Ridgeway v. Underwood

PENNINGTON, District Judge. I consider all the transactions respecting the distribution of the different lots of land and real property to the holders of certificates, from the beginning down to the deed from Jones to the holders of certificates, and including that deed, as a lottery transaction; and that the plan being contrived, and executed in Pennsylvania, makes no difference, so far as it respects the land embraced by it lying in New Jersey; and this, whether the laws of Pennsylvania were violated or not. The transaction was not only against the policy, but the express prohibitions of the statute of New Jersey; and if an action were brought in either of the courts of this state, to enforce the fulfilment of any contract made under these transactions, it would not be sustained. It might be necessary to consider how far the courts of New Jersey would sustain an action founded on a disaffirmance of such contract, if another view of the subject did not render this unnecessary. I consider the lottery transaction as at an end with the deed from Jones to Sperry, made in conformity with the scheme. This was all that was stipulated to be done by Jones; and he was under no agreement to do more. Admitting that all this transaction was unlawful and void, the title still remained in Jones, and I have not been able to perceive any objection to his conveying the land, as was done by him and his wife, to Sperry. It is said to be all one transaction, and tainted with the original malady. But although the state of the case may excite suspicion, it will not, in my opinion, warrant the conclusion. It is also said that the consideration being nominal, the deed must be taken as voluntary, and therefore void against creditors. As to the point that a deed with a consideration merely nominal, will, as it respects creditors, be treated as voluntary, it will not, I believe, be denied; but to render a deed void under the statute of Elizabeth, as respects creditors, it must be made with intent to defraud and delay creditors; and there is nothing in the case agreed to show that Jones was indebted at the time the deed was executed in 1814. The first bond was given in November, 1815, and the second in the January following. This is the only evidence that Jones was indebted at the time of executing the deed in 1S14. I am, upon the whole, of opinion that judgment, as in case of nonsuit, ought to be entered. WASHINGTON, Circuit Justice. This case presents three questions for the consideration of the court: (1) Was the first conveyance of the 15th December, 1814, by Jones and wife to Jacob Sperry, made in pursuance of a lottery transaction? If it was, then, (2) Is the case embraced by the law of New Jersey of the 13th February, 1797? If the answer be in the affirmative, then, (3) Did thé estate of Jones pass from him by. force of his subsequent deeds, or either of them? 1. That the transaction which gave occasion to this conveyance was a lottery, can scarcely admit of a doubt. There was a scheme published, by which the distribution of prizes was to be regulated; certificates, or tickets, were issued and sold; managers were appointed; wheels used for the purpose of distributing the prizes; and chance alone decided the value of the prizes to which the adventurers should respectively be entitled. Although, nominally, there were no blanks, inasmuch as some property was allotted to satisfy each certificate; yet, comparing the relative value of the different portions of the property with each other, and with the price paid for the certificates, there were in reality but few prizes, and all besides were blanks. For the case states that the price paid for the certificate, according to the scheme, was $125; that the property was valued by Jones at from $50,000 to $20. and that many of the small lots were of little or no value, and none of them worth more than $5. Upon chance, then, and that alone, could the purchaser rest his hope, whether he should, for his $125, gain property greatly exceeding that sum in value, or lose the consideration paid for his certificate, by obtaining property comparatively of no value. Every feature of this transaction then marks it as an ordinary lottery, except, that the prizes were to be satisfied by land instead of money. 2. The next question is, whether the case is embraced by the law of New Jersey of the 15 th of February, 1797? The first section of this act, which is entitled “An act for suppressing of lotteries,” declares them to be common nuisances, and certain courts are directed to take cognizance of such offences. The second section forbids the erecting or drawing of any lottery within the state of New Jersey, under a certain penalty, to be recovered and distributed in the usual way. These sections are strictly local, and would have been so, although the restrictive words in the second section had been omitted; since the criminal laws of one country are never presumed to be intended to reach of-fences prohibited by them, when committed in any other; although the offender should afterwards be found within the jurisdiction of the former. The third section is local as to the offence which it describes and prohibits; and is in part extra-territorial, as to the subject to which the offence refers. It forbids, and punishes, the selling and- the purchasing of tickets in any lottery, whether [764] •erected in this state, or elsewhere; and although the oifenee is not confined toy express terms to this state, yet, for the reason before mentioned, it ought to be so con.strued. The fourth section upon which the question arises, declares, “that every conveyance or transfer of any goods or chattels, lands or real estate, which shall be made in pursuance of any such lottery, shall be invalid and void.” The plaintiff’s counsel contend that this section referS to lotteries erected in this state, or elsewhere, spoken of in the next preceding section. On the other side, it is insisted that it is confined to lotteries set up in this state, which are prohibited by the second section. The interpretation given by the plaintiff’s counsel is, in my opinion, the correct one; it is most consistent with grammatical construction, as well as' with the apparent intention and policy of the law. The relative ought always to find its antecedent as near as possible to itself, unless the obvious meaning of the instrument requires a more remote search to be made. The lottery last spoken of is one erected in the state of New Jersey, or elsewhere, to which the relative such ought to refer for its antecedent, according to the strict rules of construction. That the policy of the law does not require a violation of this rule, is to my mind perfectly obvious. The legislature clearly intended to suppress this species of gambling, to the utmost extent of their legitimate authority. It is first condemned •as a common nuisance, and is made a public offence. As such, it is punished by severe penalties, imposed in a way, best calculated, as was supposed, to suppress the •evil. To effect this object, it was deemed necessary to forbid, not only the erecting and drawing of lotteries, but the sale and •disposition of the tickets, without which no lottery could be drawn. The former could not, with any propriety, be prohibited beyond the territorial jurisdiction of the state, and consequently, a pecuniary or personal punishment could not be consistently imposed. But so far as the law could indirectly and legitimately act, to prevent or to defeat the evil complained of, wherever the transaction might take place, is attempted in express terms by the third section, and by fair construction in the fourth. It was perfectly competent to the legislature to forbid the sale of tickets in this state connected with any foreign lottery, and so to regulate the conveyances of lands lying within this state, .as to make void such as were founded upon a lottery transaction, wherever the tickets may have been sold. To have prohibited the sale of such tickets, avowedly for the purpose of defeating (as far as the prohibition •could have the effect) the drawing of the lottery, and yet to suffer lands lying in this state, the fruits of the lottery, to pass to, and to be enjoyed by those who were adventurers in it, would have been a very imper-feet course of legislation; and would but in part only have fulfilled the declared object of the law to suppress lotteries. 3. The last subject of inquiry is, did the deeds of release from Jones, or either of them, pass an estate to the releasee? or, m other words, is it competent to the purchaser, under the judgment and execution, to impeach them, on the ground of their being voluntary? It is contended by the plaintiff’s counsel, that the consideration .of one or of ten dollars, for property which had not long before been sold for $12,630, is merely nominal; and that the deeds are consequently voluntary, and fraudulent as to creditors and subsequent purchasers. To this it is answered, that the lessor of the plaintiff was a purchaser with notice; and that whether he was so or not, still he is not protected by the act of this state, which corresponds with the statutes of 13 and 27 Eliz.; he being a purchaser, not under Jones, the grantor, but under the sheriff, in virtue of an execution. I have examined, with great attention, the various and contradictory decisions of the courts of law and equity, upon the construction of the above statutes. It is not my intention to prolong this opinion, by taking a particular review of those cases, which has been ably done by other judges; but being perfectly satisfied with the result to which my mind has arrived, I shall content myself with stating my unhesitating opinion upon the points which arise in the present case. Let it be admitted, for the sake of getting at once at the argument, that the release to Sperry m&y, upon the facts stated in the case, be considered as voluntary, on the ground of the consideration being altogether inadequate to the value of the property. It was, nevertheless, sufficient to pass the estate to the releasee, and to defeat the claim of the grantor to a resulting trust. But in a case where the rights of creditors or of a subsequent purchaser intervene, the deed may be impeached by them upon the ground of fraud, unless the grantee can show, as he is permitted to do, that the real consideration was such as to repel a presumption of fraud, arising from the circumstance of its inadequacy. • 'If the lessor of the plaintiff could be considered as a purchaser, within the meaning of the statute of 27 Eliz., I should feel no hesitation in deciding that he would not be affected by notice of the deed to Sperry or to Howell, as I consider the law to be at length settled, that a purchaser for valuable consideration, with notice of a prior voluntary conveyance, is protected by the above statute. I must at the same time, acknowledge, that in giving this opinion, I yield to the weight of authority, rather than to the reasons upon which the decisions have proceeded. The reasons upon this point are collected, and ably reviewed by Lord El-lenborough in Otley v. Manning, 9 East. i>¡). But I cannot consider the lessor of the plain [765] tiff as a purchaser, within the meaning of the 27 Eliz., as he derives his title to the land in controversy, not und$r Jones, but under a judgment and execution against the grantor in the voluntary deed, and a conveyance by the sheriff. He is nevertheless protected by the statute of 13 Eliz., because he stands in the place of the creditor under whose judgment and execution he purchased. This subject is well considered by Chancellor Kent, in the case of Hildreth v. Sands, 2 Johns. Ch. 35; and I entirely concur in the opinion there pronounced. The chancellor observes, “that when the statute gives the principal remedy, it gives also the incident. If it protects the creditor, it must protect his sale, and the purchaser under his judgment. On any other construction the creditor would be deprived of the fruit of his judgment. The purchaser under the judgment and execution is entitled to all the relief to which the creditor would have been; for he stands in his place, and is armed with his rights.” The learned judge refers to a case in Latch. 222, which strongly supports the principle upon which his opinion is founded. [For a similar action by the same plaintiff against John Ogden, Jr., see Case No. 11,814.] Considering the lessor of the plaintiff then as a creditor, he must also be treated as one subsequent to the release from Jones to Sperry, the case not stating that Jones was indebted to any person prior to the 3d of November, 1815, when his first bond to Holland bears date, which was nearly twelve months subsequent to this release. The question then is, whether, as a subsequent creditor, the lessor of the plaintiff comes within the operation of the statute of 13 Eliz. 1 have attentively considered the pumerous cases which relate to this subject, and with entire satisfaction to myself, I have come to the following result: A voluntary deed by a person indebted at the time, to any amount, is fraudulent and void as to such prior creditors, merely upon the ground that he was so indebted. But as to subsequent creditors, the deed is not void for that reason, because it does not necessarily, nor even rationally, follow, that the conveyance was fraudulently made with intent to hinder or delay creditors, who became such long after the deed was made. But if the case presents other circumstances from which fraud can legally be inferred, the voluntary conveyance will be avoided in favour of a subsequent creditor. Thus, if the grantor, in a voluntary deed, incurs debts immediately, or so soon afterwards as to warrant a presumption that the deed was made in contemplation of such future indebtedness; it would be difficult to protect such a deed against the charge of fraud. So, if the grantor, at the time the deed was made, was indebted to the extent of insolvency, or perhaps of great embarrassment, so as to create a reasonable presumption of a fraudulent design, the deed may be impeached even by a subsequent creditor, unless the presumption is repelled by showing that such prior debts were secured by mortgage, or by a provision in their favour in the deed itself. But the proof of such prior debts rests upon the party who attempts to avoid the deed, upon the ground of a subsequent indebtedness. The most prominent cases upon this subject are, Walker v. Burrows, 1 Atk. 93; Stephens v. Olive, 2 Brown, Ch. 92; Lush v. Wilkinson, 5 Ves. 387; Kidney v. Coussmaker, 12 Ves. 155; Montague v. Lord Sandwich, in a note to the preceding case; Holloway v. Millard, 1 Madd. Ch. 414; Bennet v. Bedford Bank, 11 Mass. 421; and 3 Johns. Ch. 371. The law being thus settled, as it appears-to me, it is conclusive of the present case.. The lessor of the plaintiff appears before the-court in the character of a subsequent creditor, and as representing Holland, undor whose judgment and execution he purchased. The case does not state, nor can the court presume, that Jones was indebted to the-amount of a single dollar at the time when he released to Sperry; nor is there a circumstance stated in the case from which the court can legally infer a fraudulent intent in the releasor. The deed then was not void as it respected Holland, and consequently it cannot be so considered as to the purchaser under his execution, who cannot be in a worse situation than Holland, whom he represents. The deed being valid in respect to Holland, the sheriff had no authority under his execution to levy on, and sell, land legally belonging to Ogden, Rowland, and Segur, and then in the possession of their tenant I make no particular remarks upon the release to Howell, because, if that to Sperry was valid, Jones had nothing remaining in him which he could pass to Howell: and because, if this were not so, still it appears that Jones was largely indebted, and that to Holland, at the time when this release was executed. The court was much pressed by the plaintiff’s counsel to connect the release to Sperry with the original transaction, so as to infect it with the taint of a lottery consideration. But to do this would be to carry the doctrine of presumption to a dangerous length. There are no facts stated in the case which can warrant the court in saying that the release was made in pursuance of the lottery. As a private individual, I might suspect that this was the-case; but as a judge, I dare not affirm it to be so, nor can I permit myself to substitute suspicion for fact, and to decide as if it were really so. I am then of opinion upon this case, that the law is in favour of the defendant; and that judgment should be entered, as in case of nonsuit, in conformity with the agreement of the parties.