Banfield v. Whipple

Bigelow, C. J.

We think the instruction asked for was rightly refused. In the first place, a decisive objection to the proposition insisted on by the plaintiffs’ counsel is that it assumes it to be the duty of the court to instruct a jury that the existence of a particular fact conclusively proves fraud. It is rarely if ever that a case can arise in which such a direction to the jury would be proper. The question of fraud in a particular transaction, embracing, as it necessarily does, an inquiry, not only into the acts of parties, but also into the intent or degree of knowledge with which they acted in the matter under investigation, is to be determined as an inference of fact, from the evidence adduced before the jury, on which it is their peculiar province to pass, and concerning which the court could not express an opinion without a violation of law. Gen. Sts. c. 115, §5.

But, in the next place, the instruction for which the plaintiffs asked was not a necessary or legitimate conclusion from the fact proved. The claimant had a right to receive payment of his debt. The preference of one debtor over another does not constitute a fraud at common law. If a debtor is unable to pay all his debts, he commits no fraud (in the absence of any statute *15 provision regulating the distribution of insolvent estates) by appropriating his property to the satisfaction of one or more of his creditors to the exclusion of all others. Nor does it make any difference that both the creditor and debtor know that the effect of such appropriation will be to deprive other creditors of the power of reaching the debtor’s property by legal process in satisfaction of their claims. If there is no secret trust agreed upon or understood between the debtor and creditor in favor of the former, but the sole object of a transfer of property is to pay or secure the payment of a debt, the transaction is a valid one at common law. The distinction is between a transfer of property made solely by way of preference of one creditor over others, which is legal, and a similar transfer made with a design to secure some benefit or advantage therefrom to the debtor, which is fraudulent and illegal. In the prayer for instruction submitted by the plaintiffs’ counsel, this distinction was disregarded, and it was therefore properly refused.

Exceptions overruled