Freeman v. Burnham , 36 Conn. 469 ( 1870 )

Carpenter, J.

It is conceded that the plaintiff is entitled to recover the sum of $400. He further claims that he is entitled to recover the sum due from Burnham to the plaintiff’s intestate on the 10th day of November, 1864, and for which notes were given to Mrs. Burnham and her daughter, as stated in the report. The substance of that transaction was a gift. His right to make it, provided creditors were not thereby injured, is not questioned. We think it equally clear that it cannot be sustained so far as it deprives the donor of the means of paying his creditors in full. A voluntary conveyance, which operates to defeat the rights of creditors, is in law fraudulent and void as against such creditors. This is elementary law, and requires no argument to sustain it.. The question is, whether there is anything in the form or manner of the conveyance, or the circumstances attending it, which exempts this case from the operation of this principle. If it be true, as suggested by the defendant’s counsel, that it does not appear that at the time the gift was made Rood was insolvent, or even embarrassed, or that the gift was at all disproportionate to his means or circumstances, the case might be attended with some difficulty. But we think the fair import of the finding is, that his estate, aside from the notes, was at that time insufficient for the payment of his debts. This was the plaintiff’s claim, and the auditor has expressly found that he was indebted at the time of the delivery of ffie notes, that his estate is still indebted for the same debts, and that his estate independently of these notes is insufficient for the payment of these debts in full. Unless therefore his pecuniary condition subsequently changed for the worse, it is evident that the gift, if carried into effect, rendered him insolvent at the time. There is no evidence of any such change, and-we are not called upon to presume one for the purpose of sustaining a voluntary conveyance.

Burnham, during his lifetime, paid nothing on his indebtedness to Rood otherwise than by giving the notes in question. No consideration for those notes passed from the payees. They paid nothing and incurred no responsibility. A recovery by the plaintiff then works no hardship to them, as they are in no worse condition than they were before the notes were given. It can work no hardship to Burnham’s estate, unless it is compelled to pay the notes in addition to the judgment recovered by the plaintiff. That is hardly possible, situated as this case is; yet we attach no importance to the fact that one of the payees of the notes is administratrix of Burnham’s estate, and in that capacity appeared before the auditor. Had it been otherwise, and had she been a stranger to the estate, the defendant, when sued, could have protected himself by a bill of interpleader ; so that the argument drawn from the supposed hardship fails. On the other hand, if this transaction is void as against creditors, there must be some mode in which creditors can take advantage oí it. Their remedy must be by suit against the maker, or the payees, or both. No well informed lawyer, under the circumstances, would presume to commence an action at law against the payees. A bill in equity ought not to be required unless necessary for the protection of the rights of the parties concerned. Those rights, as we have just seen, can be protected in an action at law against the maker. Ordinarily, in cases of fraud, the question is tried in an action at law. We see no sufficient reason for making this case an exception to the general rule.

It being established that it is competent for the plaintiff, representing the creditors, to avoid the gift, the question of evidence would seem to be disposed of. The defendant sets up this gift, by way of notice, as a defense, 1st,.as payment, 2d, as an accord and satisfaction. No argument can be required to show that it is competent for the plaintiff to meet this defense by proving facts which show that the gift is legally inoperative.

The only remaining inquiry is this : is the plaintiff entitled to recover the full amount of the indebtedness ? It is conceded that it is not all needed for the payment of debts; but how much will be required for that purpose cannot now be known. We quite agree with the defendant’s counsel that the plaintiff can only recover for the benefit of creditors, and that no part of the judgment should enure to the benefit of the heirs. The amount needed for debts cannot be ascertained with certainty until the settlement of the administration account. It would be inconvenient and expensive, if not impracticable, to defer judgment until that time. Besides, in most cases of this character, the defendant, rather than be exposed to a second suit, would prefer that judgment should be rendered for the whole debt.

On the whole we advise the Superior Court to, render judgment for the full amount. With the proceeds, the plaintiff, under the direction of the court of probate, will pay the debts and all proper charges. The balance, if any, he will hold for the use of the party or parties to whom it rightfully belongs. Mrs. Burnham and her daughter, or one of them, will be entitled to it upon the facts as they now appear.

In this opinion the other judges concurred.