Chatterton v. Mason

• Decision Date: 23 June 1897
• Citation: 37 A. 960,86 Md. 236
• Parties: CHATTERTON ET AL. v. MASON ET AL.
• Court: Maryland Court of Appeals

37 A. 960

86 Md. 236

CHATTERTON ET AL. v. MASON ET AL.

Court of Appeals of Maryland

June 23, 1897

Appeal from circuit court of Baltimore city.

Bill by William H. Castle and others against John H. Chatterton and Robert M. Chatterton. During the progress of the suit additional parties appeared, and John T. Mason and John Hinkley were appointed receivers. From a decree in favor of plaintiffs, defendants appeal. Reversed in part.

Argued before McSHERRY, C.J., and BRYAN, PAGE, ROBERTS, and BOYD JJ.

Julian J. Alexander and D. Meredith Reese, for appellants.

John Hinkley, John T. Mason, A. Bernard Chancellor, Joseph C France, Charles W. Field, Charles A. Hayden, and Alex. Hardcastle, for appellees.

BOYD J.

The bill was originally filed in this case by William H. Castle C. O. Baxter & Co., and Glanton & Cotton against John H. Chatterton and Robert M. Chatterton. It alleges that the firm of Newkirk & Roth, on the 10th day of January, 1894, issued an attachment against John H. Chatterton, which was levied on certain goods and chattels; that John H. Chatterton, by deed of January 11, 1894, conveyed to his father, Robert M. Chatterton, for the alleged consideration of $1,000, two lots of ground in Baltimore city, and transferred to him by a bill of sale certain goods and chattels, for an alleged consideration of $8,000; that on the 8th day of May, 1894, the plaintiffs issued executions on judgments obtained by them, respectively, on the 25th day of April, 1894; that said William H. Castle had filed, or was about to file, a motion to quash the attachment; that, by reason of said judgments and executions, they had acquired liens on all the property mentioned in the deed and bill of sale, subject to the decision of said motion to quash, and to the result of this bill. They then charge that the deed and bill of sale were made by John H. Chatterton, and received by Robert M. Chatterton, "for the purpose of hindering, delaying, and defrauding the plaintiffs and others who are creditors of the said John H. Chatterton, and who were so at the time of the making of said deed," and require the defendants "to answer fully and particularly and discover and show upon what considerations the said deeds were made, and for what reasons, purposes, trusts, confidences, and whether there was any agreement or understanding between the said defendants in regard to the payment of said creditors or in regard to the reconveyance of said property to said John H. Chatterton," etc. The prayers are that "(a) defendants may answer this bill; (b) that they may discover and show the matters and things hereinbefore required of them; (c) that said two deeds may be declared void as against the plaintiffs and other creditors of said John H. Chatterton who may come into the case; (d) and that the plaintiffs may have such other and further relief as the case may require." With the bill were filed certified copies of the deed and bill of sale, and short copies of the three judgments. The defendants filed separate answers, but they are practically the same. They admit the execution of the deed and bill of sale, but deny that they were executed to hinder, delay, and defraud the creditors of John H. Chatterton, and allege that they were bona fide and for the considerations named in them. They say they were not made upon any trusts or confidences, and that there is no agreement or understanding between them in regard to the payment of the creditors or the reconveyance of said property to John H. Chatterton. They neither admit nor deny that the judgments were obtained and executions issued as alleged, but call for full proof of the same, and deny that any lien had been acquired by them on said property. On April 30, 1895, four other creditors obtained permission to be made parties. Two of them filed short copies of judgments; another filed a copy of a note; and the other, copies of three notes. The plaintiffs commenced to take testimony by calling John H. Chatterton, and afterwards called Robert M. Chatterton. On September 26, 1896, the examiner, at the request of the solicitors of the respective parties, closed the depositions, and returned them to the court, only the two Chattertons having been examined. In October of that year 14 other parties filed a petition, alleging that they were creditors, and asking to be made parties, which was done, and several others were admitted as parties on other orders. The case was finally set down for hearing, and, after argument, the court passed an order remanding the cause to the examiner, "to the end that the respective parties complainant in the said cause shall offer before him lawful proof of their respective claims against the firm of John H. Chatterton & Co., and for no other purpose." The next day the examiner returned the testimony, which consisted of certified copies of the judgments of such creditors as had judgments, including those of the original plaintiffs, the promissory notes and open accounts of others who had been made parties, and the deposition of one witness who testified that he believed that all the notes filed were signed by J. H. Chatterton, with the exception of one; that all the claims had been admitted by J. H. Chatterton to be proper claims against the firm of J. H. Chatterton & Co. J. H. Chatterton traded in that name, but had no partner. The same day the court passed a final decree, declaring the deed and bill of sale fraudulent and void as against the creditors of John H. Chatterton, who were such on the 11th day of January, 1894, and appointing receivers to take charge of the real and leasehold estate, and to collect from Robert M. Chatterton the sum of $9,490, being the sum of $8,000, the value of the chattels as found by the court, with interest from January 11, 1894. The decree recited that it appeared that personal property of the value of $8,000 had been delivered to Robert M. Chatterton, and by him disposed of, and directed him to pay the said sum of $9,490 to the receivers.

Assuming that there was sufficient evidence to show that the several debts due the plaintiffs had been contracted prior to the making of the deed and bill of sale, the facts justified the court below in setting them aside. The bona fides of the transfer of property is as much a subject of inquiry in a case of this character as the consideration. If it be established that the deed was made by the grantor, and accepted by the grantee, with intent to hinder, delay, and defraud the creditors of the former, it matters not that full consideration has been paid. A consideration may for the time being hide a fraud, but it will not protect the participants in a fraudulent transaction when once discovered. The difficulty oftentimes is to determine the intent with which an act is done, but, in reaching a conclusion as to that courts must be governed by all the facts and surrounding circumstances. When a result is reached which an ordinarily intelligent person must have foreseen, he will generally be presumed to have intended that such result would follow his act. In this case the purchase of the property of John H. Chatterton, by his father, Robert M. Chatterton, and the payment of the purchase money, must, under the circumstances, necessarily have resulted in interfering with the creditors of the former in securing their claims, or such part thereof as his property would meet. No surer means could have been adopted than by converting tangible property, that could be reached by process of law, into cash, that could be stored away in boxes of safedeposit companies, rented in fictitious names, as was done in this case, or otherwise concealed. The fact was that John H. Chatterton owed over $40,000, and had, according to the valuation fixed by his father and himself, $9,000 worth of property. That he was seeking to place his property beyond the reach of his creditors is too clear for controversy. He cannot excuse himself by alleging that the claims on which the attachments were issued were not due. If that was true, and if they had no right to attach by reason of some fraudulent act of his, the attachments could have been defeated. If his object was to protect his creditors, he could have made an assignment for their benefit. But he not only did not do that, but, according to his statement, he used a considerable part of the money he received from his father in settling the attachments, although he claims they were illegally issued. By converting his property into cash, he was enabled to pay only such creditors as he chose to pay; and, if we look at the petition of the defendants filed after the decree, he seems to have chosen to pay only such as had attached the property, or were endeavoring to throw him into insolvency. The father, however, denied that he knew the amount of the indebtedness of his son, or that he was a party to any fraud. An attachment had been issued against the son, and levied on the stock of goods, or a part of it, and the father was present when the levy was made. He said he was in the habit of going to his son's place very often, "perhaps once or twice or three times a week, when I happened to be in town." In answer to the question, "At whose instance did you make this alleged purchase?" he said, "I can't say that it was made at any one's instance. It was a natural result of the circumstances." The attachment issued before his purchase was for over $2,000, and he was apparently indifferent as to the result of it. It was issued January 10, 1894, and the deed and bill of sale were executed the next day, and filed for record at 9:40 a. m. of that day. Was such haste to be expected of a father dealing with a son if he was not seeking to record these instruments before other creditors proceeded? When we see how far...