U.S. Fidelity & Guar. Co. v. English Const. Co.

• Decision Date: 25 April 1939
• Citation: 303 Mass. 105,20 N.E.2d 939
• Parties: UNITED STATES FIDELITY AND GUARANTY COMPANY v. ENGLISH CONSTRUCTION COMPANY.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

303 Mass. 105

20 N.E.2d 939

UNITED STATES FIDELITY AND GUARANTY COMPANY v. ENGLISH CONSTRUCTION COMPANY.

Supreme Judicial Court of Massachusetts, Middlesex.

April 25, 1939

October 3, 1938.

Present: FIELD, C.

J., DONAHUE LUMMUS, & DOLAN, JJ.

Practice, Civil Auditor: findings, drawing of inferences from findings objections to report. Fraudulent Conveyance. Fraud. Evidence Presumptions and burden of proof. Deed, Acknowledgment. Land Court, Exceptions: whether properly saved, waiver. Corporation, Ultra vires. Mortgage, of real estate: validity, foreclosure.

Although findings of subsidiary facts by an auditor whose findings were to be final must stand unless it appears that there was no evidence sufficient in law to warrant them, his conclusions of fact reached by inference from those subsidiary facts are open to review as matters of fact not only by the trial court but also by this court.

Certain questions, purported to be presented to this court by exceptions saved in the Land Court by the tenant in a writ of entry which was heard upon the report of an auditor whose findings were to be final, were not open here, either because no objection relating thereto was filed under

Rule 89 of the Superior Court (1932), Rule 6 of the Land Court (1935), or because the tenant had failed to cause the facts and evidence upon which an objection was based to appear in the auditor's report.

The demandant in a writ of entry was not bound by testimony of one who dominated, owned and controlled a corporation which was the tenant, although he called him as a witness.

An acknowledgment to a deed was not invalid merely because the magistrate who took the acknowledgment was an attorney employed by the grantee.

No objection under Rule 89 of the Superior Court (1932) is necessary to raise in the trial court or in this court the question whether a conclusion stated in the report of an auditor whose findings were to be final was proper on the subsidiary facts reported. motion for confirmation of the report of an auditor whose findings were to be final is not in accord with correct practice.

Under Rule 6 of the Land Court (1935), all exception to the overruling of objections to the report of an auditor whose findings were to be final was seasonably saved by the filing within twenty days of a bill of exceptions setting forth such exception, without a previous claim of exception.

An exception duly saved in a writ of entry in the Land Court to the overruling of objections to the report of an auditor whose findings were to be final was not waived nor lost by a failure later to raise substantially the same question by exception to or appeal from an order for judgment.

The purchaser at a sheriff's execution sale of property, previously conveyed fraudulently by the judgment debtor to a corporation which then ultra vires gave a mortgage of it to one who was "not intentionally a party to any fraud," could not maintain a writ of entry against one who, merely knowing of the fraudulent conveyance and that the corporation had acted ultra vires, had purchased the property at a sale in foreclosure of the mortgage, where it appeared that the corporation when it gave the mortgage had received more than the amount thereof and had suffered no impairment of its assets.

TWO WRITS OF ENTRY in the Land Court dated May 7, 1934. The cases were heard by Fenton, J.

W. D. Regan, for the tenants. W. F. Howard, for the demandant.

LUMMUS, J. These are writs of entry for different parcels of land. On June 10 1930, the demandant, as assignee of a judgment recovered in New York by one Mullen against Dennis E. Conners and a corporation named Conners

Brothers Company, brought an action upon the judgment in a district court in this Commonwealth, and made a special attachment of the right, title and interest of Conners Brothers Company in twelve parcels of land standing in the name of the tenant English Construction Company, a corporation, and in nine other parcels of land standing in the name of the tenant Mary L. Sheehan, then Mary L. Conners. On December 15, 1933, judgment was recovered against Conners Brothers Company for $24,955.96 damages and $28.32 costs. On January 6, 1934, execution was issued. On January 9, 1934, levy was made upon the land specially attached. On April 14, 1934, the land was sold on execution to the demandant for $19,670, and the sheriff on April 25, 1934, gave a deed to the demandant, which was recorded on May 4, 1934. The sheriff made his return on April 24, 1934.

Conners Brothers Company was engaged in the contracting business. From 1914 on it was wholly dominated and controlled by Dennis E. Conners, the Father of Mary L. Sheehan. The claim which resulted in the Mullen judgment originated in a bond for $20,000 executed on February 17, 1916, given by Conners Brothers Company to Bass Construction Company, conditioned upon the performance by the former company of a building contract. The demandant and another surety company were sureties upon this bond. An action was brought in New York upon this bond on June 28, 1918, and ultimately on June 29, 1922, the sureties were compelled to pay $25,617.46. Of this they were repaid $7,716.16. They assigned to Mullen their claims against Conners Brothers Company and Dennis E. Conners, and Mullen recovered judgment against them in New York on March 22, 1926, for $17,046.41, which judgment was assigned to the demandant on March 24, 1926.

During the litigation in New York, Dennis E. Conners, his wife Margaret V. Conners, and his daughter Mary L. Sheehan, organized the tenant English Construction Company under the laws of Delaware. They constituted all the directors. It was dominated, owned, and controlled by Dennis E. Conners. Dennis E. Conners caused Conners

Brothers Company, in December, 1921, to convey all its real estate, valued at $56,970, without consideration, through himself or his wife to English Construction Company. The auditor found that the conveyance left Conners Brothers Company insolvent. All three persons named knew the financial condition of Conners Brothers Company, and consequently knew that the effect of the transaction was to leave that corporation insolvent.

The land standing in the name of Mary L. Sheehan at the time of the special attachment was worth $30,000. It came to her in this way. One Edward F. Conners had a claim against Dennis E. Conners, which was settled by a mortgage for $5,700 given by English Construction Company on February 25, 1925, covering nine parcels of land which had been the property of Conners Brothers Company and had been conveyed to English Construction Company as already described. Edward F. Conners had no claim against either corporation. He not only released his claim against Dennis E. Conners in consideration of the mortgage, but also assigned to English Construction Company an interest in life insurance policies upon which English Construction Company ultimately received $5,816.22, more than the principal of the mortgage. But a default in the mortgage occurred, and on November 23, 1925, the land covered by the mortgage was sold at foreclosure sale to the tenant Mary L. Sheehan for $8,600. What happened to the surplus above the mortgage debt did not appear.

Judgment for the demandant was ordered in each case. Each tenant filed a bill of exceptions.

The facts already recited appear in the report of an auditor whose findings of fact by agreement were to be final. The report of such an auditor constitutes a case stated. Merrimac Chemical Co v. Moore, 279 Mass. 147. Untersee v. Untersee, 299 Mass. 417 . Vigneault v. Dr. Hewson Dental Co. 300 Mass. 223 . Pesce v. Brecher, 302 Mass. 211 . Although his subsidiary findings must stand unless it appears that there was no evidence sufficient in law to warrant them, his conclusions of fact reached by inference from those subsidiary findings are open to review as matter of fact not only by the trial court but also by this court when the case comes here "upon appeal, exceptions, report or other proceedings in the nature of an appeal." G.L. (Ter. Ed.) c. 231, Section 126. Untersee v. Untersee, 299 Mass. 417 , 420. See also Farrington v. Boston Safe Deposit & Trust Co. 280 Mass. 121 , 127. This was assumed in Bloom, South & Gurney, Inc. v. Mitchell, 289 Mass. 376 , 379, and in Brodie v. Donovan, 298 Mass. 69, 71, and cannot be doubted in view of the statute, which was designed to make the practice on appeal upon cases stated at law conform to the practice on appeal in equity cases submitted upon agreed facts (Stuart v. Sargent, 283 Mass. 536 , 541; Hannah v. Frawley, 285 Mass. 28 , 31; McMurdo v. Getter, 298 Mass. 363 , 364), or upon the report of a master. MacLeod v. Davis, 290 Mass. 335. This constitutes a statutory exception to the general rule that "the drawing of permissible inferences in an action at law is a question of fact; it is a function of the fact finding tribunal and not of this court on review of questions of law." Commercial Credit Corp. v. Commonwealth Mortgage & Loan Co. Inc. 276 Mass. 335 , 340. Jones v. Clark, 272 Mass. 146 . Worcester v. L. Rocheford & Son, Inc. 300 Mass. 261 . Cook v. Farm Service Stores, Inc. 301 Mass. 564 , 568. There are in a number of reported cases expressions which may be thought to tend towards making unreviewable by this court the conclusions drawn by the trial judge from the subsidiary findings of such an auditor, if those conclusions are warranted as matter of law; but that is not the correct rule of practice, since St. 1913, c. 716, Section 5 (G.L. [Ter. Ed.] c. 231, Section 126). See Boston Lodge, No. 10, Benevolent & Protective Order of Elks v. Boston, 217 Mass. 176 , 177; Smith v. Middlesex Mutual Fire Ins. Co. 228 Mass. 301 , 304; Standard Oil Co. of...