Curry v. Lloyd

• Decision Date: 03 September 1884
• Citation: 22 F. 258
• Parties: CURRY and others, Assignees, etc., v. LLOYD and others.
• Court: U.S. District Court — Western District of Pennsylvania

22 F. 258

CURRY and others, Assignees, etc., v. LLOYD and others.

United States District Court, W.D. Pennsylvania.

September 3, 1884

George M. Reade and George Shiras, Jr., for complainants.

Samuel S. Blair and John M. Kennedy, for respondents.

ACHESON J.

For many years prior to the transactions out of which this litigation arose, William M. Lloyd was a banker of good financial repute. He individually carried on the banking business under the style of Wm. M. Lloyd & Co., at Altoona Pennsylvania, his place of residence, and in the name Lloyd &amp Co., at Ebensburg, Pennsylvania; and he was also a partner in the banking firms of Lloyd, Caldwell & Co., at Tyrone Pennsylvania; of Lloyd, Huff & Co., at Latrobe and Greensburg, Pennsylvania; and of Lloyd, Hamilton & Co., at New York city. His credit stood very high, and was undoubted until after the financial crisis which came upon the country in the fall of 1873.

On the thirtieth of October of that year he was compelled to suspend; his financial difficulties, it would seem, having their origin in the New York house. He soon submitted a statement of his affairs to his creditors, who, at a general meeting, granted him an extension for one, two, three, and four years. Such was the confidence felt in his ability to pay under the extension that his neighbors in large numbers became his guarantors in different sums, the aggregate amount being $425,000. He resumed business on February 2, 1874.

He paid the first installment of his extended debts, but about the middle of August, 1875, suspended business a second time. On September 18, 1875, he executed a deed of voluntary assignment for the benefit of his creditors. On November 11, 1875, certain of his creditors filed a petition to have him adjudged a bankrupt, and he was so adjudged June 24, 1878. This suit is by his assignees in bankruptcy. The subject-matter of the bill is real estate, alleged to have been disposed of by Mr. Lloyd in fraud of his creditors, and personal estate, viz., mortgages, etc., alleged to have been transferred by him, either in fraud of his creditors or by way of unlawful preferential payments. The contest, however, is narrowed down to the real estate, the other claims having been abandoned, or not being pressed. The principal matter in controversy, and that to which most of the evidence relates, is a piece of land in the suburbs of the city of Altoona, having thereon erected a stone dwelling-house and other improvements. The third and fourth paragraphs of the bill concern this property.

The third paragraph, in substance, charges that William M. Lloyd, being insolvent, on November 11, 1871, made a fraudulent gift of said land, by deed of conveyance, to his son John Lloyd, one of the defendants, with intent to defraud his creditors, which gift John accepted, with the like fraudulent intent; and that the secret purpose of both was that John should hold the land for the benefit of William M. Lloyd and his family, or for the joint benefit of the father and son. The substance of the charge in the fourth paragraph is that William M. Lloyd, being insolvent, and acting in collusion with his son John, with intent to defraud his creditors, and in pursuance of a fraudulent agreement between him and John, erected a stone dwelling, with other improvements, upon said land, at a cost of from $40,000 to $50,000, 'and that said conveyance was made, and the said large and valuable improvements put thereon, in order to prevent the just creditors of the said William M. Lloyd from having the benefit of the money expended in the purchase of the said land, and expended upon the buildings and in making the improvements put upon the said land. ' The specific prayers of the bill are that the deed of conveyance may be adjudged null and void, and John Lloyd be decreed to convey to the plaintiffs the land 'and improvements thereon,' and for an account of rents.

The answer traverses all the allegations of fraud; admits a conveyance on November 11, 1871, but denies that it was voluntary; alleges it was made in execution and performance of a contract between William M. Lloyd and John Lloyd, made in 1866, and sets up, in substance, the facts about to be stated.

In the year 1865 John Lloyd, then aged 24 years, who previously was a clerk in the banking-house of William M. Lloyd & Co., removed from Altoona to the state of Tennessee, where he settled and engaged in the business of farming and fruit culture, near the city of Nashville, upon a farm which he had bought with means given him by his father. It cannot be doubted that the latter was then abundantly able to make such a gift, and the good faith of that transaction is unassailable. William M. Lloyd and John Lloyd both testify that in the year 1866 the former, who then owned nearly the entire stock of the First National Bank of Altoona, wrote to John proposing that he should give up his business in Tennessee and return to Altoona and take the cashiership of the bank, and, as an inducement to John to do so, offered to procure for and give him, in addition to his salary as cashier, the land here in question, and that John, by letter, accepted his father's proposition. These letters are not produced, but there is sufficient proof of their loss. And I may as well, at this point, say that it does not strike me as suspicious or surprising that they were not preserved, in view of the mutual confidence subsisting between the father and son. Moreover, after the deed was executed there was no reason for preserving them.

The testimony of the Lloyds, father and son, in respect to the contract between them, is corroborated by that of S. C. Baker. The land in controversy is part of the Beal farm, which William M. Lloyd, Thomas McCauley, and Mr. Baker jointly acquired in April, 1866; and these three were the grantors to John Lloyd in the deed of November 11, 1871, conveying him the land. Now, referring to that conveyance, Mr. Baker testifies: 'Years before, there was an understanding between the three of us that William M. Lloyd was to have that property for his son John, who was then in the south. ' It is here worthy of mention that Thomas McCauley had died before the testimony in this case was taken. It is shown that as soon as John Lloyd could get ready to leave Tennessee he did so, and he returned to Altoona in the spring of 1867. He was immediately thereafter elected to the cashiership of the said bank, accepted the position, and entered upon the discharge of his duties, and has ever since continued in the cashiership.

The testimony of William M. Lloyd and John Lloyd is strongly confirmed by what occurred immediately after John's return to Altoona, and subsequently; the facts about to be stated being shown by indubitable evidence. About the first of April, 1867, John entered into exclusive possession of the land in question. The Beal mansion stood on the land, and John occupied it until the fall of 1867, when, finding the house uncomfortable on account of its dilapidated condition, he moved out. He then leased it to a tenant, and it was leased by him to successive tenants, who occupied it until some time in 1872. In 1868 he put a fence around the land, except on the side next his father's homestead property. Besides fencing, he ditched the land, and planted trees on it. His improvements, down to the date of his deed, (November 11, 1871,) had cost him from $1,700 to $2,000, while the rent he received was trifling. The land was assessed to John Lloyd in 1868 and thereafter, and the taxes paid by him, except that, by some mistake, it was omitted from the triennial assessment of 1871, and no taxes were paid by any one on the land during that year and the two succeeding years. But afterwards it was assessed to and the taxes were paid by him. As early as 1870 this land appeared platted on a public map of the city of Altoona with John Lloyd's name thereon as owner. This map was in common use in the city of Altoona among conveyancers and others, and was hung up in public places. On the twenty-fourth and twenty-fifth of August, 1871, James L. Given, a surveyor, surveyed the land for John Lloyd, and on October 5, 1871, gave him a plat of survey showing the courses and distances, and the exact area, viz., 26 acres and 140 4-10 perches; and on November 11, 1871, William M. Lloyd, Thomas McCauley, and S. C. Baker executed and delivered to John Lloyd a deed for the land, according to the plat of Given's survey, for the expressed consideration of $4,719. In accounting with Thomas McCauley and S. C. Baker, his co-owners of the Beal farm, William M. Lloyd settled for this land at the same rate (with interest added) at which they bought the farm in the spring of 1866; a circumstance confirmatory of Baker's statement as to the early arrangement by which William M. Lloyd secured this piece of the farm for John, for the land had risen in value between 1866 and 1871. The parties state that the delay in executing the deed was due to mere neglect. The deed was recorded March 30, 1872.

The theory of the bill is that the conveyance of November 11 1871, was not only a voluntary one, but contiguous also; not constructively fraudulent merely, but actually so,-- the intent of both father and son being thereby to cheat and defraud the creditors of the former. I am unable to accept this theory. The hypothesis is not only disproved by the direct evidence touching the transaction, but is entirely inconsistent with the surrounding circumstances. The credit of William M. Lloyd was then good and unquestioned. At no time did it stand higher. He was in no pecuniary trouble and apprehended none. His business was, at least apparently, prosperous. Of his actual financial condition I shall soon have occasion to speak. At present I...