1 Rob. 124 | Va. | 1842
The principles of the common law denounced all frauds perpetrated .against the subsisting rights of others, and gave relief to the party injured. In regard to frauds upon creditors, the mode of redress was to tre,at the fraudulent act as a nullity, and permit the creditor to prosecute his legal remedies for the recovery of his demand, in like manner as if the fraudulent act had never been done. The statute of 13 Eliz. ch. 5. (substantially adopted into our code) was passed in aid of the common law, and sprang from the great and growing mischiefs occasioned by the covin and ingenious devices of fraudulent debtors. It is highly remedial and beneficial in its nature, and is entitled to a free and liberal interpretation. It has often been said to be declaratory of the principles of the common law ; and this is certainly true ; but it is moreover true that its operation is more extensive and salutary than the rules of the common law, at least as they were understood at the time of the enactment of the statute. In fact it introduced a principle which had not theretofore been recognized by the courts, that of extending relief to rights not in existence at the time of the fraudulent transaction ; for it was agreed in Twyne's case, 3 Rep. 83. that by common law, an estate made by fraud shall be avoided only by him who had a former right, title, interest, debt or demand, and not by one more puisne. But the statute embraces all creditors, whether existing at the date of the fraudulent conveyance &c. or thereafter arising ; for it will be seen on examination, that it
The principle, it is true, upon which the subsequent creditor has been admitted to such relief, has not always been distinctly or correctly stated. Lord Rosslyn in particular, in the case of Montague v. Lord Sandwich, fell into the error of supposing the ground to be, that the subject was thrown into assets, and the subsequent creditors so let in. But how can the subsequent creditors be let in, unless the conveyance be fraudulent as to them ? and what propriety can there be in placing the right of the subsequent creditor to relief, upon the will and pleasure of the prior creditors in re
It is the fraudulent intent, therefore, in relation to creditors generally, which forms the substance of enquiry in all questions of fraudulent alienation ; and the courts have, of necessity, resorted to a legal presumption arising out of the general nature of the case, and to marks or badges of fraud furnished by the particular circumstances. The legal presumption is founded upon a comparison of the consideration for the conveyance &c. with thht which constitutes the just claims of creditors ; and though voluntary conveyances are not mentioned in the statute, their true character and effect are necessarily involved in its application. This leads to a construction natural and wholesome, and not justly liable, it seems to me, to the imputation of Eyre, B. in Jones v. Boulter, 1 Cox’s Ch. R. 288. of being artificial and puzzling. Upon the question of fraudulent intent where the conveyance is voluntary, the law, following the dictates of common sense, gives, on the one hand, due weight to the meritorious considerations arising out of the natural duty of the grantor to make provision for his children and family ; and, on the other, to the paramount obligation of discharging the just demands of
I can perceive no objection to this legal presumption in all cases of prior indebtedness ; but the weight of it is another matter, depending, it seems to me, upon the extent of that indebtedness. There is high authority for treating the presumption as conclusive in relation to all creditors existing at the time of the voluntary conveyance, without regard to the amount of their demands or the circumstances of the grantor. It was so held by chancellor Kent in the case of Reade v. Livingston, 3 Johns. Ch. R. 492. in which the authorities are elaborately reviewed, but to my apprehension, not with his usual success. His opinion is supported by that of mr. Atherley, in his work above referred to, p. 212. The rule would no doubt be a convenient one in its practical application, and cut up by the roots many perplexing controversies. But the objection to it is, that it would not unfrequently be harsh and unreasonable in its operation, converting a laudable into a fraudulent purpose, and too often involving innocent children in
Thus, while I regard the indebtedness of the grantor at the time of a voluntary settlement or conveyance, as raising a legal presumption against its validity, that presumption I consider only prima facie, and not conclusive. It is liable to be repelled by the particular circumstances of the case; as where it appears that the then existing debts were secured by mortgage, Stephens v. Olive, 2 Bro. C. C. 93. or by the settlement or conveyance itself, George v. Milbanke, 9 Ves. 193. or that the grantor was in prosperous and unembarrassed circumstances, and the provision made for his children or family a reasonable one according to his state and condition in life, and leaving enough for the payment of his debts; Hinde's lessee v. Longworth, above cited. On the other hand, the legal presumption may be strengthened by particular circumstances, and rendered conclusive by a degree of indebtedness amounting or approaching to insolvency.
The foregoing remarks tend to shew, that though the ]egai presumption arising from prior indebtedness is highly useful in the application of the statute, yet it would not always be sufficient or safe, without resorting at the same time to the particular circumstances of the case, furnishing, on the one hand, a guide to an innocent and honest purpose on the part of the grantor, or, on the other, marks or badges of a fraudulent intent. It would of course have no application to the case of subsequent creditors, where the grantor was free from indebtedness at the time of the conveyance or settlement. And yet there can be no doubt that the alienation may still be fraudulent within the true intent and meaning of the statute, as springing from a fraudulent purpose directed exclusively against subsequent creditors. The conveyance may be made with a view to future indebtedness, and in order to shield the grantor against its consequences. Stileman v. Ashdown, 2 Atk. 481. Fitzer v. Fitzer, 2 Atk. 511. Richardson v. Smallwood, Jacob’s R. 552. Sexton v. Wheaton, 8 Wheat. 246. And where such an intent can be shewn, the conveyance will be void, whether the grantor was indebted or not. Ibid. Salmon v. Bennett, 1 Conn. R. 525. Nor is it necessary that an actual or express intent should be proved; for that would be impracticable in many instances where the conveyance ought not to be established. It may be collected from the circumstances of the case, ibid. Lord Townshend v. Windham, 2 Ves. sen. 1. and the enquiry will be aided by bearing in mind what have usually been regarded by the courts as marks or badges of fraud. Amongst these, are the unreasonableness of the gift, compared with the circumstances of the grantor; his continuing in possession of the property against the terms of the conveyance, exér
I have thus, in consequence of the conflict amongst some of the authorities, and the imperfect manner in which some of the decisions have been reported, endeavoured to ascertain the true principles belonging to the subj’ect; and if I have been successful, there will be but little difficulty in the application of them to the case before us.
If the case were free from any special marks or badges of fraud, the deed in question would still appear upon its face to have been a voluntary conveyance in consideration only of natural love and affection ; and if it be ascertained that the grantor was indebted at the time, must be liable to the prima facie legal presumption against its validity. But here it has been strongly urged by the appellants’ counsel, that the special verdict does not find any indebtedness of the grantor at
The counsel for the appellants has relied much upon the case of Farley v. Briant, 3 Adolph. & Ell. 839. 30 Eng. C. L. R. 239. in which it was held, upon the construction of the statute 3 & 4 Will. & Mary, against fraudulent devises, that the devisee of a surety who-had united with the principal in covenants for the payment of rents, which covenants were not broken in the lifetime of the devisor, was not liable in an action of debt for rents accruing after his death. The statute avoids devises as against bond and other specialty creditors, and gives to the creditor an action of debt upon the bond or specialty, against the heir and devisee of the obligor jointly. In the case of Wilson v. Knubley, 7 East 128. it had been previously held, that an action of covenant not having been given by the statute, such action would not lie against the devisee upon a covenant of seisin contained in a deed of conveyance from the covenantor, to recover damages for the loss of the land, and the expenses of defending an ejectment in which it was recovered. The two cases, taken together, shew that covenant would not lie though there was a breach in the lifetime of the devisor, and that debt would not lie where there v/as no breach till after his death; but not that debt cannot be maintained where the breach was in the life of the obligor. The remedy given by that statute is a personal action, of a particular form, against the devisee, who was not liable at common law, and an action upon a bond or specialty merely; whereas the statute against fraudulent alienations gives no personal remedy, but declares in the most comprehensive terms, applicable to all damages, as well as debts of whatever nature, (what had been before provided by the common law, at least to a great extent,) that all conveyances &c. made with the proscribed fraudulent intent, shall be void against all
I cannot therefore but think, if I am right in my understanding of the finding in the special verdict, that the grantor had incurred a liability at the time of his voluntary conveyance, which created an indebtedness within the true spirit and meaning of the statute, and the principles of the common law : and if so, the extent of that indebtedness is wholly immaterial; for the prima facie legal presumption attaches, and is rendered conclusive by the finding of the jury that the conveyance was made for the purpose of avoiding that liability; which fraudulent intent nullifies the deed in regard to all creditors, whether prior or subsequent. It will hardly be said, that, the jury having only found the fraudulent intent in regard to that liability, the idea of its existence in relation to others is excluded : for a fraudulent intent against one creditor is, as I think I have shewn, fraudulent as to all; and it was not necessary to find that comprehensive intent, which would have rendered the verdict general, instead of special, the province of the latter being to find the material facts of the case, leaving the general conclusion of law, or more properly the general conclusion of both law and fact, to the judgment of the court. 8 Bac. Abr. London edi. of 1832, p. 101. Monkhouse v. Hay, 8 Price 256. 3 Eng. Exch. Rep. 368.
But if it were even conceded that the liability found by the jury does not shew an indebtedness of the grantor at the time of the conveyance, still it shews that the deed was made to defeat a legal and just responsibility, to wit, his suretyship for the deputy sheriff, and was not therefore made bona fide for the advancement of his children. And when we come to look at the particular marks or badges of fraud attending the trans
Upon the whole, I am well satisfied that the judgment of the circuit court is right, so far as relates to the tract of 500 acres: but in regard to the tract of 100 acres, I think it wrong; that portion of the land not having been sold or levied on under the commonwealth’s execution, and though conveyed by the sheriff’s deed to the purchaser, that conveyance can pre
The finding of the jury ascertains that the deed from Hutchison to his children was not only voluntary and without valuable consideration, but was made mala fide and covinously. It is not merely constructively fraudulent as being voluntary : it is tainted with actual covin, and according to the letter and spirit of the statute, void as to all creditors. The property conveyed by it was therefore liable to the execution of the commonwealth ; and the purchaser under that execution, to the extent of the levy thereof and sale under it, has title paramount to that derived under the fraudulent deed. I think it unnecessary, in this case, to enter at large into the review of the numerous cases which have been so elaborately collected and examined by my brother Baldivin. I content myself with saying, that on other occasions I have examined them with care, and my impression was and still is, that the principle extracted by chancellor Kent, in his elaborate judgment in the case of Reade v. Livingston, 3 Johns. Ch. R. 481.—to wit, that a voluntary conveyance without valuable consideration, though free from actual covin, cannot prevail against the claims for debts existing at the time of such conveyance,—is a sound one.
The claim of the purchaser under the execution is only commensurate with the levy and sale under it. As that levy was on one tract of 500 acres, the sheriff had no authority to sell and convey more, and his deed to the purchaser for the other tract of 100 acres conveyed no title, and the judgment in respect to the tract of 100 acres was erroneous.
The judges unanimously concurred in reversing the judgment of the circuit court, with costs, and entering