11 Gratt. 552 | Va. | 1854
Three grounds have been assigned by the appellant’s counsel, upon some one of which it is insisted he is entitled to the relief sought by his bill. These are:
First, that the deeds of the 7th of March 1837 are fraudulent and void as to the creditors of Platoff Zane, and that the appellant is entitled to impeach them as such, whether he is to be regarded as a prior or subsequent creditor, in reference to the time of their execution.
Secondly, that in point of fact his debt was a pre-existing debt, and is, therefore, in terms provided for by the deeds.
Thirdly, that under the provisions of said deeds Platoff Zane took such an interest in the subject thereby conveyed as would be liable to subsequent creditors, and that the appellant is entitled as such to subject the same to satisfaction of his debt.
As to the first ground : Nothing is better settled than that a voluntary conveyance, which interferes with or breaks in upon the rights of . existing creditors, *will not be permitted to take effect to the prejudice of their just demands : and this according to many of the cases, without regard to the amount of the debts, or the extent of the property settled, or the circumstances of the party. Fitzer v. Fitzer, 2 Atk. R. 511; Taylor v. Jones, 2 Atk. R. 600; Chamley v. Lord Dunsany, 2 Sch. & Lef. 690, 714; Reade v. Livingston, 3 John. Ch. R. 481; Thomson v. Daugherty, 12 Serg. & Rawle 448; Howe v. Ward, 4 Greenl. R. 195; Hopkirk v. Randolph, 2 Brock. R. 132; Backhouse v. Jett, 1 Brock. R. 500, 511; Ridgway v. Underwood, 4 Wash. C. C. R. 67; Jackson v. Seward, 5 Cow. R. 67; O’Daniel v. Crawford, 4 Dev. Law R. 197.
On the other hand, numerous cases are to be found, which in effect maintain the doctrine, that a conveyance, although voluntary, may be good, under circumstances, even as against existing creditors; and that a partj^’s being indebted at the time is but an argument of fraud, the question still being in every case, whether the conveyance is a bona fide transaction, or a mere device to delude and defeat creditors. Cadogan v. Kennett, Cowp. R. 432; Doe v. Routledge, Ibid. 705; Richardson v. Smallwood, 1 Jac. R. 552, 4 Cond. Eng. Ch. R. 202; Gale v. Williamson, 8 Mees. & Welsb. 405; Verplank v. Sterry, 12 John. R. 536; Wicks v. Clarke, 8 Paige’s R. 161; Seward v. Jackson, 8 Cow. R. 406; Hinde’s lessee v. Longworth, 11 Wheat. R. 199.
The subject is one involving the enquiry into the relations which the two great classes of creditors, prior and subsequent, occupy in relation to a voluntary settlement. And the question is whether they occupy a common ground, so that a conveyance which would be adjudged fraudulent as to the former, would also be held to be fraudulent as to the latter; or will a discrimination be made, the effect of which will be to withdraw from enquiry in the case of a prior creditor the various circumstances attending the execution of *the conveyance, such as the nature of the consideration, the value of the property settled compared with that, if any, retained, the extent of their indebtedness, &c., &c. ; all of which are in the case of a subsequent creditor, most proper to be considered; and upon which, in order to succeed, he must be able to fix the imputation of fraud in the absence of direct and positive proof of the intent. Chancellor Kent clearly recognizes a distinction between the two classes. In the case of the prior creditor, he considers that any enquiry into the amount of debts existing at the time would be embarrassing if not dangerous; and he regards it as wholly unnecessary, considering the debtor as absolutely disabled from making any voluntary settlement to the prejudice of any existing debts; and such, he says, is the clear and uniform doctrine of the cases. Reade v. Lovingston, 3 John. Ch. R. 481, 500. Judge Story, on the other hand, evidently considers him as carrying the doctrine too far. He thinks that mere indebtedness would not per se, avoid a voluntary conveyance even as to subsisting creditors, unless the other circumstances are such as justly to create a presumption of fraud. 1 Story’s Eq. Jur. § 360 to 365, inclusive. The opinion of Chancellor Kent is supported by that of Mr. Atherley, in his work on Marriage Settlements, at p. 212; and numerous authorities are cited, which he regards as fully sustaining it. In support of his views, Judge Story refers to many cases which he regards as necessarily tending to maintain them; which will be found in the notes to the sections above cited.
The question has been the subject of a most animated and elaborate discussion between two of the former judges of this court in the cases of Hutchison v. Kelly, 1 Rob. R. 123; Bank of Alexandria v. Patton, Ibid. 499; and Hunters v. Waite, 3 Gratt. 26. Judge Baldwin strenuously combats the opinion of Chancellor Kent. *He maintains that prior and subsequent creditors stand upon common ground; and that although indebtedness at the time of a voluntary settlement may create a legal presumption against its validity, yet such presumption is only prima facie, and not conclusive, depending upon the particular circumstances of the case. Judge Stanard takes the opposite grounds; he maintains the correctness of
But though fraud in fact must thus be shown, it is not required that the actual or express intent be shown by direct proof. This would be unattainable in many cases, and if it cannot be given, it may be supplied by just legal implication from the evidence where the circumstances are such, or such marks or badges of' fraud are present, that the vicious intent may and must be inferred. Lord Townsend v. Winham, 2 Ves. sen. 1; per Baldwin, J., in Hutchison v. Kelly, 1 Rob. R. 123, 134; and per Stanard, J., in Hunters v. Waite, 3 Gratt. 26, 72.
Where the grantor is not indebted at the time of making a voluntary conveyance, no fraudulent intent can of course be shown as against existing creditors; and yet it might be thoroughly vicious because prompted by a fraudulent purpose aimed at such as might become creditors thereafter. If the grantor, however, be indebted at the time, but due provision be made for all existing debts, it is clear that all just imputation of fraud in respect of them is out of the question. In Stephen v. Olive, 2 Bro. C. C. 90, a settlement had been made in favor of a wife and child,. by a party who was indebted at the time in about the sum of five hundred pounds, but the debt was amply secured by a mortgage on all the estate embraced by the settlement. The master of the rolls maintained the validity' of the settlement; thus in effect placing a settlement made by a party indebted at the time, but whose indebtedness was duly provided for, upon the same footing as one made by a party not indebted *at all. In George v. Milbanke, 9 Ves. R. 189, 194, Lord Chancellor Eldon clearly recognizes this as the modern doctrine. He says that a provision in a voluntary settlement for payment of existing debts, would make such a settlement good against all future creditors. In Reade v. Livingston, 3 John. Ch. R. 481, 501, Chancellor Kent says, the presumption of fraud as to subsequent creditors arising from the circumstance that the party was indebted at the time of the settlement, is repelled by the fact of those debts being secured by a mortgage or by a provision in the settlement. And in the case of Hester v. Wilkinson, 6 Humph. R. 218, this doctrine was carried still further. That was a case of a voluntary settlement on a wife and children, by a party indebted at the time, and the deed contained no provision for the payment of the debts, nor was there any mortgage or other security given by which they-were provided; but the trustee admitted that it was the understanding and agreement of the parties that he should pay all existing debts by the sale of so much of the property as might be necessary for that purpose. The court held this to be sufficient, and declared that a voluntary settlement on a wife and children, if fair at the time, will be good against subsequent creditors of the party making it.
I think, therefore, that the case of a voluntary settlement upon a wife and children, although by a party indebted at the'time, will, according to most approved authorities, stand on the same footing with such a settlement by a party not indebted, provided due and ample provision be made for the payment of such subsisting debt; and that in either case, to assail such a settlement successfullj', an actual fraudulent intent must be manifested, or must be collected from the circumstances of the case. How it would seem at most a solecism to say of a conveyance, a primarjr object of which is to secure all existing debts, and for *which full provision is made, that it is fraudulent as to the creditors existing at the time. I agree, however, that a conveyance might purport to secure all existing debts, and yet by reason of terms and stipulations which it contained, intended or serving to hinder, embarrass or delay the creditors in the receipt of their respective debts, it might be held to be fraudulent and void as to them. But there is nothing of that kind in this case. The deeds contain no terms or stipulations which are unusual or unreasonable. Their
As to the matters relied on as badges of fraud, thej' are either inapplicable or without significance. That the grantor was largely indebted and the conveyance one of his whole estate, and that the creditors were hindered from their ordinary remedies by judgment and execution, would only be of force where no provision or an inadequate one is made for the payment of the debts. Here it is full and ample, and no creditor provided for is complaining. That the deeds were voluntary and by one largely indebted, is a point I have already fully considered. That neither of the trustees was a creditor, that the consideration named was the inadequate and indeed nominal one of five dollars, and that the creditors are not named and were not consulted nor consenting to the terms of the deeds at the time of their execution, are matters which under the circumstances of this case, cannot be entitled to the slightest weight. Nor is the absence of any antenuptial agreement for a settlement, a circumstance that will affect the validity of the settlement made, if it be otherwise free from objection. This is *sufficiently apparent from the cases already cited for other purposes; to which numerous others to the same effect might be added.
In what has been just said it has been assumed that a subsequent creditor may come with a fishing bill charging indebtedness to others at the time of the settlement; and upon proving the same, obtain relief directly against the subject. Yet this would seem for a long period not to have been a settled point. Chancellor Kent expresses the opinion that he wüll be entertained, and that his rights will not depend on the mere pleasure of the prior creditors whether they will or will not impeach the prior settlement. Reade v. Livingston, 3 John. Ch. R. 481. And such Judge Baldwin seems to think is the fair conclusion from the current of decisions. Hutchison v. Kelly, 1 Rob. R. 123. Sir William Grant was of a different opinion in Kidney v. Coussmaker, 12 Ves. R. 136; and the opinion of Lord Rosslyn, referred to by him, in the case of Montague v. Lord Sandwich, is adopted as the precedent which he professes to follow. In Lush v. Wilkinson, 5 Ves. R. 384, a bill of this kind was dismissed ; the master of the rolls (Rord Alvanley) saying, “it is very extraordinary for a subsequent creditor to come with a fishing bill in order to prove antecedent debts.” He however gave the party liberty to file another bill. Of this case, Sir William Grant remarked in Kidney v. Coussmaker, 12 Ves. R. 136, 155, that the only surprise he felt at Rord Alvanley’s decree was, that his lordship did not dismiss the bill absolutely without giving leave to file another. And indeed in a recent case decided in 1843, the vice chancellor remarked that a deed (of voluntary settlement) can only be set aside as fraudulent against creditors at the instance of a person who was a creditor at the time; though when it shall have been set aside, subsequent creditors may be let in. Ede v. Knowles, 2 Younge & Collyer 177, 21 Eng. Ch. R. 177.
*In Virginia, according to the opinions of Judges Stanard and Baldwin, it would seem that subsequent creditors will be let in upon a fund fraudulently alienated wherever the conveyance has been or might be successfully assathed upon the ground of actual fraud by prior creditors. Hutchison v. Kelly, 1 Rob. R. 123; Bank of Alexandria v. Patton, Ibid. 499.
There is certainly no proof in this case of any actual or express fraudulent intent on the part of Platoff Zane in executing these deeds. Nor is such intent to be fairly deduced from the circumstances of the transaction. The provision for all existing
In every view, I think the attempt of the appellant to assail these deeds on the ground of fraudulent intent either as it respects existing creditors, or those who might thereafter become such, must be held to be ineffectual.
We come now to the second ground assumed, that *the note of Zane to Prentiss was for a pre-existing debt; 'and that it may, therefore, be regarded as provided for by the terms of the deeds. But the bill contains no such allegation. It does not set out the consideration or the origin of the note. It simply avers that Zane, being indebted to Prentiss in the sum of one thousand two hundred and seventy-five dollars, on the 9th of March 1837 executed his note for the payment of the same. This is but the usual and formal mode of stating the execution of a note in pleading. It is not understood to import the existence of the debt at a previous period, but only at the time of, and just before, the execution of the note. Its effect is to give the note and the debt which it evidences a contemporaneous origin. But if a prior existence of the debt had been formally alleged, the answer of Shriver the trustee, sufficiently puts it in issue to require the appellant to support it by proof. He says that he can neither admit nor deny the existence of the note, having no personal knowledge of it or of the consideration for which it was given, but calls for full proof touching- the same. No proof whatever is furnished as to the origin or the consideration of the note. If it were for a pre-existing debt, that fact and the commencement of the debt might have been shown in evidence; and in the absence of any such proof, I think it clear that the origin of the debt must be referred to the date of the note.
It is said though that Mrs. Zane has not answered, and the allegations of the bill are as to her to be taken for confessed, and that therefore the pre-existence of the debt being admitted, the appellant is entitled to relief to the extent of any interest she may have in the subject. I have, however, already shown that there is no such allegation in the bill: and if there had been, the answer of Shriver the trustee, would serve to put it in issue for her benefit, and that of all *others claiming under the deeds. For this purpose, he may properly be regarded as representing the cestuis que trust, and his answer will enure alike to the benefit of all.
The last ground upon which the pretensions of the appellant have been rested is, that under the provisions of the deeds Platoff Zane took such an interest and property in the subject conveyed as may and should be subjected to satisfaction of such debts as he might afterwards contract. The extent of the interest secured to Platoff Zane was the right to occupy, jointly and in common with his wife and family', the residence and homestead to be purchased by the trustees for their benefit out of the trust funds, after satisfaction of the debts, and to a support and maintenance during his life, with a
Upon none of the grounds assigned do I think the pretensions of the appellant can be maintained; and I am of opinion to affirm the decree.
The other judges concurred in the opinion of Hee, J.
Decree affirmed.