Rice v. Cunningham

Ames, J. We must infer from this bill of exceptions that the instructions given at the trial upon the general subject of voluntary and fraudulent conveyances were correct. But there is reason to apprehend that when the presiding judge went on to remark upon the subject of a secret trust for the support of the grantor, and to give a definition of such a trust, and to say that it could not be created by a mere personal promise, but must attach itself in some way to the land, an element of uncertainty and confusion was unnecessarily brought into the case, which had a decided tendency to mislead the jury, and to impair the effect of other instructions which were in themselves correct. A secret trust or confidence, created for the purpose of defeating or delaying creditors, may always be proved by parol, and when so proved renders wholly inoperative the formal transactions which may have been adopted for such purposes by the parties. Hills v. Eliot, 12 Mass. 26, 31. If there was, in fact, any such trust, not apparent on the face of the conveyance, it would be a matter of no consequence how it was created or expressed. We do not understand the demandant to have requested the learned judge to rule that the jury would be warranted in finding the existence of a trust bearing any close analogy to such as is recognized and enforced in courts of equity. If a debtor, in failing circumstances, makes a conveyance of his property, purporting on its face to be absolute and without reservation, and at the same time there is a concealed agreement between the parties to it, inconsistent with its terms, intended to secure a benefit or advantage to the grantor at the expense of those whom he owes, a trust thus secretly created is a fraud upon creditors, because it places the right of possession beyond their reach. Thus in Lukins v. Aird, 6 Wall. 78, a parol reservation by the grantor, of a right to occupy for a year, was held to be a secret trust, sufficient to make void the deed as to creditors. In Coolidge v. Melvin, 42 N. H. 510, it was held to be immaterial whether the trust is express and apparent 470 on the face of thé> deed, or is implied from extrinsic circumstances. “ Such a trust is proved to exist where the conveyance is absolute on its face .... but where use and possession are retained by the vendor, or the consideration, in whole or in part, is an obligation for the future support of the grantor.” “ In short any secret trust whatever, either express or implied, by which the property is to be held in any way for the benefit of the vendor, is inconsistent with an absolute sale, and makes it void in law as to creditors.” However vague and indefinite might be the agreement of the grantee, if the real purpose of the transaction was to lock up the property out of the reach of the creditors, and at the same time to secure some advantage to the grantor from its use, or its proceeds, it would present a case of a secret trust and confidence within the case of Hills v. Eliot, supra. Banfield v. Whipple, 14 Allen, 13. Giddings v. Sears, 115 Mass. 505. The delay in the registration of the deed, the fact that the grantor continued to occupy and exercise acts of ownership upon the property, and still more the personal promise of support by the grantees, would furnish evidence to support the inference of a secret trust, without any proof that such a promise “ attached itself to the land,” in any other manner. It was also a mistake, in our judgment, to allow the tenants to show that since the date of the alleged fraudulent conveyance, the grantor had made use of other securities in the payment, as far as they would go, of certain notes at the Lancaster Bank. This transaction throws no light upon the question as to the purpose which he had in view, at an earlier point of time, in making the deed of his farm. The fact that he used part of his property in paying part of his debts is not in the least inconsistent with an attempt, at a previous time, to place another part of his property beyond the reach of his creditors by means of a fraudulent conveyance. The report discloses no such connection in time and purpose as to render it competent. All that was decided in Winchester v. Charter, 97 Mass. 140, upon this point, was that the admission of similar evidence, with some qualifications,, was “ sufficiently favorable ” to the party claiming under such a conveyance. Exceptions sustained.