Whittlesey v. McMahon

Bissell, J. The only question is, whether upon the facts disclosed on the record, the county court erred in dismissing the plaintiff’s bill. Upon the facts stated in the bill, and which have not been negatived, by the finding of the court., there would seem to be no doubt, that the plaintiff would be entitled to the relief sought. It is stated, and not denied, that the lands, upon which the plaintiff’s execution was levied, were purchased by Constantine McMahon, at a time when he was deeply indebted, and a bankrupt; and that he procured the conveyance to be made to the defendants, his minor children. Were there nothing more in the case, there could be no question, that these lands would be open to the creditors of Constantine McMahon. For although it is not found, that the conveyance was so made, with the intent to defraud creditors, and to keep the lands so conveyed out of their reach ; yet the legal inference of fraud would attach to the transaction, and would be irresistible ; because it would be apparent, that whatever consideration was paid for the land would be withdrawn from a fund to which the creditors had an equitable title, and which ought to have been applied to the payment of their debts. So far as their rights are concerned, the case would stand on the same ground, as though Constantine McMahon had been the owner of the lands, and for no consideration, other than that of natural affection, had conveyed them to his children. And it [142] is too clear to admit of discussion, that such a conveyance would be fraudulent and void, as against creditors. For, in all cases, where such conveyances have been supported, they have been sustained, on the ground that the grantor was not considerably indebted, or at least, was not insolvent, at the time of the conveyance. In Salmon v. Bennett, 1 Conn. Rep. 525. which is a leading case in this state, on this subject, the rule is thus laid down: “ But though there be no fraudulent intent, yet if the grantor was considerably indebted and embarrassed, at the time, and on the eve of a bankruptcy ; or if the value of the gift were unreasonable, considering the condition in life of the grantor, disproportioned to his property, and leaving a scanty provision for the payment of his debts ; then such conveyance will be void as to creditors.” In this view of the case, then, it is unquestionable, that these lands would be liable to the creditors of Constantine McMahon. But inasmuch as the legal title was never in him, it becomes necessary for the plaintiff to resort to a court of chancery, in order to secure the title, and thus to give effect to the levy of his execution. We are then brought to inquire, whether the facts found by the court below, and placed upon the record, although not involved in the bill and answer, are such as to redeem the case from the operation of the general principle ? It appears from the finding of the court below, that the wife of Constantine McMahon, and the mother of these defendants, inherited from her father, lands of greater value than those now in question. The lands thus inherited by her, were sold ; and the avails vested in other lands, in her name. A number of conveyances were subsequently made, and in all cases, where the avails of the wife’s lands were re-invested in real estate, the deeds were taken to her, and in her name. The last sale of her lands was in 1821 ; and the avails of that sale were never invested in other lands, although an ineffectual attempt to do so was made. The notes, however, which were the fruits of the sale, were made payable to her, were in her custody, and in a manner, subject to her controul, until her death, which took place in the same year. Immediately afterwards, the husband took possession of the notes, collected them, and appropriated the avails to his own use. [143] And here, it may be remarked, that these notes, from the time they were given, were the absolute property of Constantine McMahon. He might have sued upon and recovered them, in his own name, either during the life of the wife, or after her decease. Griswold v. Penniman, 2 Conn. Rep. 143. Beach v. Norton, 8 Conn. Rep. 71. And in appropriating them to his own use, in the manner he has done, he subjected himself to no accountability to these defendants, either at law or in chancery. This, together with his other property, constituted one entire fund, upon which he did business and gained a credit. And in this manner, he has gone on, for seven or eight years, and until the property is dissipated, and he has become a bankrupt. Can he, now, make a settlement on his children, at the expense of his creditors ? May he take any of that property, which really belongs to them, and vest it in these defendants, on the ground of any supposed equity in their favour ? It is confidently believed, that there is no case which goes so far. It is very clear, that the authorities relied upon do not sustain the principle. They do indeed prove, that a settlement made before marriage, will not, if reasonable, be set aside in favour of creditors ; because marriage is a valuable consideration. Neither will a settlement made after marriage, where the consideration was the payment of money, as a portion. Drury v. Mann, 1 Atk. 188. And whenever the husband, or his assignees, are obliged to resort to a court of chancery, in order to obtain the wife’s portion, or a legacy left her, that court will refuse its aid, until a suitable provision be made for the wife. But the case at bar does not fall within either of the principles above stated. The husband has received and expended his wife’s property ; and it is not found, that there was even a post-nuptial agreement, that he should make any settlement, either upon her or her children. It is, then, the naked case, where a husband has received and expended his wife’s fortune; and upon the eve of a bankruptcy, makes a voluntary settlement upon his children. Such a settlement, we have seen, is void against creditors. I would, therefore, advise the superior court, that there is manifest error in the judgment of the county court. [144] The other Judges were of the same opinion, except PeteRs, T ¶ , who was absent. Judgment to be reversed.