Bunch v. Empire Cotton Oil Company

• Decision Date: 30 April 1923
• Docket Number: 336
• Citation: 250 S.W. 530,158 Ark. 462
• Parties: BUNCH v. EMPIRE COTTON OIL COMPANY
• Court: Arkansas Supreme Court

250 S.W. 530

158 Ark. 462

BUNCH v. EMPIRE COTTON OIL COMPANY

No. 336

Supreme Court of Arkansas

April 30, 1923

Appeal from Pulaski Chancery Court; John E. Martineau, Chancellor affirmed.

Decree affirmed.

Rose Hemingway, Cantrell & Loughborough, for appellant, Laura L. Bunch.

The Southern Trust Company holds the beneficial interest in the property for Laura L. Bunch, appellant, and not for her husband, T. H. Bunch, as the chancellor erroneously found. The conveyances to Mrs. Bunch were not fraudulent, and this property was given to her in 1907, 1910 and 1913. There is no evidence of insolvency of Bunch until perhaps 1912. At the time the gifts were made he was not indebted to appellee, and had no intention of becoming indebted to appellee or any one else. Testimony shows conclusively that Bunch and appellee were not known to each other and had no dealings until September 15, 1915. Appellee was a subsequent creditor, and to avoid the gift must show that it was made with the actual intent to defraud. 38 Ark. 427; 50 Ark. 42; 56 Ark. 258; 59 Ark. 614; 96 Ark. 531; 110 Ark. 335. Not shown by proof that donor subsequently become insolvent. 96 Ark. 531.

H M. Armistead, for appellee, Empire Cotton Oil Company.

Question of intent to defraud subsequent creditors may be proved by all the facts and circumstances. 132 Ark. 463. The evidence supports the chancellor's findings. Appellee would have a right to an accounting in any event for the $ 15,000 and other sums Bunch paid upon the mortgages. 110 Ark. 335; 66 Ark. 419. The fact that all this property was acquired originally by her husband, connected with the other undisputed facts, puts the burden of proof upon Mrs. Bunch 142 Ark. 104; 134 Ark. 231; 133 Ark. 250; 73 Ark. 174. A voluntary conveyance made with intent to defraud, cheat or hinder other existing or subsequent creditors is void as to both. 110 Ark. 335; 20 Cyc. 425, 426; 59 Ark. 614; 20 Cyc. 454, 456, 460, also 520. Bunch filed no answer. 113 Ark. 100; 145 Ark. 167. Parol trust in lands must be established by evidence clear, strong and unquestionable. 50 Z. 7, 818; 173 F. 798; 59 S. E. (W. Va.) 964; 54 F. 299; 86 Ark. 225; 66 Ark. 98. As to claim of wife of husband's indebtedness to her, 74 Ark. 161; 129 Ark. 398; 76 Ark. 252; 20 Cyc. 498-500.

Rose, Hemingway, Cantrell & Loughborough, in reply.

No proof that Bunch owed any debts he was unable to pay at the time of conveyance or gifts to his wife. 42 Ark. 170; 59 Ark. 614. Time between the conveyances and creation of the debt may be considered to show good faith. 132 Ark. 463. The testimony does not show actual intent to defraud appellee or any other subsequent creditor, and even though there were actual fraud, which is denied, appellee was not injured or defrauded by the conveyances, and is not entitled to recover. 132 Ark. 463.

OPINION

MCCULLOCH, C. J.

This is an action instituted by appellee to set aside alleged fraudulent conveyances of real estate and to subject the same to the payment of the indebtedness of T. H. Bunch to appellee, evidenced by two promissory notes aggregating about $ 7,000, dated September 30, 1916, the notes having been executed to cover an antecedent indebtedness originating during the previous year. There was a decree in favor of appellee subjecting to the payment of appellee's debt a portion of the real estate involved in the controversy, and an appeal has been prosecuted to this court.

T. H Bunch formerly resided in Little Rock, and was engaged in business here as the sole owner of corporations bearing his own name. His first corporation became insolvent and failed in business in the year 1910. Another corporation was organized, which subsequently went into bankruptcy, and Bunch ceased to do business here in 1916. It appears from the evidence that he had been insolvent as far back as the year 1913.

Bunch acquired, by purchase and inheritance, the property in controversy on this appeal, which is four lots at the southeast corner of Broadway and Third streets in the city of Little Rock, valued at about $ 60,000 or more, and described as lots 1, 2, 3 and 4, block 103, city of Little Rock. He owned other property, acquired in the same manner, on the southwest corner of Third and Broadway, and that was included in this litigation, but passed out by the decree which has not been appealed from.

Bunch acquired the property, and it has been conveyed from time to time in four sections, each part or section covering a portion of said lots, and was accurately described by metes and bounds. The portion of the lots described in the briefs as parcel I was purchased by Bunch from Hedges and wife, and Bunch caused the conveyance to be made to the W. B. Worthen Company, a banking corporation, as trustee, under deed dated January 23, 1907. The character and purpose of the trust was not disclosed in the face of the deed, the only reference to the trust being the coupling of the words "as trustee" with the name of the grantee. On the next day, January 24, 1907, the Worthen Company executed and delivered to Laura L. Bunch, wife of T. H. Bunch, a declaration of trust reciting the conveyance of the property and declaring that the property would be thereafter held in trust for Laura L. Bunch, subject to the payment of two notes for $ 5,000 each, guaranteed by T. H. Bunch.

The portion described as parcel II was acquired by deed from the trustee in bankruptcy of the T. H. Bunch Commission Company, the deed being made by the trustee to the Union Trust Company, a banking institution of Little Rock. The deed was dated April 1, 1910, and on March 30, 1910, T. H. Bunch and wife, together with the Union Trust Company, conveyed to the W. B. Worthen Company, as trustee, the conveyance being similar to the one conveying to the W. B. Worthen Company parcel I.

The W. B. Worthen Company conveyed the property mentioned as parcel II to F. T. Vaughan, by deed dated March 25, 1911, and Vaughan subsequently conveyed the property to Laura L. Bunch by deed dated November 2, 1911.

T. H. Bunch and his sister, Mrs. Mathews, inherited a portion of the lots mentioned as parcel III, and Bunch purchased the interest of his sister, who, by deed dated January 31, 1916, conveyed the same to the W. B. Worthen Company, as trustee. It appears from the oral testimony that T. H. Bunch conveyed his half of the property to his wife in the year 1913, but the deed was never recorded.

The portion of the lots mentioned as parcel IV was inherited by T. H. Bunch from his mother, and by deed dated January 13, 1904, he conveyed the property to the Union Trust Company, and the latter conveyed to W. B. Worthen Company by deed dated March 30, 1910.

The W. B. Worthen Company, as trustee, executed a deed to the Southern Trust Company, of Little Rock, dated February 16, 1916, purporting to convey all of lots 1, 2, 3 and 4 of block 103, and on August 1, 1913, T. H. Bunch and wife executed a deed of trust to W. M. Kavanaugh, as trustee, conveying the whole of lots 1, 2, 3 and 4, block 103, to secure an indebtedness to the Southern Trust Company, the indebtedness being shown by the proof to have been that of T. H. Bunch.

The written declaration of trust executed by the W. B. Worthen Company to Laura L. Bunch on January 24, 1907, covering a portion of the property described as parcel I, was never recorded. There was oral testimony adduced by appellants tending to show that the W. B. Worthen Company held parcels II,...