Federal Land Bank of New Orleans v. Rowe

• Citation: 133 So. 50,222 Ala. 383
• Decision Date: 05 March 1931
• Docket Number: 4 Div. 496.
• Parties: FEDERAL LAND BANK OF NEW ORLEANS v. ROWE ET AL.
• Court: Alabama Supreme Court

133 So. 50

222 Ala. 383

FEDERAL LAND BANK OF NEW ORLEANS v. ROWE ET AL.

4 Div. 496.

Supreme Court of Alabama

March 5, 1931

Appeal from Circuit Court, Coffee County; W. L. Parks, Judge.

Creditor's bill by the Federal Land Bank of New Orleans against E. D Rowe and Lilla Rowe. From a decree denying relief complainant appeals.

Affirmed.

P. B Traweek, of Elba, for appellant.

C. L Rowe, of Elba, for appellees.

FOSTER J.

Appellant filed a bill in equity to set aside a conveyance executed by its judgment debtor to his wife conveying to her their homestead consisting of a house and lot in Elba of less value than $2,000, but not exempt from the payment of appellant's judgment, because that was founded on a claim in tort. For the purpose of treating the law of this case, therefore, it is as though it were not the homestead.

The law of fraudulent conveyances has had much treatment by this court, and we think that it is well settled by our numerous cases in all of its aspects. We will refer to some of its features in order to apply them to the facts of this case. The first principle to which we wish to refer is that when a conveyance is attacked for fraud by a creditor, and it appears that a part of the consideration for the conveyance is the payment of an antecedent debt, and a part is money then or thereafter paid, the same principles are applicable as when the purchase is entirely on a new consideration. Levy v. Williams, 79 Ala. 171; Carter Bros. v. Coleman, 84 Ala. 256, 4 So. 151; Harris v. Russell, 93 Ala. 59 (11), 67, 9 So. 541; Brinson v. Edwards, 94 Ala. 447, 10 So. 219.

The most important features of the law of fraudulent conveyances in other respects have been analyzed and fully treated in our case of London v. Anderson Brass Works, 197 Ala. 16, 72 So. 359. The result was there found to be that if the consideration of the conveyance be an existing debt, in a contest with an existing creditor, the grantee has the burden of showing the bona fides of his debt, and that it was adequate; whereupon the intention of the parties is immaterial. But that if the consideration is a new one, the grantee need only show that he in fact paid a substantial valuable consideration; whereupon the creditor must show that the grantee had notice of an intent by the grantor to hinder, delay, or defraud his creditors. In the latter event inadequacy is a mere circumstance material upon the subject of such intent by the grantor and notice of it by the grantee, of more or less value, as such, dependent upon all the circumstances. Boutwell v. Spurlin, 203 Ala. 482, 83 So. 481; McCollum v. Burton, 220 Ala. 629, 127 So. 224. This is upon the well-known doctrine that the grantee is thereby protected as a bona fide purchaser, paying value for the property. When this is shown the burden to prove notice is on the other party to the controversy.

The transfer of the property by one spouse to the other should, when thus attacked, be closely scrutinized, but the same principles of law apply as between other persons. Nat. Bank of Republic v. Dickinson, 107 Ala. 265, 18 So. 144; McCrory v. Donald, 192 Ala. 312, 318, 68 So. 306; 27 Corpus Juris 639, 640; Woody v. Tucker, 215 Ala. 278, 110 So. 465. Such relationship is not now considered a badge of fraud, nor evidence of notice of bad faith on the part of the other as grantor, except to illustrate other circumstances having such tendency. Goetter v. Norman, 107 Ala. 585, 19 So. 56; Halsey v. Connell, 111 Ala. 221, 20 So. 445; McCrory v. Donald, supra.

The evidence shows that the grantor and grantee were husband and wife, respectively; that they had a son who by reason of disabilities in the war became entitled to receive permanent monthly allowances from the government. He was a patient at the hospital in Tuscaloosa, and his father, the grantor, was his guardian. The circuit court made an order under authority of section 8134, Code, for the payment by his guardian of $25 per month to his mother as a dependent. She authorized her husband to take and use this money for the benefit of the family. There were three daughters in the family at the time, and the husband was enfeebled by disease. He, as such guardian, each month drew a check for that amount usually payable to cash and he drew the money with her (the mother's) consent for such purpose. There was no agreement that he should or should not refund it to her or otherwise account for it. This continued until it amounted to $750. In the meantime he sold the timber on his land, which he had mortgaged to appellant, and appellant sued him for its conversion and obtained a judgment, having foreclosed the mortgage. This left them the home referred to as their only property. A year or more before the date of the judgment, but after the conversion of the timber, he conveyed the homestead to his wife reciting a consideration of $1,500. The deed was recorded on the day of its date. This is the conveyance sought to be vacated.

At the same time they entered into a written agreement, reciting that due to his ill health, she (the wife) had advanced him $750, and further agreed to pay him $25 a month until he had received $1,200, or as much as $1,500, if he at his own expense recovered the house. This he did not fulfill, but she did that and incurred much more expense in repairing the property, due to the flood of 1929. He continued to receive the $25 a month to the full...