Lockhakd v. Absent

• Decision Date: 28 April 1877
• Citation: 10 W.Va. 87
• Court: West Virginia Supreme Court
• Parties: Lockhakd & Ireland v. Beck ley et at. (Absent, Moore, Judge).

10 W.Va. 87

Lockhakd & Ireland

v.Beck ley et at.

Supreme Court of Appeals of West Virginia.

Decided April 28, 1877.

1. Where a husband or father purchases land in the name of a wife

or child, or in his own name, and in either case procures a conveyance to be made to the wife or child, there is no resulting trust for the husband or father, as in the case of a purchase by one and a conveyance to a stranger.

2. But such a deed, if made with intent to hinder, delay, or de-

fraud the creditors of the party so purchasing, may, at the suit of such creditors, be impeached, being within the statute against fraudulent conveyances.

3. Unless such a deed is fraudulent in fact as to creditors, prior or

subsequent, improvements afterwards put upon the property by the husband or father cannot be subjected by creditors to the payment of their debts, unless such improvements were put upon the property with intent to hinder, delay or defraud the creditors of the husband or father.

4. A voluntary conveyance which interferes with or breaks in

upon the rights of existing creditors, will not be permitted to take effect to the prejudice of their just demands, but as to such creditors is absolutely void, without regard to the amount of the debts, the extent of the property so conveyed, the motives that prompted the settlement, or the condition or circumstances of the party at the time

5 The second section of chapter seventy-four of the Code of West Virginia makes a clear distinction between the rights of existing and subsequent creditors, as to a voluntary conveyance; and such a conveyance cannot be impeached by subsequent creditors on the mere ground of its being voluntary, and the party making it, or at whose instance it was made, being indebted to some extent, if there be no actual fraudulent view or intent in the party at the time.

6. But if it be shown that there was mala fides or fraud in fact, in the transaction, whether the actual fraudulent intent relates to existing creditors or is directed exclusively against subsequent creditors, the effect is precisely the same, and subsequent creditors may, upon the strength of such fraud, successfully impeach the conveyance.

7. While it is true under the second section of chapter seventy-

four of the Code of West Virginia, a voluntary conveyance, as to subsequent creditors, is not void merely on the ground that it was voluntary, and the party indebted at the time it was made; yet upon the question whether it is fraudulent in fact, it is proper to consider the circumstances of its being voluntary, and the party indebted at the time; and if additional circumstances connected with these two be sufficient to show fraud in fact, it is void as to subsequent creditors.

8. Although fraud in fact must be shown to impeach a conveyance

as to subsequent creditors, it is not required that the actual or express fraudulent intent appear by direct and positive proof; circumstantial evidence is not only sufficient, but in most cases is the only evidence that can be adduced.

9. Fraud is to be legally inferred from the facts and circumstances

of the case, when those facts and circumstances are of such a character as to lead a reasonable man to the conclusion that the conveyance was made with the intent to hinder, delay or defraud existing or future creditors.

10. Although the deed is void as to the creditors of the debtor at whose instance it was made, yet the title of the innocent purchasers for valuable consideration, will not be affected thereby, they not having any notice of the fraudulent intent of their immediate grantor, or of the fraud, rendering void the title of such grantor; but the purchase money unpaid should be subjected to the payment of the creditors as to whom the deed is void.

An appeal upon the petition of Isaac C. Beckley, Mary R. Beckley and John Price Duncan from a decree of the circuit court of Raleigh county, rendered on the 10th day of October, 1873, in a cause then pending in said court, wherein Charles O. Lockhard and Thomas S. Ireland, partners in trade under the name of Lockhard & Ireland, were plaintiffs and Isaac C. Beckley and others were defendants.

The Hon. Evermont Ward, Judge of the ninth judicial circuit, presided at the hearing below.

The case is sufficiently staled by Johnson. Judge, who delivered the opinion of the Court.

H. W. Brazie, for appellees, referred to the following authorities:

Boyd v. McLean, 1 Johns. (N. Y.) Ch., 582; Botsford v. Burr, 2 Johns. (N. Y.) dr., 406; Adams Eq. 33; Code W. Va., 474, §5; Code Va. I860, p. 570, §4; Hariston v. Randolphs, 12 Leigh, 445; Lemon's Case, 4 W. Va. 755; 2 Story Eq., 1210; 1 Story's Eq., §391-2; Evans v. Beehrell, 6 Ves., 192; Clifford vBrooke, 13 Ves., 132; Claytor v. Anthony, 6 Rand., 306; Hildreth v. Sands, 2 Johns. (N. Y.) Ch., 35; 2 Lomax. Dig., 324; Penn v. Whitefieads, 12 Gratt., 74; M. E. Church et at. v. Joques el at., 1 Johns. (N. Y.) Ch. 450; Code W. Va., ch. 66; 2 Story's Eq.,.1201; 2 Story's Eq., 1195.

James M. Laidley, for appellees, referred to the following authorities:

Story's Eq. Jur., §1374; Bump, on Fraud. Con., 296; Pennock et at. v. Cor, trustee, 23 How. 117.

Henry J. Gellaspie, for appellants, relied upon the fol1 lowing authorities:

Bump, on Fraud. Con., 15; Vanbibber v. Beirne, 6 W. Va. 168; Code of Va., 1860, ch. 121, §2; Acts 1863, pp. 1, 16; Story on Agency, 188, 192, 204-5-6; Carper et at. v. McDowell, 5 Gratt., 212; I Wash, on Real Estate, 249; Bryan v. Slump, 8 Gratt., 241; McNeale v. Governor, for Clarke, 3, Gratt., 299; 3 Green. Ev., 218 n.; Mo Kim v. Moody et at., 1 Rand., 58.

STATEMENT OF THE CASE BY THE JUDGE:

In July, 1870, the firm of Lockhard & Ireland recovered in the circuit court of Raleigh county a judgment against I. C. Beckley for $788.44 and the costs of the suit; a fi.fa. issued, and on the 3d day of October, 1870, was, by the sheriff of the county, returned endorsed " No property found." At June Rules, the complainants filed their bill in the circuit court of Raleigh county to enforce their judgment lien, and alleged in their bill and amended bills, several of which were filed, the recovery of the judgment, the execution issued and returned " No property," that the defendant I. C. Beckley had no personal property, but had a tract of one hundred acres of land in Raleigh county to which he had the legal title; and that he was the equitable owner of a tract of about four acres of land near Raleigh C. EL, including a tavern building known as the " Raleigh House," and charged that said Beckley had bought said property of his father and had paid him for it, yet with intent to hinder, delay and defraud his creditors, and those who might become his creditors, he had fraudulently combined with his father and his wife and one John Price Duncan, and had procured the conveyance of said property to be made by his father and wife to said John Price Duncan, as trustee for Mrs. Mary R. Beckley, the wife of the said Isaac C. Beckley; a copy of which conveyance is found in the record. The bill charged that Mrs. Mary R. Beckley had no property of her own before her marriage with Isaac, and the said settlement on her was made in fraud of both existing and future creditors; that said Mary R. Beckley and her said trustee, both knew that said Isaac C. Beckley had reported the said property as his; that he had repaired it at a cost to himself of $1,000, put an advertisement of it as a hotel in a newspaper, in which he proclaimed to the world that it was his; that by reason of these representations and the conduct of Mrs. Beckley, and the said trustee, complainants were in- duced to give credit to the said Isaac C. Beckley. One of the amended bills charge that since the institution of the suit the said Isaac C. Beckley and wife, and John Price Duncan, the trustee, had conveyed said property to Jas. T. and John W. McCreery for the sum of $2,500; that $1,000 of the purchase money had been paid and a lien had been reserved for the payment of the residue of the purchase money thereof. A copy of said deed is also filed. There is no charge in the bill that when their suit was instituted they had recorded a lis pendens, or that the McCreerys had any notice of the fraud in the conveyance to John Price Duncan, the trustee. They pray that the deeds may be cancelled, and that the land may be sold to pay their judgment, or that the McCreerys, against whom also an amended bill was filed, should out of the money they yet owed on the property pay the said judgment, costs, eve. The defendant, Isaac C. Beckley, filed four answers to the original and amended bills, in neither of winch does he show the circumstances under which the deed was executed, or the purpose he had in view when he requested his father to make the deed to a trustee for the benefit of his wife, He contents himself with simply denying in general terms" all fraud and combination." In his first and second answers, he is entirely silent as to the charge that he was indebted at the time the conveyance was made; in his third he says, "at that time he owed very little and has since.paid all he then owed." In his last answer he denies that he owed anything at the time the deed was made. All of the defendants answer, and in general terms deny the fraud charged; but there is no denial in any of the answers of the charge that Beckley represented the said property as his, and that his wife and her trustee, with full knowledge that he did so, never protested against it.

The record shows that Isaac C. Beckley, one of the defendants, in the city of Cincinnati, about the 31st of August, 1868, applied to the complainants, Charles O. Lockhard and Thomas S. Ireland, dry goods merchants trading as Lockhard & Ireland, to purchase a hill of goods, and represented to them that he was heir to property in Pittsburgh, left him by his grandfather, amounting to $10,000; that he had received two remittances from that source of three thousand dollars each, and...