Leonard v. Smith

• Decision Date: 12 December 1890
• Court: West Virginia Supreme Court
• Parties: Leonard. v. Smith et al.

34 W.Va. 442

12 S.E. 479

Leonard.

v.Smith et al.

Supreme Court of Appeals of West Virginia.

Dec. 12, 1890.

Fraudulent Conveyances — Trust in Favor of Wife.

1. In November, 1879, M. E., wife, and F. G., the husband, were married. In December, 1879, in January, 1S80, and in April, 1880, E. L., the administrator of the estate of her father, and her guardian, paid over to M. E., the wife, three sums, amounting in all to $2,420, as a part of her sole and separate estate, which came to her before marriage from the estate of her father. These three sums the wife, at the date of their receipt, expressly loaned to her husband, charging him therewith, at the time, by entry made byher in her account-book, giving date, and amount of each item, and which the husband received, expressly promising to repay.

3. In February, 1833, the husband was not in failing circumstances, but was sued by M. for assault and battery. The day after the writ was served, the husband conveyed three parcels of real estate (and he does not appear to have owned any other) to E. L., in trust, to secure a bond of same date, executed by the husband to the wife for said $2,430, borrowed, due one day after date, the sale to be made by trustee on request of the beneficiary, in the manner prescribed by law.

3. In October, 1887, M. obtained judgment in his suit against the husband for $2,200, and costs. In a suit by the trustee for direction of the court in selling under trust-ded, and to convene lien-holders, and in cross-bill by M., impeaching the trust-deed as fraudulent as to his judgment, held, no actual fraud in anywise appearing, the trust-deed is valid, and the wife is entitled to have the same executed for the payment of her debt.

(Syllabus by the Court.)

Appeal and supersedeas from circuit court, Upshur county.

Dayton & Dayton, for appellant.

John S. Fisher and John Brannon, for appellee.

Holt, J. On the 15th day of February, 1883. Floyd G. Smith, of Upshur county, one of ihe defendants below, and husband of Mary E. Smith, the appellant, executed to Ebenezer Leonard, trustee, a trust-deed conveying three several parcels of land in and near the town of Buckhannon, fully described, to secure his wife, Mary E. Smith, in the payment of a bond, that day executed by Floyd G. Smith to Mary E. Smith, for the sum of $2,425.50, due one day after date, with interest from date, executed for borrowed money. If the debtor made default, then the trustee was to sell when required by the creditor. This trust was duly acknowledged, and admitted to record 16th February, 1883, at 7 o'clock a. m. On the 15th day of February, 1883, for a trespass which took place on the 11th day of February, 1883, defendant Mylius brought suit in Upshur county, against Floyd G.Smith, and his brother James L. Smith, and on the 15th day of October, 1887, obtained a judgment against Floyd G. Smith and James L. Smith for $2,200, with interest from that date, and costs, amounting to $155.35, which judgment was docketed. On the 24th day of October, 1887, Ebenezer Leonard, as trustee, brought this suit in equity against Floyd G. Smith, James L. Smith, Levi Leonard, who held a vendor's lien on one of the lots mentioned, and Charles E. Mylius, the judgment creditor, setting out the foregoing facts, and that Mary E. Smith and Floyd G. were married on 6th November, 1879; that Mary E. was then the owner in her own right of a large and valuable estate, which was, after marriage, her sole and separate property, not derived from her husband; that out of it she furnished money to buy said real estate, and that out of her other separate estate the loan was made to her husband, secured by the bond mentioned in the deed of trust, and that, to protect her lien on lot No. 34, she furnished out of her separate estate the money to pay Levi Leonard $200, and interest, which was paid since 15th February, 1883, and therefore not included in the bond secured by the. deed of trust; that he has been directed to sell, but deems it improper to do so, by reason of the liens of Leonard and of Mylius without the direction of the court, and prays for ascertainment of liens, with their amounts and priorities, and the direction of the court in executing this trust. Defendant Mylius answered, charging that the trust-deed and bonds secured were fraudulent; also filed what was treated as a cross-bill, attacking the deed of trust as fraudulent. The defendants Leonard, Mary E. Smith, and others, demurred to the cross-bill, and the court sustained it as to defendants, except those who were parties to the original suit, and, as to such other defendants, dismissed it, with costs. The defendant Mary E. Smith answered the original bill, denying that she, out of her separate estate, loaned to her husband the money to buy said real estate, but did lend him the money mentioned in the deed of trust. To this answer, there is a general replication, also a general replication to the answer of Mylius to the original bill, which answer does not expressly seek affirmative relief. The process to answer a cross-bill was served on Mary E. Smith, and the other defendants; but the record discloses no answer by any one to the cross-bill, except that the decree mentions the answer of Mary E. Smith to the cross-bill, and general replication thereto, as among the papers read at the hearing. Mary E. Smith files as an exhibit with her deposition, from a small book, the following account:

                --------------------------------------------------------------
                |November 25, 1879. F. G. Smith,                   |Dr.      |
                |--------------------------------------------------|---------|
                |To cash                                           |$ 600 00 |
                |--------------------------------------------------|---------|
                |January 28, 1880. To note and interest on L. Young|1, 600 00|
                |--------------------------------------------------|---------|
                |April 20, 1880. To cash                           |220 00   |
                --------------------------------------------------------------
                

Defendant Mylius took the depositions of some five witnesses, and Mary E. Smith of some nine witnesses, and the two causes came on to be heard together on the 19th of October, 1889, when the court decreed "that the deed of trust of Floyd G. Smith to Ebenezer Leonard, trustee, of 15th February, 1883, conveying certain real estate therein mentioned and described, to secure an alleged debt therein mentioned to defendant Mary E. Smith, was fraudulent and void as to the said Charles E. Mylius, and as to his judgment against Floyd G. Smith and James L. Smith for $2,200, with interest from 15th October, 1887, and costs thereon, and that the said property thereby conveyed to the said Ebenezer Leonard is liable to be sold to satisfy the same." It gives Levi Leonard a decree for $219.76, with interest from 19th October, 1889, as first lien on the lot sold and conveyed by him to Floyd G. Smith; to Mylius, a decree for $2,626.16, with interest from that date, and gives 40 days for payment of sums decreed, and then appoints commissioners who shall, in default of payment, sell on the usual terms. From this decree, Mary E. Smith appeals, and, taking the grounds of error in the order assigned in arguments of counsel, we find: The decree is complained of because, "in effect, it wholly sets aside the trust-deed to Leonard, trustee, securing appellant her debt, and nowhere, in subordinationto the Mylius debt, or otherwise, decrees its payment."'I do not read and construe this decree in that way. In Bank v. Corder, 32 W. Va. 232, 9 S. E. Rep. 220, the decree of the circuit court not only held the deed fraudulent and void, as to the plaintiff, but expressly set aside and annulled it. In the case of Love v. Tinsley, 32 W. Va. 25, 9 S. E. Rep. 44, the court below decreed that the deed be set side, annulled, and held for naught. In Duncan v. Custard, 24 W. Va. 730, the two deeds declared fraudulent by the circuit court were, by it, canceled in toto. In Murdock v. Welles, 9 W. Va. 552, the deed was declared to be null, and void, and canceled. In Burt v. Timmons, 29 W. Va. 441, 2S. E. Rep. 780, it was impossible for this question to arise, for the court below simply decided that plaintiff was not entitled to the relief prayed for, and dismissed his bill. The case, however, on this subject, in saying what decree should have been entered, cites with approval the cases of Murdock v. Welles, and Duncan v. Custard, above. In Core v. Cunningham, 27 W. Va. 206, it is said that in that case the deed should have been held fraudulent and void as to the creditors; that the land should be sold as the wife's, having been conveyed to her; and in Bank v. Wilson, 25 W. Va. 242, it is held error to cancel and set aside, but proper to hold it fraudulent and void, as against thecreditor. Thedecree here complained of seems on this point to have been drawn with these cases in view. It declares the trust-deed fraudulent and void, as to the judgment of Mylius, but does not set it aside. If defendants, Floyd G. Smith, or his wife, or any person in interest, shall pay to Mylius his decree, then the trust-deed stands good between the parties thereto; and, if this should not be done, and a sale should take place, then, as between husband and wife, the court would decree to her the surplus, or so much as may be necessary to pay her debt.

Should the demurrer to the cross-bill have been fully sustained, and the bill have been dismissed? Defendant Mylius filed his answer to the bill of plaintiff, Leonard, but he does not allege any new matter therein, on which he relies for or prays affirmative relief; but, on the contrary, says he is advised, as he seeks relief against the trust-deed, he should file a cross-bill to the bill of the plaintiff, and not here ask for affirmative relief. The court below sustained the demurrer as to the new parties brought in, dismissed it, with costs, as to them, and it was retained as a cross-bill as to the trust-deed; and all other...