Brainard v. Van Kuran

22 Iowa 261 | Iowa | 1867

Wright, J.

1. Fraudulent conveyance: remedy of creditor. I. As to the equity cause. The object of the petition, after the levy and before the sale, was to discover the true and real nature of the debtor’s interest in the property, it being alleged that it was held in the wife’s name, in secret trust for the husband, and in fraud of the rights of his creditors. According to the testimony, there was no other visible property from which the debt could be made, for, as the debtor himself states, “ nine-tenths, or ninety-nine one-hundredths,” was conveyed by the mortgage. In such a case it is not necessary, to give the court jurisdiction, and to entitle plaintiff to the relief asked, that he should have first had a return of nulla lona. The case falls within the rule in Loving v. Pairo (10 Iowa, 282). Plaintiff is not seeking to reach equitable assets, upon which his judgment is not a lien. But after levy and before sale, he asks to have set aside a conveyance of the property levied upon, which he alleges is fraudulent and void. To do this it is not necessary to exhaust his legal remedies in his effort to obtain satisfaction of his judgment. And see also Postlewait v. Howes, 3 Id., 365; Harrison v. Kramer, Id., 543; Savery v. Browning, 18 Id., 246 ; Beck v. Burdett, 1 Page, 305.

2. home-liability to foreign debts. Plaintiff’s debt was contracted in another State, long before the homestead (a part of the property in controversy) was acquired; and as the decree reserved it from sale until the other property was there was no error in adjudging it to be ultimately liable. Laing v. Cunningham, 17 Iowa, 510.

3. fbaubuLENT CONveyance : evidence examined. The only other question is, whether, upon the facts, plaintiff was entitled to the relief asked. Defendants claim that the property belonged to the wife, _ _ , . i i because purchased by her and with her means. * # ° We think the testimony, so far from showing this, establishes, beyond any fair room for doubt, that it was purchased in law and1 in fact with the husband’s means, and taken in the wife’s name to hinder and delay creditors. And this, too, long after plaintiff’s debt was contracted. The pretense that the wife had means, arising from her father’s estate in Massachusetts, which she placed in her husband’s hands to be invested in property in the West, and that it was accordingly invested in this property, is entirely unsupported by the proof. She doubtless did realize some means from the estate, but she, years and years ago, surrendered it to her husband, and he used and invested it fifom time to time at his own pleasure, without any expectation on the part of either, of ultimate accountability to her. This is manifest from the following, among other considerations: He had this money prior to 1860, in Massachusetts, where the rule of the common law obtained, and she could, as against creditors, certainly have no claim against her husband therefor.

In 1861 he was discharged under the insolvent laws of Massachusetts; she resided there; was not mentioned among his creditors, and is thereby either barred absolutely from now setting up this claim, or, if not, the fact that she was not named as a creditor or failed to assert the same, is a most potent circumstance against its validity at this time.

Then, again, we are satisfied that there was no expectation or understanding that this money was to be returned; but she voluntarily permitted him to use it as his own, and in his own business, without notice of her rights. And, finally, her money did not pay for the property. That is to say, it was bought for the most part on credit, for which the husband is jointly bound with the wife.

So that, upon all the facts, we cannot resist the conviction that this was the husband’s property. If not, names, forms, formal legal titles, must possess an unwarrantable sanctity, and creditors are without rights in a court of conscience. Thompson v. Gray, 21 Iowa; Wolcot v. Rickey, present term; Hook v. Mowre, 17 Id., 195 ; Wilson v. Horr, 15 Id., 489; Vandall v. Vandall, 13 Id., 247; Laing v. Cunningham, supra.

II. As to the garnishee proceeding against the defendants Smith and the son Andrew Van Kuran. And this we remark was a law action, tried by the court, appellants now insisting that the finding was not justified by the evidence. Issue was taken upon the answer of the garnishee as contemplated by*ection 3208of the Revision. • The issue thus taken was tried upon full testimony, and found for plaintiff. No facts were found, but we are asked to review the testimony, and for the reason that it does not sustain the judgment or finding, order a new trial.

4. new trial: finding by the court. In this condition of the record, every presumption is to be indulged in favor of the finding below, and it must clearly appear that the verdict or finding of J r, , ,. the court is not sustained by the testimony. As to this, there is no room for controversy. Barker v. Brown, 15 Iowa, 70; Sheppard v. Downing, 14 Id., 597; Lodge v. Reznor, 13 Id., 600 ; Shepherd v. Brenton, 15 Id., 81; Bellamy v. Doud, 11 Id., 285; Pearson v. Minium, 18 Id., 36 ; Robinson v. Saunders, 14 Id., 539.

6. Attachment: garnishment of fraudulent mortgagee. In this attitude, the case presents but little difficulty. Plaintiff, instead of proceeding in equity to set aside the mortgage, or levying upon the property and claiming the right to sell it, because the mortgage was void upon its face, had the mortgagees attached as garnishees, and thus sought to reach the property in their hands. And, in this, he but adopted the suggestion made in Torbett v. Hayden (11 Iowa, 435); followed in Hughes v. Corey (20 Id., 399).

In determining the question made, we are not limited to an examination of the mortgage alone; for, whether it was fraudulent upon its face, or shown to be so in fact, by evidence aliunde, the judgment will not be disturbed. As to the law governing, there is no controversy. See the ease last above cited, and Davenport v. Cummings, 15 Id., 219; Fifield v. Gaston, 12 Id., 218; Campbell v. Leonard, 11 Id., 489 ; Kuhn v. Graves, 9 Id., 303; Wilhelmi v. Leonard, 13 Id., 330.

6. Fraudulent mortgage: badges of frand. Adhering to the rule laid down in these cases, we mention briefly some facts which justified the court below in concluding that the mortgage was void, as against plaintiff and the other creditors. In the first place Isaac Yan Kuran, the father of Andrew, was very badly in debt, and this mortgage covered almost if not the entire property then held by him, in his own name. It was made immediately after plaintiff obtained his judgment, which claim the debtor had been resisting for years. The mortgagor remained in possession, and managed and controlled the property as before, without any arrangement as to compensation, and with no express liability to render to the mortgagees an account of his disbursements and expenditures. The mortgage, upon its face, is absolute to secure four promissory notes of $7,500 each, due in thirty, sixty, ninety, and one hundred and twenty days, which was duly recorded. And yet, at the same time, a separate agreement was entered into, not placed on record, reserving to the mortgagor rights and privileges inconsistent with the mortgage —looking to the application of the money arising from the running of the car works to the payment of certain creditors of said mortgagor named therein (not, however, including plaintiff) without their knowledge or consent, and not obligating the mortgagees to pay the same, except as the funds were realized from the sale of the property mortgaged. After all this, one of the mortgagees, the book-keeper — in which capacity he acted before as well as after the making of the mortgage — wrote letters to some of these same creditors, treating the debts as still owing by the elder Yan Kuran; speaking of the property as his and managed by him, and making no disclosure of his or his co-defendant’s lien in connection with the property.

From all these facts, we think a jury (or the court as a jury) could very justly conclude that there was an intention to hinder and delay creditors. Certain it is, the finding to this effect is not so clearly against the weight of testimony as to justify our interference, and we only add, in ' conclusion, that, after defendants were garnisheed, it was their duty to either retain the property in their possession or the proceeds of the sale, and if, after that time, they parted with the same in payment of the mortgagor’s debts, they acted at their peril, and they cannot now escape liability upon the ground that they had thus applied all moneys realized from such sales.

Affirmed.