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and dealt with it by way of bounty. The rule stands upon precisely the same ground as any other disposition of his property by the debtor. The defect of the disposition is that it removes the property of the debtor out of the reach of his creditors.”
Bank vs. Hume, 128 U. S. R., 204.
We understand this to be a correct statement of the law as now generally accepted: Freeman vs. Pope, L. R. 9 Eq. Cas., 206; Carnish vs. Clark, L. R. 14 Eq. Cas., 189; Bump on Fraudulent Conveyances, 239, and cases cited; 1 Stony's Eq. Juris., $$ 307-368. The decisions of this court are to the same effect: Freeman vs. Burnbam, 36 Conn., 473; Paulk vs. Cook, 39 id., 566; Allen vs. Rundle, 50 id., 32.
In all such cases, however, the form or manner of the particular conveyance, or the circumstances surrounding the transaction, may exempt it from the operation of this general rule. It will be observed in the principal case cited (Bank vs. Hume, supra) that this doctrine is based upon the ground that the debtor has actually withdrawn a fund from his creditors available for the payment of debts. The court distinctly declares that the rule laid down by them applies only to that which the debtor could have made available for the payment of debts.
The value, or rather the want of value, of these policies, therefore as an available asset for the payment of creditors, becomes important in settling the question now under consideration. The fact that but two premiums had then been paid on the policies would have entitled the assignee only to paid-up policies for small amounts, payable on the death of Masters. Both policies provide
That if after the payment of two or more premiums upon this policy the same shall cease and determine by default in the payment of any subsequent premiums when due, then, notwithstanding such default, this company will grant a paid-up policy (payable as above) for such amount as the then present value of this policy will purchase, as a single premium; provided that this policy shall be transmitted to and received by this company and application made for such paid-up policy within one year after default in the payment of premiums herein shall first be made.
It is manifest that the policies had no cash surrender value, and oven if they had been reduced to possession by the assignee it is not probable he could thereby have increased the cash in his hands for distribution to creditors. 'Doubtless this consideration influenced both assignee and creditors in deciding to treat the policies of insurance as worthless to the insolvent estate. Masters' conduct
concerning the policies removes from him any suspicion of an intent to defraud his creditors. He did not conceal, but promptly revealed at the first opportunity he had, their existence, and was apparently ready at all times to put the assignee in possession of them. He held them nearly a year, and until by the provisions of the insolvent act proceedings looking to his discharge in insolvency must have been commenced. Here was an open disclosure and offer of the policies by the debtor to his creditors and their assignee, and an entire neglect on the part of both, for such a time as to raise a presumption that they had abandoned the policies as of no value as in fact they did, for no creditor of 1874 has ever made any claim to them. “The insolvent law assumes that creditors will reject nothing that has a seeming value:" Filley vs. King, 49 Conn., 214.
Acting upon this lawful assumption, Masters, on the 17th day of January, 1873, less than three weeks before the date of his discharge, caused the policies to be reissued and made payable to his wife. As his discharge was granted after the transfer of the policies, and could have only been granted by the action of his creditors representing in value at least three-fourths of his total liabilities, and as all his creditors had knowledge of the existence of the policies in question, it is not a violent inference that they knew and approved of this act of Masters. At all events there is nothing in the whole transaction that indicates any intent on Masters' part to defraud his existing creditors.
As evidence was offered in the court below tending to prove that these policies, with two premiums paid thereon, eight more to be paid on one, and an indeterminable number on the other, had any value as an asset in 1874, nor does the finding show they had such value. All the facts upon the record justify the conclusion that all the creditors of Masters regarded the policies in question as absolutely valueless for the payment of the insolvent debts.
If this is true, then another element, indispensable to a fraudulent conveyance, is wanting in this case. To constitute a disposition of property by a debtor with intent to defraud his creditors, the thing disposed of must be of some value out of which the creditor could have realized his claim or some part of it: Hoyt vs. Godfrey, 88 N. Y., 669.
If not fraudulent or prejudicial to creditors, then under the settled law there can be no question as to the insolvent's right to transfer the policies to his wife or for her benefit: Darcy, Trustee, vs. Regan, 44 Conn., 520; Benton vs. Ives, 8 id., 186; Converse vs. Hartley, 31 id., 379; Gilligan vs. Lord, 51 id., 562.
But even if the policies had been found to have been of value as an asset for the then existing creditors of Masters', and on that account we were compelled to hold their transfer fraudulent as to such creditors, we should still, under the facts of this case, be unable to sustain the plaintiff's claim.
The demand sought to be enforced in this action did not arise till nine years after Masters' discharge in insolvency. By the terms of the Canadian insolvent act the effect of such discharge was to completely absolve the insolvent debtor from all liabilities whatsoever then existing against him and provable against his estate. It was equivalent to payment by Masters, and left him free to face the world anew unburdened by debt: Insolvent Law of Canada, 32-33 Victo., Chap. XVI, Secs. 109-110.
Under such a state of facts there is no ground upon which a subsequent creditor can attack the conveyance in question. While the authorities differ as to whether to entitle a subsequent creclitor to relief, he must show that at the time of the commencement of this suit there were debts still outstanding which the debtor owed at the time he made the alleged fraudulent conveyance, yet all will will agree that there must at least have been debts contracted before the conveyance which remained unpaid at the time when the subsequent creditor's debt was created. A subsequent creditor must rest the foundation on his individual relief upon the equity of an antecedent creditor: Claflin vs. Mess., 30 N. Y. Eq. R., 212; Bigelow on Fraud, 107.
The case at bar fails to disclose the existence of a single unsatisfied debt created prior to the origin of the claim in suit.
Payment or satisfaction by a debtor of all debts existing prior to the time he makes a voluntary conveyance repels the idea that he thereby intended to defraud creditors: Claflin vs. Mess et al., supra; Freeman vs. Pope, supra; Lush vs. Wilkinson, 5 Ves., 387; 1 Am. Lead Cases, 41; Kerr on Fraud, 207, and cases cited.
There is no error in the judgment appealed from. In this opinion the other judges concurred.
Where, in a policy of insurance, a separate valuation has been put upon the
different subjects of insurance, as $300 on the dwelling-house, $175 on household furniture, $75 on barn, “$500 on horses, mules, and colts while in barn or on farm,” etc., the contract is severable, and not entire and
indivisible. In such case, the consideration for insurance on the house might be stated in
the policy as a separate item, so of the consideration for the household furniture, barn, horses, mules, and colts; and the stating of the aggrogate of these sums in the policy as the consideration, instead of the items separately, does not make the contract indivisible and entire, aud a conveyance of the real estate did not avoid the insurance on the personalty.
S. P. DAVIDSON, for Plaintiff in Error.
MAXWELL, J. This is an action upon a policy of insurance to recover for the death of a colt. On the trial of the cause a jury was waived, and the cause tried to the court, which found in favor of the defendant in error, and rendered judgment for the value of the animal. The cause was submitted to the court upon the following stipulation of facts: “It is agreed by and between the parties plaintiff and defendant that this policy was issued by the defendant to the plaintiff; that on or about the 16th of July, 1888, the loss occurred-a colt belonging to the plaintiff was killed by lightning on the land described in the policy, which land had been sold and conveyed by the plaintiff to a third party some time in March, 1888, but that the plaintiff was still in possession thereof; that he was the owner of the land at the time the policy was issued; that the colt was of the value of $60 at the time it was killed; that on the 20th of July, 1888, the plaintiff gave notice to S. F. Holmes, the agent of the insurance company; that on the 28th of July, 1888, the plaintiff made proofs of loss, now offered in evidence and marked ·Plaintiff's Exhibit B.' That no part of the personal property was incumbered, nor had the title thereof been transferred in any way; that the amount of loss, or any part of it, has not been paid, nor has the premium, or any portion thereof, been repaid or tendered to plaintiff. The buildings described in the policy are situated upon said land, which had been conveyed by plaintiff in March, 1888. That a receipt of the proofs of loss in July, 1888, was the first notice defendant had of said conveyance of the said property. That the paper now offered in evidence marked Defendant's Exhibit A' is the original application in pursuance of which the policy sued on was issued. It is further agreed that at the time of the loss plaintiff was the owner of five horses, mules, and colts.”
* Decision rendered, November 5, 1891. Syllabus by the Court in Part.
The policy of insurance is as follows:No. 0,221,426. By the policy of insurance. $1,300.00. The Phenix Insurance Co., of Brooklyn, N. Y. In consideration of cancellation of policy No. 065,622 and 65/100 dollars cash, and the payment at maturity of eleven dollars, for which the insured hereafter named has executed a certain promissory note or obligation of even date herewith, and payable on the first day of January, 1887, do insure J. C. Grimes against loss or damage by fire or lightning to the amount of thirteen hundred dollars, as follows: $300.00 on 1story shgl. roof frm. building, while occupied by assured as dwelling No. 1 (including foundation, cellar, or basement walls); $175.00 on household furpiture, useful and ornamental, family wearing apparel, printed books, plate and plated ware, paintings and engravings and their frames (in case of loss no one to be valued at more than cost), sewing machines, trunks, canes, umbrellas, family supplies, and fuel, while contained in dwelling No. 1; $75.00 on shgl. roof frm. barn No. 1 (including foundation); $50.00 on shgl. roof frm. granary: $200.00 on grain in granaries, or in barns, or in cribs, or in dwelling, or in stacks on cultivated land, not over $75.00 on any one stack. Classification of animals : $300.00 on horses, mules, and colts (class 1) while in barn or on farm, and against lightning while on or off premises. $200.00 on cattle (class 2, while in barn or on farm. and against lightning while on or off premises. It is hereby expressly provided and mutually agreed, and it is made one of the considerations upon which this contract is based, that, in case of loss or damage to any animal, the limit of claim upon this company shall be the amount produced by dividing the total amount insured upon the class to which the animal belongs (as above classified) by of the total number of animals of such class owned by the assured at the time of the loss or damage; it being understood, however, that in no case (except in the case of more valuable animals insured specially hereunder by names or numbers) shall this company be liable for more than $100.00 on any one horse, mule or colt, $50 on any one head of cattle, $5.00 on any one sheep, or $10.00 on any one hog, nor in any case for more than the actual cash value of the animal destroyed or damaged. Situated (except as otherwise provided) on and confined to premises now actually owned and occupied by the assured, to-wit : 80 acres, section N. E. 35, township 4, range 11, Johnson County, Nebraska.