Davis v. Southern Distr. Co.
| Decision Date | 29 September 1927 |
| Parties | FANNIE A. DAVIS, WIFE OF C. T. DAVIS, v. SOUTHERN DISTRIBUTING COMPANY, A CORPORATION, AND OTHERS. |
| Court | Virginia Supreme Court |
1. FRAUDULENT AND VOLUNTARY CONVEYANCES — Transactions Between Husband and Wife — Closely Scrutinized. — It is well settled that transactions between husband and wife must be closely scrutinized to see that they are fair and honest and not mere contrivances resorted to for the purpose of placing the husband's property beyond the reach of his creditors.
2. FRAUDULENT AND VOLUNTARY CONVEYANCES — Conveyance by Husband to Wife — Burden of Proof on Wife to Show Bona Fides — Presumption in Favor of Creditors. — In a contest between the creditors of an insolvent husband and the wife, the burden of proof is upon her to show by clear and satisfactory evidence the bona fides of the transaction. In all such cases, the presumptions are in favor of the creditors, and not in favor of the title of the wife.
3. FRAUDULENT AND VOLUNTARY CONVEYANCES — Transactions Between Husband and Wife — Recognition of Relationship of Debtor and Creditor — Contemporaneous Promise on Part of Husband to Pay Debt. — The mere holding of a bond is not sufficient evidence that at the time the bond purports to have been given it was recognized as a debt, and that both husband and wife intended to occupy the relation to each other of debtor and creditor. The burden is upon the wife to show that the original transaction represented a loan by her to the husband, and a contemporaneous promise on his part to pay the debt; otherwise, what was originally a gift to aid the husband in business, and used by him as a basis of credit, could subsequently, when he became involved, be converted into a debt to his wife, and thus perpetrate a fraud upon his creditors with the utmost facility and impunity.
4. FRAUDULENT AND VOLUNTARY CONVEYANCES — Conveyance from Husband to wife — Evidence Held not to Establish that Conveyance was in Consideration of Debt of Husband to Wife. — In the instant case, a suit by creditors to have a deed from husband to wife declared fraudulent and void, it appeared from the evidence that at the time of the conveyance the husband was indebted to sundry persons, and that the husband and wife with their family were living in a home together. It was claimed that the conveyance was for a consideration made up of sundry items advanced by the wife and evidenced by cancelled checks, some to the husband direct, others to creditors. Some of these checks had notations showing that they were given in payment of the husband's account, others were made payable to the husband without notations. It did not appear that at the time the checks were drawn by the wife and paid for the husband's indebtedness or to him direct, that there was an agreement between the parties that the transactions should constitute loans with a contemporaneous promise to pay back the amount borrowed.
Held: That the decree of the chancellor declaring the deed fraudulent and void should be sustained on appeal.
5. FRAUDULENT AND VOLUNTARY CONVEYANCES — Conveyance by Husband to Wife — Recognition by Husband of Advances by Wife as Debts and Promise to Pay — Sums Advanced by Wife Presumed to be gifts — Case at Bar. — In the instant case, a suit by creditors to have a deed from husband to wife declared fraudulent and void, it appeared from the evidence of the wife that she gave her husband checks and paid numerous debts due by her husband to third parties, but the record failed to show a single instance where the husband ever recognized any of the payments made to him or for him, as debts due his wife and made any contemporaneous promise to pay the same.
Held: That under such circumstances the law presumes the funds delivered to the husband by his wife to be gifts and not loans.
6. FRAUDULENT AND VOLUNTARY CONVEYANCES — Husband and Wife — Presumptions and Burden of Proof — Effect of Section 6210 of the Code of 1919. — The doctrine in Virginia which places the burden upon those attempting to support a conveyance from a husband to the wife as against existing creditors of the husband is well settled, and while the Code of 1919, section 6210, has made the testimony of either consort competent in controversies of this character, it has in no sense changed the burden or shifted the recognized presumptions in such cases.
7. TRUSTS AND TRUSTEES — Resulting Trust — Definition. — Where land is purchased and paid for by one person while the conveyance is made to another the law implies a trust for the benefit of the former.
8. TRUSTS AND TRUSTEES — Resulting Trust — Proof — Parol Evidence. — A resulting trust arising from the purchase and payment by one and conveyance to another may be proved by parol evidence, but it must be clear and convincing.
9. FRAUDULENT AND VOLUNTARY CONVEYANCES — Husband and Wife — Conflicting Defenses — Defense that Deed was given in Consideration of a Debt Due Wife from Husband — Defense that Wife had a Resulting Trust in the Land and the Deed was a Conveyance in Furtherance of the Trust. — In the instant case, an action by judgment creditors to have a deed from husband to wife set aside as fraudulent and void, to a judgment in favor of the creditors, it was assigned as error that the court failed to hold that a deed of the land in question from an aunt of the husband to her nephew created a resulting trust in favor of the wife, and that therefore the deed from the husband to the wife attacked as fraudulent was a conveyance in furtherance of the trust. The idea of a resulting trust seems not to have been suggested in the pleadings and was in irreconcilable conflict with the position taken in the answer, as well as in the first assignment of error, that the deed attacked was in consideration of a debt due from the wife to the husband.
Held: That there was no merit in this assignment of error.
Appeal from a decree of the Circuit Court of Lunenburg county. Decree for complainants. Defendant appeals.
The opinion states the case.
W. Moncure Gravatt, for the appellant.
W. E. Nelson, Thos W. Ozlin and N. S. Turnbull, Jr., for the appellees.
Appeal from a final decree of the Circuit Court of Lunenburg county.
This suit is the result of a certain deed executed by C. T. Davis, the husband of Fannie A. Davis, the wife, on December 8, 1921, in which he conveyed a tract of land containing seventy-two acres in Lunenburg county in consideration of $1,000.00. At the time of this conveyance and for some considerable time prior thereto, he was indebted to certain of the complainants in the court below (who will be referred to as they were in that court), some of whom had been requesting payment before the deed of December 8, 1921, was drawn and executed.
As soon after this deed was placed on record as was practicable, complainants reduced their debts to judgments and at the first June rules, 1922, filed their bill to have declared fraudulent and void the deed from C. T. Davis to his wife, and to subject the land to the payment of complainants' debts. Depositions were taken and on December 11, 1925, a decree in accordance with the prayer of the bill declaring the deed of December 8, 1921, void and of no effect as to complainants, and directing certain enquires to be made by a commissioner prior to a sale of the property.
Appellants base their defence upon two grounds, assigned as error:
The legal principles involved in the first assignment have been so often the subject of judicial consideration that a reference to only a few of the more recent expressions of the courts would seem ample.
In Sledge Reed, 112 Va. 202, 70 S.E. 523, Judge Harrison, in a case strikingly like the one under consideration, says:
1-3 "It is well settled that transactions between husband and wife must be closely scrutinized to see that they are fair and honest and not mere contrivances resorted to for the purpose of placing the husband's property beyond the reach of his creditors, and that in a contest between the creditors of a husband and the wife, the burden of proof is upon her to show by clear and satisfactory evidence the bona fides of the transaction. In all such cases, the presumptions are in favor of the creditors, and not in favor of the title of the wife. The mere holding of a bond is not sufficient evidence that at the time the bond purports to have been given it was recognized as a debt, and that both husband and wife intended to occupy the relation to each other of debtor and creditor. The burden is upon the wife to show that the original transaction represented a loan by her to the husband, and a contemporaneous promise on his part to pay the debt; otherwise, what was originally a gift to aid the husband in business, and used by him as a basis of credit, could subsequently, when he became involved, be converted into a debt to his wife, and thus perpetrate a fraud upon his creditors with the utmost facility and impunity. (Kline Kline, 103 Va. 263, 48 S.E. 882; Spence Repass, 94 Va. 716, 27 S.E. 583.)
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