Filley v. Register

• Decision Date: 01 January 1860
• Citation: 4 Minn. 296
• Parties: EDWARD A. FILLEY et al. vs. SAMUEL M. REGISTER et al.
• Court: Minnesota Supreme Court

4 Minn. 296

(4 Minn. R. p. 391.)

EDWARD A. FILLEY et al. vs. SAMUEL M. REGISTER et al.

Supreme Court of Minnesota.

Appeal from order of district court, Washington County.

D. Cooper and W. H. Burt, for appellants.

L. E. Thompson and J. B. Brisbin, for respondents.

FLANDRAU, J.

I will briefly state the facts in the case, which raise the main points. On the 1st day of May 1849, Samuel Burkleo, one of the defendants, received the title to lands, in Stillwater, from certain parties by grant in fee. He held the title in his own name until the 1st day of July, 1856, when he, together with the defendant Susanna Burkleo, his wife, conveyed the same to one Elam Greely, who, in consideration of the grant to him, and on the same day, conveyed to Susanna Burkleo the lands in controversy. On the 13th day of November, 1857, Mrs. Burkleo and her husband conveyed the last mentioned lands to the defendant Samuel Register. Burkleo was in business with one Mower from the fall of 1853, until the 13th day of November, 1857, when they failed. At the time of making the conveyance of the Stillwater property, the consideration for which Mrs. Burkleo received the land in dispute, the firm of Burkleo & Mower were in-debted in considerable amounts to various persons, among whom were the plaintiffs. After the failure, the plaintiffs put their several demands in judgment, and now file this bill to set aside the deed from Burkleo and wife to Register, and declare the lands so conveyed subject to the demands of the creditors of Burkleo; the plaintiffs claiming that the whole transaction must be regarded in the light of a voluntary settlement of the lands by Burkleo upon his wife, which would be fraudulent and void as against his creditors existing at the time. The defendants deny all fraud in the transaction, and allege, that at the time of the conveyance, Mr. Burkleo owned property besides that in controversy, ample to pay all his debts; also, that the property conveyed was bought with the money and property of Susanna Burkleo, and was her own equitably, although the title was taken in her husband by mistake. The case was sharply contested in the court below, and the jury finding for the defendants, the plaintiffs bring the case here on an appeal from an order denying them a new trial.

They present us twenty-eight points for consideration. The view, however, that we have taken of the case, will divide it into two heads or questions, one of which will be subdivided in the discussion.

The first point is, whether such a conveyance is void per se as against existing creditors. And the second is, if it is not void per se, but only prima facie evidence of fraud, as the court held below, did the court err in admitting or rejecting testimony upon the investigation of the questions of fact? I shall first consider the character of the conveyance as to existing creditors. The general principle that a debtor cannot grant away his property to his family or a stranger by a voluntary conveyance, so as to interfere with the rights of his creditors, has been approved and adopted by all enlightened nations. It is so just in itself as to defy serious objection. It was declared in the civil law, and, at a very early period, established by the common law. 1 Story Eq. Jur. § 350; Dig. Lib. 42, title 8, 1, 1, § 1. This principle was more fully carried into effect by subsequent statutes of England, as follows: 50 Edward III. ch. 6; 3 Henry VII. ch. 4; 13 Elizabeth, ch. 5, and 27 Elizabeth, ch. 4. The two first mentioned were aimed against fraudulent gifts of chattels; the 13 Elizabeth, against conveyances of lands to defeat or delay creditors; and the last, against fraudulent conveyances to defeat subsequent purchasers. It is proper to observe this difference in the English statutes when examining the cases decided under them, as in some of them the wording of the statute materially influences the decision of the case. They all, however, contain the same great principle, and have called forth a large amount of discussion in the numerous cases that have arisen under them; very learned jurists in this country and in England have held opposite views as to the effect of these statutes upon voluntary conveyances, some holding that as to existing creditors, the conveyance was absolutely void, and admitted of no explanation whatever. And others, that in such cases it was only, prima facie, fraudulent, but might be cleared up and sustained, if, at the time the conveyance was executed, the grantor had ample property, other than that conveyed, to satisfy all the demands against him, and the conveyance was otherwise bona fide. It would be an unnecessary task to undertake here a review of the cases upon the subject, when so many such reviews are furnished us by the elementary writers of the present day. See discussion of the subject in 1 Story Eq. Jur. §§ 351 to 365 inclusive; 2 Kent Com. 547 to 551 inclusive, and notes. See also, the cases of Reade v. Livingston, 3 Johns. Ch. 481, and Seward v. Jackson, 8 Cow. 406. I will merely arrange a few of the many cases involving this question under the points which I consider they sustain, adding, as I said above, that some of them are upon the question of subsequent purchasers and creditors, and some upon existing demands when the voluntary conveyance was executed. Of the English cases which sustain the doctrine that no voluntary conveyance can stand against an existing creditor of the grantor, are the following: Prodgers v. Langham, 1 Sid. 133; White v. Hussey, Prec. in Ch. 14; Gardiner v. Painter, Cas. temp. K. C. 65; Tonkins v. Ennis, 1 Eq. Cases, Abr. 334; Russell v. Hammond, 1 Atk. 15; Twynes' Case, 3 Co. 89; Brown v. Jones, 1 Atk. 188; Wheeler v. Caryl, Ambl. 121; White v. Sansom, 3 Atk. 410; Beaumont v. Thorpe, 1 Ves. 27; Townshend v. Windham, 2 Ves. 1, 10; Doe v. Manning, 9 East. 63; Nunn v. Wilsmore, 8 D. & E. 528; Doe v. Martyr, 4 Bos. & P. N. R. 332; Buckle v. Mitchell, 18 Ves. Jr. 100; Hill v. The Bishop of Exeter, 2 Taunt. 82.

While it may fairly be collected from these English cases that the judges who decided them meant to hold that a voluntary conveyance could not stand against a prior existing debt under any circumstances, but as to such was void by presumption of law, yet it should not be over-looked that the circumstances and facts of many of the cases would have warranted the decisions upon the assumption that the deeds were only prima facie evidence of fraud, and a litigation of an issue joined upon that theory. The following are some of the English cases that hold that the deed is not void per se, but may be vindicated upon proof of the bona fides of the transaction: Sagitary v. Hide, 2 Vern. 44; Sir Ralph Bovy's case, 1 Ventr. 193; Walker v. Burrows, 1 Atk. 93; Lord Teynham v. Mullins, 1 Mod. R. 119; East India Co. v. Clavell, Gilb. Eq. Rep. 37; Jenkins v. Kemishe, Hard. 398; Garth v. Mois, 1 Keb. 486; Lush v. Wilkinson, 5 Ves. Jr. 384; Cadogan v. Kennett, Cowp. 432; Doe v. Rutledge, Cowp. 705.

I will now examine the effect that the English decisions have had upon the courts of this country, so far as my limited resources will permit me. In Connecticut, in the case of Salmon v. Bennett, 1 Conn. 525, the question arose, about the year 1815 or 1816, as to a voluntary conveyance from father to son, when assailed by a creditor whose debt existed at the time of the execution of the deed. The court were unanimous in allowing the question of fraud to be examined into, and held substantially as follows: That mere indebtedness at the time will not in all cases render a voluntary conveyance void as to creditors, where it is a provision for a child; that an actual or express intent to defraud, need not be proved, for this would be impracticable in many instances where the conveyance ought not to be established, and it may be collected from the circumstances of the case; that if there be no fraudulent intent, and the grantor be in prosperous circumstances, unembarrassed, and not considerably indebted, and the gift a reasonable provision for the child, leaving ample funds unincumbered, for the payment of the grantor's debts, the voluntary conveyance will be valid against existing creditors. But if the grantor be considerably indebted and embarrassed, and on the eve of bankruptcy, or if the gift be unreasonable, disproportioned to his property, and leaving scanty provision for his debts, the conveyance will be void, though there be no fraudulent intent. The question in this case was presented in an action of ejectment, but seems to have received as full consideration as if the action had been directly to set aside the voluntary deed.

In 1818, the same question was presented to Chancellor Kent, of New York, in the case of Reade v. Livingston, reported in 3 Johns. Ch. 481. In this case the chancellor enters extensively into a review of the English cases, examining many of those which I have cited and others; he also comments upon the case of Salmon v. Bennett, in Connecticut, which had then been recently decided, and holds it to be adverse to the conclusions he draws from the English cases, by which, he says, he "considers himself governed." His views of the subject, as expressed in this case, may be gathered from the following extract from his opinion, taken from pages 504 and 505: "If the question rests not upon an actual fraudulent intent (as is admitted in all the cases), it must be a case of fraud in law, arising from the fact of a voluntary disposition of property while indebted, and the inference founded on that fact cannot depend on the particular circumstances, or greater or less degree of pecuniary embarrassment of the party. These are matters for consideration when we are seeking, as in the case of subsequent creditors, for actual fraud. I apprehend it is upon the whole better and safer not to allow a party to yield to temptation or natural impulse, by giving him the power of placing property in...