James v. Joseph

• Decision Date: 06 February 1928
• Citation: 1 S.W.2d 1017
• Parties: JAMES v. JOSEPH et al.
• Court: Tennessee Supreme Court

Page 1017

1 S.W.2d 1017

JAMES v. JOSEPH et al.

Supreme Court of Tennessee.

February 6, 1928.

Appeal from Chancery Court, Shelby County; D. W. DeHaven, Chancellor.

Bill by Emma C. James against Josie Joseph and another. Decree of chancellor dismissing bill was affirmed by the Court of Appeals, and complainant appeals. Reversed and remanded for new trial.

Stickley & Fitzhugh and C. S. Seay, all of Memphis, for appellant.

D. B. Puryear and W. B. Rosenfield, all of Memphis, for appellees.

SWIGGART, J.

This proceeding was instituted by Emma C. James as a judgment creditor of Josie Joseph to discover and reach property for the satisfaction of the judgment debt.

By an amended and supplemental bill, complainant directed her suit at a certain lot of real estate in Shelby county, containing a valuable building occupied as a residence by Mrs. Joseph.

It was charged in the bill that this property was held under a deed conveying it to Mrs. Joseph as trustee for her infant daughter, Hettie Joseph, with full power and right in the trustee to sell and convey all or any part of it; that the consideration was paid, and agreed to be paid, by Mrs. Joseph, and that Mrs. Joseph has spent large sums of money on improvements; that she had frequently stated and represented that she was the true and legal owner of the property, obtaining credit on the faith of such representations; that the deed showing the title in Mrs. Joseph as trustee had been withheld from record; and that the execution of the deed to Mrs. Joseph, as trustee for her minor child, was in furtherance of a fraudulent scheme of Mrs. Joseph to cover up and conceal her assets and property, in order to hinder, delay, and defraud her creditors.

Complainant demanded a jury, and the case was submitted to a jury for the determination of two issues of fact, stated as follows:

"Issue No. 1. Was the cash payment of $500 on the purchase price of the property here in controversy made with money belonging to Josie Joseph?

"Issue No. 2. If you answer issue No. 1 `Yes,' then say whether or not the said Josie Joseph procured said deed to said property to be executed to her as trustee for Hettie Joseph for the purpose of hindering, delaying, or defrauding her creditors of their just and lawful debts?"

The jury returned a negative answer to the first issue, and, as instructed by the court, did not answer the second issue.

After the verdict was returned, the chancellor dismissed complainant's bill, and his decree was affirmed by the Court of Appeals.

Complainant assigns as error that the learned chancellor cast upon her an improper and unwarranted burden of proof in his instruction to the jury with reference to the source of the original cash payment of $500, embodied in issue No. 1, as follows:

"The court charges you that, under the deed in question, the absolute beneficial interest described therein is in Hettie Joseph; and that, before Hettie Joseph can be deprived of her interest by this complainant, a judgment creditor of Mrs. Joseph, you must find from the evidence in the case that Mrs. Josie Joseph paid the $500 on the purchase price of the property with her own money; and the burden of proving these facts is on the complainant, and the proof to establish them must be clear, cogent, and convincing. Proof short of this will not be sufficient. It is not as in an ordinary case where the preponderance of the evidence is sufficient."

It is our opinion that this assignment of error of the complainant is correct, and should be sustained.

The deed by which the property in question was conveyed to Mrs. Joseph, as trustee for Hettie Joseph, recites that it was made for a consideration "paid by Josie A. Joseph, trustee for Hettie Joseph."

It is contended for the defendants that this recitation imports that the consideration paid was the property of Hettie Joseph, and that evidence offered to show that it was the property of Mrs. Josie Joseph was offered in an effort to alter, change, or contradict the terms of the deed, and that therefore the burden or quantum of proof cast upon the complainant was correct.

With the exception of a single case (Gaugh v. Henderson, 2 Head, 628), all of the authorities cited by defendants and in the opinion of the Court of Appeals, in support of this proposition, are cases in which parties to a written instrument, or their privies, sought to show that the written instrument did not correctly state the intention or contract of the parties thereto; as, for instance, an effort to set up a resulting trust on evidence that purchase money was furnished by the party in whose favor the trust is asserted, or an effort to have a deed, purporting to convey a fee-simple title, declared to be a mortgage only. The authorities cited by defendants are not applicable to this case. The suit is not by a party to the deed, nor by any one in privity with either of the parties; and it may well be doubted whether any of the recitations of fact contained in the deed would amount to competent evidence against complainant, who is a stranger to the deed. 27 Corpus Juris, 815 (Fraudulent Conveyances, § 758); 18 Corpus Juris, 266 (Deeds, § 223).

Gaugh v. Henderson, 2 Head, 628, involved real property purchased by a father, with title taken to his infant daughter. The property had been seized by a creditor of the father, through the aid of a chancery court, on the ground that the purchase money had been paid by the father with his own money, and that he had caused the title to be taken in the name of his daughter, to defeat his creditors. The bill was filed by the daughter, upon attaining her majority, denying that any part of the consideration money had been paid by her father, and the issue joined on that denial was said by the court to be the turning point of the case. With reference to that issue this court said:

"And upon this point, it must be borne in mind, that the burden of proof is upon the defendants to disprove, by clear and satisfactory evidence, the truth of the fact recited in the deed."

No authority was cited for this statement, nor was any reason given for the rule announced.

In Bayliss v. Williams, 6 Cold. 440, 445, this court expressed its doubt with respect to the soundness of the rule quoted from Gaugh v. Henderson, supra, by the following reference:

"Upon the issue, whether Alicia or Andrew paid the money, it was held, the recital in the deed of payment by Alicia was evidence that the money was paid by her. Perhaps this point in the case ought not to be deemed as authoritatively settled. It does not appear to have been carefully discussed or considered."

In the present cause the effort of the complainant is to show that the original purchase money was furnished by Mrs. Joseph, with the title to the property taken to her as trustee for the benefit of her infant daughter, and that this was done for the purpose of fraudulently protecting her property against her own creditors, both those in existence and prospective creditors. In its essence, the cause is not different from an effort of a creditor to show that title to real property owned by a parent was transferred to an infant child as a voluntary conveyance in fraud of creditors.

Acts 1919, c. 125, defining fraudulent conveyances, and providing remedies for relief against them, contains the following:

"Sec. 6. Every conveyance made and every obligation incurred without fair consideration when the person making the conveyance or entering into the obligation intends or believes that he will incur debts beyond his ability to pay as they mature, is fraudulent as to both present and future creditors."

"Sec. 7. Every conveyance made and every obligation incurred with actual intent, as distinguished from intent presumed in law, to hinder, delay, or defraud either present or future creditors, is fraudulent as to both present and future creditors."

In section 1 of this act, it is provided that "`conveyance' includes every payment of money."

In a number of reported cases in which creditors have endeavored to set aside conveyances of...