Smythe v. Sprague

• Decision Date: 11 May 1889
• Citation: 149 Mass. 310,21 N.E. 383
• Parties: SMYTHE v. SPRAGUE et al.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

149 Mass. 310

21 N.E. 383

SMYTHE v. SPRAGUE et al.

Supreme Judicial Court of Massachusetts, Suffolk.

May 11, 1889

COUNSEL

H.E. Fales and S.H. Tyng, for plaintiff.

C.H Sprague, for defendants.

OPINION

MORTON C.J.

This case raises the question whether land which has been conveyed by an insolvent debtor to a bona fide purchaser, for a valuable consideration, by a deed which is not recorded until after the assignment in insolvency, passes to the assignee. We are not aware that this question has been directly adjudicated by this court. The insolvent law provides that "the assignment shall vest in the assignee all the property of the debtor, real and personal, which he could have lawfully sold, assigned, or conveyed, or which might have been taken on execution, upon a judgment against him, at the time of the first publication of the notice of issuing the warrant." Pub.St. c. 157, § 46. The general purpose of the law is to vest in the assignee, for distribution among the creditors, all the property belonging to the debtor, except such as is exempt from being taken on execution. It therefore vests all the property of the debtor which he could lawfully have sold, or which might have been taken on execution against him; the last clause being intended, as stated by Chief Justice SHAW, to reach "property which he had fraudulently conveyed, without adequate consideration--such a conveyance of property, which would be good against himself, but which his creditors might attach or take on execution." Grant v. Lyman, 4 Metc. 470-473. But it is not within the purpose of the law that the assignee should take property which does not belong to the debtor, even though the title is in him, if he has a bare legal title, and no beneficial interest in it. It has accordingly been held in several cases that property held by the debtor in trust for others does not pass to the assignee, although the legal title and the apparent ownership is in the debtor, and although individual creditors, who had no notice of the trust, might take it on execution. Audenried v. Betteley, 5 Allen, 382; Chace v. Chapin, 130 Mass. 128; Holmes v. Winchester, 133 Mass. 140; Sibley v. Bank, Id. 523; Low v Welch, 139 Mass. 33.

When we consider the nature of the right of a creditor to take on execution property of the judgment debtor which has been conveyed by an unrecorded deed, we see that it is a right founded upon an estoppel of the grantee in the deed to set up his title. The statute declares that an unrecorded deed "shall not be valid as against any person other than the grantor or lessor, and his heirs and devisees, and persons having actual notice of it." Pub.St. c. 120, § 4. It does not declare the deed to be void and of no effect. On the contrary, it recognizes it as valid against the grantor, his heirs and devisees, and all other persons who have notice of it. Such a deed conveys the title to the grantee. A creditor of the grantor, without notice of the deed, may take the land on execution; but he has this right, not because it is the property of the grantor, but because the grantee, in violation of our registry laws, has failed to record his deed, has thereby committed a constructive fraud upon the purchaser or creditor, and is therefore estopped to set up his title against him. The right of an attaching creditor is...