Keel v. Larkin

• Decision Date: 07 December 1887
• Parties: KEEL AND OTHERS v. LARKIN.
• Court: Alabama Supreme Court

3 So. 296

83 Ala. 142

KEEL AND OTHERS v. LARKIN.

Supreme Court of Alabama

December 7, 1887

Appeal from chancery court, Jackson county; S. K. MCSPADDEN Chancellor.

The bill in this case was filed September 7, 1883, by William R Larkin against Lemuel H. Lewis, and the personal representative, widow (Mary F. Keel) and children of Lemuel S. Mead, deceased, and sought, principally, to subject to the satisfaction of a judgment, which the complainant had obtained against said Lewis, a tract of land which said Lewis had conveyed to said Mead in his life-time, in alleged fraud of his creditors. The tract, which contained 200 acres, was conveyed to said Lewis by J. C. Outerbridge and wife, by deed dated October 27, 1873, which recited the payment of $4,000 as its consideration, and it was conveyed by Lewis to said Lemuel S. Mead by deed dated May 28, 1875, which recited the payment of $3,000 as its consideration. Afterwards, by deed dated March 26, 1876, the said Mead conveyed 40 acres of the tract, with about 90 acres of another tract, to said Lemuel H. Lewis, in trust for Mrs. Mary F. Mead, the wife of said Lemuel S. Mead, the consideration, as therein recited, being her relinquishment of dower in other lands which said Mead had sold and conveyed, his wife joining in the conveyance. Copies of these three conveyances were made exhibits to the bill, and it was alleged that Mead paid the entire purchase money to Outerbridge, and had the title conveyed to Lewis who was his nephew, for the purpose of hindering, delaying and defrauding his creditors; that the conveyance by Lewis to Mead was without consideration, and was executed with the intent to hinder, delay, and defraud the creditors of said Lewis; and that the subsequent conveyance by Mead to Lewis, in trust for Mrs. Mead, was without consideration, and was executed with the fraudulent intent of reducing the area of the tract of land, on which he then resided, so that he might claim the residue of the tract (160 acres) as a homestead exemption.

The complainant's judgment against Lewis was rendered in the circuit court of Jackson county on March 8, 1879, and was founded on two bonds, or promissory notes under seal, executed by said Mead and Lewis jointly, each for $634.92, dated December 4, 1874, and payable one and two years after date. These notes were signed by Lewis as the surety of Mead, and were given in settlement and extension of a former debt, on which a suit in chancery was then pending, under circumstances as stated in the opinion of the court, alleged in the bill. Another judgment was recorded by the complainant on these notes against said Mead, on October 20, 1877. It was alleged that an execution had been regularly issued on said judgment against Lewis, and returned, "No property found;" that executions had been regularly issued on said judgment against Mead, until his death, which occurred January 14, 1878; that an execution, regularly issued after his death, was levied on the tract of land, which was thereupon claimed by the widow and children as a homestead exemption; that Lewis was insolvent, and that the estate of Mead had been reported and declared insolvent. The bill prayed for special relief; and, generally, "that on the hearing said conveyance executed by said Lewis to said Mead, on May 28, 1875, may be declared fraudulent and void as against your orator's said judgment of March 8, 1879; that the tract of land therein mentioned and described may be declared subject to the payment of said judgment, with all costs and interest thereon accrued; that your orator may have a money decree against said Lewis for said sum, with an order for the sale of said land for the satisfaction thereof; that said deed from said Mead to said Lewis, as trustee for said Mary F., of date March 20, 1876, may be declared fraudulent and void; that the same may be canceled, and said tract of land sold under a decree of this court freed from such cloud on the title, for the satisfaction of said judgment," etc. Upon the hearing of said cause the testimony, which is fully set out in the opinion of the court, did not sustain all the allegations of the bill. The chancellor's decree therein is, inter alia, assigned as error.

D. D. Shelby, for appellant.

R. C. Brickell and J. E. Brown, for appellee.

STONE C.J.

When this case was before us at a former term, (Larkin v. Mead, 77 Ala. 485,) we passed only on the equity of the bill, and held it made a case for equitable relief. In that case the question was raised on demurrer, and only the averments of the bill could be considered. Taking the averments to be true, we held that Mead, and those claiming in his right, were estopped from setting up any title, legal or equitable, in him (Mead) at the time he induced Larkin to accept Lewis as surety. Our ruling was rested on the averments that "Mead induced Larkin to dismiss his suit to subject the proceeds of the life-policy, and to extend time of payment on his notes or bonds, with Lewis as surety, *** on the representation that Lewis held a fee-simple title to the lands." The case comes before us now on pleadings and testimony, and on the chancellor's final ruling thereon. The answers deny the averments of the bill on which its equity was rested at the former hearing, and there is not a semblance of testimony offered in support of them. We must therefore determine this case on the other questions raised.

We hold that the testimony authorizes us to draw the following conclusions of fact: That Mead purchased the Outerbridge tract of land,-the land in controversy,-and paid for it with his own means, and took the title in the name of Lewis, with the intent of fraudulently placing it beyond the reach of his creditors generally, and particularly to hinder and defeat any attempt the present complainant might make to subject it to the demand set up in the bill; that Lewis accepted and held the title in secret trust for the benefit of Mead, to aid him in consummating his fraudulent design; and that when, in the changed conditions, it became unsafe for the title to remain in Lewis, it was voluntarily retransferred to Mead, who had greater facilities for further covering it beyond the pursuit of creditors, and with the intent that he should do so. We speak of Mead's intent; for we are convinced that Lewis had neither interest nor intent, further than to aid Mead in carrying his fraudulent purposes into execution.

It is contended for appellants that, when Lewis transferred the title of the land to Mead, he only placed it in him who had paid the purchase money, thus executing the trust which had been reposed in him; and that such conveyance cannot be a fraud on the creditors of Lewis, no matter what his motive may have been; that the land, ex quo et bono, belonged to Mead, and it cannot be a fraud to place the title where it rightfully should be; that the land, so far as creditors are concerned, has all the while belonged to Mead, and the conveyance only made visible that which already existed, though secretly.

There are authorities which seem to maintain this proposition. Clark's Adm'r v. Rucker, 7 B. Mon. 583; Davis v. Graves, 29 Barb. 480; Cramer v. Blood, 57 Barb. 155, and 48 N.Y. 684. And the following authorities, it is contended, go far to support the same principle. Caffal v. Hale, 49 Iowa, 53; Clemens v. Clemens, 28 Wis. 637, 9 Amer. Rep. 520; Parker v. Tiffany, 52 Ill. 286; Matthews v. Buck, 43 Me. 265; Bank v. Lyle, 7 Lea, 431; Petty v. Petty, 31 N. J. Eq. 8; Moore v. Livingston, 14 How. Pr. 1; Wait, Fraud. Conv. § 398. In none of these cases, however, was the question of actual intentional fraud in the reconveyance either proved or relied on. In the present case, as we have stated, we are satisfied that in the original placing of the title in Lewis, and in the retransfer to Mead, the purpose and intent were to defraud Larkin, and to hinder him in the collection of the debt this bill seeks to enforce. In reaching this conclusion, we are influenced by the clearly-proven motive and intent of Mead, and the further manifest fact that Lewis was simply his instrument, without interest and without independent motive.

When the title to the land was placed in Lewis, under the circumstances and with the intent shown above, the fact that Mead had negotiated the purchase, and made the payment, gave him no right, either in law or equity, to recover the lands from Lewis. Concurring, as they did, in the fraudulent intent, the law denies to each all redress as to any mere executory agreement. It leaves the title where they placed it, and lets them severely alone. In pari delicto potior est conditio possidentis. The law withholds its hand not in furtherance of any claim the grantee may assert, but as a punishment of the bad motive of him who invokes its aid. Ex turpi causa non oritur actio. Nor does such fraudulent grantee rest under a moral obligation to restore the property. If there be any obligation which is...