Thompson v. Pennell

Libbey, J.

From a careful examination of the disclosure of the trustee and the evidence taken under the plaintiff’s allegations, we are satisfied that the trustee, Bowker, on the 11th of November, 1874, took from the principal defendant, Fennell, a conveyance of one-eighth of the ship Martha Bowker, then worth at least $2500, as collateral security for about $1000, for a debt due from Pennell to him, money paid, and liabilities assumed for Pennell, with the verbal agreement between the parties that Bowker should give to Pennell a bond to re-convey the same to him on payment of said sum; that the matter remained in that way till the 25th of February, 1875, the day before the commencement of this suit, when Bowker, knowing Pennell to be insolvent, and having reason to believe the plaintiff was about to bring a suit against Pennell, and in some form attempt to attach his interest in the ship, went to Pennell and refused to give the bond as he had agreed, and it was thereupon agreed between them that the conveyance should be treated as an absolute sale of the one-eighth of the ship for $1000, with a secret understanding between them that Bowker would re-convey to Pennell on payment by him of that sum.

This conveyance was for less than one-half of the value of one-eighth of the ship, and though absolute in form and to be treated as absolute as to third parties, it was not so in fact between the parties, but was intended as security only. Setting it up by Bowker as 'an absolute sale, against existing creditors of Pennell is, under the facts of the case, a fraud on them and they may avoid it. By virtue of B. S. c. 86, § 63, the trustee must be charged.

The court below erred in charging the trustee conditionally. He does not claim to hold the ship as security. He claims to hold it as against the plaintiff absolutely. This claim of title is fraudulent as against the plaintiff. If the trustee comes into court and sets up a fraudulent claim of title, he cannot invoke equity. If the decree will be a hardship to him, it results from the position he lias voluntarily and deliberately assumed, and which, if he should be permitted to succeed, would defraud the plaintiff. But in this case he will not suffer by being charged unconditionally, as the interest in the ship is worth more than enough to pay plaintiff’s claim and the sum advanced by.the trustee.

Exception sustained.

Trustee charged for one-eighth of the ship Martha Bowker.

Appleton, C. J., Dickerson, Danforth and Yirgin, JJ., concurred.