Gilliland v. Fenn

• Citation: 90 Ala. 230,8 So. 15
• Parties: GILLILAND ET AL. v. FENN ET AL.
• Decision Date: 28 May 1890
• Court: Supreme Court of Alabama

8 So. 15

90 Ala. 230

GILLILAND ET AL. v. FENN ET AL.

Supreme Court of Alabama

May 28, 1890

Appeal from circuit court, Etowah county; JOHN B. TALLY, Judge.

This action was brought by the appellees, as heirs of one John H Shepherd, deceased, against the appellants, and sought to recover the possession of certain lands specifically described in the complaint. The material facts in the case are substantially as follows: On May 15, 1867, A. W. Shepherd and his wife executed to his son, John H. Shepherd, a deed to the lands in controversy, which deed was voluntary, and shown to have been made in order to defraud his creditors Rhea &amp Whorton; and it was alleged that the son, John H participated in the fraud. This deed was duly recorded the 9th day of August, 1867. At the time of the execution of this deed John was and had been living on a portion of the land by and with the consent of his father, the said A. W. Shepherd who was also living on the same land, and had been for years before. There was no visible change of possession. The said John H. Shepherd died on the 8th day of August, 1872. The father continued in the possession of the land until he conveyed them, as is shown hereafter. John's family moved away from the land shortly after the death of John. A. W. Shepherd and others being indebted to Rhea & Whorton by note, this indebtedness was reduced to a judgment October 10, 1867, and on April 5, 1869, the lands here in controversy were sold under an alias execution on said judgment, and were bought at said sheriff's sale by Rhea, he receiving the sheriff's deed for the same. On August 28, 1869, the said Rhea brought an action of ejectment against the said A. W. and John H. Shepherd for the recovery of said lands, and on May 6, 1871, the said Rhea recovered the lands in controversy from John H. Shepherd. On May 26, 1873, an alias fi. fa. was placed in the hands of the sheriff, which was levied on the lands in controversy, and said lands were sold to said Rhea on July 7, 1873, and a deed executed to him on that day. Rhea then commenced suit against A. W. Shepherd and others for said lands; and while said suit was pending, to-wit, April 22, 1877, A. W. Shepherd compromised said suit by paying him a certain amount, and Rhea and wife making to said A. W. Shepherd a quitclaim deed to the said lands. On the 28th December, 1877, the said A. W. Shepherd, being in possession of said land, sold and conveyed by warranty deed for a valuable consideration a part of the said land to appellant J. R. Gilliland, and then about a year afterwards sold another portion, and then after that conveyed the remainder of the tract to him. On 28th February, 1877, the appellees instituted this suit to recover the said land, and based their claim to the same on their being the heirs of the said John H. Shepherd. The points decided were raised principally by charges asked by the defendants and refused, but it is not necessary to set out these charges here. There was judgment for the plaintiffs, and the defendants appeal, and assign the various rulings of the lower court as error.

Jas. Aiken and Dortch & Martin, for appellants.

W. H. Denson, for appellees.

SOMERVILLE J.

The main point of contention in this case involves an inquiry into the relative priority of the conflicting claims of title in ejectment, that of the plaintiffs being derived by immediate inheritance from an alleged fraudulent donee, and that of the defendants under a conveyance for valuable consideration from the alleged fraudulent donor. The salient facts as to the conveyance are these: The grantor, A. W. Shepherd, being largely indebted, conveyed to his son, John H. Shepherd, substantially his entire property, consisting of a farm, except one tract of about 40 acres, upon which his residence was situated. The recited consideration is $3,000, but the evidence tends to show that no consideration whatever in fact passed between the parties, but that the transaction was purely a voluntary conveyance; and, further, that it was a mere sham, made expressly with the fraudulent intent to hinder or delay creditors. The father continued to occupy the premises with the son, there being no visible change of possession by either, and the evidence tends to prove that he (the donor) still collected and appropriated the rents derived from certain occupying tenants; that he even furnished the son money to pay the taxes on the land; and, as between the parties, the whole affair was regarded as a secret trust mutually intended to cover a transparent fraud on creditors; and that the son asserted no real claim of title as against his father. This deed from the father to the son was recorded. Afterwards the father sold the land to the appellant Gilliland, as the evidence tends to prove, for a valuable and adequate consideration in cash. The son having died, his heirs bring this suit, claiming title under him.

The question under consderation is one in which there is no little conflict of authority, as observed on all hands, in the text-writers and the adjudged cases. The apparent difficulties seem to me to have arisen from a failure in some instances to properly distinguish the application of the principles involved in their bearing on two classes of conveyances: (1) Those that are merely voluntary; and (2) those which, in addition to being voluntary, are infected with an actual fraudulent intent. Another source of conflict is the difference of opinion as to how far notice of the prior conveyance and its nature will affect the title of the subsequent purchaser from the fraudulent donor or grantor. There are some important propositions which we may formulate as premises in this discussion, as to which little or no doubt can exist. They will serve as valuable aids in arriving at a correct solution of the question in hand. (1) All executed conveyances, whether voluntary or actually fraudulent, are unquestionably valid inter partes. Such a conveyance is binding on the grantor, his heirs and personal representatives, and is absolutely unassailable by them. Coffey v. Norwood, 81 Ala. 512; Davis v. Swanson, 54 Ala. 277; Anderson v. Roberts, 18 Johns. 516; Code 1886, § 1735, and cases cited. (2) The statute of frauds (13 and 27 Eliz.) on this point is substantially embodied in section 1735 of our present Code, and has long prevailed as a statutory provision in this state, to say nothing of its being, as long ago asserted by both Lord MANSFIELD and Chief Justice MARSHALL, but affirmatory of the common law. It declares void all conveyances made with intent to hinder, delay, or defraud creditors, purchasers, or other persons who are or may be so hindered, delayed, or defrauded. Carter v. Castleberry, 5 Ala. 277; Dougherty v. Jack, 30 Amer. Dec. 335. (3) Subsequent creditors and subsequent purchasers are thus placed precisely on the same footing, equal protection being afforded to each. 27 Eliz. was made to embrace purchasers, while 13 Eliz. only included creditors. Our statute includes both, as that of New York and other states also do. As to the New York statute, SPENCER, C.J., said in Anderson v. Roberts, 9 Amer. Dec. 235, supra: "I cannot perceive the least difference between a conveyance to defraud subsequent creditors and a conveyance to defraud subsequent purchasers." Hood v. Fahnestock, 34 Amer. Dec. 489. The past decisions of this court, I may add, bearing on this subject, as we shall see, appear fully to recognize this view. (4) Our decisions uniformly hold also that a mere voluntary conveyance, unaffected with actual fraud, is valid as to subsequent creditors. But if actual fraud- mala fides, or fraud in fact-is shown, whether directed against existing or subsequent creditors, either class can successfully impeach and defeat such conveyance, so far as it may affect the right to the satisfaction of their lawful debts or demands as creditors of the fraudulent grantor. Seals v. Robinson, 75 Ala. 364, Stiles v. Lightfoot, 26 Ala. 443; 3 Brick. Dig. 515, § 119. In other words, as clearly stated by Mr. Freeman: "Such fraudulent conduct renders the transfer void in toto, except as to the parties; and of this invalidity a subsequent creditor may take advantage, as well as one whom the debtor intended to defraud." Jenkins v. Clement, 14 Amer. Dec. 706, 707, note.

Assuming these premises, we pass to other questions of greater difficulty. The present rule in England undoubtedly is that mere voluntary conveyances, although not infected with actual fraud, are absolutely and conclusively void under the statute of 27 Eliz. as against a subsequent purchaser for a valuable consideration, although he purchased with notice of the existence of such former voluntary conveyance. Elliott v Horn, 10 Ala. 348, 44 Amer. Dec. 488. Or, as stated by Mr. Pomeroy, (2 Eq. Jur. § 974,) the English rule now recognized is that the statute of Elizabeth "avoids all voluntary conveyances as against subsequent purchasers for a valuable consideration, even though such conveyances were made in good faith, without any actual fraudulent intent, and though the subsequent purchasers for value had notice thereof." This rule, as he observes, has been accepted by a portion of the American decisions, but not by the great current of American authority. Mr. Sugden, in his treatise of the Law of Vendors, (pages 474, 475,) asserts that this has always been considered "a harsh interpretation" of the statute of Elizabeth, and "ought never to have been established." And such, indeed, seems to be the general current of opinion among both the English and American jurists and judges. Mr. Pomeroy conceives the American rule, as supported by the current of authority, to limit the operation of the statute to prior voluntary conveyances made with fraudulent intent,...