Stevens v. Kirk

Peck, J. The question in this case is whether the trustees are chargeable. On an accounting on the basis of the prices agreed upon between the trustees and the principal debtor at the time the trustees received the assets real and personal, the commissioner’s report does not show any balance in the hands of the trustees subject to the trustee process. This is the result after deducting the claim of $318. made by the trustee Robinson for money paid to Mrs. Keith which the commissioner disallows. It is true that exclusive of interest there would be a trifling sum due from the trustee Robinson, but the balance of ine rest in favor of the trustee to which he probably would be .enti [207] tied, would turn the balance the other, way ; but whether it would or not the sum being less than $10. could not be held by trustee process. Whether the conveyance of the real estate is regarded as Iona, fide or as fraudulent as to creditors, does not vary this result, if the creditor goes for the stipulated price of the land, since in either ease if the plaintiff seeks to recover the price by trustee process, he thereby adopts the sale to the trustees and must take it according to its terms, and be content with the price agreed upon by the parties to the conveyance. Beyond the price agreed no indebtedness was created. The whole $2000., the price agreed upon for the real estate, having been accounted for to the principal debtor, the trustees cannot be chargeable for the real estate unless something has transpired since the sale to the trustees to change the relation of the parties even if the conveyance should be held to be fraudulent as to creditors. It is well settled that a purchaser of real estate under a conveyance fraudulent and void as to creditors, cannot be held as trustee on account of the land held by him under such conveyance, unless he is indebted to the principal debtor for the price stipulated. But the plaintiff claims that the conveyance to the trustee was fraudulent and void as to creditors, and that as the trustees have conveyed the premises, the plaintiff can hold the trustees for the value of the land or the avails of such sale. There are some facts reported by the commissioner tending to show the conveyance fraudulent and void as to creditors, but no fact is reported which is conclusive, nor does the commissioner find the fact that it was fraudulent. But it is claimed that the facts found are sufficient for the court to pronounce it fraudulent. It is true as claimed in argument, that it is not in all cases necessary for the report to show in terms that the sale was fraudulent, such facts may be found as to enable the court to say as matter of law that the sale was fraudulent and void. It was proper for the commissioner after stating the facts and circumstances appearing in his report, to draw a conclusion of fact which he has done in this case, as the facts previously stated by him do not necessarily make the conveyance void. The ultimate finding of the commissioner is that a leading motive and purpose of the principal debtor in disposing of his property as he [208] did, was to place Ms property in a condition less accessible to Ms creditors, and that as to the principal debtor the conveyance was fraudulent, but that there was no evidence that either of the trustees had any connection with him or his family about disposing of the defendant’s property for any such illegal purpose, but that the trustees knew that the plaintiff’s notes would mature in November after, (one of them,) and that the defendant was disturbed about his financial affairs, and were willing to improve that condition of the defendant to drive a sharp bargain, and make money. This knowledge and conduct on the part of the trustees, in connection with other facts previously stated in the report, point in the direction of knowledge on the part of the trustees of the fraudulent design of the grantor, but it is not conclusive. The report would have been more explicit and satisfactory had the commissioner found in terms whether the trustees knew of the fraudulent design of the principal debtor, but he has not done so. He has however reported that “ there was no evidence that either Robinson or Field (trustees) had any connection with Kirk or Ms family about disposing of the defendant’s property for any such illegal purpose.” This probably was intended to exclude the idea that the trustees had knowledge of, or were privy to the fraudulent purpose and design of Kirk, and we think we must so regard it. Taking the whole report together therefore, it is not inconsistent with good faith on the part of the trustees towards creditors. We have no occasion therefore to decide whether a fraudulent grantee of real estate who has sold the property, can be held as trustee for the avails in Ms hands. But if such grantee can be thus held, and we should hold this conveyance to the trustees fraudulent, there might still be a difficulty in holding the trustees chargeable in this case. It appears that the trustees when they took the conveyance from Kirk, executed a bond giving him a right to redeem. The bond is dated a few days after the date of the deed, but the report shows that the bond was executed in pursuance of an agreement made cotemporaneous with the execution of the deed to the trustees. Taking the deed and bond together, the conveyance has the character of a mortgage with a power of sale. When the trustees exchanged the premises for the tavern stand in Derby, and took a note for $500. for the difference, it was done with the consent of Kirk and [209] with the understanding that Kirk’s right of redemption was still to continue in the tavern stand the same as before. This appears from the disclosures which the report states were not controverted except as to the question of fraud. It is difficult to see why the tavern stand is not in the same condition so far as the trustee process is concerned as the land deeded in exchange while the trustees held it. As to the $500. note taken in the'exchange as the difference in the value, it not being collected it cannot be held by trustee process against these trustees, even if it could be treated as the property of the defendant Kirk. In any view of the case we are unable to see how the trustees can be held chargeable. Judgment affirmed.