Dorr v. Tracy

• Decision Date: 03 March 1924
• Citation: 248 Mass. 201,142 N.E. 781
• Parties: DORR v. TRACY et al.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

248 Mass. 201

142 N.E. 781

DORR

v.TRACY et al.

Supreme Judicial Court of Massachusetts, Suffolk.

March 3, 1924.

Appeal from Superior Court, Suffolk County; Marcus Morton, Judge.

Suit in equity by Dudley H. Dorr, as trustee in bankruptcy of the estate of Neil J. Tracy, bankrupt, against Grace P. Tracy and others, to recover as assets of bankrupt estate proceeds of sale of stock. Decree for plaintiff, and defendants appeal. Affirmed.

H. V. Cunningham and W. S. Bangs, both of Boston, for appellants.

Grafton L. Wilson, of Boston, for appellee.

PIERCE, J.

This is a suit in equity, brought by the trustee in bankruptcy of Neil J. Tracy to recover of the defendants Tracy, as assets of the bankrupt estate, the definite proceeds of the sale of three hundred and twenty-five shares of stock, which Tracy transferred September 15, 1920 (more than four months before his bankruptcy), to his wife, the defendant Grace P. Tracy, without consideration other than love and affection; and which she in turn transferred in March, 1921, to their son, upon his becoming of age, for a like consideration, but with the purpose to carry out and execute the intent and plan of her husband that the stock should be given to the son. The case was heard by a judge of the superior court and all the evidence appears in a commissioner's report. The question for decision is, whether the finding of the judge ‘that said transfer was presumptively in fraud of creditors; and also that the said transfer made by the said Neil J. Tracy was made with the actual intention to defraud his creditors' is so plainly wrong that it should be reversed by this court. Lindsey v. Bird, 193 Mass. 200, 79 N. E. 263;Glazier v. Everett, 224 Mass. 184, 186, 112 N. E. 1009.

Tracy, in 1918, with others organized the corporation known as the Harney, Tracy, Crehan Company, putting in $25,000, for which he received one-third of the capital stock, represented by two hundred and fifty shares, later, by a stock dividend, increased to three hundred and thirty-four shares. The business of this corporation was successful, as appears from the fact that shortly before this suit was brought the defendant Edward W. Tracy sold the three hundred and twenty-five shares of it which he had received from his father through his mother for $25,000; the proceeds invested by Tracy (the son) in bonds are the property sought to be reached and applied by the creditors of Neil J. Tracy to the payment of his debts.

When these shares of stock were transferred to Tracy's wife for the benefit of his son, Edward, on September 15, 1920, Neil Tracy's liabilities amounted to $187,606.54, of which $163,509.38 was due the Merchants National Bank, where Tracy had obtained the cash to buy the large amount of leather that formed his principal assets and which to Tracy's knowledge looked to his assets (including the stock in question and also a house owned by Tracy's wife) for its security. His assets exclusive of leather were worth about $17,000, perhaps no more than $7,500.

The leather was bought in the fall of 1919 and spring of 1920, at a time when there was a great inflation of prices, at a cost of $336,021, and consisted of about four hundred and seventy-eight thousand feet of glazed kid, known as ‘table run.’ This is a stock which contains various grades, not sorted and separated. When shipped to foreign ports it passes through the hands of a merchant who resells it after sorting it out near the customers to suit...