Hauk v. Ingen

• Decision Date: 16 April 1902
• Parties: HAUK et al. v. VAN INGEN et al.
• Court: Illinois Supreme Court

196 Ill. 20

63 N.E. 705

HAUK et al.

v.VAN INGEN et al.

Supreme Court of Illinois.

April 16, 1902.

Appeal from appellate court, First district.

Creditors' bill by Edward H. Van Ingen and others against Columbus B. Hauk and others. From a judgment of the appellate court (97 Ill. App. 642) affirming a decree in favor of complainants, defendants appeal. Affirmed.William W. Gurley and Horace G. Stone, for appellants.

F. W. Becker, for appellees.

This is a creditors' bill, filed on February 11, 1892, setting up the recovery in the circuit court of Cook county of a judgment on October 2, 1891, for $2,254.90, by the appellees, Edward H. Van Ingen and David T. Leahy, as partners under the firm name of Van Ingen & Co., in the city and state of New York, against the appellant, Columbus B. Hauk, impleaded with Robley D. Bruce and Henry D. Hauk, the issuance of execution on said judgment, and the return of the same unsatisfied; and also setting up the execution of a warranty deed on January 13, 1891, which was recorded on January 20, 1891, in the recorder's office of Cook county, by Columbus B. Hauk, conveying to his wife, Joanna N. Hauk, who is made a party defendant to the bill, the north 40 feet of lot 22, of block 66, in Hyde Park, etc., said premises having a west front of 40 feet on Washington avenue. The bill alleges that, on and before January 1, 1891, Columbus B. Hauk was engaged in the mercantile business in Springfield, Ohio, and that he became indebted to divers persons to a large amount. The bill charges that, at the time of the conveyance, Hauk was the owner in fee simple of the property conveyed, and that then, and prior thereto, he was insolvent; that on April 17, 1891, he executed and delivered to one George S. Dial a deed of assignment of all his property, real and personal, in trust for the payment of his debts, but that said deed of assignment did not embrace the premises so conveyed, and that said conveyance to Joanna N. Hauk was made without valuable consideration, or with the intent to hinder, delay, or defraud the creditors of Columbus B. Hauk. The bill seeks to set aside the deed so made by Hauk to his wife, as fraudulent as against appellees, as creditors.

Columbus B. Hauk and Joanna N. Hauk, his wife, filed an answer, admitting the judgment, the issuance of execution, the engaging in mercantile business, as alleged in the bill, the incurring of indebtedness, and the making of a general assignment on April 17, 1891, to Dial, of Springfield, Ohio, in trust for the benefit of creditors. The answer, however, denies that Hauk was the owner of the property conveyed to his wife, but sets up that is was purchased with her money on November 9, 1889. The answer admits that, when the purchase was made on November 9, 1889, the title was conveyed to Columbus B. Hauk, but asserts that it was so taken in good faith and held by him in trust for the benefit of his wife. The answer admits the execution of the deed by Hauk to his wife on January 13, 1891, and denies the insolvency of Hauk at that time, or that the deed was made with the intention of hindering, delaying, or defrauding creditors.

Subsequently, on June 9, 1899, by leave of court, the bill was amended by inserting the following allegation: ‘That said complainants at the time of said conveyance of the premises aforesaid, and prior thereto, were creditors of said Columbus B. Hauk.’ It was stipulated by counsel for the defendants below that the foregoing amendment to the bill might be filed. Replication was filed to the answer, and the cause was referred to a master in chancery, who took testimony and made a report. Exceptions were filed to the report, both by the complainants and by the defendants below. The exceptions of the complainants were sustained, and those of the defendants were overruled by the final decree of the court, entered on June 13, 1900. This decree confirmed the report, except as to the matters therein excepted to by the complainants, and found that the equities of the cause were with the complainants; that the material allegations of the bill, and of the amendment thereto, were true; that there was due to the complainants $2,157.54, with interest from September 1, 1892, at 5 per cent. per annum; that, on or about January 1, 1891, and before that time, Hauk was engaged in the mercantile business in Springfield, Ohio, being a member of the firm of Bruce, Hauk & Co.; that the indebtedness, for which the judgment was rendered on October 2, 1891, was for goods, wares, and merchandise sold by complainants below to Bruce, Hauk & Co. from July 5, 1890, to November 13, 1890; that the bulk of the goods in the account were bought between August 1, 1890, and September 15, 1890; that such goods were sold on a credit of four months; that the account was due on January 16, 1891; that, on and prior to January 13, 1891, Hauk held the title in fee simple to said premises; that, by warranty deed dated January 13, 1891, acknowledged in Springfield, Ohio, on January 16, 1891, and recorded as aforesaid on January 20, 1891, he conveyed the premises to his wife, who now holds the title to the same; that at that time he was insolvent, or in contemplation of insolvency; that he executed an assignment to Dial, as above stated, on April 17, 1891; that said conveyance so made by him to his wife was made and accepted without valuable consideration, and was, in legal effect, fraudulent as to the rights of the complainants and other creditors; that said Columbus B. Hauk is the equitable owner of said premises so conveyed, or enough thereof to satisfy the claim of the complainants; that complainants were creditors of Hauk when the conveyance was made; that said conveyance was fraudulent and void as to the complainants; and that the premises are subject to the payment of said debt. It was thereupon by said decree ordered and adjudged that said deed be set aside and held to be null and void as to complainants; and that the defendants, or one of them, should, within 30 days, pay $2,906.25, with interest, etc., and a further sum for master's fees and costs, or, in default thereof, that the premises, with the improvements thereon, should be sold at public sale, etc.; that out of the proceeds the master should pay to the complainants the amount so found due to them, with interest, and, if there was any surplus, should hold the same subject to the further order of the court. An appeal was taken to the appellate court, and the appellate court has affirmed the decree of the circuit court so as above entered. The present appeal is prosecuted from such judgment of affirmance.

MAGRUDER, J. (after stating the facts).

The question involved in this case is whether a deed, made by a judgment debtor to his wife while he was in debt, is fraudulent and void as against the judgment creditor, so as to subject the land conveyed by the deed to the claim of the judgment creditor, or whether it is a valid deed, vesting title to the land in the wife, so that she can hold it free from the claim of such judgment creditor.

On November 9, 1889, the lot in Hyde Park in controversy here was conveyed by a warranty deed to the appellant Columbus B. Hauk. The consideration named in that deed was $4,000, and the amount actually paid for the lot was $4,000. Of this amount, $2,000 was paid in cash, and a note was given for the remaining $2,000, which note was paid in January, 1891. The cash payment of $2,000 was made by Columbus B. Hauk, and the note for the remaining $2,000 was executed by Columbus B. Hauk, and, when it was due, was paid by himself. On March 24, 1890, a building permit for the construction of a house upon the lot was issued to the appellant Columbus B. Hauk; and, in pursuance of said permit, a dwelling house was constructed upon the lot at a cost of $6,000. This sum of $6,000 for the construction of the house was paid by the appellant Columbus B. Hauk, who had a bank account at the First National Bank in his own name. It was paid by checks upon his bank account, and there is some evidence going to show that $4,000 of the money used in the construction of the house was borrowed by him from his son, Charles D. Hauk. On January 13, 1891, Columbus B. Hauk conveyed the house and lot to his wife, the appellant Joanna N. Hauk, the consideration expressed in the deed being $12,000. This deed was acknowledged by Hauk on January 16, 1891, and recorded on January 20, 1891. No money whatever was paid by Mrs. Hauk to her husband when the deed was made to her, nor is it claimed that any consideration passed from her to him at the time of the execution of the deed. On March 1, 1883, the appellant Hauk formed a partnership with one Weimer for the purpose of carrying on a general clothing business at Springfield, Ohio. The firm was originally Weimer & Co., but in 1884 Bruce and Hauk bought out Weimer's interest in the partnership, and thereafter the firm was known as Bruce, Hauk & Co. This firm began purchasing goods of the appellees soon after its organization. Harry S. Hauk, a son of Columbus B. Hauk, was in the employment of Bruce, Hauk & Co., and represented his father's interest, and attended to the correspondence of the firm. The indebtedness for which the judgment forming the basis of the creditors' bill filed in this case was rendered was contracted by the sale of goods by appellees to Hauk between July 5, 1890, and November 13, 1890. The goods were sold on a credit of four months, running from the average time covered by the account, to wit, September 16, 1890, making the account due on January 16, 1891.

It will thus be observed that when the indebtedness involved in the present suit was contracted the title to the lot in question stood in Columbus B. Hauk, and not in his wife. Three days before the indebtedness matured, to wit, on January 13, 1891, the lot was conveyed by Hauk to his wife without any consideration whatever. At the time the conveyance was made by Hauk...