German Insurance Bank v. Nunes

80 Ky. 334 | Ky. Ct. App. | 1882

■JUDGE HINES

delivered the opinion of the court.

The only question to be considered is, whether.the following deed of trust is fraudulent and void because made to hinder and delay creditors.' The material part of the deed •reads: “That whereas, the said first party is, indebted to sundry persons in various sums, amounting in the aggregate to about thirty-eight thousand dollars, and is the owner of a large amount of assets, estimated to be worth more than fifty 'thousand dollars; and whereas, the said first party is unable to convert his said assets into money fast enough to discharge his said indebtedness as it matured, and is desirous that the same shall not be sacrificed, but so managed and ■disposed of that they will realize their fair value at as little cost as possible, and satisfy his creditors in full, and leave a residue for him. ”

In all cases where conveyances are made for the ostensible purpose of securing an equal distribution among creditors • of the property of the debtor, the validity of the conveyance depends upon the intention of the debtor. ' If the. ¡intention be to hinder and delay creditors in the enforcement of their demands against the debtor, rather than to ¡secure an equitable distribution of the property among creditors and for their benefit, the conveyance is fraudulent and void. It is not the effect of such conveyances that determines their validity, for every such conveyance, in effect, hinders and delays creditors. It is the intention that controls, and that intention cannot be better determined than' from the language of the conveyance, although it may be established by extraneous evidence. Here the deed declares, that it is made “to prevent a sacrifice” of the property, and “to leave a residue” to the debtor. It avows that the assets are largely in excess of the liabilities, and thus manifest, in support of the express declaration quoted, that the primary and sole object of the deed was not to secure as much as possible to the creditors, but, on the contrary, to obstruct the creditors in the enforcement of their legal remedies, in order that the debtor might be benefited. In our opinion the deed upon its face is fraudulent, and should be set aside. (Ward, &c., v. Trotter, See., 3 Monroe, 1; Vernon, &c., v. Morton & Smith, 8 Dana, 263.

Judgment reversed, and cause remanded for further proceedings consistent with this opinion.