Boston Marine Insurance v. Proctor

Holmes, J. This is a bill in equity to reach and apply the proceeds of insurance upon a vessel in the hands of the defendant Cunningham, on the ground that the vessel was transferred to Cunningham by the defendant Proctor in fraud of Proctor’s creditors. The judge before whom the case was tried dismissed the bill, on the ground that Cunningham was a bona fide purchaser for value. The case is here on report, and the plaintiff contends that, notwithstanding the well known presumptions in favor of the finding, the decree manifestly should have been the other way. We are of opinion that this cannot be said as matter of law. The stress of the plaintiff’s argument is, that Proctor did not receive anything for his transfer, which is true enough, but does not at all affect the fact that Cunningham paid a valuable, and, at least possibly, a perfectly adequate- consideration. Proctor had conveyed the vessel, by a recorded bill of sale absolute in form, to Potter and Wrightington, as security for a debt upon which there remained due $2,401.30. The transfer to Cunningham was in consideration of his paying this sum. He also paid the -vessel’s bills, amounting to $872.60. The vessel would have brought from twenty-six to twenty-nine hundred dollars on a forced sale, so that it is impossible for us to say that the price was not fair, and doubly impossible to say that the transaction was not honest. The plaintiff bases a part of his argument on the state of the registration and the right of attaching creditors. The registered title of Cunningham comes through a series of bills of sale absolute in form, but it is said that the first one, from Proctor to Potter and Wrightington, was a mortgage, and all the rest are only transfers of a mortgage. This is a mistake. Proctor delivered the vessel and renounced his equitable rights to Cunningham after the conveyance to him. There is no doubt, of course, that this passed his title as between the parties, (Rev. Sts. U. S. § 4192,) and there was no need, in order to give Cunningham a title good as against attaching creditors, that Proctor should execute a bill of sale to him for registration. Proctor’s equity while it lasted did not affect the character of his bill of sale as an instrument. See Carpenter v. Snelling, 97 Mass. 452, 457. It was a collateral though paramount matter. When it was renounced, [501] the bill of sale was as good a foundation for a title as if there never had been an equity of redemption. We quite agree with the statement of the defendants’ counsel that purchasers or attaching creditors cannot be allowed to treat an unrecorded equity as valid, and an unrecorded waiver or conveyance of it as invalid. But a shorter answer to the whole matter is that the plaintiff by his bill puts his case on the ground of a conveyance in fraud of creditors, and nothing else, and as he has seen fit to make that charge he must maintain it or fall. A further and short answer to the plaintiff’s case is, that it does not appear that the insurance was taken out in any part for the benefit of Proctor, and this being so, he would have had no interest in the proceeds, even if he had been interested in the vessel. Harrison v. Pepper, 166 Mass. 288. The bill made some averments touching cargo, but that part of the case is not argued, and seems to have no foundation. Bill dismissed.