210 S.W. 596 | Tex. App. | 1918
This is an appeal from a judgment of the district court of Erath county, dissolving a temporary injunction theretofore granted upon the petition of Mrs. L. A. Quarles, joined pro forma by her husband, John Quarles. She alleged that she possessed in her own separate right, and was the owner and holder of the legal and equitable title to certain described real estate located in Erath county, consisting of some 319 acres, and of certain personal property consisting of cattle and horses. It was further alleged that she held title to said real estate by deeds, duly recorded in the office of the county clerk of Erath county, and that thereafter there was issued out of the district court of Erath county a certain order of sale in the case of Eaton-Blewett Company v. John Quarles, under a judgment in said cause against said John Quarles for the sum of $892.47, ánd for a foreclosure of an attachment lien theretofore levied upon said real estate as the property of said John Quarles,
• The salient facts are that John Quarles and his wife, Mrs. L. A. Quarles, had accumulated as the fruits of their joint labor and efforts during a period of some 35 years, about 1,000 acres of farm and pasture .land' in Erath county and near to the town of Gordon, and also certain live stock and other personal property. On January 25, 1915, John Quarles conveyed all of said land and personal property to his wife during her natural life, and the instrument further provided that at the death of Mrs. Quarles the estate should descend to and be divided among their five children named. The instrument recited as follows:
“Know all men by these presents: That I, John Quarles, of said county and state (on the condition that the grantee herein allows to me the sum of thirty-three and one-third dollars per month during my natural life), for and in consideration of the love and affection that I have for her, and the further consideration that she pay to me.the said sum above mentioned during my lifetime and the further consideration that she give me a home during my lifetime, have granted, sold and conveyed and given, and do by these presents grant, sell, convey and give to my wife, L. A. Quarles of Erath county, Texas, all the following described real estate and personal property.”
The evidence discloses that the instrument of conveyance was filed for record on the date of its execution; that at this time the children of Mr. and Mrs. Quarles were all grown, or practically so, and that' one son, Tobe, was married; that the property described in the instrument of conveyance was all community property of John Quarles and his wife; and that he had no separate property. During the year 1915, and beginning shortly after the date of the execution and record of said instrument of conveyance, and ending October 9th, John Quarles incurred an indebtedness to Eaton-Blewett Company of some $853.10. The items purchased consisted of groceries, farm implements, clothes, fence posts, a wagon, a hay press, plows, and, generally, such articles as would ordinarily be used by a family and on a farm. Of this amount, $6.30 was purchased during 1914, $17.10 was purchased during January, 1915, but prior to the date of the deed. A credit for $22.40, rent of a stable, was allowed Quarles on January 5th. Hence practically the entire indebtedness was incurred after January 25, 1915. During the same period, that is, from January 25th to some time in October,- 1915, Quarles purchased, from the Hardin Lumber Company of Gordon, lumber and other building material in the sum of $723.26. This material, the evidence shows, was placed in the home and on the premises occupied by. Mr. and .Mrs. Quarles. During the same time Quarles purchased from J. W. Conway, also a merchant at Gordon, various articles of general merchandise, dry goods, hardware,; etc., making a total of $775.32, from February to October 22d. He also purchased during said period, from J. M. Oden, farmers’ supplies of the same character, in the total sum of $708.80. The total purchases during said period aggregated something over $3,00Q. While some of these goods were purchased by the adult children of John Quarles and by his tenants, he had instructed the merchants to sell to the said children and to the tenants- and charge the items to him.
In October the adult son of Quarles brought some cotton into Gordon for sale. It had been customary that when farmers were indebted to merchants for them to sell to said merchants their cotton and other farm products, as they .were gathered, and to permit the same, or at least, a portion. thereof, to apply on their indebtedness. When young Quarles, by whom some of the articles bought had been purchased and who lived on his father’s place, was asked by one of the merchants interested if he would sell his cotton and allow, th,e proceeds to apply on. the indebtedness, he replied that he did not owe anything,, and must, have cash for the cotton. This unexpected attitude on the part of young Quarles caused some surprise, and the -investigation following resulted in the discovery that John Quarles was indebted to the several merchants mentioned in an aggregate amount largely in excess of what had been his usual and customary-annual expenditure. The creditors had a “grove meeting.” It appeared that each merchant dealing in general merchandise had thought that Quarles was dealing exclusively with him, and that durT ing former years Quarles’ total account did not run in excess of some $700. Following a report of the execution and record of this instrument of conveyance, parties were sent to Stephenville, the county seat, and found that the report was true, and that the instrument was on record. Then the creditors sent representatives to see Quarles, who lived some seven or eight miles from Gordon. He admitted the execution of the instrument and acknowledged that he had no present means of paying the indebtedness, or any property with which it could be paid, but stated that he would try to borrow the money with which to settle.it. The creditors' of■fered to take notes signed by Quarles and his wife, but Mrs. Quarles refused, and John Quarles failed to execute the notes sent for that purpose. Quarles also declined to tell W. P. Gibbs, attorney for appellee, from what-
Appellant urges that as without controversy the indebtedness of John Quarles was. incurred subsequent to the conveyance by him to his wife, such conveyance could not be in fraud of the creditors. Appellee, defendant below, pleaded the insolvency of John Quarles at the time of the accrual of the indebtedness complained of, that the articles purchased were reasonably necessáry for the support and maintenance of Mrs. Quarles and her children, and certain of the articles, such as lumber and other building material, farm implements, etc., were for the benefit of Mrs. Quarles’ claimed separate estate in the property involved, and constituted valuable and permanent improvements upon her real estate, thus enhancing the value thereof, and that both plaintiffs purchased and appropriated all of the goods for which the indebtedness was incurred with the full knowledge on the part of Mrs. Quarles of the insolvency of her husband, by reason of' the conveyance afoiesaid, of which insolvency defendant had no notice or knowledge whatever. Mrs. Quarles accepted said goods and used them for the benefit of her children, and that she became liable, and promised to pay for them.
Appellee further alleged that the real estate and the personal property was the community estate of Mr. and Mrs. Quarles, and that Mrs. Quarles accepted the conveyance of said community estate to her with the full knowledge of the intention of her husband to purchase goods, wares, and merchandise largely in excess of what he had theretofore purchased annually, and that she received .and used said goods and accepted and ratified all of the transactions in question with the full knowledge of her husband’s insolvency, and with the full knowledge that he intended at the time to defraud the merchants and tradesmen with whom he was dealing out of the value of said goods; that prior to said time it had been the custom of plaintiffs to purchase, from the defendant and the other merchants at Gordon, largely on credit, running through the season, aggregating $300 or $400 a year, and that theretofore the plaintiffs had always paid their debts promptly, and had a good reputation in the said town and among said merchants for honesty and fair dealing; that said merchants, and especially defendant, having no knowledge of the change of heart on the part of plaintiffs, nor of the execution of the instrument of conveyance, relied upon plaintiffs’ former conduct and reputation for honesty and fair dealing, and relied on the fact that they possessed valuable property, upon which they had for many years made good crops, and said merchants parted with their goods relying on such facts, and entirely ignorant of the intent to defraud on the part of both plaintiffs, and of the execution of the conveyance from John Quarles to his wife.
Neither plaintiff testified in the case, nor sought to explain the purchase of goods só largely in excess of their former annual purchases. No explanation was given as to the reason of the conveyance,- except that John Quarles stated to the attorney for ap-pellee, when the latter went to the farm to see him:
“I regard the conveyance to my wife as more of a will than anything else. I wanted to fix up my property so if anything happens to me the courts and lawyers would not gobble it up.”
Jim Quarles, brother of John Quarles, and T. J. Quarles, his father, testified that about the time the creditors were seeking to get a settlement out of John Quarles, the latter asked if he could get some money from them with which to satisfy his creditors. Jim Quarles told John that if he could sell a certain bunch of cattle he would let him have the money received therefor. The evidence shows that Jim Quarles was asking $1,800 for said cattle, and that he allowed $15 between what he asked and what he was offered to prevent the trade. He further testified:
“I did not intend to give John the money; I was just intending to loan it to him. Yes, sir; I intended to make myself secure in the loan. I don’t know just how long before I saw Judge Gibbs that day it was before John spoke to me about the money; I guess it was something like a week probably. I expected to get security just any way John could make me safe. Q. You didn’t expect him to make you safe if he had no property? A. I supposed he could do it some way or another; I didn’t know just how it could be fixed up.”
T. J. Quarles testified that he was 84 years old, and lived about one-half mile from his son John. He further testified:
“John spoke to me -about getting some money last fall, before the time that Judge Gibbs and some more parties were out there levying on John’s property. X had agreed to let Johp have the money. X had the money in the bank at Gordon, Eirst National. John said he guessed he would need what money I had — he said those people wanted their money, and, ‘I have a chance to get some from Jim.’ * - * * I had before that time promised John this $500. I didn’t tell Judge Gibbs anything about that.”
Article 3967, Vernon’s Sayles’ Texas Civil Statutes, is as follows:
“Every gift, conveyance, assignment, transfer or charge made by a debtor, which is not upon consideration deemed valuable in law, shall be-void as to prior creditors, unless it appears that such debtor was then possessed of property within this state subject to execution sufficient to-*599 pay Ms existing debts; but such gift, conveyance, assignment, transfer or charge shall not on that account merely be void as to subsequent creditors, and though it be decreed to be void as to a prior creditor, because voluntary, it shall not for that cause be decreed to be void as to subsequent creditors or purchasers.”
In Lewis v. Simon, supra, the court held that a voluntary conveyance in fraud of existing creditors, recorded on the day of its execution, is not void as to future creditors merely because the grantor afterwards engages in extensive speculations, and soon be-' comes insolvent. The opinion in part is as follows:
“Conceding, therefore, that the deed from Simon to his wife was a voluntary conveyance, and that it was void as to existing creditors, this does not render it void as to subsequent creditors. The only facts remaining, from which fraud in the conveyance as to the latter class of creditors could be deduced, are that soon thereafter Simon began operating upon a large scale, and shortly became insolvent. The use of the word ‘merely’ in the statute quoted indicates that the Legislature' contemplated that cases might arise in which a voluntary conveyance should be held void even as to subsequent creditors, but we are clearly of opinion that the facts here in evidence do not make such a case. If a grantor should voluntarily convey his property to his wife or children, and should cause the deed to be withheld from the record, intending, notwithstanding Ms conveyance, to obtain credit upon the faith of his still being the owner of the property, and should he accordingly obtain such credit, a strong case would be presented for holding the conveyance fraudulent, although it might be placed upon the record before the creditor secured a lien upon the property by judgment or otherwise. * * * It has been held that where a voluntary conveyance is made in contemplation of the grantor’s entering upon hazardous speculations, and with a view to protect it from subsequent creditors, in the event his ventures should result disastrously, it is fraudulent as against such subsequent creditors. Wait, Fraud. Conv. §§ 100, 101, and cases cited. But the author cited also says: JAs a general rule, a subsequent creditor, who acquired his claim with knowledge or notice of the conveyance sought to be annulled, cannot attack it as fraudulent.’ Id. § 106; Baker v. Gilman, 52 Barb. [N. Y.] 39. This rule has been recognized in former decisions in this court. Lehmberg v. Biberstein, 51 Tex. 457; De Garca v. Galvan, 55 Tex. 53; Van Bibber v. Mathis, 52 Tex. 406. The creditor knowing that the grantor has voluntarily parted with his property, we fail to see the device or deceit by which he can claim to have been defrauded.”
In the instant case the evidence shows, that the creditor had no actual knowledge of the conveyance, and that neither John Quarles nor his wife, up to the time of the visit by the creditors to the Quarles farm, ever intimated to the creditors that such conveyance had been made. In the case of Walsh v. Byrnes, 39 Minn. 527, 40 N. W. 831, cited in footnote to Lewis v. Simon, supra, it is said:
“Voluntary conveyances by an embarrassed debtor are prima facie fraudulent as to preexisting creditors, and the presumption arises from the existence of the indebtedness, and hence the rule could not, in the absence of additional facts tending to prove fraud in fact, apply to cases of subsequent indebtedness. But it is well settled that where voluntary conveyances are actually fraudulent, and the purpose or effect of the same is to prejudice subsequent creditors, such conveyances will also be void as to them. * * * And -where a conveyance is made mala fide, and the fraud is participated in by both parties thereto, it is subject to be assailed by creditors, existing or subsequent. But the question whether a subsequent creditor will be entitled, in any particular case, to have a prior conveyance set aside for fraud, must be one of fact, to be determined upon its own peculiar circumstances.”
In Cole v. Terrell, 71 Tex. 549, 9 S. W. 668, it is said:
“Appellants insist that the appellees were not existing or prior creditors (or claimants of damages) at the date of Wilson’s deed to his wife, and therefore cannot complain at the transfer.”
The court then quotes article 2466, now 3967, Revised Statutes, and further says:
“This statutory rule, as explained by itself, does not prevent a voluntary conveyance from attack by a subsequent creditor upon showing ■not merely that the conveyance was voluntary, but was made with fraudulent intent.
“The Texas statute of frauds (Revised Statutes, article 2465) which is a substantial reenactment of St. 13 Eliz. c. 5, has been construed and applied under the authorities from the many courts upon its terms. In Bump on Fraudulent Conveyances (2d Ed.) p. 308, referring-to numerous authorities, their general effect is summed up: ‘It is, accordingly, well*600 settled that if a party makes a conveyance of his property with the express intent to become indebted to another and to defraud him of his debt by means of this artifice, such' subsequent creditor may contest, and by proof defeat, the transfer, although he was not a creditor of the grantor at the time of the conveyance.’ And again: ‘The simple fact of a subsequent indebtedness is not sufficient to make a transfer fraudulent." There must exist at the time, on the part of the grantor, a fraudulent view, and until this fraudulent purpose is established, either by positive proof or the exhibition of such facts as justify the inference of its actual existence, the conveyance cannot be set aside.’ Id. p. 310.
“Erom these citations it appears that article 2466, Revised Statutes, is but a legislative approval of the rule of decision theretofore followed by the courts as to the effect of a voluntary conveyance as against the creditors of the grantor. The cases (56 Tex. 53, De Garca v. Galvan, and 65 Tex. 658, Willis & Bro. v. Smith) where the general proposition is given that subsequent creditors cannot complain seem to have been cases where the conveyances were attacked without producing evidence of -intent to defraud the complaining creditors.”
In Dosche, Adm’r, v. Nette, 81 Tex. 265, 16 S. W. 1013, the court held that—
“A gift by an insolvent debtor would be void- as to prior creditors, but not necessarily so as to subsequent creditors even though it should be decreed void as to prior creditors. Rev. Stats, art. 2466.”
The Supreme Court reversed the judgment in this case because the trial .court refused a special charge, submitting to the jury the question of fact as to whether the creditor had made the conveyance to his son with intent to place the property beyond the reach of, and to hinder, delay, or defraud, his creditors, and in contemplation of contracting future debts. See Rives v. Stephens, 28 S. W. 707, writ denied; Bergson v. Dunham, 40 S. W. 17. “The simple fact of subsequent indebtedness is ,not sufficient to make a transfer fraudulent, but there must exist at the time, on the part of the grantor, a fraudulent view; and, until this fraudulent purpose.is established, either by positive proof, or the exhibition of such facts as justify the inference of its actual existence, the conveyance cannot be set aside.” Bump, Eraud. Conv. (2d Ed.) p. 308. But it is well understood that fraud of the kind charged in this case can rarely be established by direct evidence, and resort must almost always be had to circumstances; more or less conclusive in their nature.
Reformed and affirmed.
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