Gallagher v. Ping's Trustees

• Decision Date: 01 November 1935
• Citation: 261 Ky. 122,87 S.W.2d 130
• Parties: GALLAGHER et al. v. PING'S TRUSTEES.
• Court: Kentucky Court of Appeals

87 S.W.2d 130

261 Ky. 122

GALLAGHER et al. v. PING'S TRUSTEES.

Court of Appeals of Kentucky

November 1, 1935

Appeal from Circuit Court, Pulaski County.

Suit by W. O. Hays, trustee in bankruptcy of the estate of C. L Ping, against Sophronia A. Gallagher and others. From an adverse decree, defendants appeal.

Decree affirmed in part and reversed in part, with directions.

H. C Kennedy, of Somerset, for appellants.

B. J Bethurum and Virgil P. Smith, both of Somerset, for appellees.

THOMAS Justice.

In 1926, C. L. Ping negotiated for and purchased from Joe H Gibson a residence lot in Somerset, Ky. but the deed was executed to him and his son Delbert C. Ping jointly; the latter being about 25 years of age at the time and had theretofore engaged in teaching school. A residence costing some $3,000 or more was erected on the lot, and it was then occupied as such by C. L. Ping and his family. Soon thereafter, and in the same year, the property was traded to Dudley Denton for about 50 acres of farming land near Somerset, with, perhaps, some slight differences in the valuation of the respective properties. But before C. L. Ping would agree to make the exchange, he required of Denton to procure one J. H. Hardwick to convey him about the same amount of adjoining land at practically the same valuation put upon the Denton tract. Denton looked after the preparation and execution of both his and Hardwick's deeds, and they were made to C. L. Ping alone, not recognizing his son, the appellant and defendant below, Delbert C. Ping, as a party to the transaction in any way. Following the execution of those deeds, and in the same year (1926), C. L. Ping and wife conveyed a one-half undivided interest in and to the small farm, composed of the combined parcels purchased from both Denton and Hardwick, to their son, the defendant Delbert C. Ping, and he moved onto the farm and seems to have operated it for the joint interest of himself and father continuously since then.

At the dates of such transactions, C. L. Ping was a member of a partnership that was engaged in road contracting, but it does not appear anywhere in the record that either he individually or the members of his firm were indebted to any one in any amount at that time. The deed executed by C. L. Ping and wife in 1926, conveying a one-half undivided interest in the farm to their son, Delbert C. Ping, was not recorded until about the middle of the year 1931. Between the years 1926 and 1931, C. L. Ping incurred a considerable indebtedness, the greater portion of which originated in notes executed to two separate banks in Somerset and aggregating some $6,000 or more. On one of those notes, amounting to $4,000, Dudley Denton was surety, and he eventually paid it, thereby making C. L. Ping his debtor for that amount. The other note was for but $2,000, and it is still held by the bank to which it was executed.

After the first residence constructed by C. L. Ping, hereinbefore referred to, was conveyed to Denton, he (Ping) erected another one on a separate lot he owned in which he and his family thereafter resided; the son, Delbert C. Ping, having no claim in and to that property. In April, 1931, C. L. Ping and wife conveyed the latter residence to the appellant and defendant below, Sophronia A. Gallagher, a sister of C. L. Ping, and the wife of Dr. A. T. Gallagher, a physician residing in Louisville, Ky. The expressed consideration in that deed was $3,000, $1,800 of which was recited to be cash in hand paid, and the cancellation of two notes claimed to have been owed to the vendee by the vendor for money theretofore borrowed of her; the amounts as testified to being $700 borrowed by C. L. Ping from his sister in 1924, and $500 he borrowed from her in 1930. In the same month and near the same day, C. L. Ping and wife conveyed to their son, Delbert C. Ping, the other one-half undivided interest in and to both the Denton and Hardwick tracts (after their conveyance to their son in 1926 of the other half), and the consideration recited in that deed was "one dollar in hand paid and other good and valuable considerations" therein acknowledged, and the assumption by their son and vendee of the balance due on a mortgage which he and his father had put upon the land to secure the money with which to pay Hardwick at the time the purchase was made from him, the balance of which debt at that time amounted to $2,800.

During the same spring (of 1931), C. L. Ping also transferred to his son-in-law, a Mr. Sneed, an automobile for the alleged consideration of $600, a large portion of which was an alleged debt that Ping owed to his son-in-law. The deed to Mrs. Gallagher conveying to her the Ping residence in Somerset was executed and acknowledged by C. L. Ping and wife in Somerset and was carried by the latter to Louisville and delivered to Mrs. Gallagher. Accompanying it was a note signed by C. L. Ping to his sister, saying: "I am sending you deed for house by Rachel. You deliver any notes that I owe you to her and pay her the balance, eighteen hundred dollars." Upon delivery of the deed by Mrs. Ping, Mrs. Gallagher is alleged to have paid her $1,800 in cash, and for which she executed a receipt saying: "Received of Sophronia Gallagher $1,800.00 balance on house." In addition to the consideration expressed in the last deed that C. L. Ping and wife executed to their son, Delbert C. Ping, in 1931, the latter is alleged to have transferred and delivered to his father 15 head of cattle that had been reared on the farm that the son managed and chiefly operated, but which property was created and brought into existence through the joint operation of the farm.

After thus stripping himself of all of the property he had, both personal and real (by placing title thereto in his relatives), except perhaps some household goods and wearing apparel, C. L. Ping in October, 1931, after the expiration of more than four months from the time he made the 1931 conveyances and transfers referred to, filed his voluntary petition in bankruptcy, and plaintiff and appellee, W. O. Hays, became trustee of his bankrupt estate. He later filed this action in the Pulaski circuit court against C. L. Ping, his sister Sophronia A. Gallagher, Sneed, and the son, Delbert C. Ping, seeking to set aside all of the conveyances referred to by which C. L. Ping conveyed and transferred property to defendants, on the ground that they were fraudulent and were made and executed with the intent and design to hinder, delay, and defraud his creditors, and that the vendees and transferees had knowledge of and participated in such fraud, and plaintiff prayed to have the involved properties declared and adjudged to be a part of the estate of C. L. Ping for distribution among his creditors.

Defensive pleadings filed by each defendant put in issue the material averments of the petition, and after the issues were developed considerable testimony was taken by the respective parties. Later the case...