O'Doherty v. Toole

• Decision Date: 26 September 1887
• Docket Number: Civil 191
• Citation: 2 Ariz. 288,15 P. 28
• Parties: JOHN O'DOHERTY, Plaintiff and Appellant, v. LOUISA M. TOOLE, Defendant and Respondent
• Court: Arizona Supreme Court

15 P. 28

2 Ariz. 288

JOHN O'DOHERTY, Plaintiff and Appellant, v. LOUISA M. TOOLE, Defendant and Respondent

Civil No. 191

Supreme Court of Arizona

September 26, 1887

APPEAL from a Judgment of the County Court in and for the County of Pima.

Reversed.

J. A Anderson, for Appellant.

Hereford and Lovell, for Respondent.

Appellant brought this action for the purpose of setting aside the deed of James H. Toole to respondent, upon the ground that said deed was fraudulent, and to subject the property conveyed to the satisfaction of his judgment against the firm of Hudson &amp Co., of which James H. Toole was a member. The court below did not find as a fact any fraudulent intent on the part of Toole in making the deed of gift, and it is not pretended that there was any fraud on the part of the respondent. Fraudulent intent is a question of fact, and not of law. Sec 23, Chap. 37, Com. Laws of Arizona. Fraud must have been intended at the time of the conveyance. Mattingly v. Nye, 8 Wall. 370. Neither fraud or fraudulent intent was found as a fact by the court. It is the intent which renders a conveyance void for fraud as against creditors. Bump on Fraudulent Conveyances, 3rd. Ed. p. 269.

The general rule is that a conveyance by a husband solvent at the time to his wife, will be supported, if he retain ample property to pay his debts, and the gift or conveyance was a reasonable one. Wait on Fraudulent Conveyances, par. 99, p. 308, and par. 208, p. 292; Wallace v. Penfield, 106 U.S. 260, 1 S.Ct. 216; Graham v. R. R. Co., 102 U.S. 148.

In the absence of evidence that the husband was indebted at the time there is no presumption of invalidity. Kane v. Desmond, 63 Cal. 464; Hussey v. Castle, 41 Cal. 239. Subsequent creditors cannot question the conveyance. Wait on Fraud. Con. par. 208, p. 292. Graham v. R. R. Co., supra. Fraud must have been intended at the time. Mattingly v. Nye, supra; Dunlap v. Hawkins, 59 N.Y. 342, James H. Toole was worth from $ 50,000 to $ 75,000 in his own right, about $ 32,000 of which was in real estate in Pima County, Arizona, and he owed little or nothing at the time he made the gift to his wife. Under the laws of this territory the respondent in case of the death of Mr. Toole, would have inherited no part of his property. Sec. 1, Chap. 26, Comp. Laws. The gift was therefore a reasonable one. Baker v. Koneman, 13 Cal. 9.

The case of Bittinger v. Kasten was decided by the Supreme Court of Illinois in Sept., 1885, and reported in 19 Reporter 299. We call the attention of the Court specially to this case, and the authorities there cited.

Some point was made in the court below, upon the fact that the deed from Mr. Toole to his wife was not recorded until after the assignment to Stiles. But the appellant does not claim under the Assignee. The common law in force when this deed was made. Sec. 7, Chap. 61, Comp. Laws of Ariz. Nor was there any law in this territory requiring the deed to be recorded. Sec. 26, Chap. 42, Comp. Laws. is to the effect that if the deed is not recorded, "it shall be void as against any subsequent purhaser, in good faith and for a valuable consideration." No other penalty attached. "Judgment creditors are not "purchasers" within the meaning of the recording acts and unless put upon the same footing they do not obtain a benefit which a subsequent purchaser does by a prior record." 2 Pomeroy Equity Jurisprudence, par. 721, p. 177. An unrecorded deed is good as against a subsequent attaching creditor. "The Register Act does not make an unrecorded deed void as against subsequent attaching creditors." Wilcoxon et al. v. Miller et al., 45 Cal. 193. Schroeder v. Guernsey, 73 N.Y. 430.

The appellant neglected to present his judgment to the executor of Toole, for allowance. The court below held he was barred by reason of such failure. Secs. 202 and 203, Chap. 29, Comp. Laws.

Counsel for appellant contends that these sections, giving the executor or administrator the right of action to recover property fraudulently conveyed by a decedent, for the benefit of creditors, is merely cumulative, and concurrent with the right of the judgment creditor to maintain the action, and cites Wait on Fraud. Con. Sec. 112, p. 175, and Sec. 113, p. 127. We contend that these citations show that the contrary is the rule.

It rested with the plaintiff to show fraud and fraudulent intent. Wait on Fraud. Conv., par. 273. A mere suspicion of fraud is not sufficient to defeat a conveyance. Idem. par. 383.

Appellant neglected to present his judgment to the executor and have it allowed as a claim against the estate of Toole, and to request the executor to institute a suit to recover the property alleged to have been fraudulently conveyed; his judgment is therefore barred forever, and he cannot therefore maintain this suit against the respondent. Sec. 202, chap. 29, Comp. Laws; Board of Pub. Works, v. Columbia College, 17 Wall. 521; Hill v. Sherwood, 48 Cal. 386; Bate v. Graham et al., 11 N.Y. 237.

Wright, C. J. Barnes, J and Porter, J., concurring.

OPINION

The facts are stated in the opinion.

WRIGHT, C. J.

The main questions raised by the record in this case are: (1) Had the appellant and creditor, under the general law, the right to pursue the property fraudulently conveyed by the debtor in the hands of the vendee, without joining the executor of the deceased debtor? (2) If so, has the law of this territory contravened that right, or by it is the debt barred and the right lost, because the claim was not presented for allowance in the probate court within the 10 months allowed by said law?

John O'Doherty, the appellant and creditor, had recovered judgment against James H. Toole, the husband of respondent, Louisa M. Toole, and one Hudson, during the life-time of said Toole, in the district court of Pima county, for about $ 3,800. The exact date of the judgment was May 29, 1884; the appellant having been a creditor of the said Toole some months prior to the date of the judgment. On the first day of November, 1882, Toole executed a deed to the respondent, his wife, whereby he deeded to her certain premises in the city of Tucson, worth at the time probably $ 15,000. This was a voluntary conveyance, made in consideration of one dollar and love and affection; and the judge below, in his first conclusion of law, finds that the deed was fraudulent and void as to appellant, but that it vested a good title in respondent, as to said Toole, his heirs, devisees, and assigns; and, in his second conclusion of law, he finds that respondent was and is estopped from denying that said deed was and is void as to the creditors of the said Toole.

These findings or conclusions of law were undoubtedly correct. The evidence showed that, after Toole had executed this deed to his wife, the respondent, she and he suffered it to lie in a drawer, along with other papers of his, for nearly two years that it was not recorded until two months after the assignment, in May, 1884; that during all that time the public, including appellant, had no intimation whatever that the property had been deeded by Toole to his wife; that, on the contrary, Toole gave the property in to the assessor as his, during the years 1883 and 1884, and paid the taxes thereon during those years; that he continued to act towards the property in every respect as though it was his, thereby in a measure superinducing the deposits, by appellant and others, in the bank of Hudson & Co., and the consequent loss of their money. In a word, here was a case of actual fraud, and the court below so found. Now, the appellant was a judgment creditor of the said Toole; and his judgment having been regularly docketed, was and is a lien upon the property so conveyed by Toole to his wife, the respondent here; and while said property, by virtue of said conveyance, ceased to be a part of Toole's estate, the deed being good between the parties thereto, it was and still is subject to the lien of appellant's judgment. While, as the learned judge below observed, it was fraudulent and void as to creditors, it was good as to Toole and his heirs and assigns. Appellant's judgment, it was true, was a valid and subsisting claim also against the said Toole's estate; and, until the expiration of the 10 months allowed by statute for presenting claims, it might have been presented and allowed against said estate; but, because it was not thus presented and allowed, and is therefore forever barred as a claim against said estate, has the appellant lost his remedy against the property so fraudulently conveyed to respondent as aforesaid? Clearly not, we think. Indeed, we believe no doctrine of equity is more generally and explicitly settled in this country by general law than that creditors may pursue property fraudulently conveyed into the hands of the vendee. This doctrine has come down from the old statute of 13 Eliz. An examination of the cases will show that the law has been settled, almost uniformly, in accordance with the spirit of that statute in all the states; and, while confined largely to the domain of chancery courts, its principles have generally obtained in courts of law; the main difference being that in the latter fraud must be proved, while in the former it is often presumed; in the one the chancellor stands upon the broad plains of conscience; in the other the judge may not go beyond certain stern and inflexible rules. It is the province of a court of conscience to tolerate no unclean thing. Honesty and fair dealing are the vitalizing currents of its healthy existence. He who would have others be honest, must be careful that he himself is not dishonest. Here no man is to be allowed to profit by his own wrong. He cannot rightfully ask that others keep their houses in order till he has...