Jolly v. Kyle

• Decision Date: 01 April 1895
• Citation: 27 Or. 95,39 P. 999
• Parties: JOLLY et al. v. KYLE et al.
• Court: Oregon Supreme Court

39 P. 999

27 Or. 95

JOLLY et al. v. KYLE et al.

Supreme Court of Oregon

April 1, 1895

Appeal from circuit court, Washington county; T.A. McBride, Judge.

Action by W.B. Jolly and others against Richard M. Kyle and others. There was a judgment for plaintiffs, and defendants appeal. Reversed.

This is a suit to set aside a deed, and subject the real property therein described to the payment of the grantor's debts. The facts show that, the defendant R.M. Kyle being indebted to William Jolly and F.B. Jolly in the sum of $500, he and his father. the defendant S.M. Kyle, on December 6, 1882 executed and delivered to said creditors a promissory note for that amount, payable in two years, with interest at the rate of 10 per cent. per annum, and that F.B. Jolly assigned all his interest in said note to William Jolly; that, at the time the note was executed, S.M. Kyle was the owner in fee simple and in possession of a tract of land in Washington county containing 120 acres, which he, on August 24, 1885 for the expressed consideration of $1,200, conveyed by quitclaim deed to his sons, the defendants Charles M. and John W. Kyle, who, as a consideration therefor, assumed and paid an indebtedness of $1,000 and interest, secured by a mortgage upon said real property, and agreed to pay and also paid another debt, of $200 and interest, which their father owed to one W. Simmons; that the deed was duly recorded on the day it was executed, and the grantees entered into possession of said premises, but their father, who was quite aged and infirm, and their mother, who was blind, continued to occupy an old log house thereon; that S.M. Kyle, at the time he executed the deed, also sold and delivered to his said sons. Charles M. and John W., in consideration of $272 all his personal property, since which time he has been wholly insolvent; that on September 3, 1892, William Jolly died testate, and, his last will having been admitted to probate, the plaintiffs were appointed executors thereof and duly qualified as such; that on November 28, 1892, the said note not having been paid, the plaintiffs, by consideration of the circuit court of said county, obtained a judgment against the makers thereof for $999 and the costs and disbursements of the action, and on December 13th of that year an execution was issued upon said judgment, and delivered to the sheriff of said county, but that officer being unable to find any property belonging to either of the defendants in the writ, upon which he could levy, on the 24th of that month, returned it wholly unsatisfied. The plaintiffs allege that the defendants R. M. Kyle and S.M. Kyle are insolvent, and that said deed was made and accepted without any consideration therefor, and with a fraudulent intent on the part of the grantor and grantees to prevent the collection of the debt which is the subject of this suit, and with knowledge of said insolvency. The defendants Charles M. and John W. Kyle, after denying any fraudulent intention, allege that they paid the full value of said land, and also undertook and agreed to maintain, support, and care for their parents from the time the deed was executed until their death, which agreement they have kept and are willing to perform, thereby necessitating a great outlay of money. The reply having put in issue the allegations of new matter contained in the answer, the cause was referred to William McQuillen to take and report the evidence, with his findings of fact and law thereon. While the evidence was being taken, the defendants Charles M. and John W. filed with the referee an amended answer, in which they allege that the agreement to support their parents was gratuitous, and formed no part of the consideration for said conveyance. The referee, having taken the evidence, found the facts as above detailed, and also that the land in controversy was of the value of $2,400 at the time the deed was executed; that said deed was made by S.M. Kyle, and accepted by Charles M. and John W. Kyle, with knowledge of the insolvency of R.M. and S.M. Kyle, and with the intent of preventing the creditors of S.M. Kyle from having said land applied to the satisfaction of their demands; that Charles M. and John W. Kyle paid $1,056 on the mortgage debt, and $200 to Simmons, and also agreed to support and maintain their parents during their natural lives; that the said grantees had made permanent improvements upon the premises, which, together with the sums paid as the consideration therefor, amounted to $2,730,--and, as conclusions of law, found that the premises should be sold, and the proceeds thereof applied as follows: (1) To the payment of the amount found due the defendants Charles M. and John W. Kyle; (2) to the payment to plaintiffs of the amount due on their judgment; and (3) the remainder, if any, to be paid to the defendants Charles M. and John W. Kyle. The court, having affirmed said report, rendered a decree accordingly, from which the defendants appeal.

Dell Stuart, for appellants.

Thos. H. Tongue, for respondents.

MOORE J. (after stating the facts).

The defendants contend that in the transaction complained of there was no intention to hinder, delay, or defraud the creditors of S.M. Kyle; that the full value of the premises was paid; that the agreement to support and maintain their parents was gratuitous; and that a conveyance made under such circumstances should not be set aside at the suit of a grantor's creditors. An insolvent debtor is not prohibited from selling and conveying his property, and his deed will not be set aside, at the suit of his creditors, unless it appears that at the time the conveyance was executed he intended to hinder, delay, or defraud them. And, even though the grantor may have intended to defraud his creditors, yet the deed cannot be annulled when his grantee has paid a full consideration, unless it also appears that, having full knowledge of his grantor's fraud, the grantee was a party to and participated in it. Bump, Fraud.Conv. 194. The grantee who would successfully resist a suit to set aside a deed made to him with intent to defraud the creditors of his grantor must be able to show that he is an innocent purchaser, for a valuable consideration, and without knowledge or notice of his grantor's fraud; for, if the transaction is not in good faith, it is void as to creditors, although the grantee has paid a full consideration. The intent of the grantor and grantee at the time the conveyance was executed is therefore the first question to be considered, in ascertaining the bona...