Peck v. Land

By the Court.

Lumpkin, J.

delivering the opinion.

This writ of error has originated in a Claim case; a mode of trying the rights of property, unknown to the Common Law. Henry Solomon obtained a judgment against Henry Holmes in the Superior Court of Twiggs County, which being assigned over to Nathan Land, was levied on sundry property, real and personal, in the possession of the defendant; and all of which was claimed by Ira Peck. The special jury on the final trial, found the whole subject to the fi. fa., and the Court below overruled a motion for a new trial, and the plaintiff in this writ the claimant in the Circuit Court, complains that Judge Scarborough, before whom this cause was tried, committed error, as well in his charge to the jury, as in refusing the application for a re-hearing. And hence it becomes our duty to examine, first, the charge, to see if it contain any misdirection; and then to look into the facts, in order to ascertain whether or not we will control the discretion exercised by the Circuit Judge, in disallowing a new trial.

The charge is as follows:

“ Proof of the execution, the levy under it, and that the defendant was in possession of the property levied on, maltes a prima facie case for the plaintiff. Then the onus prohandi is devolved on the claimant to support his title. For that purpose claimant introduced a deed to the land, and a bill of sale to the negroes and other personal property levied on, of an anterior date to the judgment, with evidence of the consideration paid.”

Judge Scarborough states the law correctly, and the practice under it, in relation to proceedings under our Claim acts: Namely, that proof of the execution, the levy under it and possession of the property by the defendant, at the date of the judgment, or at any time subsequently, makes out a prima facie case for the plaintiff, so as to put the claimant upon proof of his title. In Georgia, real estate, as well as personal property, is bound by the judgment and liable to be sold under execution. And although mere naked possession is the lowest and most imperfect degree of title to lands and tenements, still it is such an interest therein, as will subject it to levy and sale, unless claimed and proof is made, that the paramount title resides in another. For this mere naked possession may and will, in process of time, unless disturbed, ripen into' a title completely legal. I make this remark, because much of the argument in behalf of the plaintiff in error, has assumed the fact, that titles to land can be evidenced by deed only.

The Judge proceeds. “ This is a question of fraud, and the issue submitted to the jury is, the bona fides or honesty and good faith of the transaction. There are badges, or evidences of fraud, which are of different imports. A badge is a circumstance, sign, mark, or suspicion, not sufficient of itself, to authorise a finding, unless more than one combine. Evidences of fraud are either presumptive or conclusive. All presumptions become conclusive, unless rebutted.”

As to the dissertation of the Court upon frauds, and the indicia which usually accompany them, I need only say, that we are not prepared to assent to the proposition, that in order to condemn a transaction as fraudulent, that two or more of the marks of a collusive conveyance must be affixed to it. On the contrary, we should be inclined to hold, that continued possession by the vendor, unexplained, and in the face of an absolute transfer, would of itself warrant a finding that the sale was covinous. And so of the other badges. Indeed the charge itself inculcates the same doctrine, for it expressly affirms, that all presumptions become conclusive, unless explained. This is not an error, however, with which the plaintiff here has any right to be dissatisfied, and we notice it, because should it be passed in silence, it might be understood as having received the indorsement of this Court.

“ The pending of the writ at the time of the sale,” continues the Judge, “is a badge of fraud. If a creditor buy in satisfaction of his antecedent debt, and also in satisfaction of the debts of other favoured creditors, to the exclusion of a particular creditor whose suit is pending, and buys a large surplus over, this is a badge of fraud.”

Now, if the first proposition be true, that it is a sign of fraud for an insolvent debtor to sell his property pending a suit against him, the second, which is only an amplification of the first, is necessarily so. For if fraud be inferred from a sale, even to a third person, much stronger will that conclusion become, when the purchaser is a creditor, and he buys not only in extinguishment of his own debt, but the debts also of other favoured creditors ; and not only property sufficient to discharge these demands, but a large surplus over.

[1.] The first and main question to be settled then is, is the sale of his property by an insolvent debtor, pending a suit against him, to the exclusion of the collecting creditor, a circumstance calenlated to create suspicion, that it was done to hinder or defeat such creditor. Not whether it will have the effect of delaying such creditor o'f his debt; for srich is -the effect pro tanto of every transfer that can be made by one who has creditors. Every disposition of an insolvent’s property, however valuable .the consideration, and honest the motive, diminishes the fund out of which payment is to be made of his remaining' liabilities. This, therefore, is not the issue. The question is, was it done fraudulently % And was this Sale, under the circumstances, an evidence that such was its character % The affirmative of this proposition was ruled distinctly to be law in Twyne’s Case, 3 Coke’s R. 62, nor has it ever, within the knowledge of this Court, been adjudicated otherwise. Pierce was indebted to Twyne ¿6400, and to one C. ¿6200. C. brought an action of debt against Pierce and, pending the writ, Pierce being possessed of goods and chattels to the value of ¿6300, in secret made a deed of all his goods and chattels to Twyne in satisfaction of his debt, and yet Pierce continued in possession of the property, and some of it he sold, and the sheep he marked with his own mark; and afterwards C. had judgment and a fieri facias to the sheriff and by virtue thereof bailiffs came to make execution of the goods, and divers persons, by the commandment of Twyne, with force resisted them, claiming the goods to be Twyrie’s by virtue of the deed made to him, and the question was, whether or not this conveyance was fraudulent. Upon an information, per Coke, Attorney General, against Twyne for contriving and publishing a- fraudulent deed, it was decided by Sir Thomas Egerton, Keeper of the Great Seal of England, and by the Chief Justice Topham, and Anderson, and the whole Court of Star Chamber, that this deed was fraudulent and within the Statute of 13th Elizabeth c. 5. And in this case, the following points were resolved:

First. That this deed had the marks of fraud. It was general and without exception of his apparel or any thing of necessity : for dolosus versatur in generalibus.

Secondly. The donor continued in possession.

Thirdly. It was madé in secret, et dona clandestina sunt semper suspidosa.

Fourthly. It was made pending the writ.

Fifthly. There'was a trust between the parties; for the donor was' in possession arid1 used them, and fraud is always appareled With a' trust, arid trust'is the cover of fraud.

Sixthly. It was contained in the deed that it was made honestly, truly and bona fide, et clausula inconsueta semper inducunt suspicionem, fyc.

It was resolved that although it was a debt due to Twyne, and a good consideration of the deed, yet it was not within the proviso of the said act of the 13th Elizabeth, by which it is provided, that the said act doth not extend to any estate or interest in lands, &c., goods and chattels, made upon good consideration and bona fide ; for although it be upon good and true consideration, yet it is not bona fide; for no deed shall be deemed to be made bona fide within the said proviso that is accompanied with any trust; for the proviso saith, upon good consideration and bona fide; so a good consideration doth not serve, if it be not also bona fide.

I have extracted from the report the whole of these resolutions, although it is the fourth only that has immediate application to the point under discussion. It will be found, however, that there are other features in this leading case altogether analogous to the one at bar. Besides, this was an early and sound exposition of the Statute of Elizabeth, and the doctrines which it promulgated although perhaps, somewhat modified and restricted, have never been overturned nor materially altered : on the contrary, they have always been recognised as sound law, both in England and in this couutry. (Holbird vs. Anderson, 5 Term R. 236; Cadogan vs. Kennett, 2 Cowp. 432; Seward vs. Jackson, 8 Cowen, 443, et passim.)

“And,” says Sir Edward Coke at the foot of the foregoing case, “ because fraud abounds in these daies more than in former times, it was resolved that all statutes made against fraud shall be liberally expounded, for to suppress the fraud.” If the corruption of the times in the age of Queen Elizabeth, required not only the enactment of this law, but its liberal interpretation—an epoch, the most remarkable feature of the jurisprudence of which, was its antipathy to deceit, and which had already comprised within its code the notable aphorism, that even right itself is turned into wrong by circumventing to obtain it—what shall we say of our own day, when the temptations to fraud, as well as the facilities for its commission, are multiplied an hundred fold; when so.many areseeking to live by their wits, instead of their labour; by cunning and craft, instead of eating their bread in the sweat of their brow.

The Statute of Elizabeth goes no further than the Common Law as now understood. I apprehend the time never was, when a fraudulent conveyance would not be invalidated, which was intended to defeat, delay, or hinder creditors of their just debts. And we have not only adopted the Common Law, but we have expressly incorporated the Statute of Elizabeth as a part of the law of this State, and with it Twyne’s case, as a rule of construction.

The purpose for which any conveyance is made, is a conclusion from all the circumstances attending the transaction, and a sale pending a suit by an insolvent debtor is, in the nature of the case, well calculated to awaken suspicion. The vendor is insolvent. And why insolvent ! In three-fourths of the cases, I venture the assertion, from improvidence or wild speculation. The vendor, then, overwhelmed with debt, and unable to pay, when pursued by his creditor, whose property he has appropriated, takes it upon himself to withdraw his effects from the lien about to be created, and to secure them to others. Is it strange that the law should imply a fraudulent intent !

Who has not marked the smile of derision curling the lip, whenever the title is quoted of our honest debtor’s act ! And does not this very act treat its beneficiary as a suspected person ! Why is his conscience purged by oath ! Why notice to creditors, with the privilege of forming an issue and testing the fairness of his surrender! Is it not obvious, that the law presumes an insolvent guilty rather than innocent ! And while therefore it accords to him the privilege of making a preference, still it distrusts his motives ; and hence it requires of him every thing in the manner of making the transfer of his property, which will rebut the presumption of an interest for himself.

Again, the sale is made pending the suit. Shall that suit be defeated ! To permit it would seem to bring disrepute and discredit upon our Courts. They are constituted to coerce delinquents into a fulfilment of their engagements. Shall the debtor be allowed to hold the rod, in terrorem, over his creditors, by postponing those altogether who dare resort to their legal remedies 1 Would not this policy be, to reverse the maxim, the law regards those only who watch, and not those who sleep ! Shall the debtor not only get his creditor’s property without compensating him for it, but mulct him with the expense which he has incurred in suing out his writ ! Does not the principle, prior in tempore, potior in jure, equitably apply to this case ! If equality is equity, then is this preference strongly tainted with fraud and injustice. If there be a preference given, it would seem to be due to those who are first in the raee. But in this case, the first is made last, and the last, first. The inference is irresistible. Every such voluntary disposition, by an insolvent, creates distrust as to his motives. They may be meritorious. The law allows the right to the debtor upon the supposition that he knows best whom to favour. Experience demonstrates, however, that this is a fiction, and that the exclusion of the vigilant creditor is the result of irritation, and for no better reason is his recovery defeated. In nine cases out of ten the debtor is influenced by the determination to thwart the particular creditor, or to secure an interest to himself in the arrangement. Either of these facts will invalidate the conveyance. And a sale, pending a writ, is clearly evidence of one or the other of them.

[2.] But to return to the charge :

“ The possession of the vendor, after an absolute sale of personal property, is now only prima facie evidence of fraud, and is open to explanation. Possession of land remaining with vendor, after an absolute deed, is not, under the Statute of 13th Elizabeth, c. 5, an evidence of fraud.”

As it respects the sale of personal property, we cheerfully concur in the opinion of the Court below. The science of jurisprudence, like all others, is progressive ; and notwithstanding it was settled, and repeatedly held at home and abroad, that an absolute bill of sale of chattels, unaccompanied with possession, was fraudulent in law, and void as against creditors, yet the Courts every where are adopting the less rigid rule, that the vendor’s retaining possession after an unconditional sale, was not conclusive, but only prima facie evidence of fraud and susceptible of explanation; that strictly speaking, there is no such thing as fraud in law, and that fraud or no fraud, is, and ever must be, a question of fact to be found by the jury. Wash vs. Medley, 1 Dana (Ken.) R. 269; Sterling vs. Van Cleve, 7 Halsted R. 285; Howell vs. Elliott, 1 Dev. R. 76; Callen vs. Thompson, 3 Yerger R. 475; Ibid, 502; Bissell vs. Hopkins, 3 Cowen R. 166; Adams vs. Wheeler, 10 Pick. R. 199; Haven vs. Lowe, 2 N. H. R. 13; Eastwood vs. Brown et al. 1 Ryan & Moody R. 312; Storer et al. assignees of Ketcher, a Bankrupt, vs. Hunter, 3 Barn. & Cressw. R. 368; Martindale vs. Booth, 3 Barn. & Adolph. R. 498.

We are constrained to dissent, however, from Judge Scarborough as to real estate. It is true, that the ownership to lands is usually evidenced by deeds and other written muniments of title. Still, in real as in personal property, we hold, that if the vendee take an absolute conveyance and nevertheless leave the property in the possession of the vendor, it is prima fade evidence of fraud. If a man convey his land- absolutely, and yet is allowed to continue in possession as its absolute, unqualified owner, this will he a proof that the conveyance -is fraudulent. (Newland on Contracts, 372; Stone vs. Grubham, 2 Bulst. R. 226 ; Hungerford vs. Earle, 2 Vernon R. 261; Styleman vs. Ashdown, 2 Atk. R. 479; Russell and others vs. Hammond and others, 1 Atk. R. 13, 16.) If, says Lord Coke, a man mortgage his land and continues his possession, no disseisin is wrought by this. If it was an absolute conveyance and a continuance in possession afterwards, this shall be adjudged in law to he fraudulent.

In Sands vs. Codwise, 4 Johns. R. 503, the question related to real estate, where it is certainly true, that possession is much less important than it is in relation to personal property, yet the Court of Errors of New York thought it strong evidence of fraud that the grantor continued after the sale to exercise acts of ownership.

In the case before us, the sale was made pending an action by the defendants in error, for the collection of their debt. There was no change of possession; and what explanation is offered of this strong evidence of fraud? -None other, except that the purchaser remarked to the debtor at the time that the deed was executed, “remain here until I can make other arrangements,” and at the expiration of several years the vendor is still found in the occupancy and enjoyment of the property. It is not even attempted to be shown that he acted as the agent of Peck, the most plausible account that could have been given of this continued possession. But this would not have availed. The change of possession must he actual and complete, and a divided enjoyment which leaves the vendor to appear to the world as the owner, will not do.

Lord Ellenborough, in the case of Wordall vs. Smith, 1 Camp. R. 332, said, “ it was a mere mockery to put in another person to take possession jointly with the former owner, and that a concurrent possession with the assignor by the assignee, was colourable. He declared that the possession must be conclusive to protect the transfer.”

With all the facts of this case before me, I will not say with a distinguished jurist in a similar case, that within the two and a half centuries which have elapsed since the Legislature first came to the aid of the Courts for the suppression of fraud against creditors, there never has been a time when this transaction could stand the test of a judicial investigation; yet I will affirm, that the facts developed in this case, not only created a presumption of fraud, but warranted the most scrupulous and searching examination.

The Statute of 13th Elizabeth, c. 5, relating to frauds against creditors, directs, that no act whatever done to defraud a creditor or creditors, shall be of any effect against such creditor or creditors. We concur fully with the Circuit Judge, “that the fact that the claimant paid a fair price for the property is not a sufficient explanation of the transaction.” a The question still occurs, was the conveyance made in good faith 1 And does not the continued possession, together with the joint, if not the whole, reception of the profits impress the mala mens upon it %

[3.] In the case of Cadogan vs. Kennett, 2 Cowp. R. 432, Lord Mansfield stated, that he had known several cases where persons have given a fair and full price for goods, and where the possession was actually changed, yet being done for the purpose of defeating creditors, the transaction has been held fraudulent and therefore void. It is assisting one man to cheat another, which the law will not allow.

Judge Scarborough charged the jury, “that the circumstance that Mrs. Holmes, the wife of the defendant, sold two or three loads of com and three bags of cotton during the absence of her husband at the North, ought not to be admitted as proof of fraud against the claimant.”

It will be kept in mind, that Holmes, the original defendant, was not a party to the proceeding below. But the contest was between Peck, the claimant, and the plaintiff in execution. If Peck therefore, having in his pocket the title papers to the land and negroes, stood by and permitted Mrs. Holmes, the wife of the defendant and vendor, to sell the com and cotton made on the plantation, this is a circumstance going to establish the covinous intention between the parties to this transaction, and that a trust had been reserved for the benefit of the vendor’s family. And it would seem that the absence of Holmes had nothing to do with the matter.

Counsel for the plaintiff in error have presented with much confidence, this view of the case. By the Common Law, a debtor was allowed to prefer one set of creditors to another; the Statute of Elizabeth does not militate against this right. And although in the preamble to the act of 1818, the practice of selecting particular creditors to the exclusion of the rest, is denounced as “ contrary to the first principles of equity and justice, still the privilege of making this preference is expressly secured by the body of that statute, provided the disposition of the insolvent’s property he “ Iona fide and absolute, and free from any trust for the benefit of the seller or any person or persons appointed by him, her or them.” And such is the construction put upon this act by this Court. It is demanded then, how can the doing of that be fraudulent which the law authorises to be done % If an insolvent debtor, at any time before judgment, can sell the whole or any part of his property, either to a creditor in satisfaction of his antecedent debt, or to an indifferent person for money or other thing, how can it be deemed a badge of fraud to execute a conveyance under these circumstances %

This inquiry may be answered by propounding another. May not the purchaser of property suffer it to remain in the possession of the seller % Is it either illegal or immoral to do so ? And yet the doing so, is not only a cogent badge of fraud, but, unexplained, will condemn the transfer as void. An insolvent debtor may dispose of his goods in secret, to a near relation, still, should he do this, the transaction would be shrouded in a shade so dark, that it would be difficult to extricate and sustain it. Any one of the badges in Twyne’s case would singly impeach the assignment of property ; nevertheless, the whole of them might unite and many more be superadded and, still the conveyance protected. A man presents his pistol and snaps it within a foot of the head or heart of another. Under this evidence he would be convicted of an assault, with intent to murder. He proves, however, by witnesses, that the pistol was unloaded, and that it was a mere trick to try the other’s metal, and he is acquitted. Is there any thing inconsistent in this 1

It is contended that the Court below erred in admitting in [4.] evidence the original writ to prove the pending of the suit. We think otherwise. We apprehend that it is the every-day practice of all the Courts to allow the original papers of file in the office to be used in evidence in the same Court. Bills and answers, as well as verdicts and decrees in chancery, while in paper, are constantly offered to prove a particular fact. In this instance, the writ is produced merely for the proof of the res ipsa, namely the pending of the suit.

The special jury having found the property subject to the [5.] execution, an application was made for a new trial, on the following grounds, to wit:

First. That the jury found contrary to evidence and without evidence.

Second. That the jury found contrary to law.

Third. That they found contrary to the charge of the Court.

If it were true, as assumed in this rule, that the verdict was without evidence, there would he no doubt in the case. The judgment below would have to be reversed and a new trial ordered. But by looking into the testimony, we are satisfied that such is not the fact. The rule for our guidance is clearly defined in the books, and is this, “ that the verdict will not be set aside as contrary to evidence, where there has been evidence on both sides, and no rule of law violated, nor manifest injustice done, although there may appear to have been a preponderance of evidence against the verdict.” 2 Strange R. 12, 38 ; 7 Taunt. R. 153; M. & Sel. R. 192 ; 1 Burr R. 11; 10 Johns. R. 101; 1 Cowen R. 77; 2 S. C. Cond. R. 337, 441; 6 Conn. R. 185; 2 Miller, L. R. 12, 21, 449; 2 Str. R 1142; 2 Wend. R. 352; 15 Johns. R. 493; 8 Conn. R. 223; 3 J. J. Marshall R. 421; 7 Wend. R. 270; 5 Mass. R. 353 ; 3 Call R. 276 ; 2 Vermont R. 165; 8 Peck R. 182; 1 Ham. (Ohio) R. 357; 1 Hayw. R. 14, 132; 3 McCord R. 276; 1 Cowp. R. 37; 10 East R. 268; 6 Term R. 619:

If it be true that in all cases, facts are the peculiar province of the jury, and that it is for them to say in- any given case, whether the proof produced be sufficient or not, much more will the Courts refrain from disturbing the verdict when a question of fraud is submitted to the jury. 1 Hill R. 467.

In conclusion, we will advert briefly to the testimony in reference to two points only, that is, the continued possession of Holmes, the vendor, and the acts of ownership exercised by him subsequent to the sale to Peck.

E. E. Crocker testified as to the sale and formal delivery of the property, that the consideration was $1,700, which Peck held individually on Holmes, $500 or $900 in debts due by Holmes to Wiggins, Reynolds and others, and Peck gave his note for $1,000, the balance of the purchase money at the time of the sale.. Peck told Holmes to take care of the property until he could make other arrangements; none of the property was taken away at that time.

Bullard swore that Holmes continued to live on the plantation after the sale and work, the property.

John Hughes stated in his examination, that Holmes'hired him (witness) in 1845, to superintend the saving of his fodder, while he went to the North. Cherry and Phillis (two of the negroes sold to Peck) were there. Holmes’family resided on the place. Holmes paid witness for said service. Witness let Holmes have ploughs and gear, which he was to return, but never did—he paid witness for them—never saw any one else in possession hut Holmes. His wife sold two or three loads of com, while her husband was absent, and three bags of cotton, made by the children of Holmes and the negroes—saw Peck two or three times in the latter part of 1843. Holmes gathered witness’ fodder in 1844, and Bullard paid witness five dollars for Holmes; all the balance Holmes paid in work. Witness repaired the gin house in 1843, and Holmes settled with witness at the rate of one dollar per day.

William Stafford testified, that Holmes ginned his cotton in 1842 and 1843, and witness paid him for it. Aleck packed it and Phillis fed the gin, (these negroes were a part of those sold by Holmes to Peck.) Witness paid Holmes the thirteenth part in money after he sold the cotton.

Charles Whitehead states, that he rented land to Holmes in 1843, and, subsequent to the sale to Peck, Holmes paid witness for the rent, partly in fodder made on the land. The land was cultivated by the negroes sold by Holmes to Peck.

Well might the Court below not think it a discreet exercise of its power to interrupt the finding of the jury against the claimant, upon such evidence.

A majority of this bench would have come to the same conclusion, to wit, that the facts fully warrant the belief, that as to the surplus at least, there was a benefit reserved to the vendor and his family, and the contract being entire, if part of it be tainted with fraud, the whole must fail. It is void altogether.

Were it otherwise, and we believed the verdict against the weight of evidence, still the Judge, who tiled the case, being satisfied with it, this Court would decline to set it aside. It must be a very strong case that would induce this Court to order a new trial, when it has been refused by the presiding Judge on the merits.

The verdict then, in our opinion, is not contrary to law, but in conformity with it; and it is only repugnant to so much and such parts of the charge as were against law, and on the side of the claimant; of course that would not authorise us to intermeddle with it. The motion for the reversal of the judgment below, must therefore be denied.