68 So. 306 | Ala. | 1915
This is a general creditor’s bill by the trustee in bankruptcy seeking to have set aside certain described conveyances of R. M. McCrory to his wife, Bessie McCrory, as having been made in fraud of the rights of creditors of appellant. As to one of the conveyances questioned, it is the insistence of the trústete in bankruptcy that appellant purchased lands conveyed therein from one Kemp, and had the deed made to his wife when the full consideration therefor was paid from moneys subject to the payment of the creditors’ debts.
(1, 2) The evidence discloses the facts that at the time of the first conveyance R. M. McCrory was without education; that he wa,s about 50 years old, and his wife was about 25 years old; that he was engaged in farming and dealing in cattle until the year 1907, when he moved to Pachuta, Miss., and undertook to do a mercantile business at this point, placing in charge of this business a nephew, John McCrory. It further appears from the evidence that when R. M. McCrory undertook the mercantile business at Pachuta he had moneys, uniqcumbered personal property and land, and
Before the appellee can have this deed of date of October 16, 1908, set aside as fraudulent and void as against creditors, the evidence must show that on the date of its execution and delivery R. M. McCrory, with the intention to defraud his subsequent creditors, made this voluntary conveyance to his wife, and that his wife accepted it for the purpose of assisting her husband in defrauding his creditors.
A subsequent creditor cannot complain of such conveyance, or have same set aside on the ground that it was made with the intent to hinder, delay, or defraud creditors, unless it is alleged in the bill, and the evidence sustains the allegation, that a fraud was committed by the parties to the conveyance and that the creditors suffered thereby. And in charging fraud the rule is that “mere conclusions, as that a conveyance is fraudulent, or that it was made with fraudulent intent, will not suffice against a proper demurrer.” The bill must aver particular facts showing in what the
The distinction, as to the burden of proof, between the existing and subsequent creditors was discussed by Chief Justice Brickell in Seals v. Robinson, 75 Ala. 363, as follows: “It is settled by a long line of decisions in this court that a voluntary conveyance, a conveyance not resting upon a valuable consideration, is void per se, without any regard to the intention of the parties, however, free from covin or guile they may have been, as to the existing creditors of the donor, without regard to his circumstances, or the amount of his indebtedness, or of the kind, value, or extent of the property conveyed, if it be not exempt from liability for the payment of debts. As to subsequent creditors, if it be not shown that there was a mala tides, or fraud in fact in the transaction, the conveyance is valid and operative. But, if actual fraud is shown, it is not of importance whether it was directed against existing or subsequent creditors; either can successfully impeach and defeat the conveyance, so far as it breaks in upon the right to satisfaction of their debts. The distinction between existing and subsequent creditors is that, as to the former, the conveyance is void per se, for the want of a valuable consideration; as to the latter, because it is infected with actual fraud. — Miller v. Thompson, 3 Port. 196; Cato v. Earley, 2 Stew. 214; Moore v. Spence, 6 Ala. 506; Costillo v. Thompson, 9 Ala. 937; Thomas v. de Graffenried, 17 Ala. 602; Foote v. Cobb, 18 Ala. 585; Stokes v. Jones, 18 Ala. 734; s. c., 21 Ala.
This was the rule declared by Mr. Justice Stone in Huggins v. Perrine, 30 Ala. 396, 68 Am. Dec. 131, and restated by Mr. Justice Anderson in Alim et al. v. Caldwell, Ward, et al., 149 Ala. 293, 298, 42 South. 855, and it has never been departed from in this state. The right of the subsequent creditor, then, to have conveyances made by the debtor set aside, depends upon the existence of actual fraud in the conveyance; and the burden of proving it rests upon the complainant.
In Cartwright et al. v. West, 155 Ala. 623, 47 South. 94, the Chief Justice said: “It is true that the adjudication of bankruptcy is in the nature of a decree in rem, and is conclusive, if rendered by a court having jurisdiction, of the fact of the bankrupt’s insolvency, and therefore of existing creditors at the date of its rendition; but the probative force of that adjudication cannot be extended, so as to make it proof of the fact that such creditors existed a year or more prior to the date of its rendition. And in order to avoid the necessity of alleging and proving a fraudulent intent it would be necessary to aver that the respective debts of the several ‘creditors arose or accrued prior to the making of the several conveyances attacked.”
In Claflin v. Mess, 20 N. J. Eq. 211, the court well said that: “In order to establish a good title to relief” by a subsequent creditor, “he must show that at the time of the commencement of his suit there were debts still outstanding which the grantor owed at the time he made the deed, otherAvise no foundation is laid for avoiding it as fraud upon antecedent creditors; for, if the grantor has paid all his debts incurred prior to the conveyance, that fact fully repels all idea of fraud as to them.”
In Pinkston v. McLemore, 31 Ala. 308, Mr. Justice Walker declared that a contract between husband and Avife, by Avhich a separate estate is created in the wife in the earnings of herself and her domestic servants, will not be declared void at the insistence of subsequent creditors of the husband, on proof that he was greatly embarrassed with debts and contingent liability at the time the contract was made, when it also appears that he then possessed a large estate of unineumbered real
In Schreyer v. Scott, 134 U. S. 405, 416, 10 Sup. Ct. 579, 583 (33 L. Ed. 955), Mr. Justice Brewer, writes of conveyances by husband to wife that: “The very confusion and carelessness in the dealings between husband and wife make against, rather than in favor of, the claim of fraud. There is no evidence that he was in debt at the time of these conveyances, at least beyond a trifling amount, which was subsequently paid; and, if the parties had intended fraud and wrong, unquestionably their accounts would have been kept carefully and accurately, and books"would now be presented showing such accounts. Husband and wife evidently saw no necessity of dealing with each other at arm’s length; the title to the property was placed in- her name when there was no legal or equitable reason why it should not be done.”
(3) In Goetter, Weil & Co. v. Norman, 107 Ala. 585, 19 South. 56, Chief Justice Brickell declared that: “The relationship of the grantors and the grantee, and the fact that they lived together under the same roof, proved nothing unless connected with other facts and circumstances having a just tendency to prove fraud. * * * The law does not prohibit persons who are sui juris, standing in the nearest relations of consanguinity or affinity, or the most intimate of business relations, from dealing with each other.”
And in Halsey v. Connell, Green & Co., 111 Ala. 221, 226, 20 South. 445, the Chief Justice states that: “The more recent decisions have departed from this doctrine (that relationship is a badge of fraud), declaring that relationship is a mere circumstance, dependent for its value upon other circumstances, which serve to throw light upon the transaction. — Teague v. Lindsey, 106
(4) We fail to find from the evidence that on the date (October 16, 1908) of the voluntary conveyance of R. M. McCrory to his wife, Bessie McCrory, of the 546 acres of land in Choctaw county, Ala., conditions were such as to indicate that the conveyance was made for the purpose of defrauding any creditor. The deed was promptly filed and recorded in the county where the land Avas located, and thus gave notice that the husband had parted Avith his title in the lands and vested it in his Avife. He Avas at the time solvent; desired to provide for his Avife, Who Avas much younger than himself; had other unincumbered lands, moneys, and personal property with Avliich to maintain his general business. There is no evidence that tends to show that the parties to the conveyance thought of defrauding any one. There is no eAddence of mala tides in the transaction.
(5) It is insisted that the subsequent declarations of R. M. McCrory of his continued ownership of the Alabama lands procured for him credit during the subsequent years of his mercantile venture and showed his fraudulent intent in the making of the conveyance. This statement is denied by appellant. Yet, if he did make such subsequent statements, they cannot be imputed to his grantee, Mrs. Bessie McCrory, to the dertiment of her title to the land. — Bartlett v. Delprat, 4 Mass. 702; Clarke v. Waite, 12 Mass. 439; Bridge v. Eggleston, 14 Mass. 245, 7 Am. Dec. 209.
(6) The burden Avas on the appellee, as trustee, to shoAV this bad faith on the part of either the grantor or grantee at the time of the execution of the deed, and, failing in this, the decree of the chancellor declaring
(7, 8) Another conveyance sought to be declared fraudulent and void is the one of June 1, 1910, by RM. McCrory to his wife, Bessie McCrory, and filed for record in Deed Book 10, page 460, in the office of the judge of probate of Choctaw county, Ala., and reciting a consideration of $2,000. At the time of its execution, R. M. McCrory was insolvent, and the burden of proof was upon his wife, as the grantee, to show that a valuable and adequate consideration was paid him by her. —Ledbetter v. Davenport, 154 Ala. 336, 45 South. 467, 129 Am. St. Rep. 62; Martin v. McDaniel, 170 Ala. 270,
The evidence is voluminous, and after its careful consideration we are of the opinion that the husband and wife yielded to the temptation of placing the property conveyed in the last two deeds beyond the reach of existing creditors. The chancellor, as to these conveyances, has justly enforced the doctrine of the courts “that the claims of justice are prior to those of affection.”- — Chancellor Kent, Reade v. Livingston, 3 Johns, Ch. (N. Y.) 481, 8 Am. Dec. 520. The appellant, Bessie McCrory, as grantee in these two conveyances, has not met the burden of proof cast upon her under the law, and the decree of the chancellor declaring these
The cause is reversed and rendered in part, and in part affirmed.