Lace v. Smith
Lace v. Smith
Opinion of the Court
This is a bill in equity brought by John J. Lace, Jr., as assignee in insolvency of Clarence A. Smith, against said Clarence A. Smith, Marquis D. L. Mowry, and the Industrial Trust Company for the purpose of setting aside certain transfers and conveyances made by Smith to Mowry and alleged to be in fraud of creditors. The allegations of complainant’s bill are, substantially, as follows: That on January 21, 1910, a petition was filed in the Superior Court of Providence county by a creditor of said Clarence A. Smith praying that said Smith be adjudged insolvent, and that on April 20, 1910, said Smith was duly adjudged insolvent by said court; that on June 3, 1910, the complainant was duly appointed assignee in insolvency of said Smith; that on the same day he duly qualified as such assignee, and that he has ever since been, and now is, acting as such as *430 signee; that prior to his adjudication in insolvency, to wit, on September 30, 1909, said Smith was the owner of certain real estate (described in the bill) of the value of, to wit, $4,000 and that on September 29, 1909, said Smith had certain moneys on deposit -with the said Industrial Trust Company of the value of, to wit, $300; that on September 30, 1909, said Smith, being then insolvent, and acting in contemplation of insolvency, transferred and conveyed said real estate to said Marquis D. L. Mowry and on September 29, 1909, assigned and transferred said moneys, on deposit with said Industrial Trust Company, to said Mowry; that' said transfers, conveyances, and assignments were made by said Smith with the intended purpose on his part to hinder, delay, and defraud his creditors, and with the further intended purpose on his part to prefer said Mowry, an alleged •creditor; that said Mowry, at the time of taking and receiving said transfers, etc., knew, or had reasonable cause to believe, that said Smith was insolvent, and was acting in contemplation of insolvency, and was making said transfers, etc., with the intents aforesaid; that said property so transferred is not exempt from execution; that the complainant has caused written demand to be made upon the said Industrial Trust Company for the payment to him of said moneys, and a further demand upon said Smith and said Mowry for the conveyance to him, as assignee as aforesaid, of said real estate and said moneys, and that the respondents have neglected and refused, and still neglect and refuse, to comply with said demands; and that -the complainant is informed and believes that said Mowry intends to get control of said moneys by virtue of the said assignment thereof to him by said Smith.
The prayers of the bill are substantially as follows: That said transfers, conveyances, and assignments be decreed to be invalid and void with respect to the complainant; that the complainant be decreed the owner of said real estate and said moneys, as assets of the estate of said insolvent; that the respondents be prohibited from exercising any acts of control *431 over said property; that the respondents Smith and Mowry be ordered to make to the complainant proper transfers of said real estate and of said moneys; that an account be taken of the rents and profits which the respondents have received from said property and that they be ordered to pay over such rents and profits to this complainant; and that the respondents Smith and Mowry be charged for their joint and several use and occupation of said land, and that an account be taken of the sum or sums of money in which they, or either of them, are chargeable therefor.
The averments of the answer of Clarence A. Smith are substantially as follows: It is admitted that said Smith was adjudged an involuntary insolvent on April 20, 1910; it is neither admitted nor denied that the complainant was appointed assignee of said Smith and that he qualified, and has since acted, as such assignee; it is.admitted that said Smith was, on September 30, 1909, the owner of certain real estate, but the correctness of the description of the same is neither admitted not denied, and the value set upon the same is denied; it is neither admitted nor denied that said Smith, on September 29, 1909, had certain moneys on deposit in the Industrial Trust Company; it is denied that said Smith, being insolvent, and acting in contemplation of insolvency, transferred said property to said Mowry and that said transfers were made with the intent to delay and defraud his creditors and to prefer an alleged creditor, said Mowry, and that said Mowry at the time of receiving said transfers knew, or had reasonable cause to believe, that said Smith was insolvent and acting in contemplation of insolvency, and was making said transfers with the intent aforesaid, and that the property so transferred is not exempt from execution; and it is neither admitted nor denied that the alleged demands were made, and that said Mowry intends to get control of said moneys by virtue of said assignment thereof to him by said Smith.
The averments of the answer of Marquis D. L. Mowry are substantially as follows: It is neither admitted nor *432 denied that said Smith was adjudged an involuntary insolvent on April 20, 1910; it is denied that the complainant was ever duly and legally appointed assignee in insolvency of said Smith; it is admitted that said Smith made to said Mowry the alleged transfers of said real estate and of said moneys, but it is averred that said transfers were made in consideration of legal services performed by said Mowry for said Smith, and it is denied that said Mowry, in receiving said transfers, acted in any such collusion as is alleged in the bill; it is averred that part of said real estate is exempt from execution; it is denied that the complainant ever had any authority to make the alleged demands; and it is admitted that said Mowry has attempted, by legal process, to get control of said moneys on deposit in the said Industrial Trust Company.
The averments of the answer of the Industrial Trust Company are substantially as follows: It is admitted that on September 29, 1909, said Smith had certain moneys on deposit with the said Industrial Trust Company, and it is averred that the exact amount thereof on that day was $337.98; it is admitted that the complainant has caused written demand to be made upon the said Industrial Trust Company for said moneys, and that the said company has neglected and refused, and still neglects and refuses, to comply with said demand; and it is admitted that said Mowry intends to get control of said moneys deposited with the said company. All the other allegations pf the bill of complaint are neither admitted nor denied.
The complainant filed a general replication to each answer. The case was tried in the Superior Court on bill, answers, replications, and proof; a decision was rendered for the complainant and a final decree was entered, as follows: “This cause came on to be tried in said Court October 2, 1912, upon the bill, answers, replications and issues of fact, and testimony was adduced in behalf of the complainant and in behalf of the respondents, and said cause was argued by counsel, and thereupon, upon consideration thereof, it *433 is ordered, adjudged and decreed, that said assignment of moneys deposited with said Industrial Trust Company, bearing date September 29th, A. D. 1909, made by said respondent, Clarence A. Smith, to said respondent, Marquis D. L. Mowry, and that said deeds of certain real estate situated in Johnston in said county, and described in the bill of complaint, bearing date September 30th, A. D. 1909, made by said respondent, Smith, to said respondent, Mowry, are invalid; that the complainant is entitled to said deposit of money and to said real estate as assets of the estate of said Clarence A. Smith, an insolvent;- that said Marquis D. L. Mowry be ordered and directed, and he is hereby ordered and directed to forthwith make in writing his assignment of said deposit, with the accumulated interest thereon, to the complainant, and to deliver thé same, and the bank book containing an entry of said deposit, to the complainant; that said Marquis D. L. Mowry be ordered and directed, and he is hereby ordered and directed, to forthwith make his deed or deeds conveying all his right, title and interest in said real estate to the complainant (excepting the burial ground located upon said real estate), and to deliver the same to the complainant; that said respondents, Marquis D. L. Mowry and Clarence A. Smith, and each of them, be, and they hereby are, perpetually enjoined from further prosecuting in this court and in any other court of this State, said action at law against the respondent, said Industrial Trust Company, mentioned in the answers of said Industrial Trust Company and of said Mowry in this cause, which said action is now pending in this court, and is entitled Clarence A. Smith, Trustee, appellant, vs. Industrial Trust Company, and is numbered 26,749 on the docket of said court; and that the complainant recover from the said respondents, Clarence A. Smith and Marquis D. L. Mowry, his costs to be taxed by the Clerk.”
From this decree the respondents Mowry and Smith appealed, the reasons of appeal being as follows:
*434 “1. That said decree is against the evidence and the weight thereof.
“2. That said decree.is against the law, and null and void.
“3. That said decree is against the right of the respondents as disclosed in pleadings and proof.
“4. That said Lace, pretended assignee, was never legally appointed assignee.
“5. There is no allegation of intentional fraud alleged in complainant’s bill, and intention is a fact which ought to be averred and proved, and the circumstances pleaded do not in themselves amount to fraud.
“6. That the pretended assignee has an adequate remedy at law to set aside the conveyances if fraudulent or a cloud . on his pretended title of the real estate mentioned and described in his bill and try title to the same and recover possession thereof in an action of trespass and ejectment and not by bill in equity.
“7. That his bill does not allege that said pretended assignee was in possession of the estate described in his bill or any part thereof at the time of bringing his bill or ever was in possession of the said estate or any part thereof. Equity will not lie to remove a cloud on title to real estate unless the complainant is in possession thereof.
“8. That his bill does not allege, aver or set forth that it was the fraudulent intent or purpose of defts. Mowry or Smith, or either of them, under said transfers of property to hinder, delay and defraud the creditors of said Smith, deft., or either or any of them.
"9. The complainant does not state facts sufficient to constitute a cause of action.
“A suit in equity to remove a cloud from title is not the proper remedy where the only purpose is to try the legal title. The cause presented in this case and in this way shows that this proceeding is an attempt under the guise of a bill in equity to remove a cloud, to try the legal title to the premises.
*435 “ 10. That his bill does not, nor in the allegations thereof set out or disclose any fraud, or how or in what manner and in what particular or by what means fraud was practiced by said Smith or Mowry, or either of them to hinder, delay or defraud the creditors of said Smith by the conveyances of said real estate and the money on deposit in said Industrial Trust Company.
“11. That his bill does not set out or allege what was the value of Smith’s property at the time it was conveyed and transferred to said Mowry, or how much Smith was indebted at the time of the conveyances and transfers and that he owned no other property at the time and that the transfers were without consideration, or adequate consideration or that Smith had no other property.
“12. That said bill alleges said Mowry was a preferred creditor of said Smith at the time the conveyances were made by said Smith, but does not allege how he was a preferred creditor or how much was owing said Mowry or how much Smith was owing at the time or that Mowry knew, or had reasonable cause to believe that the assets of said Smith at a fair valuation at the time of the conveyances and transfers of said estate and deposits were insufficient to pay Smith’s creditors or that said conveyances and transfers were made to said Mowry as a preferred creditor.”
The more material contentions of the respondent Mowry, as raised by his reasons of appeal, may be classified as follows: (1) That a bill in equity is not the proper form of remedy; (2) that the allegations of the bill are insufficient to make a case; (3) that the complainant is not the legal assignee of the respondent Smith; and (4) that the finding of the Superior Court was against the evidence.
It would not be profitable, in view of the preceding, to further discuss the testimony. It already sufficiently appears that the said transfers and conveyances to Mowry were made by the said Smith with the intent to hinder, delay, and defraud his creditors and that the said Mowry, at the time of taking said transfers and conveyances, from his long connection with Smith as his counsel, knew or had reason to believe that the said Smith was insolvent and that such transfers and conveyances were made by him with intent to hinder, delay, and defraud his creditors.
The appeal is dismissed, the decree of the Superior Court is affirmed, and the cause is remanded to said court for further proceedings.
Reference
- Full Case Name
- John J. Lace, Jr., Assignee vs. Clarence A. Smith Et Al.
- Status
- Published