201 Mich. 673 | Mich. | 1918
The defendant, Alexander Wallace, and one of his sisters were given by their father’s will a certain farm property of about 95 acres in Livingston county, charged, however, with the payment of certain debts, funeral expenses and the cost of erecting a monument on the cemetery lot. Mr. Wallace purchased his sister’s half interest for $2,500, which he borrowed from his brother, Henry M. Wallace, on the security of a mortgage on the property. In addition to this 95 acres Mr. Wallace owned some adjoining land, making altogether a farm of about 246 acres, of
Oñ June 24, 1915, Mr. Wallace borrowed $225 from the plaintiff, the First State Bank of Milford, on his unsecured note. The money, according to Ms testimony, went to an automobile agent, with whom he was making a trade in automobiles. On July 15, 1915, he indorsed a note made by one, Seely' Orr, for $100, on which the plaintiff loaned- that amount without security. On July 30, 1915, Mr. Wallace borrowed $30
“Q. * * * You turned over all that property for this property in Ann Arbor, is that right?
“A, No, the personal property was turned in for that stock.
“Q. And the farm was turned in for the property here, in Ann Arbor?
“A. Yes.”
The $4,100 cash paid over in the transaction was borrowed by Mr. and Mrs. Wallace from Henry M. Wallace; $2,400 of this was paid by a five-year lease of No. 307 North State street, given by Alexander and Lena Wallace to Henry M. Wallace, payment of rent for the full term being credited in advance. The remaining $1,700 was to be secured by a mortgage on the same property, which, however, at the time of hearing had not been given, owing to this litigation.
The notes given to the plaintiff bank were not paid, and the bank brought suit against Alexander Wallace and took judgment by default for $372.46 damages and $27.60 costs, on which a writ of execution was issued and levied on the two pieces of real estate in Ann Arbor acquired by Alexander and Lena C. Wallace in the exchange, and the bank then filed a bill in aid of execution, alleging that the transaction was in fraud of creditors, and praying that the conveyance, in so far as it appertains to Lena C. Wallace, be set aside and declared void and any attempted joint tenancy be revoked and that plaintiff be authorized to proceed upon its writ of execution. After a full hearing the court below entered a decree granting the relief prayed for.
“Well now I cannot. I have disposed of those securities and I have taken this farm back in my own name, and I own this 270 acres in my own name absolutely, free and clear from incumbrance.”
And that it was on the faith of that representation that he loaned the money without security. Mr. Wallace in his testimony made a direct and positive denial that he had ever made such a statement. There was also some conflicting testimony as to the value of the farm property and as to sales'of other land in the vicinity bordering on the lake.
It is the contention of counsel for the plaintiff that by the transfer of the personal property and the transfer of the real estate a fraud was committed by the defendants, and that at the very moment that the transfer of the property was made to George Gallup, the tenancy by the entireties in the real estate in Livingston county was severed. That the purchase of the property in Ann Arbor with the proceeds of the farm and personal property created a new condition. While we are not prepared to approve this contention of counsel as made, we nevertheless are of the opinion that the result reached by the learned trial judge can be justified by authority.
In Newlove v. Callaghan, 86 Mich. 300, it is said:
“It does appear that, at the time of the purchase of this property, the defendant John Callaghan was in*678 debted to complainant in the amount of this judgment, and that defendants jointly purchased this property, and jointly paid the sum of $1,850 therefor, and that, the deed was made to them jointly. In the absence of any showing to the contrary, the- defendant John Callaghan must be presumed to have paid one-half of the purchase price. * * *
“It would be a gross injustice to permit debtors to apply moneys which should be applied to the_ payment of their debts, to the creation of an estate which would be beyond the reach of their creditors. Had the entire estate been placed in the wife’s name, there could have been no question but that the same would be regarded as fraudulent under the statute, and it is no less a fraud upon creditors because the title has been taken in the name of the defendants jointly. In other words, estates in entirety cannot be created at the expense of creditors, and held in fraud of the latter’s right.”
And in the opinion on the rehearing of- the same case, it was said:
“According to the answer, the purpose of taking the title in the joint names of the defendants was that the survivor should take; but if any part of the consideration was paid by defendant John Callaghan, the effect was to place that part beyond the reach of process, and that operated as a fraud upon creditors. A denial of actual intent to defraud does not avoid the consequences of an act which is in effect a fraud.”
In the present case, if the Livingston farm property had been exchanged for the Ann Arbor real estate as an even exchange, without the payment of any difference by the defendants in cash, especially if it had been a technical “exchange,” there might be good ground for the argument that the estate by the entirety in the Ann Arbor property might properly be considered as a continuation of the estate by the entirety in the farm property, which had been lawfully acquired. In such a case there would have been no conversion into money, but one estate by the entirety would have been exchanged for another estate by the entirety.
Assuming, then, that the investment in the Ann Arbor properties represented by the valúe of the Livingston farm land still continues to retain the character of an estate by the entirety, nevertheless, as to the amount of money invested by the defendant Alexander Wallace in the Ann Arbor properties above the value of the Livingston farm we do not think, under the circumstances of this case, that he should have the right to create an estate by the entirety. At least to the extent of this amount the land should be subject to the claim of the plaintiff, and we are therefore of the opinion that a decree should be entered ordering a sale of such an interest in the Ann Arbor properties as represents one-half of the investment made therein in excess of the value of the Livingston farm property as established by the sale thereof.
A decree may be entered in accordance with this opinion, with costs to the plaintiff.
I think it is obvious that the decree indicated by this opinion cannot be enforced in accordance with any known rules.