McDonald v. Baldwin
| Decision Date | 16 November 1940 |
| Parties | McDONALD v. BALDWIN et al. |
| Court | Tennessee Court of Appeals |
Certiorari Denied by Supreme Court March 8, 1941.
Appeal from Chancery Court, Fentress County; A. F. Officer Chancellor.
Suit by W. E. McDonald against C. C. Baldwin and Mary Baldwin to set aside as fraudulent a conveyance of land from C. C. Baldwin to his wife, Mary Baldwin, and to have the land sold and the proceeds applied to the payment of W. E. McDonald's judgment against C. C. Baldwin, and to the payment of W. E McDonald's store account against C. C. Baldwin. From the decree, the defendants appeal.
Affirmed and decree entered in favor of W. E. McDonald, and cause remanded for sale of land.
Robert F. Turner, of Jamestown, for appellants Baldwin.
John S. Hale, of Jamestown, for appellee McDonald.
This is a suit to set aside as fraudulent a conveyance executed by the husband, C. C. Baldwin, to his wife, Mary Baldwin, and to have said lands sold and the proceeds applied to the payment of the complainant's judgment of $170.78 and a store account of $80.13 against C. C. Baldwin.
The defendant C. C. Baldwin answered and denied that the conveyance was fraudulent, and alleged that his wife had paid a valuable and sufficient consideration for the land, and that at the time the conveyance was made he did not owe the complainant. He pleaded laches on the part of the complainant in attacking the conveyance, and pleaded the statute of limitations as to the store account.
The defendant Mary Baldwin demurred to the bill on the grounds (1) that complainant was not an existing creditor at the date of the conveyance, and (2) that the complainant was guilty of laches in attacking the conveyance. The demurrer was overruled by the court.
Thereupon the defendant Mary Baldwin answered and alleged that she knew nothing about the debt and judgment in question, and alleged that this property was purchased with the proceeds from the sale of a piece of property which her father had conveyed to her before her marriage, and she denied fraud. She pleaded laches in that the complainant had delayed his attack on this conveyance for more than six years after obtaining judgment, and claimed homestead in the lands.
The Chancellor found that the conveyance was fraudulent in fact and in law and should be set aside as to the judgment; that Mrs. Mary Baldwin did not participate in the fraud; and that C. C. Baldwin's interest in the land should be sold. He sustained the plea of the statute of limitations as to the store account. Decree was entered in favor of W. E. McDonald and against C. C. Baldwin for $256.19 and the lands were ordered sold subject to Mary Baldwin's interest and the homestead rights of defendants.
The defendants excepted to said decree and appealed to this court and have assigned errors, which are, in substance, as follows:
(1) The Chancellor erred in holding that the conveyance was fraudulent. The burden was on McDonald to show that it was fraudulent, which he failed to do.
(2) The Chancellor erred in overruling the defendants' demurrer. The complainant was not an existing creditor when the conveyance was made, hence said conveyance did not hinder or delay complainant in the collection of his debt.
(3) The Chancellor erred in not dismissing the complainant's suit because of laches in waiting so long to bring this suit and in failing to exercise any diligence to collect this debt.
(4) The Chancellor erred in admitting in evidence, over objection, copies of the warrant, judgment, and note.
(5) The Chancellor erred in admitting in evidence a statement made by Baldwin as to his reason for executing the conveyance.
(6) The Chancellor erred in refusing to admit testimony of C. C. Baldwin that the lands were bought with Mrs. Mary Baldwin's money.
The facts necessary to be stated are as follows:
On January 1, 1931, the defendant C. C. Baldwin borrowed $150 from T. J. Norris and executed a note payable to Norris, due twelve months after date, with interest at 6%, and W. E. McDonald (the complainant) and Wilburn Todd signed the note as sureties.
On May 20, 1931, Baldwin executed a deed conveying all his property to his wife, Mary Baldwin. The deed recited that it conveyed all of his personal property, 45 acres of land, and everything he owned for the consideration of $650.
On January 5, 1932, Norris brought suit before a justice of the peace on the note and recovered a judgment against Baldwin, McDonald and Todd for $159 and the costs of the suit. McDonald and Todd paid the amount of the judgment and took judgment over against Baldwin for $170.78, on January 30, 1932.
Todd assigned to McDonald his interest in the judgment, on October 4, 1933.
The judgment not having been paid, McDonald instituted this suit to collect the same, on April 16, 1938.
The lands involved were in three tracts. One tract of 18 acres was conveyed to C. C. Baldwin and wife, Mary Baldwin, in 1918; one tract of 10 acres was conveyed to C. C. Baldwin in 1919; and one tract of 20 acres was conveyed to C. C. Baldwin in 1920.
The answers of Baldwin and Mrs. Baldwin allege that Mrs. Baldwin paid a valuable and sufficient consideration for the lands.
But Baldwin and Mrs. Baldwin both testified that the consideration was an antecedent debt; that when they were married Mrs. Baldwin owned a small farm which her father had conveyed to her; that she sold it (in 1912) and the proceeds of the sale were used in the purchase of this land (in 1918, 1919 and 1920); and that title was taken in C. C. Baldwin by mistake.
This is not a proceeding to reform the deed or to set up a resulting trust. According to the pleadings the Baldwins' claim is that Baldwin was indebted to Mrs. Baldwin.
In order for the deed from Baldwin to his wife to be sustained it must be shown that at the time he received the money it was understood that he received it as a loan, and that both husband and wife intended to stand to each other in the relation of debtor and creditor. Robertson v. Wade, 17 Tenn.App. 457, 466, 68 S.W.2d 487; 12 R.C.L. 590.
The existence of a debt from the husband to the wife cannot be established by their uncorroborated testimony. Sanford et al. v. Allen, Tenn.Ch.App., 42 S.W. 183, 185; Farmers Bank of Lynchburg v. Farrar, 4 Tenn.App. 186, 192; Hartnett v. Doyle, 16 Tenn.App. 302, 64 S.W.2d 227; Robertson v. Wade, supra.
The burden of proof under the pleadings in this case is upon Mrs. Baldwin to show that the amounts paid by her to Baldwin were loans. Yost v. Hudiburg, 2 Lea 627, 70 Tenn. 627; Farmers Bank of Lynchburg v. Farrar, 4 Tenn.App. 186; Robertson v. Wade, supra.
The testimony of Baldwin and Mrs. Baldwin is to the effect that the money was lent to him, but this testimony is uncorroborated and is of no weight.
M. H. Spurlin testified that Baldwin admitted that the conveyance was made to evade this debt. He testified that he was a notary public in 1931 and took Baldwin's acknowledgment to the deed conveying the lands to Mrs. Baldwin and that when Baldwin employed him to draft said deed he told him that McDonald and Todd would levy upon his property if he did not convey it to Mrs. Baldwin. And he was corroborated by his wife.
The title to this property had been allowed to remain in the name of C. C. Baldwin for more than ten years, during which time this indebtedness was incurred. Hence we are of the opinion that this conveyance was fraudulent.
The terms "creditor" and "debtor" are defined in the Uniform Fraudulent Conveyance Act as follows:
By reason of this statute a surety may bring an action to set aside a fraudulent conveyance of his principal before any loss incurred or payment made. Greene v. Starnes, 1 Heisk. 582, 48 Tenn. 582; 24 Am.Jur. 291, § 152.
"Under the Uniform Fraudulent Conveyance Act, if the debtor intended to defraud 'either present or future creditors,' the transaction is 'fraudulent as to both present and future creditors."' 24 Am.Jur. 285, § 143; Code, § 7277.
3. The defendants contend that the complainant was guilty of laches in failing to bring suit before the expiration of about six years. We think there is nothing in this contention.
There is no evidence that Mrs. Mary Baldwin has made any valuable improvements on this property or made any expenditures in reliance on her title.
Apparently the property was occupied by both Mr. and Mrs. Baldwin after the execution of the deed in the same manner as before.
Ordinarily laches will bar equitable remedies where the delay works prejudice to a party, such as changed...
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