O'Gasaplan v. Danielson

• Decision Date: 13 September 1933
• Citation: 284 Mass. 27,187 N.E. 107
• Parties: O'GASAPLAN v. DANIELSON et al.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

284 Mass. 27

187 N.E. 107

O'GASAPLAN

v.DANIELSON et al.

Supreme Judicial Court of Massachusetts, Middlesex.

Sept. 13, 1933.

Appeal from Superior Court, Middlesex County; Gray, Judge.

Bill of complaint by Mary O'Gasapian, administratrix of the estate of Charles O'Gasapian, deceased, against Jean M. Danielson and others, wherein one Sookikian was permitted to intervene. From an adverse decree, complainant appeals.

Affirmed.

A. L. Brown, of Boston, for appellant.

G. Mooradkanian, of Boston, for appellees.

FIELD, Justice.

This suit in equity was brought by the administratrix of the estate of Charles O'Gasapian to establish debts of the defendants Danielson and Barsam to the intestate and to reach and apply in payment thereof certain property including real estate standing in the name of the defendant Vartainan and a note secured by mortgage of real estate described in the third paragraph of the bill of complaint. See G. L. (Ter. Ed.) c. 214, § 3 (7). This paragraph alleges that ‘Carl M. T. Anderson and Ida M. Anderson are husband and wife residing in Boston and that they are the owners of certain real estate #22 Worcester Square in Boston * * * and that on September 2, 1930 they executed a promissory note secured by a first mortgage on the said real estate in the sum of Five thousand (5000) Dollars to the defendant Jean M. Danielson, which mortgage is still held and owned by the said Danielson.’ A motion of one Sookikian, hereinafter referred to as the intervener, ‘that he be allowed to intervene * * * by being joined as party defendant’ was allowed. No question is raised as to the propriety of the allowance of this motion. The intervener answered alleging his ownership of the note and mortgage referred to in the third paragraph of the bill, and praying that they ‘be released from further attachment in this suit and be adjudged and decreed to be the property of the defendant,’ the intervener. The trial judge made findingsof fact and rulings of law. Thereafter a decree was entered dismissing the bill as to Barsam and the intervener and the intervener's prayers for relief, establishing the debts of Danielson, hereinafter referred to as the defendant, to the plaintiff, and ordering a sale of real estate standing in the name of Vartanian and the application of a part of the proceeds thereof to the payment of the debts so established. The plaintiff appealed. The evidence is not reported.

The rulings and findings of the trial judge in regard to the note and mortgage referred to in the third paragraph of the bill of complaint are as follows: ‘With respect to the allegations of paragraph 3 of the bill of complaint I find that the defendant Danielson is the record holder of the mortgage therein referred to. I find that for several years prior to the date of said mortgage, the intervener, Sookikian, was the real owner of said property and that title thereto was in the name of his wife. In September 1930 Sookikian sold the property to the Andersons referred to in the bill of complaint and by the terms of the sale a mortgage in the sum of five thousand dollars was to be given to Sookikian to secure the purchase price. Sookikian caused the mortgage and the note which secured it to be taken in the name of the defendant Danielson, and the mortgage was duly recorded. Danielson furnished no part of the consideration for the note but there were two claims pending against Sookikian at the time and he caused the note and mortgage to be taken in the name of Danielson in order to place this property beyond reach of his creditors. Danielson knew of these circumstances. Danielson, at the time of taking the mortgage, gave Sookikian an assignment thereof duly executed and acknowledged in the form introduced in evidence as Ex. #28 [This assignment was under seal, signed by the defendant, and purported to ‘assign said mortgage and the note and claim secured thereby’ to the intervener.] But the assignment has never been recorded, because to record it would defeat Sookikian's purpose in taking title in the name of Danielson. In other words, Sookikian has deliberately kept his assignment off the record in order to carry out his purpose of defrauding his creditors. In this situation the plaintiff's bill was filed on January 9, 1931, a lis pendens was filed in the Registry of Deeds on the same day, and on January 23, 1931 a stipulation signed by the parties hereto including Sookikian was filed in lieu of an injunction. The defendants thereby stipulated that pending the further order of the Court the defendant Jean M. Danielson would not assign, pledge or otherwise hypothecate the above mentioned mortgage or mortgage note. No evidence was offered by either side as to whether the note had been endorsed by Danielson to Sookikian prior to the bringing of this bill. There is no evidence that Danielson still holds the note. The Andersons were not made parties to the bill and no attachment of the money due on the note was sought. There was no evidence as to whether Sookikian had other assets at the time he placed this mortgage in the name of Danielson. On these findings I rule that the plaintiff is entitled to no relief as to this mortgage.' The debts of the defendant to the plaintiff were created before September, 1930.

The plaintiff is not entitled to reach and apply to the payment of the defendant's debts the note or the mortgage in question.

The case of Weinberg v. Brother, 263 Mass. 61, 160 N. E. 403, goes far toward sustaining the conclusion that the defendant had no interest in the note or mortgage which could be reached and applied to the payment of his debts. There the note and mortgage were taken by the real owner thereof in the name of the defendant who assigned them to the real owner. As here, the assignment of the mortgage was not recorded. It was held that the note and mortgage could not be reached by a creditor of the defendant for the reason that, in spite of the failure to record the assignment, the defendant retained no interest in the note, and the mortgage was security for such note and could not be reached and applied to the defendant's debts since the note itself could not be so reached and applied. The court said, page 62 of 263 Mass.,160 N. E. 403, that the ‘plaintiff, by making the equitable attachment, is in no better position than that of the assignee of a mortgage after the mortgagee has transferred title to the debt or note which the mortgage was given to secure.’ Persons dealing with title under the mortgage were charged by the record thereof with notice that it conveyed a title for security only and there is no requirement in the recording acts that the transfer of the note secured by the mortgage be recorded. The distinction between this situation and a situation where persons are dealing with title to real estate subject to a mortgage-that is, with the equity therein-rather than, as here, with title under the mortgage appears in Wolcott v. Winchester, 15 Gray, 461. See also Swasey v. Emerson, 168 Mass. 118, 120, 121, 46 N. E. 426,60 Am. St. Rep. 368. Compare Stark v. Boynton, 167 Mass. 443, 445, 45 N. E. 764. The principle, urged upon us by the plaintiff as controlling, that a creditor attaching real estate is in the position of an innocent purchaser for value and his attachment takes precedence of a prior unrecorded conveyance (Waltham Co-operative Bank v. Barry, 231 Mass. 270, 121 N. E. 71;Hillside Co-operative Bank v. Cavanaugh, 232 Mass. 157, 161, 122 N. E. 187) did not aid the plaintiff in Weinberg v. Brother, 263 Mass. 61, 160 N. E. 403, and cannot aid the present plaintiff unless the cases are distinguishable upon their facts. In neither case was credit extended to the defendant in reliance upon the fact that the record title to the mortgage stood in his name. Here the debts established against the defendant were created before the transaction between the defendant and the intervener took place.

The plaintiff, however, contends that the present case is distinguishable from Weinberg v. Brother for the reasons that here the note was not assigned by the defendant to the intervener and the transaction between the defendant and the intervener was a fraud upon the creditors of the intervener participated in by the defendant.

1. The findings do not bear out the contention that the defendant's interest in the note was not assigned by him to the intervener. The assignment was in statutory form, G. L. (Ter. Ed.) c. 183, appendix, form (9), was under seal and purported to assign the note as well as the mortgage. See Merritt v. Harris, 102 Mass. 326, 327, 328. The intention to assign the note was clearly manifested. See Cosmopolitan Trust Co. v. Leonard Watch Co., 249 Mass. 14, 19, 143 N. E. 827. Such an assignment was effective to transfer to the intervener the defendant's interest in the note even if the note was not endorsed (Westminster National Bank v. Graustein, 270 Mass. 565, 574, 170 N. E. 621) or delivered. Strong v. Jackson, 123 Mass. 60, 62,25 Am. Rep. 19;Herman v. Connecticut Mutual Life Ins. Co., 218 Mass. 181, 185, 105 N. E. 450, Ann Cas. 1916A, 822;Ingram v. Mandler (C. C. A.) 56 F.(2d) 994, 996;Watson v. Goldstein, 176 Minn. 18, 24, 222 N. W. 509. Since the assignment was under seal it was valid and irrevocable by the assignor even without actual consideration. Williston on Contracts, § 440. And, as between the assignee and the maker of the note, neither consideration nor notice to the maker was essential to an assignment. Cosmopolitan Trust Co. v. Leonard Watch Co., 249 Mass. 14, 19, 143 N. E. 827. See G. L. (Ter. Ed.) c. 107, § 72; Brannan's Negotiable Instruments Law (5th Ed.) 472, 473. It follows, therefore, that the defendant had no equitable interest in the note or mortgage.

Since the assignment of the note to the intervener was prior to the plaintiff's equitable attachment the intervener had the superior right. The underlying principle is that ‘an attaching creditor cannot stand...