Churchill v. Wells

• Decision Date: 30 April 1870
• Citation: 47 Tenn. 364
• Parties: Wm. E. Churchill et al. v. A. T. Wells et al.
• Court: Tennessee Supreme Court

47 Tenn. 364

Wm. E. Churchill et al.

v.A. T. Wells et al.

Supreme Court of Tennessee.

April Term, 1870.

FROM MEMPHIS.

At the February Term, 1868, the bill of complainants was dismissed, from which decree they have appealed to this Court. Chancellor WM. M. SMITH, presiding.

WRIGHT & MCKISICK, JACKSON & CRAFT, for Complainants.

YERGER, KORTRECHT, MCDAVITT and HENRY G. SMITH, for Respondents.

GEORGE ANDREWS, J., delivered the opinion of the Court.

The bill in this cause was filed by complainants, who constitute the firm of Churchill, Johnson & Co., to set aside voluntary conveyances made by Allen T. Wells, and alleged to have been made in fraud of creditors.

Wells was a merchant, doing a large business in the City of Memphis, having been in business about thirteen years prior to the making of the deeds in question, in 1859. His purchases of goods, in the course of his business, amounted to $116.743.59 for the year 1857, and to $166,813.33 for the year 1858.

On the 10th of September, 1859, Wells conveyed to Charles Kortrecht, for the nominal consideration of $8,000, two lots in the City of Memphis; and on the same day, Kortrecht reconveyed one of the said lots to said Wells, to hold in trust for Wells' children, and conveyed the other lot directly to the wife of said Wells, to her separate use. The two last-mentioned deeds expressed the consideration, respectively, of five thousand and three thousand dollars; but no consideration was, in fact, paid for any of the conveyances--the design of the whole transaction being simply to effect settlements for the benefit of the wife and children of Wells. These three conveyances were all duly registered on the 12th day of September, 1859. The total value of both lots, at this time, was probably about $10,000. The lot settled on Wells' children was his family residence; and an old and not very valuable house situated thereon was torn away to make room for the new house subsequently erected by him.

At the time of making these conveyances, on the 10th of September, 1859, the total indebtedness of Wells was $121,427.24. He is shown to have had at the same time, besides the lots in question, a village lot worth $5,000, but subject to a mortgage for $1,300, situated, in a town in the interior of New York. He may also have owned, at this time, two lots on Jessamine street, in the City of Memphis, and worth $3,280, as he appears to have been the owner of them some months afterward.

He owned, at the same time, in personal property, outside of his mercantile business, about $3,200. His merchandise on hand, at cost prices, ten per cent. added, amounted to $105,741.58, and the accounts and bills receivable due him, to $34,314.21. Of these last, about $17000 were recent debts, which were mostly good. About $9,500 was of older date, and but a small part was ever collected; and the remainder--about $7,400--consisted of old accounts of little or no value, which were never collected.

It is doubtful if the entire property of Wells, besides the lots in controversy, was, at this time, equal in value to the amount of his liabilities; it is almost certain that it could not have sufficed, if forced upon the market, to pay those liabilities. The question of solvency depends upon whether enough can be realized from the property of the debtor to pay his liabilities--not upon the nominal value of unsalable goods: Parish vs. Murphree, 13 How., 100.

Some time in 1859, but at what precise time does not appear, Wells added a wholesale department to his mercantile establishment. His purchases for the month of August, 1859, amounted to $11,401.41. After making the settlements on his wife and children, he continued his business; and from that time to the 5th day of June, 1860, when he suspended, he purchased goods on credit, in the regular course of his business, to the amount of about $260,000; his purchases for September, October and November, 1859, being about $35,000 per month. His purchases for December, 1859, were about $8,000, and for January, February and March, 1860, about $78,000, $29,000 and $38,000, respectively.

On the 20th day of January 1860, Wells made a contract for the erection of a double tenement frame house on the lot on Court Street, which he had settled on his children. The price agreed to be paid for the house was $9,750, and Wells paid therefor to the contractors, including extras, $9,912.48. Of this amount, $3,280 was paid according to contract, in two lots on Jessamine street, and the remainder in cash and dry goods, $3,500 in cash being drawn from the mercantile business, and applied to this purpose between March 14th and June 5th, 1860.

On the 5th day of June, 1860, Wells suspended business, and made a general assignment of his property for the benefit of his creditors. His indebtedness then amounting to about $250,000, most of which was owing to merchants in the eastern cities. The complainants resided in New York.

Wells was indebted to complainants on the 10th of September, 1859, by notes given for goods bought previous to that time; but these notes were fully paid previous to the assignment made June 5th, 1860; the debts now due to complainants having resulted from other sales made during that interval, but before the payment of the previous notes; so that there was no time after September 10th, 1859, when Wells was not indebted to the complainants. The amount due complainants is evidenced by the note, for $3,116.67, dated October 4, 1859, payable at eight months after date; and the goods for the price which it was given, were probably purchased shortly before that time, as the proof shows that Wells' custom was to settle the amount of his purchases of goods by note, after receiving the invoices.

During the interval between September 10th, 1859, and June 5th, 1860, Wells continued to buy goods, usually on a credit of from six to eight months, and to pay off his indebtedness as fast as it matured, from proceeds of sales and collections. In this manner he paid off, prior to June 5th, 1860, the entire amount of his indebtedness existing September 10th, 1859, except one debt of $117.50 due to one Butler, who is not one of the complainants, and possibly another debt of about $300, due to another party, which was afterwards so confused with subsequent transactions, as to render it difficult to say whether it can properly be said to be paid or not.

Wells, in his answer, denies all intention to defraud existing or subsequent creditors. He states that shortly after making the settlements, he visited the eastern cities for the purpose of purchasing his fall supply of goods, as was his annual custom, and as he expected and intended to do when he made the settlements; that he did not make the settlements because of that intention, but in good faith to provide, while he was able, as he then knew himself to be, a moderate competence for his family, in the event of subsequent misfortunes, to which every merchant is liable.

The Chancellor, upon final hearing, held the deeds of settlement to be valid, and...