Pope v. Cantwell
| Decision Date | 12 July 1913 |
| Docket Number | 313.,312 |
| Citation | 206 F. 908 |
| Parties | POPE v. CANTWELL. SAME v. CANTWELL et al. |
| Court | U.S. District Court — District of Massachusetts |
In Case No. 312:
Nason & Proctor, of Boston, Mass., for complainant.
Lee M Friedman and Henry I. Morrison, both of Boston, Mass., for respondent.
In Case No. 313:
Nason & Proctor, of Boston, Mass., for complainant.
E Philip Finn, of Boston, Mass., for respondent Ford.
Henry I. Morrison, of Boston, Mass., for respondent Cantwell.
Patrick J. Cantwell, of Brookline, a builder, was adjudged bankrupt in this court on his own petition November 28, 1911. His schedules showed liabilities of more than $10,000 against assets of about $4,000, no part whereof was in tangible property; the whole consisting of claims now in litigation in the Massachusetts courts.
The defendant Sarah M. Cantwell is the bankrupt's wife, to whom he has been married since 1894. By deed dated November 1, 1909, John C. L. Dowling conveyed to her a parcel of land on St. Paul street, Brookline, containing, according to the deed, 11,730 square feet. The consideration named was $1, etc., and the land was recited to be subject to a mortgage of $2,000.
The actual transaction was in part an exchange. By deed of the same date there was conveyed to Dowling a parcel of land said to contain 6,107 square feet, with a house thereon, on Kent street, in Brookline, standing in Mrs. Cantwell's name. The deed, executed by her, recited that the conveyance was in her right, and the bankrupt joined in it for the stated purpose of releasing his interest. The consideration named in it was $1, etc., and the property was recited to be subject to a mortgage for $6,500. Dowling also paid Mrs. Cantwell $2,300 in cash.
The land thus conveyed to Mrs. Cantwell was thereafter surveyed into two lots, hereinafter referred to as A and B. Upon lot A, containing about 6,5 feet and having a frontage of 69 feet on St. Paul street, Mrs. Cantwell gave a construction loan mortgage, recited to be in her right, to W. W. Babcock, under date of May 15, 1911; the bankrupt joining as in the above deed of the Kent street property. Upon this lot there was thereafter erected a six-apartment house; the bankrupt being the architect and builder. It was completed about November 1, 1911, four weeks before his bankruptcy. Of his debts as scheduled, some part-- how much is left uncertain-- was incurred while he was constructing this building. The second of the above suits is concerned with lot A and this building thereon, as will below appear. The mortgage of $2,000 on both lots, to which the conveyance received by her was subject, was paid off and discharged September 10, 1911.
Lot B still stands in Mrs. Cantwell's name. It contains about 5,159 square feet, is in the rear of lot A, and is connected with St. Paul street by a 10-foot passageway at the side of and over lot A. With this lot the first of the above suits is concerned.
The plaintiff is the trustee of Cantwell's estate in the bankruptcy proceedings above mentioned, being the case numbered 17,715 on the bankruptcy docket of this court. His bill in the first case is brought against Mrs. Cantwell only. In it he alleges that the bankrupt caused lot B to be conveyed to his wife in contemplation of bankruptcy; that the consideration for the conveyance was the bankrupt's property, not his wife's; that she furnished no part of the consideration; that in causing the title to be put in her name he acted with intent to hinder, delay, and defraud his creditors; that he thereafter incurred further debts in contemplation of bankruptcy; that she took the title with intent to assist the bankrupt's fraudulent purpose and to hold the title for his benefit, under the fraudulent appearance and claim, as to all others, of absolute ownership in herself; also that the bankrupt caused the conveyance to be made to her while himself insolvent and contemplating bankruptcy, with the view of preventing the property from coming to his trustee, and thus prevent its administration under the Bankruptcy Act for his creditors' benefit, and that she had reasonable cause to believe him insolvent and contemplating bankruptcy at the time. The bill alleges, further, that she was about to transfer the property to an innocent purchaser for value. It asks that the above deed of November 1, 1909, from Dowling, under which she holds the property, be declared void, and a conveyance of it to the plaintiff as assets of the estate be ordered, and that meanwhile any transfer or incumbrance of the land be restrained. An injunction ad interim has issued.
Dowling, who made the transfer which the plaintiff seeks to 'avoid,' is neither charged with any fraud nor is he made a party. It is not claimed that the property he transferred was the bankrupt's, in any sense, at the time. The case, therefore, is not the ordinary suit by a bankruptcy trustee under section 70e of the Bankruptcy Act (Act July 1, 1898, c. 541, 30 Stat. 565, 566 (U.S. Comp. St. 1901, p. 3452)). It is not sought to avoid the transfer as to the grantor but to treat the grantee as holding it under a conveyance lawful so far as the grantor was concerned, but for her husband the bankrupt, instead of for herself, and to obtain a conveyance accordingly from her.
Mrs. Cantwell, in her answer to the bill, denies all its allegations of fraud or fraudulent intent and of knowledge thereof, or cause to believe, on her part, that there was any such fraud or fraudulent intent; and she alleges that the property conveyed was at all times hers, paid for by her, and not by her husband, and never his property, either legally or equitably.
The plaintiff contends, and the defendant denies, that this Kent street property, transferred to Dowling subject to a mortgage for $6,500 in exchange for the St Paul street land, whereof lot B is part, was really the bankrupt's. It stood in his wife's name, and she testified that she paid about $4,800 of her own money for it and another lot on Kent street below referred to. The bankrupt testified that it belonged to her. But these statements must be considered in connection with the following facts which appear from the evidence:
The deed under which Mrs. Cantwell held this Kent street lot was from the trustees of the Aspinwall estate, dated March 25 and recorded March 26, 1902. It ran to her, and, so far as it showed, the lot was then unincumbered, save for certain restrictions. The same trustees had previously given another deed to her, dated November 1 and recorded December 26, 1901, of an adjoining lot on Kent street, containing 6,175 feet. This lot she had mortgaged to one Graffam for $6,000; the deed being dated December 12 and recorded December 26, 1901. By deed dated March 25 and recorded March 26, 1902, she had mortgaged both lots to Graffam for $1,500. By deed dated October 1 and recorded November 5, 1902, she had mortgaged both lots to Graffam for $7,000; and by deed dated November 21 and recorded November 24, 1902, she had mortgaged both lots to the Curtis & Pope Lumber Company for $1,200.
Each of the above mortgages was expressed to be in her right, and in each her husband had joined. The mortgage for $6,000 on the first lot acquired was not expressed to be subject to any prior mortgage. That for $1,500 on both lots was made subject to the $6,000 mortgage. That for $7,000 on both lots was not expressed to be subject to any prior mortgage. That for $1,200 was made subject to the mortgage for $7,000. Before the exchange for the St. Paul street property all these mortgages, except that for $7,000, had been discharged, and a partial release from that had been given.
Upon each of the Kent street lots a three-apartment house had been built during 1902. The bankrupt was the builder. By deed dated August 1, 1907, Mrs. Cantwell conveyed the lot transferred by the trustee deed to her of November 1, 1901, with the house since built on it, to Ellen Shanahan, for what price does not appear, free from incumbrances. The Graffam mortgages for $6,000 and $1,500, also the Curtis, etc., Company mortgage for $1,200, were discharged, and this lot released from the $7,000 mortgage. The remaining house on Kent street, on the lot covered by the trustees' deed of March 25, 1902, continued to stand in her name until conveyed by her as above in exchange for the St. Paul street property, subject to a mortgage for $6,500, presumably the Graffam mortgage, given originally for $7,000, less a payment for partial release. The Curtis & Pope mortgage she claims to have paid off.
The testimony of the bankrupt and of his wife was that he agreed with her to build the two Kent street houses on the above lots standing in her name for $14,500, being the total amount of the three mortgages to Graffam-- these being 'construction loan' mortgages. If there was such an agreement, there is nothing but their testimony to prove it. It is not claimed to have been anything but an oral agreement, nor is anything in writing produced to show that it was ever carried out as made. It is not shown to have been based on any written specifications. Although he had then been carrying on building operations, sometimes involving considerable amounts, since before his marriage in 1894, and continued to do so until his bankruptcy in November, 1911, the bankrupt never kept any books. Nor, although his wife had similar transactions with him, both before and after this one, also involving considerable amounts, did she ever keep any books, or take from him any written receipts or accounts, showing what money raised on property in her name went into his hands or what he had done with it.
According to the testimony of both, while building the Kent street houses, he got money, under her authority,...
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