Ky. Bank & Trust Co. v. Pritchett

• Decision Date: 25 August 1914
• Docket Number: Case Number: 3418
• Citation: 143 P. 338,44 Okla. 87,1914 OK 385
• Parties: KENTUCKY BANK & TRUST CO. et al. v. PRITCHETT et al.
• Court: Oklahoma Supreme Court

1914 OK 385

143 P. 338

44 Okla. 87

KENTUCKY BANK & TRUST CO. et al. v. PRITCHETT et al.

Case Number: 3418

Supreme Court of Oklahoma

Decided: August 25, 1914

Syllabus

¶0 1.APPEAL AND ERROR--Harmless Error--Instructions--Suit in Equity.In cases of equitable cognizance, while the judge may call in a jury or consent to one, for the purpose of advising him upon the questions of fact, he may adopt or reject its conclusions, as he sees fit, and the whole matter must eventually be left to him to determine, and instructions to the jury furnish no grounds of error upon appeal.It was not only the right, but the duty, of the court to determine all questions of fact as well as law.Barnes et al. v. Lynch et al., 9 Okla. 157, 59 P. 995.

2.FRAUDULENT CONVEYANCES--Right to Prefer Creditors.When a debtor is in failing or insolvent circumstances, he has a right to prefer one creditor over another, and if accepted by the creditor in good faith such preference will be sustained, even though it has the effect to delay, hinder, or defeat other creditors.ON REHEARING.

3.BANKRUPTCY--Voidable Preference--Proof of Elements-- Necessity.Under subdivisions (a) and (b) of section 60 of the Bankruptcy Act(ActJuly 1, 1898, c. 541, 30St. at L. 562[U. S. Comp. St.1901, p. 3445]), as amended in 1903(ActFeb. 5, 1903, c. 487, sec. 13, 32 St. at L. 799[U. S. Comp. St. Supp.1911, p. 1506]), in order to set aside an alleged voidable preference, it is necessary for the trustee to prove all the elements of a voidable preference as defined by section 60, supra.

4.SAME- -"Voidable Preference"--Essentials.Among the essential elements of a "voidable preference" to be proven by the trustee under section 60, supra(ActJuly 1, 1898, c. 541,30 Stat. 562[U. S. Comp. St.1901, p. 3445], as amendedFebruary 5, 1903, c. 487, section 13, 32 St. at L. 799[U. S. Comp. St. Supp.1911, p. 1506]), are: (1) That at the date of the consummation of a voidable preference the transferror was insolvent; and (2) that the person receiving the benefit of the preference had reasonable cause to believe that a preference was intended.

5.SAME--Construction.Where the court finds that a conveyance was made for the purpose of hindering, delaying, or defrauding creditors, and also finds that the bankrupt was indebted to the transferee in the sum of $ 5,000, and that the transfer was made in payment of said indebtedness, all the findings are to be construed together.Held, that the finding that the transfer of February 15, 1910, was for the purpose of hindering, delaying, or defrauding the creditors of W. H. P., was a finding that the transfer was a constructive or technical fraud, in that it made an unequal distribution among the creditors of W. H. P., and does not bring the case within section 67 (e) of the Bankruptcy Act(ActJuly 1, 1898, c. 541, 30St. at L. 564[U. S. Comp. St.1901, p. 3449]).

Bond & Melton and Wm. J. Cox, for plaintiffs in error.

Lee Gibson, Will Linn, and F. E. Riddle, for defendants in error.

RITTENHOUSE, C.

¶1 On August 12, 1908, T. W. Pritchett, W. H. Pritchett, and C. W. Pritchett executed and delivered to the Kentucky Bank & Trust Company three promissory notes of $ 1,835 each, and on said date W. H. Pritchett was the owner of lot 7 in block 42, in Sayer's subdivision of lots 10 to 14 in block 42 in the city of Chickasha, Okla., and the money received by Pritchett on said notes was used in paying the purchase price of said lots and for the purpose of constructing a brick building thereon.On the 15th day of May, 1909, W. H. Pritchett and Martha Pritchett, his wife, conveyed an undivided half interest in said lot to C. W. Pritchett, and on the 15th day of February, 1910, W. H. Pritchett and Martha Pritchett, his wife, and C. W. Pritchett made, executed, and delivered a deed to said property to T. W. Pritchett, who was the father of W. H. Pritchett and C. W. Pritchett, and on the same day T. W. Pritchett conveyed said property to Martha Pritchett in consideration of love and affection and services to be rendered; and it is alleged by plaintiffs that all of said conveyances were voluntarily made without a valuable consideration and for the purpose of defrauding plaintiffs and other creditors of W. H. Pritchett, T. W. Pritchett, and C. W. Pritchett.On October 13, 1910, Willis C. Hopewell, trustee in bankruptcy of the estate of W. H. Pritchett, intervened in said action and filed his answer, alleging, in substance, that W. H. Pritchett on June 21, 1910, filed a voluntary petition in bankruptcy in the District Court of the United States for the Western District of Kentucky, and was adjudged a bankrupt, and that he, Hopewell, was elected and had qualified as trustee of said estate; that there were proved debts against said estate in the sum of $ 8,978.47; that the assets were not sufficient to pay any of the general claim, and prayed that the deeds be set aside and held for naught, and that the property be subjected to payment of claims as proved in said estate.The evidence shows that the transfers were made to the parties as alleged, and that at the time the said T. W. Pritchett became the owner of said property, his sons W. H. Pritchett and C. W. Pritchett were indebted to him in the sum of $ 5,000, and that said property was transferred to him in payment of said sum; he being preferred over other creditors to that extent.The court impaneled a jury, instructing them on the law of the case, and submitted to them special interrogatories, but not a general verdict.After the answers were returned, the court rendered judgment in favor of the defendant.The plaintiffs in error complain of the several instructions given to the jury, and also of the ambiguity of the answers made to the several questions submitted, and insist that under the answers the court would be compelled to render judgment in favor of the plaintiffs.A suit to cancel a deed on the grounds of fraud is an equitable action, and the parties are not entitled to a jury trial as a matter of right, but the court may, in its discretion, submit to the jury special interrogatories, but the answers thereto are merely advisory to the trial court, and it may adopt or reject such advice as it may deem just and proper under the evidence in the case.The plaintiffs in error complained of the instructions which the court gave to the jury, and the answers which the jury made to the special interrogatories.If there was error in the instructions or the special interrogatories, such error is immaterial, and cannot be the basis for a reversal in this cause, as the trial court has the power, and it is its duty, to pass upon the law and the facts independent of the advice furnished by the answers to such special interrogatories.It has been said in Barnes et al. v. Lynch, 9 Okla. 156, 59 P. 999:

"The law is, however, in cases of equitable cognizance, that, while the judge may call in a jury or consent to one, for the purpose of advising him upon questions of fact, he may adopt or reject their conclusions, as he sees fit, and that the whole matter must eventually be left to him to determine, and that the instructions furnish no ground of error upon appeal.It was not only the right, but the duty, of the court to finally determine all questions of fact, as well as of law."And this holding has been adhered to in the following cases: Mosier v. Walter, 17 Okla. 305, 87 P. 877;Richardson D. G. Co. v. Hockaday, 12 Okla. 546, 73 P. 957;Wattah-noh-zhe v. Moore, 36 Okla. 631, 129 P. 877;Apache State Bank v. Daniels, 32 Okla. 121, 121 P. 237, 40 L.R.A. (N. S.) 901, Ann. Cas. 1914A, 520;Murray v. Snowder, 25 Okla. 421, 106 P. 645;Hogan et al v. Leeper, 37 Okla. 655, 133 P. 190, 47 L. R. A. (N.S.) 475;Mo. Valley Lbr. Co. v. Reid, 4 Kan. App. 4, 45 P. 722;Shorten v. Judd, 60 Kan. 73, 55 P. 286.

¶2 There remains only one question for determination in this cause, and that is whether there is sufficient evidence to support the judgment.There was evidence to show that T. W. Pritchett was in good faith a creditor of W. H. and C. W. Pritchett in the sum Of $ 5,000 at the time of the transfer of the property in this cause, and that the property did not exceed in value that amount.The court was justified in finding that he was a creditor in good faith, and that he could be preferred over other creditors, even though in preferring him there would not be sufficient assets left to satisfy such other creditors.It was said in Brittain, Smith & Co. v. Burnham et al., 9 Okla. 522, 60 P. 241:

"Under the laws of this territory a debtor in failing or insolvent circumstances has a right to pay one creditor in preference to another or to give to one creditor security in payment of his demand, in preference to another; and if accepted by the creditor in good faith, for the payment or the securing of a subsisting, honest debt, due from the debtor to the creditor, it will be sustained, although it has the effect to delay, hinder, or defeat other honest debts of the debtor."20 Cyc. 472;Pollock v. Meyer, 96 Ala. 172, 11 So. 385;Carter v. Coleman, 84 Ala. 256, 4 So. 151;Lewy v. Fischl, 65 Tex. 311;Bamberger v. Schoolfield, 160 U.S. 149, 16 S. Ct. 225, 40 L. Ed. 374;Birmingham v. Smith, 93 Ala. 97, 9 So. 548;section 4434,Comp. Laws 1909;section 2901,Rev. Laws 1910.

¶3The trial court had under consideration these questions and also the question as to whether the transfer to Martha Pritchett by T. W. Pritchett was in fraud of the creditors of the said T. W. Pritchett, and, after weighing all the evidence, the court found every material fact in favor of the defendants; and, as there was sufficient evidence in the record to support this finding, this court cannot weigh the evidence in order to grant or refuse a new trial, but is bound by the judgment of the trial court under such circumstances.For the foregoing reasons, the cause should be affirmed.ON REHEARING.It is urged in the petition for rehearing that...