80 Ky. 381 | Ky. Ct. App. | 1882
delivered the opinion oe the court.
In view of the importance of the questions involved, and ■as a response to the earnest petition for a rehearing by the 'learned counsel who presented it, we have concluded to ■restate, in a more extended form, the opinion .we entertain ■of the law and facts pertinent to a decision of the material vssues in this action.
On the 26th day of February, 1877, Shultz conveyed a tract of land to Mary Jones for $7,000; one third thereof was paid in hand, and the other two thirds secured by -promissory ‘notes, due respectively March 1st, 1878, and March 1st, 1879, which, on the same day of their execution, were assigned by Shultz to Beatty, to indemnify him .against loss on account of his suretyship for Shultz in a iarge süm.
On the 4th of August, 1877, Shultz filed his • voluntary -petition in bankruptcy, and the appellee, Dudley, was ap•pointed as his assignee.
In November thereafter the appellee brought this action -to recover said notes and the sum that had been paid .on -them, on the alleged grounds that Shultz had fraudulently ■ assigned them; that he was insolvent, and had assigned ‘them to Beatty with the view of giving hitrua preference.
These allegations of the petition appear to be inconsistent; but we are inclined to think they are not condemned ’by subsection 4 of section 113^ Civil Code, as it is in effect .-alleged that the plaintiff does not know which of the inconsistent allegations is true, but that one of them is; and if the assigned notes had been more than sufficient to pay Beatty’s liability, which was not fully known at the institution of the action, the allegation of fraud was appropriate
The appellants’ answer put in issue all of the material averments of the petition, and they also pleaded the statutes of limitation. The evidence shows that Beatty’s liability as Shultz’s surety was greater than the amount of the notes in •contest; that Shultz, at the time of the assignment of the notes, was insolvent, and that Beatty had reasonable grounds so to believe, if indeed he was not actually cognizant of the fact.
It appears that Beatty is the father-in-law of Shultz, but did not participate in the sale to Mrs. Jotaes; nor are the assigned notes, or any part of them, to be held in trust for Shultz. Under this state of facts it is insisted that both Shultz and Beatty were guilty of actual fraud, and that sections 5128 and 5129 of the Revised Statutes of the 'United States are applicable thereto, or that section 1, •article 1, chapter 44, General Statutes, embrace this case. It never has been' held that the payment of a debt, or the giving of an indemnity against loss by reason of suretyship, -is actually fraudulent, unless the creditor or surety received from the debtor more of his property than was necessary to pay the debt or protect the surety, or united with him in illegally placing beyond the reach of his creditors his prop■erty or some part of it, or aided him in some act which would hinder, delay, or defraud his creditors.
To some one of these exceptions it will be found, by 'Careful analysis, that all of the cases cited are applicable, •and we have been unable to find any case which decides that the bare collection or indemity against debt by legal means, although the debtor be known to be insolvent, -is
The cases of Edwards, &c., v. Coleman, 2 Bibb, 204; Lyne, &c., v. Bank of Kentucky, 5 J. J. M., 554; Lowry v. Fisher, 2 Bush, relate to voluntary conveyances, and in each it will be found that the transactions were in whole or part without valuable consideration.
The two cases of Pett’s trustee v. Viley, 4th Bibb, and McKinley, &c., v. Combs, &c., 1 Mon., are similar, and. based upon the doctrine that a conveyance in trust for a. nominal consideration, and to pay debts without either the request or subsequent consent of the creditors, is without consideration. *This fact, however, distinguishes the former from the latter case. In the former, the deed was held fraudulent because judgments were obtained against the debtor before it was executed.
In Ward, &c., v. Trotter, &c., 3 Mon., 4, the deed of trust was held fraudulent because it was made to prevent a sacrifice of the grantor’s property, and thereby “hinder his creditors from effectively using the lawful means of obtaining the payment of their debts.’’ Nevertheless, in that case it was decided to be lawful for a debtor, by a deed of trust, to prefer and secure one creditor over another.
Such preferences are legal and enforceable unless attacked under the provisions of the state and federal statutes within six months after they are made. The case of White v. Graves, 7th J. J. Mar., 525, turned upon the secret parol agreement between the grantor and trustee that the former should have part of the money for which the property embraced by the deed might sell, which was held to be fraudulent, and rendered the deed of trust illegal.
The main point in the case of Beadles and wife v. Miller, Gardner, &c., 9th Bush, 410, was to show that the grantee, who bought the land from her brother,'and paid him a fair price for it in money, entered into the contract with him with notice that he intended, by the sale and conveyance to her, to delay, hinder, or defraud his creditors.
The court decided that she did not have notice of such a purpose upon his part, and upheld the conveyance. It is clear-from this decision that, had notice of the intention of the grantor to delay, hinder, or defraud his creditors by the conveyance been communicated to her before she paid him the money and accepted the deed, it would have been held fraudulent, in pursuance of the last sentence of section 1, article 1, chapter 44, General Statutes, title “Fraudulent Conveyances and Devises,” which reads:
‘ ‘ This section shall not affect the title of 'a purchaser for a valuable consideration, unless it appear that he had notice of the fraudulent intent of the immediate grantor, or of the fraud rendering void the title of such grantor.”
And we think this statute was intended to provide against the fraudulent practices of vendees in knowingly facilitating the disposition of property by vendors to avoid the payment of their just debts.
And as more than four months expired after the assignment and before Shultz’s bankruptcy, the statute of limitation provided in section 5x28, Revised Statutes of the United States, furnished a complete- bar t<? the action of appellees. That section applies to payments or assignments to secure antecedent debts, and embraces transactions like this, which are protected by limitation after four months.
As the assignment was not voluntary, and therefore not within section 2, article 1, chapter 44, General Statutes, but for a valuable and commensurate consideration, it belongs to the category of cases provided for by the statute of 1856, which is contained in article 2, chapter 44, General Statutes, and cannot be avoided, 'because the suit was not brought
Wherefore, the judgment is reversed, and cause remanded, with directions to render judgment in conformity to the •.principles of this opinion.