Wilson v. Kohlheim

46 Miss. 346

• Court: Mississippi Supreme Court
• Decided: April 15, 1872
• Status: Published

Opinion

Peyton, C. J.:

It appears from the record in this case, that Charles Anderson, Sr., a citizen of Pontotoc county, was seized and possessed of an estate real and personal, of the value of more than $200,000, and being about seventy years of age and desirous of settling the greater portion of said estate upon h'is children in his life-time, to avoid an administration thereof, after his death, in the probate court, he conveyed by deeds of gift, which were duly acknowledged and recorded, all his said estate to his children, except property to the value of about $30,000, which he reserved for himself and wife, who was about his age. That on the 31st day of March, 1865, for the consideration of natural love and affection, he conveyed to his son, John R. Anderson, a certain tract of land, for and during the term of his natural life, and at his death to his child or children, if he leave any surviving him, and if he die, leaving no surviving child, then to the children of his daughter, Ann D. Kohl-heim, their heirs and assigns forever. The said John R. Anderson accepted the deed of gift, and took possession of the land thereby conveyed, and on the 13th of August, 1867, departed this life, leaving no child surviving him ; and that at the time of his death, Charles P. Kohlheim was and now is the only surviving child of the said Aun D. Kohlheim, the daughter of Charles Anderson, Sr., named in said deed of gift.

That on the 18th of October, 1855, the Mobile and Ohio Railroad Company obtained judgment against the said Charles Anderson, Sr., for the sum of $782 50, for a debt due at the date of said deed of gift, on his subscription for stock in said company. Under this judgment the land conveyed by said deed of gift was sold by the sheriff to the said John R. Anderson, who conveyed the same to James K. Wilson.

The said Charles F. Kohllieim brought an action of ejectment in the circuit court of Lee county, in 1869, against Ewing Gill to recover the tract of land of about three hundred and twenty acres, situated in said county, which was conveyed by deed of gift as aforesaid, Wilson having leased the land to said Gill, was admitted to defend as landlord, and joined in the plea of not guilty.

It was admitted at the trial of this cause that, at the date of said deed of gift, of March 31,1854, the grantor, Charles Anderson, Sr., owed no other debt than that to said railroad company, except, perhaps, a trifling amount for current expenses; that he was very wealthy, owning lands, negro slaves and other property in this state, and chiefly in Pontotoc county, of the value of more than $200,000 ; that an alias execution, issued on said judgment, was first levied upon three quarter sections of land conveyed by said donor, in fee simple, to his son, William A. Anderson, and upon five quarter sections of land, given and conveyed by him in fee, to his son Charles W. Anderson, in all about twelve hundred and eighty acres, worth about $10,000. And, at the instance of John R. Anderson, the land in contest was added to the levy, with the assent of the donor, in order that the said John R. Anderson might purchase the same at the sheriff’s sale, and thus get the fee simple title in himself, and thereby defeat the interest in remainder of the children of Ann D. Kohlheim ; that at the sheriff’s sale, the land in dispute, which had been added to the levy as aforesaid, was first exposed to sale and bid off by the said John R. Anderson at $600, which was then worth $2,000, and the same was conveyed to him by the sheriff, and the balance due on the judgment was paid without a sale of any other property. Evidence was adduced of the rents and profits of the land in controversy, and the jury, upon the proofs, found the issue for tbe plaintiff, and assessed bis damages by way of mean profits at $2,000.

Tbe defendants then moved for a new trial, wbicb motion was overruled by tbe court, and tbe defendants filed their bill of exceptions, whereupon tbe court rendered judgment upon tbe verdict for tbe plaintiff against tbe defendants, wbo bring tbe case to this court by writ of error.

Tbe plaintiff in error makes tbe following assignments of error : 1st. That tbe court refused to permit witness Kohl-beim to answer tbe following question: “Was not your son, tbe plaintiff, aware of tbe sale, and if be was then, tbougb a minor, a precocious lad, and capable of understanding business, and of attending to and protecting bis own interest ?” 2d. That tbe court erred in giving to tbe jury all tbe charges asked by tbe plaintiff, to tbe number of nine, inclusive. 3d. That tbe court erred in refusing to give to tbe jury tbe first five charges asked by tbe defendant. 4th. That tbe court erred in modifying tbe sixth charge asked by the defendant, by inserting tbe words “ and was made to defraud creditors.”

We think tbe charges given for tbe plaintiff below were proper, except tbe third and ninth. Tbe third charge was not applicable to facts of tbe case, and was a mere abstract proposition of law, and ought not to have been given. The ninth charge is still more objectionable. There can be no doubt of tbe right of tbe tenant for life to purchase tbe inheritance where there is no intermediate estate. This right existed at tbe common law, but, by tbe common law, tbe intermediate contingent remainders would be destroyed by tbe purchase of tbe inheritance, and to prevent this, tbe statute upon wbicb this charge is based, was enacted. There were, in this case, no intermediate contingent estates to be destroyed by tbe union and coalition of tbe inheritance and tbe life estate. Tbe evil intended to be remedied by tbe statute could not occur in this case, for tbe reason that there was no intermediate contingent interest that could be affected by tbe purchase of the inheritance by the tenant for life ; the charge was, therefore, erroneous.

We can perceive no error in the refusal of the court to give the first five charges asked by the defendant. And with regard to the fourth assignment, which impeaches the right of the court to modify the instructions asked by either party to a suit, we think it is not well taken. There can be no doubt of the right of the court to modify the instructions asked to be given to the jury. It is not only the right but the duty of the court to inform the jury of the law of the case, when requested to do so by the parties, or either of them. Nor is the judge confined to granting or refusing instructions to the language in which they are propounded to him. If they do not as presented to him fairly and concisely declare the law, on all the points embraced in them, he should so modify them as to communicate to the jury his view of it.

The main question presented by this record for our determination is: “Is a voluntary conveyance of property, by a father to his son in consideration of love and affection, fraudulent and void jver se as to existing creditors ? ”

Our statute to prevent frauds and perjuries has embodied, substantially, the provisions of the English statutes of the 13th and 27th Elizabeth, on this subject. And it must be conceded that, in the construction of these statutes, both in England and America, there has been considerable oscillation of judicial opinion, which, if we are to judge from modern adjudications, is believed to be settling down to a more benign and liberal construction of those statutes, on both sides of the Atlantic, that was formerly given to them. The first of the above-named statutes was intended for the protection of creditors, and the latter for the protection of purchasers.

The case of Bogard v. Gardling, 4 Smedes & Marsh. 310, is believed to be the only case in which the court of the last resort in this state has directly decided that a gift by a parent to a child cannot be sustained against a prior creditor. This decision was based upon the case of O’Daniel v. Crawford, in 4 Dev. 197, the facts of which are these: On the 11th of April, 1809, Henry O’Daniel, in consideration of love and affection, conveyed the land in dispute to several of his children, reserving a life'estate to himself in the land. At the time of the conveyance the grantor owed three or four hundred dollars, and, in 1822, he contracted another small debt. In addition to the life estate in the land, he was possessed of personal property of the value of five or six hundred dollars. A majority of the supreme court of North Carolina, following the case of Reade v. Livingston, 3 Johns. Ch. 481, and the old English cases therein cited, decided that the conveyance was fraudulent in respect to existing debts, by presumption of law, without regard to the amount of the debts, the extent of the property conveyed, or the circumstances of the party. The authority of this case is very much weakened by the dissenting opinion of Judge Daniel, who said: “ O’ Daniel was possessed of personal property to the value of five or six hundred dollars at the time of the conveyance, and reserved to himself- a life estate in the land; he owed two small debts, and must we say, from these facts, that he made the conveyance for the intent to hinder and delay these two creditors. Policy may call for such a decision, but I cannot bring my mind to believe it is within the statute.” The doctrine of this case has since been much modified by subsequent decisions of the same court, as will appear by reference to the cases of Jones v. Young, 1 Dev. & Bat. 352; Arnett v. Wanett, 6 Ired. 41; and Smith v. Reavis, 7 ib. 343. In the last cited case the court say, “that it has always been held necessary to show that the maker of the deed was indebted at the time, or so soon afterward as to connect the purpose of making the deed with that of contracting the debt and defeating it; and when the donor’s indebtedness at the time is spoken of, it is not intended that the deed is void, if he owed a trifling sum in comparison to his estate, for then no man could make a deed that would stand ; but, if a father who conveys to a son be indebted at the time, that does not avoid the deed, provided the father pay the debt, or if he retain property sufficient to pay the debt, and out of which the creditor can raise the money.” •

A voluntary deed is not void as to creditors when the donor retains sufficient property to pay his debts, and out of which the claims of creditors may be satisfied. 6 Ired. 41. A voluntary conveyance made by a debtor, who owned at the time, and left at his death, sufficient property to pay all the debts which he owed at the time of the conveyance, is not' necessarily fraudulent and void as to creditors. The actual intent with which the deed was made must be submitted to the jury. Jones v. Young, 1 Dev. & Bat. 352. These cases seem to sweep away the foundation upon which the case of Bogard v. Gardley rested.

In the case of Swayze v. McCrossin, 13 Smedes & Marsh., the court say: ‘‘ The debt upon which the judgment was rendered was antecedent to the deed of gift. That deed was voluntary and'without pecuniary consideration. It eannot stand as against a creditor whose debt was valid and subsisting at the date of such deed.” These were obiter dicta. The validity of the deed was not a question necessary to the adjudication of the cause, which was decided on the ground that there was not sufficient proof of identity to warrant the recovery of the land sued for. A judicial tribunal, when referred to a previous decision as an authority respecting the law, looks at the state of the record and the facts of the case, and the subject-matter, before it undertakes to weigh the words used by the judge in pronouncing the opinion, and limits the effect and scope of the words by what thus appears.” '

In the case of Catchings v. Manlove, 39 Miss. 669, a bill in equity was filed to subject to the payment of the debts of the assignor, the proceeds of a policy of insurance which had been assigned to his wife without any valuable consideration at a time when he was indebted to insolvency. Mr. Justice Handy, in delivering the opinion of the court in this case, says : “ The assignment in this case appears to have been of a very considerable part of the property of the assignor, and though a party may lawfully make a gift to his wife or child, of a reasonable part of his property, if he be not insolvent at the time or largely indebted, and such gift will be valid, if made dona fide as against subsequent creditors, yet, if he be insolvent at the time, the gift cannot stand against the claims of creditors then existing, whether made with an actual, fraudulent intent as to them or not.” And he cites in support of this doctrine, Salmon v. Bennett, 1 Conn. 525; Hind’s lessee v. Longworth, 11 Wheat. 199-213, and 1 Story’s Eq. Jur., §§ 356, 357. The logical sequence of this opinion is, that if the grantor be not insolvent or largely indebted at the time of the gift, but retain in Ms hands and possession property liable to pay his debts and amply sufficient for that purpose, the voluntary conveyance would not be fraudulent per se and void as to existing creditors. And this is in accordance with reason, justice and the current of modern adjudications upon this subject, both in England and America, and especially in this country. Our courts lay down the reasonable doctrine, that a conveyance to a child, by a parent who was indebted at the time, is presumptive evidence of fraud ; but this presumption may be rebutted by showing that the parent was in prosperous circumstances and not embarrassed; that his debts were small, and sufficient property was retained to pay them, and that the gift was no more than a reasonable provision for the child. Walker’s Am. Law, 429. In the case of Holloway v. Millard, 1 Mad. Ch. 417, it was decided, that a voluntary conveyance is prima facie evidence, where the party is loaded with debts at the time, of an intent to defeat and defraud his creditors. It is undoubtedly the law that, if the party be insolvent at the time of making a voluntary conveyance, it is void as to existing creditors. And a large indebtedness at the time, as compared with the resources and property of the party making a voluntary conveyance, is, prima facie, evidence of a fraudulent intent.

In the case of Lerow v. Wilmarth, 9 Allen, 386, the conrt repudiates the doctrine, that a voluntary conveyance by a father for the benefit of his child, is, per se, fraudulent as to existing creditors, although shown not to have been fraudulent in fact, and is liable to be set aside, because the law conclusively presumes it to have been fraudulent, and shuts out all evidence to repel such presumption. And it is laid down as the better doctrine, that there is, as applicable to voluntary conveyances, made on a meritorious consideration, as blood and affection, no absolute presumption of fraud, which entirely disregards the intent and purpose of the conveyance, if the grantor happens to be indebted at the time it was made ; but that such a conveyance, under such circumstances, affords only prima facie or presumptive evidence of fraud, which may be rebutted and controlled. Such seems to have been the rule as established by the right and force of reasoning in the text-writers, and best considered cases in this country.

In New Hampshire it has been held, that a voluntary conveyance, for the consideration of natural love and affection, made by a person not embarrassed at the time, but retaining ample means to pay all his existing creditors is good, unless it be made to appear that such conveyance was not bona fide; and whether it was bona fide or not is a question of fact depending upon all the circumstances of the case, such as the reasonableness of the provision, the extent of the indebtednéss, the nature and sufficiency of the fund retained to satisfy such debts, and other circumstances bearing upon the motives of the conveyance. Pomeroy v. Bailey, 43 N. H.

The supreme court of Tennessee have decided that an indebtedness which bears an inconsiderable proportion in amount to the property reserved, does not, of itself, render a voluntary conveyance void. If the property retained be entirely ample to pay all demands, the gift is good. It cannot be presumed in such a case, from the fact of indebtedness alone, that the object was to defeat creditors of their just demands. Turkey v. Self, 4 Sneed, 124. It is a great mistake to suppose that the statute makes void, as against creditors, all voluntary conveyances. The courts, in construing the statute, have held it to include deeds made without consideration as being prima facie fraudulent, because necessarily tending to delay creditors. But the question in each case is, whether the deed is fraudulent or not, and to rebut the presumption of fraud, the party is surely at liberty to give in evidence all the circumstances of the transaction. A deed made in consideration of natural love and affection only, is not necessarily void as to existing creditors, although it may be made so by evidence.

In Maryland, it is held that a bona fide conveyance, founded upon a good consideration, is not void per se, though the grantor may be indebted at the time. The mere fact of being indebted at the time does not, of itself, constitute a substantive ground to avoid a voluntary conveyance for fraud; the question, whether fraudulent or not, is to be solved by taking into consideration all the circumstances of the case, and not alone from the mere fact of indebtment at the time. Atkinson v. Phillips, 1 Mad. Ch. 510.

Chancellor Bland says: “It is laying down the rule much too large to say, on the one hand, that all voluntary conveyances are void if the grantor be at all indebted at the time ; and, on the other, that they are good if he be not at the time actually insolvent. .The true rule by which the fraudulency or fairness of a voluntary conveyance is to be ascertained, in this respect, is founded on a comparative indebtedness, or, in other words, on the pecuniary ability of the grantor at the time to withdraw the amount of the donation from, his estate, without the least hazard to his creditors, or in any material degree lessening their prospects of payment.” Kipp v. Hanna, 2 Bland. 33. And this is the doctrine of the courts of Pennsylvania. Posten v. Posten, 4 Whar. 40; Chambers v. Spencer, 5 Watts, 410; and Miller v. Pearce, 6 Watts & Serg. 101.

In New York it is held,- that if a person making a settlement is insolvent, or in doubtful circumstances, the settlement comes within the statute of 13th Elizabeth, ch. 5. But if the grantor be not indebted to such a degree as that the settlement will deprive the creditors of an ample fund for the payment of their debts, the consideration of natural love and affection will support the deed, although a voluntary one, against creditors, for, in the language of the decisions, “it is free from the imputation of fraud.” Verplank v. Story, 12 Johns. 536, 559; and Seward v. Jackson, 8 Cow. 406, 438.

In Vermont, it was held, that where one in prosperous circumstances, and not much embarrassed with debts, in consideration of natural love and affection, made a voluntary conveyance to his daughter of a portion of his estate, leaving means amply sufficient to pay all he owed, such conveyance was good and valid as to an existing creditor. Bracket v. Waite, 4 Vt. 398.

In Arkansas, the courts hold, that a voluntary conveyance by a parent to a child is not fraudulent per se as against existing creditors, and when made in good faith by way of advancement, and abundant property at the time of the conveyance is retained by the parent to pay all his debts, it is good against existing as well as subsequent creditors, even though the property retained should afterward so depreciated in value as to be insufficient to pay all the exist ing debts. Dodd v. McGraw, 3 Eng. 93, and Smith v. Yell, ib. 470. And the same doctrine is maintained in Michigan,, where it is held, that a voluntary conveyance by a father to his child is not per se fraudulent as to existing creditors, when made in good faith by way of advancement, and abundant means are retained by the father for the payment of his debts, the conveyance, though voluntary, is good against existing as well as subsequent creditors. Walker’s Ch. 438.

In the case of Worthington v. Shipley, 5 Gill, 449, the court of appeals of Maryland say: “We consider it as now well established, at least by a decided preponderance of authority, and upon principles alone consistent with a just and rational interpretation of the statute, that an indebtment at the time of a voluntary conveyance, is prima facie only, and not conclusive evidence of a fraudulent purpose, even with respect to a prior creditor ; and that this presumption may be repelled by showing that the grantor or donor at the time of the gift was in prosperous circumstances, possessed' of ample means to discharge all his pecuniary obligations, and that the settlement upon the child was a reasonable provision, according to his or her station and condition in life.” Testing the voluntary conveyance in the 'case under consideration, by the rule thus announced, there can be no doubt that it must be pronounced good and valid. The question with respect to the true construction of the statute of 13th Elizabeth, ch. 5, was considered by Lord Langdale in 1840, as master of the rolls, in Townsend v. Westacott, 3 Beav. 345, he said : £l There can be a little exaggeration' in the argument on both sides as to the principle on which the court acts in such cases as these ; on the one side it has been assumed that the existence of any debts at the time of the execution of the deed would be such evidence of a fraudulent intent as to induce the court to set aside a voluntary conveyance, and oblige the court to do so under the statute of Elizabeth, I cannot think the real and just construction of the statute warrants that proposition, because there is scarcely any man who can avoid being in debt to some amount; he may intend to pay every debt as soon as it is contracted, and, consequently, use his best endeavors, and have ample means to do so, and yet may be frequently, if not always, indebted in some small sum; there may be a withholding of claims, contrary to his intention, by which he is kept in debt in spite of himself; it would be idle to allege this as the least foundation for assuming fraud or any bad intention; on the other hand, it is said that something amounting to insolvency must be proved to set aside a voluntary conveyance; this too is inconsistent with the principle of the act, and with the judgments of the most eminent judges.” And the same doctrine is maintained by the court of exchequer in the case of Gale v. Williamson, 8 Mees. & Wels. 409. In the case of Cadogan v. Kennett, Cowp. 434, Lord Mansfield said: ‘ ‘ The statute of 13th Elizabeth, ch. 5, which relates to frauds against creditors, directs, that no act whatever, done to defraud a creditor, shall be of any effect against such creditor or creditors; ” but then, such construction is not to be made in support of creditors as will make third persons sufferers. Therefore, the statute does not militate against any transaction bona fide, and where there is no imagination of fraud. And so is the common law.” And in the case of Doe v. Routledge, Cowp. 710, the same judge says: “A custom has prevailed, and leaned extremely, to consider voluntary settlements fraudulent against creditors. But if the circumstances of the transaction show it was not fraudulent at the time, it is not within the meaning of the statute, though no money was paid. One great circumstance, which should always be attended to in these transactions, is, whether the person was indebted at the time he made the settlements. If he was, it is a strong badge of fraud.”

The impression made by these declarations of Lord Mansfield is, that every gift, made by a person indebted at the time, is liable to great and serious objection, and is, to use his own expression, a strong badge of fraud, but it is not, necessarily, and under all possible circumstances, absolutely fraudulent. We take the correct rule upon this subject to be, that where a parent is in prosperous and unembarrassed circumstances, and makes advancements to his children, adapted to their wants and justified by his means, leaving ample funds for the payment of all his just debts, there can be no propriety in treating his conduct as fraudulent in behalf of creditors. While the indebtedness of the grantor, at the time of a voluntary settlement or conveyance, may be regarded as raising a presumption against its validity, that presumption is only prima facie, and not conclusive. It is liable to be repelled by the particular circumstances of the case. And this principle is announced by the court of appeals of Kentucky, in the case of Trimble v. Badcliff, 9 B. Monr. 514, in wbicb. tbe court say: “We do not suppose tbat tbe principle wbicb requires every man to be just before be is generous, or tbat tbe requisition of good faitb toward Ms creditors, as imposed either by statute or tbe principles of justice and morality, is violated by a gift from a father to Ms child, suitable to tbe condition of each, which is neither intended, nor upon any reasonable estimate can be expected, to operate to the injury or hinderance of any existing creditor or of any contemplated liability.”

It was held, in the case of Salmon v. Bennett, 1 Conn. 525, that, where there is no actual, fraudulent intent, and a voluntary conveyance is made to a child in consideration of love and affection, if the grantor is in prosperous circumstances, unembarrassed, and not considerably in debt, and the gift is a reasonable provision for the child, according to Ms state and condition in life, leaving ample funds unincumbered for the payment of tbe grantor’s debts, then such conveyance will be valid against creditors existing at tbe time. For if all gifts to children, by men in affluent and prosperous circumstances, were to be rendered void upon a reverse of fortune, it would involve children in the ruin, of their parents, and, in many cases, might produce greater evil than that intended to be remedied. Nor will all such conveyances be valid ; for then it would be in the power of parents to provide for their children at the expense of their creditors. The character of the transaction must be collected from the circumstances of the case. This is a leading case in this country, and gives a construction to the statute which is in accordance with the doctrine upon this subject, as it is now established by an almost unbroken series of modern decisions in England and the United States,

In the case of Hinds, Lessee, v. Longworth, 11 Wheat. 213, the supreme court of the United States held, that a deed from a parent to a child, for the consideration of love and affection, is not absolutely void as against creditors. It may be so under certain circumstances, but the mere fact of being in debt to a small amount would not make the deed fraudulent, if it could be shown that the grantor was in prosperous 'circumstances and unembarrassed, and that the gift to the child was a reasonable provision according to his state and condition in life, and leaving enough for the payment of the debts of the grantor. The want of a valuable consideration may be a badge of fraud, but is only presumptive, and not conclusive evidence of it and may be met and rebutted by evidence on the other side.

It will thus be seen that the mere laet of indebtment at the time does not, per se, constitute a substantive ground to avoid a voluntary conveyance for fraud, even in regard to prior creditors. The question, whether it is fraudulent or not is to be ascertained, not from the mere fact of indebtment at the time alone, but from all the circumstances of the case. And if the circumstances do not establish fraud, then the voluntary conveyance is deemed to be above all exception. 1 Story’s Eq. Jur. 358, § 362; Bank of the United States v. Housman, 6 Paige, 526, and Abbe v. Newton, 19 Conn. 27. It may be laid down as a general proposition, that if such conveyance be made to any person other than a ehild, it will be void as to existing creditors, and when made to a child, or as a settlement upon a wife; whether it shall be void or not depends upon the condition of the grantor as to his ability to pay his debts out of his remaining property at the time of its being made. 3 Washb. on Real Prop. 297 (3d ed.); Newland on Contracts, 384, 385; Toulmin v. Buchanan, 1 Stew. 67; Howard v. Williams, 1 Bailey, 575; McElwee v. Suton, 2 ib. 128.

Chancellor Kent, in the second volume of his commentaries, 442, in a note, seems to concede that the old doctrine of Reade v. Livingston is too strict for the present age. He says of Mr. Justice Story: “This learned commentator has examined the authorities on the question very critically, and he comes to tbe conclusion that tbe doctrine in tbe case of Eeade v. Livingston is strietissimi juris ; and be evidently settles down upon tbe conclusion under tbe statute of 13tb Elizabeth, that mere indebtedness at tbe time would not, per se, establish that a voluntary conveyance was void, even as to existing creditors, unless tbe other circumstances of tbe case justly created a presumption of fraud, actual or constructive, from tbe condition, state and rank of tbe parties, and tbe direct tendency of tbe conveyance to impah’ tbe rights of creditors. I have no doubt that this is tbe tendency of tbe decisions both in England and America, and that tbe conclusions of fraud are to be left as matters of fact to a common jury. Tbe doctrine in Eeade v. Livingston, and of those English chancellors on whom it rested, is, as I greatly fear, too stern for tbe present times.”

Upon a full and patient -investigation of this case, we have arrived at tbe conclusion that tbe deed of gift in this case was not fraudulent and void as to tbe creditors of tbe grantor, and that John E. Anderson acquired no title to tbe land in controversy by bis purchase at tbe sheriff’s sale, and tbe plaintiff in error, by bis purchase from him, obtained only tbe life estate, limited to bis vendor by tbe deed of gift.

Although tbe third and ninth charges given for tbe • defendant in error are wrong, yet, as tbe verdict is right, we are not disposed to disturb it.

The judgment is affirmed.