Equity Jurisdiction, To reach and apply property conveyed to hinder, delay or defeat creditors. Trust, Validity.
An insolvent debtor conveyed to his sister his interest in his father's estate, which was of the approximate value of $10,000 and was substantially all he owned, in consideration of $3,000 named in the deed as consideration and an oral agreement that she would care for him and his minor children so long as he needed and until they became of age and that she also would care for his crippled daughter so long as there was any need. About three years later a creditor of the brother obtained a judgment against him. In a suit in equity commenced in the Superior Court nearly ten years after the conveyance to reach in satisfaction of the judgment debt the property conveyed, the judge found that the sister acted in good faith and that the consideration for the deed had not been proved inadequate, and dismissed the bill. The plaintiff appealed. Held, that
(1) The undisclosed trust was voidable by the plaintiff;
(2) The fact, that the judgment which the plaintiff sought to satisfy was not entered until after the transfer which he sought to avoid, did not preclude relief;
(3) It must be presumed that the grantor intended the probable consequences of his own acts, which tended directly to hinder and defraud his creditors;
(4) It was unnecessary that any moral turpitude be shown;
(5) The finding of the trial judge that inadequacy of consideration had not been proven was not plainly wrong;
(6) The money and the promise in the circumstances could not be so separated as to make either the agreement or the money the sole consideration;
(7) The plaintiff was entitled to recover and apply in satisfaction of his judgment only so much of the property as might be found to be in excess of $3,000, on which interest might be computed from the date of the filing of the bill to the date of the entering of the decree, if upon further proceedings in the Superior Court it was found that such action was just and equitable;
(8) The decree dismissing the bill must be reversed.
BRALEY, J.
The defendant Clark, against whom the plaintiff has recovered a judgment which remains unsatisfied, while heavily in debt and insolvent, conveyed to his sister, the defendant Nye, his interest in the estate of their father Cyrus T. Clark, who died testate. The plaintiff contends that this conveyance, having been made in fraud of creditors, should be set aside and the property, or so much thereof as may be necessary, applied in satisfaction of the judgment. R. L. c. 159, § 3, cl. 8. Billings v. Mann, 156 Mass. 203.
The only consideration named in the deed, which was recorded in the registry on the day of its date, was "three thousand dollars;" but at the same time, although not expressed or referred to in the instrument, the grantee undertook and orally promised "to see that David O. Clark" the grantor "and his minor children were cared for so long as he needed it and until they became of age, and an agreement that I was to see that his crippled daughter was cared for so long as there was any need; my share to make up whatever was needed after other payments had been made." If the necessary effect of the whole transaction was to place the property which was "all, or substantially all," he owned beyond the reach of his creditors while concurrently securing an advantage for himself, the record presents such a case of an undisclosed trust as is voidable by the plaintiff even if he recovered judgment after the date of the transfer. Rice v. Cunningham, 116 Mass. 466, 470. Woodbury v. Sparrell Print, 187 Mass. 426. It must be presumed that the grantor intended the probable consequences of his own acts, and a conveyance, even if in part founded on a valuable consideration but which in fact, as found by the trial judge, also rested on a secret reservation for his benefit, tended directly to hinder and defraud his creditors. Widgery v. Haskell, 5 Mass. 144, 152. Oriental Bank v. Haskins, 3 Met. 332, 337, 338. It is true that the intention to hinder, delay and defraud creditors is generally a question of fact. Bailey v. Wood, 211 Mass. 37, 44, 45. See Deshon v. Wood, 148 Mass. 132. "But such facts as appear in this case are prima facie evidence of the intent, which, uncontrolled, call for a legal inference that the intent exists." Matthews v. Thompson, 186 Mass. 14, 23. It is unnecessary that any moral turpitude should be shown. Parkman v. Welch, 19 Pick. 231, 235. Rolfe v. Clarke, 224 Mass. 407. Beck v. Burdett, 1 Paige, 305.
The property is represented as having an approximate value of $10,000. We are not however satisfied that the findings of the trial judge, that under all the conditions of the grantor's title inadequacy of consideration had not been proved, were plainly wrong. While the agreement for future support can by analysis be considered as distinct from the consideration named in the deed, the defendant's own statement, as shown by the record, is that the agreement for support as well as the money paid constituted the actual consideration moving between the parties. Kennedy v. Welch, 196 Mass. 592, 595. Even if the amount named in the deed is treated as the sole consideration, the undisclosed trust created by the insolvent for his own benefit, the effect of which was to withdraw assets from the reach of his creditors, must stand in full force and effect. The money and the promise under such circumstances cannot be so separated as to make either the agreement or the money the sole consideration. A part of the consideration however having been paid in money, the amount of which is certain, and the defendant having been found to have acted in good faith, the plaintiff is entitled to recover and apply in satisfaction of his judgment only so much of the property as may be found to be in excess of $3,000, on which interest may be computed from the date of filing the bill to the date of entering the decree, if upon further proceedings it is found that such action is just and equitable. Holland v. Cruft, 20 Pick. 321, 337. In re Johnson, 20 Ch. D. 389; affirmed on appeal in Golden v. Gillam, 51 L. J. (N. S.) Ch. 503. Clements v. Moore, 6 Wall. 299, 312. Farlin v. Sook, 30 Kans. 401. Boyd v. Dunlap, 1 Johns. Ch. 478. Robinson v. Stewart, 10 N.Y. 189. Muirheid v. Smith, 8 Stew. 303. See Sidensparker v. Sidensparker, 52 Maine, 481, 491; Ellis v. Sullivan, 241 Mass. 60.
The decree dismissing the bill, therefore, must be reversed and a decree with costs is to be entered in accordance with the opinion, the details of which are to be settled in the trial court.
Ordered accordingly.