Donohoe v. Collett
| Decision Date | 23 November 1920 |
| Docket Number | 3975. |
| Citation | 105 S.E. 265,87 W.Va. 383 |
| Parties | DONOHOE v. COLLETT ET AL. |
| Court | West Virginia Supreme Court |
Submitted October 26, 1920.
Syllabus by the Court.
The settled rule that neither the recital, in a deed from a fraudulent or insolvent debtor, of payment of consideration nor averment thereof in his answer, or the answer of the grantee, or both, is evidence against an attacking creditor who is not a party to the deed; and the grantee, in order to sustain the conveyance to him, must clearly prove payment of a fair and adequate consideration, has no application in the case of a conveyance of a debtor's property, even to a close relative of his, other than his wife, made by a trustee in pursuance of a sale thereof under a valid deed of trust.
In such case, the ground of relief is that of a purchase by the grantee for the benefit of the fraudulent debtor, or with money furnished by the latter for the purpose, and the issue as to it is an affirmative one, the burden of proof In which rests upon the attacking creditor; and the validity of the deed of trust having been established by proof, and the allegations of fraud in the sale and conveyance having been fully denied, a decree setting aside the trustee's deed cannot be properly entered on the ground of failure of the parties to the transaction to disprove such allegations.
Close relationship between the parties to conveyances by which a creditor's right to resort to his debtor's real estate for satisfaction of his debt is thwarted, unaided by other circumstances, is neither evidence, proof, nor a badge of fraud in the transactions complained of in the bill assailing them. It is a mere circumstance having probative value in connection with others tending to prove fraud.
Legally sufficient responses in an answer to interrogatories propounded in a bill, are evidence for the respondent, and if not controverted, are taken as true for the purposes of the cause.
Application by an insolvent debtor of all of his property to the payment of his debts and necessary expenses is not proof of intent to defraud a creditor whose debt was not included in the payments.
A communication to an attorney, by one to whom he had previously given advice concerning the subject-matter of the communication, and to whom he was giving advice generally about the legal phases of his business, during a period of time within which the communication was made, is privileged notwithstanding lack of a charge or payment, for the services rendered.
Appeal from Circuit Court, Randolph County.
Suit by M. E. Durkin Donohoe against Fronia H Collett and others. Judgment for plaintiff, and defendant Nell Phares appeals. Reversed, and bill dismissed.
W. B. & E. L. Maxwell, of Elkins, for appellant.
A. M. Cunningham, of Parsons, for appellee.
The decree under review on this appeal, setting aside a deed as having been made in fraud of the rights of creditors, and enforcing a judgment lien on the property conveyed by it, is founded upon the theory of duty on the part of close relatives between whom a conveyance has been made, directly or indirectly, which stands in the way of a creditor complaining of it and charging fraud in the execution thereof, to prove good faith in the transaction. In the opinion of the trial court, there was no admissible evidence of fraud in the record, but, because the debtor and the purchased of the property, sisters, were charged with fraud in the pleadings, and did not prove by their own testimony facts showing such good faith, the final decree is in substance and effect as above indicated. The grantee has appealed.
The deed in question was not made directly from the debtor to the grantee therein. It was executed by a trustee in a deed of trust by way of execution of the trust. Mrs. Fronia H. Collett, the debtor, and Mrs. M. E. Durkin Donohoe, the creditor, had been partners in business, and the indebtedness is evidenced by a decree in favor of the latter, pronounced May 27, 1916, after long and troublesome litigation, in a suit brought by the former for settlement of the partnership accounts. While that suit was pending, Mrs. Collett borrowed from J. C. Michael $350, and secured the debt on the property in question, by a deed of trust in which L. R. Fowler was the trustee. Professing to have sold it under the deed of trust to Miss Nell Phares, a sister of Mrs. Collett, he conveyed the same to her, by a deed dated June 24, 1916. In the original bill, filed August 31, 1916, the deed of trust was not noticed. The land, about an acre, worth not more than $500 was proceeded against as if it were unincumbered.
While the cause was before a commissioner, under a decree of reference, the debtor filed an answer, disclosing the deed of trust and conveyance by the trustee. Thereupon an amended and supplemental bill was filed, June 8, 1917, making Miss Phares and Michael parties, and attacking the deed of trust and the conveyance, on the ground of fraud in both transactions. It charges there was no such indebtedness as the deed of trust purports to secure; that, if there was, it had been fully paid and dicharged before the alleged sale and conveyance; and that Miss Phares, Michael, and the debtor had conspired with one another to prevent collection of the plaintiff's debt. A second amended bill was filed, April 13, 1918, more specifically charging fraud, collusion, and conspiracy against the plaintiff, in the transactions above mentioned, and making Fowler, the trustee, a party. Answers were filed, in which all charges of fraud were fully and specifically denied.
The indebtedness to Michael, secured by the deed of trust, was clearly proved by a witness called by the plaintiff, and the trial court specifically found and held that the deed of trust was executed in good faith and without fraud. As the witness related the facts upon his personal knowledge and is wholly uncontradicted, this finding cannot be disturbed.
Whether the Michael debt had been paid at the time of the sale, and that transaction and the subsequent conveyance were mere pretenses, are questions that depend for solution upon the admissibility of certain evidence, and, if it is admissible, upon its sufficiency to prove payment. The evidence of payment of the debt prior to the sale was held by the trial court to have been a privileged communication between an attorney and his client. J. B. Ward, the witness, was an attorney at law, and represented Michael in the making of the loan to Mrs. Collett. He examined the title and prepared the deed of trust and note, and the loan was made upon his advice as to the state of the title. He testified further that, before the property was advertised, he prepared and delivered to Michael, at his request, a release of the deed of trust, which he thinks Michael signed and acknowledged before him, and that Michael told him at that time the debt had been paid, or was then to be paid. Upon a second interrogation in chief about the matter he testified that Michael had said the debt had been paid. On cross-examination, he went back to his first statement. He further testified that later, how much later he did not remember, Michael had told him in a casual conversation that he intended to have the trustees sell the property, in order to protect Mrs. Collett from the debt due from her to Mrs. Donohoe, and also that the trustee knew nothing of the release, which had not been recorded. He admitted that he had been Michael's attorney in a general way. He was frequently consulted, but generally paid by those with whom his client dealt upon his advice.
In this state the rule of privilege between attorney and client is strict and rigid. State v. Douglass, 20 W.Va. 770. If the relation of attorney and client existed between the parties to the transaction in question, the communication was clearly privileged. The witness had approved the title of the property, and the note and deed of trust for Michael, and prepared a release. He did not see the release delivered, and was not told in terms that it had been. He merely inferred...
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