Am. Net & Twine Co v. Mayo

• Decision Date: 15 June 1899
• Citation: 97 Va. 182,33 S.E. 523
• Court: Virginia Supreme Court
• Parties: AMERICAN NET & TWINE CO. v. MAYO et al.

33 S.E. 523

97 Va. 182

AMERICAN NET & TWINE CO.

v.MAYO et al.

Supreme Court of Appeals of Virginia.

June 15, 1899.

FRAUDULENT CONVEYANCES—ACTIONS TO SET ASIDE — SUFFICIENCY OF PLEADING—BURDEN OF PROOF—CONSIDERATION—INTENT TO DEFRAUD—KNOWLEDGE OF GRANTEES.

1. A bill in equity to set aside deeds, alleging that the grantor thereby conveyed all of his property to his son, leaving nothing out of which complainant could make its debt, and that the deeds were not only without valuable consideration, but were executed with intent to hinder, delay, and defraud complainant, is sufficiently specific to put in issue whether the deeds were made with intent to defraud, and whether the grantee was privy to such fraud.

2. The burden, primarily on one attacking a conveyance as fraudulent, is shifted to those trying to uphold the conveyance, when a prima facie case of fraud is shown.

3. An insolvent avowed his purpose not to pay any of the debts of a firm of which he was a member, including the debt of complainant. Pending complainant's action to recover his debt, the insolvent conveyed all his real estate to his son, who had notice of the insolvency and of the action. The son claimed to have paid for the property $4,500 in cash, $2,400 of which was alleged to have been accumulated by working at $15 a week for six years, three of which was for his father, who testified he paid him only $10 a week. The son stated that he made no investments, hut kept the money in his room, and that, notwithstanding his father owed him $300 of borrowed money, he paid the entire $4,500 in cash. Within a month beforethe alleged purchase, the son had tried to borrow $300 for his father. Shortly after the conveyances the son sold, for $700, a piece of said property bought for $900, though he testified he had some $700 "and more" spare money, none of which was accounted for. The father was unable to say just how much the son paid him, but stated that he took home the money, which was paid in D.'s office, and handed it to his wife to take care of, yet neither the wife nor D. testified. The father's statements as to what he did with the money were evasive, contradictory, and improbable, and not corroborated, except by evasive answers by witnesses alleged to have received it in payment of debts; and, besides, the father received other funds at about the same time, with which he could have paid all such debts. A short time after the conveyances were made, the father said to A., in the presence of the son, that he would have transferred the property to A., but he knew he would not take it; to which A. replied that he would not have taken it, and that he had "had a good many offers * * * to cover up property, " the son remaining silent. Held, that the conveyance was without valuable consideration, and was with intent to defraud complainant, and that the son had notice, and was a privy to the fraud.

Harrison and Buchanan, J J., dissenting.

Appeal from law and chancery court of city of Norfolk.

Bill by the American Net & Twine Company against B. Mayo and others. From a decree dismissing the bill, complainant appeals. Reversed.

Fentress & Agelasto and Loyall & Taylor, for appellant.

D. Tucker Brooke, for appellees.

CARDWELL, J. This is an appeal from a decree of the court of law and chancery of the city of Norfolk dismissing the bill of appellant, the American Net & Twine Company, a corporation, filed against B. Mayo, his wife, and John T. Mayo, their son; the purpose of which is to set aside two deeds executed by B. Mayo and wife to their son John T. Mayo, whereby the latter acquired all of the real estate of which B. Mayo was seised and possessed at the time the deeds in question were executed. The bill alleges and charges that the deeds were not upon a consideration deemed valuable in law, but were executed with intent to hinder, delay, and defraud complainant, and that since the conveyances were made B. Mayo has no property out of which the judgment in favor of complainant against him can be made.

The two deeds in question were executed on the 20th day of October, 1890, during the pendency of the suit of appellant on the law side of the court of law and chancery of the city of Norfolk, in which the judgment in favor of appellant before referred to, was obtained.

The defendants B. Mayo and wife answered the bill jointly. They admit the execution of the deed to their son, but deny that they were made without consideration deemed valuable in law, or that they were made to hinder, delay, and defraud complainant.

The answer of John T. Mayo states that it is true that on the 20th day of October, 1890, and after the institution of the common-law suit of complainant against B. Mayo, B. Mayo conveyed, by two separate deeds, to respondent, the real estate in the bill set out and described, and that respondent is the son of B. Mayo. Respondent then denies that the conveyances were made by B. Mayo in anticipation that judgment would be recovered against him by the plaintiff in the common-law suit, or with the object or intent on his part to prevent the plaintiff from realizing anything on the judgment, if obtained, from the property so conveyed to respondent; and that, if B. Mayo had any fraudulent purpose in his mind in making the conveyances to respondent, he (respondent) was not informed of such purpose and did not unite in it. He further denies that the deeds in question were not upon a consideration deemed valuable in law, or that the same were made to hinder, delay, and defraud the complainant.

The complainant replied generally to the defendants' answers, and numerous depositions were taken for the complainant and the defendants, and the court below dismissed the bill, upon the ground that the evidence was not sufficient to sustain the charge that the deeds were not upon a consideration deemed valuable in law, leaving out of view the evidence adduced to show that the defendant John T. Mayo had knowledge of the fraudulent intent of the grantor, B. Mayo, in making the deeds in question.

The first question for consideration is, do the pleadings put in issue, as to the defendant John T. Mayo, the fact whether or not the conveyances in question were made with the intent on the part of the grantor, B. Mayo, to hinder, delay, and defraud the appellant, and that the defendant John T. Mayo was privy to such fraud?

The averment of the bill as to fraud in the execution of the deeds follows the forms given by Barton in his Chancery Practice, and Sands in his Suit in Equity, where deeds are attacked on the ground that they were made without consideration deemed valuable in law, and with the intent to hinder, delay, or defraud the creditors of the grantor.

The averment is almost identical with that filed in the case of Herring v. Wickham, decided by this court and reported in 29 Grat. 028. In that case there was no demurrer to the bill, but an answer only by Mrs. Wickham, denying the allegations of fraud, and disclaiming any knowledge on her part of the fraudulent intent of the grantor; yet the court, in its opinion by Staples, J., after holding that the deed was upon a valuable consideration, marriage then being in law deemed a valuable consideration, said: "Though it were conceded that the grantor's (John H. Wickham's) intention in making the deed in question was to avoid payment of his debts, the question still arose whether or not the grantee, Mrs. Wickham, had notice of that intention;" and proceeded todiscuss that question at great length, holding that the evidence was not sufficient to fix upon Mrs. Wickham knowledge of the fraudulent intent of the grantor in making the deed of settlement under consideration. It therefore clearly appears that the court in that case considered that that question was put in issue; otherwise, after holding that the deed was upon a consideration deemed valuable in law, the end of the case was there reached, and the court would not have gone into a careful consideration of the evidence as to whether Mrs. Wickham was a privy to the fraud alleged in the bill.

Fraud must be charged, and this should, in general, be done by setting forth the facts which constitute the fraud. A mere allegation imputing motives of fraud is not sufficient. But an averment of an intent to delay, hinder, or defraud creditors is not an averment of a conclusion of law, but of an essential fact. Fraud may be sufficiently averred by setting forth the particular manner in which the act was done and the particular end and design to be accomplished. Where the facts thus stated show that a fraud was designed and perpetrated, that may be a sufficient averment of the fraud, although the bill does not state the conclusion which the law will draw that the act was fraudulent. Bump, Fraud. Conv. p. 547.

The averment of the bill in this case is that the grantor, B. Mayo, conveyed by the two deeds in question all of his property to his son, leaving nothing out of which complainants could make its debt; and that the deeds were not only without consideration deemed valuable in law, but were executed with intent to hinder, delay, and defraud the complainant.

Now, the averment that there was no consideration must necessarily relate to the grantee as well as to the grantor, as the consideration could alone come from him, and, when that averment is followed immediately by the conjunction "but, " it seems that it would have no real sense, unless this word referred also to the same persons as the word "consideration" refers to.

A deed is the method by which the title and possession of real estate is transferred from one person to another, and there must be a grantor and a grantee; and, where the charge is that the deed was executed with intent to defraud, —that is, as a part of a scheme to defraud, —it seems to necessarily follow that the charge of fraud and the manner in which it was perpetrated refers to the grantee as well as to the grantor; and in this case the grantee, John T....