151 Ky. 627 | Ky. Ct. App. | 1913
Opinion of the-Court by
Affirming.
Suits were instituted in the Taylor circuit court against James E. Creel and his two sons, by John W. Cloyd and Smith & Flora, creditors of James E. Creel, in which they sought to have a conveyance, by s'aid Creel to his two sons; .set aside, on the ground that it was without consideration and for the fraudulent purpose of defeating* them in the collection of their debts. The defendant, James E. Creel, admitted the indebtedness, hut denied that the conveyance was made for a fraudulent purpose; and pleaded affirmatively that it was for a valuable cash consideration. His two sons- likewise denied the allegation of fraud as to them, and pleaded that the conveyance was for a valuable consideration. Proof was taken, and, upon consideration, the chancellor adjudged the conveyance fraudulent and directed the deed canceled and the land subjected to the payment of 'plaintiff’s debts. The defendants appeal.
The evidence shows that, for some years before the date of the conveyance, James E. Creel had, in connection with Cloyd and another person, been engaged as partners in the livestock business in Taylor county. They had bought and sold much livestock, the transactions being conducted through a bank at Campbellsville. The business had not proven profitable and they had lost considerable money. In the settlement and adjustment of their business with the bank, Cloyd had to pay several hundred dollars for his associates in business; and it was Creel’s part of this partnership indebtedness, which ■he had to pay to the bank for him, that he was seeking to recover in this suit. Oeel was likewise indebted to Smith & Flora and they had instituted suit against him,.
While the deed recites that it was for a cash consideration, the evidence discloses that nothing was paid for the land at that time. Appellant, James E. Creel, testifies that he was indebted to his sons in the sum of $1,000, and that the deed was made for the purpose of «satisfying this indebtedness. The explanation offered by appellants of the way and manner in which this indebtedness, on the part of the father to his sons, arose is: James E. Creel received as much as $1,000, for his boys from their grandfather, or his estate; that the' money was paid over to him by John L. Collins for them; and that he agreed to account to them for it. This money, «he says, was1 paid1 to him many years ago, he thinks in 1887. His brother-in-law, John E. Collins, acting for his father-in-law, his children’s' grandfather, 'paid him the money. His wife died in 1887, some six or eight months after her father died; that this- money, which he received, was his wife’s part of her father’s estate; that John L. Collins was his father’s administrator; and ■that the money that his wife received from her father was the money that paid for the land. He makes certain other statements, which are not altogether clear, but, from the foregoing, it is apparent: first, that he' never received any money whatever from his father-in-law for his children, but that any money that came to him from either his father-in-law or the estate of his ■father-in-law, was received by him in the life time of his 'wife; and, if it was not by him, at that time, reduced to possession upon the death of his wife, in September ■following, he was entitled to all of it; for, chapter 31, section 11, sub-section 3, of the Ceneral Statutes, then in force, gave to the husband the entire personal estate of his wife. If he received any money for his children from their grandfather, or his estate, it must have been received after their mother’s death; and, if received at all, was evidently received after the death of his father-
Their father’s effort to invest them with title'to- this property in -order to compensate them for the money which he received from their grandfather’s estate, if free from even the suspicion of fraud, would be merely a gift.on his part and not the -satisfaction of any legal obligation to them, and, when viewed in this light, the transaction cannot be upheld, nor can they insist that it should be. A debtor must be just before he is generous, and a conveyance under such circumstances is fraudulent in fact, whether so- intended or not. It might, for the purpose of this case, be conceded that neither James- E. Creel nor his two sons intended to .perpetrate a fraud upon his creditors-, but nevertheless, if their acts had this effect, they would in fact amount to a fraud, and being such, the conveyance should be cancelled.
A similar question arose in Trimble v. Ratcliff, 9 B. M., 511, and, in holding that the conveyance -should be set aside as amounting to a legal fraud, the court said1:
“It is a disputed question, whether a conveyance by an indebted father to his -child, founded solely on the consideration of love and affection, may not be avoided as- fraudulent, per -se, without reference to the amount of the grantor’s indebtedness, -as compared with the entire estate, or with, the part conveyed. But we do not -suppose that the principle which- requires; every man to be just before he is generous, or that the requisition of good faith towards Ms creditors, as imposed either by .statute or by the principles of justice and morality, is* violated by a gift from a father to Ms child1, suitable
In that case, $300.00 had, in fact, been paid in cash; whereas, here nothing was paid, but the consideration was rested upon what amounted, at most, to a moral obligation on the part of James E. Creel to pay to his children, money which 'he received from their mother which he was under no legal obligation to pay.
Judgment affirmed.