70 W. Va. 1 | W. Va. | 1911
This is a suit attacking conveyances to a wife as being in fraud of the husband’s creditors. The chancellor found from the pleadings and proofs that the conveyances were not made in actual fraud, but that one of them conveying a lot of ground was' voluntary and, therefore, void as to the debts contracted prior to its date; that all the debts claimed by the bill and petitions were contracted after this conveyance was made, except a debt of one of the petitioning creditors; that the wife furnished $1,800 of the money that paid for the lot and the improvements thereon from resources of her own, other than those of her husband; and that the improvements placed on the lot a considerable time after the conveyance are chargeable with the debts of the husband, claimed by plaintiff and the other petitioners, to the extent that his means went into those improvements, that is, to the amount of $1,325’. Accordingly a decree was entered directing that the property be sold for the satisfaction of the debts to that amount, if not paid to that extent by the wife in a day given. Prom this decree plaintiff and other creditors have appealed. The main contention is that the court erred in not subjecting the property as a whole to the payment of the husband’s debts.
The case is so similar to many that have received extended ju-
Plaintiff claims that he is a prior creditor in relation to the conveyance of the lot. If it were so, his debt should have a better priority than that given in the decree; for the voluntary conveyance of the lot would then be void as to him. Because plaintiff’s debt grows out of a running account extending from a date long before the conveyance to a date long thereafter, it is insisted that the balance finally remaining due on the account should be considered a debt prior to the conveyance, notwithstanding the various payments made on the account more than equal the items of indebtedness contracted prior to the date of the conveyance. Our statute settles this matter. Code 1906, ch. 74, sec. 2. Judge Luoas. in Greer v. O’Brien, 36 W. Va. 277, gives a clear exposition of this statute. Therein it is held: “Under said act the courts of this state have no power to substitute subsequent creditors to the'shoes of prior creditors, or to confound the two classes which the act was intended to make, and has made, absolutely distinct.” In a running account extending over the date of a voluntary conveyance, part is contracted prior to the conveyance and part subsequent to the conveyance. The creditor is clearly a prior creditor as to part and a subsequent creditor as to part. The conveyance can only be considered void for voluntariness as to the part contracted prior to it. As to the other part it is valid, unless overthrown for actual fraud in relation thereto. As to this subsequent part, mere voluntariness will not avoid the conveyance. “ The statute defines the debts for which a voluntary conveyance must give way. It declares that a conveyance “not upon consideration deemed valuable in law, shall be void as to creditors whose debts shall have been contracted at the time it was made: but shall not upon that account merely be void as
Having observed that plaintiffs account was of such a character as to make him prior creditor as to one part and subsequent creditor as to the other part, we must next inquire whether he still retains the position of prior creditor. The payments made on the account are sufficient to pay all the items that were contracted prior to the conveyance. Iiow are those payments to be applied ? Clearly, in the absence of any direction by the paying debtor, or any specific. application of the payments by the creditor, the law will apply the payments to the oldest part of the account. The payments on the account due plaintiff were made and credited thereon without direction or particular application. They should be held to apply as payments ordinarily do under such circumstances — they should go to the payment of the oldest items of account. “In cases of long standing accounts, where debits and credits are constantly occurring, and no balances are struck otherwise than for the mere purpose of making rests, the payments ought to be applied to extinguish the debts according to priority of time.” 11 Enc. Dig., Va. & W. Va., 124; 30 Cyc. 1244. There is nothing to show that the parties intended the payments to go to the items of account contracted after the conveyance, or that they intended them to be distributed over the whole account. We can only give the payments the application that the acts of the parties gave them at the time they were made. The debtor paid on the account without direction. The creditor made no particular application of the payments. 'Hnder these circumstances, the acts of the parties in the making and receiving
In some jurisdictions continuous or running accounts beginning before the conveyance are considered prior debts. 20 Cyc. 422; Thomas v. Lyle, 37 Ill. App. 482; Spuck v. Logan, 97 Md. 152; Paulk v. Cooke, 39 Conn. 566; Waite on Fraudulent Conveyances, sec 103;.Bump on Fraudulent Conveyances, sec. 296. But, as we have stated, our statute defines who is a prior creditor and who is not. By the terms of the statute a creditor’s relation to a voluntary conveyance is fixed only by the time of the contracting of the debt. It does not permit making a creditor what he has not made himself in this regard. It does not recognize the subrogation which other jurisdictions have invoked to make one a prior creditor.
The contention by plaintiff that the decree is erroneous in recognizing the debts of the petitioning creditors is overruled. Plaintiff’s bill invited these petitioners to come into the suit. They filed petitions fully setting up their debts and joining with plaintiff in the suit. Thereby they became responsible for costs. Hot a word of objection to their petitions was entered in the court below. The debts claimed by them have been contested by no one, not even by the debtor or his wife who claims the property on which these debts are made charges. Several of these petitioning creditors were even allowed to join with plaintiff in this appeal.
The decree finds that plaintiff and petitioners, other than the petitioner decreed to be a prior creditor and whose debt is charged against the lot, shall share pro rata in the amount charged
Affirmed and remanded, with directions.