Ewing v. Runkle

Breese, J. The principal question in this case, arises out of the instructions given on behalf of the defendant, Runkle, in which a construction was given to our statute of “ Frauds and Perjuries,” Chap. 44, sec. 2, R. L., 258, to which it seems to us not to be entitled. . The language of that part of this section necessary to be noticed, is as follows: “ Every gift, grant or conveyance of lands, tenements, hereditaments, goods or chattels, or of any rent, common or profit of the same, by writing or otherwise; and every bond, suit, judgment or execution, had and made, or contrived of malice, fraud, covin, collusion or guile, to the intent or purpose to delay, hinder or defraud creditors of their just and lawful actions, suits, debts, accounts, damages, penalties or forfeitures, or to defraud or deceive those who shall purchase the same lands, tenements or hereditaments, or any rent, profit or commodity out of them, shall be from thenceforth deemed and taken only as against the person or persons, his, her, or their heirs, successors, executors, administrators or assigns, and every of them, whose debts, suits, demands, estates and interests by such guileful and covinous devices and prácticos as aforesaid, shall, or might be, in anywise disturbed, hindered, delayed or defrauded, to be clearly and utterly void and, moreover, if the conveyance “ be of goods and chattels only, then acknowledged or proved by two witnesses before any court of record, in the county wherein one of the parties live, within eight months after the execution thereof, or unless possession shall really and bona fide remain with the donee.” This section is substantially a transcript of the statute of 18th Eliz., Chap. 5, and is the basis of all American jurisprudence on this subject. It is, however, only declaratory of the common law, whose antipathy to every species of fraud is so well known and understood. 2 Bac. Abr., “Fraud;” 2 Com. Dig., “ Covin.” The emphatic words of this section, the test words, by which the validity of voluntary assignments is tried in all our courts, are, “ with the intent or purpose to delay, hinder or defraud creditors.” Every conveyance, having the effect to delay or hinder creditors, of their just and lawful actions, suits, debts, etc., is not therefore fraudulent within this statute, for such is the effect of all voluntary assignments, made expressly for the benefit of creditors, and which the courts will always sustain. But the conveyance must be “ had and made, or contrived of malice, fraud, covin, collusion, or guile,” with that intent, to bring it within the statute, and both parties, grantor and grantee, must have that purpose in view. Was this conveyance to Ewing of that sort? Where is the evidence of the “ malice,.fraud, covin, collusion or guile;” words of great meaning and of vast importance, in construing this statute ? The facts of the case show that Brown and Son, who conveyed to Ewing, were broken down railroad contractors, largely indebted, and perhaps of considerable property, valued at about seven thousand dollars, scattered over the country; part of it claimed by other parties, some secreted, some run off, and a large portion of it seized on writs of attachment, and such the state of feeling against the Browns, that it was hazardous for them to search for, and collect the property, or meddle with it. Ewing, Price, Hagey and Armstrong, creditors of the Browns, Ewing to the extent of one thousand dollars, met and consulted on the subject, when it was agreed that Ewing should take a bill of sale of the property, collect it together, pay himself out of it, and then divide the balance among the creditors of Brown and Son. Ewing, accordingly, took the bill of sale, and at considerable expense, collected a portion of the property, to the value of about fifteen hundred dollars, paid out money to relieve it from claims made on it, and brought it to Knoxville, where, it seems, these other creditors who had made this agreement, were ready, with executions in the hands of the sheriff, to levy upon it, who did seize and sell it, as the property of Brown and Son, and which acts are the foundation of this suit. We think it very clear, that there is no evidence whatever of such fraud as is contemplated by the statute. There must be fraud in the getting up, and setting on foot, the conveyance, and not merely the execution of a conveyance, which may delay or hinder other creditors. A vigilant creditor is entitled to all legal advantages, and ean protect himself by a bona fide transaction. The conveyance, to be void, must be made and contrived of malice, fraud, covin, collusion or guile, and the intent must be marked by these characters, or some one of them. As Lord Mansfield observed, in Cadogan v. Kennett, Cowper’s R. 434, “ the question in every case is, whether the act done is a bona fide transaction, or whether it is a trick and contrivance to defeat creditors.” And so, Chief Justice Marshal, in the case of the United States v. Hooe, 3 Crunch R. 88. This conveyance seems to possess none of these ingredients, and nothing attaches to the transaction, as fully appears from the testimony, calculated to stigmatize it as fraudulent. The debt to Ewing was really due ; the deed was not made in secret, but on consultation with, and by the consent of three other creditors ; was duly acknowledged and recorded ; is absolute on its face, and no secret trust connected with it, but an open and clearly expressed declaration that, the balance of the property, after paying Ewing’s debt, and expenses, should be distributed among the creditors of Brown and Son. In the language of Grose, Justice, in the case of Meux et al., qui tam., v. Howell and Atler, 4 East R. 1: “It makes one shudder to think that persons who appear like the defendants, to have acted most honestly, should have been in any hazard of being subjected to punishment for having endeavored to procure an equal distribution of their debtor’s effects among all his creditors. Their conduct was meritorious, and the judgment confessed by Norton was not covinous or feigned, but given bona fide, and upon good consideration, for debts due to the defendants and the other creditors.” It is attempted, however, to give a fraudulent color to this transaction, by the fact that after the execution of this conveyance, Brown and Son confessed a judgment in favor of Ewing, for the amount of this same indebtedness. From the testimony, it appears that this confession was made by an attorney of the court, without the knowledge of Ewing, and without his procurement, or that of his attorney, though it appears his attorney had an execution issued upon it. Be this as it may, there is no evidence that the judgment was to stand in place of the conveyance, and taking judgment could not, independent of any agreement to that effect, release the property covered by the conveyance. Ewing might have a double security, and two distinct remedies for Ms debt, and avail himself of either; he insisted, however, on his bill of sale. It is Very certain, all the parties who were present at the sale to Ewing, and assented to it, ought to be bound by it, and could have no pretense to levy their executions upon the property after such assent. As to all others who were not present and assenting, the sale is considered good, as to such property of which Ewing got possession before any liens attached. His vigilance should not go without its reward. He had an undoubted right to secure himself, and get the property in his possession for such purpose. As to the instructions on behalf of the defendant, the views already presented fully dispose of them. Taking them in their order, the first assumes that the trespass consisted in levying the attachments, whereas, by the record, it appears that four of the horses taken and sold by the defendant, had not been seized by attachment, but had been levied on and sold on executions issued after the sale from Brown and Son to Ewing. It is agreed that such was the fact, and the instruction could not but mislead the jury. The second instruction is too loose, and is predicated on the idea, that if it was the intention of the Browns to hinder or delay their other creditors, by making the bill of sale, it is therefore void as to such creditors. Both parties must conspire to hinder and delay, the grantee as well as the grantor, and must be made with malice, fraud, covin, etc., on the part of both. And it excludes the tact from the consideration of the jury, that certain other creditors assented to the sale. * As to the third instruction, we have already said that taking the judgment was not, of itself, an extinguishment of the bill of sale. The fourth instruction is liable to the same objections as the second. It considers the sale void as to all persons, however honest Ewing’s intent may have been. It would not be just that he should suffer, if he acted honestly and with no evil intent. He must have been a knowing party to the criminal transaction, and joined in the fraud, covin and guile, and a party to all the fraudulent and covinous intents and purposes. As to the fifth instruction, it will be perceived, there is no evidence on which- to base it. Coughlin v. The People, 18 Ill. R. 266. There is no proof that after Ewing’s debt was paid, he was, at his discretion, to pay the balance over to the other creditors. There is no proof of any secret trust or understanding, but the only trust reserved is open and patent, and is for the benefit [of the creditors generally, and which they could enforce in a court of chancery. Had there been a benefit or advantage reserved, secret or otherwise, to the Browns, it would have avoided the deed; but there is none such, nor pretense of any. After Ewing’s debt was paid, the creditors were to participate in the balance. All the property was devoted, by the Browns, to the payment of their debts, and they seem to have acted, throughout, with the most honest intentions. The sale was as well for the benefit of the creditors, generally, as for Ewing’s benefit, and much credit is due to him for his exertions in collecting it together, scattered as it was, in three or four counties, and under embarrassments of no ordinary character. He may be considered the trustee for the creditors, of the balance remaining after his debt is paid. The same remarks will apply to the sixth instruction. There is no proof on which to raise an inference of a secret trust, and in the absence of it, there is a manifest impropriety in directing the attention of the jury to that which is not in the case, and call upon them to tax their imagination, to supply the want of facts. The same is the case with regard to the seventh and eighth instructions. As to the ninth instruction, that is calculated to mislead. It was the undoubted right and duty of Ewing, acting for himself, and as trustee for the other creditors, to defend all suits not properly instituted, whether by attachment or otherwise, a.nd whether they were “ rightfully ” brought or not, was no question for the jury. The tenth instruction, has not any evidence on which to base it, and the court should not send the jury out into the broad field of conjecture, but confine them to the facts as proven, on which, alone, instructions can be properly raised. The objection to the eleventh instruction is as to the form. The jury are instructed, “ If they believe the plaintiff, &c.” Juries should be permitted to believe nothing, except that belief be occasioned by the evidence, and their' minds should always be directed to that, and to that only, as the ground of their belief. To the substance of this, and of the twelfth instruction, there can be no objection. The Circuit Court having entertained views and opinions inconsistent with this opinion, the .judgment is reversed, the cause remanded, and a venire de novo awarded. Judgment reversed.