Covington v. Murray
| Decision Date | 26 April 1967 |
| Citation | 220 Tenn. 265,416 S.W.2d 761,24 McCanless 265 |
| Parties | , 220 Tenn. 265 James E. COVINGTON, Receiver, Appellant, v. T. L. MURRAY et al., Appellees. |
| Court | Tennessee Supreme Court |
D. L. Lansden, Nashville, of counsel, Waller, Lansden & Dortch, Nashville, for appellant.
Ira E. Parker, III, Nashville, of counsel, Hooker, Keeble, Dodson & Harris, Nashville, for appellees.
A general creditors' proceeding was instituted against the Nashville Baseball Club. In the proceeding James E. Covington, the appellant in this case, was appointed Receiver for the Club.
Pursuant to authority given him in that proceeding, Covington filed the bill in this cause against T. L. Murray, the former President and a Director of the Club, his wife, Emily Murray, and other former Directors. The bill alleged mismanagement and breach of fiduciary duty on the part of the defendants and sought damages.
It was further alleged that after the general creditors' bill had been filed, the defendant, T. L. Murray, had fraudulently conveyed to his wife, Emily, certain real estate which had been held by them as tenants by the entirety.
The prayer of the bill was that the conveyance be set aside as null and void as to the Receiver, except to the extent the conveyance terminated the tenancy by the entireties in the said real estate.
By their answer, Murray and wife denied the conveyance was fraudulent.
By a consent decree of the parties the defendants were permitted to sell the real estate free from any lien which might have been acquired by the Receiver on the filing of the bill, on the condition the funds derived from the sale be deposited in the registry of the court to await adjudication of the Receiver's rights in the property. The property was sold and the fund deposited in court. In was agreed the funds stood in the place and stead of the real estate and whatever rights the parties had in the property would apply to the fund.
Thereafter, T. L. Murray died and the cause was revived against Commerce Union Bank, the Executor of his estate. Mrs. Murray then moved for an order of distribution to her of the fund. The Chancellor granted the motion and ordered the entire proceeds paid to her. The Receiver was granted a discretionary appeal to this Court.
The Chancellor reasoned that if the conveyance by the deceased to his wife was valid as to his creditors, she took a fee simple estate under T.C.A. Section 64--110, which permits a husband to convey his interest in a tenancy by the entireties to his wife directly; and that on the other hand, if the conveyance was invalid and subject to be set aside for fraud by the creditors, she would retain her original estate as a tenant by the entirety, which, on her husband's death, ripened into a fee simple estate by right of survivorship. Accordingly, the Chancellor held in either event Mrs. Murray became the owner of the property in fee simple free from any claims of her deceased husband's creditors.
If the conveyance of the deceased to his wife was valid, the Receiver had no interest or lien on the property or funds, since the Receiver represented the creditors of the deceased only.
The question presented by the appeal is whether the conveyance, if fraudulent, destroyed the tenancy by the entireties and thereafter deceased and his wife held the property as tenants in common. In the event the conveyance was fraudulent and destroyed the tenancy by the entireties and deceased and his wife thereafter held the property as tenants in common, then the deceased's creditors would be entitled to one-half of the funds.
The Receiver insists the Chancellor erred in holding as a matter of law Mrs. Murray was entitled to the entire proceeds of the sale even though the conveyance of T. L. Murray to his wife was fraudulent.
It is our opinion the decree of the Chancellor should be affirmed.
It is argued by the Receiver if the conveyance of Murray to his wife was fraudulent, which is conceded by appellees for the purpose of this appeal, T. L. Murray and his wife became tenants in common in the real estate, and a lien attached to the one-half undivided interest of T. L. Murray on the filing of the bill.
In support of this argument, the Receiver cites and relies on the case of McGhee v. Henry, 144 Tenn. 548, 234 S.W. 509, 18 A.L.R. 103 (1921).
In that case, a husband and wife owned real estate by the entireties. Both died simultaneously in a fire. The wife left a son as her only heir at law. The husband left several children as his heirs at law.
The son of the wife filed a partition proceeding. He insisted he owned a one-half undivided interest in the real estate and conceded the children of the deceased husband owned a like interest. The defendants insisted they owned a five-sixths undivided interest and plaintiff a one-sixth undivided interest.
In the course of the opinion this Court said:
'In all other respects they must be treated as holding the property as if they were separate individuals, which under our statute is as tenants in common, and at common law is equal.
'Likewise, it must be held that the estate is limited by the period of the matrimonial union, and, when death comes to both at the same instant, it must descend as if husband and wife had been tenants in common.'
It is, thus, clear this case does not support the contentions of the Receiver a conveyance by a husband to his wife in fraud of his creditors converts a tenancy by the entireties into...
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