Appeal of Bugbee ( 1885 )

Mr. "Justice Gordon

delivered the opinion of the court, October 5th, 1885.

There was a difference of opinion between the Master and the court below as to the status of Albert Bugbee with reference to the fraudulent scheme concocted by his uncle, Wesley Millspaw, and his father, Frederick Bugbee, to defraud creditors. In all other particulars they agreed. The Master, having had Albert before him as a witness, says: “ he appeared to be a young man of less than average intelligence and capacity. While he was the undisputed owner of the lands in question, as well as after his conveyance to Millspaw, he was engaged in the manufacture of lumber thereon, under the direction of his father and Millspaw, without, so far as I can discover, any clear conceptions of his own relations to the business.” From this, to him, evident want of intelligence on the part of Albert, and from the absence of any direct evidence- to implicate him in the scheme devised and carried out by his father and uncle, he acquits him of any fraudulent intention, and recommends a decree in his favor. We have given this caso a very careful examination, and notwithstanding the learned and able opinion of the court below, we have failed to discover wherein the Master was wrong. The question is, why did Albert execute to Millspaw the deed dated October 22d, 1875, for the fifty-five acre track? Was it for the purpose of putting it out of the reach of Selew & Popple, creditors of his father and himself? The Master asserts that such was not his purpose; that he executed it at the instance of his father on the representation that Millspaw was about to lend him, the father, some money to be used in the rebuilding of the sawmill upon this tract No. 55; that the deed would be delivered to Millspaw as security for the loan, and that a bond, or defeasance, would be given in order to insure a reconveyance of the land on repayment of the money. In other words, the transaction, as represented to Albert, amounted to a mortgage on which money was to be raised to be applied to the payment of debts and expenses incurred in the rebuilding of a mill in which they were both interested. It is true, that the bond, or defeasance, was never executed, neither was the money advanced, but non constat that Albert was not cheated as well as his creditors. Had the representations made by Frederick Bugbee to his son, at and before he obtained from him the deed, been fulfilled; had he taken the bond, for which Albert had stipulated on delivery of the deed to Millspaw, and had the money been paid on the debts for the rebuilding pf the mill, the transaction could not have been impeached. The difficulty arises in the fact that Millspaw and Frederick Bugbee intended nothing of the kind; their intention was to defraud the creditors of the two Bugbees, make the best possible out of the property, and pocket the proceeds. Nevertheless, the learned Master fails to find evidence sufficient to implicate Albert in the knavery of two relations. He had his suspicions that Albert did know, or ought to have known, what was intended, but having no direct testimony on that point, and believing, from the appearance and manner of the young man when before him, that he was intellectually of an inferior grade, he concluded that he was the dupe of liis uncle and father, and unconscious of their designs. The learned court, on the other hand, thinks Albert’s stupidity was merely put on for the purpose of deceiving the Master, and enters into a lengthy argument to prove this assumption. We are not, however, convinced that in this the Master has been convicted of error. He had Albert before him as a Avituess, and had thus a means of judging of his character that the court had not. Nor does it follow that because, in a subsequent transaction, he contradicted himself, and Avas guilty of falsehood, that he was, therefore, not intellectually weak; rather the contrary. The court, independently of this, thought that the master had overlooked, or had not given sufficient attention to, the letter, MillspaAV to Albert, of the 14th of October, 1875, and that herein Avas found proof positive that the latter had notice of the intended fraud. In this again, we aro not satisfied that the court was right. Let us examine this letter which is supposed to have given Albert information of a scheme to defraud his own and his father’s creditors, and without which the court does not profess to have any direct evidence to connect him with that scheme. “If I take a deed, and give you a bond, I can get the mill insured, and if it burns it won’t be discounted, and your debts and your father’s won’t crowd you. I do this for your good, for you know 1 am safe for what money I have advanced.” This letter evidently refers to some previous proposition, doubtless that of Frederick Bugbee, and was intended to induce Albert to carry it out. But how does this convey notice of an intended fraud on creditors ? As he had been informed, Millspaw was to advance money to his father to pay for the erection of the mill; to pay debts contracted for that purpose; and reading this letter in view of the previous arrangement, to what conclusion could he come other than that he was to be relieved from the importunity'- of- his creditors by' the payment of their accounts? Now, it is all idle to say that this letter informed Albert that Millspaw was already secured for the money that he had advanced for this purpose, for there had been none advanced, nor was it contemplated that any should be except on the security of the deed. The reference must, therefore, be to some previous indebtedness by' Frederick Bug-bee to Millspaw. This letter, then, was any-tiling but notice of an intent to cheat Selew & Popple, or any one else, and for aught we can discover, the appellant had a perfect right to rely on the integrity of his father and uncle in the arrangement proposed by them. It is now sufficiently evident that the scheme was to get from Albert the title to his property without consideration, and to leave both him and his creditors in the lurch, but we do not see how the young man was to know in advance that his father and uncle deliberately' intended the perpetration of a fraud of this kind. Under the circumstances thus as above detailed, we cannot agree with the learned judge of the court below that the finding of the Master required reversal, and we must therefore adopt the decree which he has recommended.

As to the appeal of Tolies et al. we have but little to say-. The notice of the Lake Erie Oil Company to Beaty' came to nothing, for it was based on a mere suspicion without a fact to sustain it, and if that company had not been able to discover the defect in Millspaw’s title, it is entirely too much to charge Beaty with a discovery of that kind. To no purpose would have been an inquiry of the parties to the fraud; it is not to be presumed that they would have revealed their own iniquity', and as to Albert, had he at that time been asked whether, in face of his own deed to the contrary', he still claimed to own the property, he would, doubtless, have answered Beaty', as he (lid ot-liers, that liis title had been sacrificed to Ms uncle for the debts of his father. Moreover, inquiries of this kind are necessary only when there is some good reason for them. But what reason had Beaty to go hunting around after a fraud connflitted by the Bugbees and Millspaw on their creditors, when he had not the remotest evidence to put him upon such a search? The Lake Erie Company alleged that they believed that somehow or the other an attempt had been made to cheat them. But if so they were particeps of the cheat, for why did they take a lease from Frederick Bugbee when there was a deed on record for the land to Wesley Millspaw? Their title under such circumstances was clearly good for nothing, and Beaty had a perfect right so to treat it. Then, as Albert Bug-bee at that time made no claim to the property, we can discover no reason why Beaty should have been put on inquiry.

The appeal of Tolies, Eider et al. is dismissed at their costs, and the decree of the court, as to them, is affirmed.

The decree in the case of Albert Bugbee is reversed at the costs of the appellees, Wesley Mills-paw and Frederick Bugbee, and it is ordered that the court below proceed in the premises as recommended in the report of the Master.