Home Life & Accident Co. v. Schichtl

• Decision Date: 08 November 1926
• Docket Number: 237
• Citation: 287 S.W. 769,172 Ark. 31
• Parties: HOME LIFE & ACCIDENT COMPANY v. SCHICHTL
• Court: Arkansas Supreme Court

287 S.W. 769

172 Ark. 31

HOME LIFE & ACCIDENT COMPANY v. SCHICHTL

No. 237

Supreme Court of Arkansas

November 8, 1926

Appeal from Lee Chancery Court; A. L. Hutchins, Chancellor affirmed.

Finding affirmed.

Daggett & Daggett, for appellant.

Mann & McCulloch, for appellee.

MCCULLOCH C. J. HART, J., dissenting.

OPINION

MCCULLOCH, C. J.

In September, 1919, John N. Schichtl, one of the appellees became the owner in fee simple of a tract of land in Lee County, Arkansas, containing 643 acres, known as the Sullivan place, the consideration for the purchase being the sum of $ 40,000, of which $ 10,000 was paid in cash to J. K. Sullivan, the vendor, and annual installment notes were executed for the balance, with a mortgage on the land to secure the same. Sullivan subsequently assigned the notes to appellant. About the same time, Schichtl purchased an adjoining tract of land containing about 1,100 acres, known as the Highland place, the consideration for the purchase being $ 28,500, which was all paid in cash except $ 5,000, a note and mortgage on the land securing the same being executed, and this note also was assigned to appellant. Neither of these debts was paid, and on June 22, 1922, appellant, being still the legal holder of said notes, instituted actions in the chancery court to recover judgment against Schichtl and to foreclose the lien on said tracts of land. The amount of the several debts for which the decree was rendered was $ 31,950, the indebtedness against the Sullivan Place, and $ 5,000, the indebtedness against the Highland place. This decree was rendered on September 27, 1922, and a sale of said lands was ordered to pay the debt. The sale was made by the court's commissioner on January 23, 1923, and appellant became the purchaser of the Sullivan place for the consideration of $ 15,000, and of the Highland place for the sum of $ 5,000, the amount of the indebtedness against that place.

It appears from the undisputed proof adduced in the present litigation that, during the time that Schichtl owned these lands and a year or two before the foreclosure of the mortgages, he collected from the St. Francis Levee District the sum of $ 20,000 as damages caused by the taking of a right-of-way along the Mississippi River for reconstructing the levee. Out of this fund thus collected, Schichtl spent $ 9,000 in the erection of a gin on the Sullivan place, and he also erected three houses on the farm, the cost thereof not being disclosed in the evidence. Schichtl was also the owner of 630 acres of wild and unoccupied lands in Lee County, the value thereof not being shown in the record in the present case, and, during the pendency of the foreclosure proceedings and prior to the rendition of the decree in the case, he conveyed those lands to his wife, Annie G. Schichtl, one of the appellees, for the recited consideration of ten dollars and love and affection and funds which she had previously advanced to him.

Appellant commenced this action in the chancery court of Lee County on August 11, 1923, to set aside the said conveyance of John N. Schichtl to his wife and to subject the lands to the payment of the unpaid balance of appellant's debt represented by the decree against John N. Schichtl. It was alleged in the complaint that the conveyance was executed by Schichtl to his wife without any valuable consideration and with fraudulent intent to cheat, hinder and delay appellant as his creditor. The answer contained denials of all the allegations of fraudulent intent in regard to the conveyance in question. The cause was heard upon oral testimony and upon an agreed statement as to some of the material facts in the case, and the chancery court rendered a decree in favor of appellees, dismissing appellant's complaint for want of equity.

There was a sharp conflict in the testimony upon some of the material facts, principally as to the market value of the Sullivan place and the Highland place at the time of the execution of the deed by Schichtl to his wife which is alleged to have been executed with fraudulent intent. The chancellor made no special findings of fact, but we must assume that he found in favor of appellees upon all disputed facts which are essential to the support of the court's decree.

It is undisputed that the consideration for the purchase of these lands in September, 1919, aggregated the sum of $ 68,500; that the lands were worth that sum at that time, and that Schichtl spent $ 9,000 in improving the lands by building a gin thereon, making a total valuation of $ 77,500. There is proof of further improvement of the Sullivan place by building three houses, but we find no statement in the record of the cost of those houses. If the $ 20,000 received by Schichtl from the St. Francis Levee Board should be deducted from the total valuation stated above in arriving at the true valuation, it would leave an aggregate valuation on the two farms of $ 57,500. According to the testimony in the case, the appraisers for the levee boards fixed the value of the lands taken at $ 250 an acre, and no improvements on the farm were taken into the right-of-way. The aforementioned settlement with Schichtl was made upon that appraisement.

The amount of the indebtedness against the two tracts of land at the time of the conveyance now under investigation was about $ 37,000. The commissioner's sale of the two farms left a deficiency decree of something over $ 16,000. There was, as before stated, a conflict in the testimony concerning the value of the Sullivan place and the Highland place at the time of the conveyance under consideration, but we must accept the finding of the chancery court as conclusive, unless it is against the preponderance of the evidence. The testimony adduced by the appellees concerning the value of the two farms at the time of the execution of this deed was from $ 50,000 to $ 60,000, and the testimony adduced by appellant tended to show that the value of the two tracts at that time was from $ 35,000 to $ 40,000. According to the preponderance of the evidence, the value of the lands at that time was considerably above the amount of Schichtl's indebtedness to appellant. The finding of the chancellor that the value was as much as that shown by the testimony of witnesses adduced by appellees is not against the preponderance of the testimony, and we must therefore accept that finding as correct. In addition to that, it appears from undisputed evidence that, after appellant became the owner of the Highland place, it sold timber therefrom at the price of $ 2,000. It is undisputed that Schichtl had no other indebtedness of any character except that to appellant, as above stated. Schichtl testified, as his reason for making the conveyance to his wife, that she had been in very bad health for two or three years, and constantly needed money, and that he conveyed the lands to her so that she could be prepared to take care of herself. He testified that he had no idea of defrauding appellant, and supposed that it would realize a sufficient sum from the sale under the mortgages to collect its debt.

It is thus seen that we have a finding of the chancery court in accordance with the preponderance of the evidence to the effect that the deed of conveyance under investigation was executed without any actual intention to defraud creditors, and that the grantor was not insolvent at the time of the execution of the deed. The question then presented is, whether or not there was constructive or legal fraud conclusively presumed from the execution of the deed without consideration other than the grantor's affection for his wife, the grantee. It should be noted, in the beginning of the consideration of this question, that our statute (Crawford & Moses' Digest, § 4874) renders invalid only those conveyances "made or contrived with the intent to hinder, delay or defraud creditors * * * or as against creditors and purchasers prior and subsequent." A conveyance, even without consideration, is valid against creditors and purchasers if its execution is free from fraud, either actual or presumed. Nearly every phase of the subject of fraudulent conveyances has been dealt with in numerous decisions of this court. The subject was treated at length by Mr. Justice COMPTON in delivering the opinion of the court in Bertrand v. Elder, 23 Ark. 494. Reference was there made to the opinion of Chancellor Kent in Reade v. Livingston, 3 Johns. Ch. 479, where it was directly decided that a voluntary conveyance of property is, as against existing creditors, conclusively presumed to be fraudulent, and that no circumstances will be permitted to repel the presumption. But that decision was directly rejected by this court in the following language: "Though the decision in this case is not unsupported, the decided preponderance of authority, both in this country and in England, is against it, and establishes a rule less rigid, and, in our opinion, more consistent with the sound interpretation of the statute of frauds." After a full discussion of the authorities, the court said:

"The principle, as we apprehend, to be extracted from the decisions in England and America, is that the voluntary conveyance of a party to his wife or child, though he be indebted at the time, is prima facie only, and not conclusively, fraudulent, in respect to the claim of an existing creditor, and that the presumption thus raised may be met and repelled by proof on the other side. The question of fraud must depend on all the circumstances of the case, looking to the state and condition of the grantor, the extent of the property conveyed, and the direct tendency of the conveyance respecting the claims of creditors."

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