Glenn v. Grover

It is well settled, that a debtor, in failing circumstances, may prefer one creditor to another by a transfer of his property, made in good faith; and it is equally dear, that if such a transaction he assailed on the ground of fraud, the onus of proof is upon the party impeaching the assignment. Where a hill charges, generally, that certain deeds were fraudulent and void, and also propounds special interrogatories predicated upon some of the averments, the defendants have a right to answer all the allegations whether specially interrogated or not. Jn such a case the positive denials of the answers must he met in the usual way, by the oaths of two witnesses, or by that of one with'pregnant circumstances. The deeds themselves are prima facie proof of what the consideration was upon which they were executed. The fact that the grantor is embarrassed or insolvent at the time, cannot affect the validity of the conveyance, provided it be made in good faith; preferences are allowed, and they always pre-suppose that there are creditors against whom the assignment is to operate. Where a deed is without consideration, the argument, that the fact of the indebtedness or insolvency of the grantor at the time being shown, throw's the burden of proof upon the grantee, applies with great forpe. • Even where there is a debt clue from the grantor to the grantee, the amount of property conveyed, compared with the debt intended to be secured, and the number, amount and character of his other debts, may be properly considered in determining tj)e honafides of the transaction towards other creditors. The fact that the grantee leased the land conveyed by the deed, to the grantor upon the terms, that the rent should he expended in improving the estate, is not evidence of fraud between the parties. Where the defendants are interrogated by the hill as to the arrangement made between them about the farm conveyed by the deed which the bill attacks, and whether it was written or verbal, and the answer sets oat a paper as the arrangement, it is responsive, and must be taken as true until disproved. Where the handwriting of a party who signs a paper is proved, the contents are also thereby established until the contrary appears. The ^execution and delivery import that the instrument is truly dated. •Possession of a bond by the obligee is prima facie evidence of delivery and acceptance. The answer of one defendant, however inconsistent with that of his co-defendant, or with the proof in the case, cannot be used against the latter. The statements of the grantor, made at the time of his application for the benefit of the insolvent laws, and after the execution of the conveyances, that he was to have the property re-conveyed to him upon certain terms, cannot, standing by themselves, be used to defeat or impair the title of the grantee. A responsive answer of the grantor, speaking in reference to the motives and views under the influence of which the transfer was made, is conclusive upon the question of intent unless overcome by the testimony of two witnesses, or that of one with pregnant circumstances. If there be pregnant circumstances, yet standing alone, without the aid of the positive testimony of a single witness, they will he unavailing.

Appeal from the Court of Chancery. The bill in this case was filed on the 16th of May 1841, by the appellant, as permanent trustee of Charles Grover, art insolvent debtor, and as adin’r d. b. ft., of Eaton R. Partridge, to set aside, as fraudulent against creditors, two deeds executed by Grover to the appellee, McColm, the one dated the 20th of April 1839, conveying a certain farm in Baltimore .county, the other dated July 18lh, 3^839, conveying all the stock, farming utensils, &c., on said farm. The bill alleges, that Grover had the equitable title to the farm in controversy, then worth from §6,000 to §7,000, the legal title being in certain trustees; that be procured the trustees to execute, and joined them in executing the deed of April 20th, and afterwards, himself, executed the deed of July 18th. That the first was made without consideration and fraudulently, to hinder, delay and defraud the creditors of Grover, and screen from them the property mentioned in it for his own use and benefit, and was received by McColm with knowledge of this fraudulent intent on the part of Grover, and combining and confederating with him to effectuate it. That the second deed was also covinously and' fraudulently made, and was meant to hinder, delay and defraud the creditors of Grover, and to screen the property described in it from their just debts, for his own use, and that the consideration therein mentioned is merely colorable and was not paid at the time, and that it was also received by McColm with like knowledge and design as the first deed. The bill further charges, that Grover, at the time of executing these deeds, was considerably indebted on his own account, and was under heavy engagements for others, and had, on the 16th of January 1839, been sued as surety in the bond of Susan Partridge as adm’x of John Partridge, against whom a judgment for $45,000 had been recovered on the 22nd of December 1838, by the administratrix d. b. n., of John Partridge, That at the date of the first deed, Grover was utterly insolvent and known so to be by McColm; that the real and personal property conveyed by said deeds constituted, at that time, the largest part of Grover’s available assets, and that he had continued to, and still does use, enjoy and possess all said property for his own use. That Grover applied for the benefit of the insolvent laws on the 16th of March 1841, and the appellant was appointed his permanent trustee, and that on the 22nd of February 1837, Grover was indebted to the estate of Eaton R. Partridge in the sum of $5000, which is still due and unpaid.' The bill then prays that Grover and McColm may answer “ all and singular the premises,” as if specially interrogated thereto, and that “they may set forth the amount which had been paid by Grover on account of his purchase of said farm at the time of the conveyance therefor to McColm, and what was the arrangement then, or theretofore, or since made between them in respect to said farm, and whether it was written or verbal, and whether the consideration mentioned in the conveyance of the stock and utensils passed at the time of executing the same, and that Grover may set forth the amount of his indebtedness and property at the date of the fiist deed by items,” that the deeds be annulled as fraudulent, and the property sold, and for further relief. The answer of McColm admits the execution of the two deeds, but denies that either of them was made without consideration, or fraudulently, to hinder, delay or defraud the creditors of Grover, or to cover or screen from them the property for the use of Grover or any other person. It also denies that McColm received either of the deeds with knowledge of the fraudulent intent imputed by the bill to Grover, or that he combined with Grover lor any such fraudulent intent or purpose, and avers that said conveyances were made for bona fide considerations, fairly and fully paid by McColm before their execution, except a small balance on the real estate which was paid immediately after. It also denies any general knowledge by McColm of Grover’s circumstances at the times when the deeds were executed, does not admit that he was then utterly insolvent, and avers that he was not so known to be by McColm when he received said deeds, and that he did not know what proportion of Grover’s assets the property conveyed constituted. It then admits, that Grover has continued in possession of the property since the conveyances, but denies that he has taken or enjoyed the rents and profits to his own use, but on the contrary avers, that his possession has been as McColm’s tenant under certain agreements filed as exhibits A and B. It then admits Grover’s application for the benefit of the insolvent laws, as alleged, and that appellant is his permanent trustee as well as administrator d. b. n. of E. R. Partridge, but no indebtedness of Grover to Partridge’s estate is admitted. The answer then alleges, that in consequence of sundry dealings for several years previous, Grover was indebted to McColm, on the 1st of July 1S38, in the sum of $2220.95, and in consequence of further advances, owed him, on the 15th of April 1839, $3892.88, principal and interest. That the real property in controversy was bought by one Rebecca Carter front the trustees, under a decree in equity, and that she, on the 1st of March 1838, transferred her interest therein to Grover. That McColm, on the 15th of April 1839, agreed to’ purchase the land from Grover at $25 per acre, and accordingly paid the trustees $1434.78, gave Grover a release for $3892.88, his above mentioned indebtedness, and received the conveyance impeached by the bill, in which the trustees, Rebecca B. Cater and Grover, joined as grantors. That this left a small balance of $128.08 still due Glover, which was afterwards fully paid. It then avers, that this purchase was bona fide and fair, without any reservation on the part of Grover, and certainly without any view of his being, or contemplating to' become, an insolvent debtor. That a few days after McColm leased the'farm to Grover on the terms stated in exhibit A. That Grover being thus in possession of the farm, and owning the stock and implements thereon, McColm, on the faith thereof and the agreement that they should be purchased and taken by him at their value, from time to time advanced Grover cash and notes to an amount exceeding $2000, when, upon the 18th of July 1839, McColm purchased and received a bill of sale of said stock and implements for the sum of $1100. That this purchase was bona fide and fairly made, without any view to Grover’s insolvency. The answer likewise avers, that said contracts' of purchase were made verbally, except so far as they appear on the conveyances and exhibits filed with the answer. Exhibit A, filed with this answer, is a paper admitted to be signed by McColm and Grover, dated 20th of April 1839, whereby McColm certifies, that he has leased the farm in controversy to Grover for five years from date, for $326 per annum, said rent to be paid by improvements on the farm, i. e., in clearing the land, making fences, arid erecting such necessary buildings as McColm may consent shall be built. No timber is to be cut or sold off the farm, except by McColm’s consent, or for the use of the farm or buildings. All improvements are to be valued by referees at the lowest cash price, and all misunderstandings with respect to anything in the lease to be settled by arbitration. 'Exhibit B is a paper also admitted to be signed by McColm and Grover, dated 18th of July 1839, and recites, that McColm' has received from Grover a bill of sale of his stock and farming utensils, valued at $1100, for which sum he has given' Grover credit on account, and that he has agreed with Grover that the latter shall have the use of said stock and farming-utensils for five years, from the 20th of April 1839, at $66’ per annum, to be paid in money or improvements on the farm,' such as are described in the above lease. Grover agrees not to kill any of the stock or sell any thereof without McColm’s' consent, and also to account for the full value, as now valued,' at the end of the five years.- The answer of Grover states, that he purchased the farm in question at $25 per acre, amounting to $5275; that he paid Mrs. Carter on account thereof about $1500 in money lent to him by McColm, $700 in a small house, and $1800' for building two houses for her, of which sum McColm lént him between .$1000 and $1100. That being indebted to' McColm for said loans and advances, and for other moneys to a large amount, he agreed to cause said farm, stock and' farming utensils to be conveyed to McColm, the latter to pay the balance of the purchase money due thereon, about $1400,’ and that the deeds attacked by the bill were made in accordance with this agreement, and for that consideration and no other, and without any fraudulent purpose whatsoever, either" to screen the property or to secure it for his use, or any other fraudulent purpose. It denies fraudulent continuance in possession, averring that his possession has been as tenant to McColm; denies all fraud or fraudulent combination with McColm, and avers that the farm and chattels are the property bona fide and entirely of McColm, he, Grover, having no interest therein and no right to claim a reconveyance thereof, except so far as McColm may think proper to reconyey them to him, on- payment of all that Grover owed him- on; every account, said McColm having, after the conveyances, so promised Grover, but without any such view to reconveyanee, or any terms to that effect or on’ that subject, having been a part of the agreement under which the conveyances were made. His application' for the benefit of the insolvent laws is then admitted, and he also" admits that when said conveyances were executed he was “indebted considerably.” He also admits his suretyship for Susan R. Partridge, but denies her indebtedness in the sum of $45,000. The complainant then filed with the commission, as part of his proof, certified copies of the two deeds attacked by the bill. The first, being the deed of the farm, recites the sale of the farm to Mrs. Carter by the trustees, on the 18th of October 1837, at $30.25 per acre, amounting t.o $6244.73, the transfer for a valuable consideration by Mrs. Carter to Grover, his assignment to McColm, and the satisfaction to the trustees of the whole purchase money, and then conveys the farm containing about two hundred and six acres to McColm; the grantors being the two trustees, Mrs. Carter, and Grover and wife. The second, being the conveyance of the chattels, is executed by Grover, and conveys-the chattels in dispute to McColm, “in consideration of the sum of $1100 in hand paid by him.” The papers in Grover’s insolvent application were also filed by complainant. These papers and the proof in relation to them show, that McColm appeared with Grover before the insolvent court and made oath to the fact of Grover’s residence, on the same paper and immediately under the schedule of Grover’s property; and that in said schedule Grover, after stating the conveyances to McColm upon the considerations mentioned in his answer, avers, that both the farm and the stock were conveyed to him under an agreement, that if within five years Grover should pay all his indebtedness to McColm, the latter would reconvey the property, and if not, it should be sold and the said indebtedness paid out of the proceeds, and that no conveyances or agreements have since taken place on his part relative to said farm or stock. These papers were all prepared by Charles F. Mayer, he being the provisional trustee, and McColm, his surety in his bond, as such trustee. They also show, that Grover made his application on the 16th of March .1841, received his personal discharge on the same day, that the complainant Glenn was appointed his permanent trustee, and a final discharge granted on the 1st of December 1841. The complainant also proved Grover’s suretyship for Mrs. Partridge, that suit was brought against him as such surety on the 16th of January 1839, and judgment recovered on the 19th of September 1839, for §18,081.69. Proof was also taken tending to prove that Grover had possession of the farm and stock, with full control over both from the date of the conveyances till the time the witnesses were examined, selling, buying, building and enjoying profits as if owner. On the part of the defendants it was proved, by Charles F. Mayer, who prepared Grover’s insolvent papers, that McColm was not present when they wmre prepared, and never read them, and that they never went out of witness’ possession until they were sworn to; that McColm only attended to prove Grover’s residence, and to become surety for bis appearance and for the wdtness as his provisional trustee. The complainant excepted to the admissibility and competency as evidence of all parts of the answers, setting up affirmatively any consideration as having been paid by McColm to Grover, or the trustees, for the farm, and also to the admissibility in evidence, for any purpose, of exhibit B. The defendant, McColm, also excepted to the admissibility against him of all portions of the evidence furnished by the insolvent papers connected with Grover’s application, touching any contract between Grover and McColm in regard to the properly in dispute. ' The chancellor (Johnson) passed a decree dismissing the bill, without costs, from which the complainant appealed. The chancellor’s opinion accompanying this decree is reported in 3 Md. Ch. Decisions, in the case of Grover vs. Grover. ■ >■