Bailey v. Banther

• Decision Date: 15 December 1983
• Docket Number: No. 15759,15759
• Citation: 314 S.E.2d 176,173 W.Va. 220
• Parties: Nelson R. BAILEY, Jr., et al., v. J.D. BANTHER.
• Court: West Virginia Supreme Court

Page 176

314 S.E.2d 176

173 W.Va. 220

Nelson R. BAILEY, Jr., et al., v. J.D. BANTHER.

No. 15759.

Supreme Court of Appeals of West Virginia.

Dec. 15, 1983.

Dissenting Opinion March 2, 1984.

Syllabus by the Court

1. "Where a father purchases land, and has it conveyed to his son, the presumption is that the purchase was intended to be an advancement or gift to the son, and no trust results in favor of the father. But extrinsic evidence, either written or parol, is admissible on behalf of the father to rebut this presumption, and to show that a trust results in his favor." Syllabus Point 1, McClintock v. Loisseau, 31 W.Va. 865, 8 S.E. 612 (1888).

2. Courts are reluctant to decree trusts in favor of parties who transferred property to avoid creditors or liabilities. However, if those creditors or liabilities are nonexistent, imaginary or unproved, a grantor can enforce a constructive or resulting trust against his grantee.

3. "Whatever is sufficient to direct the attention of a purchaser to prior rights and equities of third parties, so as to put him on inquiry into ascertaining their nature, will operate as notice." Syllabus Point 1, Pocahontas Tanning Co. v. St. Lawrence Boom & Mfg. Co., 63 W.Va. 685, 60 S.E. 890 (1908).

4. "A purchaser of real estate, contracting with a claimant not in possession, is put on inquiry by the fact that another is in possession of the property; and if he takes a conveyance from such claimant, he is charged in favor of the person so in possession with all the information such inquiry would have disclosed if diligently pursued. (Citation omitted.)" Syllabus Point 6, Johnston v. Terry, 128 W.Va. 94, 36 S.E.2d 489 (1945).

D. Grove Moler, Mullens, for appellants.

Harlen Ray Tiller, Oceana, for appellee.

HARSHBARGER, Justice:

The Wyoming County Circuit Court ordered J.D. Banther to be evicted from a certain plot of land and found $4,000 damages against him for unlawful detention of the property, which was titled in Nelson and Mary Jane Bailey. Banther appeals.

J. Dillard Banther, Sr. allowed J.D., his son, to build a simple shelter on a two and one-half acre tract in Lilly Haven, Oceana District, Wyoming County, West Virginia, to house J.D., his wife and son. In 1968, after he was divorced and remarried, J.D. negotiated with his father to purchase the land for $365, and paid $165 down. ¹ At that meeting it was decided that the deed would be made from J. Dillard Banther, Sr., and Eliza, his wife, to J.D.'s seven-year-old son, Mark Evans Banther, to protect the property from claims of J.D.'s first wife and his creditors.

The next day Dillard, Eliza, and J.D.'s sister Louise, went to an attorney who drew the deed to Mark. It recited ten dollars consideration.

J.D. testified that he asked his father to deed the property to his son because his first wife, after she had him confined to Weston State Hospital, lived in his house and ran up bills about which he had no knowledge. There is nothing in the record to indicate for what or for how much the bills were, except one specifically mentioned was for thirty-five dollars.

J.D., his wife Janice, and their children have lived on the property continuously since, and improved it. Mark, however, moved in with his Aunt Louise before his father remarried, and stayed with her afterwards, although he visited in his father's house occasionally for a few days at a time. His Aunt Louise and his father, J.D., were neighbors. When he was thirteen or fourteen, the Welfare Department removed Mark from his father's legal custody ² and awarded his custody to his Aunt Louise. Mary Jane Bailey, Louise's daughter, lived there too and testified that she and Mark were raised as brother and sister. When Mary Jane married, she and her husband, Nelson Bailey, bought a used trailer and moved on another lot adjacent to her mother, Louise.

In February, 1981, prior to his eighteenth birthday and during his senior year in high school, Mark gave his father and stepmother an eviction notice. Then he got in trouble for using drugs, his Aunt Louise called the Welfare Department, and it took him from Louise and sent him to a home. While he was there, he contacted his father and stepmother to help him get back home, telling them to forget the eviction. Louise, however, was convinced to take him back in.

J. Dillard Banther, Sr. died in April, 1981, one month before Mark became 18. When Mark became eighteen, he deeded his property where his father, step-mother and their family had lived since he was a toddler, to his cousin Mary Jane and her husband, Nelson, in exchange for their lot and trailer. This transaction involved two separate deeds and cited no consideration other than familial ties. After Nelson and Mary Jane saw an attorney in their attempt to evict J.D., a deed of correction was recorded that illustrated the exchange of properties was each deed's consideration.

Mark moved out of his aunt's home after this property exchange, next door into his new property that was still occupied by Nelson and Mary Jane, and the three (and a Bailey baby) shared the Bailey's mobile home for five months until the arrangement became unbearable. The couple introduced into evidence five rent receipts, numbered 001-005, from May, 1981, through September, signed by Mark, for $200 each. These are part of the damages they allegedly suffered because of J.D.'s continued possession of the place that Mark had conveyed to them. In October the Baileys moved, renting an apartment for $160 per month. Six months later, they moved again. At the time of trial, they had paid three months' rent there at $200 per month. Their rent receipts totalled $2,560, and their other damages were for J.D. causing them inconvenience and aggravation.

The trial court concluded that J.D.'s evidence did not overcome the presumption that there was a gift from him to Mark, and the Baileys were purchasers for value without notice and entitled to the property.

A property purchaser who has it conveyed to someone in his or her family, is presumed to have made a gift or an advancement of the property. ³ Carter v. Walker, 121 W.Va. 81, 1 S.E.2d 483, 484 (1939); Edwards v. Edwards, 117 W.Va. 505, 185 S.E. 904 (1936); Syllabus Point 2, Deck v. Tabler, 41 W.Va. 332, 23 S.E. 721 (1895); Hamilton Co. v. Steele, 22 W.Va. 348 (1883); Syllabus Point 1, Lockhard & Ireland v. Beckley, 10 W.Va. 87 (1877). This is a presumption of fact and may be rebutted by competent evidence. Syllabus Point 1, McClintock v. Loisseau, 31 W.Va. 865, 8 S.E. 612 (1888); Syllabus Point 3, Deck v. Tabler, 41 W.Va. 332, 23 S.E. 721 (1895); Steagall v. Steagall, 90 Va. 73, 17 S.E. 756 (1893); Hamilton Co. v. Steele, supra.

But where there is once convincing evidence to rebut the presumption, we can no longer treat it as a presumption raised by the law, but must go into the character and sufficiency of the evidence pro and con, as establishing his intention in that behalf at the time as a question of fact. Deck v. Tabler, supra 23 S.E., at 723.

J.D. and his stepmother, Eliza, were present when negotiations for the sale or gift were ongoing, and testified that J.D. purchased the property and that Mark was given legal title only to avoid creditors of J.D.'s first wife. ⁴ Equity makes courts reluctant to establish trusts in favor of those who transfer property to avoid creditors. But a deed to avoid creditors that may be voided by creditors, is valid between grantor and grantee. Syllabus Point 2, McClintock v. Loisseau, supra.

However, the equities are different when it turns out that the supposed claims were invalid, unproved, or illusory. Wilcoxon v. Carrier, 132 W.Va. 637, 53 S.E.2d 620 (1949), overruled on other grounds, 304 S.E.2d 312, 322 (1983); Hall v. Linkenauger, 105 W.Va. 385, 142 S.E. 845 (1928); Criss v. Criss, 65 W.Va. 683, 64 S.E. 905 (1909). If a grantor transfers property to another party to avoid invalid or imaginary claims, a court may still find that the grantee holds in trust for the grantor. See Annot., Rule Denying Recovery of Property To One Who Conveyed to Defraud Creditors as Applicable Where the Claim Which Motivated the Conveyance Was Never Established, 6 A.L.R. 4th 862 (1981 and Supp.); 37 Am.Jur.2d Fraudulent Conveyances § 113.

In Criss v. Criss, supra, Mrs. Criss feared that people had forged her signature to certain notes that would be charged against her home. She purchased a home and had it deeded to her son (and later to her other son) to avoid these illusory, but threatening, claims. Several years later when the matter of the claims was settled, she attempted to get her son to reconvey the property to her. He refused and behaved quite badly toward his other relatives about ownership of the property. Our Court decided that Mrs. Criss was entitled to the property and her son was only a trustee. Because the creditors she attempted to avoid were nonexistent, her original transfer was not fraudulent. See also, Wilcoxon v. Carrier, supra; Syllabus Point 1, Thomas v. Anderson, 76 W.Va. 496, 85 S.E. 657 (1915).

Other courts have found that if a conveyance was made to avoid creditors or potential liabilities, and the claims were not proved or asserted, the grantor could enforce his constructive or resulting trust against his grantee. E.g., Estate of Blanco, 86 Cal.App.3d 826, 150 Cal.Rptr. 645, 6 A.L.R.4th 850 (2d Dist.1978) (parent-doctor entitled to return of property conveyed to daughter to avoid potential malpractice judgment after doctor prevailed in malpractice action); Mentzer v. Mentzer, 325 Mo. 941, 30 S.W.2d 146, 148-149 (1930) (dictum); Brady v. Ellison, 2 Hayw 348 (N.C.1805) (a grantor who conveyed property to a grantee who agreed to reconvey it to the grantor or to grantor's children, had his property returned by the court after the litigation that precipitated the property transfer was resolved in his favor); Hickey v. Ross, 197 Okl. 543, 172 P.2d 771 (1946) (see, discussion p. 774); Bobier v. Horn, 95...