Optnton or ttte Court, by
Judge Barrer
Reversed on direct and cross appeals.
- Frank Schank owned a small farm with a dwelling-house and'the' other ordinary farm improvements thereon situated in Daviess county, Kentucky. He was indebted to the Daviess County Bank and Trust Company in the sum of one thousand dollars, secured by morVa«’e upon his farm. On the 30th day of March, 1903, he and his wife, Barbara Schank, conveyed to their chu^btor and only child, Mary Willett, the wife of the defendant, Pat L. Willett, thirty-six acres, being one-half of the farm, on consideration that they assume and pay off the mortgage to the trust company. Afterwards, he borrowed several sums of money for which he executed notes aggregating five hundred dollars or more, with the appellees as his sureties. On the 25th day of July, 1903, he and his wife conveyed to their daughter, Mary Willett, the balance of the farm, together with all the live stock,, provender and crops thereon, upon the recited consideration of two thousand dollars cash; after which he immediately left the State, and, so far as the record shows, his whereabouts are unknown. His wife remained with her son-in-law and daughter wholly [781]*781unprovided for, her husband having, it is said carried with him the entire sum which it is claimed he was paid for the farm. The appellees, who as said before, are his sureties on his various notes, instituted three actions in equity (afterwards consolidated! to have both conveyances declared null and void for fraud, it being alleged that no money was paid as a consideration for the conveyances, and they were for the purpose of defrauding appellees and the other creditors of the grantor. Pat L. Willett and Irs wife, Mary, the grantees in the deeds, filed their answer, denying all of the material allegations of the petition, thus completing the issues. A trial being had, the chancellor held that both conveyances were fraudulent as against the rights of the appellees, but that Pat L. Willett, instead of two thousand ^Tirs, had paid the sum of eight hundred dollars, and the land; was ordered to be sold, and out of the proee^-N there was to be paid, first, the thousand dolin'- r^or-to-age of 'the trust company .(which is not disputed 1, and then ■the sum of eight hundred dollars paid by Pat L. Willett; and out of the remainder, the indebtedness for which appellees were sureties was to be paid. Prom, this judgment both parties have appealed.
It is not disputed that the convey'-n -< March 30th, 1903, was made prior to the time a' h appellees became the sureties of the grantor, n'-' : -, and as there is neither allegation nor proof th"' die time it was made, he had any intention of defrauding thef -appellees, we do not understand upon what ground, it can be set aside at their suit. Undoubtedly, if one] contemplating becoming indebted makes a fraudulent conveyance of his property with the intent to defraud his future creditors, the conveyance could be set [782]*782aside under tbe statute; but in order for tbe subsequent creditor to avail himself of this right be must both allege and prove tbe fraudulent intent.'
In tbe conclusion that tbe conveyance of July 25th, 1903, was fraudulently made, we heartily concur, and the difficulty we have on tbis branch of tbe case! is to understand upon what principal tbe fraudulent grantee was allowed credit for tbe sum of eight hundred dollars, assuming be actually paid it, which wej do not believe; but tbis question we will dispose of hereafter. I
Pat L. Willett and bis wife and children lived in one room of tbe small dwelling bouse on tbe farm, and; bis father-in-law, Frank Scbank, and bis wife, Barbara, occupied tbe remaining room, and they bad so resided for several years. The father-in-law is said to have been addicted to periodical sprees, and is described as a rough man when drinking. Tbe testimony of tbe witnesses as to the value of tbe farm; varies; those who were introduced by tbe appellees place tbe value of the land at from forty-five to fifty dollars per acre; those for appellants at from twenty-five to thirty-five dollars, we are inclined to accept tbe valuation of tbe witnesses for tbe appellees, although it is not necessary that we should rest our conclusion as to tbe merits of tbis branch of tbe case upon the question of inadequacy of price.
We think appellant’s own evidence convicts him of fraud. He states that, on tbe day, or tbe day- before, tbe deed to bis wife was made, bis father-in-law said to him,, that be desired to go to Evansville to be treated for fistula, and for that reason desired to sell out to bis son-in-law; that thereupon tbe selling price, was agreed upon at two thousand dollars cash, the [783]*783deed was drawn np, and they went together to the clerk’s office of Daviess county, where the deed was, delivered and the money paid over. When called upon to account for the possession of so large a sum of ready money he stated that it was the proceeds of his savings for several years, which he had kept in a shoe box in hi? wife’s trunk most of the time, but which, during a part of the time, he had carried around in his pocket. He lived within' five miles of Owensboro, and was used to banks and banking; understood how to deposit money and check it out) as he needed it, and testified that, during the period he had used the shoe box as a place of deposit, he frequently had money in the bank at Owensboro. He does not show, or pretend, that he ever lost any money by the failure of a bank, or express any sort of fear of their being unsafe. The only reason he gives for, keeping the money in a shoe box at home is that he did not have to pay.taxes on it, by which, as we understand it, he n.eans that he could thus defraud the State of the taxes due it.
It was obvious, of course, to the son-in-law, that the father-in-law did not need more than a tithe o^ the money said to have been paid him for the farm; for the purpose of going to Evansville to be treated for fistula, and yet he seems not to have been surprised that, for this purpose, the grantor was selling out everything he had— the farm, live stock, and his share of the growing crops. Barbara Schank, the abandoned wife, when placed upon the stand in the interest oft appellants, stated that the reason she did not go with her husband was that she did not feel willing to go into a strange country. She does not pretend that her husband went to Evansville to be treated for fis[784]*784tula. Probably, if this had been true, she would have gone with her husband in order to be with him and| nurse him in his sickness. ,
One of the witnesses for appellant, Glenn, testified that he was in the employ of Sehank, and saw the son-in-law count out the money to the grantor at the home* and the table was covered with the bills. Willetty himself, testified that the money was paid over to-his father-in-law at the county clerk’s office. Both of these statements could not be true, and the introduction of false evidence is one of the surest badges] of fraud. ]
The testimony of Willett as to how he saved the money he pretends he paid his father-in-law is very; unsatisfactory. In the first place, he gives the gross sums which he received for the crops he says he sold* and the painting he claims to have done, whereas common experience teaches us that the whole of these sums could not have been saved, but only the net profits made by him. For instance, he claims to have-raised thirty-five acres of wheat, from which he realized three hundred bushels, his part of the money being about one hundred and forty dollars.
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Optnton or ttte Court, by
Judge Barrer
Reversed on direct and cross appeals.
- Frank Schank owned a small farm with a dwelling-house and'the' other ordinary farm improvements thereon situated in Daviess county, Kentucky. He was indebted to the Daviess County Bank and Trust Company in the sum of one thousand dollars, secured by morVa«’e upon his farm. On the 30th day of March, 1903, he and his wife, Barbara Schank, conveyed to their chu^btor and only child, Mary Willett, the wife of the defendant, Pat L. Willett, thirty-six acres, being one-half of the farm, on consideration that they assume and pay off the mortgage to the trust company. Afterwards, he borrowed several sums of money for which he executed notes aggregating five hundred dollars or more, with the appellees as his sureties. On the 25th day of July, 1903, he and his wife conveyed to their daughter, Mary Willett, the balance of the farm, together with all the live stock,, provender and crops thereon, upon the recited consideration of two thousand dollars cash; after which he immediately left the State, and, so far as the record shows, his whereabouts are unknown. His wife remained with her son-in-law and daughter wholly [781]*781unprovided for, her husband having, it is said carried with him the entire sum which it is claimed he was paid for the farm. The appellees, who as said before, are his sureties on his various notes, instituted three actions in equity (afterwards consolidated! to have both conveyances declared null and void for fraud, it being alleged that no money was paid as a consideration for the conveyances, and they were for the purpose of defrauding appellees and the other creditors of the grantor. Pat L. Willett and Irs wife, Mary, the grantees in the deeds, filed their answer, denying all of the material allegations of the petition, thus completing the issues. A trial being had, the chancellor held that both conveyances were fraudulent as against the rights of the appellees, but that Pat L. Willett, instead of two thousand ^Tirs, had paid the sum of eight hundred dollars, and the land; was ordered to be sold, and out of the proee^-N there was to be paid, first, the thousand dolin'- r^or-to-age of 'the trust company .(which is not disputed 1, and then ■the sum of eight hundred dollars paid by Pat L. Willett; and out of the remainder, the indebtedness for which appellees were sureties was to be paid. Prom, this judgment both parties have appealed.
It is not disputed that the convey'-n -< March 30th, 1903, was made prior to the time a' h appellees became the sureties of the grantor, n'-' : -, and as there is neither allegation nor proof th"' die time it was made, he had any intention of defrauding thef -appellees, we do not understand upon what ground, it can be set aside at their suit. Undoubtedly, if one] contemplating becoming indebted makes a fraudulent conveyance of his property with the intent to defraud his future creditors, the conveyance could be set [782]*782aside under tbe statute; but in order for tbe subsequent creditor to avail himself of this right be must both allege and prove tbe fraudulent intent.'
In tbe conclusion that tbe conveyance of July 25th, 1903, was fraudulently made, we heartily concur, and the difficulty we have on tbis branch of tbe case! is to understand upon what principal tbe fraudulent grantee was allowed credit for tbe sum of eight hundred dollars, assuming be actually paid it, which wej do not believe; but tbis question we will dispose of hereafter. I
Pat L. Willett and bis wife and children lived in one room of tbe small dwelling bouse on tbe farm, and; bis father-in-law, Frank Scbank, and bis wife, Barbara, occupied tbe remaining room, and they bad so resided for several years. The father-in-law is said to have been addicted to periodical sprees, and is described as a rough man when drinking. Tbe testimony of tbe witnesses as to the value of tbe farm; varies; those who were introduced by tbe appellees place tbe value of the land at from forty-five to fifty dollars per acre; those for appellants at from twenty-five to thirty-five dollars, we are inclined to accept tbe valuation of tbe witnesses for tbe appellees, although it is not necessary that we should rest our conclusion as to tbe merits of tbis branch of tbe case upon the question of inadequacy of price.
We think appellant’s own evidence convicts him of fraud. He states that, on tbe day, or tbe day- before, tbe deed to bis wife was made, bis father-in-law said to him,, that be desired to go to Evansville to be treated for fistula, and for that reason desired to sell out to bis son-in-law; that thereupon tbe selling price, was agreed upon at two thousand dollars cash, the [783]*783deed was drawn np, and they went together to the clerk’s office of Daviess county, where the deed was, delivered and the money paid over. When called upon to account for the possession of so large a sum of ready money he stated that it was the proceeds of his savings for several years, which he had kept in a shoe box in hi? wife’s trunk most of the time, but which, during a part of the time, he had carried around in his pocket. He lived within' five miles of Owensboro, and was used to banks and banking; understood how to deposit money and check it out) as he needed it, and testified that, during the period he had used the shoe box as a place of deposit, he frequently had money in the bank at Owensboro. He does not show, or pretend, that he ever lost any money by the failure of a bank, or express any sort of fear of their being unsafe. The only reason he gives for, keeping the money in a shoe box at home is that he did not have to pay.taxes on it, by which, as we understand it, he n.eans that he could thus defraud the State of the taxes due it.
It was obvious, of course, to the son-in-law, that the father-in-law did not need more than a tithe o^ the money said to have been paid him for the farm; for the purpose of going to Evansville to be treated for fistula, and yet he seems not to have been surprised that, for this purpose, the grantor was selling out everything he had— the farm, live stock, and his share of the growing crops. Barbara Schank, the abandoned wife, when placed upon the stand in the interest oft appellants, stated that the reason she did not go with her husband was that she did not feel willing to go into a strange country. She does not pretend that her husband went to Evansville to be treated for fis[784]*784tula. Probably, if this had been true, she would have gone with her husband in order to be with him and| nurse him in his sickness. ,
One of the witnesses for appellant, Glenn, testified that he was in the employ of Sehank, and saw the son-in-law count out the money to the grantor at the home* and the table was covered with the bills. Willetty himself, testified that the money was paid over to-his father-in-law at the county clerk’s office. Both of these statements could not be true, and the introduction of false evidence is one of the surest badges] of fraud. ]
The testimony of Willett as to how he saved the money he pretends he paid his father-in-law is very; unsatisfactory. In the first place, he gives the gross sums which he received for the crops he says he sold* and the painting he claims to have done, whereas common experience teaches us that the whole of these sums could not have been saved, but only the net profits made by him. For instance, he claims to have-raised thirty-five acres of wheat, from which he realized three hundred bushels, his part of the money being about one hundred and forty dollars. We do not think it would require much experience to know that the net profit on a yield of ten bushels to the acre would be very small, if anything. Without pursuing1; this feature of the evidence further, we close it by saying that, in the computation, appellant makes nqallowance for the expense of living for himself and’ family during the three years in which he claims to-la ave accumulated the two thousand dollars paid tq his father-in-law. ¡
It is also a significant fact, that although by the deed of March 30th, 1903, he had assumed to pay o£6 the-[785]*785mortgage of one thou,«and dollars, which was drawing interest at the rate of six per cent, per annum, he allowed this debt to run at interest while he kept two thousand dollars idle in the shoe box. His counsel say,- on this branch of the case, that while this might be a suspicious circumstance against a banker or other person who kept a close account of his monetary affairs,it does not necessarily constitute a ground to suspect the purity of their client’s motive, because he was a man unused to such nice calculations. There would be a good deal, of force in this suggestion if the learned counsel were not obliged to show that their client was a man who saved and put away almost every penny he made, in order to account for his possessing so large a sum of ready cash. In order to believe that Pat L. Willett had anything like the amount he claims to have had in the shoe box, we must believe that he was a man who looked after his money affairs with almost miserly parsimony and care. This disposition is entirely inconsistent with his allowing an indebtedness of one thousand dollars to be outstanding against him at interest, while he kept so large a sum of money idle in the' shoe'box.
• The fact that Willett introduced a witness to show that, several years before, he saw him give to his brother eight hundred dollars to'keep for him, even if true does hot corroborate Willett’s claim to have had it and paid it over to his father-in-law at the time of the sale. But even if appellant paid eight hundred dollars as a part consideration for the purchase,- he was not entitled to a' credit upon the conveyance being? set aside for actual fraud. The chancellor must have-reached the conclusion that both'Schank and Willett' were guilty of actual fraud as to the creditors of the [786]*786former by the conveyance in question. Willett either paid two thousand dollars to his father-in-law, or hiSj testimony on that subject is false. If false, this convicts him. of actual fraud. If the chancellor had set aside the conveyance as constructively fraudulent because of the inadequacy of price, then he would have allowed a credit of two thousand dollars — the sum actually paid. The allowance of only eight hundred dollars shows that the chancellor believed the transaction was actually fraudulent, and upon that hypothesis no credit should have been allowed to the fraudulent grantee. Short v. Tinsley, 1 Met., 397; Wood v. Goff’s Curator, 7 Bush, 59; Whittaker v. Garnett, 3 Bush, 402; The Diamond Coal Co. v. Carter Dry Goods Co., 20 Ky. Law Rep., 1444.
We think the evidence in this ease clearly established the actual fraud of the parties as to the conveyance of July 25th, 1903. The transaction has every badge of moral turpitude. The relationship of the parties, the inadequacy of price, the large sum of money kept for so long a time in the shoe box, the fact that the grantor did not need anything like thej sum said to have been paid him for the purpose of securing treatment for the disease it is said he had, the failure of Willett to pay off his assumed indebtedness which was drawing interest when he had a large sum of ready money idle, all conduce irresistibly to the conclusion that the transaction was a fraudulent scheme to defeat the grantor’s creditors.
Truth is not only consistent with itself, but likewise with all the facts with which it is surrounded and with which it has relation. In order to make falsehood successfully simulate truth, it is necessary to¡ isolate it from all known and credible surroundings, To illustrate: If Pat L. Willett had kept his money [787]*787in a responsible bank, and paid it over to his father-in-law by check, the truth of this payment could have been at once established beyond question by the evidence of the banker and the accuracy of his books. If, on the contrary, he had stated he paid his father-in-law by check on a reputable bank, the banker and hiq books would at once have disapproved the false statement. In order, therefore, to give the transaction as to the payment of the purchase price of the farm even the semblence of verisimilitude, it was necessary to isolate it from all surroundings, known and credi] ble facts and circumstances; in other words, to isolate it so that it would have to stand or fall upon thé evidence of the interested parties. This could not bq done more successfully than by keeping the money] for a long period of time in a shoe box in the wife’s trunk, and when it was taken from thence and placed in the pocket of the grantor, to have him then! decamp with it without allowing it to come in contact with any of the ordinary channels by which largq sums of money are usually transported from one place to another. This complete isolation of so important a transaction leaves no doubt upon the ordinary mind that the possession and payment of the money was a mere fraudulent fabrication.
For the reasons given the judgment is reversed both upon the direct and cross appeals, with directions to enter a judgment in accordance with this opinion. ■ 1 . . , '