The plaintiff, assignee for the benefit of creditors of Eastern Mass. Insulation Co., Inc., under an instrument dated February 18, 1960, sought in this bill of complaint to recover three automobiles transferred by the corporation to the defendants who were the three stockholders of the corporation and its officers and directors, and also to recover two payments ($1,200 and $3,800) which adjusted the lesser value of two of the automobiles, all allegedly without fair and adequate consideration. The final decree in the Superior Court dismissed the bill.
The judge found that the transfers, on or about September 30, 1959, and the payments on January 14, 1960, had been charged to 1959 salaries; in 1959 the corporation, which had theretofore made profits, was losing money; at no time was it insolvent but it had ceased to be a profitmaking enterprise; "at the time of the transfer there was no intention of the corporation being liquidated ... and ... [the defendants] acted without any intentional fraud." The judge found also that the plaintiff had sold the assets and collected the receivables, and that the amount realized and to be realized was sufficient, without paying the expenses of administration, to pay the creditors in full. There was evidence tending to show that upon full payment of fees and expenses, in the amounts claimed, the creditors would not be fully paid.
In the circumstances the burden of proof to show consideration for the transfers and withdrawals may have been upon the defendants. Shaw v. Harding, 306 Mass. 441, 447 (the president, who was also treasurer, general manager, and a director, had the burden in respect of items charged as "expenses"). Accord, Daniels v. Briggs, 279 Mass. 87, 92. See Heise v. Earnshaw Publications, Inc. 130 F.Supp. 38, 40 (D. Mass.); Von Arnim v. American Tube Works, 188 Mass. 515, 517; Uccello v. Gold'n Foods, Inc. 325 Mass. 319, 327; Samia v. Central Oil Co. of Worcester, 339 Mass. 101, 126-128; Pepper v. Litton, 308 U.S. 295, 306; McKey v. Swenson, 232 Mich. 505, 514-515; Washington and Rothschild, Compensating the Corporate Executive, (Rev. ed.) pp. 374-376, 378-379. Compare Columbian Insecticide Co. of Boston v. Driscoll, 271 Mass. 74, 78; Murphy v. Hanlon, 322 Mass. 683, 686-687, and cases cited.
We do not, however, reach that issue nor others which would be presented if the plaintiff was acting under a general assignment.
The transfers of the automobiles and the adjusting payments, even if fraudulent as to creditors, were not void, Service Mortgage Corp. v. Welson, 293 Mass. 410, 413, and we need not determine whether tangible property not within the precise terms of the description, such as automobiles, was assigned. For the "general rule" that a general assignee may not set aside a fraudulent conveyance, nor act in the right of creditors, rather than in the right of the assignor, see Glenn, Fraudulent Conveyances (Rev. ed.)
The bill of complaint alleges, in paragraph 5, that the corporation "executed a general assignment." The answers admit the allegations of the paragraph. This allegation is of mixed fact and law. General Laws c. 231, § 87, (made applicable in equity by G.L.c. 231, § 144), in providing, as to pleadings, that "allegations therein shall bind the party making them" refers primarily, at least, to allegations of fact. Adiletto v. Brockton Cut Sole Corp. 322 Mass. 110, 112. Willett v. Webster, 337 Mass. 98, 101. See Bancroft v. Cook, 264 Mass. 343, 348, and cases cited; De Nunzio v. City Manager of Cambridge, 341 Mass. 420, 421.
Admissions of law in the course of trial do not bind the party making them. Boston Hat Manufactory v. Messinger, 2 Pick. 223, 240 ("... the confession of a party as to the legal effect of his contract cannot bind him ... [nor] others who may be joined with him"). Day v. Old Colony Trust Co. 228 Mass. 225, 230. Tritsch v. Ayer Tanning Co. Inc. 316 Mass. 598, 602-603 ("The admission by Burns in his testimony that the correspondence constituted the entire contract does not help the plaintiff [and the remainder of the contract could be shown]. It is still a question of law what was the contract and what is its meaning"). Gow v. Buckminster Hotel, Inc. 336 Mass. 606, 608.
It is established that admissions of fact, contrary to the true fact, which would have the effect of depriving a court of jurisdiction (Rolfe v. Atkinson, 259 Mass. 76, 78), or of importing jurisdiction to a tribunal (Singer Sewing Mach. Co. v. Assessors of Boston, 341 Mass. 513, 517), are not binding.
Undoubtedly such an allegation of mixed fact and law, as that the assignment was "general," and the admission thereof, without more, will conclude the issue. Stone v. Lothrop, 109 Mass. 63, 66. Klem v. Commonwealth, 301 Mass. 340, 342. Adiletto case, supra, p. 112. McDade v.
The case is remanded to the Superior Court and, upon the allowance therein within thirty days of an amendment to the answer denying that the assignment was general, the decree is to stand affirmed; otherwise the case is to be returned to this court.
1956: drawings, $15,400; net profit, $ 6,900 (cents omitted) 1957: drawings, $20,000; net profit, $ 3,500 ( " " ) 1958: drawings, $ 8,500; net profit, $ 3,054 ( " " ) 1959: drawings, $18,509; net loss, $56,670 ( " " )