Stewart v. Kearney

He who parts with the possession of his property for the purpose of defrauding1 his creditors, cannot maintain trover to recover it back. But after his death, if his estate be otherways insufficient to pay his debts, the action of trover survives to his personal representative, who may prosecute it for the benefit of creditors.

ERROR to Fayette county. • Jacob Kearney’s administrator against Alexander Stewart and John Shough. This was an action of trover, brought by Jacob Kearney against the plaintiffs in error, for a wagon and team. The cause was arbitrated, and an award found for the plaintiff, for 416 dollars. From this award Alexander Stewart appealed. Jacob Kearney died, and R. P. Flenniken, his administrator, was substituted. The defendant pleaded not guilty. It appeared that Kearney had delivered the team to Shough, who gave his notes for the price; but it was alleged, and proof offered to establish the allegation, that this was a mere cover, and that Shough engaged to drive the team into Maryland, and there redeliver it to Kearney. Shough sold the team, excepting one horse, to Stewart, who gave his notes, which he afterwards paid. But it was alleged, that Stewart knew that the contract between Kearney and' Shough, was a sham, and was privy to the whole transaction. On the trial of the issue, the counsel for the defendants requested the court to charge the jury, among other things: “ That if the team was delivered to Shough, in furtherance of an illegal contract, to defraud his (Kearney’s) creditors, this action does not lie.” « That if the sale and transfer of the team in dispute, were made by Kearney to Shough, in order to defraud his creditors, and slip the property into another state, out of their reach, he cannot now take advantage of his own fraud, but is bound by it, inasmuch as it was sold by Shough to Stewart, a third person, who has paid his money for it.” Court charged the jury as follows: It is the opinion of the court, that the cause of action does survive, and may be maintained by the administrator, in its present form. If Kearney made a fair sale of the team to Shough, the plaintiff cannot recover. It is a general principle of law, that a party who has entered into a fraudulent contract or arragement, to defeat his creditors, cannot have the aid of legal proceedings to enforce it. If, therefore, he made a sale and transfer (or delivery) of the team to Shough, although the design was to “ defraud his creditors and to slip the property into another state, out of reach,” he cannot now take advantage of this, his own fraudulent intention, but must be bound by it if the property has been sold by Shough to Stewart, and he has paid his money therefor, without notice of the secret and unfair purpose. If there was a sale and delivery of the team, by Kearney to Shough, the plaintiff cannot recover in this action,” unless Stewart was a party acting with Shough in a fraudulent, mutual design, at the time to defraud Kearney, or had notice of such design.” If there was a delivery of the property into the hands of the defendants, by Kearney, in order to sustain this action, there must be a demand and refusal, on their part, to redeliver the team, before a conversion can be established: unless The delivery was a bailment for a special object, (as, for instance, to drive the team into Maryland, and then restore it to the owner,) and the defendants, instead of doing so, actually made use of the property for their own benefit, by selling it, or carrying it off and disposing of it so as to deprive the owner of the property. Errrors assigned. 1. The court erred, in neglecting to charge the jury on the second point submitted by the defendant’s counsel. 2. The court erred, in saying that the plaintiff would be bound by his fraudulent sale, only, “ if the property has been sold by Shough to Stewart, and he has paid his money therefor,” and then, only in case Stewart acted, “without notice of the secret and unfair purpose.”