Hale v. Hollon

• Decision Date: 25 February 1897
• Citation: 39 S.W. 287
• Parties: HALE v. HOLLON et al.
• Court: Texas Supreme Court

39 S.W. 287

HALE v. HOLLON et al.

Supreme Court of Texas.

February 25, 1897.

Error from court of civil appeals of Third supreme judicial district.

Action by V. W. Hale against W. R. Hollon and another to set aside a certain deed. From a judgment of the court of civil appeals (36 S. W. 288) affirming a judgment for defendants, plaintiff brings error. Affirmed.

A. C. Prendergast, R. W. Andrews, and Hale & Hale, for plaintiff in error. Clark & Bolinger, for defendants in error.

DENMAN, J.

S. E. Hollon, who was all her life non compos mentis, died October 15, 1894, at the age of about 68 years, the owner of valuable real estate situated in McLennan and other counties in Texas, which she had inherited some years before, leaving as her heirs her brothers, D. P. Hollon and W. R. Hollon, and the children of a deceased sister; said D. P. Hollon having been her guardian for some years. Prior to the 25th day of June, 1894, various judgments were rendered against D. P. Hollon, and on that date he executed to his brother, W. R. Hollon, a conveyance of his "entire interest in the estate of S. E. Hollon, of whatsoever kind and nature she is now in possession of, or may hereafter become possessed of," which conveyance contained a general warranty of title, and was duly filed for record in McLennan county on the day of its execution. A few days after the death of S. E. Hollon, executions, issued upon said judgments, were levied upon an undivided one-third interest in the lands owned by S. E. Hollon at the date of her death as the property of D. P. Hollon, and at the sales under said executions the same was purchased by plaintiff in error, V. W. Hale. On the 10th day of January, 1895, said Hale brought this suit against D. P. and W. R. Hollon, and, in addition to the facts above stated, alleged that said transfer from D. P. to W. R. Hollon was executed for the purpose of hindering, delaying, and defrauding the creditors of D. P. Hollon, who was then insolvent, and for the purpose of defrauding the said S. E. Hollon, the same being made without her knowledge or consent,— all of which was well known to W. R. Hollon; wherefore he prayed for a cancellation of said instrument as being a cloud upon his title acquired as purchaser at the execution sales aforesaid. W. R. and D. P. Hollon answered by general denial, and W. R. Hollon answered specially, denying all knowledge of insolvency of D. P. Hollon, or of any fraud or intent to hinder or delay creditors in the execution of said instrument; alleging that he purchased the interest of D. P. Hollon in the estate of their sister, S. E. Hollon, in good faith, paying value therefor; and prayed for a cancellation of plaintiff's deeds as a cloud upon his title thereto. On trial before the court without a jury, judgment was rendered that plaintiff take nothing by his suit, and that the deeds from the sheriff to plaintiff be canceled as a cloud upon the title of defendant W. R. Hollon. The trial judge filed no conclusions of fact or law. The court of civil appeals, in affirming the judgment, upon conflicting testimony, find as a fact "that the transfer [from D. P. to W. R. Hollon, above mentioned] was not made with intent to defraud creditors of D. P. Hollon."

It is assigned as error here that the court of civil appeals erred in holding that D. P. Hollon could, as against his judgment creditors, make a valid conveyance of a naked expectancy without the knowledge or consent of S. E. Hollon. The first question involved in the assignment is, could D. P. Hollon contract with reference to the mere expectancy of inheritance from his sister in such way that by virtue of such contract any property he might inherit from her would pass to W. R. Hollon? Whatever may be the rule at law, it is well settled, as stated in Spence's Equity Jurisdiction (volume 2, p. 865), that "a naked possibility or expectancy of an heir to his ancestor's estate, or even of the anticipated rights of a person as next of kin, may be the subject of contract in equity, which will be equivalent to an assignment of the property if and when it shall fall into possession." Nimmo v. Davis, 7 Tex. 26; Richardson v. Washington, 88 Tex. 339, 31 S. W. 614; Tailby v. Official Receiver, 13 App. Cas. 523; Matsin v. Marlow, 65 N. C. 695; Jenkins v. Stetson, 9 Allen, 128; In re Fritz's Estate, 160 Pa. St. 156, 28 Atl. 642.

The second question involved in the assignment is, conceding that D. P. Hollon could bind himself by such a conveyance, was same binding upon his judgment creditors? If it be admitted that creditors, in the absence of contract, have any legal or equitable right to look to such expectancies for satisfaction of their claims, and therefore have the right to insist that the debtor do not dispose of same with intent to defraud them,—upon which question we do not deem it necessary to express an opinion,—still the court of civil appeals, in support of the judgment of the trial court, having found as a fact that the conveyance was not made with intent to defraud creditors, such finding is conclusive upon us, and we must therefore hold, as a matter of law, that the conveyance is as binding upon such creditors as upon the debtor, D. P. Hollon. In re Fritz's Estate, 160 Pa. St. 156, 28 Atl. 642; Fitzgerald v. Vestal, 4 Sneed, 258; Read v. Mosby, 87 Tenn. 759, 11 S. W. 940; Stover v. Eycleshimer, *42 N. Y. 620.

The third question involved in the assignment is: Conceding that such an expectancy is a subject-matter of contract in equity, and that there was no actual fraud in the execution of the instrument from D. P. to W. R. Hollon as above indicated, does the mere fact that S. E. Hollon did not assent thereto, she being without capacity to assent, prevent its having any binding force or efficacy? The doctrine of McClure v. Raben, 133 Ind. 507, 33 N. E. 275, answers this question in the affirmative, and that of Mastin v. Marlow, 65 N. C. 695, in the negative. We have been able to find no other direct authority. Doubt as to how this question should be answered was the ground upon which we granted the application for writ of error. The rules permitting and regulating dealings by expectants with reference to such expectancies, being of common-law origin, were adopted by us along with the body of that law by act of congress of the republic of Texas approved January 20, 1840, which provided "that the common law of England (so far as it is not inconsistent with the constitution or the acts of congress now in force) shall, together with such acts be the rule of decision in this republic, and shall continue in full force until altered or repealed by congress." The inquiry then naturally presents itself, what was the common-law rule as recognized in the courts of England at that time upon the question under consideration? For since there has been no statute or direct decision in this state in reference thereto it would seem that such rule should be entitled to much respect at this late day, as being the probable basis of many titles to land. While the courts of equity in England have long recognized and enforced contracts by expectants in reference to such expectancies, they have from the earliest period viewed them with great suspicion. This arose first from the fact that such expectants, being often young, inexperienced, hard pressed, or of extravagant habits, are inclined to sacrifice their future interests to meet their present real or imaginary wants, thus rendering them easy victims of the schemes of that cunning and pernicious element who too often mark them as their prey; and, second, from the fact that such transactions are looked upon as a species of fraud upon the ancestor or person from whom the expectancy is to be received, in that they, being usually of a secret nature, tend to destroy or lessen his influence and control over the expectant by giving him independent means of gratifying his desires, and in that the ancestor would often be thereby deluded into virtually leaving his property not to the persons intended, but to the stranger who had so insidiously undermined his domestic authority, and encompassed the ruin of the intended beneficiary of his fortune. Therefore, as early as the leading case of Earl of Chesterfield v. Janssen, 2 Ves. Sr. 158, 1 Atk. 339, decided in 1750, we find the doctrine firmly established in said courts that, whether the suit be by the holder of the contract to enforce specific performance, or by the expectant to be relieved from the terms thereof, the prima facie presumption was that the same was a fraud both upon the expectant and the ancestor or party from whom the expectancy was to be derived, and therefore the burden was imposed upon the holder to rebut such presumption, in order, in one case, to obtain the relief prayed for by him, or, in the other, to defeat that sought by the expectant. We are not called upon in this case to determine the character of proof the holder was required to produce in order to rebut such presumption, except as to whether it was necessary to show the consent of the ancestor or person from whom the expectancy was to be derived. Doubtless, the absence of such assent, where the whole evidence did not clearly show a fair and just transaction, was considered by the courts as most cogent evidence of fraud entitling the expectant to relief, but we have been able to find no English case where its mere absence has been held to authorize such relief if the proof offered showed a transaction otherwise free from fraud, unfairness, and inadequacy of consideration. Indeed, most of the cases seem to proceed upon the assumption that there was no such assent; so much so that Lord Brougham erroneously considered that no relief could be granted against the contract if it were present. Earl of Aylesford v. Morris, 8 Ch. App. 491. In Beckley v. Newland, 2 P. Wms. 182, decided in 1723, Beckley and Newland, having married sisters, who were cousins and presumptive heirs of Mr....