Wadsworth v. Laurie , 1895 Ill. App. LEXIS 968 ( 1895 )

Mr. Justice Wall

delivered the opinion of the Court..

Since the opinion was filed in this case, our attention has been called to the brief of the said Laurie upon the point raised by his assignment of error. As was stated in the opinion, he also appealed and had assigned error upon the judgment against him on the issue raised by the plea in abatement traversing the affidavit for a writ of attachment against the estate of Lloyd W. Brown, but as we found nothing in the brief on the point, wre assumed it had been abandoned.

It appears that a separate brief had been filed, fully discussing that point, but from some accidental cause it did not come to our notice. It is proper, therefore, that we should now consider it and express our views in regard thereto.

The affidavit for attachment alleged that Lloyd W. Brown, within two years prior to the date, had “ fraudulently conveyed or assigned and disposed of his effects and property, or a part thereof, so as to hinder and delay his creditors.” A plea was filed traversing the affidavit, and the issue was tried by jury. At the close of the testimony the court instructed the jury to find the issue for the defendant, which was done. It is urged that herein the court erred.

The evidence relied upon by the plaintiff to support the attachment was:

1st. That on the 8th day of May, 1893, the said Brown conveyed to W. E. Yietch, cashier of the Central Bank, 1,004 acres of land for the expressed consideration of $75,000, which was filed for record August 26, 1893, the day following the appointment of the receiver on the bill in chancery heretofore referred to.

2d. The filing of said bill, under and pursuant to which said receivers were so appointed and took possession of all the assets of said bank.

3d. A trust deed executed by said Brown to E. P. Kirby, September 13, 1893, covering some 1,500 apres of land, to secure sundry items of indebtedness to different persons, aggregating over $98,000.

4th. A mortgage by said Brown to Mrs. Adams, dated July 20, 1893, covering 800 acres of land, to secure an indebtedness of $60,000, and any additional sum that might afterward be loaned by the mortgagee to the mortgagor.

In disposing of the question here presented, it is important to ascertain in the first place what is the meaning of the statutory provision upon which the writ of attachment was based.

The Supreme Court have construed the statute in the case of Weare Commission Co. v. Duley, 156 Ill. 25. In substance, the ruling is that the writ may not issue for mere constructive fraud as contradistinguished from fraud in fact. In other words, though the transaction be such that a court of equity might regard it as constructively fraudulent, and therefore subject to be set aside at the instance of creditors, yet unless there was a fraudulent purpose or design actuating the defendant, the case is not within the statute.

Applying the rule so announced to the facts in proof, we entertain no doubt that the plaintiff wholly failed to sustain the charge made in the affidavit, and that the court was perfectly justified in the instruction to find for defendant.

Regarding the first transaction—the deed of a valuable tract of land to Yietch, cashier of the bank—it appears the purpose was to strengthen the bank, and while the deed was absolute on its face, it was subject to a condition that the grantee should hold the land for the protection of the bank, the grantor to enjoy merely-the use and occupancy, and that when the necessity for such protection should no longer exist, the lands were to be reconveyed to the grantor. Conceding, for the sake of argument, that equity would hold such a transaction as voidable at the instance of creditors, yet very clearly there was no dishonest purpose manifested thereby. On the contrary, the purpose was laudable, i, e., to secure and protect the creditors of the banking house of which the grantor was one of the members, and as a matter of fact, the lands so conveyed were appropriated by the receivers as a part of the bank assets, and the plaintiff will, as a creditor of the bank, receive his due share of the proceeds.

As to the filing of the bill to wind up the concern and as a preliminary step placing the assets in the hands of a receiver—we are unable to discover fraud either actual or constructive.

When it was ascertained that by reason of the existing conditions the bank could no longer be conducted with safety, it was the legal duty of those in control to suspend and take such course as would insure a fair distribution of the assets among the creditors. It would have been indictable to continue receiving deposits when the fact of insolvency was known. As a matter of prudence and in justice to all concerned the first public announcement would be that receivers had been appointed. The honest object being to secure an equitable distribution of the assets it ivas entirely proper to place the entire estate in the custody of the law. The fact that the application for a receiver was made at an unusual hour, and that the order was made by a judge in vacation, can not be urged as proof of fraudulent purpose.

It was necessary to proceed with haste and on account of the absence of counsel the application was somewhat delayed. NTor is the defendant to be charged with a fraudulent purpose merely because as a matter of law it is not competent for a judge acting in vacation to appoint a receiver.

While knowledge of the" law is to be inferred for certain purposes, yet this is a mere legal presumption. It is a maxim, that ignorance of the law does not excuse; but fraud is not to be inferred from or predicated upon an act, otherwise blameless, because done without legal authority. Here the defendant acted upon the advice of counsel and obtained an order from the judge of the Circuit Court which ivas supposed to be regular and was not very uncommon as a matter of practice. Eo doubt he acted in good faith and it would be a gross perversion of the law to make this act the basis for a writ of attachment on the ground of fraud.

Some stress is laid upon the alleged fact that the bank was kept closed on the 25th of August upon the mere pretext of the death of the mother of Mr. Yietch, the cashier, but in view of all the proof we regard the point as requiring no consideration.

As to the deed of trust and the mortgage there is nothing upon which the charge of fraud can rest. It does not appear that these conveyances were in bad faith or that the several debts they were given to secure were either colorable or misstated in any particular. Regarding the proof as a whole Ave are satisfied a verdict for the plaintiff Avould necessarily have been set aside. In such a state of case it is proper to instruct the jury to find for the defendant. C. & T. R. R. Co. v. Simmons, 110 Ill. 340. Affirmed.