Tapley v. Forbes

Bigelow, C. J. This action is brought by the plaintiffs, as assignees of an insolvent debtor, to recover the value of certain property alleged to have been sold by him to the defendant, contrary to the provisions of St. 1856, c. 284, 27, (Gen. Sts. c. 118, § 91.) By that section, it is enacted that any sale, assignment, transfer or conveyance made by an insolvent debtor in violation of its provisions shall be void, and.the assignees may recove the property so sold, assigned, transferred or conveyed, ór tli value thereof, as assets of the insolvent estate. 1. The first objection urged by the defendant to the maintenance of the present action is, that the declaration is insufficient, and does not support the case as proved at the trial, because it contains no speeilie allegations of the facts on which the [24] plaintiffs rely to sustain their right to recover under the statute. This objection, though specious, is not sound. The statute, while it declares the right of assignees to recover in clear and explicit terms, prescribes no particular form of remedy. It therefore presents a case for the application of the well settled and familiar principle, that, if a right is conferred by statute without affording a specific mode for its enforcement, a party may resort to any common law action, which will furnish him an adequate and appropriate means of redress. Knowlton v. Ackley, 8 Cush. 97. By the operation of the statute, the title of the defendant to the property acquired by the sale from the insolvent debtor to him was defeated, as against the assignees. He took only a present, temporary and defeasible title, subject to be devested by proceedings in insolvency; and when such proceedings were had, they took effect by relation back to the time when the sale and transfer were made to the defendant, and rendered his claim to the property void ab initia. In other words, the insolvent debtor had no power by a fraudulent sale to defeat the equitable title which his creditors had to the proper appropriation of his property to the payment of their debts. The defendant took subject to this equity, which ripened into a legal title in the assignees, in its nature prior to and paramount to that acquired by him. Any act of his which amounted to an application of the property to his own use and beneficial enjoyment, in exclusion of the right of the assignees, and under a claim inconsistent with their title, was a conversion. We think, therefore, an action of tort in the nature of trover, which is in substance a remedy to recover the value of personal chattels wrongfully converted by another to his own use, might well be maintained against the defendant on the facts proved at the 'rial. Stevens v. Austin, 1 Met. 557. 2. Nor can the objection avail the defendant, that the plaintiffs did not offer to return the money paid by him to the insolvent debtor for the property in controversy, or to reconvey the right in equity to redeem certain real estate which formed a part of the consideration for the transfer. It is a sufficient answer to this objection, that there was no evidence at the trial that [25] either the money or the real estate had come to the hands of the plaintiffs, or been vested in them. For aught that appeared, the insolvent debtor had appropriated the entire consideration received by him from the defendant to his own use and benefit, before the proceedings in insolvency were commenced. Certainly the plaintiffs could not be called on to restore that which they had never received. But, if it were otherwise, we do not think the right of the plaintiffs to maintain the action could be made to depend on the condition precedent, that there should be a restitution or offer to return the consideration of the alleged fraudulent sale. The rights of the creditors to the assets of their debtor are superior and paramount to any such claim by the vendee. The sale to him is declared void by statute, and the right to recover the property is absolute and unconditional, if those facts are proved which in law make the sale fraudulent. It is not like a case of a sale of goods obtained by fraud practised by the vendee on the vendor, in which the latter disaffirms the contract and seeks to recover back the property. In such case, the rights of third parties do not intervene, and are not affected by the dealings between the original parties. But where property is transferred by an insolvent debtor in fraud of the rights of his creditors, the statute aims to protect their interests, and gives to the assignees, as their representatives, an immediate and absolute right to recover the property or its value from the fraudulent vendee. The claim of the plaintiffs in the case at bar is much more analogous to that of a creditor where a transfer of property, fraudulent and void at common law under the statutes of Elizabeth, has been made by a debtor. The right of the creditor, in such a case, to recover the property is absolute on proof of the fraud. No restitution, or offer to return the consideration of the fraudulent conveyance, is necessary to the maintenance of such an action. We do not mean to say that assignees have no power to affirm a sale which was fraudulent and void as to creditors. If the consideration was executory, and they elected to enforce it, it might well be held that they were estopped from afterwards seeking to invalidate a contract which they had by their own act recognized, and the fruits of [26] which they had sought to recover. Snow v. Lang, ante, 18. But no such considerations are applicable to the case at bar. The plaintiffs have done no act which tends to show any acknowledgment of the validity of the sale to the defendant. On the contrary, they have disaffirmed it by bringing this action to recover the value of the property. The broad doctrine for which the defendant contends would defeat the wise and salutary objects which the statute was intended to accomplish. It would prevent the recovery of property fraudulently transferred by an insolvent debtor in all cases where the assignees had not assets with which to make or tender restitution to the fraudulent vendee. We should be very slow to adopt a construction of the statute which would lead to such a conclusion. 3. The objections taken to the admission of evidence at the trial are not well founded. The declarations of the insolvent, made subsequent to the sale to the defendant, were clearly incompetent ; but the error of admitting them was afterwards cured by the explicit statement, in the hearing of the jury, that they were to be disregarded by them. If the defendant wished for a more distinct instruction on this point, it was his duty to have asked it. Besides ; the fact which these statements tended to prove, that the vendor in making the sale had a fraudulent intent, was admitted at a subsequent stage of the trial. So the evidence, if erroneously admitted, was immaterial. The questions put to the witness Gerrish, on cross-examination, were such as might well be allowed by the court in the exercise of a sound discretion. 4. The instructions given to the jury were sufficiently full and accurate, and were adapted to the facts in proof. They in substance required the jury to find that the defendant knew that the sale to him was not made in the usual and ordinary course of the business carried on by the insolvent. This, if established, was by express provisions of the statute prima facie evidence that the defendant participated in the fraudulent act. Exceptions overruled.