Baxter v. Currier , 13 Vt. 615 ( 1841 )

The opinion of the court was delivered by

Williams, Ch. J.

The trustee discloses that he received of the principal debtor a deed of two lots of land, for which he says that he paid him in full; that the land was incumbered by a mortgage ; that he received of the principal debtor-two notes against one Alpha Allyn, amounting to about one hundred and fifteen dollars, exclusive of interest, and these notes he received for the purpose of extinguishing the mortgage ; and further, that he is not indebted to, and has no property of, the principal debtor in his hands or possession. It is evident, from the disclosure, if it is true, that Jason Currier is not indebted to the principal debtor in any way, and if he is to be adjudged chargeable, it must be on the ground either that there was a contract on his part to make further payments to the principal debtor, or that the transaction between them was fraudulent and void as to the creditors of John Currier, the principal debtor. To effect this, other evidence was introduced falsifying the disclosure ; and the county court, on this evidence, charged the trustee with the value of the two lots, and the notes against Allyn, to the amount of six hundred and seventy-seven dollars, and credited him with the sum of three hundred and twenty-five dollars, paid on a mortgage, executed by the principal debtor, and adjudged him a trustee for the balance, being three hundred and fifty-two dollars.

On argument, before the county court, the question arose whether a person, who had received a fraudulent conveyance of property, could be adjudged a trustee, when the principal debtor could have no action against him therefor. It is stated that the evidence, aside from the disclosure, tended to prove the conveyance and transfer of property, made by the debtor to the trustee, fraudulent as against the creditors of the debtor, and the counsel for the trustee contended that if the court should find the same to be fraudulent, so that said John (the debtor) could enforce no claim against the said Jason (the trustee) for the said property, the said Jason could not be adjudged trustee, and it was supposed that the view which the county court might take of this was to have a decisive effect on the question whether he was to be adjudged trustee or not. The court, in effect, decided this question against the trustee, so as to present the same fairly to this court for revision. The county court found, as a fact, that, as to the lots of land and notes against Allyn, no payment had been made by the said Jason, except the payment on the mortgage, and they decided “ that, inasmuch as the trustee had, by his disclosure, placed his defence on the ground of a purchase, at a fair and full consideration, he was liable as trustee for any balance of the admitted consideration, or just value of the property, not paid by him. And that, in such case, fraud between him, and the said John, or falsehood in his disclosure in relation to payments, would not protect him.

It is evident there was no contract, express or implied, on the part of the trustee to pay for the land, either at a stipulated value, or at a value to be estimated thereafter by them, or others. The disclosure expressly repudiates any such idea. The evidence, aside from the disclosure, tended only to prove the conveyance and transfer of the property fraudulent ; but no contract to pay for the land is found by the county court. The plaintiff, by his interrogatories, drew out the particulars of the transaction between the debtor and trustee, the conveyance, sale of the note, &c. and the payment therefor. The trustee insisted that he had. paid a full consideration, to resist the inference of fraud, and this having been found not to be true, he was adjudged a trustee.

It is true that the court say that the trustee had placed his defence on the ground of a purchase, at a fair and full consideration. I apprehend, however, that this view does-not alter or affect the question actually arising in this case, either before the county court or this court. The defence would have been ample and irresistible in a suit instituted by the principal debtor against the trustee, that is, if the land was deeded, and the notes against Allyn delivered or sold, and no executory contract made by the trustee to pay any thing thereafter. The whole contract was executed, and the fraud, if any, between them would prevent any suit being maintain-tained by either party against the other. The case, then, must be decided on the view which we take of the question, whether a fraudulent grantee or vendee can be adjudged a trustee of his grantor or vendor.

In relation to land, it may be remarked that if the lands are fraudulently conveyed, the conveyance is void, and they are liable .to be taken in execution by the creditors of the grantor, and neither in Massachusetts nor Connecticut, where they have a proceeding similar to our trustee process, has a fraudulent grantee of lands ever been held chargeable as trustee of his grantor.

The statute, which is similar to the custom of London, in relation to foreign attachments, provides for those cases where the trustee was indebted to the principal debtor, or held property of his in trust, and subjects the debt or the property to attachment, or execution, at the suit of the creditor of such debtor, and gives the creditor all the rights or claims which the debtor has against the trustee. The case of Sargeant v. 2 Vt. R. 277, and Hutchins v. Hawley, 9 Vt. R. 295, were decided on this view of the statute. It cannot be extended to reach a fraudulent conveyance where there is no trusb and the reasons which may have induced the courts in other states to adjudge the trustee liable, who holds under a fraudulent conveyance, or assignment, under the statutes of those states, are not applicable here, nor warranted by a true and just construction of our statute. In the first place, it would subject a person to be examined on oath where the matter of inquiry is in relation to a transaction of a criminal nature, and his answers might subject him to a penalty. The person sued as trustee must submit to be examined on oath, and he may be interrogated as to any thing which would be proper for the consideration of the court. In the second place, on the trial of a question of fraud, the trustee would be deprived of the benefit of a trial by jury, for the question, whether trustee or not, is to be tried and determined by the court,and not by the jury. And in the third place, he would be subject to an additional forfeiture, not contemplated in the statutes against fraudulent conveyances, and a penalty more severe than ought to be enforced. The goods, chattels, or lands conveyed, are liable to be taken at the suit of the creditors of the fraudulent grantor or vendor. The grantee or purchaser forfeits the full value of the property conveyed, to be recovered in a suit brought by the person aggrieved and the county treasurer. And if the trustee process is to be sustained, he may be held as a trustee, or indebted to the principal debtor for the estimated price, or value, of the property conveyed. The statute, in force when this transaction took place, does not warrant a procedure so at variance with its literal meaning, and so obviously unjust. The interest of creditors is sufficiently protected against the fraudulent transactions of these debtors, without giving them this additional remedy.

In this case, the trustee held the lands by a deed from the debtor. He held the notes against Allyn by a contract or purchase for a specific purpose, and he was under no obligation, by contract, to pay the debtor, or account to him therefor. If the transaction was false or fraudulent, the creditors have their remedy by levy on the lands, and the trustee is subject to the penalty provided in the statute against fraudulent conveyances. We do not perceive that he is indebted to the debtor,' or has any property in trust for him, and therefore he cannot be adjudged trustee.

The judgment of the county court is reversed.