11 Md. 198 | Md. | 1857
The opinion of the court was delivered as follows:
This bill was filed for the purpose of vacating the voluntary deed executed by Hannah K. Chase, on the 2nd of August 1844, upon the ground of its being void, because fraudulent as to creditors, under the Statute of Vith of Elizabeth, ch. 5. The suit was instituted for the benefit of the complainants and all other creditors of the grantor, who should come in and con
The deed was executed for the purpose of conveying to Nathaniel Williams and Joseph B. Williams all the estate and property, real and personal, of the grantor, in trust “to suffer and permit the said' Hannah K. Chase and her assigns, for and during the period of her natural life, to have, hold, use, occupy, possess and enjoy, all and singular, the estate, chattels, effects and property thereby conveyed and assigned, and the rents, issues, income and profits thereof, during that period, to receive and take, and the same to apply to such uses and purposes as she might think proper; and from and immediately after the decease of the said Hannah Kitty Chase] then in trust, and under and subject to the like powers, limitations, restrictions and conditions as are mentioned, expressed and declared, of and concerning the estate and property generally mentioned in and devised by the last will and testament of the said Hannah Kitty Chase, to the trustees therein named, and in and by the three several codicils by her made to said will.’5 The date of the will, and the dates of the three codicils referred to, are stated in the deed.
With the exception of a lot of ground called “Newington,’* and a ground-rent of $43.50 per annum, according to the provisions of the deed, (considering the will and three codicils as constituting parts of the same,) the trustees were to hold the whole estate of Mrs. Chase, after her decease, for the use of her daughter and grandchildren.
By the 10th clause of the will, “Newington” and the ground-rent of .$43.50 were to be for the use of William C. and Samuel C. Barney equally. By the codicil dated the 9th of June 1841, this provision of the will is revoked, and one-half of “Newington” and of the said ground-rent are to be held in trust for the use of Samuel C. Barney; the other half being disposed of in the following language: “And whereas, I am now liable for the payment of large sums of money for and on account of my grandson, William Chase Barney, the payment of which I am gradually effecting during my life, but which may not be wholly accomplished before my death, l '
Previous to any examination of the proof in regard to the condition of Mrs. Chase’s affairs, at the date of this deed, we deem it proper to notice some decisions with reference to the construction of the Statute of 13th Eliz., ch. 5.
The cases on this subject are numerous, and distinguished jurists have entertained conflicting opinions in regard to the interpretation of the statute in some respects. To undertake an examination of the decisions, with a view of reconciling them, would require much labor without any hope of success.
In Reade vs. Livingston, 3 Johns. Ch. Rep., 481, Chancellor Kent held, that indebtedness at the time of executing a voluntary conveyance, conclusively fastens upon the instrument a fraudulent character, as an inference of law, with reference to the claim of an existing creditor. But this doctrine has been repudiated in Worthington & Anderson vs. Shipley, 5 Gill, 449. Instead of sustaining Chancellor Kent our Court of Appeals refer' to the opinion of the Supreme Court of Connecticut in Salmon vs. Bennett, 1 Conn. Rep., 525, as enunciating what is to be considered the true interpretation of the Statute of Elizabeth. And there we find it said: “Mere indebtedness at the time will not, in all cases, render a voluntary conveyance void as to creditors, wheie it is for a child in consideration of love and affection.” “Nor will all such conveyances be valid, for then it would be in the power of parents to provide for their children at the expense of their creditors. Nor is it necessary that an actual or express intent to defraud creditors should be proved, for this would be impracticable in many instances where the conveyance ought not to be established.” ■
The conclusion of the court’s opinion in Worthington & Anderson, vs. Shipley, shows, that although an indebtmcnl at the time of a voluntary deed, is only prima facie and not conclusive evidence of a fraudulent purpose, even as regards a prior creditor, yet the onus is thereby cast upon the grantee of showing “that the grantor, or donor, at the time of the gift was in prosperous circumstances, possessed of ample means to discharge all his pecuniary obligations, and that the settlement upon the child was a reasonable provision, according to his or her station and condition in life.” See, also, 11 Wheat., 211, Hinde’s Lessee vs. Longworth; 13 How. S. C. Rep., 99, Parish, et al., vs. Murphree, et al.
With the cases of Salmon vs. Bennett, and Worthington & Anderson vs. Shipley, before him, in Bullett vs. Worthington, 3 Md. Ch. Dec., 105, Chancellor Johnson, we think, very correctly said: “The party who sets up a voluntary conveyance in opposition to the claims of pre-existing creditors, is required to show, by evidence which leaves ilo reasonable doubt upon the subject, that the means of the grantor, independent of the property conveyed, are abundantly ample to pay them all. If there be a reasonable doubt of the adequacy of his means, or if his property be so encumbered, that delays, difficulties and expense, must be encountered before it can be made available to his creditors, then, as I conceive, the
We will now endeavor to ascertain whether claims have been exhibited and proved, which, in point of character and amount, are sufficient to justify a decree for vacating the deed in controversy.
The claims relied upon by the complainants as antecedent debts, are the following:
The note given to N. Williams, on the 9th of December, 1841, for......$250 00,
N. Williams’ account for fees, - - - 100 00
Mrs. Oldfield’s debt to Sarah Polk, 6th of May 1843, - 100 00
Note given to C. H. Pitts, 18th of June 1844, - - 250 00
lyote to H. C. Elion, 2nd of J uly 1844, payable six months after daje, - 350 00
Note to W. C. Barney, July, 30th, 1844, payable two years after date, and endorsed to W. P. Mills, - - 300 00
A Note dated the 30th of July 1844, payable two years after da,te, given to W, C. Barney, and endorsed by him to R. B-enwick, 16thof June.1,849,marked ExhibitNo. 3, 2000 00
A note dated the 30th of July 1844, payable to W. C. Barney one year after date, now claimed by D. B. Banks, marked Exhibit No. 4, - 2000 00
A note dated the,30th of July 1844, payable to W. C. Barney one yea,r after d;ate, which is described in the Bill of Complaint as held and owned by D. B. Banks, marked
Exhibit D. B. B., No. 1, but appearing under the commission to be No. 5,. - - - - 2000 00
Total amount exclusive of interest, - - - $7350 00
In the examination of the proof by which these claims are. fought to, be established, the evidence of Mr. Pitts must be. held inadmissible. He has been objected to on the ground of interest, because the note given to him by Mrs. Chase was endorsed by him to W. H. Harrison & Co., and has been protested for non-payment. We think he is. trot competent to prove the existence of a claim, to be used for the purpose of authorising a decree to set aside the deed; a?, his evidence would be to. ¡jssift ip creating a¡ fund,, or in, rendering property liable for the payment of the note,, which he, as endorser, would otherwise haye to pay; and withopt the least prospect of his ever being repaid* unless this deed is, declared void;
The testimony of this witness being the only proof to establish either the execution or the indorsement of the note of the 30th of July 1844, marked Exhibit No. 4, it must be regarded as having no proof to sustain it.
The signature of Mrs. Chase to each of the notes mentioned in the foregoing list of claims has been proved by the witnesses, Alexus B. Wolfe and Joshua Cockey. Her signature to the claim of Sarah Polk has also been established by the same witnesses.
Upon the note to Elion he obtained judgment against Mrs. Chase, on the 28th of March 1846.
The complainants filed the following interrogatories, to be answered by W. P. Mills:
“First. — When did you receive the promissory note referred to in your petition, filed with the papers in the aforesaid case of Banks and Stewart against Williams and, others 9 From whom did you receive it? and was it after it was overdue? File the original note, or a copy of it, with your answer.
“Second. — What consideration was paid for it, in money or otherwise, by the payee to the pretended maker of said note? Did the payee ever state to you the consideration he had paid for it, or that he had paid no consideration therefor?
“ Third. — What consideration did you pay for said note; in money or otherwise? To whom did you pay any consideration?
“Fourth. — Has any other person than yourself,. and if any, what person, any interest in said note?”
Interrogatories similar to these were propounded to, R. RenWick, in reference to his claim, exhibit No. 3.
D. B. Banks was also required to answer like interrogatories in regard to his claim, spoken of in the bill as exhibit D. B. B., No. 1, but which is exhibit No. 5, according to its description under the, commission. The interrogatories to Banks are omitted in the. record, but it is conceded they were like
Under the act of 1785, ch. 72, sec. 21, the answers to such interrogatories are “evidence in the cause, in the same manner, and to the same effect, that the defendant’s answer to the plaintiff’s bill is evidence.”
Mills answered as follows:
“1. I received the note in question from William Chase Barney before its maturity; the precise day I cannot state; the original is already filed.
“2. 1 do not know what consideration was paid for said note by the payee to the maker; the payee did not state to respondent any thing about the consideration he paid for said note; never stated that either he or the maker had had no consideration therefor.
“3. Í paid the full value of the note in question to William Chase Barney, partly in money, partly in clothes.
, “4. No one but myself is interested in said note.”
R. Renwick’s answer to the first interrogatory is, “that the note filed in this cause came into his possession on the 16th day of June 1849, after it became due, from William Chase Barney, the payee.” To the second interrogatory he says, he “does not know what consideration was paid for said note by the payee, and he never informed him, and never told him that he had paid no consideration.” To the third interrogatory he answers, “that he paid the sum of fifty-five dollars and fifty cents, in cash and furniture, on the 16th day of June 1849, and receipted a bill of furniture, due to this respondent from payee, amounting to one thousand sixty-seven dollars and twenty-nine cents, with interest thereon, making a sum total of $1306.12, paid for said note by this respondent to said payee, William Chase Barney.” The fourth interrogatory is answered by saying, “that no other person than this respondent has any interest in said note.”
D. B. Banks answers the interrogatories in the following manner:
To the first he says: “That he does not recollect the time when he received the promissory note mentioned in the said
To the second interrogatory he answers: “That he cannot recollect the sum paid by him for the note mentioned in said interrogatory, because there were several notes of same date and amount received by him at different times; nor does he know what consideration was paid to the maker of said note by William C. Barney or any other person, but that the amount of the different notes drawn by Hannah K. Chase, and held by this respondent, were acknowledged by her to be due to this respondent by her.”
To the third interrogatory he says: “That he is under no engagement to pay Wm. Chase Barney the consideration, or further consideration, in the event of a recovery of said note in whole or in part; the said note was bought and paid for as the property of this respondent, and is absolutely his without any contingent consideration connected in any possible way with it whatever.”
These answers of Mills and Renwick show the sale and transfer, from Wm. C. Barney, of the notes claimed by them respectively. So likewise the answers of Banks are evidence of the sale and transfer, from Barney, of the note marked exhibit No. 5, but cannot be regarded, under the act of 1785, as proof in support of the note, marked exhibit No. 4. The interrogatories relate alone to No. 5, and what is said in the answers respecting any other note cannot be evidence, because not responsive to the interrogatories.
In their statement, or brief, the defendants say: “Before we proceed to examine these claims in detail, to ascertain who are prior creditors, and the amount of their claims, we inform the court that we have excepted to some of them, and objected that they are subject to be dismissed from the case or’ reduced in amount on the following grounds:
«2nd. For being tainted with usury. Notes given to raise money on, create no debt or liability until passed away to a third person, and under the facts proved, many, if not all these notes were obtained upon usurious terms.
«3rd. Because they are barred by statute of limitations, pleaded in answers, and relied on in exceptions, and limitations applies to the time of filing claims.
«4th. Because they were obtained by fraud, imposition and undue influence practiced upon a veiy aged woman, and such contracts, if not annulled, will not be enforced by a court of chancery.
«5th. Because they claimed under the deed to Talbott, and received their dividends, and are estopped from impeaching the deed to appellants, which is recited in Talbott’s deed — which was operative solely upon the life-estate reserved in the deed to Williams.”
Under the first objection it has been contended that some of the earliest claims are not properly in the case; because the claimants did not file them} and are not insisting upon their being paid. But surely the complainants have a right to show the existence of those claims at the date of the deed, when they are seeking to invalidate it upon the ground of the grantor’s indebteness at the time of its execution* And we suppose it cannot be seriously insisted, that the claims of those who came in as parties after the bill was filed are not properly in the case, merely because they did so come in.
As regards the want of authentication or proof, the objection is a good one in reference to the claim =} exhibit, No. 4. But that we entertain á different opinion as regards the other claims mentioned in the foregoing list will appear from what has already been said.
With reference to ante-dating, we see no proof sufficient to establish it in this case, in opposition to the legal prima facie presumption that each note was executed by the maker at the date upon its face.
The second ground of objection is usury. Without deciding
Usury has not been relied upon against the claims of N. Williams, S. Polk, C. H. Pitts or Hs C. Elion. The last being a judgment against Mrs. Chase, on a note dated the 2nd of July 1844. The defendants, in their statement^ say: “These are undisputed debts, but are all subject to our .third objection on limitations as they were none of them filed in this case until returned with Mr. Pinkney’s commission, under which they were proved on the 17th of February 1851.”
Mills’ claim cannot be defeated upon the ground of usury. His answers to the interrogatories, in the absence of contradictory proof, must exclude such a defense.
R. Renwick’s claim, (exhibit No. 3,) came into the cause after the answers to the bill were filed. The 5th exception of the defendants, as set forth in the record, objects to this claim in the following language:
“And they further except to the note filed among the proceedings and proved by the affidavit of Robert Renwick, because the same was executed long subsequently to the deed of the 2nd of August 1844, and ante-dated so as to appear antecedent to said deed, and because, even if the same were not ante-dated, the said note remained in the hands of W. C. Barney, who held the same for his own accommodation until long after the date of said deed, and after the death of said H. K. Chase, when the same was paid to said Renwick, at the time and for the consideration stated by said Renwick ■ and the said rióte then, and not prior to the execution of said deed, became available as against the estate of said H. JK. Chase, and because the said note was concocted and originated in usury to which said Renwick was a party, and nothing is due thereon except the amount so staled by him to have been paid thereon.” By this exception the defence of usury is presented, in regard to the claim.
As the debt existed prior to the adoption of our new constitution the provisions of that instrument, on the subject of usury, can have no effect upon it. And under the act of 1845. ch.
The proof has fully convinced us, that no consideration for the note in question was given by the payee to the maker;— that it was purely for the accommodation of the former; and that Renwick took it from him nearly three years after it fell due, paying only $1306.12 for the same, it being a note for $2000.
The complainants contend, that conceding the note was purchased, as above stated, still it was not usurious, because there was a valid consideration passing between the maker and payee. In support of which they rely upon the fact, that at Mrs. Chase’s death, there was, amongst her papers, a note to her from W. C. Barney, for $4000, dated the 30th of July 1844, payable one year after date. The existence of such note, it is said, shows a mutual exchange of notes, constituting a valid consideration for each; and consequently the purchase by Renwick, although at much less than the amount of the note he received, did not render the transaction usurious. Whether, under the circumstances of this case, such would be the effect of a mutual exchange of paper, we need not stop to inquire, because we do not think there was any such exchange as would make each note an available consideration for the other. That this sort of exchange, which the authorities sometimes call “cross-notes,” will amount to a sufficient consideration has been frequently held. But to do so it must appear that it was the intention of the parties to make a mutual exchange of paper. And whether such was their design will depend upon the “particular circumstances of each case. ’ ’ Chitty on Bills, 565, (Ed. of 1821.) In the case before us Barney was known to Mrs. Chase to be an extravagant spendthrift of the means she was furnishing him with; in cash, by sales of her stocks and by loans or gifts of her notes, totally insolvent, and indeed without funds to procure food and clothing for himself, without her assistance. And we have yet to see the proof that he ever paid her back one of the many notes he received from her. In view of such facts we cannot, for a moment, suppose that
In Munn vs. The Commission Company, 15 Johns. Rep., 55, Mr. Justice Spencer says, in delivering the opinion of the court: cíIf a bill or note be made for the purpose of raising money upon it, and it is discounted at a higher premium than the legal rate of interest, and where none of the parties whose names are on it, can, as between themselves, maintain a suit on the bill when it becomes mature, provided it had not been discounted, then such discounting of the bill would be usurious.” See also Sauerwein vs. Brunner, 1 Har. & Gill, 477, and Williams vs. Reynolds & Smith, 10 Md. Rep., 57, in regard to the subject of usury.
When the note now in question came to maturity it had not been disposed of by Barney, the payee, and a suit upon it. could not have been maintained by him against the maker, Mrs. Chase, as it was merely for his accommodation. Subsequently it was purchased from him by Renwick, at the large discount mentioned in his answers. Such a transaction is usurious,- and, therefore, on this claim, he is only entitled to the sum of 01306.12, with interest thereon, under the act of 1845.
The complainants’ counsel have contended that the decision in Renwick vs. N. & J. Williams, Ex'rs of H. K. Chase, 2 Md. Rep., 355, should exclude any defense upon usury against this claim in the present suit. But although, in that case, usury was pleaded, there was no proof to sustain the plea, and no question on that subject came before the court. Their attention appears to have been confined chiefly to the question, whether proving a note to be an accommodation note, and its not being endorsed until over-due, will constitute a sufficient defence to the suit upon the note by the endorsee?
The claim of Banks, filed with his bill, has also been resisted as usurious. The affirmative of this charge by the defendants, rests upon them, under the act of 1845. .And they have not sustained it by evidence which can enable the court to decide, that less than the nominal amount of the note was paid for it, and how much less, so that under tire 3rd section
The defendants’ third objection is, that the claims are barred by limitations.'
We need not decide whether the claims of Williams, Polfe and Pitts, should be excluded under this defense, because without them there are debts enough to invalidate the deed,, and because they were not decided upon below, but were expressly “reserved for further consideration.” For these reasons we may also refrain from expressing an opinion as to th© effect of the fourth and fifth objections so far as those claims, are concerned.
In the case of McDowell, et al., vs. Goldsmith, 6 Md. Rep., 337, this court say: “We can express no opinion as to the last of these claims. The chancellor has neither allowed nor rejected it, but on the contrary, has reserved it for further directions.”
Limitations cannot bar Elion’s claim, as he obtained a judgment upon it against Mrs. Chase, on the 28th of March 1846.
The note held by Mills is dated the 30th of July 1844, payable two years after date. He filed the same on the 7th of July 1849, with his petition, asking to be admitted as a co-complainant j at which time the note had not been due three years. And ip their second exception, whilst the defendants are insisting upon the statute of limitations as barring other claims, they except the claim of Mills from its operation, in express terms.
Renwick was not an original complainant, but came in as. a party by filing his petition and claim on the 20th of March 1850, which was subsequent to the filing of the answers to the bill. These answers, relying upon limitations, can have no effect upon this claim subsequently coming in. Speaking in regard to persons who were made parties complainants after the filing of the original bill in the case of McDowell vs. Goldsmith, 2 Md. Ch. Decisions, 390, it is true the chancellor says: “Notwithstanding, however, the claims of these parties have been proved, the plea of limitations, relied upon in the answer,, must bar the remedy upon them, unless the fraudulent charac .'.
As against Renwick’s claim, the statute of limitations has not been relied upon in either of the exceptions filed by the defendants, as contained in the record. We say as contained in the record,, for the purpose of distinguishing these exceptions from objections spoken of as contained in the statement or brief of the defendants.
As this claim cannot be affected by the plea of limitations in the answers of the defendants, and as it has not been resisted by such a plea in the exceptions, it is not subject to such a defense.
When Banks’ claim, “D. B. B., No. 1” or “No. 5,” was filed with the bill, which was on the 29th of July 1848, it had not been barred by limitations, three years not having expired since it fell due.
The fourth objection, stated in the brief, alleges “fraud, imposition and undue influence practiced upon a very aged woman.” During the argument, we understood this objection as designed to apply exclusively to the notes given to Barney and endorsed by him. The proof, in our opinion, fails to establish a participation, on the part of the endorsees, or any of them, either separately, or in connection with Barney, in the use of means for the purpose of defrauding, imposing upon, or exerting an undue influence over JVIrs. Chase. The evidence shows they purchased the notes from the payee, but how, or in what manner they were instrumental in enabling
That Barney had great influence over his grandmother there can be no doubt. Her extravagant liberality to him is conclusive evidence of this. Anditwould seem to be equally certain, that his influence was the consequence of her unbounded affection for him. Whether it be true, as alleged, that for the purpose of procuring any of the notes mentioned in the preceding list of claims, Barney resorted to other means than his influence, arising from her affection for him, the evidence furnishes no satisfactory proof.
Mrs. Chase, it must be recollected, although ninety years of age, still had a sound mind, and was very capable of transacting business. It would be a dangerous principle in a commercial community, to hold, in the absence of proof of fraud and imposition, that if a person in her condition sees fit to execute notes for a considerable amount, for the accommodation of her grandson, which are negotiated, even when over-due, such notes may be invalidated, because it is proved the payee had great influence over the maker in consequence of her strong affection for him.
The proof does not convince us that the fourth objection ought to be sustained.
The fifth objection insists upon an estoppel against the claimants, because they claimed under the deed to Talbott, and received their dividends. The 2nd exception of the defendants, in the record, is that on which this objection is based, and is as follows:
W. A. Talbott filed a statement showing what persons filed claims and received dividends under the deed of trust from Mrs. Chase to him, dated the 28th of January 1845.
The parties agreed to receive as evidence this statement, to the same extent as if the matters therein certified had been proved under the commission. They, at the same time, “admitted that the notes dated the 30th of July 1844, filed in this case before the same was set down for hearing, were not filed for dividends under Talbott’s deed of trust, and received no dividends under said deed.”
Under this agreement it will be seen, that the claims of Mills, Renwick and Banks, upon their respective notes, dated the 30th of July 1844, were neither presented for dividends, nor received any, under the deed to Mr. Talbott.' This 5th objection, therefore, cannot operate upon them. Nor can Elion’s claim be affected by it, as the statement of Mr. Talbott does not show any dividend was paid or demanded upon that debt.
The defendants claim the right to use the note for $4000, from Barney to his grandmother, as a set-off’ against the notes given by the latter to the former, inasmuch as those were accommodation notes, and endorsed when over-due.
In some of the States of the Union, the doctrine thus insist
It has been said, that as the notes dated the 30th of July 1844, were all accommodation notes, and were negotiated after the execution of the deed of August 1844, they did not create any debts or liabilities until negotiated, and consequently they were not antecedent, but subsequent claims. This position is based upon the principle which has been established in reference to the nature of an accommodation note before it is discounted, when considered with regard to a charge of usury) alleged to have arisen at the transfer of the note by the payee to the first endorsee. Whilst it remains in the hands of the payee the authorities speak of it as not being available, because he cannot maintain a suit upon it) and when passed to the endorsee he is said to be the first holder.
Indeed, in Munn vs. The Commission Company, the court go so far in speaking of the character of such a note before it is discounted, as to say) it is nothing more than blank paper. But we do not concur in the correctness of such language to its full extent. That there is no absolute legal liability whatever upon the maker, which can be enforced against him by any person, until'the note is negotiated) there can be no doubt. But it would seem to be equally clear of doubt, that executing the note and delivering it to the payee, with authority to get it discounted, must create a contingent liability on the maker, which will become absolute so soon as it passes into the hands of the party to whom it is regularly endorsed for value. Supposing) however) there is not even such contingent liability prior to the first endorsement, still some rights of the parties, after the note is discounted, are to be controlled by its date,
Again, if such a note as we are considering is executed and not discounted until after the maker’s decease, can it be doubted that it is his note, and a valid claim against his estate? Will it be seriously contended, that because it had no legal efficacy until after the maker died, the negotiation after the death could not then give the note vitality, so as to create a claim against a dead man, when that claim was nothing more than blank paper during his life ? We suppose the appropriate response to such questions would be, that the note created no liability from the maker to the payee, but its execution imposed upon the former a contingent liability to whoever might become an indorsee thereof for value. And when the note is discounted, the contingent responsibility is rendered absolute, and, as between tlie maker and endorsee, it will be regarded as a valid claim from its date against the former.
Formerly the claim of an accommodation indorser or other surety, was not one which he could prove under a proceeding in bankruptcy or insolvency against the principal; and for that reason the former could sue the latter after paying the original claim subsequently to the discharge of the latter. At least
Notwithstanding this, still we find the authorities holding, that when the question is, whether a voluntary conveyance is void as to creditors, the contingent claim of a surety against his principal, the grantor, will be considered as having the effect of an antecedent debt.
In 1 American Leading Cases, 57, (Ed. of 1847,) it is said, “The statute, 13 Elizabeth, ch. 5, protects creditors and others; and a liberal construction in allowing to persons who are or might be injured by a fraudulent conveyance, the character of creditors under this statute, has always prevailed. As to rights from contracts, any one liable upon a contract, express or implied, though only contingently, is a debtor from the time that the liability is entered .into; accordingly, a surety is a creditor of the co-obligor or co-sureties, from the time that the obligation is entered into; and those interested in an official bond, are creditors of the surety from the time that the bond is executed by him; the guarantee of an assigned judgment is a creditor of the guarantor from the time that the guaranty is given.” Several cases are referred to in their notes, in support of what the authors have thus said.
In Pennsylvania, it has been held that a grantor’s liability as accommodation indorser, may be used to show indebtedness at the time of a conveyance alleged to be fraudulent, though the note was not then dishonored. 4 Barr., 178, Hamet vs. Dundass.
The defendants have contended, that although the notes of the 30th of July 1844, are dated prior to the deed, still, being accommodation notes, they, or at least such of them as were discounted when over-due, and with notice of the deed to the indorsees, cannot be used to impeach that instrument. It is, however, well settled, as may be seen in Renwiclc vs. Williams, that accommodation notes may be negotiated when over-due. It is true, they are to be taken subject to certain equities of the
Considering the language and design of the statute of Elizabeth, and the authorities in regard to the present question, we think the claimants upon the notes dated anterior to the deed, although discounted subsequently, whether before or after maturity, should be regarded in the light of antecedent creditors. But in reference to the effect of those claims upon the deed, it is a matter of little importance whether they are held to be antecedent or subsequent.
If a voluntary conveyance is made with a view or expectation of becoming subsequently indebted, and, in accordance with such view or expectation, debts are contracted, those who thus become creditors may avoid the deed, although their claims had not, at its date, even a contingent existence. 1 Amer. Lead. Cases, 55; Parish, et al., vs. Murphree, et al. 13 How. S. C. Rep., 99.
On account of the following claims, exclusive of any others, we think the deed of 1844 may be held void:
H. C. Elion’s note of the 2nd of July 1844, and the judgment upon it, .... §350 00
Mills’ note, dated the 80th of July 1844, 300 00
Ren wick’s note, same date, for §2,000, reduced by usury to ------ - 1,308 12
Banks’ note, dated the 30th of July 1844, Exhibit D.B.B., No. 1, or No. 5, - 2,000 00
§3,956 12
Elion’s was certainly an antecedent debt. And the three notes, dated the 30th of July 1844, although accommodation notes, and negotiated subsequent to the deed, still they may be used to avoid it. For only three days before its execution, these notes were given by Mrs. Chase to her grandson. Knowing, as well as she did, from sad experience, his pecuniary condition and his general habits, it is not possible she
The annual value of Mrs. Chase’s whole estate at the date of the deed, according to the estimate of the defendant’s own counsel, as set forth in their statement, amounted to $4137.17, after deducting but $200 for her support, If the deed should be held valid, then her life-interest in the property thus estimated, and but one-half of the rent of the lot called “Newington,” and one-half of the ground-rent of $43.50, after her decease, constituted all the means retained by her, after executing the deed, with which the above stated claims were to-be paid.
When the means of paying such an amount of claims were to depend, in a very great degree, upon the life interest of Mrs. Chase, then over ninety years of age, in property, the estimated annual value of which exceeds the claims but a mere trifle, we cannot consider her as being, at the date of the conveyance, in such prosperous circumstances that her settlement should be regarded as a reasonable provision for her family, in her then condition, leaving no reasonable doubt of her still possessing ample means to pay all claims, for the payment of which she was bound to make abundant provision.
The Bible informs us that “The days of our years are three score years and ten; and if by reason of strength they be four score years, yet is their strength labor and sorrow; for it is soon cut off, and we fly away.” The great uncertainty of life, is necessarily much increased at ninety; and if this deed should be sustained, it would be virtually allowing Mrs. Chase, at that advanced age, to make her creditors insurers of her life, without their consent.
Although she lived some four years after making the deed, and, during that period, her life-estate may have yielded sufficient funds to have paid all her debts, and the liabilities for which she was bound to make ample provision at the date of the deed, still that instrument cannot be relieved from the effect
All the judges sitting in this case concur in what has been said thus far. What, follows, in relation to the rights of subsequent creditors, only expresses the views of the judge by whom this opinion is written.
The deed being declared void, on account of the claims which have been specified, it becomes necessary to ascertain whether the creditors whose claims originated after the date of the deed, can come in.
Upon careful examination of the authorities, and due consideration of the statute, I think that whenever a voluntary deed is held to be void, because fraudulent as to creditors, either for actual fraud or on account of the legal inference of fraud in the absence of proof showing a fraudulent intention, subsequent creditors will be let in, although there may not have been fraud in fact as to them.
In Richardson vs. Smallwood, 4 Cond. Eng. Ch. Rep., 265, (Jacob, 552,) it is said by Sir Thomas Plumer, as Master of the Rolls, “If it be once shown that it is a deed which, as against any of the creditors, cannot stand, then the property becomes assets, and is applicable to the payment of debts generally; and all the creditors come in at whatever times their debts may have arisen. That is decided.”
In Reade vs. Livingston, whilst giving his views in reference to the rights of subsequent creditors, Chancellor Kent thinks they are let in only in particular cases, but in enumerating such particular cases, he states one to be, “where it is requisite to interfere, and set aside the settlement, in favor of the prior creditor.” He refers to the note in 12 Ves., 156, as showing that in Montague vs. Lord Sandwich, Lord Rosslyn held, that if a settlement be affected as fraudulent against creditors who were such at its date, the subject is thrown into assets, and all subsequent creditors are let in.
This portion of the Chancellor’s opinion was not under consideration in our Court of Appeals when they refused to adopt his doctrine, that the inference of fraud arising from the mere
In Iley vs. Niswanger, 1 McCord's Ch. Rep. 518, the second question considered by the court is, whether a voluntary transfer, if not void as to subsequent creditors, yet if set aside in favor of subsisting creditors, shall be held void in loto, so that subsequent creditors may be let in? In reference to this question the court say: “But the decree may be supported on the second ground. Chancellor Kent, in the case above alluded to, lays it down as a settled rule, that when a deed is set aside by prior creditors, subsequent creditors are entitled to come in.” The court then refer to what has already been stated as having been held by Lord Rosslyn in Montague vs. Lord Sandwich.
On page 523, of 1 McCord, it is decided, and I think correctly, that’ notice of the conveyance to a subsequent creditor, will not prevent him from coming in, because when once the deed has been set aside as fraudulent, so far as creditors are concerned, it is as though it never existed, consequently notice to the creditor can make no difference.
It is true that the correctness of the note in 12th Ves., 156, as to the opinion of Lord Rosslyn in regard to subsequent creditors being let in, is questioned by Judge Story, in his 1st Vol. of Equity Jurisprudence, note 2 to sec. 361. The reporter, however, not only states what was the opinion but adds, “This was clearly held by Lord Rosslyn in Montague vs. Lord Sandwich." This statement of the reporter is treated as correct by Chancellor Kent in Reade vs. Livingston, 498, as also by the court of South Carolina in Iley vs. Niswanger, 522.—And although Mr. Atherly (Marr. Sett., marg. page 213, note 1, in 27 Law Lib.,) disputes the soundness of the decision, he does not even intimate a doubt, as to its being correctly reported in the note. The case it seems is nowhere reported at large, but was decided in July 1797.
The doctrine contained in this note is adopted by the Chancellor in 2 Bland's Rep., 35, Kipp vs. Hanna. He refers to the note, with other cases, as sustaining him in saying, “But it has also been long well established, that where a voluntary
In Ingram vs. Phillips, 5 Strobhart’s Rep., 206, the court say, “The law certainly is, that one who is not indebted may give away his property, and that the gift shall be valid against the donor and all persons. But if the donor be indebted beyond his means of payment, the gift is a fraud against his creditors, and void as to them. In such case, even if no dishonest intention can be imputed to the donor, the gift will be set aside in favor of creditors. If it be void against prior creditors, it is void as to all creditors; for by the fraud against some, the gift is void as to all. When a person is indebted, having made a voluntary deed, the property shall still be considered a part of his estate. If a deed is fraudulent as to subsisting creditors, the subject is thrown into assets, and all subsequent creditors are allowed to participate in the distribution.”
In Thompson vs. Dougherty, 12 Serg. & Rawle, 458, it is said: “The law making the settlement void as to antecedent debts, lets in the subsequent creditors on the estate conveyed. If the settlement is void as to one set of creditors, it is void as to all.” See, also, Walker vs. Burrows, 1 Atk., 94. Ede vs. Knowles, 2 Younge & Collyer N. R., 172, 178.
It has been supposed that our registration laws should produce some change in the principles regulating the rights of subsequent creditors, as those principles were first established in England when no general registration laws there prevailed. But such laws exist in most, if not in all, of our sister States, and yet no decision in any one of them has been cited, tending to show that such laws, upon the ground of notice, or on any other grounds, should be considered as rendering it proper to change, or in anywise to modify or alter the principles relating
These authorities are very decidedly in favor of the right of subsequent creditors to be let in, whenever a voluntary conveyance is set aside at the instance of creditors who are entitled to a decree for that purpose. And this, upon principle, would seem to be the proper construction of the statute. It has long since been correctly held that the Statute of 13th Elizabeth does not extend to voluntary conveyances, merely as such, but only makes them void as to creditors, when fraudulent. Any instrument, therefore, which, under the provisions of the*statute, is void as to creditors, must be fraudulent. The courts have drawn a distinction between fraud in law arid fraud in fact. Either, however, under some circumstances, will avoid a voluntary deed; but still, in every case when held to be void, it is so because fraudulent,, within the meaning of the statute; the design of which is to prevent any such instrument from operating injuriously upon the creditors of the grantor. In providing for their protection, the language is general. It certainly is not restricted or limited by any particular or special allusion to those who may be such at the time of the transaction. When, therefore, at the instance of creditors, a deed is held to be void, in regard to them, because fraudulent in law, although it may not be so in fact, still it is rendered void because the statute denounces such conveyance as fraudulent against creditors. And if void because fraudulent as to some, the general language of the statute would seem, to make it so in regard to all. This interpretation is advocated by Mr. Atherly, marg. pages 215 to 218. But by referring to him as authority for such a construction, I do not adopt his views, in holding that mere indebtedness at the time .of the conveyance, without regard to the amount of the property conveyed, and the ability of the grantor to pay his debts, will render a voluntary deed void, as fraudulent against prior and subsequent creditors also. Such doctrine is at variance with the decision in Worthington & Anderson vs. Shipley. When, however, according to the principles of that case, the debts
A majority of the court, however, think the subsequent creditors, in this case, are not entitled to come in, although the deed is declared void; it is, therefore, unnecessary for me to examine the various reasons which have been urged by the appellants, why the subsequent claims before us should be excluded, even were this a case in which subsequent creditors, having valid claims, might be let in.
I think with my brethren, that, without reversing or affirming the decision below, the case should be sent back for further proceedings, under the act of 1832, ch. 302.
We assent, for the most part, to the opinion of our learned brother. He has very fully and accurately defined the law applicable to the very many questions involved in the case, in all of which, with but a single exception, we fully concur. We dissent, however, from that portion'of the opinion which recognizes the right of the creditors, who became so subsequently to the execution of the deed to the Messrs'. Williams, to come in for a distributive share of the assets of the estate conveyed by that insirument.
We do not deem it necessary to revierv the cases which sanction the doctrine announced by our brother: it is sufficient we should acknowledge that they sustain it fully. But, in our opinion, those cases are not binding on us, and are in
The English doctrine, if applied here, would (as was said in that case of purchasers) permit a subsequent creditor to be knowingly instrumental in disappointing just and honest expectations, based upon a voluntary deed or settlemént, unaffected by the slightest fraud, in fact, at the time of its execution.
The view which we have taken, we believe, is supported by the language of the statute, and in conformity with the
In these observations we wish to be understood, not as denying the right of subsequent creditors to invalidate a fraudulent deed when made witb the intention and design to defraud those who should thereafter become creditors. Such creditors would bo in the same condition as those whom we have referred to as having the benefit of the principles governing cases in which there is actual fraud. In this case, however, we do not believe there was any intention on the part of Mrs. Chase to commit, any fraud whatever, on existing or subsequent, creditors. We concur with our brother in returning the case to the circuit court, under the act of 1832, so that the rights of parties may be definitively settled, according to this and his opinion.
Cause remanded, under Act of 1832, chap. 302.
