Beach v. Boynton

26 Vt. 725

• Court: Supreme Court of Vermont
• Decided: December 15, 1853
• Status: Published

Opinion

The opinion of the court was delivered by

Redfield, Ch. J.

The only question made in the present case is, whether the plaintiff is so related to the parties to the alleged fraudulent conveyance, as to be entitled to sue for the penalty. The plaintiff was at the time of the conveyance a surety merely, having never paid any portion of the debt, which he subsequently did pay, and had an allowance against the estate of the grantor in the conveyance. The question is, whether the plaintiff can be considered the party aggrieved, within the meaning of the statute ?

It is certain that, for many purposes, the plaintiff was not a creditor, at the date of the conveyance. It is not claimed, nor is it necessary perhaps to show, that he was a creditor, in every sense, and to every purpose. He could not sue the principal, but in equity he might take proceedings, after-the debt becomes due, to compel the creditor to assign the debt to him, on payment of the amount due, and thus enable himself to take the property of the debtor.

And it is not seriously urged, that he could not avoid the conveyance made by the debtor, after he became surety, and before he assumed the debt. It would be strange if this were not so. For it is admitted, as it must be, that he' was a creditor after assuming the debt. But it is urged, that he is to be treated as a creditor subsequent to tbe conveyance, and only from tbe date of tbe actual assumption of the debt. Now it is very obvious that his rights, and the duty owing to him, are altogether of the nature of a prior creditor.

1. The prior creditor is allowed to avoid the conveyances because it deprives him of property, to which he does look, or has the right to look, for his indemnity. 2. The prior creditor may avoid a subsequent fraudulent conveyance, because it is supposed to deprive him of a means of indemnity, which may be presumed to have formed the consideration of his undertaking. 3. The subsequent creditor cannot avoid the conveyance, chiefly because he is not deprived, either of the consideration of his undertaking, or of his indemnity.

Now, in both these respects, the surety is more within the requisites of a prior creditor, than even the primary creditor was, who may be supposed, as is commonly the fact, to look more to the surety for his indemnity, than to the property of the primary debtor. And under these circumstances, if these debts were the only ones owing, (and they may fairly be viewed in that light, for the present purpose,) the surety is, in equity, and within the evil intended to be remedied, by the statute, far more obviously than the principal creditor, the party aggrieved. He is, if responsible, the only party aggrieved in the general and popular sense. And the grantor, in a case like that supposed, must be understood to have intended the necessary result of his conduct, i. e., to defraud the plaintiff, by depriving him of all redress or indemnity for his undertaking.

But I should consider, that the plaintiff, to prevail, must not only show himself within the equity of the statute, and the evil intended to be remedied, but also within the fair imp ort of the words of the statute, construed with reference to their subject-matter.

This statute must undoubtedly be regarded as a penal statute, so far as the present action is concerned, for any recovery had will be strictly a penalty. But as the statute is expressed, it seems to me impossible to say, that one who may avoid the conveyance under the twenty-third section, is not the party aggrieved under the twenty-fourth section. For the twenty-fourth section refers in express terms to the twenty-third section, for the definition of the “ party aggrieved.” The party aggrieved must be the party, and all the parties, whose right, debt or duty is attempted to be avoided.

And when it is said the plaintiff may avoid this conveyance possibly, but that he comes in to do so, under the common law, and not under the statute, I must say, that I do not feel any sound basis for such an argument to rest upon. If a statute exists upon the subject, it must be conceded that it was intended to supersede the common law, and to govern future cases. That being so, a case not within the statute might fairly be presumed to have been purposely omitted, and if so, virtually excluded from the benefit of the statute, and by consequence, of the common law, in regard to avoiding the conveyance, even by levying upon the property. And especially should this be so regarded, in a case coming clearly within the range of the statute. Now the statute may fairly bé considered as intending to embrace all rights, coming under the general denomination of contracts. The word “debt” is undoubtedly the controlling word in defining the “ party aggrieved.” But very obviously the words “ right and duty ” are intended to extend the definition beyond the strict import of the word “ debt,” else they would scarcely have been used. That statute was drawn up, and has passed through the hands of men who may fairly be presumed not to multiply words for mere euphony; some purpose was doubtless intended to be served by them. But “ right and duty ” are no doubt limited to such rights and duties as are of the nature of debts, such as exist ex contractu. But even with that limitation, (and no other occurs to me, as coming fairly within the probable purport of the statute,) they are far more extensive in their signification than “ debt ” in its strict sense.

And although no right existed on the part of the plaintiff, or any duty on the part of Boynton, vddch could form the basis of an action at the time of the conveyance, yet that is not indispensable. If it -were, the right or duty must not only exist, but be perfect, and due presently. It may doubtless be, not only due, in futuro, which no one denies, but it may be contingent, to some extent, like a covenant against incumbrances, or for quiet enjoyment, which could scarcely be said to import no duty, on the one part, or right on the other, and are clearly of the nature of a debt, so far as to be matters of contract, and are still as really contingent, as that of the right of a surety to indemnification. And if the surety had taken a bond of indemnity, no one could question his claim would be strictly analogous to that of the covenants of warranty in a deed. And still, I think, it would scarcely be claimed, that, in that case, the surety might be regarded as the party aggrieved by the conveyance, and not in a case like the present. Such a difference, in result, could scarcely be predicated upon a difference as to the ' form of the undertaking. There is as really a right to be indemnified on the part of the surety, and a duty on the part of the principal to indemnify, as if it were in the form of a bond. And it has been held, that if the surety has been really damnified, before he brings suit, and subsequently pays a part of the debt, or the whole, while the suit is pending, such payment, subsequent to the bringing of the suit, may be recovered in the action. The truth is, that in popular language, and within the evil intended to be remedied by this statute, the surety has a right and the principal owes him a duty, which is of the nature of a debt, to save him harmless. And if necessary, for any purpose, to show .the date of his claim, he may declare upon this implied duty, or promise, to save harmless, which is certainly recognized in the elementary writers upon this subject, and in most of the cases which speak upon this part of the subject. Ch. J. Mellen, fully indorses this view in Howe v. Ward, 4 Greenl. 195; and that case seems fully in point to govern the present in all its facts. And the case of Carlisle v. Rich, 8 N. H. 44, and the case of Thompson v. Thompson, 19 Maine 244, being bonds for official faithfulness, and the conveyance before any fixed liability of the sureties, seem in principle to control the present, and the courts, in both these cases, very fully recognize a surety as the creditor of his principal, from the date of his suretyship. So also does the case of Sargent v. Salmond, 27 Maine 539. And so does Jackson v. Seward, 5 Cow. 67; and the reversal of the case does not touch this question. The assertion of the court in Brooks v. Clayes et al., 10 Vt. 37, that a party might set aside the contract, in many cases, where he could not recover the penalty, is no doubt true in many respects. But that, as our statute is expressed, both subjects being combined, by express reference, how it can be true, that in a case of clear proof, one may be so situated, as to be entitled to avoid the conveyance, and not sue for the penalty, I do not comprehend.

The twenty-third section of our statute says that “ only the party, whose right, debt, or duty is attempted to be avoided, may avoid the conveyance,” and the twenty-fourth section, that “ all the parties to such fraudulent and deceitful conveyance, &c. shall forfeit and pay a penalty,” &c., which'forfeiture shall be equally divided between the party aggrieved, i. e., whose right, debt, or duty is attempted to be avoided; referring in totidem verbis, to the definition of the person who may avoidsfthe contract, thus mating them identical, so far as language can do it. So that to say, in this case, that the plaintiff is entitled, under the statute, to avoid the conveyance, and not to sue for the penalty, is a mere arbitrary evasion of the manifest import of the statute.

Bankrupt cases prove nothing either way. Sureties were formerly not allowed to prove their claim as creditors, either in this country or in England. But in the late bankrupt’law of the United States, sureties were allowed to prove, and were, of course, barred by the bankrupt’s discharge; as wa sheld in the case carried up to the United States Supreme Court, from the decision of this . court, Wells v. Mace, 17 Vt. 503, which was reversed upon that ground alone. And the late English bankrupt laws are the same. And so against insolvent estates, sureties may now present their claims. But these remote analogies prove but little either way. There are, no doubt, some difficulties in the way of treating the plaintiff, as the party aggrieved, from the date of his suretyship, but far more in denying it. If we deny it, we must, to be consistent also deny his right to avoid the conveyance. In allowing it, we .meet the obvious intent of the statute, in both respects, and certainly do no violence to its words ; while, in the other case, we defeat both the sense and the words, and the obvious design of the statute.

The first impression of the question in this case is very striking —that to deny a surety the right to come in as a creditor from the date of his suretyship, is a manifest perversion of his true position ; and the more I have examined the subject, the more I have felt convinced, that the impediments in the way of his being so treated, are rather technical than substantial; that they are too refined for common apprehension, or general acceptance. Such.a construction of the statute would be, in my judgment, but to invite additional legislation, in order to reach what is now very satisfactorily expressed in the statute.

It can scarcely be claimed, I think, fairly, that the difference in terms between our statute and the statutes in Maine and New Hampshire, justify any difference of construction upon the point now under consideration. Our statute upon this very point is more comprehensive than in some of the states, where these decisions, treating a surety, as the party entitled to redress, as a creditor from the date of Iris suretyship, have been made, and no more perhaps than others, but they axe all very similar, more so than the decisions in regard to them, very probably.

When Ch. J. Williams says, in Brooks v. Clayes et al., 10 Vt. 54, “I apprehend that the word right, is synonymous with debt or dutyhe is arguing against its extension to mean, a mere right to attach his debtor’s property. And in that sense we fully concur. It most undoubtedly is confined to rights, which are of the nature of debts; but was, very probably, inserted to reach cases analogous to the present, where an inchoate right or duty existed, but which bad not become ripened 'or perfected into a debt. And a statute without some such provision, all must admit, would be sadly defective. The fact that it was inserted shows the sagacity of the framers. And still the statute is so drawn as to exclude rights in the nature of torts, as was held in regard to the Connecticut statute, in the cases cited by the defendant’s counsel. But within the range of matters of contract, I do not perceive but that our statute is as extensive as that of the 13th Elizabeth, or most of the American statutes upon the subject. It seems to have been the purpose of the Connecticut statute, and of that of this state, following in the same path, (and far more so than those of many of the states where the doctrine has been held which we now hold, as in New Hampshire and Maine, where, I think, the controlling word is “ creditor,”) to exclude rights of the nature of torts, or not to include them. And if we construe § 24 without reference to § 23, our statute giving the penalty to any party aggrieved, may be made as extensive as the New York statute. The party aggrieved, with no limitation, is as extensive as creditor, or any other person, but most undoubtedly, our statute intends any person aggrieved, by having his right, debt or duty attempted to be defeated. In the original draft of our statute upon this subject and until the revision of 1839, the right to avoid and to recover the penalty were both given, in one section and in terms, to the same persons, as at present. As we are not able to see any reason wby a surety should not be treated as a creditor, or as one liable to be aggrieved, by his principal conveying away his property, to defeat the “ rights ” of the surety, and evade the “ duty ” of the principal, in the implied obligation to save the surety harmless, the judgment in this case is reversed, and the case remanded for trial.