149 Tenn. 673 | Tenn. | 1923
delivered the opinion of the Court.
The bill in this cause was filed by the complainant, R. P. Long, who alleges that he is a judgment creditor of his father, E. B. Long, against the defendants, and particularly defendant H. C. True, to reach certain funds in the hands of said True, and have them subjected to the satisfaction of a judgment obtained against the' said E. B. Long.
The predicate of the bill is that True is the fraudulent grantee of E. B. Long, who voluntarily and without consideration, and for the purpose of putting said property beyond the reach of his creditors, on September 26, 1918, conveyed to defendant True certain lands situated in Robertson county, Tenn., and that True afterwards conveyed said property to others, and now has in his hands a portion of the proceeds, amounting to the sum of $5,200.
The bill alleges:
That E. B. Long, the father of complainant, with a view of avoiding payment of certain debts which he owed to creditors in the State of Texas, conveyed to defendant True the lands in Robertson county for the recited consideration of $11,680. That Long, though advised by True to do so, hesitated for a long time to make said conveyance to him, but upon the assurance of True that he could and would hold the title to Said lands for him so as to
That, pending- the execution of the deed to True, E. B. Long conferred with his wife and son, complainant, R. P. Long, as to the advisability of executing the deed to True, and that both his said wife and son advised him not to deed the lands to True, but advised him to sell the lands to his father, John R. Long, to pay him the debts that he was E. B. Long’s surety for in Robertson county. That, however, E. B. Long was dissuaded from this by True, and, as stated above, was induced by True to convey the lands to him. That at the time of said conveyance, and for many years prior thereto, True was the attorney and confidential advisor of E. B. Long, and the latter spent a great deal of time in True’s office, practically making the same his headquarters That E. B. Long had the utmost confidence in True, and, believing that he would keep faith with him in the matter, he deeded said lands to him, True all the time representing to Long that he could and would take care of him, treat him right in the matter, and carry out his agreement with him to the letter.
That E. B. Long, wishing to realize on his lands, approached True on the subject of a sale' of the same, when True said to Long: “If you will find purchases for the lands, I will execute deeds to them, and turn the proceeds over to you.” E. B. Long thereupon found purchasers in
That on June 8, 1918, True paid $1,000 more on said $7,000 note, and after the note became due the bank
True answered the bill, and filed a cross-bill on March 4, 1919, in which he denied that Long was entitled to the proceeds of said note, and averred that the lands were his, and that Long had executed the deed to him in settlement of a debt of $10,200 and interest, growing out of certain Texas land transactions, and that the $7,000 note, executed as aforesaid, was a sham, was never intended to be paid, and that he was entitled to have the same canceled and delivered up to him.
In that suit, however, the chancellor held against True’s contention, and rendered a decree in favor of the bank against True for the balance of the note and interest. Prom the decree True appealed to this court, when and where the decree of the chancellor was affirmed; the case being reported in 144 Tenn., 171, 231 S. W., 541.
That after the trial of said cause of People’s Bank of Springfield v. H. C. True in the chancery court of Robertson county, and pending the appeal to the supreme court, and after True had repudiated his agreement with E. B. Long to turn over to him the proceeds of said lands, the complainant R. P. Long, having acquired claims against his said father, brought suit in the chancery court of Robertson county against him in January 1920, and recovered a decree on said claims in the sum of $7,601.07; and that thereafter, to-wit, on the 25th day of March, 1920, execution issued on said decree, and the same was returned milla dona. Thereupon the said R. P. Long, as said judgment creditor of his father, E. B. Long, brought the present suit to recover of the defendant True the remainder of the purchase price of said lands, to-wit $5,200
Answers were filed by the various defendants, and defendant True in his answer averred that the lands conveyed to him by E. B. Long were his; that he had paid for them; that his associates in certain Texas land transactions, of which E. B. Long was one, owed him, in September 1918, more than $10,000, and that E. B. Long assumed this entire indebtedness for their associates and conveyed to him (True) said Robertson county lands in satisfaction of said indebtedness, and that said conveyance was therefore for a valuable consideration, and was made and accepted in good faith.
Upon this issue a large volume of evidence was taken in the cause, and the evidence taken in the cause of People’s Bank of Springfield v. H. C. True was considered by the chancellor in the trial of the present cause, and is now before this court for consideration _ in the present cause.
On the hearing the chancellor held and decreed:
That the conveyance made by E. B. Long to defendant True on September 26,1913, of the Robertson county lands was made at a time when he (E. B. Long) was indebted, along with other persons in Robertson county, to the extent of several hundred thousand dollars growing out of land transactions in the State of Texas, which was past due, and on which, or a part of which, judgments had been rendered. That neither the said E. B. Long, or said other persons owing said indebtedness with him, could pay said indebtedness, and that said E. B. Long did not desire that his lands in Robertson county be subjected to the payment of such indebtedness. That he discussed his condi
That the defendant H. C. True sold said lands, and gave to the said E. B. Long a note for $7,000, and another note which the said E. B. Long owed with his father, J. R. Long, as surety thereon, amounting in all to $8,800 of said proceeds of sale of said lands by True, paid by the said True to the said E. B. Long while the said H. C. True received $14,000 for said lands, thus leaving $5,200 of the proceeds of sale of said lands in the hands of defendant True.
That thereafter complainant, R. F. Long, bought up certain claims against his father, E. B. Long, which had been in existence for many years, and which were secured by J. R. Long, the father of said E. B. Long, and which the said J. R. Long, now deceased, provided in his last will and testament should be paid out of his (the said J. R. Long’s) estate. That neither the said J. R. Long nor the owners of said claims had ever at any time called in question the said conveyance by E. B. Long to defendant True, or taken any steps to set the same aside. That the said R. F. Long, on January 7, 1920, filed his original bill in the chancery court against his father to recover a decree
The further material features of the chancellor’s decree are that the conveyance of the Robertson county lands by E. B. Long to defendant True was fraudulent, and was made for the purpose of defeating his creditors in the collection of their debts; that the complainant, R. F. Long, counseled and advised with his father, E. B. Long, to make such disposition of his said lands; that the said R. F. Long stands on no higher ground than his said father; and that his father would not, being guilty of fraud in making said conveyance to True, be entitled to any relief in a court of equity; and that his son, the complainant having counseled and advised his father to make fraudulent disposition of his lands, cannot maintain the present bill, and is not entitled to any relief, and the bill was therefore dismissed, with costs against complainant.
From this decree complainant, R. F. Long, has appealed and assigned errors.
We are of the opinion, after a careful exámination of the record and the law governing the questions involved, that complainant cannot recover of defendant True, even though it be conceded that the conveyance from E. B. Long to defendant True of the Robertson county lands was fraudulent and made for the sole purpose of defeating E. B. Long’s Texas creditors in the collection of their debts, as both E. B. Long and his son the complainant,
R. F. Long frankly admitted in his deposition that, after said conveyance was made by his father to defendant, True, he assisted them’ in arranging an account with the People’s Bank of Springfield, of which he was cashier at the time, in the name of E. B. Long, agent, to make the transaction look genuine and straight, and to carry out the scheme which E. B. Long and defendant True had entered into.; it being agreed between E. B. Long and defendant True that E. B. Long was to remain in possession
“A. I assisted him only in this way — my father came to me and stated that True told him that he would have to have an account in the People’s Bank or somewhere as agent to malee this transaction over here look genuine, and to carry out the scheme that True had started, and I filled out a note for |300, and True signed it, and put the money to my father’s credit as agent; I did it myself, and True never paid the note either, it wasn’t supposed to be paid, and wasn’t paid; just a scheme to carry out his plan, as I told you before and in other depositions.
“Q. To whom was the note payable?
“A. It was payable to me to the best of my recollection.
“Q. Who furnished the money that went to the credit of the agent’s account?
“A. I did myself; this note was never not anywhere else; I held it myself; just as I have furnished other money to help my father out; and I wouldn’t do this until he assured me that True had nothing to do with it and wouldn’t get any of it.
“Q. This agent account was one opened up in the said People’s Bank in the name of E. B. Long, agent, and, as I understand you, was a part and parcel of the scheme for handling these lands, that is the operation of them that your father had deeded to True?
“A. It wasn’t a thing in the world but just a plan that True had outlined for my father that would be necessary to make this land transaction look genuine to make it show that way; that was all there was.”
It was held by this court in Nelson v. Vanden, 99 Tenn., 224, 42 S. W., 5, that a voluntary conveyance is valid as to a subsequent creditor who had actual or constructive notice of the conveyance when the debt was contracted, and no actual fraud was practiced upon him, although existing creditors remained unpaid, and the conveyance is fraudulent as to them. This case distinguishes the earlier cases in which it was held that, if a voluntary conveyance is made with the intent to defraud existing creditors it will, in general, be held void as to subsequent creditors.
In 12 R. C. L., page 487, section 28, it is said:
“But the better rule is that creditors who contract debts under such circumstances that the knowledge of previous voluntary transfers must be imputed to them cannot be*684 regarded as hindered, delayed, or defrauded by such transfers, and therefore cannot avoid them for the purpose of obtaining collection of their debts.”
To the same effect is the holding of the court in Kid v. Mitchell, 1 Nott & McC. (S. C.) 334, 9 Am. Dec. 702; Howard v. Williams, 1 Bailey (S. C.) 575, 21 Am. Dec., 483.
In a note on page 751 of volume 14 of American State Reports it is said:
“The grantor in a voluntary deed may part with all possession and. dominion over the property, or, when it is real estate, the grantee may cause the conveyance to be recorded, and thereby impart notice of its existence to all subsequent purchasers and creditors of the grantor. In either event, all subsequent creditors of the grantor have notice of his existing financial condition. They have no reason to expect that the property which has thus been transferred can be made available to them for the satisfaction of their debts. Knowing that the debtor no longer has this property, they may contract with him or not, as they may think best, in view of his apparent financial condition. It is difficult, therefore, to understand how they can be defrauded by the prior transfer of which they are thus notified. It has been said that if they have notice of the transfer, they also have notice that it was fraudulent as against pre-existing creditors, and that it is therefore, void, and that they may therefore go on contracting with the grantor upon the assumption that the apparent conveyance is in fact no conveyance at all, because it was fraudulent and void in its inception. But the better rule, we think, is, that creditors who contract debts under such circumstances that the knowledge of previous voluntary*685 transfers must be imputed to them cannot be regarded as hindered, delayed, or defrauded by such transfers, and therefore cannot avoid them for the purpose of obtaining collection of their debts” — citing Lehmberg v. Biberstein, 51 Tex., 457; Monroe v. Smith, 79 Pa., 459; Fowler v. Stoneum, 11 Tex., 478, 62 Am. Dec., 490; Lewis v. Simon, 72 Tex., 470, 10 S. W., 554; Baker v. Gilman, 52 Barb., (N. Y.), 39; De Garca v. Galvan, 55 Tex., 53; Bullitt v. Taylor, 34 Miss., 708, 69 Am. Dec. 412.
We have examined these cases, and find that they support the rule stated in the note above quoted.
Reference is made in the brief of counsel for complainant to several cases bearing on the duty of an attorney toward his client in professional matters, which hold that an attorney is bound in law to act with honesty and fairness toward his client, as the relation of attorney and client is one of great delicacy and extremely fiduciary in its character.
We have examined these cases, and find that they have no application to the questions under consideration here. They relate to contracts for professional services between attorney and client. It is true that defendant True had been the attorney of E. B. Long and represented him in legal matters. The conveyance, however, by Long to True of his Robertson county lands was not a transaction of a professional nature, nor does the evidence show that True overreached Long in the matter. Long was a man of intelligence and wide experience in business affairs, and fully understood what he was doing. According to his own evidence he had deliberately formed a purpose to make a fraudulent conveyance of his lands to some one, if not to True, for the purpose of defeating his Texas cred
The chancellor, therefore, properly dismissed complainant’s bill, and his decree is affirmed, with costs.