Hubbard v. Allen

59 Ala. 283

• Court: Supreme Court of Alabama
• Decided: December 15, 1877
• Status: Published

Opinion

BEICKELL, C. J.—

Conveyances of property real and personal, whether the consideration is adequate or inadequate, good or valuable, if made in good faith, are valid and operative as between the parties. But as against the existing creditors of the grantor, they can not be supported, unless shown to have been founded on an adequate and valuable consideration. "When between the grantee, and an existing creditor, a controversy arises as to the validity of the conveyance, it has long been the settled rule of this State, that the recital of a consideration, is the mere declaration or admission of the grantor, and is not evidence against the creditor.—McCain v. Wood, 4 Ala. 258; Br. Bnk Decatur v. Kinsey, 5 Ala. 9; McGintry v. Reeves, 10 Ala. 137; McCaskle v. Amarine, 12 Ala. 17; Falkner v. Leith, 15 Ala. 9; Dalin v. Gardner, ib. 758. The bill avers, and the answers admit the averment, that the debt on which, the judgment in favor of the appellee was rendered, was contracted in 1860, about eight years before the deed was executed by Taylor to Hubbard. The onus of proving that the deed was not a mere voluntary conveyance—that it was founded on an adequate and valuable consideration, is consequently, by law, cast on the appellants. Whatever may have been the motives of the parties in its execution, as to creditors whose rights were existing, it must be regarded as merely voluntary, and presumed to be fraudulent, until the contrary is shown.

The deed is of bargain and sale, and recites as its consideration, the sum of seven thousand dollars lawful money of the United States, paid by the grantee to the grantor. The consideration, (in the absence of fraud and mistake, and on an application to a court of equity, for a reformation), can not be varied by parol proof. A valuable consideration being expressed, a consideration of that kind must be shown—it is not permissible, if it would be available, to show a good consideration. While the value of the consideration ■ may not be changed, any consideration of the character of, and not inconsistent with that expressed may be shown, and if it is adequaté will support the conveyance. It is certainly very desirable, that all legal instruments should truly declare the actual considerations on which they are founded. Especially would it be better, when the rights of persons, strangers to them, are to be affected. But the law is satisfied when a consideration of the kind expressed, is satisfactorily shown. A deed reciting a pecuniary consideration, may be shown to have been taken in payment of a debt, though it declares, as does the present deed, that the money was actually paid to the grantor. The two considerations are of the same character—equally meritorious and adequate, and the nature of the conveyance is not altered. But that the real consideration was not pecuniary—was mere love and affection—was good, not valuable, it is not admissible to prove. The nature of the conveyance would be changed, and the consideration proved, would be different from, and inconsistent with that expressed.—Murphy v. Br. Bnk Mobile, 16 Ala. 90; Potter v. Gracie, 58 Ala. 303; Ellinger v. Crowl, 17 Md. 361; Cunningham v. Droyer, 23 Md. 219; Hildreth v. Sneeds, 2 Johns. Ch. 35; Bump on Fraud. Conv. 579.

The consideration attempted to be proved in support of the deed, is not the payment of money to the grantor, but the extinguishment of an indebtedness owing by him to the grantee, and to his wife, the daughter of the grantor. The sufficiency of the proof of a consideration, must depend on the relations existing between the parties, the circumstances surrounding them when the transaction is entered into, and their subsequent conduct in reference to it. Clearer and more convincing proof will be required if these are calculated to excite a just suspicion of the fairness of the transaction. Transactions between parent and child are jealously watched in a court of equity, even when the controversy arises between them, and are sustained only when shown to be free from the taint of the influence of the relation. There are older authorities which hold that when the controversy is with creditors, relationship by affinity, or consanguinity, is a badge of fraud. The generally received opinion now is, that it is a mere circumstance dependent for its value on its connection with other circumstances, which serve to throw light upon and give color to the transaction.—Bump on Fraud. Conv. 54. "When it exists, and the rights of creditors are involved, clearer, fuller proof must be given of an adequate and valuable consideration, and of the good faith of the grantee or vendee, than would be required of a stranger.—Bump on Fraud. Conv. 54; Lloyd v. Williams, 21 Penn. 327.

The indebtedness of Taylor, to his daughter, Mrs. Hubbard, which is said to have been the material element of the consideration of the deed, and of other transfers of property to Hubbard, soon after his marriage, consists of three distinct items, which are thus enumerated in the written argument of counsel—“ note for rents of land, $5,000.00 ; distributive share of mother’s estate, $12,000.00; note foi money of Mrs. Hubbard, $1,110.00.” Let us examine the evidence in relation to these items separately. The first, a note for the rent of land, was made in 1865. The land was given the daughter by parol in 1858, while she was an infant, to equalize her advancements of real estate, with those Taylor made to his other children. Taylor remained in possession. until after the marriage of the daughter, and no conveyance or other written evidence of the gift was ever executed. In 1866, the husband of the daughter having made sale of the lands, at his request, Taylor executed a conveyance-to the purchaser. The parol gift of the land to the daughter was void. It vested in her no right or title, legal or equitable, to which rent could be an incident. The father could have consummated the gift by a conveyance, but it rested merely in his volition, whether he would consummate or repudiate it. The gift was voluntary, and if a subsequent conveyance had been made merely in consummation, the conveyance would have been also voluntary; the estate of the daughter would have commenced from the day of its execution, and would not have related to the time of the parol gift.—Hendon v. White, 52 Ala. 597; Davis v. McKinney, 5 Ala. 719; Rucker v. Abell, 8 B Monroe, 566. In this last case it is said: “Any other doctrine would -enable a father, by a verbal gift of his land to his children, retaining the title in himself, either to remain the real, as well as ostensible proprietor of the property, or by a completion of the gift, to divest himself of all right and title to it, whenever circumstances might render it necessary to do so for the purpose of placing it beyond the reach of his creditors. Such a power on the part of the father, the ownership of the property affording him the means of obtaining a delusive credit, would open a wide door for the introduction of fraud and imposition upon creditors.” A debt forming a consideration which will against creditors support a transfer of property, must rest not only in moral, but in legal obligation, and the law must furnish a remedy for its enforcement. Statutes may bar the remedy, and if' there is a valuable consideration, the statutory bar may be waived, the debt converted into a legal demand,'and it will become a sufficient consideration to support a transfer or conveyance. Or, the statute of frauds may operate a bar to the enforcement of promises or agreements, for which there was a valuable consideration, and which are morally binding, the statute may be waived, and the agreement executed,, without just cause of complaint by creditors who have not acquired liens. But a mere inchoate gift, it is not in the power of the donor to consummate to the prejudice of creditors.—Bump on Fraud. Conv. 220. Gratuitous promises, not resting on a valuable or meritorious consideration, are not recognized and enforced in courts of law or equity. Kirksey v. Jones, 8 Ala. 131; Forward v. Armstead, 12 Ala. 124. The note for rents was without consideration, incapable of enforcement by legal remedies, and can not be considered as forming a consideration which will support the deed against creditors.

The next item of indebtedness—the interest of Mrs. Hubbard in her mother’s estate is not shown by the clear and full proof, which the law demands to support a conveyance made by an insolvent debtor to a child, or to a son-in-law. In this case there is not only insolvency, with its attending vexations of suits and judgments, and the relationship existing between the parties, but there is a combination of other-suspicious circumstances, exciting the jealousy of the court, and which demand clear, full proof not only of consideration, but of the freedom of the transaction from all impurity of intention. The previous transfers to the son-in-law of choses in action founded on the same considerations as the deed—the prior voluntary conveyance to the daughter of a part of the real estate, and the effort to protect the title by a subsequent sale under execution, at which there were no other bidders, than the grantee, and his brother, who was the attorney procuring the judgment for the grantee,—and the successful bidder—the immediate redemption from him by the grantee, are circumstances easting a cloud on all the transactions, and which it was the duty of the parties to remove by clear, convincing evidence. Now, the evidence in reference to the alleged indebtedness of the grantor, on account of ihe share of his daughter in the property the-mother had brought into the marriage, is too vague and indefinite, to justify any court in pronouncing that there was-in law any such indebtedness. Of what the property consisted—when it was received—whether it was then impressed with any trust which excluded the marital rights of the husband, or, whether the statutes excluding these rights were then of force, are matters of which there is no evidence. Slaves may, and probably did constitute a large part of the fortune of the wife, and emancipated by operation of law, the husband was freed from all liability to account, if such liability ever existed. The grantor is the only witness who testifies in reference to this indebtedness, and it was his duty as the facts rested peculiarly within his knowledge not to have left them, to say the least, in doubt and uncertainty. The fair and just inference from his meagre statements, is, that though there was no legal obligation, he felt himself under a moral obligation to account to his children for the property the mother had brought him. It seems that in the life of the mother, he had advanced to his older children an amount equal to that which is now claimed as due to his youngest daughter, and if these advances were made in obedience to a legal obligation, and not as a mere matter of affection, the property must have been impressed with some trust, by the terms of the gift to the mother, which ought to have been shown.

The evidence in regard to the item for money loaned by the daughter — or rather money given her, as birthday presents, which the grantor used, is not of that character, which the case demands. No memoranda, no account of these presents was kept—no evidence of debt was given for them, until about the time of the marriage of the daughter, and until the insolvency of the father. These from memory, without any data to guide him, with no recollection of the years in which the presents were made, or the amount given at any one time, he estimates that they amount to eleven or twelve hundred dollars, and gives the daughter a note for the amount. The daughter is not examined, and the debt stands on the unsupported evidence of the grantor. The debt may really exist, but it must under the circumstances be shown by clearer and fuller evidence, against a creditor whose debt and rights are fully established. A consideration or a debt of this kind is so easily feigned between parent and child, that it is mere justice, when the rights of bona fide creditors are involved, to demand that it be fully proved. .

The remaining item of indebtedness, which it is said formed a part of the consideration of the deed, is money loaned by the grantee to the grantor. The evidence in support of this item is unsatisfactory. It is said by the grantee-the money was loaned in different sums, at different times, through a period of twelve or eighteen months—no evidence of debt was taken, and the grantor declares that he has no - recollection of having borrowed it, and consequently none that it formed any part of the consideration of the deed. A fact, not without its importance, attending all the transactions, is, that though the grantor parted with property of considerable value, in payment of these several items of indebtedness, no receipt or release was ever given him, and the transfers do not indicate that he was entitled to be discharged. A bona fide creditor, though he be closely allied to his debtor, and the latter insolvent, may take property at a fair price in payment of his debt, and his title will be unassailable. The law does not forbid it; and the debtor may be moved by the influences of relationship, in preferring the creditor. If other creditors assail the transaction, it is no hardship to require clear proof of the debt, and a reasonable explanation of every suspicious circumstance. The means of proof, lie within the ability of the parties, and if they do not produce it, the transaction must be pronounced fraudulent as to complaining creditors.

The cross-bill is filed for the purpose of enabling Hubbard- and wife, in the event they failed to sustain the deed, to retain the property conveyed by it, in satisfaction of the alleged indebtedness to Mrs. Hubbard, and also in satisfaction of two judgments which Hubbard claims to hold against the grantor. We have declared the evidence does not show an indebtedness to Mrs. Hubbard, and her right to relief therefore fails. This would be fatal, for the principle that when two join as complainants, they must show that they have a common or joint interest, and are both entitled to relief, and the want of interest, or right to relief of one, compels a dismissal of the bill, is as applicable to a cross-bill, as it is to an original bill. But it is not necessary to the affirmance of the decree of the chancellor that it should be rested on this narrow and technical ground. Hubbard has accepted a deed expressing an actual moneyed consideration, and has failed to prove that the consideration was real. The deed is void as to creditors—it conferred on ,b¿m no title. The law condemns as wrongful its acceptance, and condemns the possession derived under it. His duty was to reconvey it to the insolvent debtor; failing in that duty, he is regarded as a trustee in invitum, holding for the benefit of creditors. It • would encourage, not suppress fraud, if he was permitted when the conveyance fails, to retain the property in satisfaction of demands, however just, the grantor may be liable for to him, and which were subsequently acquired forming no part of the consideration of the deed. Indirectly, effect would be given to the conveyance the statute of frauds denounces as void. There may be cases of purely voluntary conveyances, in which the donee is innocent of either actual or constructive fraud, and a court of equity would protect his possession until any just debt he had against the donor was satisfied; or would so mould a decree granting relief to other creditors, as to require payment to him, or placing him on an equality with them.—Bump on Fraud. Conv. 596. Or an innocent donee may remove incumbrances, and he will be entitled to indemnity, if the conveyance is set aside at the instance of creditors.—Potter v. Gracie, 58 Ala. 303. Hubbard does not stand as an innocent donee, claiming under a purely voluntary conveyance. The deed of bargain and sale, purporting to be founded on a pecuniary consideration, and fails for want of proof of that consideration. There is no principle upon which the deed can stand as a security to him for debts due him from the grantor. Tainted with actual fraud, it must be set aside altogether.—Bump on Fraud. Conv. 597; Mariatt v. Givens, 8 Ala. 694; Wiley, Banks & Co. v. Knight, 27 Ala. 336. There are other cases in which a grantee or vendee will be protected by a court of equity, though at law the conveyance would be wholly condemned. The particular circumstances of the case, may justify a court of equity, in allowing the conveyance to stand as a security for the amount the donee or vendee may have advanced on the faith of it; or it may compel a vendee when he has purchased at an inadequate price, to pay the difference between the price and the actual value. Or may permit it to stand as a security for the debt, really due, if it was intended as a security for, or payment of such debt when right and justice require it.— Clements v. Moore, 6 Wall. 299; Price v. Masterson, 35 Ala. 483. But a party claiming under a conveyance which is actually fraudulent, because made without a valuable consideration, while expressing that consideration, and who attempts and fails entirely to sustain the consideration,—has no equity to claim the retention of the property either as security for, or in payment of independent and distinct demands against the vendor or grantor. As to creditors he has acquired the property tortiously, and he stands in the same attitude he would stand in towards the grantor, or vendor, if he had taken possession by an admitted trespass—the conveyance under which he derives title and possession is void, not warranting the possession. It is plain that a mere creditor at large obtaining possession -of the property of his debtor by force or fraud, can not set up his debt as an excuse or justification of his tort.—Stetson v. Goldsmith, 31 Ala. 649; Harrison v. McCrary, 37 Ala. 687. The reason and foundation of the principle, that a right cannot grow out of a wrong, is as applicable to the donee or vendee guilty of actual fraud, as it is to the trespasser.

Nor can his redemption of the four lots, from the purchaser at the sheriff’s sale, avail him. ¥e do not enter on the inquiry whether the judgment under which the sale was made was founded on a just debt. A judgment may be obtained on an honest debt, and yet obtained and used for a fraudulent purpose.—Bum v. Abd, 29 Penn. 387. "When so obtained and used, it is void as to_ all whose rights are offended, and who are in a position to assail it. It is not a pleasant, and a rather unprofitable task, to recapitulate the evidence which induces us to concur in the conclusion of the chancellor, that the judgment was obtained and used for the purpose of protecting the property sold from pursuit by the creditors of Taylor. Admitting the endorsement of the bonds fixed, a liability on Taylor, he alone, of the several indorsers, is sued. The judgment is rendered at a term of the court when the cause was triable only by consent of the defendant. No defence was made, nor was it intended that any should be made, and yet the record is made to bear the form of a judgment rendered on the appearance of the defendant by attorney, and on issue tried by a jury, and in the absence of the attorney, requested by the plaintiff’s attorney to represent the defendant. The execution is levied on real estate, in which the defendant had no interest, and which was the property of the plaintiff in execution, if the deed to him was valid. The sale was made, after the filing of the present bill, and after notice of it to Hubbard and his attorney. At the sale, the attorney, Hubbard’s brother, and Hubbard, are rival bidders, and the only bidders, the former becoming the purchaser. Four days thereafter the formalities of a statutory redemption are gone through, and a conveyance is executed to Hubbard. These circumstances, it may be possible to explain, removing the unfavorable infer■ences which must be drawn from them. There is an absence of all explanation, and no other conclusion can be drawn than that the judgment was obtained, with the intent to use it as it was used, to affect and prejudice the pre-existing rights of' the bona fide creditors of Taylor.

The conveyance of the lands by Taylor to Griffith, in pursuance of the parol gift he had previously made to his daughter, was fraudulent as to his creditors. Title doubtless passed to Griffith, because he was a purchaser without notice. The purchase money in the hands of Hubbard, was liable to the demands of creditors—held by him as a trustee for their benefit.—Bump on Fraud. Conv. 589. When the lands were-resold by Plubbard, after the rescission of the sale to Griffith, the purchase-money still remained a trust fund, which creditors could pursue. It was not in the power of Hubbard, by any application he could make of the purchase-money, or by any transfer of the notes given for it, so far as he is concerned, to divest it of its character as a trust fund, or to affect the rights of creditors. When he applied these notes, to the extinguishment of the mortgage given Mrs. Gilmer, and which is valid as against creditors, because she was without notice of the infirmity of his title, removing that mortgage as a prior lien, it was an application for the benefit of creditors, a court of equity would have compelled. The transfer of the mortgage to his wife, was without consideration, and conferred on her no right to keep it alive as a prior lien defeating the right of Taylor’s creditors.

The exceptions to the register’s report, raise no other question than the period of time, at which the value of the corn, acquired by Hubbard under the deed, should be computed. The chancellor was of opinion, that it should be computed at the time of the conveyance, when possession and use passed to Hubbard. The exceptions are based on the hypothesis that he should be charged with its value, at-the time of taking the account. A fraudulent grantee, converted into a trustee, is subject to the general principle governing all trustees, that he shall derive no benefit and take no advantage from his relation. Having converted the corn long prior to the taking of the account, and its conversion, (being property consumable in use,) having commenced immediately on the transfer, the value of such property, at the time of the conversion was the true measure of his liability, and not its value at the time of taking the account. Bump on Fraud. Conv. 593.

The result is, the decree must be affirmed.

Stone, J., not sitting.