Jones v. Williams
| Decision Date | 20 March 1920 |
| Docket Number | No. 205.,205. |
| Citation | 109 A. 803 |
| Parties | JONES v. WILLIAMS et al. |
| Court | Vermont Supreme Court |
Appeal from Chancery Court, Rutland County; Fred M. Butler, Chancellor.
Suit by Ellen T. Jones, administratrix of the estate of Thomas T. Jones, against Mary A. Williams and the Ludlow Savings Bank & Trust Company. From a decree for plaintiff against defendant Williams, and for defendant bank, plaintiff and defendant Williams appeal. Decree altered and affirmed, and cause remanded.
Argued before WATSON, C. J., and POWERS, TAYLOR, MILES, and SLACK, JJ.
M. C. Webber and J. P. Leamy, both of Rutland, for plaintiff.
Lawrence, Lawrence & Stafford, of Rutland, and Stickney, Sargent & Skeels, of Ludlow, for defendants.
TAYLOR, J. Hugh J. Williams, formerly of Poultney, died testate July 26, 1909. In the settlement of his estate claims largely in excess of the visible assets were presented and allowed. Plaintiff, as administratrix of Thomas T. Jones' estate, is one of the principal creditors. June 1, 1909, Mr. Williams conveyed the house and lot where he resided in the village of Poultney to his wife, the defendant Mary A. Williams. This bill is brought by the plaintiff in the name of Hugh J. Williams' executor, pursuant to G. L. 3340, to set aside this conveyance as being fraudulent as to creditors. The Ludlow Savings Bank & Trust Company is made a defendant, being the holder of a mortgage subsequently placed upon the premises by the defendant Mary A. The cause was tried by a special master. At the hearing on the report both defendants were granted leave to file and filed amended answers. Without further proceedings the court adjudged that the defendant bank was the innocent holder, without notice of defective title, of the mortgage in question, and decreed that it was valid as against the plaintiff and other creditors of Hugh J. Williams' estate and the defendant Mary A. Williams, dismissing the bill as to it with costs. It was further decreed that the conveyance to the defendant Mary A. was fraudulent and, void "as to the right of the plaintiff to the extent of the amount reported due her," and the deeds effecting the conveyance were set aside and adjudged null and void. The case is here on an appeal from the decree by the defendant Mary A. and by the plaintiff in so far as it was adverse; so both phases of the case are before us for review.
The plaintiff complains of the action of the chancellor in granting the defendants leave to amend their answers at the hearing on the report. But there is nothing in the record to show that this was not a proper exercise of discretion, nor even that it was done against her objection. Besides, the amendments would have no prejudicial effect, if they went outside the case as tried before the master. The rights of the parties are to be determined on facts found and reported. It would be discretionary with the chancellor to permit amendments to make the allegations conform to the proof, and that he was so acting will be presumed; the contrary not appearing.
As bearing upon the question whether the conveyance from Hugh J. Williams to his wife was in fraud of creditors, the master makes the following findings: Mr. Williams was the owner in fee of the premises described in the bill of complaint, which he occupied as a homestead until the time of his death. He had for a long time been engaged in the slate business. In February, 1909, he was interested in a quarry opening in Whitehall, N. Y., and owned a farm in this state on which there were slate quarries, only one or two of which were in operation, other openings having been abandoned. These quarries were operated by lessees. His income from his quarries had averaged about $1,500 a year for the past 3 years. He was 77 or 78 years of age, and was, and for a long time had been, blind. He married the defendant. Mary A. Williams, who for the present will be referred to as the defendant, in June, 1906, she being a second wife. Prior to their marriage Mr. Williams agreed, but not in writing, to pay the defendant $5,000 if she would marry him, and in consideration of this promise the marriage was consummated. The defendant did not urge the matter of payment, believing that Mr, Williams would keep his promise and give her that sum. About June 1, 1909, Mr. Williams desired to raise some money for use in his business, and in order to secure the funds wished to place a mortgage upon the home place, where he and the defendant lived. The defendant, when requested to sign the mortgage, again called his attention to his antenuptial agreement, and declined to execute the mortgage until he carried out his promise. Thereupon it was suggested that Mr. Williams convey the home place to the defendant for the purpose of carrying out the agreement, which was assented to. Accordingly a mortgage was executed to the Rutland Savings Bank to secure a loan to Mr. Williams of $2,500, and the same day he conveyed the home place to the defendant, through a third party, subject to the mortgage. The master in terms finds that the conveyance was without consideration, except that the conveyance of the house to the defendant was made "for the purpose of carrying out said antenuptial agreement, and for the purpose of raising money as above stated, and for no other purpose whatever."
Respecting Mr. Williams' solvency after conveying the premises in question to the defendant, the master makes alternative findings, in effect submitting the ultimate question to the court. Among other things he reports that Mr. Williams retained the farm with the slate quarries, which was incumbered by a mortgage for $5,000. At the time of the conveyance two of the quarries on the farm were in operation, and the property was thought to be worth several thousand dollars. Subsequently, and within a few months, the slate vein in these quarries "brought up against flint rock," which made the quarries worthless, or of very much less value. After Mr. Williams' death the mortgage was foreclosed, and his executor offered the equity of redemption at public auction, but found no bidders. It was subsequently sold to the defendant for $50. The master finds that, if the quarries were to be given the value that quarry people placed upon them, without knowing their condition with respect to the approach of the slate vein to the flint rock, Mr. Williams was left solvent; but, if they were to be given the value at that time that they were given a few months later, when the flint rock was discovered, he did not retain sufficient property at the time of the conveyance to pay his debts. The master in effect says that, if the quarries are to be valued as they appeared at the time of the conveyance, Mr. Williams retained sufficient property to pay his debts; but otherwise, if they are to be given their value at that time as affected by the condition later discovered. Mr. Williams was insolvent at the time of his death. During the administration of his estate the defendant was allowed by the probate court for her support about $1,100. Claims aggregating $3,613.99 are outstanding, not including the expense of administration, and the present assets of the estate are $736.42. These claims were all existing at the time of the conveyance.
The court in effect adjudged on the facts reported that the conveyance was voluntary, and that Mr. Williams did not retain sufficient property to make adequate provision for the satisfaction of pre-existing debts. It is well settled that a voluntary conveyance is fraudulent in law as to existing creditors for whom ample provision has not been made. Ludlow Savings Bank & Trust Co. v. Knight, 92 Vt. 171, 102 Atl. 51, 2 A. L. R. 1433. The cause of action and the right to maintain a suit under the statute is made out, if the conveyance was voluntary, if adequate provision was not then made for the payment of existing creditors, and if ultimately there is a deficiency of assets to pay the claims of such creditors. As to creditors at the time of the conveyance, the question of the good faith of the parties thereto is not involved. Such a conveyance is fraudulent and void as to them, although no actual fraud was intended. Farmers' National Bank v. Thomson, 74 Vt. 442, 446, 52 Atl. 961; McLane, Adm'r, v. Johnson, 43 Vt. 48, 59. It is very generally held that a voluntary conveyance by one indebted is presumptively fraudulent as against existing creditors, and that the burden is on those who seek to sustain it as a valid transfer to prove that the grantor retained other property or means adequate to pay his debts and discharge his obligations. This, upon the principle that one is presumed to intend the natural consequences of his act, which is to hinder, delay, or defraud his creditors. Briggs v. Sanford, 219 Mass. 572, 107 N. E. 436; Kennard v. Curran, 239 Ill. 122, 87 N. E. 913; Kolb v. Mall (Iowa) 174 N. W. 226; Arthur & Boyle v. Morrow Bros., 131 Md. 59, 101 Atl. 777, L. R. A. 1918A, 400; Scharff v. McGough, 205 Mo. 344, 103 S. W. 550; Miller v. Allen (Mo.) 192 S. W. 967; Kerker v. Levy, 206 N. Y. 109, 99 N. E. 181; Merithew v. Ellis, 116 Me. 468, 102 Atl. 301, 2 A. L. R. 1429; Crary v. Kurtz, 132 Iowa, 105, 105 N. W. 590, 109 N. W. 452, 119 Am. St. Rep. 549. For other cases see note 119 Am. St. Rep. 556. However, it is not necessary for the determination of the case at bar to decide as to the burden of proof; for, assuming that the plaintiff had the burden of showing that Mr. Williams did not retain ample means to meet his present obligations, it must be held that she has discharged that burden.
It is not a mere question of solvency or insolvency at the time of the conveyance. So far as existing creditors were concerned, Mr. Williams was bound to reserve ample property for the payment of his debts. Whether the property reserved is what will be deemed ample does not depend entirely upon its amount and value, for the real end to be accomplished is that the conveyance shall not...
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