Ferguson v. Daughtrey

• Decision Date: 11 February 1897
• Citation: 26 S.E. 822,94 Va. 308
• Parties: FERGUSON et al. v. DAUGHTREY et al.
• Court: Virginia Supreme Court

26 S.E. 822

94 Va. 308

FERGUSON et al.

v.DAUGHTREY et al.

Supreme Court of Appeals of Virginia.

Feb. 11, 1897.

Fraudulent Conveyance—Evidence Considered —Knowledge of Grantee—Evidence.

1. A conveyance will be set aside as fraudulent where the evidence shows that the grantor, who was a married woman, was at the time a member of an insolvent firm, which made an assignment a few days later, that the property conveyed was substantially all the grantor owned, including her home, and, though the real estate market was then active, the sale was made to the grantee's sister in a distant city, who had no income, and small property, and who gave her unsecured note, due in five years, without interest, for the entire price above the incumbrances, which note has not been paid; and that during the following two years the grantor and her husband had continued to occupy the residence, and collect rents from the remaining property, and had rendered no account, and paid no rents over to the purchaser.

2. It is not necessary, to impeach a conveyance for fraud, that the grantee had actual knowledge of the fraudulent intent of the grantor, hut it is sufficient if he had knowledge of such facts as would have put an ordinarily prudent person on inquiry which would have ledto knowledge of facts from which such fraudulent intent would be implied.

3. Under Code, § 3351, a party is permitted to call a person having an adverse interest as a witness; and where a plaintiff, alleging fraud, which is denied by the defendants, calls the defendants as witnesses, and proves by their own testimony facts which establish the fraud, he is entitled to the full benefit of such facts, notwithstanding the denial, to the same extent as though they had been proved by other evidence.

Appeal from circuit court, Nansemond county.

Bill by W. B. Ferguson & Co. and others against Beatrice J. Daughtrey, Eugenia A. Blacknall, and others to set aside certain deeds on the ground of fraud. Decree for defendants, and plaintiffs appeal. Reversed.

Edwards & Happer and E. E. Holland, for appellants.

J. F. Crocker and W. J. Kilby, for appellees.

RIELY, J. The plaintiffs, who are creditors of the late mercantile firm of Daughtrey & Hines, composed of Beatrice J. Daughtrey and W. E. Hines, filed their bill to impeach and have declared fraudulent and void three deeds of conveyance made by her and her husband of her real estate to Eugenia A. Blacknall.

Insolvency does not deprive the owner of the right to sell his property, unless the sale is made with intent to delay, hinder, or defraud his creditors; and the law does not then invalidate the title of the purchaser if the sale is for valuable consideration, and the purchaser has no notice of the fraudulent intent of the grantor. The inquiry, therefore, is as to the intention of the grantor in making the conveyances, and, if that was illegal, whether the grantee had notice of it.

First, as to the intention of the grantor.

Beatrice J. Daughtrey, the owner and grantor of the property, resided, and the property conveyed is situate, at Suffolk, Va. The grantee is her sister, and resided at Atlanta, Ga. The husband of Mrs. Daughtrey left their home at Suffolk on October 1, 1891, and went to Atlanta, whence he returned home on October 18, 1891. The matters sought to be Impeached were transacted by him during this visit. The record does not disclose that he went to Atlanta for any other purpose than to sell his wife's property to her sister. The sale was accomplished, and the deeds delivered, before he returned home. The purchase price was $8,100. Deducting therefrom the liens subsisting on the property, amounting to $4,300, there was left a balance of $3,800. He owed the grantee $125, which being also deducted there remained the sum of $3,675, for which sum the grantee executed her note to Mrs. Daughtrey. The sale having been consummated, he returned home, bringing with him the deeds to be recorded and the note for $3,675.

The note was given by Mrs. Daughtrey to her husband, to do with it as he pleased. Being asked, on her examination, to produce it for inspection, she failed to do so, and answered that her husband had disposed of it. To whom, or in what way, he had disposed of it, she did not disclose.

The deeds were admitted to record on November 2, 1891, and eight days thereafter, on November 10, 1891, the firm of Daughtrey & Hines made a general assignment of all their effects for the benefit of their creditors.

The circumstances under which the sale was made, and its very unusual terms, plainly manifest an illegal purpose.

At the time it took place, the firm of Daughtrey & Hines was utterly insolvent, and there was no way by which its creditors could obtain satisfaction of their debts except by resorting to the individual property of Mrs. Daughtrey. The property so sold and conveyed constituted all, or substantially all, of the estate of the grantor, and included the residence and home of herself and her husband. The only reason stated by her for making the sale was that her husband thought he might do better elsewhere. This, however, constituted no ground for seeking a purchaser in a near relative in the distant city of Atlanta, for the real-estate market at Suffolk was then active and upward, and there would have been no trouble in making an advantageous sale at home, if that was the real purpose. Nor does the subsequent conduct of herself and her husband confirm her explanation of their reason for the sale. She has not changed her home, nor he his place of business. Nor does it appear that he has sought business elsewhere. She continues to occupy her same residence and home at Suffolk, and her sister to reside in Atlanta, while he has become the agent of the latter to look after the property so sold and conveyed to her.

The grantee was possessed of no income, and was only the owner of an unimproved lot at Atlanta, for which she had paid $1,200, and had $100 lent out. This was her only means of paying the purchase money of $8,100 for the property. Not a dollar of money passed. There was no cash payment, and the part of the purchase money in excess of the liens was upon a credit of five years, without interest, and without security; not even a lien therefor being retained on the property sold.

Both in her answer...