Bryan v. Jackson

• Decision Date: 10 September 1941
• Docket Number: Record No. 2383.
• Citation: 178 Va. 123
• Parties: G. W. BRYAN, TRUSTEE, ETC. v. PEARL D. JACKSON, ET ALS.
• Court: Virginia Supreme Court

Page 123

178 Va. 123

G. W. BRYAN, TRUSTEE, ETC. v. PEARL D. JACKSON, ET ALS.

Record No. 2383.

Supreme Court of Virginia, Staunton.

September 10, 1941.

Present, Campbell, C.J., and Holt, Hudgins, Gregory, Browing and Spratley, JJ.

1. FRAUDULENT AND VOLUNTARY CONVEYANCES — Husband and Wife — Conveyance to Wife within Four Months of Bankruptcy — Effect of Sale to Bona Fide Purchaser — Case at Bar. — The instant case was a suit by a trustee in bankruptcy to set aside a deed from the bankrupt to his wife as fraudulent and to set aside as preferential a deed to the same property from the bankrupt and his wife to a third party. The bankrupt operated a store in South Carolina and his wife conducted a guest house and cafe in the same building. The wife's business was successful and the husband continually borrowed money from her to operate his business, giving the wife a note to cover the loans, upon the face of which he stated that his farm in Virginia was pledged as security. The husband, within four months of his bankruptcy, conveyed the farm to his wife, in payment of the loans, and later joined with the wife in conveying the land to a third party in Virginia. This later deed was admitted to record subsequently to the docketing and record of a lis pendens. The chancellor confirmed a report of the commissioner in chancery, applying section 5184 of the Code of 1936, subsection b of section 60, and subsection d, (6), of section 67 of the Bankruptcy Act, to the effect that the deed from the bankrupt to his wife was not fraudulent, but that the conveyance constituted a voidable preference in favor of the wife; that the third party, who knew nothing of the financial condition of the bankrupt and his wife or of their personal affairs, was a bona fide purchaser from the bankrupt's transferee for a present fair equivalent value of the amount paid her; that this later deed should not be set aside and that the lis pendens did not affect the bona fides of the transaction; that the wife had reasonable cause to believe her husband insolvent at the time of the transfer made to her, and that on account of the preference in her favor coming within the four-months period prior to bankruptcy, the trustee was entitled to recover a judgment against her for the value of the property transferred.

Held: No error.

2. FRAUDULENT AND VOLUNTARY CONVEYANCES — Husband and Wife — Effect of Actual Loan by Wife to Husband. — Where it is shown that a wife has actually loaned her money to her husband, upon his express contemporaneous promise to repay the loan, she becomes his creditor to the same extent as any other person advancing the money under like circumstances, and it is as much the duty of a husband to be just to his wife as to other persons.

3. FRAUDULENT AND VOLUNTARY CONVEYANCES — Husband and Wife — Conveyance by Husband in Payment of or as Security for Loan Made by Wife. — A conveyance of a husband's property, either in payment of a loan made to him by his wife, or as security for such a loan, with a promise of repayment by him, is a valid conveyance, and not subject to successful attack by his other creditors.

4. LIS PENDENS — Effect — Makes Static the Record. — A lis pendens makes static the record as it is when it is filed. Any subsequent paper affecting title is charged with notice.

Appeal from a decree of the Circuit Court of Lunenburg county. Hon. N. S. Turnbull, Jr., judge presiding.

The opinion states the case.

W. E. Neblett, for the appellant.

W. Henry Cook, for the appellees.

BROWNING, J., delivered the opinion of the court.

G. W. Bryan, trustee in bankruptcy of C. H. Jackson, bankrupt, filed a bill in chancery praying that the deed from C. H. Jackson to his wife, Pearl D. Jackson, dated December 3, 1938, be set aside and annulled and that H. C. Coleman be required to release a certain deed of trust which the said Jackson and wife had executed to trustees conveying the land, hereinafter referred to, to secure certain indebtedness of the grantors, the said H. C. Coleman having acquired the said land by purchase from Mrs. Jackson, and the validity of her deed thereto was challenged.

A recital of the facts relating to the various phases of the case and the attendant circumstances is a refutation of the contention of the appellant and a sustention of the decree of the chancellor, confirming the report of the commissioner in chancery, to whom the issues in the cause were referred.

C. H. Jackson and his wife, Pearl D. Jackson, went from Virginia to Myrtle Beach, South Carolina, to engage in business. The husband established and operated, at times, a store, which he called "Jackson's Log Station". His wife conducted, in the rear part of the building, a guest house and cafe. Jackson divided his time between trafficking in tobacco and his store. He was unsuccessful in both. His wife, apparently a provident person, and a good business woman, was successful from the start. Her husband continually borrowed money from her to operate his business. These loans were represented by checks drawn by her for various amounts for which he executed his notes, until December 1, 1937, when he made one note for the sum of $1,225.00, which was the aggregate of a number of smaller ones. At the bottom of this note were these words: "Farm 163 acres in Virginia, Lunenburg County, pledged as security."

C. H. Jackson owned a tract of land of 163 acres in Lunenburg county, Virginia, which he conveyed to his wife on December 3, 1938. This transaction was had in the office of Mr. Perry A. Ozlin, an attorney at law with offices at Chase City, Virginia. At this time Mrs. Jackson, through Mr. Ozlin, delivered to her husband the various notes which she held against him, marking each one "paid in full December 3, 1938," and affixing her signature.

Dr. H. C. Coleman, an optometrist of South Hill, Virginia, had, through a tenant, heard of the tract of land and become interested in purchasing it. This was consummated on December 23, 1938, when Mrs. Jackson executed a deed to him. The consideration was the payment to her of $1,350.00 in cash and the assumption of the payment of the deed of trust indebtedness of $900.00. She had assumed the payment of the trust deed debt when her husband conveyed the land to her.

On February 6, 1939, some of the creditors of C. H. Jackson filed a petition in bankruptcy in the Federal District Court in South Carolina, at which time C. H. Jackson was adjudged a bankrupt. His personal property in South Carolina was sold by the trustee. The proceeds did not pay his creditors in full and this suit ensued.

The deed from Jackson to his wife was attacked as fraudulent. It was alleged to have been made with intent to hinder, delay and defraud his creditors. It was also attacked as a preferential act, and it was charged that it was without consideration deemed valuable in law. The deed...