Younger v. Massey

The opinion of the court was delivered by

Mr. Chief Justice McIver.

This was an action brought by the plaintiff to set aside a deed from the defendant Massey to his co-defendant Brown, as well as a deed of assignment from said Massey to the defendant Wallace, upon the ground of fraud in both of said deeds. It appears that Massey, who had been, for several years, carrying on business as a merchant in the little town of Tirzah, in. York County, about seven miles from Yorkville, some time in the year 1891, and possibly before, became insolvent, and being pressed by his creditors for payments which he said he was unable to make, on the 17th of November, 1891, executed a deed to the defendant Brown, who was his father-in-law, conveying to'him his store house and lot, together with another lot in the town of Tirzah, and, also, his entire stock of goods in his store, with the furniture and fixtures. This conveyance purports to have been made in consideration of indebtedness by Massey to Brown in an amount exceeding the sum of seven thousand dollars, which arose as far back as the 1st of February, 1887, and in payment of the same. On the same day that this deed was executed, Brown signed a paper, appointing Massey his “agent and clerk in my store at Tirzah, to serve in said store;” and accordingly, Massey continued to carry on the business as formerly, to all appearances, so far as the public were concerned, the transfer not having been known to Massey’s nearest neighbors or to his customers until the 25th of November, 1891, when the plaintiff, who, in the meantime, or rather on the morning of that day, had recovered judgment on some of his claims against Massey, sent the officer to levy on the goods in the store, when, for the first time, the fact of the transfer was made known. The officer, nevertheless, did levy upon some of the goods, when they were replevied by Brown in an action of claim and delivery, and retained by Brown.

On the 16th of February, 1892, Brown reconveyed to the defendant Massey all the property which had been transferred to him by the deed of 17th of November, 1891, except the goods which had been sold in the interval between the execution of the two deeds, and except, also, the goods which had been levied upon under the trial justice executions obtained by the plaintiff herein against Massey on the 25th November, 1891. The exception in the deed of these goods is followed by this language: “If I succeed in recovering said articles, I hereby declare my purpose to turn over same, or their full value, to such assignee as he (Massey) may name, he having declared his purpose to make an assignment for the benefit of creditors, in which purpose I fully concur.” On the same day that this last mentioned conveyance was made, to wit, on the 16th February, 1892, Massey and Brown executed an agreement in writing, under seal, that in consideration of the reconveyance above mentioned, the debt of Massey to Brown, then amounting to over eleven thousand dollars, which had been extinguished by the conveyance of the 17th of November, 1891, should be revived. Accordingly, on the 16th of February, 1892, Massey executed to the defendant Wallace a deed of assignment, purporting to transfer all of the property of said Massey, except such as may be exempt under the homestead laws, for the benefit of his creditors. This deed of assignment contained, amongst other things, a provision preferring such of the creditors as should accept the terms of the assignment and execute releases within twenty-one days from the day appointed by the assignee for the first meeting of the creditors, which, it seems, was held on the 25th of February, 1892.

The case was heard on the testimony taken in open court, which is set out fully in the “Case.” The Circuit Judge, after hearing the testimony and argument of counsel, subsequently filed his decree, which is likewise set out in the “Case,” and should be incorporated in the report of the case, in which he rendered judgment setting aside both of the deeds assailed as fraudulent and void, appointing the defendant. Wallace receiver, requiring defendant Brown to account for all the proceeds of goods sold or taken out of the store by him between the 17th of November, 1891, and the 16th of February, 1892, and directing the receiver to call in the creditors to prove their respective claims against Massey within a time to be specified by him. From this judgment the defendants appeal upon numerous grounds, which are set out in the record; but as they raise nothing but questions of fact or, at most, question the propriety of the inferences drawn by the Circuit Judge from the facts, we do not deem it necessary to set them out in detail here.

Under the well settled rule, the judgment of the Circuit Court must stand, unless it is without any evidence to sustain it, or is manifestly against the weight of the evidence.

1 We think it- clear that neither of these things can be properly said of the judgment appealed from in this case. Where this is so, it is not usual, and would serve no good purpose for this court to enter into any discussion as to the correctness of the conclusions reached by the court below. Indeed, we think that the elaborate and thorough discussion of the circumstances of this case by the Circuit Judge in his decree is abundantly sufficient to vindicate the correctness of his conclusions, and it would be very difficult for us to add anything to what he has so well said. We may, however, mention some few points which have especially attracted our attention. The entire omission by Massey of any mention of the very large indebtedness to his father-in-law, in his statement of his condition made to Wagener & Co. on the 16th of July, 1891, as a basis of credit, and the similar omission in a similar statement made to Dun & Co. on the 28th of August, 1891, show either one of two things: either that there was really no such indebtedness or that Massey deliberately intended to deceive and mislead his creditors. His lame attempt to account for such omission, in his testimony in this case, by saying that he never expected to be called upon for payment of such alleged indebtedness, because he thought his wife’s share of her father’s estate would cover it, not only ignored the rights of his wife, over which he had no legal control, but is entirely inconsistent with his subsequent conduct. For when financial trouble was impending, he was quite ready to acknowledge this indebtedness, and to revive it after it had been extinguished, with a view to save his property from the claims of his just creditors.

While this may not have affected Brown, it is impossible from his subsequent conduct to avoid the inference that he was ready to co-operate with his son-in-law in his efforts to screen his property from his creditors. For while the mere fact that he indulged his son-in-law for more than four years on this large debt, which was increasing all the time, and on the contrary was paying him large accounts from year to year, without ever asking that any portion thereof should be credited on his large debt, might not be sufficient, standing by itself, to implicate Brown; yet bis subsequent efforts to assist his son-in-law in his effort to cover up a large part, if not the whole, of his property from his other creditors, are sufficient to excite a very strong suspicion, if not an absolute inference, that his real purpose was not to secure the payment of his debt, but to assist his son-in-law in screening his property from his creditors. True, Brown does say in his testimony that he knew very little about the extent of Massey’s indebtedness; but in another part of his testimony he says that his reason for asking for the deed of 17th November, 1891, was that Massey was getting too much in debt — showing that he then thought that Massey was either insolvent or approaching that condition.

Then, too, the fact that the transfer of the store and stock of goods, if not concealed, was certainly not disclosed, not even to Massey’s own brother, who was doing business within about one hundred feet of the store, nor to any of the customers trading at the store, until the officer levied ou the goods on the 25th of November, 1891, when it became necessary to make the disclosure; this taken in connection with the fact testified to by McCants, the collecting agent of the plaintiff, and not denied by Massey in his testimony, that on the very day before the execution of the deed to Brown, 17th November, 1891, Massey promised McCants not to sell out or make an assignment, goes very far to justify the conclusion reached by the Circuit Judge. But again, the fact of the reconveyance by Brown to Massey goes far to show that the parties felt that the deed.of 17th November, 1891, could not stand the test of investigation. For if that deed was bona fide and free from any taint of fraud, it is difficult to conceive of any good reason why the reconveyance should have been made. But we need not pursue the inquiry, as we are quite satisfied with the reasoning of the Circuit Judge on this point.

2 If, then, the deed of 17th November, 1891, was void for fraud, it is the same as if no such deed had ever been made; and the property which it purported to convey still remained the property of Massey. If so, then, as the deed of assignment to Wallace did not cover all of Massey’s property, it would be void for that, if there were no other, reason. It certainly did not cover that portion of the goods which had been levied on by Younger under bis trial justice’s executions and taken out of the store and placed in the possession of Brown before the deed of assignment was executed, and were not covered by it. The fact, stated in the “Case,” that during the argument on Circuit, Brown, through his counsel, offered to return the property levied upon by Younger, and, also, to have his wife’s dower released on the deed of reconveyance, and that until this was done, he consented that he should be excluded from any dividend on his claims, cannot affect the questions which the court was called upon to decide. Those questions could only be considered in the light of the circumstances existing at the time the deed of assignment was executed or, at least, at the time this action was commenced. If it was void, then no subsequent action of the parties can be considered in determining its validity. While, therefore, this offer of Brown may have its effect on the present moral aspects of the transaction, it can have no effect upon the legal rights of the parties.

We, therefore, without going further'into the consideration of the facts of the case, are content to rest our conclusion upon the reasoning of the Circuit Judge as to the invalidity of the deed of assignment, as well as to the deed of the 17th November, 1891.

The judgment of this court is, that the judgment of the Circuit Court be affirmed.