Sheldon v. Bradley

Seymouk, J. It appears that in June, 1861, the deceased, William E. Bradley, by a deed absolute on its face, conveyed the premises in controversy to Stephen P. Bradley. The conveyance was made partly to protect the property from the grantor’s creditors and partly to secure a debt of $1,000 due from the grantor to the grantee. There was an incumbrance on the premises to a savings bank of $1,500, but the property considerably exceeded in value the incumbrances, being-worth about $6,000. In January, 1864, William E. Bradley died and the petitioners were appointed administrators on his estate, which was represented to be and actually was insolvent. The facts in regard to the conveyance now in dispute, its object" and consideration, were fully known to the widow, and the means of knowledge were open to the other administrator, but they did not include the premises in the inventory until compelled to do so by a creditor of the deceased; and until after the sale of the property by Stephen P. Bradley in 1867, the administrators seem to have made no efforts to secure it for the benefit of creditors. And thus it has come to pass that, though the interest of William E. Bradley’s estate in the premises appears obvious and indubitable, matters are now so complicated that this interest is in danger of being lost to the creditors. ■ If in' the pending bill the administrator was seeking anything for his own individual benefit we might regard his rights as abandoned by the manner in which the administrators treated the interests committed to their keeping, but the [337] creditors of the estate have rights -which can he prosecuted in no other way than in the name of the administrator, and we feel bound to protect these rights of creditors so far as we may be able to do it without doing injustice to others. One of the principal difficulties in giving any relief to the petitioner arises from the decree of the Superior Court of May term, 1867. By that decree it is found “ that said deed from William E. Bradley to the said Stephen P. Bradley was a valid and bond fide deed and for a valuable consideration, and vested absolutely in the said Stephen P. Bradley all the title in and to said premises which the said William E. Bradley had at the time of said conveyance.” Immediately upon the passing of this decree Stephen P. Bradley conveyed the property in fee to the wife of Clark R. Shelton, and she has since sold portions of the premises to third persons. At the time Stephen so sold and conveyed he had a clear title of record and had the decree of the Superior Court in his favor pronouncing his title good. The grounds alleged in the petition ..for setting aside this decree and this conveyance by Stephen, are not found to be true, and we have come to the conclusion that we cannot disturb the title thus vested in the wife of Clark R. Shelton and her grantees. Nor do w.e feel at liberty to disturb and set aside the decree itself. But we do not construe the decree so as to make it a full answer to the pending petition. The respondents claim that this decree conclusively settles the fact that the conveyance from William to Stephen was bond fide and absolute and without condition, and left no equity of redemption in William or in his representatives, and in terms the decree is broad enough to support this claim of the respondents ; but on examination of the proceedings upon which the decree was-passed it appears that the petition in that case attacked the conveyance solely as being made in fraud of creditors. The petitioner in that case, Joseph Sheldon as administrator, was the same as one of the petitioners in the case now before us. Pending the petition he left for Europe. In his absence an answer is filed and decree passed by the consent, not of the petitioner, but of G. T. Shelton, [338] attorney for one Dorman, -a creditor of William’s estate, in ■whose behalf that petition had been in part prosecuted. Under these circumstances the most that Stephen could justly claim as against the petitioner was a decree negating the fraud charged in the petition. Neither the petition nor answer were conversant in any manner with the claim now made in the pending petition that the conveyance was in truth a mere mortgage to secure a debt of $1,000. We think the decree must be construed in connection with the bill and answer on which it was founded, and in connection with the circumstances under which it was passed, and, as between Stephen himself on the one hand and the estate of William on the other, we think it is going quite far enough if we give to Stephen the benefit of that decree so far as it relieves the conveyance to him from the charge of being in fraud of creditors. We cannot construe the decree as a bar to the present claim of the administrator, that the conveyance was a bond fide mortgage made to secure an honest debt and subject to redemption on payment of the debt. The decree cannot be construed to decide a matter which was not in issue before the court upon the pleadings and to which the attention of the court was not called. So far then as Stephen P. Bradley is concerned we think the conveyance to him must be treated as a mortgage. The committee finds that it was so understood, and that at first no other writing than the deed was contemplated. In the case of French v. Burns, 35 Conn. R., 359, it was decided that a deed absolute on its face, if in fact taken as security for a debt, constitutes in equity a mortgage. The document executed by Stephen P. and William P. Bradley two days after the date of the deed is in form a contract to sell and convey the premises on certain terms, but in substance and effect it is a defeasance and cannot operate to extinguish the right of redemption. If therefore Stephen P. had not sold the property, the administrator of William would be entitled to redeem for the benefit of the creditors of the estate; but the property is now in the hands of purchasers whose title we think, as before [339] stated, we ought not to disturb. We therefore advise the Superior Court to confirm the sale, and that Stephen P. Bradley be charged with the amount which ho received on the sale with interest, deducting the amount due him on the debt to secure which the conveyance to him was made. The amount which he received for the property more than his debt belongs in equity to the estate of William. If a party who receives property as security for a debt sells the property to a bond fide purchaser, so that the property itself cannot be followed by the equitable owner of it, the proceeds of the sale are monies had and received for the use of the equitable owner, after payment of course of the debt to secure which the property was pledged. In this case the money could not be recovered at law, because at law the absolute deed could not be shown to be a mortgage. The case is therefore a proper one for equitable relief. It appears from the report of the committee that $1,000 of the purchase money of the property sold by Stephen was by the terms of the arrangement to be paid to the administrator on William’s estate. Of this sum $500 is in the hands of James J. Baldwin and $500 in the hands of O. T. Shelton, ready to be paid to the administrator. These sums should of course be paid to the administrator and received by him us so much of the proceeds of the sale. In order to ascertain the amount due an account must be taken by the Superior Court. In taking the account Stephen will of course be charged with whatever rents and profits, if any, he has received while he has been in possession. We notice that in the pending bill the petitioner does not allege that these funds are wanted for the payment of the debts of the deceased. There is only a general allegation that the estate is in progress of settlement as an insolvent estate. It appears from the committee’s report that the estate is in fact insolvent and needs the proceeds of the property in dispute to pay creditors. Our advice is founded on this consideration; for if the funds are not wanted to pay debts the right of redemption is in the heirs of the deceased and not in the administrator. [340] Our advice is therefore conditional, that the hill be amended to show what the report of the committee finds to be true, that the amount is needed for creditors and to be applied for their benefit. The widow joins with the administrator in this petition ; but it appears that, having a full knowledge of the interest which her husband’s estate had in the premises, she, while acting as administrator, declined to vindicate the rights of the estate by proceedings against Stephen, though requested to do so by a creditor with an offer of indemnity against costs and expenses. Down to the sale of the premises by Stephen in 1867 she acted in direct opposition to the claim she now makes. Her motives may be inferred from the finding of the committee “ that until the actual sale she was hoping that Stephen would convey the premises to her on payment of his original debt of $1,000, as he indeed had promised her he would do.” Having thus trifled with the rights she now seeks to enforce, we think she has no just claim for the intei'ference of a court of equity in her behalf. On the final settlement of her husband’s estate in the court of probate she may possibly be able to establish a right to share in the amount recovered by the administrator in these proceedings, but we cannot in this bill adjust the relative rights of these parties with each other, and our advice is that the bill as to the widow be dismissed without prejudice to such rights as she may have at law. In this opinion the other judges concurred.'