McKeown v. Allen

Liddon, J.:

The answer makes no defense upon any claim of homestead upon the part of Mrs. Lucy Allen, and that question is eliminated from the discussion.

' In a recent decision of this court, made at the present term (Claflin & Thayer vs. Ambrose) 'it was held that “a voluntary conveyance of real property not his *495 homestead, made by a husband to his wife when in failing circumstances, is void as to his creditors whose claims existed at the date of such conveyance.” This is a correct statement of the law applicable to the facts of the case then before the court. The voluntary conveyance' which was avoided in that case was made when the proof shows that the husband who was engaged in a mercantile business was in failing circumstances; the failure and an assignment for the benefit of creditors by the firm of which such husband and grantor was a member occurred within a few months afterwards. It is not necessary, however, in order to avoid such a voluntary deed that the husband grantor therein should be in what, in common language, is called “failing circumstances.” A voluntary conveyance by one who is indebted is presumptively fraudulent, when attacked by a judgment creditor upon a debt existing at the time of its execution. In such cases it is not necessary to show that the debtor was actually insolvent at the time he executed the conveyance. Bump on Fraudulent Conveyances, p. 278; Pratt vs. Custis, 2 Lowell, 87 ; Ellinger vs. Crowl, 17 Md. 361 ; Martin vs. Evans, 2 Rich. Eq. 368 ; Cook vs. Johnson, 12 N. J. Eq. 51, S. C. 72 Am. Dec. 381 ; Williams vs. Banks, 11 Md. 198 ; Young vs. White, 25 Miss. 146 . In tlie case of Worthington vs. Bullitt, 6 Md. 172 , text 198, 199, the court, as we think, correctly held: “If at the time of the execution of the deed the grantor had creditors, who would be hindered, delayed and exposed to expense and difficulty in collecting their debts, by reason of the deed, even though the grantor was not in fact insolvent, still so far as it was voluntary, or rested upon the consideration of natural love and affection; it would be void. * * * We have not *496 said, nor do we design to intimate, that the deed in question was’in fact fraudulent in its inception. We pronounce it void because of the fact alone of its having been a voluntary conveyance, made at a time when the grantor was indebted, and that that indebtedness still exists.” There can be no doubt that the deed under consideration was a voluntary one. The general rule is that a deed with a consideration merely nominal will be considered voluntary as against attacking creditors. Ridgeway vs. Underwood, 4 Wash. (Ct. Ct.) 129. Passing upon a deed almost identical in its statement of a consideration, the Supreme Court of Alabama has well said: “A conveyance of lands by a husband to his wife, which purports to be made in consideration of love and affection, ‘and for the sum of one dollar cash in hand paid, the receipt whereof is hereby acknowledged,’ is purely voluntary and void as against the existing creditors of the husband.” Houston vs. Blackman, 66 Ala. 559 , S. C. 41 Am. Rep. 756 . Such a deed can only be upheld in equity when it is founded upon a good and meritorious consideration, and does not interfere with existing rights of third persons. Waterman vs. Higgins, 28 Fla. 660 , 10 South. Rep. 97 ; Claflin & Thayer vs. Ambrose, supra.

There is some conflict of authority as to the effect upon the rights of existing creditors of voluntary conveyances by debtors of their real estate. By some authorities it is held that such conveyances by a man indebted at the time is of itself a fraud upon creditors, no matter how innocent or meritorious the motive with which the conveyance was made, or how inconsiderable the part of the grantor’s property which is disposed of. Upon the other hand, the greater weight of authority supports the proposition that such convey *497 anees are not absolutely fraudulent per se, but that they only afford a prima facie or presumptive evidence of fraud which may be rebutted or explained. In a note to Jenkins vs. Clement, 14 Am. Dec. 704 , 705, Mr. Freeman, the able editor of this series of reports, has collated the authorities upon both sides of this question. Upon the same subject, see, also, Wait on Fraudulent Conveyances, secs. 93, 94. The presumptions of fraud arising from the execution of the voluntary deed, the burden of proof to show that the deed was not fraudulent falls upon the defendants. Chaflin & Thayer vs. Ambrose, supra; Wait on Fraudulent Conveyances, secs. 95, 225; Bump on Fraudulent Conveyances, sec. 269; Harrell vs. Mitchell, 61 Ala. 270 ; Williams vs. Banks, 11 Md. 198 ; Pratt vs. Curtis, 2 Lowell, 87 . It is unnecessary for the purposes of this case to discuss what facts or circumstances would rebut the presumption of fraud arising from the execution of the deed. The defendants offer no reason why the deed should be upheld, and make no defense except that the consideration named therein was a valuable one, and therefore it was not a voluntary conveyance. There is no proof of the payment of any consideration. As to existing creditors of the grantor, one dollar is no good or valuable consideration for land which cost $250, to which improvements had been added, and forty-six head of cattle and twenty-five head of hogs. Authority would not seem to be needed upon so plain a proposition, but the Alabama case cited is precisely in point.

The defendants deny that their intention was to defraud, hinder or delay creditors, in the execution of the conveyance between them. Such hindrance and *498 delay of the complainant, however, has clearly been the result of the conveyance. Where such has been the effect of the conveyance,' the real motives of the parties thereto are immaterial. Marmon vs. Harwood, 124 Ill. 104 , 16 N. E. Rep. 236, S. C. 7 Am. St. Rep. 345 .

While we have said that it is not essential to show that the debtor was insolvent at the time of the execution of the voluntary conveyance, we think upon principles of law governing the case that it does appear that J. Wesley Allen was insolvent at the time he executed the deed in controversy to his wife. By the return of nulla bona upon the execution it appears that he was wholly insolvent at such time, and as to real estate, except that included in the deed, was insolvent when the judgment was rendered. The debt upon which judgment was recovered was in existence for years before the conveyance was executed. In such cases the insolvency will be considered as extending back in time beyond the conveyance. Carlisle vs. Rich, 8 N. H. 44; Strong vs. Lawrence, 58, Iowa, 55, 12 N. W. Rep. 74 .

The decree of the Circuit Court is reversed with directions that a decree be entered for complainant granting the relief prayed for in the bill of complaint.