68 W. Va. 630 | W. Va. | 1911
This is a- bill to set aside fraudulent conveyances.
This judgment was paid by Dudley, Wolfe and Vrooman, three of the aforesaid sureties, and Dudley and Wolfe shortly thereafter brought this suit for the purpose of having certain conveyances of real estate, situate in the City of Parkersburg, set aside for the alleged reason that they were voluntary and fraudulent and made for the purpose of hindering and delaying plaintiffs in the collection of this debt.
Buckley was engaged in the mercantile business in tliQ City of'Parkersburg, and had contracted a great many debts. Binding himself to be insolvent, he endeavored to effect a compromise settlement with his creditors, and, thinking he had done so, he made a conveyance of all his real estate to B. E. Stewart on the lTth day of October, 1898. But this attempted compromise failed, and on November 22, 1898, B. E. Stewart reconveyed this property to him; and on the same day Buckley made á general assignmen of all of his property to John H. Mitchell, trustee,
The bill alleges that this deed was made with fraudulent intent. The answers of Buckley and Stewart both deny the fraud; and Stewart alleges in his answer that it was for “a consideration of $4,500 every cent of which he had obligated himself to pay.” He further says that this sum was raised on notes negotiated in the Citizens National Bank of Parkersburg and in the Parkers-burg National Bank, and that he was bound to pay the same. ■ But Ire does not allege that he ever paid any part of this $4,500 to the banks. He further says that, so far as J. L. Buckley was concerned, said conveyance was absolute and was without reserve; but that at, or about, the time of the conveyance respondent did agree with Cora L. Buckley, who was the 'wife of J. L. Buckley, that if she would pay said $4,500 within two years he “would sell and convey said lands to her.” But he admits, in his answer, that “he regarded himself only as a mortgagee as to Cora L. Buckley, with right of redemption, or right to purchase, in her.” He alleges that these notes in bank were renewed from time to time, and the discount paid, and that the entire amount was finally and actually paid by somebody; but he does not say bjr whom it was paid; and says that he supposed, upon information, that it was paid by Cora L. Buckley.
On the 16th day of April, 1901, B'. F. Stewart and wife conveyed by deed, with special warranty of title, this “Ann Street Property” to Cora L. Buckley, wife of J. L. Buckley, for a stated consideration of $2,500.00. After this a fine dwelling house was erected on this lot and is occupied by J. L. Buckley and wife, and by ,11. M. P’atton and wife. The other real estate conveyed by Buckley to Stewart-was reconveyed by Stewart and his wife to- Mrs. Cora L. Buckley, or was conveyed by Cora L.
Cora L. Buckley and J. L. Buckley, her husband, on the 3rd day of March, 1902, conveyed to H. M. Patton an undivided one-half interest ;n the Ann Street property, reciting a consideration of $4,250.00. Within two weeks after the last named conveyance, the said Patton married Laura Buckley, the daughter of his grantors, and almost immediately, to-wit, on the 14th day of March, 1902, Patton conveyed said half interest directly to his wife, Laura B. Patton. On June 4th, 1902, Laura B. Patton and her husband conveyed this same half interest to Douglas Miller, of Otsego County, New York, reciting a consideration of $5,000.00. The said Douglas Miller by deed which bears date on March 21, 1903, recom^ed this one-half interest to Laura B. Patton.
So that, by these various conveyances we find Cora L. Buckley and her daughter Laura B. Patton invested with the title to this Ann Street property, and residing upon it in a fine dwelling house erected thereon after the conveyance from Stewart to Cora L. Buckley, on April 16, 1901. L. Dudley and W. H. Wolfe, two of the four sureties of Bhckley who paid the debt to the Board of Education, filed.their bill October, 1903, against J. L. Bucldey, Cora L. Buckley, H. M. Patton and Laura B. Patton and B'. F. Stewart, attacking the aforesaid conveyances. At the time of filing the original bill only three of the sureties, to-wit, these two plaintiffs and W. Yrooman, had contributed to the payment of said judgment. But while the bill was pending they sought and obtained, contribution from the estate of A. A. McDougle, deceased, one of their co-sureties. They thereupon, at the November rules, 1906, filed their amended bill, making the administratrix of the estate of A. A. McDougle a party, and amending the bill in other particulars.
Answers to the amended bill were filed by J. L. Buckley, Cora L. Buckley, B. F. Stewart, Ií. M. Patton and Laura B. Patton, his wife, denying all charges of fraud concerning the said several conveyances, and denying any intention, or knowledge, of fraud. No depositions were taken by, or on behalf of, any of the defendants; but the depositions of W. E. Stout, W. H. Wolfe, and F. P. Moats were taken on behalf of the plaintiffs. The cause came on to be finally heard upon the bill, amended bill, and
Did the circuit court err in holding the said deeds to be fraudulent, and in setting them aside and ordering a sale of the land ?
The following points are assigned as error by counsel for appellants in his brief, viz:
“First: It was error to cancel the conveyances for actual fraud, because the charge was not sustained.
“Second: It was error to cancel the conveyances as voluntary, because the allegations of the bill were insufficient to support such a decree.
“Third: It was error to allege actual fraud, and decree cancellation of the deeds on any other ground. There are three distinct grounds on which deeds may be decreed void as to the creditors, and this distinction must be maintained.
“Fourth: It was error to decree relief as between the co-defendants, in favor of W. Yrooman and the Estate of A. A. McDougle.
“Fifth: It was error to decree a sale without an order of reference.
“Seventh: It was error to decree a sale without proof that the rents of the property would not pay the debts within five years.
“Eighth: It was error to decree a sale of the interest of Laura M. Patton, unless or until the interest of Cora L. Buckley had first been offered for sale and found insufficient.”
First, as to the deed made from J. L. Beckley and wife to B. F. Stewart, of date March 4, 1899, by which he conveyed
Was it error, then, to set it aside? If it was error at all, it was harmless. Because the rights of no one were affected by
Whose equity was it to redeem? Evidently the equity of redemption belonged to the mortgagor, J. L. Buckley, at the 'time of making the mortgage. How did the right to redeem pass to Cora L. Buckley? What consideration did she give for this equity? Absolutely nothing, unless she paid the notes in bank on which Stewart was endorser. She has not shown she did this. The purpose of the mortgage was to secure these notes. But Stewart and Buckley and 'Mrs. Buckley all say that so far as J. L. Buckley was concerned it was an absolute sale by him, but it is already shown to be in fact a mortgage. It could not be both a mortgage and a sale at one and the same time, so that in this respect the answers are self-contradictory. Mrs. Buckley knew of her husband’s insolvency, and according to the testimony of W. H. Wolfe expressed a purpose to save all the property she could. J. L. Buckley also stated to witness F. P. Moats, the receiver in Bankruptcy, as follows: “I have arranged matters so that I will still have something left. How iff you will never say a word about it but will keep it quiet I will tell you what I have done.” Whereupon Moats cautioned him that in view of his official position he could not receive any confidential communications and the subject was then dropped. This testimony taken in connection with other circumstances in the case shows that J. L. Buckley and his wife must have had a purpose in common to save all the property they could from the wreck of Mr. Buckley’s business failure. So far as concerned the title to this piece of property she occupies no better position than does the wife of an insolvent husband who receives a conveyance for property for a consideration furnished by her husband. She is a grantee without a consideration and occupies no better position as against the rights of these plaintiffs than J. L. Buckley himself would
Counsel for appellants argue, that if the deed from Buckley to Stewart, of date March 4, 1899, was not fraudulent, then the deed from Stewart back to Mrs. Cora L. Bucklejq even though without valuable consideration, could not be held void as to plaintiffs. Because, as he contends, their rights accrued subsequent thereto. But plaintiffs are subrogated to the rights of the Board of Education, and their rights are co-extensive with the existence of the debt which they paid after it was reduced to judgment. True, the judgment in favor of the Board of Education was not recovered until November, 1902, and was not satisfied until some time after that, by plaintiffs and their co-sureties, Yrooman and McDougle. Consequently, plaintiff’s right to sue did not exist at the time of the conveyance from Stewart to
It is insisted that there is no allegation in the bill on which proof could be admitted that the debt existed at the time of the fraudulent conveyance. While it is true there is no specific allegation that the debt existed, still the bill alleges that the suit in which judgment was rendered was brought against Buckley and the sureties on his official bond, as sheriff, to recover money collected by him belonging to the Board of Education, and not accounted for. Upon this allegation it was proper to take evidence to show when he was sheriff, and when'the debt originated.
Cora L. Buckley, being only a voluntary holder, it is not necessary to decide whether she had knowledge of, and participated in, the fraudulent intent of her husband, or not, the rights of plaintiffs being antecedent to her acquisition of title. Lockhard
J. L. Buckley being* admittedly insolvent, and the conveyance from Stewart to Buckley’s wife having* been attacked for fraud by Buckley’s creditors, the law puts the burden upon his wife of proving by evidence, clear and satisfactory, that the consideration for the conveyance was furnished by her, from her separate estate. This she has not attempted to do. It must, therefore, be presumed that J. L. Buckley paid the notes held by the banks which Stewart had endorsed for his accommodation. There was no other consideration to support the. wife’s deed; none other is claimed by appellants’ counsel. Rose v. Brown, 11 W. Va. 122; McMasters v. Edgar, 22 W. Va. 673; Stockdale v. Harris, 23 W. Va. 499; Walker's Admx. v. Peck, 39 W. Va. 325; Harr v. Shaffer, 52 W. Va. 207. This rule of law placing the burden upon the wife in such cases is sometimes thought to be a hardship. But when it is considered how easy a matter it is for persons whose relations are as intimate as are those of husband and wife, parent and child, or members of the same .family, to falsify such transactions, and evade detection; and on the other hand, how éasy it is for the grantee, having possession of all the facts and circumstances, to prove the real consideration, it is readily seen that, while this requirement is a departure from the general rule of evidence requiring proof of facts to be furnished by him who alleges them, the wisdom and justice of the departure is apparent. The rule works no hardship. Why was not the court furnished with some proof on this question of such vital importance to appellants? They can answer; we can not. No' one of them testified in the case. The presumption., therefore, is that if their testimony had been given it would have been against their contention. Knight v. Capilo, 23 W. Va. 639; Hefflebower v. Detrick, 27 W. Va. 16; Bindley v. Martin, 28 W. Va. 773; Union Trust Co. v. McClellan, 40 W. Va. 405; Dewing v. Hutton, 48 W. Va. 576; Garber v. Blatchley, 51 W. Va. 147; Vandervort v. Fouse, 52 W. Va. 214.
Stewart, B-uckley and Mrs. Buckley all claim that the deed from Buckley to Stewart was a straight out sale to Stewart, so far as J. L. Buckley was concerned, and that there was an agreement between Stewart and Mrs. Buckley to “sell and convey” this property back to her, upon the payment of these bank notes.
This brings us to consider whether, or not, the deed made on March 3, 1902, by Cofa L. Buckley and J. L. Buckley, her husband, to H. M. Patton for one-half interest in the property, is also fraudulent, as to plaintiff’s claim. The deed to him recites a consideration of $4,250.00. The bill alleges that it was made with intent to defraud the creditors of J. L. Buckley, and especially to defraud these plaintiffs; also, that the consideration of $4,250 was never paid by him; that this conveyance was only in furtherance of the fraudulent scheme of J. L. Buckley to invest title to said property in his wife and daughter, Laura B. Patton. The bill also alleges that said H. M. Patton was insolvent at the time said conveyance was made to him.
Patton and his wife filed a joint answer in which they deny the charge of fraud, and allege that a full and adequate consideration was paid by H. M. Patton; they also deny any knowledge of fraud on the part of J. L. Buckley. They also allege that in the early part of the year, 1901, said H. M. Patton entered into an agreement with Cora L. Buckley to buy an undivided half interest in said 13th Street, or “Ann Street Property,” and to
II. M. Patton furnishes no proof whatever to show that he paid any consideration whatever for said one-half interest. He fails to deny the charge of his insolvency, and this allegation of the bill, therefore, must be taken as true. He was admittedly an intimate friend of the family; was engaged to be married to the daughter of J. L. Buckley and Cora L. Buckley, as early as the early part of the year 1901. The date of their marriage does not appear. They were evidently married, however, before March 14, 1902, because that is the date of the deed to his wife. We think these facts and circumstances show such intimate relationship between him and the Buckley family, as would bring him under the rule respecting the burden of proof, and would require him to furnish satisfactory proof of the 'bona fieles of the transaction, and that he did, in fact, pay a valuable consideration for the property. Especially ought this rule to apply when it appears that at this time he was insolvent, and that, within a
The fraudulent purpose of J. L. Buckley, we think, is well established by facts and circumstances proven in the case. For instance, it appears that in filing a schedule of his assets in the bankrupt court he omitted to mention a considerable amount of his property, and that F. P. Moats was appointed a receiver of the Federal Court to ascertain, and take charge of, such property as he had not listed. The list of such property filed by Moats, while it does not show the value, shows that it consisted of valuable household furniture, cut glass and silverware, beds, bedding, &c., also notes amounting to hundreds of dollars. But the schedule of property filed by the said J. L. Buckley, and verified by his affidavit, shows his only assets to be the stock of goods in store, valued at $8,600; personal effects to the value of $50, and the real estate which he himself had conveyed to J. H. Mitchell, -trustee, and which was afterwards reconveyed to him by order of the bankrupt court, after the composition had been effected with his creditors. It further appears from the testimony of W. -H. Wolfe, Sr., that his house was elegantly furnished, a good deal of the furniture being upholstered. It also appears that J. L. Buckley claimed to have assigned a number of notes and accounts to one D. E. Leach. It is very doubtful, indeed, whether or not this was a genuine assignment. Because it appears from the testimony of W. H. Wolfe, Sr., one of the plaintiffs, that Leach owned little, or no, property and that he was a relative of Mrs. Cora L. Buckley. The testimony of F. P. Moats proves that J. L. Buckley brought suit, on a number of these claims against the debtors, in his own naüie. There was one note, known as the “Nellie Cook” note, which amounted, with its interest, to nearly as much as the judgment obtained by the Board of Education. This note had been placed in the hands of Mr. S. T.
It is admitted that the deeds made by IT. M. Patton to his wife, Laura B. Patton, by H. M. Patton and his wife to Douglas Miller, and by Douglas Miller back to Laura B. Patton, for the one-half interest in said property, were purely voluntary, and that the two last mentioned deeds were made simply for the purpose of investing legal title in Laura B. Patton, and to effectuate the purpose- intended by the deed made by Patton directly to his wife. The conveyance from Stewart and wife to Mrs. Buckley having been made in fraud of plaintiffs’ rights, the fraud affects the property in the hands of her daughter, Mrs. Patton. All mediate conveyances of the one-half interest in the lot in question, from Stewart’s deed to Mrs. Buckley down to the. vesting of title in Mrs. Patton, are purely voluntary, and necessarily tainted ivith the fraud.' No subsequent conveyance, which is purely voluntary, can place the property out of the reach of Buckley’s creditors whose debts,existed at the inception of the fraud. Equity prefers the right of a creditor to those of
Fourth. Was it error to decree relief in favor of W. Yroo-man and the estate of A. A. McDougle, two of the four sureties who had paid an equal proportion of the aforesaid judgment? Yrooman and McDougle’s administratrix did not join in the suit with the plaintiffs, but were made co-defendants. Yroo-man demurred to the bill, but did n.ot answer. McDougle’s ad-ministratrix made no appearance. There are numerous authorities holding that relief may be granted to a co-defendant upon a case made out by the evidence and the pleadings between plaintiff and defendant. We have many decisions of our own on this point. Vance v. Evans, 11 W. Va. 342; Ruffner, Donnally & Co. v. Hewitt-Kerchival Co., 14 W. Va. 738; Worthington v. Staunton, 16 W. Va. 208; Roots v. Salt Co., 27 W. Va. 483; McKay v. McKay, 33 W. Va. 724; Dudley v. Barrett, 66 W. Va. 363; and 1 Hogg’s Eq. Pro., section 578. But proof only of such co-defendant’s right to the relief is not sufficient. There must be both pleadings and proof in order to entitle him to relief. An examination of the above cases will show either that the prayer of the plaintiff’s bill was made on behalf of the co-defendant, as well as for himself, or that the co-defendant answered and prayed for relief. In the present case the prayer of the bill is that the deeds “be set aside as fraudulent and void so far as the rights and interests of these plaintiffs are concerned.” The prayer for general relief is also on behalf of plaintiffs only. The prayer is an essential part of the pleading; so much so, that in case a complainant omits to add a prayer for general relief, and mistakes the relief to which he is entitled
Fifth. Was it error to decree a sale without referring the case to a commissioner, to ascertain the liens and priorities?
Plaintiffs in their amended bill pray for a reference; but they have a right to abandon this part of their prayer, unless the law makes a reference indispensable. There are only two liens mentioned in this bill, the one 'in favor of these plaintiffs, which bears date November, 1902; the other, the judgment in favor of the First National Bank of Parkersburg against J. L. Buckley and W. McCosh, rendered by a justice of the peace on January 20, 1903. This judgment was paid by McCosh who was the endorser for Buckley, and he took from the bank an assignment of the judgment. He was afterwards adjudged insane and Wirt N. ICellar was appointed his committee. Kellar is a party to the bill, but he makes no appearance. The McCosh debt is separate and distinct from the debt of plaintiffs. It is also subsequent in date. His committee has not appealed from the decree of the circuit court of Wood county; and we fail to see how appellants are prejudiced by a failure to refer the case to a commissioner. Hardy v. Scott, 26 W. Va. 710; Miller v. Rose, 21 W. Va. 291; Clark v. Johnston, 15 W. Va. 804; Kimble v. Wotring, 48 W. Va. 412; Core v. Cunningham, 27 W. Va. 206; Colston v. Miller, 55 W. Va. 490.
It was not necessary to refer the case to a commissioner to state accounts on these two judgments; the court could easily do that itself; and it does not appear that there are any other liens on the property than these two mentioned in the bill. Weinberg v. Rempe, et al., 15 W. Va. 829. In one sense this suit might be regarded as a bill to enforce judgment liens; yet in a larger, and more important sense, it is a bill attacking-fraudulent conveyances, and seeking satisfaction out of the debtor’s property conveyed to another before the lien of the judgment attached. It was not necessary that judgment should have been rendered before plaintiffs would have had a right to
“Seventh.” It is alleged that it was error to decree a sale without proof that the rents and profits of the property would not in five years pay the debt. This is a bill attacking a fraudulent conveyance, and it was not necessary to ascertain whether or not the debt would be paid in five years, by a rental of the property before decreeing sale. This is well established by numerous decisions of this Court. McMasters v. Edgar, 22 W. Va. 673; Core v. Cunningham, 27 W. Va. 206; Burt v. Timmons, 29 W. Va. 441; Reynolds, Admr. v. Gawthrop’s Heirs, 37 W. Va. 3; Colston v. Miller, 55 W. Va. 490; State v. Bowen, 38 W. Va. 91.
“Eighth” Was it error to decree a sale of Mrs. Laura B. Patton’s half interest in -the property along with that of Mrs. Cora L. Buckley? It is a rule of equity, in the enforcement of liens against land in the hands of alienees of the judgment debt- or, which alienees acquired title at different times, to first exhaust the land, if any, remaining in the hands of the judgment detor before proceeding against the lands of any of the alienees, and in the event it is necessary to subject any of their lands to the satisfaction, of the lien, it must be done in the inverse order of the alienation, thus making the burden fall first upon those who stand nearest, in the time of receiving their conveyance, to the alienor.
But this rule has no application to alienees who hold their title by fraudulent conveyances; or to voluntary holders under fraudulent grantors. Such persons occupy no better position in respect to the rights of the creditors of the fraudulent grantor than the fraudulent grantor himself occupies.
In so far as the decree complained of gives relief to the co-defendants Vrooman and the McDougle estate, it is erroneous and will be reversed. In all other respects it will be affirmed, with costs in favor of appellants against Vrooman and Mc-Dougle’s administratrix, notwithstanding these parties did not answer in the court below they have filed briefs in this Court contesting the rights of appellants. This makes them liable for costs.
The cause will be remanded for further proceedings.
. Affirmed, in Part. Reversed in Part Remanded.