Kirtland v. Snow

HINMAN, J. The questions in this case arise upon facts [27] found by the court. [He then stated the facts concisely, and proceeded thus-] As it was lawful for Beckwith to prefer one or more of his creditors, so it was lawful for Lamphear and Mrs. Kirtland to obtain payment or security for their debts, by an appropriation of their debtor’s property for that purpose. It was no objection to this, that such appropriation might deprive other creditors of their means of enforcing payment. There is no more objection to a creditor’s purchasing his debtor’s property, and applying it in payment, than there is in securing himself by legal process. The fact, therefore, that the effect of this transaction was to put the property beyond the reach of other creditors, is, of itself, of no importance. But, although a creditor may purchase his debtor’s property in payment, regardless of the effect upon other creditors ; still, he has no more right to use his debt as a colourable consideration, to enable a debtor to withhold his property from his creditors, and retain it for his own use, than he has to purchase and pay for property, with the fraudulent design of defeating creditors. Had Mrs. Kirtland, at the time she made this purchase, taken possession of the property, and retained it afterwards, we should have had difficulty in saying that the transaction was fraudulent. The circuity practised, of passing the title to Lamphear, and through him to Mrs. Kirtland, would have been a circumstance proper for the consideration of a jury ; but we could not have said, that it conclusively proved a colourable or fraudulent transaction. The want of any real or substantial change in the possession of the property, after the sale, is of a different character. Where this difficulty exists, there, as a matter of strict law, the transaction is fraudulent; or, rather, the neglect of the purchaser to take and retain possession of his purchased property, is conclusive evidence of such a trust as renders the transaction fraudulent and void. What, then, is the fact in regard to any real or substantial change in the possession of this property, after the sale? It is found, that it was one object of the parties to this sale, to pay or secure Lamphear and Mrs. Kirtland: in this, as we have seen, there was nothing improper. Another object was, to so do this, that the property should be kept from Beckwith'’s other creditors. This, though not a very laudable [28] object in itself, yet, connected with the fact that these persons really had bona fide debts, which they had a right to secure, amounts to no more, perhaps, than that they intended to secure their own debts in preference to those of others ; and, if so, then this was lawful. But they had still a further object; they intended that this should be so done, as that Beckwith should continue to use and controul the property, in the same manner as he did before the sale; and it is expressly found, that he did use the property on said farm, in the same manner as before the agreement was made; and that he offered to sell a part of it. This, we think, shows the whole transaction to have been colourable only, and not real. The mala fides upon which the case turns, is the trust, which entered into the sale, for the benefit of the vendor ;- that he should continue to use and controul the property, in the same manner as he did before the sale. This trust was, in this case, openly expressed by the parties ;-it was also proved, by the fact, that Beckwith did retain possession of the property, after the sale. It is to-be observed, that the question is not, whether the transaction was honest or otherwise ; but whether there is not that evidence of fraudulent intent, which precludes enquiry into its integrity, as a question of morals. This court has repeatedly said, that the rule of law which requires the vendee of personal property to take and retain the possession of it, in order to protect it from the vendor’s creditors, is a rule of policy, as well as of evidence; its object being to prevent fraud, by taking away the temptation to commit it. The doctrine has been so fully and clearly expressed, in the case of Mills v. Camp & al., 14 Conn. R. 219., and the three or four cases which have since arisen, especially the case of Osborne v. Tuller & al. in the same volume, that we believe no one would have supposed this transaction capable of being supported, had it not been for a former decision which is thought to sanction it. The rule is founded upon the presumption, that a purchaser will naturally perfect his purchase, by taking possession. The enjoyment of the thing purchased, is generally, if not always, the object a purchaser has in view : and his neglect to take possession, is, therefore, so unusual and contrary to general experience, as to be very strong evidence, that the purchase [29] was only colourable, and not real. And, the reason of extending it from a mere rule of evidence, calling it a badge of-fraud only, and arbitrarily declaring, as matter of law, that it renders the sale void, as to creditors, notwithstanding the highest evidence of the honesty of the sale, is, because it has been thought better to take away the temptation to prac-tise fraud, than to incur the danger arising from the facility with which testimony may be manufactured, to show that a sale was honest. < It is claimed, however, that the facts in this case are so nearly identical with the facts in the case of Talcott v. Wilcox & al., 9 Conn. R. 134., that it is impossible to hold this conveyance fraudulent, without expressly overruling that decision. That the two cases are, in many respects, very similar, is not to be denied; still, we think they may be distinguished, and we are not disposed to extend, at all, the doctrine of that case, so far as it is supposed to form an exception to the general rule requiring a change of possession of personal property, in order to render a sale valid as against the creditors of the vendor. The question in that case was raised after verdict, on the ground that the verdict was contrary to the evidence, or against the evidence in the cause ; it could not therefore, be inferred, that the giving up of the controul of the farm, and the personal property with it, was only for the purpose of enabling the original owner to continue to use it, for his own use and benefit; but it could only be treated, as a real surrendery of the farm, for the use alone of Mrs. Talcott. Such is not the case here ; on the contrary, it is expressly found, that the object here was, that Beckwith should continue to use and controul the property, for his own use, in the same manner as before the sale. The court in that case felt bound to presume, that the jury drew every inference in favour of an actual change of possession, that the evidence before them would justify or authorize. Here, the finding is by the court; and it is not only, as above stated, that Beckwith should continue to use the property as before the sale ; but that he, in fact, did so continue to use it. in the former case, there was conflicting evidence, on the point of a change of possession. The plaintiff’s witness testified, that the controul of the farm, after the sale, was given up to the vendee ; and, although the original owner [30] remained there, yet, that the vendee had upon the farm another man, hired and paid by her to take care of it, and of the property upon it; and that he did so, and the original owner took nothing from it, but by permission. In the case under consideration, no such fact existed, or was claimed ; and this fact, of itself, if true, would justify the verdict in that case. If it were necessary, the two cases might, we think, be distinguished in other particulars; but enough has been said to show, that they are distinguishable in the important fact as to the change of possession after the sale. On the ground, that there was no such change of possession in this case, and that none such was intended, we advise the superior court, that the sale was void as to the defendants ; and, therefore, that judgment be rendered in their favour. In this opinion the other Judges concurred. Judgment for defendants.