Bates v. Coe

10 Conn. 280

• Court: Supreme Court of Connecticut
• Decided: July 15, 1834
• Status: Published

Opinion

Daggett, Ch. J.

The questions presented and discussed will be considered in the order in which they appear on the motion.

1. It is said, that the court erred in refusing to compel the plaintiffs to receive the special pleas. Whether these pleas ought to have been received, is a question, which I deem it unnecessary to decide. It is attended with some difficulty; and is wholly unconnected with the merits of the cause; for it is apparent, that every fact was in evidence under the general issue, and was considered by the court and jury. As no injury has arisen, or could arise, to the defendant, by the course pursued by the court in relation to these pleas, I am of opinion, that it would be a departure from principle to allow this motion to prevail on that ground.

2. Another ground suggested for a new trial, is, the rejection, by the court, of William S. Camp and others, offered by the defendant, as witnesses, to prove the mortgage deed and assignment fraudulent and void. The plaintiffs claimed under the mortgage deed made prior to the assignment. The witnesses offered were creditors of the grantor in both deeds, and had proved their debts under the assignment.

Here, it is said, first, that their interest is balanced. This answer supposes that they are interested. If so, the court must be satisfied that the interest is balanced. This is attempted, by alleging, that they were offered to show both instruments fraudulent. But to support this answer, the facts which they were to disclose, should have been distinctly stated ; otherwise, it could never appear, that their interest would not preponderate. In Barnwell & al. v. Mitchell, 3 Conn. Rep. 101. this principle is illustrated. The witness was liable to the plaintiff, or to the defendant, to pay a certain sum. He is admitted as a witness, on the ground that it is indifferent to him, to whom he is to pay it. But how can it be ascertained, without further facts, that the interest of these persons was balanced 1

Again, it is said, that if they were interested in the question, still that would not exclude them, unless they were interested in the event of the suit. This is true. It is also said, that this verdict never can be given in evidence in any future action in which these creditors might be parties. But that is not the only criterion, by which to decide the question of interest in the event of the suit. “ If the effect of the witness’s testimony will be to prevent the diminution of a fund created for his benefit, he is incompetent; and it is not necessary that the interest of the witness in the fund should appear to be inevitable.” Stebbins & al. v. Sackett, 5 Conn. Rep. 258. Phœnix v. The Assignees of Ingraham, 5 Johns. Rep. 427. Austin v. Bradley, 2 Day, 466. Craig, admx. v. Cundell, 1 Campb. Rep. 381. 1 Phill. Ev. 52.

Let this principle be applied to the present question. Here, the plaintiffs claim, by the mortgage, to take the property in question from the attaching creditors. This mortgage is the prior lien. Then comes the assignment, by which all the property is transferred to the creditors. A part of these creditors have attached this property. The persons offered as witnesses have proved their debts under the assignment. They are now called upon to testify to defeat the mortgage, and thus augment the funds in the hands of the assignees, to which they look for payment of their debts. If that mortgage is defeated, will not their condition be bettered ? They, therefore, are interested in the event of this suit. This is the result to which I have come.

3. As to the validity of the mortgage, under which the plaintiffs claim, it is said, first, that it is to be taken as part and parcel of the assignment; because having been executed about the same time, and its object being the same, it is to have the same effect. To this position are cited several authorities. 1 Sw. Dig. 227. Isham v. Morgan & al. 9 Conn. Rep. 374. Draper & al. v. Jennings & al. 2 Vern. 518. It is indeed true, that where two instruments are executed at the same time, between the same parties, relative to the same subject matter, and to effectuate one object, they are to be taken together ; but where two deeds are given to different persons, for different considerations, not executed at the same time, nor relative tc the same subject matter, nor to effectuate the same. object, nor in pursuance of a contract made by the grantees jointly, they will be considered and take effect as separate instruments. To this extent, and no further, the cases cited go. There is nothing common between these instruments, except the property conveyed. The mortgage was first in point of time; then the deed of assignment. They are not between the same parties. Daniel Bates, Parsons Coe, and Benjamin Baldwin are the mortgagees ; and Daniel Bates and Parsons Coe are the assignees. The mortgage is conditional, — to secure debts and against liabilities : the assignment is absolute, — to pay creditors. It is beyond comprehension that these instruments, in their nature and object thus diverse, should be deemed part of the same transaction.

Secondly, it was insisted, by the counsel for the defendant, that this mortgage deed contains, on the face of it, a trust. I am satisfied with the notice taken of this point, by the judge at the circuit. His charge is : “ The deed, upon the face of it, contains no such trust as has been claimed ; for however the case might be, alter the expiration of the law-day, the several grantees were not constituted trustees, the one for the other, at the making of the deed.”

But thirdly, the great point under this head, and indeed in the case, is, whether this mortgage deed is fraudulent and void, under and by virtue of the statute of 1828. c. 3.

It is believed, that this is the first time, that this question has come under the consideration of this court for decision. It is now distinctly insisted, that this mortgage, being made with a view to insolvency, is void. On this part of the case, the judge instructed the jury, that it was not, on that account, and/or that reason, void ; leaving, very properly, the question whether it was fraudulent, in fact, to the jury, upon the evidence. I now concur with that judge in his construction of the act of 1828.

The first section of the act (chap. 3. p. 182.) is in these words : “ That all conveyances and assignments of any lands, tenements, goods, chattels, or choses in action, hereafter made, directly or indirectly, by any person in failing circumstances, with a view to his insolvency, to any person or persons, in trust for his creditors, or any of them, shall, as against the creditors of the person making such conveyance or assignment, -be deemed and adjudged fraudulent and utterly void, unless the same be made in writing, for the benefit of all said creditors, in proportion to their respective claims,” <fec.

In the first place, the statute does not embrace the instrument. It does not, therefore, prohibit a mortgage, “ by a person in failing circumstances, with a view to his insolvency.” The prohibition is of conveyances and assignments. But surely, a mortgage is not an assignment: for that passes the whole interest in the thing assigned; whereas a mortgage creates a lien only in favour of the mortgagee. Nor is it a conveyance, within the meaning of that term, as it has been understood, by jurists in Nero- York, Massachusetts, Maine and Connecticut, for the last thirty years ; and by English judges, for the last half century. For the English doctrine, see Martin v. Mowlin, 2 Burr. 978, 9. The King v. St. Michaels, Doug. 602. The King v. Edington, 1 East, 288. In New- York: Hitchcock &. ux. v. Harrington, 6 Johns. Rep. 290. Runyan v. Mersereau, 11 Johns. Rep. 534. Green v. Hart, 1 Johns. Rep. 590. Johnson v. Hart, 3 Johns. Ca. 329. Jackson v. Willard, 4 Johns. Rep. 42, 3. Sedgwick v. Hollenback, 7 Johns. Rep. 376. 380. Collins v. Torry, 278. Coles v. Coles, 15 Johns. Rep. 319. Titus v. Neilson &. al. 5 Johns. Ch. Rep. 452. 4 Kent's Com. 160. In Massachusetts : Groton v. Boxborough, 6 Mass. Rep. 50. Goodwin v. Richardson, 11 Mass. Rep. 469. Bolton v. Ballard, 13 Mass. Rep. 227. Snow v. Stevens, 15 Mass. Rep. 278. In Maine : Blaney v. Bearce, 2 Greenl. 132. In Connecticut : Gunn v. Scovil, 4 Day 234. Reeve's Dom. Rel. 560. Fish & al. v. Fish, 1 Conn. Rep. 559. Barkhamsted v. Farmington, 2 Conn. Rep. 600. Leonard v. Bosworth, 4 Conn. Rep. 421. Huntington v. Smith, 4 Conn. Rep. 235. Roath & al. v. Smith & al. 5 Conn. Rep. 133. Swift, exr. v. Edson & al. 5 Conn. Rep. 531. See also the very learned opinion of the late Ch. J. Hosmer, in Clark v. Beach, 6 Conn. Rep. 142. The court, it is true, did not concur in opinion with him on the main point; but his reasoning and authorities were recognized, by the court, as will be seen at page 150. of the same case.

The result of all these cases, is, that a mortgage is not a conveyance of the land, but a charge or lien upon it; and that the mortgagee’s interest is a chattel; and that he is vested with the right to maintain ejectment to obtain and appropriate the pledge. Nor is the mortgage in question, in any sense, a conveyance “ to his creditors, in trust for them, or any of them.” The transfer, to come within the statute, must be in trust for creditors ; but we have seen above, that this mortgage is no trust. A trust is where an estate is held for the use of another ; but this, surely, is not true of a mortgage. The mortgagee may become, by the happening of certain events, a trustee for the mortgagor ; but, in no sense, is this true of him upon the creation of the mortgage.

In the next place, this statute does not profess to break in upon the long established doctrine of the common law, that a debtor may prefer one creditor to another ; nor upon our law authorizing the attachment of the real and personal property of the debtor. It is insisted, by the counsel for the defendant, that the great object of the enactment of 1828, was, that the estate of an insolvent debtor should be equally distributed among his creditors. If such was their object, it is very strange that no suggestion of the kind, no provision to effectuate such intention, should appear. Nor can it be believed, that the legislature intended any thing in nature of a bankrupt law. Such a law cannot co-exist with the subsisting provisions respecting attachments.

The single object, so far as I can discern, was, to provide a responsible trustee to receive property, when assigned for the benefit of creditors, and to cause it to be distributed proportionally among those creditors ; but not at all to interfere with the long established principle of a debtor giving a preference voluntarily, or with a law of Connecticut of ancient standing authorizing a preference by attachment.

If, then, this mortgage is not a conveyance or assignment in trust, within the purview of the act, and if the common law right still exists of preferring creditors, it cannot be said, that in point of law this deed was a fraud upon the statute of 1828; and the plaintiffs were entitled to recover, unless the evidence was such as to satisfy the jury of fraud in fact. This question was fairly submitted to the jury.

A new trial, therefore, must be refused.

Bissell, J. was of the same opinion.

Church, J.

It has not been suggested, that the witnesses -whose testimony was rejected, on the trial, were otherwise interested in the event of the suit, than that they were interested in the fund created by the assignment of Timothy W, Baldwin for the benefit of his creditors, of whom these witnesses were some whose debts had been allowed.

It is conceded, that if this fund would not be increased, by the recovery of the defendant, nor diminished, if the plaintiffs recover, these witnesses are not interested in the event, however they may feel themselves interested in the question on trial.

The assignees of Timothy W. Baldwin, who.are the only representatives of the fund created for the benefit of his creditors, are neither parties nor privies to this action ; but the suit is in favour of the mortgagees of Baldwin against the sheriff, who acts for the attaching creditors of Baldwin, to recover certain articles attached ; and nothing else is affected by this suit. The truth is, that both plaintiffs and defendant claim this property adversely to the assignees of Baldwin ; adversely to all the other creditors of Baldwin, among whom are the witnesses whose testimony was rejected ; and it is not perceived, how the result of this controversy can operate upon their interests at all. The assignees of Baldwin can, notwithstanding any judgment which may be rendered in this suit, maintain an action either against the plaintiffs, (the mortgagees,) or against this defendant, or the attaching creditors, unembarrassed by this judgment.

If this action had been brought, by the assignees of Baldwin, against the mortgagees, these witnesses could not have been admitted to defeat the mortgage ; because the avails of the judgment recovered by the assignees, would increase the fund in which they had an interest. The consequence would have been the same, in a suit between the assignees and the attaching creditors, and the witnesses had been called to support the assignment or defeat the attachment. So also, if the suit had been between the mortgagees and the assignees, these witnesses could not be received to destroy the mortgage, and thereby preserve the fund from diminution. But here the case is widely different. If the plaintiffs, the mortgagees, shall recover, in the present case, the amount recovered goes into their own pockets, and not to the fund ; and if the defendant shall recover, the property attached is sold, and the avails paid over to the attaching creditors, and the fund receives nothing. How then, can these witnesses be interested in this controversy ?

It was suggested in argument, that if, by reason of the testimony of these witnesses, the defendant should recover, the attaching creditors would, in consequence, receive payment of their debts, partially or entirely, and would thereby be prevented from coming in to participate in the fund, and thus leave a more ample dividend for these witnesses. It should be remembered, that the mortgagees are creditors also ; apd that whatever of their debts is left unpaid, by the recovery of the defendants, is a charge upon the fund ; and they, instead of the attaching creditors, will come in for a dividend; so that the fund remains the same. It may be remarked, however, in reference, as well to the aforesaid suggestion, as to the answer to it, that it no where appears, that either the attaching creditors, or the mortgagees, had ever exhibited their respective claims to commissioners under said assignment, or that either of them could come in for a dividend. I have, therefore, not been able to discover any legal interest in the witnesses excluded, which should have prevented them from giving evidence at the trial; and for this reason alone, I think a new trial should be granted ; although upon all other questions, determined by the court, I entirely concur.

Williams, J. was of the same opinion. Peters, J. gave no opinion, being absent.

New trial not to be granted.