Johnston's Heirs v. Harvy

2 Pen. & W. 82

• Court: Supreme Court of Pennsylvania
• Decided: September 15, 1830
• Status: Published

Opinion

'The opinion of'the Court was delivered by

Gibsok, C. ff.

Doubtless the want of a.sufficient interval between the transcript and rthe testatum, was an irregularity; and perhaps, the question is, whether the acceptance of.the residue of the purchase money by the debtor, as whose estate the land was sold, operates as a confirmation of the sale against one who claims ■under him, and through a fraudulent conveyance.

A transaction more palpably fraudulent than this conveyance, can hardly be imagined. A father on the verge of insolvency, •conveys to his sons, in consideration of an agreement to pay off certain judgments, which he seems to think may be incumbrances, as well as the.residue of the purchase money, to the-state; and to .maintain him and his wife while they live, and the rest of the family till they are able to maintain themselves. Is not that, in principle, the case of McAllister v. Marshall, 6 Binney, 388, in which a tacit agreement to vest a part of the property in trustees, for the benefit of the family, avoided the conveyance as to creditors who had not assented to the arrangement. The stat. 13 Eliz. which professes to avoid conveyances, “with intent to delay, hinder, or defraud creditors,” would be of little use, if a debtor might put his estate beyond the reach of his creditors, and still get a living from it. The ordinary consideration for an estate, may be subjected to execution, specifically, or wrested from the debtor’s grasp by execution of his body; but the reservation of a living is too inseparable from his person, and too indefinite to be made liable to satisfaction in either of these ways, or to pass by an assignment under the insolvent laws. In Russel v. Hammond, 1 Atk. 13, where the debtor took back an annuity to the value of the property comprised in the settlement, the creditors were relieved, because that was said to be equivalent to retention of possession. That was a settlement of personal estate; but in the construction of the statute, no other difference, that I can perceive, has been made in respect of the species, than to require that a conveyance of chattels be accompanied with actual possession. In Adlum v. Yard, 1 Rawle, 163, a conveyance in trust for payment of debts, was unanimously held to be in delay of creditors hecause the trustees were restrained from selling the trust estate for three years. And on the authority of that case, I thought myself justified in ruling, at the circuit, that a conveyance to sons, who were to pay nothing but the interest of the purchase money during their father’s life, could not be sustained.

Is the defendant, then, to be affected by notice of the fraud? He is a purchaser from the sons, and as the fraudulent conveyance is a link in his title, he is to be affected by whatever appears from the terms of it. But it is not enough that it would be fraudulent against creditors, without bringing home to him notice that there were creditors to be defrauded. In the absence of that fact, the conveyance to the sons would be good, and his purchase from them unexceptionable. There is, however, enough on the face of the deed to have induced a violent presumption of the existence of creditors who might not be paid. The trust was to pay judgments which should be entered up at the date of the conveyance; and by the grantor’s implied admission, there might or might not, according to circumstances, be creditors who had not obtained judgments, and who would be defrauded unless they could have recourse to the land. The grant was in consideration of payment by the sons of “all judgments that are now entered against a certain tract«f land, &c, an the prothonotary’s docket at Greensburg, or on the prothonotary’s docket in Pittsburg, or that are now At this time entered on both dockets.” Why now at this time, unless others were expected? The object was, manifestly, to put the estate into the hands of the sons, with no other burden than what the law had already imposed on it. If then it appeared even probable,that there were debts unprovided for, was not that enough to put a cautious and a conscientious man on inquiry? To purchase with even a suspicion of the fact, was unconscionable. Doubt should have been resolved into certainty; and for want of this, the defendant having had the means of information in his power, must stand by the title of those from whom he purchased.

Putting his supposed equity out of the way, then, what is there to hinder the debtor from confirming the sale? “A fraudulent conveyance,” says Chief Justice Kent, 4 Johns. 598, “is no conveyance against the interests intended to be defrauded.” As owner of the land so far as to subject it to satisfaction of his debts, the debtor is certainly competent to dispense with a fieri facias or an inquisition before-hand: and why may he not produce the same effect by confirmation subsequently? The conveyance is doubtless good between the parties to it, and the purposes of satisfaction being answered, the residue belongs to the grantee: hence the difficulty is in conceiving how the debtor can confirm the sale by receiving what does not belong'to him. The solution is that as regards the creditor, the party on the record is the owner of every thing, and that the confirmation operates not on the grantee’s right to the residue, but on the debtor’s title to the land; and it may consequently consist of any act which sufficiently evinces his assent to the proceedings. The creditor has nothing to do with the grantee who is without day; and although the Court would not wantonly see his interest sacrificed by collusion, its interference in his behalf would be more of grace than of right. He certainly would not be suffered to interfere before the acknowledgment of the sheriff’s deed on the ground of mere informality. An objection strictly technical may be waived by the party on the record, who is the only person that the creditor is bound to know. If the estate is divested as to him, it is also divested as to one who stands in the place of his fraudulent grantee, who unlike the alienee of land bound by a judgment, is not entitled to a day in court on a scire facias. A fraudulent conveyance raises no equity to cast on the creditor, the burden of seeing to the application of the surplus purchase money, between the grantor and the grantee. Had the defendant here preferred his claim in season, he would have had leave to take it out of court, and that would clearly have been a confirmation: having omitted to do so, his remedy is against the original grantor who received it. and who was competent, by an expression of assent, to ratify all that had been done. It seems, therefore, the verdict passed rightly for the plaintiff.

Huston, J. and'jEoss, J. dissented.

Judgment affirmed.