Stratton v. Putney

• Decision Date: 12 March 1886
• Parties: STRATTON and others v. PUTNEY and another. HALL and others v. SAME.
• Court: New Hampshire Supreme Court

4 A. 876

63 N.H. 577

STRATTON and others

v. PUTNEY and another.¹

HALL and others

v. SAME.

Supreme Court of New Hampshire.

March 12, 1886.

Bills in equity to remove a cloud from the title of certain real estate. The plaintiffs in both actions attached the land in question as Putney's, February 20, 1884; and, having obtained judgment in their suits took out executions, and the return of the levy was made at the September term, 1884. The defendant Elliott claims the land under a warranty deed from Putney and wife, dated July 7, 1882. Before this conveyance Putney applied to Elliott for a loan of $2,000, and proposed to mortgage the land as security; but Elliott preferred an outright deed, and it was so arranged. July 28, 1882, an agreement under seal was executed by Elliott and Putney that Elliott would sell, and Putney buy, the land for $2,000, to be paid in 10 equal annual installments of $200 each; and, when paid, Elliott would give Putney a deed. Putney was to pay Elliott rent. He paid one installment of $200 in 1883, and has paid rent to January, 1884. In February, 1884, he failed. The plaintiffs had no notice of the conveyance, except the constructive notice from the record of the deed, until a few days before the failure, and no notice till then of the agreement for a reconveyance. No part of either of the accounts on which the plaintiffs took judgment existed at the time of Putney's conveyance. At that time the value of the land conveyed was $2,300. The question reserved is whether, on these facts, the conveyance was fraudulent in law as against these plaintiffs.

Albin & Martin, for plaintiffs.

Briggs & Huse, for defendants.

SMITH, J. The conveyance by Putney to Elliott, and the agreement executed by them, in pursuance of the understanding entered into at the time of the negotiation for the conveyance of the land, that Elliott would reconvey to Putney upon repayment of the purchase money, were, in effect, a loan by Elliott to Putney of $2,000, and a taking of security for the loan by deed absolute upon its face. The value of the land exceeded the amount of the loan, and Putney was in embarrassed circumstances. The law does not permit debts to be secured in this manner, as against creditors. A secret understanding that, on payment of the debt, the land shall be reconveyed, constitutes a secret trust that renders the conveyance void against subsequent as well as existing creditors. The conveyance is deemed fraudulent, whether the actual purpose to defraud is found as a fact, or is conclusively presumed from admitted facts. The trust being established, the intent to defraud creditors is conclusively presumed. Such a trust is inconsistent with an absolute sale. Smith v. Lowell, 6...