166 Iowa 728 | Iowa | 1914
On October 28, 1910, plaintiff obtained a judgment against F. W. Daiker and his mother, Theresa Daiker, in the district court of Carroll county. On the same day execution was issued thereon, and immediately or very soon returned unsatisfied. On October 31, 1910, this action was begun; the plaintiff alleging that, shortly before the entry of said judgment, the defendant Theresa Daiker fraudulently and without consideration conveyed a valuable tract of land owned by her in said county to her son Peter Daiker, and that such conveyance was made by her and received by said grantee with intent to defraud, hinder, and delay the plaintiff in collecting its said debt. Upon these allegations it was prayed that the conveyance be set aside and plaintiff’s judgment be enforced by a sale of the land. Defendants admit the rendition of the judgment, admit the prior conveyance of the land to Peter Daiker, and deny all charges of wrong and fraud made against them in the petition. They further allege that said judgment defendants had appealed from said judgment to the Supreme Court, and had filed a good and sufficient supersedeas bond in said cause, and the bond had been duly approved. Issue having thus been joined, it appears that the ease was continued upon the docket without further action therein for several terms; meanwhile the appeal in the original ease was prosecuted to completion, and the judgment was reversed on the ground that the debt sued upon was not due when that action was begun. It further appears that, after the reversal, further proceedings were had in the district court, where on October 28, 1912, another judgment was rendered against F. W. Daiker and Theresa Daiker for the amount of
To ayoid repetition, it may be said that the several defenses present substantially the following alleged facts: The defendants John Daiker and Theresa Daiker, husband and wife, are persons of advanced age, and F. W. Daiker and Peter Daiker are their children. It is claimed that about the time Peter Daiker became of age, and many years before the creation of the debt, which plaintiff seeks to enforce, was contracted, he entered into an agreement with his parents by which he was to have the land in consideration of his undertaking to care for and maintain them during the remainder of their lives. It is further claimed that, acting upon such agreement, Peter took possession, management, and control of said land and for twenty-eight years has continued therein openly and notoriously, thus imparting to plaintiff and the world constructive notice of his rights in the premises, and that the services he has so rendered in consideration of said land is equal to or more than its market value at that date, and that the conveyance made to him was given and received in good faith and in consummation of the agreement in fulfillment of which he has given all the time and labor of his adult years.
The foregoing is a sufficient statement of the issues upon which the merits of the case must turn.
I. Passing the many technical and collateral questions of pleading and practice which have been argued by counsel, we take up the vital inquiry whether the transfer of the land
(1) A conveyance which is merely voluntary, and when the grantor had no fraudulent view or intent, cannot be impeached by a subsequent creditor. (2) A conveyance actually and intentionally fraudulent as to existing creditors cannot be impeached by subsequent creditors. (3) If a conveyance is actually fraudulent as to existing creditors and merely colorable, or if the property is held in secret trust for the grantor, who is permitted to use it as his own, it will be set aside at the instance of his subsequent creditors. The second rule above laid down is subject to some exceptions, among which may be mentioned eases in which the conveyance is made with the express intent and view of defrauding those who may thereafter become his creditors; cases wherein the grantor makes the conveyance with the express intent of becoming thereafter indebted; cases of voluntary conveyances where the grantor pays existing creditors by contracting other indebtedness in like amount, and wherein subsequent creditors are subrogated to the rights of the creditors, whose debts their means have been used to pay; and cases in which one makes a conveyance to avoid risks or losses liable to result from new business ventures or speculations.
The foregoing quotation states the rule so clearly and unequivocally as to render unnecessary further reference to authorities upon the fundamental proposition that, generally speaking, only existing creditors can successfully avoid a voluntary conveyance, gift, or other disposition of property.
II. Whether the appellee herein is entitled to be classed as an existing creditor depends entirely upon the further
Counsel for appellee assume in argument that we must look alone to the deed, and, as this was confessedly made after the creation of the indebtedness which is sought to be enforced against the land, appellee was therefore clearly an existing creditor. To this we are unable to agree. It is shown so clearly as to be beyond fair question that very soon after Peter Daiker reached his majority there was an agreement between him and his parents that he was to have the land in consideration of his undertaking to remain upon it, control and manage it, and support and maintain his parents during the remainder of their lives. It is true that the testimony is somewhat involved and somewhat awkwardly slated, and that, upon examination and cross-examination of the parties, the words “wages” and “rent” are sometimes employed. The parents are of foreign birth, the mother still speaks only in her native tongue, and all of them use words apparently without full and clear comprehension of their exact technical import; yet taking the evidence as a whole, including that given by disinterested witnesses, we can come to but one conclusion, that Peter was to have the land upon the consideration above mentioned. It is shown without dispute that he did then assume charge of the land, and that ever since, and for a period of twenty-eight years, he has used it in all respects as his own, rendering no account to his parents, but has supported and cared for them and supplied their needs as occasion has required. This situation was open and notorious to their neighbors and to the public, and plaintiff admits, by the testimony of its officers, that, when the mother’s.name was obtained .upon the notes of F. W. Daiker, it knew that Peter was in possession, farming the land. Such possession and control were notice to the world of the right or claim of right under
A somewhat similar question was before this court in Cloud v. Malvin, 108 Iowa, 52, where an action was brought in the nature of a creditor’s bill to subject certain tracts of land to payment of a judgment against Sarah Malvin. Before she contracted the debt on which the judgment was rendered, Sarah Malvin had agreed with three of her sons that, if they would stay at home and operate the farm, she would leave them a specified tract of sixty acres. In pursuance of that agreement, the children performed the stipulated service for a period of ten years, when, on the eve of the rendering of a judgment against the mother, she conveyed the land to her sons in satisfaction of her agreement. The judgment creditor then became plaintiff in an equity proceeding to subject the land to the payment of the debt, and it was held that the conveyance was supported by a sufficient consideration, and the judgment creditor was without recourse upon the land. A holding to similar effect is found in Nichols v. Burch, 128 Ind. 324 (27 N. E. 737), where the grantee in such a deed, pleading to an action by the grantor’s creditor, alleged that the conveyance was made pursuant to an agreement for future support long before grantor had become indebted to plaintiff, and without fraudulent intent, and upon demurrer the answer was held to be good. The same court has held that such a conveyance is valid against everybody, except existing credi
The only authority cited by appellee which may afford any apparent support for a different rule is Graham v. Rooney, 42 Iowa, 567, and this, when carefully read, will be found not inconsistent with the view we have already expressed. In that action the defendants were garnished as supposed debtors of their father, the judgment defendant, and the proof showed they had taken a conveyance of land from him shortly before the judgment was entered; the deeds reciting the consideration thereof to be $1,000, and the evidence showing it to be worth in fact $6,400. It was their claim that the real consideration was.labor performed by them on the farm and their agreement'
Assuming, then, as we think is correct, that the right of Peter Daiker in the premises must be held to date from the time he entered into the agreement with his parents and gave notice thereof by taking over the possession and control of the property, it must also be held that the plaintiff herein was not an existing creditor, and can maintain this action only upon an affirmative plea and proof of a sufficient estoppel against the assertion of Peter’s right to the property, or that the transaction between him and his parents was tainted with an express fraudulent intent to cheat and wrong the subsequent creditors of the parents. To this point we cite again Brundage v. Cheneworth, supra, and the cases there mentioned and relied upon. That there was any purpose in the original transaction to defraud subsequent creditors there is no showing whatever. More than a quarter of a century elapsed from that date before plaintiff herein claims to have extended credit on the strength of the notes since reduced to judgment. Certainly it cannot be claimed or even imagined that this mother, when she entered into the agreement with Peter, had a prophetic vision of the fact that in the far future one of her
In this connection we may as well refer to the argument advanced that actual fraudulent intent is evidenced by the gross inadequacy of the consideration for parting with the
III. We have thus far assumed that Peter Daiker took and retained possession from the time when the agreement with his parents was made. Counsel for appellee contend
Peter paid the bills and did the business in relation to family matters. Peter paid all the bills. ¥e looked to Peter to pay the bills.
He further says that the parents informed him “years ago ’ ’ that Peter was to have the farm. The family physician during all these years, who had visited the place on different occasions, says:
It was apparent Peter was the manager of the farm. He paid me.
The nearest neighbor says Peter appeared to be operating the farm, and that the mother frequently said the other children had received what was coming to them, and that the farm was to be Peter’s. The farm implement dealer says:
Peter was running the farm and everything was charged to him.
There is other evidence to the same import, and none whatever to the contrary. There is not a word of evidence tending to show that, from the time the agreement with Peter is alleged to have been made, the parents exercised any act of dominion or ownership over the property, except the circumstance that a loan or mortgage debt secured on the land was removed or extended, and in these transactions the parents executed the necessary papers — a thing which is not necessarily inconsistent with Peter’s claim in this action. In this connection it further appears that the proceeds of the loan, over and above the amount necessary to satisfy the old lien, were turned over to Peter. It is true there has never been any change in the residence of the parties. They have continued to live as one family in the same house on the farm, but this is not inconsistent with a change of possession, in the
Is it to be assumed that, because Miss Williams did not turn her father and mother out of the house after she had*741 purchased the property, the whole transaction was a sham and devoid of good faith? Is it a legitimate inference that the sale was pretended'and not real because the daughter, after acquiring the property, permitted her father to remain under the shelter of the roof which had been his for years? Unless it be an unbending and inexorable requirement of the law of evidence that, when a child buys from a parent property owned by the latter, the child, to avoid the imputation of fraud, . . . must at once and for all time close the door of her home against the father, from whom she purchased it, the mere fact that he continued to reside on the premises after the conveyance, as he had done prior thereto, cannot impeach her good faith in acquiring title to the land. The law exacts no such unfilial and unnatural conduct to vindicate the integrity of the transaction.
The ease before us is far stronger for the defendant than those we have cited, because the agreement between the parents and Peter Daiker clearly contemplated that the parties should continue to live together on the farm. The agreement being, as we have said, a perfectly legal and valid one between themselves, the only change necessary to carry it into effect was a change in their respective attitudes and relations with respect to the property. Peter was to become in effect the business head of the family where before he stood simply in the ordinary relation of a son in the home of his parents. His parents were to surrender dominion over the property, and he was to assume it. He was to provide support and maintenance for the mother and father, who had hitherto supported him. The good faith of the agreement is challenged by no existing creditor. It has been acted upon and performed by the parties for a long series of years, and unless there has been such a want of notice to the world, as that plaintiff may be heard to say it was deceived into extending the credit, it is not, as a subsequent creditor, entitled to challenge the good faith or validity of the transaction. There was of course no record notice until the filing of the deed, which was thereafter made, but notice by possession, by open and notorious exercise of exclusive dominion and claim of
'' Nor is there any other proved circumstance on which he can be held estopped to insist upon his rights. It is shown that he never knew or heard that his mother had signed the
Without substantial exception, all the precedents to which ‘ we are here cited by appellee are those in which title to property has passed between husband and wife without visible substantial change in its possession, management, or control, and the grantees have been held estopped or to be chargeable with fraud as against the creditors of the grantors! These ■ cases are not at all parallel with the one before us, and, granting the soundness of all such decisions, they are not here applicable.
IV.- What we have already said is determinative of the appeal, but it may be proper to say further, in view of the argument made, that, even if it had been found for any
Moreover, there being no showing of express fraud on the part of Peter Daiker, his title could be set aside only upon allowing him, as a preferred claim, the value of the
Other conclusions, as set forth in the preceding paragraphs of this opinion, supersede the necessity of our going into any investigation of the value of the consideration so furnished for the conveyance, but it is evident that it would amount to a very considerable sum. As having more or less bearing upon the various topics discussed, see Cottrell v. Smith, 63 Iowa, 181; Bank v. Weston, 103 Iowa, 736; Sharpless’ Appeal, 140 Pa. 63 (21 Atl. 239); Martin v. Remington, 100 Wis. 540 (76 N. W. 614, 69 Am. St. Rep. 941); Schreyer v. Scott, 134 U. S. 405 (10 Sup. Ct. 579, 33 L. Ed. 955); Paris Grocer Co. v. Burks, 56 Tex. Civ. App. 223 (120 S. W. 552); Trust Co. v. Comstock, 130 Mich. 572 (90 N. W. 331).
For the reasons stated, the decree below must be reversed, and the cause will be remanded, with instructions to dismiss the plaintiff’s petition. — Reversed.