Didier v. Patterson

• Decision Date: 17 September 1896
• Citation: 93 Va. 534,25 S.E. 661
• Parties: DIDIER et al. v. PATTERSON et al.
• Court: Virginia Supreme Court

25 S.E. 661

93 Va. 534

DIDIER et al.

v.PATTERSON et al.

Supreme Court of Appeals of Virginia.

Sept. 17, 1896.

Fraudulent Conveyance — Reservation — Attachment—Residence op Dependant.

1. An assignment, absolute on its face, to a bank, by a contractor, of moneys due and to become due the contractor under a construction contract, though intended merely as security for moneys loaned and to be loaned by the bank to enable the contractor to carry on the work, with an agreement that the bank shall collect the monthly payments on the work, credit the contractor therewith, and charge him with the amount then due the bank, is not void as to creditors because of the further agreement that any balance, from month to month, in the contractor's favor, shall be subject to his check; there being no fraudulent intent.

2. One who is dwelling in the state, with no intention of leaving, being engaged in constructing public work under a contract that will occupy him for an indefinite period, is not a nonresident, within the attachment laws.

Appeal from corporation court of Roanoke; John W. Woods, Judge.

Action by Didier and others against Patterson and others. Judgment for defendants. Plaintiffs appeal. Affirmed.

Scott & Staples, for appellants.

Watts, Robertson & Robertson and Hansbrough & Hall, for appellees.

RIELY, J. An intent on the part of a debtor, in making a conveyance or transfer of his property, to delay, hinder, or defraud his creditors, renders the conveyance or transfer void as to them, except as against a purchaser for valuable consideration and without notice of the fraud. This is the case both by the common law and under the statute. Wait, Fraud. Conv. § 16; Code Va. § 2458. Fraud may appear from the provisions of the instrument itself or be proved by evidence aliunde. Whenever it is apparent on the face of the instrument, it is called constructive or legal fraud; and insuch case the fraud is adjudged by the law to be conclusively established by the provisions of the conveyance itself, and cannot be disproved by other evidence. Gordon v. Cannon, 18 Grat. 387; Hughes v. Epling (Va.) 25 S. E. 105; and Bump, Fraud. Conv. (4th Ed.) § 338. But mere badges of fraud, whether they appear on the face of the instrument or from evidence aliunde, may always be repelled by other evidence. Gordon v. Cannon, supra; Hickman's Ex'r v. Trout, 83 Va. 478, 3 S. E. 131. While an instrument which is fraudulent on its face is conclusive of the question of fraud, and the contrary cannot be shown by extrinsic evidence, no appearance of fairness on the face of a conveyance, if executed with a fraudulent intent, will exclude evidence of the fraud (1 Gieenl. Ev. § 284; 2 Minor, Inst. 336, 690; and Starke's Ex'rs v. Littlepage, 4 Rand. 368), or give validity to the conveyance if it be proved to be fraudulent. An instrument which on its face is an absolute conveyance may be shown by evidence aliunde to be in fact a mortgage, or only a security for a debt or for money lent. Taking an absolute conveyance as a security for a debt or for money lent is not, however, conclusive evidence of fraud. it is only a badge of fraud, and, if it be shown that there was no fraud in taking the security, it will be held to be valid and be enforced. Wait, Fraud. Conv. § £38; Bump, Fraud. Conv. § 55; Bank v. Haskins, 3 Metc. (Mass.) 332. The instrument which it is here sought to impeach on the ground of fraud is an assignment made by W. F. Patterson on December 17, 1892, to the Fidelity, Loan & Trust Company of Roanoke City, of all moneys due and to become due to him from the said city for work done and materials furnished and to be done and furnished under his contracts with the city for public improvements. On its face it is an absolute conveyance, and no unfairness is disclosed by its provisions. But while, on its face, it is an absolute conveyance, the testimony shows that it was only intended as a security for moneys already borrowed by Patterson from the said company to enable him to carry on the work under his contracts with the city, and for future loans or advances to be made to him for the same purpose. The testimony shows that the assignment was free from any intentional fraud. This, indeed, was conceded, but it was claimed by the counsel for the appellants that the effect of the agreement was, nevertheless, such as to constitute fraud in law. One may not only convey or transfer a chose in action or any other property to secure an existing indebtedness, but it is also well settled that he may likewise do so for the purpose of securing future loans and advances. Institution v. Thomas, 29 Grat. 483; U. S. v. Hooe, 3 Cranch, 89; Shirras v. Caig, 7 Cranch, 34; Lawrence v. Tucker, 23 How. 14; Wait, Fraud. Conv. § 217; Bump, Fraud. Conv. § 210.

The evidence discloses that Patterson had undertaken large contracts with the city of Roanoke for public improvements, and that the city was to pay monthly for the work as estimated by its engineer, less 10 per cent., which amount was to be reserved until the work was completed, and accepted by the city, in order to insure the faithful performance of his contracts. The work required a large and continuous expenditure of money for machinery, materials, and labor, which necessitated some arrangement, especially in consequence of the amount reserved by the city until the completion of the work, by which Patterson could command sufficient means for these purposes, and prevent delays and disaster. He had been at work under his contracts for several months prior to the execution of the assignment which is the subject of this controversy, and at first obtained from the said bank the moneys he needed upon notes indorsed by J. A. McConnell and discounted by it. Subsequently, additional security being required for the moneys he was borrowing from the bank, he assigned to it on October 12, 1892, the moneys payable on the monthly estimates for September and October, 1892, for work done. it collected the same, and placed it to his credit, and charged up to him his notes as they became due. During the month of December, 1892, Patterson had needed, and the bank had lent to him, more money than would be coming to him upon...