Burbank v. Hammond

4 F. Cas. 688, 3 Sumn. 429

• Court: U.S. Circuit Court for the District of Massachusetts
• Decided: October 15, 1838
• Status: Published

Opinion

STORY, Circuit Justice.

The questions, arising in the case, are: (1.) Whether Stephen, at the time of the conveyance to him, had any notice of the mortgage to Dresser. If he had, it is perfectly clear, that he must be postponed to the claim of the plaintiff, as assignee of that mortgage. Notwithstanding the denials of the answer of both of the defendants, I am strongly disposed to believe, that Stephen had full notice. The very object of the conveyance to him, as avowed by Josiah, was to defeat the mortgage of Dresser, upon grounds, which must now be taken to be mere pretences. John M. Warren, the brother-in-law of Josiah, admits, that he knew of this mortgage, and that he told Josiah, that if he conveyed the estate, it ought to be to some one, who knew nothing about Dresser’s claim upon it. And Warren asserts, that he was present, when the transaction took place between Stephen and Josiah. It is manifest, that it is a family concern; and the very nature of the trusts and circumstances of the case afford very strong presumptions, that all the parties present knew, or had reason to know, that the object was to defraud or to delay creditors. The trusts were secret and unavowed. The deed was absolute, with warranty. It was intended to hold out false lights to the public. The agreement respecting the Rutland estate has nothing to do with the case — so as to help the matter. Looking at the terms of the agreement, it would seem to be intended as a mere pretence and cover, and not as a bona fide transaction.

(2.) Whether the conveyance can be treated as a conveyance bona fide to a purchaser for a valuable consideration. There is no-pretence to call it a purchase. It was a mere conveyance -upon trust for the grantor. It is attempted to set up parol trusts beyond those stated in the written agreement of the 18th of August. But that is contrary to the statute of frauds of Massachusetts respecting trusts (act of 1783, c. 3, § 7), which on this point is substantially like the English statute of frauds of 29 Car. II. c. 3, §§ 7, 9. We must take the trusts, therefore, to be those, and those only, which are in the written agreement. What are they?' Plainly, of the loose and most indefinite-nature. The trusts are to sell the estates, and pay to the order of Josiah all the debts incurred for building the houses, and to pay such just demands as shall be presented. Not one word is said about an? debts due to Stephen being specially paid; and no debts were to be paid, except by order of Josiah. It is plain, therefore, that the whole trusts were for the benefit of Josiah, controllable by him and recoverable by him. They were secret, undefined trusts, the effect of which was to lock up the property against all his creditors, and to enable him to defeat the mortgage of Dresser in particm lar. No creditors, as such, were parties to the deed; none could claim under it. It is clear, upon principle as well as upon authority, that trusts of this nature are countermandable at the mere will of the grantor. The cases of Wallwyn v. Coutts, 3 Mer. 707, 3 Sim. 14; Garrard v. Lord Lauderdale, 3 Sim. 6; and Acton v. Woodgate, 2 Mylne & K. 492, are directly in point. The caso, then, must be taken exactly as if it were a subsequent conveyance of Josiah H. Hammond upon trusts for himself alone, and to be executed as he should direct. Under such circumstances, it is clear, that it cannot prevail against prior purchasers from him, or prior creditors of him. As. to the expenditures of Stephen Hammond; they were all made after Dresser’s mortgage was registered, of which by law Stephen must be presumed to have constructive notice, — at least from the time of the registration. My opinion is, that the deed to Stephen is fraudulent and void, and was originally designed to defraud creditors and prior purchasers. The plaintiff is at once a creditor and a purchaser in the sense of the rule. The conveyance ought to be declared to be null and void, as a fraud upon creditors and purchasers; and Stephen ought to be decreed to execute, in due form of law, a release of his title under the said conveyance to the plaintiff; and he, and his heirs and assigns, ought to be perpetually enjoined not to set up or assert against the plaintiff, or his heirs and assigns, any title thereto under the said conveyance.