Galbreath, Stewart & Co. v. Cook

30 Ark. 417
CourtSupreme Court of Arkansas
DecidedNovember 15, 1875
StatusPublished
Cited by11 cases

This text of 30 Ark. 417 (Galbreath, Stewart & Co. v. Cook) is published on Counsel Stack Legal Research, covering Supreme Court of Arkansas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Galbreath, Stewart & Co. v. Cook, 30 Ark. 417 (Ark. 1875).

Opinion

Walker, J.:

The appellants filed their bill in equity, in the Lincoln county Circuit Court, to have set aside, and declared void, a deed executed by Cook, to Martha Buford, with whom he afterwards intermarried, which plaintiffs allege to have been executed by Cook in fraud of the rights of his creditors.

They allege that the lands conveyed comprise the whole of Cook’s estate subject to sale by execution; that he was largely indebted, and insolvent; that among other debts was one for $2,000 due to plaintiffs, and, upon which, before the deed had been executed, suit had been brought; that their suit was prosecuted to judgment, upon which execution was issued and placed in the hands of the proper officer for collection, who returned that the defendant had.no property .out of which to make their debt.

The evidence fully sustains all of these allegations, indeed none of them are seriously controverted.

Leaving the question as to whether the conveyance was made with intent to defraud plaintiffs, his creditors, that such was Cook’s intention in making the conveyance is clearly shown from the evidence.

But it is contended for the appellees that whatever may have been the intent of Cook, the grantor, unless it is shown from the evidence that Martha Buford, the grantee, purchased the land with a knowledge of such fraudulent intent, her right to the property conveyed should be sustained.

She denies in her answer all knowledge of the indebtedness of Cook, of his fraudulent intent, or of any participation with Cook in attempting to put his property out of reach of his creditors.

There is no evidence which tends to bring such knowledge and intent, home to her, unless the very inadequate consideration expressed in the deed, and the fact that at the time the deed was being prepared, Cook took out a $100 bill and told the draftsman, in the presence of the grantee, that that was the consideration which he had received for the land, arid which, so far as appears from the evidence, she did not deny, whilst in her answer she does not pretend that any money was paid, but states positively that the only consideration given for the land was a contract of marriage, a marriage settlement. These circumstances, if connected with others, might be sufficient to show that she was a participant in the fraud, but, standing alone, they are not sufficient to fix such knowledge and participation upon her, and we must hold her to be an innocent purchaser, that is, a purchaser without knowledge of the failing circumstances of Cook, or of his intent to defraud his creditors by putting his property beyond their reach.

This protection to innocent purchasers is extended to those who not only buy in good faith, but who also pay a fair price for the property, at least a price not grossly inadequate. The inadequacy is of itself evidence of a dishonest purpose, and such as to put the purchaser upon inquiry. The grounds upon which the purchaser is protected in the purchase, is, that he bought in good faith and paid his money for the property.

"When the creditor comes to demand that this property should be given up to satisfy his debt the purchaser may reply: If you take this property from me I will have a claim against the debtor equal in equity to your own, and, when equities are equal, the party having the legal title should retain the property. But with what show of equity could the purchaser of this land worth $7000, who only professes upon the face of the deed to have paid $100, not one dollar of which has been paid, confront the creditor who has a judgment for $2000 due ? Cexiainly none.

It may be considex’ed as settled in this court, that when a party purchases property and pays for it a fair px’ice, and without lmowledge of the failing circumstances of the debtor, or of his intent to defraud his expeditor’s, he will be protected in his purchase. Splawn v. Martin, 17 Ark., 152, and Christian v. Greenwood, 23 Ark., 266.

When considering the latter case, Mr. Justice Fairchild, who delivered the opinion of the court, said: “ If Christian bought the negroes of Hunley and paid the value of them, without notice of Hunley’s fraud, his equity as a purchaser is at least equal to that of the creditor to have his debt paid out of Hunley’s property, and the legal title derived from the purchase will prevail.”

But if the purchaser have notice of the fraud and deal with the vendor, and by so doing aid him. in the perpetration of a fraud upon his creditors, then, even if a full price is paid by him, he can assert no claim to equitable relief, and whilst such has been our uniform decisions in cases of this kind, all purchasers without notice or participancy in the fraud are not protected. Those who pay no consideration, or a grossly inadequate consideration, have no debt at all, or none of amount to compare with the equity of the creditor, should not be permitted to hold the property purchased, free from liability to satisfy the creditor’s debt. Ringgold v. Waggoner, 14 Ark., 72, and Leach v. Fowler, devisee, 22 Ark., 143.

In the latter case, the conveyance was made by Leach to his son, who was at the time a non-resident of the State, and had no notice of the fraudulent intent of his father. Elanagin, special judge, said: “ Where a father, immediately before judgment, conveys all of his property subject to execution to his minor son in his absence, and who does not appear to have the means to purchase, it is sufficient to put the grantee upon the proof that it was a purchase upon actual consideration and in good faith.”

Thus we see that in order to protect the purchaser in his property, it is not alone necessary that he should be an innocent purchaser, but that he should also have paid a consideration for the property. These combined protect him; if either is wanting he must fail.

In determining questions of this kind, we rarely find positive evidence of fraud, but arrive at conclusions from the numerous attendant circumstances which, if considered separately, would lead to no satisfactory conclusions, but, when taken together, lead us to clear and strong convictions of the intention of the actors.

We will first dispose of the case as presented by the deed.

Conceding Martha Buford, now Mrs. Cook, to be an innocent purchaser, shall we say that she was also a purchaser for a valuable consideration? was she in circumstances to purchase $7000 worth of land ? did she, in good faith, do so, or attempt to do so? did she, in fact, pay any consideration whatever.

From the evidence we learn that Martha Buford, who claims to have made this purchase, was* an orphan girl between eighteen and twenty years of age, residing with her step-father, Moore, in the neighborhood of her co-defendant, Cook, who had lately been connected with a mercantile firm in the sale of goods. What Miss Buford’s rank and position in society was is not disclosed by the evidence, nor whether she owned any property or other means.

Cook was the owner of a tract of 800 acres of land, 300 or 400 acres of which had been cultivated; with cotton gin and dwelling house.

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Bluebook (online)
30 Ark. 417, Counsel Stack Legal Research, https://law.counselstack.com/opinion/galbreath-stewart-co-v-cook-ark-1875.