Pittsfield Bank v. Clough

A trustee in foreign attachment, who acquired land from the defendant in fraud of the ' defendant’s creditors, and afterward sold the land, is chargeable only for the profits of the transaction.

Foreign Attachment. The principal defendants, Thomas Clough and others, made no defense, and the trial was to determine the liability of the trustees, David M. Clough and others. The plaintiffs claimed that the trustees were chargeable, among other things, for the proceeds of the sales of certain real estate made by them, formerly the property of the defendant, Thomas Clough, and which had come into their hands by virtue of certain mortgages and levies, alleged to have been fraudulent and void as to the creditors of the defendant, because made to cover up the property, in order to hinder, delay, and defraud the creditors. On trial, it appeared that the trustees acquired their title to a portion of the real estate for whose proceeds they were sought to be made chargeable, by the foreclosure of certain mortgages, taken by them from the defendant, by taking and retaining possession thereof for one year, and giving notice of such possession taken in a newspaper, agreeably to the provisions of the statute; and to another portion by the levy of sundry executions against the defendant thereon, which executions had issued in suits originally commenced by creditors of the defendant, whose interest therein said trustees had purchased before judgment. The plaintiffs claimed that these mortgages were taken by the trustees, and the interest of the creditors in the suits jvherein said executions issued, purchased, and said executions subsequently levied by said trustees, fox- tbe purpose of covering up this real estate of the defendant from his creditors, in order to hinder, delay, and defraud them. The plaintiffs admitted that the claims, purchased by the trustees, as before stated, while in suit, were just and valid debts of the defendant to the original creditors; and it appeared that one of the debts, secured by one of the mortgages from the defendant to the trustees, w-as a valid promissory note, originally given by the defendant to a creditor for money borrowed, and fully secured by a collateral note and mortgage of double its amount, and by him transferred, with the collateral note and mortgage, for a full consideration, to the trustees, piior to the execution of the mortgage to them to secure its payment. There were vai-ious mortgages of said real estate from the defendant to other parties, made subject to the rights finally acquired by the trustees under the mortgages to them axxd the levies upon said executions. The trustees had received some $17,000 for real estate sold by them. The trustees requested the court to instruct the jui-y that, even if the mortgages and levies, whei-eby the trustees had acquired title to the real estate for whose proceeds they were sought to be charged, wei-e fraudulent, as having been made for the purpose of covering-up the property of the defendant, in order to hindei-, delay, and defraud his creditors, inasmuch as the mortgages had been duly foreclosed and the levies completed in conformity to the provisions of the statute, the trustees could not be charged for the proceeds of the sales of the real estate thus fraudulently mortgaged to and levied upon by them; or, if chargeable at all, it could only be for the balance, if any, of such proceeds remaining in their hands, after deducting therefrom all sums advanced to and for the defendant, as the consideration of the debts secured by said mortgages, and to purchase the claims upon which the executions thixs levied issued, with interest, and full compensation for all their services, expenses, and trouble in the premises. The court declined thus to instruct the jury, but did instruct them that, if they found the trastees had in their hands the pi-oceeds of sales by them of real estate formerly belonging to the defendant, the title to which they had acquii-ed only by mortgages taken by them for the purpose of covering up his propei-ty, in oi-der to hindei-, delay, and defraud his ci-editoi-s, or by levies made by them for the same purpose, such mortgages and levies being void as against his creditors, they were chargeable for such proceeds as trustees, without regard to or deduction of the sums by them advanced, as the consideration of the debts secured by such fraudulent mortgages, or to purchase the claims upon which the executions thus fraudulently levied had issued. The jui-y having, by their verdict, found the trustees chargeable, the trustees moved that the same be set aside and a new trial granted, for supposed errors in l-efusing to give to the jury the instructions requested, and in giving those that wei-e given. And the questions arising were reserved.