Lang v. Stockwell

Secret trust — Reservation of use of chattel by vendor. In Coburn v. Pickering, 3 N.H. 424, the court, RICHARDSON, C. J., say, — "A sale of goods, in order to be considered as made bona fide with respect to creditors, must be made without any trust whatever, either express or implied. It is not permitted to a debtor to convey away his goods, by sale, with any secret understanding between him and the vendee, that the goods shall be holden for the benefit of the vendor, in any way whatever. The nature of the benefit reserved in the sale is immaterial. It matters not whether the benefit is to consist in the use of the goods, or in some other favor to be shown by the vendee. Anything of this kind is a trust, and what the law denominates a fraud." This is the doctrine of Twyne's case, and rests upon the 13 Eliz., ch. 5, which Lord Coke tells us was simply declaratory of the common law. An examination of all our cases decided since Coburn v. Pickering, shows most conclusively that there has never been any disposition to relax the rule there laid down. For example: in Coolidge v. Melvin, 42 N.H. 522, BELLOWS, J., says, — "Any secret trust whatever, either express or implied, by which the property is to be held in any way for the benefit of the vendor, is inconsistent with an absolute sale, and makes it, as matter of law, fraudulent and void as to creditors." Coburn v. Pickering is our leading case on this subject, and the very thorough and luminous discussion of the whole matter found in that opinion has left little to be done in cases which have since arisen, except to make a correct application of the principles there laid down. 1 Sm. Lead. Cases 63 (American notes to Twyne's case. How does that rule apply to the case before us? At the time of the sale of the horse and wagon by McDuffie to the plaintiff, it was agreed between them, and was part of the trade, that McDuffie should have the right to use the property in and about his business, and that, in consideration therefor, he should pay the taxes on the same. What could be more inconsistent with an absolute sale? An unrestricted right of use constitutes the very essence of the idea of property, whether in things real or personal. A sale which leaves the right to use the thing sold still in the vendor, without limitation as to time or manner of use, leaves the beneficial property, to all practical intents, where it was before, — in the vendor.

The case states that, at the time of sale, McDuffie was boarding with the plaintiff, and continued to board with her while he was in Jefferson, he being then about closing up his business; and it was then agreed that he should have the right to use said horse, wagons, and harness in and about his business. It may be the fair implication from this, that McDuffie was only to have the right to use the property in and about the business he was then about closing up business at Jefferson. Suppose that be so: how does it alter the case? What difference in principle whether he might close up his business, and so terminate his right of use in a week, a month, a year, or not until the property was wholly worn out with using? I confess I can see none. The right of use reserved for a single day is, to my mind, as inconsistent with an absolute sale, an unqualified passing of the property, as would be the right to use a year or ten years. I am therefore of opinion, that here was a trust, — a holding by the vendee for the benefit of the vendor, — which brings the case within the doctrine of Coburn v. Pickering, and all our cases since; and, where the trust is shown, fraud is an inference of law that the court is bound to pronounce. Coolidge v. Melvin, 42 N.H. 522. I think the defendant was entitled to the substance of the instructions which he requested.

It now appears, by an amendment of the case, that there was no substantial difference in the statement of the contract as made by the plaintiff from that made by McDuffie and we are thereupon asked to order judgment for the defendant. If my views are correct, and there was no evidence at the trial tending to show a different contract from that stated in the case, a verdict should have been ordered on motion for the defendant because from that contract, showing as it does a secret trust, fraud would be a conclusion of law without regard to the actual motives and intentions of the parties; but, according to the usual practice of the court, I think we should go no further than to set the verdict aside for error in refusing the instructions asked for, and also in those given.

The testimony of McDuffie that he had never discovered any evidence of unsoundness or string-halt in the horse seems to have been inadmissible under the authority of Spear v. Richardson, 34 N.H. 428.