Bailey v. Wood
| Decision Date | 26 February 1912 |
| Citation | 211 Mass. 37,97 N.E. 902 |
| Parties | BAILEY SAME v. WOOD et al. SAME v. WOOD (two cases). |
| Court | United States State Supreme Judicial Court of Massachusetts Supreme Court |
Hollis R. Bailey and Albion L. Millan, for trustee.
G. W Anderson, for defendants.
The trustee in bankruptcy of James A. Wood brings these suits against Caroline A. Wood and Mercy L. Wood, who are respectively the wife and daughter of the bankrupt, to set aside certain conveyances alleged to have been fraudulently made by him to Mercy L. Wood of his interest in three parcels of real property, and for such further relief as may be necessary to vest the title in the plaintiff. By the statute the assignment conveyed the property of the bankrupt, and although the conveyances in question were made more than two years before the date of bankruptcy, the plaintiff was clothed with the rights of creditors to reach as assets of the estate property fraudulently conveyed at common law. Bankruptcy Act U.S. 1898, § 70; Knowlton v. Moseley, 105 Mass. 136. The mortgages which were assigned by the conveyances, were found by the master to have been at her death the sole property of Sarah B. Wood, a sister of the bankrupt, who was her only heir at law, and upon her decease was duly appointed administrator of the estate. If through inheritance he took the property charged with a trust, and the conveyances were in performance of the trust, and for no other purpose, it could not have been seized by creditors and the plaintiff has not succeeded to any enforceable interest. Sibley v. Quinsigamond National Bank, 133 Mass. 515, 522, 523; Low v. Welch, 139 Mass. 33, 29 N.E. 216; Stratton v. Edwards, 174 Mass. 374, 54 N.E. 886; Emery v. Boston Terminal Co., 178 Mass. 172, 184, 59 N.E. 763, 86 Am. St. Rep. 473; King v. Cram, 185 Mass. 103, 104, 69 N.E. 1049.
It is important to a clear understanding of the nature of the bankrupt's title to refer to the master's explicit findings to which on this question no exceptions were taken. Sarah B. Wood for many years was a member of his household, and during the four or five years immediately preceding her death frequently expressed to him a desire that whatever property she might leave should go to his wife and two children. But being an invalid she could not anticipate how much of her savings might be required for her comfortable support, and for this reason was averse to making a testamentary disposition of the estate while she fully realized that upon intestacy he would come into possession as her heir. It was during these interviews that she requested him to distribute the estate between his wife and children in such proportions as in his discretion he deemed advisable. The master's conclusions, that a definite understanding and agreement were reached that she should not make a will, but the property was to pass by descent to be distributed between his wife and children, and that she refrained from making a will in their favor, relying upon his assurance, that if he survived, distribution would be made as she had requested, are decisive as to the facts.
The intention of the parties that when received the property was to be disposed of in a particular way, and for the sole benefit of those who had been designated as beneficiaries being manifest, no precise form of words was necessary to create a trust, and the terms 'trust' and 'trustee' were unessential. Packard v. Old Colony Railroad, 168 Mass. 92, 46 N.E. 433; Sawyer v. Cook, 188 Mass. 163, 165, 74 N.E. 356. Nor was it necessary to inform the beneficiaries that a trust existed in their favor, as they would have been clothed with the equitable, when he became vested with the legal title. Woodward v. James, 115 N.Y. 346, 356, 22 N.E. 150; Fletcher v. Fletcher, 4 Hare, 67, 74. It has been held under Rev. Laws, c. 74, § 1, cl. 4, and chapter 147, § 1, that an express trust concerning land, if executory, must be evidenced by an instrument in writing, or it cannot be enforced. Tourtillotte v. Tourtillotte, 205 Mass. 547, 91 N.E. 909; Kennerson v. Nash, 208 Mass. 393, 94 N.E. 475. And if the verbal agreement had been reduced to writing and signed by the parties, or if at her death he had executed and recorded a proper declaration, an effectual trust would have been established against all persons claiming under him. Urann v. Coates, 109 Mass. 581, 585; Blodgett v. Hildreth, 103 Mass. 484, 486; Holmes v. Winchester, 135 Mass. 299, 305; Barrell v. Joy, 16 Mass. 221; Silvers v. Potter, 48 N. J. Eq. 539, 22 A. 584; Gardner v. Rowe, 2 Sim. & Stu. 346; s. c. 5 Russ. 258. But having come into a court of equity for redress the plaintiff must recognize the equitable rights of the defendants which are to be ascertained as of the date of bankruptcy. The agreement was entered into in good faith. It was not illegal or a mere nullity. It could be proved by parol evidence; and in reliance on its terms Sarah B. Wood died intestate. Cahill v. Bigelow, 18 Pick. 369, 372; Coughlin v. Knowles, 7 Metc. 57, 39 Am. Dec. 759; Potter v. Kimball, 186 Mass. 120, 71 N.E. 308.
The master reports that James A. Wood considered himself bound to distribute the property thus inherited as his sister had requested and he had promised; and in performance of what he considered to be his plain duty, and without any intent to hinder, delay or defraud creditors, distribution of the entire estate was made between his wife and children, including the portion conveyed to Mercy L. Wood. See Haigh v. Kaye, 3 L. R. 7 Ch. App. Cas. 469. It was said by this court speaking through Chief Justice Gray in Olliffe v. Wells, 130 Mass. 221, 225: 'Where a trust not declared in the will is established by a court of chancery against the devisee it is by reason of the obligation resting upon the conscience of the devisee, and not as a valid testamentary disposition by the deceased.' The transaction may be none the less fraudulent in a court of equity, where the sole heir at law induces the ancestor to die intestate, honestly intending at the time to comply with his requests as to the distribution of the estate, but upon receiving the inheritance changes his mind, and in disregard of his express promise deliberately appropriates the property to his own use. Jones v. Bradley, L. R. 3 Ch. App. 362, 363, 364; McCormick v. Grogan, L. R. 4 H. L. 82, 88, 97; French v. French, [1902] L. R. Ireland, 1 Ch. 172, 187, 224, 225. The statute of frauds and the statute of wills have been held not to bar relief in cases springing from the perpetration of fraud. Potter v. Kimball, 186 Mass. 120, 71 N.E. 308; Young v. Peachy, 2 Atkins, 254; Rolfe v. Gregory, 4 De G., J. & S. 576, 579; Jones v. Bradley, L. R. 3 Ch. App. 362, 363, 364. But we need not consider whether the fiduciary relations were such that a constructive trust existed which the defendants could have enforced if Wood had acted unconscientiously. Nor is it of importance what effect, if any, the doctrine of the common law which prevails in this commonwealth, that the mortgagee as between himself and the mortgagor is seised in fee of the premises, would have upon an executory agreement resting in parol for the transfer of the interest of the mortgagee. Ewer v. Hobbs, 5 Metc. 1, 3; Ayres v. Waite, 10 Cush. 72, 74; Adams v. Parker, 12 Gray, 53. Or whether the mortgages having been in equity merely security for the payment of the mortgage debts in which an express trust, notwithstanding the provisions of Rev. Laws, c. 147, § 1, could be created by parol. James A. Wood, who as administrator was vested under Rev. Laws, c. 150, § 7, with the legal title of the mortgagee as personal property, held it subject to the trust. Sturtevant v. Jaques, 14 Allen, 523, 527; Childs v. Jordan, 106 Mass. 321; Thacher v. Churchill, 118 Mass. 108, 109; Currier v. Studley, 159 Mass. 17, 29, 33 N.E. 709; Potter v. Kimball, 186 Mass. 120, 71 N.E. 308; Look v. Kenney, 128 Mass. 283, 286; 1 Perry on Trusts (6th Ed.) § 86. And the defendant having the equitable title to the mortgage debts, could have compelled their transfer with an assignment of the mortgages. Barnes v. Boardman, 149 Mass. 106, 114, 21 N.E. 308, 3 L. R. A. 785.
The parol trust or agreement, having been fully executed, was unaffected by the statute of frauds which cannot be invoked to defeat the estate conveyed. Stone v. Dennison, 13 Pick. 1, 4, 5, 23 Am. Dec. 654; Coughlin v. Knowles, 7 Metc. 57, 39 Am. Dec. 759; Bush v. Boutelle, 156 Mass. 167, 170, 30 N.E. 607, 32 Am. St. Rep. 442; Blackwell v. Blackwell, 196 Mass. 186, 190, 81 N.E. 910, 12 Ann. Cas. 1070; Tillinghast v. Coggeshall, 7 R. I. 383, 393; Robbins v. Robbins, 89 N.Y. 251; Silvers v. Potter, 48 N. J. Eq. 539, 22 A. 584; Janes v. Falk, 50 N. J. Eq. 468, 26 A. 138, 35 Am. St. Rep. 783; Sackett v. Spencer, 65 Pa. 89, 99; Greenfield's Estate, 14 Pa. 489; First National Bank of Appleton v. Bertschy, 52 Wis. 438, 454, 455, 9 N.W. 534; McCormick Harvesting Machine Co. v. Griffin, 116 Iowa, 397, 90 N.W. 84; Neves v. Scott, 9 How. 196, 13 L.Ed. 102; Bowen v. Chase, 94 U.S. 812, 818, 24 L.Ed. 184; Gardner v. Rowe, 2 Sim. & Stu. 346; s. c. 5 Russ. 258; Milroy v. Lowe, 4 De G., F & J. 264, 274.
We cannot accede to the further contention of the plaintiff that if Wood was insolvent the conveyances necessarily must be treated as fraudulent. The bankrupt's insolvency at...
To continue reading
Request your trial