Millington v. Hill

Decision Date02 October 1886
Citation1 S.W. 547
PartiesMILLINGTON <I>v.</I> HILL and others.
CourtArkansas Supreme Court

Appeal from Desha circuit court. In chancery.

W. M. Randolph and Leland Leatherman, for appellants. Bigelow & Hill, for appellees.

COCKRILL, C. J.

This appeal grows out of the successful effort of certain judgment and mortgage creditors of Seth W. Bolton to subject a plantation in Desha county, which he had conveyed to his sister, Mrs. Millington, to the payment of their respective claims. The suit was begun by a creditors' bill, filed by W. B. Galbreath, a judgment creditor, to which the other judgment and mortgage creditors, Mrs. Millington and her husband, and the administrator of S. W. Bolton, were made parties. Cross-bills were filed by the defendant creditors to settle the priorities of their liens, and by Mrs. Millington to assert the priority, over all, of her claims. The plantation was unoccupied, and not in cultivation, when the bill was filed, and a receiver was appointed by the court to lease the place, and collect the rents. Upon the hearing, the court found that Mrs. Millington's purchase was a fraud upon the rights of Bolton's creditors, marshaled the liens, made a distribution of the fund raised by the receiver, and condemned the lands to be sold to pay off the residue of the claims in litigation. Mrs. Millington and her husband alone appeal.

The history of the transactions connected with the purchase of the plantation is about as follows:

In 1876, Seth W. Bolton resided in Desha county, and was the owner of the plantation in dispute. He was, at that time, indebted beyond his ability to pay. One or more judgments had been rendered, and two actions for the recovery of money were pending against him. One of these was Galbreath's, to collect a debt of something more than $5,000, to which there was no defense. Bolton expressed a willingness to secure this debt, if security was insisted upon; and, at this juncture, left home with the avowed object of conferring with Galbreath about the security, and extension of the time of payment of the debt; but, instead of calling upon Galbreath, he went direct to the home of his sister, Mrs. Millington, the appellant here, in Shelby county, Tennessee, and there, upon a Sabbath night, and with much haste, considering the importance of the transaction, concluded a sale of the place to her. The trade was consummated the next morning by the delivery of a deed reciting a consideration of $10,000. The consideration consisted of an agreement by Mrs. Millington to discharge certain notes held by Hill, Fontaine & Co., amounting, as the deed recited and the parties agreed, to about $6,000, and secured by two mortgages on the plantation, reference being made in the deed to the records of Desha county to identify them; and for the residue of the purchase price, and as a cash payment of $4,000, Mrs. Millington transferred to Bolton two bills of exchange, drawn by E. M. Apperson upon E. M. Apperson & Co., for $2,000 each.

Within a few days after this transaction these two bills gave rise to a litigation, in the Tennessee courts, between Galbreath, Bolton, and Mrs. Millington, which has an important bearing upon the litigation between the same parties here. It arose in this way: Galbreath sued Bolton, in Memphis, for the recovery of the debt already in suit in Arkansas, and impounded the two bills of exchange by causing an attachment to be levied upon them as Bolton's property. Mrs. Millington intervened in this proceeding, claimed the bills as her own, and undertook to show that, soon after transferring them to Bolton, she purchased back one of them for $1,600 in gold, and that the other was retransferred to her as indemnity against a further lien that her husband and brother, upon further consideration, supposed might be established against the land. Galbreath answered that the retransfer of the bills to Mrs. Millington was fictitious, and part of a general scheme, entered into between Bolton and his sister, to cheat, hinder, and delay the creditors of the brother; the first step in the scheme being, as he alleged, the purchase of the plantation. Upon this issue a mass of testimony was taken, and the chancellor before whom the cause was heard, found that the whole transaction was concocted in fraud, and, by appropriate decree, subjected the proceeds of the bills of exchange, which had in the mean time been collected, to the satisfaction pro tanto of Galbreath's debt. Mrs. Millington prosecuted an appeal from this decree to the supreme court of Tennessee, where the testimony was reviewed, the facts carefully collated, and the chancellor's conclusions indorsed in strong and unequivocal language by the supreme court commission, and the decree remained undisturbed. It was after the determination of that suit that Galbreath filed the bill that gives rise to this appeal. A transcript of the entire Tennessee record found its way, by common consent, into this litigation, and is submitted to our consideration.

Counsel who represent the Galbreath interest here argue that the Tennessee decree renders the question of fraud in the purchase made by Mrs. Millington res adjudicata, so far, at least, as Galbreath is concerned; but the effect of Galbreath's proceeding in Tennessee precludes him from inquiring into the question of fraud, and so ends his litigation here in limine. He had charged in his answer to Mrs. Millington's assertion of title to the two bills of exchange, in the Tennessee suit, that the purchase of the lands was a fraud on his rights as a creditor of Bolton. Thereupon Mrs. Millington, while denying the fraud, offered to reconvey the lands to Bolton, and permit Galbreath to subject them to the payment of his debt, if he would release the bills of exchange from the levy of his attachment. Galbreath declined this, prosecuted his attachment, and reaped the benefit of the land sale by appropriating the consideration he alleged was paid for it. The acceptance of the benefit arising to him from the transaction, with knowledge of the surrounding facts, estops him from afterwards questioning the sale.

A conveyance to defraud creditors is good, as between the parties and their privies, although it may be avoided by the creditors of the fraudulent grantor. If the creditors condone the fraud, the grantee's title is good against all comers; and when any creditor, with knowledge of the wrong that has been done him, makes his election to take from the grantee the purchase price agreed to be paid for the land, his conduct is, in effect, an affirmance of the sale, and a waiver of the right to complain of the fraud. Lemay v. Bibeau, 2 Minn. 291, (Gil. 251;) Hathaway v. Brown, 22 Minn. 214; Butler v. O'Brien, 5 Ala. (N. S.) 316; Rennick v. Bank of Chillicothe, 8 Ohio, 529; Frierson v. Branch, 30 Ark. 453; Pickett v. Merchants' Nat. Bank, 32 Ark. 346.

There is nothing in the record, however, to debar the other judgment creditors from asserting their claims against the land. But it is argued, on behalf of Mrs. Millington, that, however fraudulent the intent of her brother may have been in effecting the sale to her, there is nothing to show that she participated in his design, or knew anything of his embarrassed affairs. Without recounting the facts and suspicious circumstances surrounding the transactions, the bona fides of which has been questioned in these litigations, it must suffice to say we have weighed them carefully, and cannot escape the conclusion arrived at by the Tennessee supreme court commission in the opinion that has been furnished us, reviewing the same testimony that the case is submitted to us upon almost without variation. It is true that the fact at issue in that case was as to the bona fides of the transfer of the bills of exchange by Bolton to Mrs. Millington, but the negotiation for the purchase of the land was unearthed with great detail of circumstance, and the good faith of that transaction was considered by the Tennessee court under the familiar rule that it is competent, in this class of cases, to show other conveyances than the one attacked to be fraudulent, if made about the same time, and as a part of the same scheme of fraud. It is upon the same principle that we now weigh and consider the fraudulent attempt of Bolton and Mrs. Millington to place the bills of exchange, given as part of the pretended purchase price of the land, beyond the reach of Bolton's creditors, — the question really decided in the Tennessee case. While the Tennessee decision is not binding upon us, we concur in the conclusion reached, that both transactions are of a piece, and fraudulent.

It is also urged that, Mrs. Millington's money having been appropriated by a creditor of her vendor to the payment of his debt, the land should not now be taken to satisfy debts that were not liens at the date of her purchase; or that, if it is condemned to pay these debts, she should be allowed to share in the assets as the equitable assignee of the extinguished demand. It is not true, in the outset, that Mrs. Millington's money has been taken in satisfaction of her vendor's debt. The decree in the suit between her, her...

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