Fox v. Hudson's Ex'x

• Decision Date: 22 October 1912
• Citation: 150 Ky. 115,150 S.W. 49
• Parties: FOX v. HUDSON'S EX'X et al.
• Court: Kentucky Court of Appeals

150 S.W. 49

150 Ky. 115

FOX v. HUDSON'S EX'X et al.

Court of Appeals of Kentucky.

October 22, 1912

Appeal from Circuit Court, Boyle County.

Action by Mary M. Fox against A. B. Hudson's executrix and another. Judgment dismissing the petition, and plaintiff appeals and defendants prosecute a cross-appeal from a grant of new trial after verdict in their favor. Affirmed on plaintiff's appeal.

Chas C. Fox and Henry Jackson, both of Danville, for appellant.

Robt. Harding and E. V. Puryear, both of Danville, Stoll & Bush, of Lexington, and C. C. Bagby, of Danville, for appellees.

CARROLL J.

In 1892 L. W. Hudson and A. B. Hudson & Co. executed their note for $2,000 to Miss Mary Moberly, who afterwards married and is now the appellant. In 1893 the firm of A. B. Hudson & Co. composed of A. B. and L. W. Hudson, became very much involved in debt, and in October of that year L. W. Hudson and Lizzie B. Hudson, his wife, entered into a contract with the creditors, including appellant, of L. W. Hudson and the firm of A. B. Hudson & Co., by which L. W. Hudson and wife delivered over to them certain designated valuable property under the following conditions: The property was to be appraised by two appraisers mentioned in the contract, and, when this appraisement was made, the Hudsons agreed to convey all the property, or a sufficient part thereof to pay the debts of the creditors, to a trustee for the benefit of the creditors. It was further stipulated in the contract that, if the property surrendered should be appraised at an amount more than sufficient to pay the debts, the surplus or excess should be retained by the Hudsons. In the event that the property was not appraised at an amount equal to the debts, then, upon the conveyance of the property to the trustee for the benefit of the creditors, L. W. Hudson was to be released "from any and all further liability to them and any of them on account of their said debts." It was also provided, in the contract that Lizzie B. Hudson, the wife of L. W. Hudson, should release her dower, homestead, and other exemption rights in the property conveyed. Soon after this the property was appraised, and it was found that it would not pay the debts, and after this and in October, 1893, L. W. Hudson and his wife, in compliance with the contract, conveyed to Richard Gentry as trustee for the creditors all of the property specified in the contract before mentioned. In this deed of trust it was provided that "it is expressly agreed and understood that this conveyance does not, and nothing herein is to be construed as making any change, alteration, modification or release of the liability of any other person or persons to any of said creditors and their respective claims aforesaid, or as a release or waiver of any security of any kind already held by any of said creditors, but each of said creditors retain all of its, his, or her rights in these respects." Acting under this deed of trust, the trustee disposed of the property conveyed to him and distributed it among the creditors, including appellant, in proportion to their debts, and thus matters stood until 1905, when this action was brought by the appellant against L. W. Hudson and the executrix of A. B. Hudson, who died subsequent to 1893, to recover judgment on the note for $2,000 that had been executed to her in 1892 by L. W. Hudson and A. B. Hudson & Co., less the credits to which the note was entitled.

In April, 1905, L. W. Hudson filed his answer, in which he averred that in execution of the contract he had surrendered the property therein mentioned, and that the creditors, who were parties to the contract, had received their proportionate part of the proceeds realized from the sale of the property, and pleaded and relied on the stipulation in the contract that, in consideration of the surrender of the property therein mentioned, he should be released from further liability on his indebtedness to the creditors, who were parties to the contract. To this answer appellant filed a reply and amended replies, in which she alleged, in substance, that she was induced to sign the contract of 1893 upon representation made to her by L. W. Hudson that the property described in the contract was all the property of every kind that was owned by Hudson at that time, and she charged that these representations, upon which she relied, were false, and that the property described in the contract was not all the property owned by Hudson at that time. She averred that within five years before the filing of her reply there had been paid to Hudson the sum of $7,000 in cash in settlement of claim due and owing to him at the time the contract was entered into, which claims were at that time a part of his estate, and that in collecting the $7,000 and appropriating the same to his own use, and in failing to turn it over to the trustee for the benefit of the creditors, he practiced a fraud upon her. She also averred that Hudson had failed to surrender to the trustee all of the tobacco he agreed in the contract to deliver to him, and she pleaded and relied upon these facts in avoidance of the defense made by Hudson. She further averred that in the deed of trust made by Hudson and wife to Gentry no mention was made of the contract previously entered into, and that this deed of trust, which was really an assignment for the benefit of the creditors of Hudson, supplemented and took the place of the contract, and, as there was no stipulation in it releasing Hudson from liability, his defense that the contract contained such a stipulation was not available. To this last-mentioned matter a demurrer was sustained, and in February, 1907, Hudson filed a rejoinder, in which, after denying the affirmative matter in the reply except as to the $7,000, admitted that he had collected in 1903 $7,000 under insurance policies that he had on the life of his brother, A. B. Hudson, which insurance had been assigned to him in March, 1893, to secure the payment of debts which he had paid in settlement of the partnership debts of Hudson & Co.

In January, 1911, the executrix of A. B. Hudson filed her answer, in which she set up and relied upon the condition in the contract of 1893, releasing L. W. Hudson from liability and charged that this stipulation in the contract had the effect of releasing A. B. Hudson, who was jointly liable on the note for $2,000 with L. W. Hudson. In April, 1911, L. W. Hudson and the executrix of A. B. Hudson offered a rejoinder pleading, and relying on the statute of limitation as a bar to the charge of fraud contained in the reply of appellant, but it seems that the court refused to allow either one of these pleadings at that time to be filed. Afterwards in September, 1811, the court permitted the rejoinders pleading the statute of limitation to be filed, and sustained demurrers to all of the replies filed by the appellant, and, declining to plead...