the court, on application of the creditors, could correct the error. If the sale should be unreasonably delayed, the court could hasten it. Not so, however, in respect to a discretionary power expressly vested in him by the assignment.” Also, it is assumed that, under the provisions of the deed in that case, creditors might *485 be “ kept at bay so long as tbe assignee selected by tbe failing debtor himself may deem it expedient to retain the management of tbe assigned property.” The case was cited in Gardner v. Commercial National Bank, supra, though Durfee, C. J., said of it: “The New York Court of Appeals probably went further than we should be likely to go in a similar case.” We cannot now follow the case for several reasons. First, the concurrence of the court in the part of the opinion holding the assignment void on account of the discretionary powers was doubted in Benedict v. Huntington, 32 N. Y. 219. Second, in the latter case and in Jessup v. Hulse, 21 N. Y. 168, in which, as in Dunham v. Waterman, the opinion was given by Selden, J., it is expressly stated that a discretionary power which does not go beyond the power which the law would give to a trustee, i. e. a reasonable discretion, does not avoid a deed. Third, the facts in this case are quite different from those assumed in Bunham v. Waterman. The trustee is not authorized by this deed to carry on the business indefinitely against the will of all, assenting and non assenting creditors ; he is limited to three years, or sixty days after default, and to a request to sell by the holders of one fifth of the notes. As already stated, considering the instrument a mortgage and a preference, with the terms of which, therefore, if not illegal, non assenting creditors can find no fault, the circumstances of its inception and the nature and extent of the estate, we regard the limitations as reasonable and proper, and think that under them the trustee took no greater powers than the court, in view of the facts, would have said he ought to be allowed to exercise, without reference to the deed. After default there is no special discretionary power which permits the trustee to carry on the business at his own will. The deed says he “ may ” and upon the request of one fifth “ shall ’’ sell. This authorizes but does not require a sale except upon the request. Suppose then the trustee and one fifth of the creditors should take no steps for a sale after default, but allow the business to go on, endangering t he margin that might remain for non assenting creditors, what could the latter do ? Clearly they could apply to the court for an order of sale, such as in fact was made in Quidnick Company v. Chafee, 13 R. I. 367, 381. A similar authority was sustained in Kendall v. New England Carpet Co. *486 13 Conn. 383. See, also, Brinley v. Spring, 7 Me. 241, where a mortgage which allowed the business to be kept open for five years was held not to be fraudulent “ in a concern of this magnitude.” The objection that the deed does not provide for the payment of debts existing at its execution, but for new debts to be substituted on January 1st, 1874, is close to cavilling. One of the objects of the mortgage is the “funding” of existing indebtedness. The notes are simply a new form of promise and not a new debt, and by the terms of the deed they are to be given only in exchange or extension “ of the present outstanding indebtedness.” Another objection is that corporate, copartnership, and individual property are mingled in one conveyance and for common security and payment. Of course the property of one cannot be taken from his creditors to pay the debt of another. It appears, however, in this case that there was a most remarkable confusion in the affairs of the grantors. The business was carried on by the corporation; some of its property stood in individual names, while some of the individual property stood in the name of the corporation ; payments had been made by each on account of the other quite indiscriminately; the individual indebtedness was very small, and that of the copartnership was chiefly on account of indorsement of the corporation notes. Moreover the individuals, as stockholders, were personally liable for the debts of the corporation. In view of these complications, it is quite proper that all the grantors should join in one instrument. If no provision is made for a proper marshalling of assets, or, even if this is prevented by the community of obligation on the notes, still we cannot set the deed aside on that account, except at the request of some creditor who is injured by the diversion of that which belongs to him. Courts give remedies for real not imaginary wrongs. The creditor in this case held his debt against the corporation, and if the private assets exceeded the private liabilities, he, of course, could suffer no harm by the turning in of the balance for corporate debts. It does not appear, nor does the complainant claim, that he has been injured in any way on that account; on the contrary, the evidence shows, in the report of the committee before referred to, that there *487 was a large surplus of private assets over private debts. It will be time eno'ugb to consider this matter fully when some creditor shows that he sustains or has reasonable cause to fear a damage on this account. As the case stands we see no occasion for complaint. The reservation of corporate stocks is also urged as an evidence of fraud upon creditors. But the same sentence which contains the exception provides that they shall “ be transferred to the party of the second part, upon his request in writing, by way of pledge and collateral security to secure the performance of the conditions of this instrument.” When it appears that this clause was inserted at the request of the trustees proposed by the creditors, in order to shield themselves from the personal liability of stockholders under our law relating to manufacturing corporations, and that in fact the transfer of all stock was made immediately after the execution of the deed, we fail to see proof of a fraudulent intent. Here, too, the importance of the nature of the instrument is seen again. By it the grantors offered certain property as security to certain creditors. If they reserved anything, it was not out of their hands and was attachable ; if they did not put in all, this would not vitiate the conveyance of what was included, for the deed did not purport to be, nor was it, an assignment of all their property. As the law then stood, they had the right to transfer or pledge it, in whole or in part, for existing debts. With reference to the stock in question, in this case, it was transferred to be applied to creditors, according to the terms of the mortgage, and the balance ratably among other creditors. We see no fault in this. The deed before us has been passed upon by the Supreme Court of Errors of the State of Connecticut in De Wolf v. Sprague Manufacturing Co. 49 Conn. 283. So far as the mortgage is concerned that case was decided on the point that, being a mortgage, the conveyance was invalid because it did not sufficiently describe the property under the law of that State, but the opinion goes on to criticise the deed in other respects. Notwithstanding the faults set forth are simply dieta, our respect for the learned court is too high to allow us to overlook their suggestions on these points. The first criticism is that the deed mingles the debts and assets *488 of the several grantors, so that if the debts of individuals exceeded their assets something would have to be taken from the corporate assets in the equal distribution, to the loss of the complainant, who ■was a creditor of the corporation. Had the court been called upon to decide the case upon this point, they would, doubtless, have asked whether this was so. They probably would not have set the deed aside for the reason that under imaginary circumstances the complainant might suffer an injury when in fact he had not suffered one. The machinery of the law works to set right real wrongs and not abstract propositions. If it should turn out that the balance was in the complainant’s favor, be could not object on that account, while individual creditors, who in such case would be entitled to the difference, might waive their claim to it if they chose. The court say that as the deed does not disclose the relative debts and assets, it was unreasonable to expect a creditor to assent to it. It seems to us that this is a question of fact. If it appeared that the creditor was fully apprised of the situation at the time, by the report of a committee or otherwise, and that the arrangement was thus made to avoid serious complications, would the court feel compelled to say, notwithstanding, it is a deed “ contrived of fraud, covin, collusion, or guile, to the intent or purpose to delay, hinder, or defraud creditors ? ” Under certain circumstances the terms of the deed might have injured the complainant, and in their criticism the court, probably inadvertently, stated this as conclusive without stopping to ask whether the deed did so in fact.' The other ground of objection to the mortgage in the opinion is that it empowered the trustee to run the mills at the expense of the estate. The court make no account of the fact that, if he had to take possession of the property, sure loss would follow from idleness, unless he could have such authority. Under the mortgage, “ The diligence of the provident man is the measure of the trustee’s duty,” for he is held accountable for any loss which happens from his neglect or default. It could not be expected that a trustee would take all the chance of loss from business upon himself, and unless he can be thus authorized to run the mills they cannot be run at all. It would be a harsh rule of law that would forbid to creditors a choice between possible and certain loss : be *489 tween the¡ advantage that would arise from the sale of a going concern and the disadvantage that might come from unsuccessful business. The court further say, “if profits should be made” they would go to the assenting creditors; but this could not barm the non assenting, for it would leave so much more to be paid to them. If “losses be sustained,” it would diminish the value of the equity of redemption. This is true, but it should be considered in two aspects. If the grantors were insolvent and the property insufiicient to pay the mortgage notes, the equity of redemption would be valueless, and no loss would occur to non assenting creditors from its diminution. If the grantors were not insolvent or the property was more than enough to pay the mortgage notes, the non assenting creditors would have an interest in the equity of redemption, and the question would then be whether it would be better for their interests to use the property or to let it stand idle. Inasmuch as in the execution of this power by the trustee there could be no resulting gain to the grantors, we do not think it necessarily and conclusively follows that the deed is thereby fraudulent. The rest of the opinion is devoted to the assignment of April 6, 1874, which is not before us in this case. In Stafford National Bank v. Sprague, 17 Fed. Reporter, 784, Shipman, J., follows the decision of the state coúrt as to the sufficiency of the description under the law of the State, and then taking the mortgage and the assignment together he declared them fraudulent. He nowhere says that the mortgage by itself is fraudulent; he simply says it is void in Connecticut for want of particular description of the property. His strictures evidently refer to the assignment rather than the mortgage, for he refers to its terms, and quotes the language of the court in De Wolf v. Sprague Manufacturing Co., which applied solely to the assignment. For the reasons we have given we conclude that the mortgage was not executed to hinder, delay, or defraud creditors, and this is the point of the inquiry. As stated in Bump on Fraudulent Conveyances, 3d ed. p. 359, “ The only fraud which will vitiate an assignment is fraud in its concoction. If there is no fraud in its inception, the property vests immediately in the assignee for the benefit of the creditors, and no subsequent fraudulent dealings can *490 revest the property in the debtor, or have a retroactive effect so as to avoid the assignment itself.” Note. — The foregoing case was heard by Stinbss and Tillinghast, JJ. Arnold Green $ William B. Beach, for complainant. Andrew B. Patton, for respondent A. & W. Sprague Manufacturing Company. Charles P. Robinson, for respondent Phenix Iron Foundry. Charles Hart, James Tillinghast ‡ 0. Prank Parhhurst, for respondent Chafee. It follows from this conclusion that the title to the stock in question was in the trustee at the time of the levy, and therefore the complainant took nothing under the sale. This being decisive of the case, we do not consider the other questions raised and argued. The bill is dismissed. Decree entered April 19, 1884, dismissing bill without costs.