National Union Bank v. Brainerd

The opinion of the court was delivered by ROWELL, J. One who holds a deed of another’s land merely as a cover to cheat the owner’s creditors,- is not [299] thereby chargeable as his trustee, for the land is not “ effects” in his hands or possession, nor its value a “ credit,”' and there is no indebtedness to constitute a “ credit.” In such case the land is attachable in the ordinary way, but if' the grantee should be held chargable with its value, he-might, after having paid that value to one creditor, have the land taken from him by another creditor, and thus lose it. after having paid for it. Woodward v. Wyman, 53 Vt. 645 ; Prout v. Vaughn, 52 Vt. 451; Stevens v. Kirk, 37 Vt. 204; Hunter v. Case, 20 Vt. 195 ; Baxter & Edmunds v. Currier, 13 Vt. 615; How v. Field, 5 Mass. 390; Bissell v. Strong, 9 Pick. 561; Risley v. Welles, 5 Conn. 431. Although in the defendant’s first deed of the Canada land to the trustee Hatch it was expressed that Hatch should pay $11,000 of the defendant’s debts therein specified, yet that transaction was not intended as a sale to Hatch, nor as a trust for him to execute, but only as a cover to prevent the.land from being attached by the defendant’s creditors. Hatch has never paid any of those debts, but they have been paid by the defendant, as the understanding was between them that they should be. The defendant has ever since possessed and used the land the same as before, and Hatch has. received nothing therefrom. But it is claimed that the further deed of that land from defendant to Hatch, executed on March 16, 1887, for the express consideration of $11,300, no part of which has been paid, is not found to have been fraudulent, and that therefore Hatch is indebted to the defendant by reason of that transaction, and hence is chargeable as trustee on account thereof. But this transaction was. not considered a sale to Hatch any more than the other was, nor as making Hatch indebted to the defendant, but only as another step in the fraudulent scheme in which they were engaged, taken for the purpose of more certainly accomplishing the end in view. This is the result of the finding. It follows, therefore, that Hatch is not chargeable on [300] the score of this deed an}'- more than on that of the first deed. But it is further claimed that as the trustee judgment against Hatch in the Plattsburg Bank case was paid with money and property that belonged to the defendant, the law raises a promise on the part of Hatch to reimburse the defendant therefor, and that this is an indebtedness that can be reached by the trustee process. But the Canada land transaction, on account of which Platch was charged as trustee in that case because it was found to be an honest sale to him with the price unpaid, is now found not to have been a sale at all, but a mere covering of the land to cheat the defendant’s creditors, and this case must stand upon that finding; therefore, when that judgment was paid with the defendant’s money and property, the law raised no promise on the part of Hatch to reimburse the defendant therefor, for as between them that was not Hatch’s debt to pay, but the defendant’s, and he has no claim against Hatch in respect of the matter. It appearing that the defendant derived $2,342.92 from sales of some of the Canada land and from wood and lumber taken therefrom by him, it is claimed that Hatch is chargeable for that amount, as it was allowed to him and deducted from his liability in the Plattsburg Bank case, being treated and applied as part payment of the purchase-price of the land. But as those avails never, came into Hatch’s hands, and that whole business was a fraud, as now found, Hatch is not chargeable for that amount. The defendant paid taxes on the Canada land, paid money on debts, and expended money in and about the lumber business, and entered the money on his cash-book as paid for Hatch ; but that was a fraud. The land was the defendant’s as between him and Hatch, the debts were his, and the lumber business was his ; and therefore no implied promise [301] arises on the part of Hatch, as the plaintiff claims, to pay the defendant for these disbursements. It is also claimed that Hatch should be chargeable for the value of the logs and lumber at the mill when the attachment in this case was made. But the commissioner finds that whatever was said or agreed upon between the defendant and Brainerd & Hatch in respect to the sale of that property to the latter, the defendant retained the ownership and possession thereof down to the time of the attachment, and so> it was not goods or effects in Hatch’s hands, nor did he ever become indebted therefor to make a credit. If that property had gone into Hatch’s possession, a different question would have been presented. Hatch owed the defendant $11.75 for wood and lumber that he had bought of him, and the agreement was that the defendant should “ trade at Clark & Hatch’s store, and take his pay for it that way” ; and he did so after this suit was brought. It does not appear that the defendant ever called for payment out .of the store and was refused, so Hatch never became liable to pay in money, and the defendant’s creditors cannot step in and vary the contract so as to compel payment in money in the first instance. Fuller v. O’Brien, 121 Mass. 422; Willard v. Butler, 14 Pick. 550; Bartlett, J., in Bartlett v. Wood, 32 Vt. 378. It was error, therefore, to render a money judgment against Hatch for that debt. The judgment should have been for payment out of the store, according to the agreement found by the commissioner. This is the only' judgment warranted by the statute. Bartlett v. Wood, above cited, is authority for such a judgment. There the trustee was charged in a sum certain, to be paid in work, as that was the contract mode of payment. In Rice v. Talmadge, 20 Vt. 378, the trustee was charged in a sum certain, payable in leather. The correctness of this judgment was not specially decided by the supreme court, but the court treated it as falling within the [302] same principle as contracts payable in specific articles, and proceeded to consider the case accordingly. It was error, in the circumstances, to refuse the trustee Hatch costs below. The statute provides that if a person summoned as a trustee appears and submits himself to an examination upon oath, he shall be allowed his costs for travel and attendance, and such further sum as the court judges reasonable for his counsel fees and other necessary expenses. R. L. 1,158. This trustee did appear and submit himself to examination upon oath. Nor is the fact upon which he is held chargeable one that he denied and the plaintiff traversed, but it is one that he admitted on his examination, and it is found as he admitted it; therefore costs were not deniable to him under Rule 36 of the county court. The refusal of costs to the plaintiff against the claimants was matter of discretion with the court below, and is not revisable here. R. L. 1,124; Laclair v. Reynolds, 50 Vt. 4x8. yudgment against the trustee Hatch reversed, and judgment that he is chargeable for $11.75, with interest thereon from the service of the writ, jay able out of Clark & Hatch’s store, according to the agreement in respect of -payment found by the commissioner; and costs are adjudged to said trustee in this court and in the county court against the plaintiff. In all other respects the judgment below is affirmed, with costs in this court to the plaintiff against the claimants, who excepted to the judgment against the other trustees as well as to the judgment against Hatch.