Syester v. Brewer

27 Md. 288, 1867 Md. LEXIS 50

Opinion

Cbain, J.,

delivered the opinion of this Court.

The bill in this cause • was filed on the 22d day of November, 1852, by the trustee, for the benefit of the creditors of Benjamin Cushwa, an insolvent debtor, to set aside a deed executed by Benjamin Cushwa to his brother John, on the T4thday’of November, 1826, as void under the insolvent laws of this State.

On the final hearing-of the cause, the Circuit Judge for Washington County, dismissed the bill and filed an opinion, stating at length the reasons for his-conclusions. ■ By this appeal we are required to review his decision. We have carefully examined all the facts found in the record, and read'with attention the opinion'delivered by the learned Judge, and-are of opinion that the conclusions stated by him in general are correct. As the deed of the 14th of November, 1826, was executed fora valuable consideration, it could not be assailed as fraudulent and void at common law or under the Statute of Elizabeth, as it is well established that by the common law a debtor may secure one creditor to the exclusion of others by a bona fide transfer of his property. But the charge in the bill is, that the deed was void under our insolvent system, as it was made with a view and under an expectation of talcing the benefit of the insolvent laws and also with intent thereby to give his brother John an undue and improper preference. To maintain this proposition, the appellant’s counsel has insisted with great earnestness and ability, that the verdict upon the allegations against Benjamin Cushwa, tried in the county Court for Washington County, was an adjudication in rem., and Avas conclusive upon the rights of John CushAva, the grantee in the deed ; but Ave are of opinion that no such operation and effect can legally be given to that verdict. In this country there are adjudications in rem. in admiralty cases and under seizures for a violation of the revenue laws, recognized as valid and conclusive, but no such power was conferred on the county Court by the insolvent system of this State. The character of a judgment in rem. is very aptly stated in 2 Smith’s Leading Cases, 585, Avhere the author says, “ a judgment in rem. I conceive to be an adjudication pronounced upon the status of some particular subject matter, by a tribunal having competent authority for that purpose, such an adjudication being a most solemn declaration from the proper and accredited quarter, that the status of the thing adjudicated upon is as declared, concludes all persons from saying that the status of the thing adjudicated upon Avas not such as declared by the adjudication.” No such pretension or claim can be made for the tribunal before whom these allegations were tried. The status of the property Avas not put in issue or adjudicated by this proceeding. On the contrary, the only issue Avas the truth or falsehood of the allegations, and his conviction of the impropriety and illegality of the act was a judgment in personam Avhich precluded him forever from the benefit of the insolvent laws.

But it was also contended by the counsel for the appellant, that assuming it was not an adjudication in rem., it was nevertheless to be admitted as evidence in the cause, “ of that state of mind and the view and expectation under which the deed was executed, that rendered the conveyance void and vested the property in John Cushwa as trustee.” This proposition concedes to the verdict the operation and effect of a judgment inter partes. This Court acknowledges the rule as to the conclusiveness of a judgment of a Court of competent jurisdiction between the same parties and privies, and has uniformly applied it, but it was well said by Chief Justice Holt, that no record of a verdict can be given in evidence but such whereof the benefit may be mutual. That is such as might have been given in evidence for the plaintiff or defendant, upon the principle that estoppels are mutual and bind all parties and privies. Can it be contended that a verdict on these allegations could validate the title of John Cushwa, the grantee in the deed? Certainly not; nor can it bind or prejudice the rights of John Cushwa; he was.no party to the proceeding ; had no opportunity of calling witnesses or cross-examining them on the other side; could not except to any ruling of the Court or appeal therefrom, and was a stranger to the whole proceeding. Rejecting it as a judgment binding and conclusive on the rights and property of John Cushwa, yet it was argued and pressed upon the Court, that the verdict was at least prima facie evidence and admissible as a muniment of title, for by the finding it was contended, there was a charge produced in the vesting of the estate attempted to be conveyed. We cannot sanction this proposition. It claims for the verdict that John Cushwa was divested by it of his title as grantee, and received the estate as trustee for Benjamin. As John Cushwa was not a party to the suit, the proceeding was res inter alios acta and not admissible for the purpose of impairing his rights; he was the grantee of Benjamin Cushwa for a valuable consideration, prior to his application for the benefit of the insolvent latvs, and no act or declaration of Benjamin’s, subsequent to the date of the deed, was admissible evidence against him. But the counsel for the appellant insisted that this verdict was prima facie evidence against John Cushwa, and shifted the burden of proof on him to show that Benjamin had no intention of evading the provisions of the insolvent system when he executed this deed. He insisted that the cases in 4 Rawle, 234 ; 5 Halstead, 217, and 9 Ves., 609, were analogous cases and fully maintained his position ; on an examination we find they were all cases of inquisitions de lunático inquirendo and regulated by particular statutes, and are merely held as evidence of the incapacity of the lunatic to make valid contracts within the time ascertained by the verdict, and are not held as binding on strangers. The case relied on in 7 How., 627, was a case of proceedings in bankruptcy and was also regulated by the statute, and was an attempt on the part of a creditor of Benjamin Brandon, the bankrupt, to set up a lien on the bankrupt’s property against the assignee of the bankrupt’s estate, and it was held by the Court, “that a decree of the District Court sitting in bankruptcy was sufficient evidence as against those who were not parties to the proceeding, to show, that there was a debt due the petitioning creditor; that the bankrupt was a merchant or trader within the meaning of the act; and that he had committed an act of bankruptcy.” This decision was made in virtue of the several sections of the bankrupt law, and was necessary to maintain its validity and operation on the bankrupt’s estate. In our insolvent system in 1826 there was no such provision, and therefore a verdict on allegations against the insolvent cannot operate to the prejudice of his grantees previous to his application. Having excluded the testimony of the trial and convic tion of Benjamin Ousliwa on allegations, as inadmissible against John Cushwa, we will examine the record to ascertain whether- it contains evidence sufficient to satisfy our- minds, that, the deed from Benjamin to his brother John was made with a view and under an expectation of taking the benefit of the insolvent laws, and with an intent thereby to give an undue and improper preference. From repeated decisions of-this Court, both intents must be found to exist or the conveyance will not be disturbed. The leading case on this interesting question was Kennedy vs. Boggs, 3 H. &. J., 411 ; in that case Chief Justice Chase, in delivering his opinion, says, “ When does a person become an insolvent.debtor under the insolvent laws ? I know no criterion by which it can be so well and certainly known as the time of filing his petition. It is then he acknowledges his inability to pay his debts and applies for relief.” Until he does apply, there can be no proof of a mental intention, unless he avows his determination, as the intention cannot be implied from his circumstances. And in the case of Beatty against Davis, 9 Gill, 211, and in the case of Crawfords and Bellman vs. Taylor, Trustee of Ford, 6 Gill & John., 323, the law is clearly settled, that to avoid a transfer under the insolvent law, it is necessary.to establish, that the debtor made the transfer with a' view or expectation of taking the benefit of the insolvent law, and also that he voluntarily made the transfer sought ;to be vacated. The time, which elapsed between the execution of the deed. and. the application for the insolvent law, precludes the idea according to the opinion of Chief Justice. Chase that at that time he had the intention of taking the benefit, whilst in Malcolm vs. Hall, 9 Gill, 177, the learned Judge.said,. :“-mere proximity in.point of time between the date of the assignment and the application for the benefit of the insolvent laws, standing alone, without any supporting circumstances, is not to be received as adequate or reliable proof of what the insolvent intended at the time of executing the assignment.” But we must find that he made the conveyance voluntarily, and can this he done, when John Cushwa had paid to various persons, for Benjamin, a large sum of money, amounting, with the advances made to Benjamin, to $7,300, the full value of the real estate, incumbered, as it was, with a contingent widow’s dower? After this length of time we will make every fair presumption to support the deed, made for a valuable consideration, and presume that it was made at the request of John Cushwa. There is another consideration sufficient in our opinion to negative the intent at the time he executed the deed, and that is, that Benjamin was really in jail when he applied, so that however good may have been his motive when he made the deed, he was obliged to apply to relieve himself from imprisonment. But we find in the record that subsequent to this deed to his brother John, he executed three other conveyances of valuable personal property to three different persons. It does not appear that any proceedings were instituted to vacate them on the ground that they were made in fraud of the insolvent system, or that the property vested in the trustee. But the onus of the proof was on the appellant to show, that the deed was made with the view and under the expectation of taking the benefit and to give an undue and improper preference thereby to the grantee. This conveyance was made before the Act of 1834, chapter 292, and therefore that act does not apply to this case, and in the absence of proof, we must find that the deed was executed in good faith and for a valuable consideration.

As this is an appeal to the conscience of the Court, it is our duty to examine the facts of the case in reference to its equity. John Cushwa, the grantee in the deed, lived nearly twenty years after its execution, and Benjamin, the grantor, more than twenty years after his application for the benefit of the insolvent laws, and the pre sumption of law is, after such a lapse of time, that the insolvent estate was settled and closed, and a Court of Chancery would not entertain a hill filed by the trustee of the insolvent estate against grantees under deeds from the insolvent previous to his application, unless the Court was satisfied that there were bona fide subsisting debts due from the insolvent. In this case it appears only one party alleges himself a creditor of Benjamin Cushwa at the time of his application, and he is Henry Rickenbaugh, who obtained two judgments against Benjamin Cushwa at November Term, 1827, of the county Court for Washington County, amounting to about $230, with interest; these judgments were obtained after Benjamin Cushwa petitioned, and after the verdict of the jury against him on the allegations. Rickenbaugh had his election to proceed against his debtor’s property by a fi.fa., or against his person by a ca. sa. He had also an undoubted right to file a hill in equity to vacate the conveyance to John Cushwa, if it were fraudulent or made in view of the insolvent system. Such a proceeding was instituted in the case of Swan vs. Dent and Richards, 2 Md. Ch. Dec., 111, and 7 Gill, 366. That case was analogous to this in the charges in the bill. Dent being largely indebted, conveyed all his property to his daughter, Priscilla Richards, for the sum of $7,000, and three months thereafter applied for the • benefit of the insolvent laws. George T. Richards, the husband of his daughter Priscilla, was appointed his 'trustee. His creditors filed allegations against him, and the jury found him guilty. The Chancellor vacated the conveyance, the property was sold by trustees and Dent’s creditors paid. The creditors'of Dent did not, like Henry Rickenbaugh, sleep for twenty years on their rights and acquiesce in the fraudulent conveyance, but immediately they discovered he had executed the deed they filed their bill. Admitting the theory of the appellant’s counsel was correct, Rickenbaugh had also a full and complete remedy at law, as he could have sued the trustee’s bond of John Cushwa, and held him and his sureties responsible in a Court of law for his debt. The Court will assume that he knew what the law was, and whenever a party knows his rights and does not assert them for twenty years, but acquiesces in the acts of others, we will apply to him the maxim, “vigilanlibus non dormientibus servil lex.”

The view which we have taken of the rights of John Cushwa under this deed disposes of the argument of the appellant’s counsel, that it was an express trust, and the Statute of Limitations did not apply ; for we have said the deed from Benjamin to John being bona fide and for a valuable consideration, vested the estate in John, as the grantee and owner, against the whole world. As we have decided that it is not an express trust, we think laches and lapse of time a full bar to the appellant’s recovery. It was contended that the defendants in their answer had not relied upon this defence, and could not avail themselves of it at the hearing. But we are of opinion that the Court itself, in its own discretion, may refuse to grant relief after a limited period, even though the statute is not pleaded and the bill is not demurred to. See Lewin on Trusts, 617, (24 Law Lib.) Laches and lapse of time are as effectual as the plea of limitations, and they are analogously applied in equity. 2 Story’s Equity, sec. 1520, a ; 36 Missi. Rep., 320 to 323 ; 11 B. Monroe, 161. What will constitute such laches and lapse of time as will bar the right of parties to recover on a claim purely equitable, all the authorities say, must depend upon the particular facts and circumstances of each case. Hanson & Wife et al. vs. Worthington et al., 12 Md. Rep., 441. The deed to John Cushwa was made in 1826, and the bill was filed in 1852 ; the creditors of Benjamin knew of the deed to John ; the notice was full and complete to the creditors in 1826 and 1827 ; they never moved in it; they never pretended to claim the land ; never appeared in Court to obtain an order for the sale of the real estate; took no action to remove John, or appoint a permanent trustee. For twenty years no complaint was made or action brought against the trustee. After such a length of time the Court is hound to presume the trustee had done his duty. Stale claims do not meet the favorable consideration of a Court of Equity, which only lends its aid to reasonable diligence, and has a right in the exercise of its equitable jurisdiction not to sanction antiquated claims. Entertaining the views expressed in this opinion, we affirm the decree of the Circuit Court with costs.

(Decided 27th June, 1867.)

Decree affirmed with costs.