Carberry v. Lann-Carter Hardware Co.

• Decision Date: 27 June 1921
• Docket Number: 21749
• Citation: 126 Miss. 293,88 So. 769
• Court: Mississippi Supreme Court
• Parties: CARBERRY et al. v. LANN-CARTER HARDWARE CO

88 So. 769

126 Miss. 293

CARBERRY et al. v. LANN-CARTER HARDWARE CO

No. 21749

Supreme Court of Mississippi

June 27, 1921

FRAUDULENT CONVEYANCES. Conveyance of interest in land by husband to wife void as to creditors existing prior to filing for record.

Under the provisions of section 2522, Code of 1906 (section 2056. Hemingway's Code), which among other things provides that a conveyance of land between husband and wife "shall not be valid as against any third person, unless the transfer or conveyance be in writing and acknowledged and filed for record," a conveyance of any interest whatever in land by the husband to the wife is void as to the creditors of the husband whose debts were contracted prior to the filing of such conveyance for record.

On suggestion of error. Suggestion of error overruled.

On suggestion of error. Suggestion of error overruled.

For former opinion, see 88 So. 532.

Suggestion of error overruled.

Paine & Paine, for appellant.

As to the cross-appeal of the appellee, we respectfully submit the following: The court held, and the decree recites that this deed by Mr. & Mrs. Carberry to Leo Carberry was made in good faith, and was not withheld from the record fraudulently and that it was filed for record three years and three months before appellee recovered a judgment. The record also shows that appellee had no lien of any kind until this judgment was recovered. The record further shows without dispute that the deed was executed May 8, 1908. That at the time the deed was executed Mr. Carberry did not owe any creditors and of course could not and did not execute the deed with any fraudulent purpose of defrauding appellee, whose debt was not contracted until the year 1914. The proof also shows that at the time he executed this deed, and at the time he contracted the debt that he had other property, and was not insolvent. That he executed the deed in conformity with the plan which he had adopted with his first set of children, to-wit: The ones in Iowa; that was to deed them property and reserve a life estate therein. His purpose was clearly shown that he wanted Leo Carberry, the child of his old age, to have the Monroe County land and that he did not want or expect the Iowa children to have any interest in it. The fact that he had executed this deed to Leo, was not kept secret but on the contrary was openly discussed with all his friends and acquaintances. He was shown to have been a man of splendid reputation and even the appellee, through its president admitted it. All these facts were found by the chancellor in favor of the appellant.

There was and could have been no actual fraud in the execution of this deed or the withholding of it from record. It is true that when actual fraud is proven, a creditor will prevail over a vendee in an unrecorded deed, no matter whether the creditor has a lien or not, and no matter whether the deed is voluntary or for a valuable consideration. But where actual fraud is not proven, and the deed is not recorded through inadvertance or negligence, the grantee will prevail against all subsequent creditors, except such creditors as have obtained a lien by judgment or attachment or the like, prior to the recordation. Appellee relies on section 2787, Code of 1906, to the effect that an unrecorded deed is void as to all creditors and subsequent purchasers for value and without notice. But a complete answer to this is that the word "creditors" in this section applies to only such creditors as have obtained a lien by attachment or judgment, prior to the recordation of the deed. Johnson v. Bank, 85 Miss. 252; Loughridge &amp Bogan v. Bowland, 52 Miss. 546; Green v. Weems, 85 Miss 566.

In the case at bar, it is admitted that appellee did not obtain judgment until three years and three months after the deed was recorded. Therefore this section is of no benefit to appellee.

We admit that wilful withholding of a deed from record to obtain fictitious credit, is a fraud on subsequent creditors and that subsequent creditors can avoid the conveyance, when the intention was such that the grantor gained credit on the strength of his concealing his insolvency. But we submit that the facts show that the deed was not withheld from record with any fraudulent purpose as decreed by the court. The record shows that at the time the deed was executed and at the time the debt was contracted, the grantor was not insolvent. But on the contrary Carberry had a life estate in valuable lands in Iowa and a life estate in the lands in question, a section of land, the rents from all of which amounted to a considerable amount yearly.

It is also true the deed was a voluntary deed but a voluntary deed is not fraudulent per se, even as to existing creditors, and it is not necessarily void as to subsequent creditors. Whether a voluntary deed is fraudulent as a matter of law as to existing creditors, depends upon the financial condition of the grantor at the time the deed is executed or the debt is contracted. See Wilson v. Kohlhaim, 46 Miss. 346.

This court will also bear in mind that in the case at bar the grantee was a minor of tender years when the deed was executed, and a minor when the deed was recorded. That the failure on his part to record the same until 1915 was due to inattention on his part, and the chancellor held in the opinion and decree under the facts in the case that the withholding of the deed was not fraudulent. We therefore submit that the findings of facts by the chancellor on the cross-appeal of appellee, settles the cross-appeal, and the same should be affirmed as to it.

The case of McCrory v. Donald, 119 Miss. 256, cited by counsel for appellee is not in point. In that case the court held that the execution of the deed constituted actual fraud, which vitiates all deeds; and besides this, the deed was between husband and wife; and the recordation of the same required under a special section of the code, to-wit: section 2522, Code of 1906, which said section is not involved in the case at bar.

We ask pardon for this prolix brief, and respectfully submit the case should be reversed and bill dismissed on the direct appeal, but affirmed on the cross-appeal.

Leftwich & Tubb, for appellee.

Suppose we were to grant, for argument's sake, the claim of counsel for appellant that the reservation or exception in the deed worked a transfer of interest in the life estate to the wife. Should we grant that argument, then in that event the chancellor was still right, for if the deed should be considered a conveyance from Mr. Carberry to his wife, as it plainly is not, then, so far as creditors were concerned, it had no effect whatever until recorded. Sec. 2522, Code of 1906 (Sec. 2056, Hemingway's Code); McCrory v. Donald, 119 Miss. 256.

In construing that section on the very point in controversy in the case of McCrory v. Donald, supra, the court found the facts on page 267 as follows: "It appears in evidence that at the time of making the deeds from R. H. McCrory to his wife, that R. M. McCrory was not in debt to any considerable extent, if at all, but subsequent to making this deed to his wife and prior to the recording of the deeds in Mississippi, McCrory made large accounts for merchandise on credit, and at the time of the filing of the creditor's bill was largely indebted to Winner Klein & Co., and also made numerous other creditors."

Further on in the opinion this court remarked that section 2522, supra, expressly requires a recording of the instrument before it shall take effect so far as any third party is concerned. And under the facts in that record as described in the opinion, in speaking as to whether the creditor was existing or subsequent, the court at page 270 used this language:

...