Dudley v. Buckley
| Decision Date | 07 February 1911 |
| Citation | 70 S.E. 376,68 W.Va. 630 |
| Parties | DUDLEY et al. v. BUCKLEY et al. |
| Court | West Virginia Supreme Court |
Submitted September 7, 1909.
Syllabus by the Court.
A deed of conveyance, absolute on its face, may be shown to be a mortgage.
A deed for land appearing to be absolute, and reciting a cash consideration of $4,500, but which was, in fact, made to secure and indemnify the grantee as the accommodation indorser of notes made by the grantor constitutes the grantee a mortgagee, and not a purchaser.
The grantor in such a conveyance is vested with the equity of redemption, and will not be permitted to dispose of it in fraud of the rights of his existing creditors.
If an insolvent husband make such a conveyance, and at the time of making it, or afterwards, agree with the grantee that, upon the payment of the notes to secure which the deed or mortgage is given, the grantee shall convey the property to grantor's wife, such an agreement is in fraud of the rights of existing creditors of the grantor; and if the grantor afterwards pay the notes, and the grantee, in pursuance of the agreement, convey the property to grantor's wife, it will be set aside at the suit of the husband's existing creditors. Such conveyance to the wife is without consideration, and amounts in law to a gift from her husband.
The voluntary grantee of one who fraudulently acquired title is in no better position than his grantor.
When a conveyance is attacked as fraudulent, and the fraudulent intent of the grantor is shown, it is incumbent on the grantee to prove that he is a purchaser for value; and, if he fails to do so, he will be regarded as having been a party to the fraud.
A man admitted to be engaged to the daughter, claims to be the purchaser of land from her mother, and very shortly after the alleged purchase marries the daughter, and immediately conveys the land to her. Held that, for the purpose of ascertaining the good faith of the alleged purchase, he must be regarded as a son-in-law at the time of the alleged agreement.
Whenever a surety is compelled to pay the debt of his principal, he is entitled to be subrogated to all the rights and remedies of the creditor against his principal. Such rights are not limited to the time of the payment, but are coextensive with the debt or obligation.
A board of education brought suit against a sheriff and his sureties on his official bond, and obtained a judgment for a balance found to be due it and in the sheriff's hands, and the sureties paid the judgment. Between the ending of his term of office and the date of the judgment the sheriff had fraudulently procured a transfer of his property to be made to his wife without consideration.
Held that, being subrogated to the rights and remedies of the board of education, the sureties are to be treated as existing creditors at the time of the fraudulent conveyance, and can have it set aside, and the land subjected to the payment of the debt.
Where a conveyance is attacked and set aside for fraud, an order of reference to ascertain liens and their priorities is not generally necessary. Neither has the fraudulent grantee any right to demand a renting, instead of a sale, of the property.
There are no equities between fraudulent grantees who receive conveyances at different times which will warrant the application of the rule that the land should be subjected in the inverse order of its alienation. Lands in the hands of such alienees are equally liable for the grantor's debts.
Notwithstanding the rights of a codefendant are clearly established by the proof taken on the pleadings, between plaintiff and defendant, still no relief can be granted such codefendant unless relief for him is included in the prayer of plaintiff's bill, or unless he has himself answered and prayed for relief.
Appeal from Circuit Court, Wood County.
Bill by L. Dudley and others against J. L. Buckley and others. Decree for plaintiffs, and defendants appeal. Affirmed in part reversed in part, and remanded.
Dave D. Johnson and V. B. Archer, for appellants.
W. H. Wolfe, Jr., F. P. Moats, and W. E. McDougle, for appellees.
WILLIAMS, P.
This is a bill to set aside fraudulent conveyances.
J. L. Buckley was sheriff of Wood county from 1889 to 1893, inclusive. W. H. Wolfe, L. Dudley, A. A. McDougle, W. Vrooman, Samuel Stewart, and Thompson Leach were sureties on his official bond given to secure his faithful accounting for the public school moneys that should come into
his hands as such sheriff. Upon a settlement had with the board of education of Parkersburg district on the 20th day of April, 1898, he was found to be indebted to the board of education in the sum of $1,382.95. The board issued a draft upon him in favor of the then sheriff of Wood county for the aforesaid amount. Buckley refused to honor this draft, and thereupon the board of education brought an action against him and W. H. Wolfe, L. Dudley, A. A. McDougle, and W. Vrooman, the surviving sureties; Thompson Leach and Samuel Stewart being then deceased. On the 3d day of December, 1902, judgment was rendered against said Buckley and the above-named sureties for the sum of $1,153.89 and costs. Before this judgment was obtained J. L. Buckley had become insolvent, and had filed a voluntary petition in bankruptcy. Pending the bankruptcy proceeding he effected a composition with his creditors at 35 cents on the dollar, and on the 2d day of March, 1899, a decree was entered discharging him from further liability. His obligation to the board of education, being in the nature of a trust, was not compromised, or in any way affected by the bankrupt proceedings. This judgment was paid by Dudley, Wolfe and Vrooman, three of the aforesaid sureties, and Dudley and Wolfe shortly thereafter brought this suit for the purpose of having certain conveyances of real estate situate in the city of Parkersburg set aside for the alleged reason that they were voluntary and fraudulent, and made for the purpose of hindering and delaying plaintiffs in the collection of this debt.
Buckley was engaged in the mercantile business in the city of Parkersburg, and had contracted a great many debts. Finding himself to be insolvent, he endeavored to effect a compromise settlement with his creditors, and, thinking he had done so, he made a conveyance of all his real estate to B. F. Stewart on the 17th day of October, 1898. But this attempted compromise failed, and on November 22, 1898, B. F. Stewart reconveyed this property to him, and on the same day Buckley made a general assignment of all of his property to John H. Mitchell, trustee, for the benefit of all his creditors pro rata. Immediately after making this general assignment, he filed his petition in bankruptcy, and, pending the bankruptcy proceeding, he was enabled to effect the composition with his creditors, as before stated. Acting under decree of the federal court, Mitchell, trustee, reconveyed to Buckley the before-mentioned real estate, including the lot on Ann street, the one now in controversy. This lot was then vacant. It appears that the stock of merchandise was sold to one Derwacter by Buckley on the 28th day of October, 1898, at the price of $10,000, for which Derwacter executed his notes. This sale was ratified and confirmed by the federal court. After his discharge in bankruptcy, and being then the owner of this Ann street property and certain other real estate situate in, and near to, the city of Parkersburg, he on the 4th day of March, 1899, conveyed all of it to the defendant B. F. Stewart, reciting in the deed a consideration of $4,500. This deed on its face appears to be absolute and to have been made two days after Mitchell, trustee, had reconveyed the property to Buckley.
The bill alleges that this deed was made with fraudulent intent. The answers of Buckley and Stewart both deny the fraud; and Stewart alleges in his answer that it was for "a consideration of $4,500, every cent of which he had obligated himself to pay." He further says that this sum was raised on notes negotiated in the Citizens' National Bank of Parkersburg and in the Parkersburg National Bank, and that he was bound to pay the same. But he does not allege that he ever paid any part of this $4,500 to the bank. He further says that so far as J. L. Buckley was concerned said conveyance was absolute and was without reserve; but that at or about the time of the conveyance respondent did agree with Cora L. Buckley, who was the wife of J. L. Buckley, that, if she would pay said $4,500 within two years, he "would sell and convey said lands to her." But he admits in his answer that "he regarded himself only as a mortgagee as to Cora L. Buckley, with right of redemption, or right to purchase, in her." He alleges that these notes in bank were renewed from time to time, and the discount paid, and that the entire amount was finally and actually paid by somebody; but he does not say by whom it was paid, and says that he supposed, upon information, that it was paid by Cora L. Buckley. On the 7th day of May, 1901, B. F Stewart and his wife and J. L. Buckley and his wife conveyed by joint deed to George H. Textor "the Walker district property," which was a part of the land previously conveyed by Buckley to Stewart. This deed has the following clause: "The deed from said Buckley to said Stewart on its face is an absolute deed, but as a matter of fact it is only a deed of trust to secure B. F. Stewart the payment of certain notes, and said Stewart, together with his wife, joins herein for the purpose of granting and releasing to the said Textor all his interest in said real estate." Who was the maker of these notes? Stewart does not say. Mrs. Cora L. Buckley does not say they were her notes; nor is it...
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