Audenried v. Betteley

Hoar, J. It was said by Lord Denman, in Pickard v. Sears, 6 Ad. & El. 474, that “ the rule of law is clear, that, where one by his words or conduct wilfully causes another to believe the existence of a certain state of things, and induces him to act on that belief, so as to alter his own previous position, the former is concluded from averring against the latter a different state oí things as existing at the same time.” This was said in a suit where the plaintiff, a mortgagee of personal property, had [385] allowed it to be seized and sold by a sheriff for a debt of the mortgagor, and purchased by the defendants, without making any claim or disclosure of his title; and had so conducted in negotiations with the defendants as to lead them to the belief that the property was the debtor’s. The court held that the evidence might authorize a jury to find that he concurred in the sale. The doctrine of Pickard v. Sears was recognized by Baron Parke in Freeman v. Cooke, 2 Exch. 663, “ as established,” and the rule fully explained and illustrated. It is there said that “ in most cases to which the doctrine in Pickard v. Sears is to be applied, the representation is such as to amount to the contract or license of the party making it.” p. 664. That case was by the assignees of a bankrupt against a sheriff, for taking property of the bankrupt as the property of a third person. The bankrupt had represented the property to belong to the third person, in order to prevent it from being seized as his own; but had not intended to have it taken as the property of the other ; and when he found that the officers had a writ against the other, retracted his statement. It was held that the plaintiffs were not estopped from maintaining the action. The doctrine has been reaffirmed and fully approved in Howard v. Hudson, 2 El. & Bl. 1, and has been repeatedly sanctioned in this commonwealth. Dewey v. Field, 4 Met. 381. Coggill v. Hartford, &c. Railroad, 3 Gray, 549, by Bigelow, J., arguendo. Osgood v. Nichols, 5 Gray, 420. It may therefore be conceded, if the plaintiffs put their property into the possession of Hammond, with the fraudulent purpose of giving him a false credit, that any creditor of Hammond, who was induced to give him credit by reason of his apparent ownership of that properly, might have attached it as the property of Hammond, and the plaintiffs would not have been permitted to set up their title against such an attachment. The defendants then contend, as this property might have been taken on execution by any creditor of Hammond who had been induced by the fraudulent acts of the plaintiffs to give him credit, that by the express terms of the insolvent law [386] it passes by the assignment of his estate in insolvency. The language of the statute is, that “ the assignment shall vest in the assignee all the property of the debtor, real and personal, which he could have lawfully sold, assigned or conveyed, or which might have been taken on execution upon a judgment against him at the time of the first publication,” &c. Gen. Sts. c. 118, § 44. The material question then is, whether this property can be regarded as “ the property of the debtor ” Hammond, “ which might have been taken on execution upon a judgment against him” within the meaning of the law. We are of opinion that it cannot. Under the English bankrupt law, this case is provided tor by express legislation. Sts. 21 James I. c. 19, § 11; 13 Eliz. c. 5 ; 27 Eliz. c. 4. But these statutory provisions tend to -¡how that the common law was otherwise, and they have never been incorporated into our insolvent system. An estoppel in pais, on the ground of fraud, is personal to the particular creditor defrauded, and does not pass the property so as to enure to the benefit of creditors generally. As was said by Mr. Justice Curtis, in Hawes v. Marchant, 1 Curtis C. C. 144, “ to constitute such an estoppel, a party must have designedly made an admission inconsistent with the defence or claim which he proposes to set up, and another party have, with his knowledge and consent, so acted on that admission that he will be injured by allowing the admission to be disproved ; and this injury must be co-extensive with the estoppel.” The analogy has been strongly pressed upon us in argument, of a conveyance of property by a debtor in fraud of creditors. The debtor could not himself afterward convey it, but creditors might take it on execution. This would pass to the assignees for the general benefit of creditors. Grant v. Lyman, 4 Met. 473. And it was decided in Norton v. Norton, 5 Cush. 524, that where an administrator had a license to sell the real estate of his intestate, including “ all that the deceased may have conveyed with intent to defraud his creditors,” the estate thus sold becomes general assets, to be distributed among all the creditors [387] pro rata, although the conveyance may have been fraudulent only against existing creditors at the time it was made, and not as against subsequent creditors. But the defect in this analogy is, that the property which a debtor attempts to convey in fraud of creditors has once been his. When the conveyance is avoided by a creditor, or by one succeeding to the rights of a creditor, in the mode prescribed by law, it is the property of the debtor which is to be dealt with. The assignee takes it as property which in contemplation of law has remained the debtor’s property. But in the case at bar, the property never was the property of Hammond. If it had been sold by the plaintiffs before it had been taken by legal process on behalf of any creditor actually defrauded, a good title would have passed. If the plaintiffs had become insolvent, it would have passed to their assignees. The mere right to take property on execution by virtue of a lien acquired by attachment on mesne process does not pass to the assignee. Under the St. of 1838, if a creditor had attached property which after his attachment had been conveyed to a third person, the assignment in insolvency dissolved his attachment, although the effect was to perfect the title of the grantee, and not to convey the property to the assignee. Grant v. Lyman, ubi supra. Shelton v. Codman, 3 Cush. 318. The supplementary act of 1841, c. 124, § 5, was passed to furnish a remedy against this result, by providing that the attachment might survive in such a case, and the suit be prosecuted by the assignee to secure the property attached for the benefit of the estate. But this act would have been unnecessary if by St. 1838, c. 163, § 5, the property attached would have passed to the assignee upon the dissolution of the attachment. Yet it was property that the particular creditor who had attached it had a right to take on execution at the time of the first publication; but it was not then the property of his debtor. The effect of an estoppel which existed as to rights of property between the debtor and third persons would pass to an assignee; but we do not think the insolvent law intended to pass rights by estoppel between the creditor and third persons. Each creditor who was actually defrauded may still have his [388] action against the plaintiffs. But this right of action, which is special and individual, is not transferred to the assignee of the debtor in insolvency; and the right to treat the property which was fraudulently represented as the property of the debtor as if it were really his property, seems to us equally the personal right of the creditor who was defrauded, and not transferable by the assignment for the benefit of créditors generally. The second issue tendered by the defendants was therefore immaterial, and the refusal to submit it to the jury must be sustained.