McMillan v. McMillan

• Decision Date: 03 March 1926
• Parties: LILLIE MCMILLAN, Respondent, v. E. N. MCMILLAN, Appellant
• Court: Idaho Supreme Court

245 P. 98

42 Idaho 270

LILLIE MCMILLAN, Respondent, v. E. N. MCMILLAN, Appellant

Supreme Court of Idaho

March 3, 1926

FRAUDULENT CONVEYANCES - TRANSFER TO GRANTOR'S WIFE WITHOUT CONSIDERATION-WIFE'S ACTION TO QUIET TITLE-FINDINGS.

1. Generally, transfer of property with intent to defraud a creditor is void as against creditors, but a man may, in good faith, convey his property to his wife, or anyone else, and it is of no concern to his creditors if he still retains sufficient property to satisfy their legal demands.

2. In order to set aside a conveyance as fraudulent, there must be fraud of vendor and injury to creditor.

3. Where secured creditor, alleging fraudulent conveyance by debtor, merely proved transfer and debt and subsequent foreclosure of security with deficiency judgment, it was not necessary for grantee to prove that donor was solvent when transfer was made, as fact of subsequent deficiency is of no consequence, if security was sufficient at time of conveyance.

4. Under C. S., sec. 5435, gift from a man to his wife, or conveyance to another without consideration, is not prima facie fraudulent, but evidence is required from which intent to defraud may be inferred.

5. Validity of transfer from husband to wife as fraudulent conveyance against creditors does not depend on subsequent events.

6. Where husband, at time of contract for purchase of property instructed vendors to name wife as grantee, and deed left in escrow was, through mistake, executed to husband, wife became vested with equitable title, and, being in actual possession was entitled to have title quieted as against husband's creditor alleging fraudulent conveyance to wife, irrespective of validity of subsequent alteration of deed.

7. Appellate court is in no position to say that testimony taken before trial court was not true.

8. Failure of court to make finding which would not be in conflict with other findings was not error.

9. Failure to make specific findings was not error, where court found ultimate facts and findings supported decree.

APPEAL from the District Court of the Seventh Judicial District, for Washington County. Hon. B. S. Varian, Judge.

Action to quiet title. Judgment for plaintiff. Affirmed.

Judgment affirmed. Costs to respondent.

Ed. R Coulter, for Appellant.

By the deed from Waters to Hack McMillan, as grantee, the lands in question became the property of Hack McMillan. The subsequent erasure of his name and the inserting of the name of Lillie McMillan, as grantee, did not divest Hack McMillan of the estate, and did not make this property the separate estate of Lillie McMillan. (Gulf Red Cedar Lumber Co. v. O'Neal, 131 Ala. 117, 90 Am. St. 22, 30 So. 466; Gibbs v. Potter, 166 Ind. 471, 77 N.E. 942; Stanley v. Epperson, 45 Tex. 644; Alexander v. Hickox, 34 Mo. 496, 86 Am. Dec. 118; Hancock v. Dodd (Tenn.), 36 S.W. 742; Hunt v. Nance, 122 Ky. 274, 92 S.W. 6; United States v. West, 22 How. (U. S.) 315, 16 L.Ed. 317; Woods v. Hinderbrand, 46 Mo. 284, 2 Am. Rep. 513; Wheeler v. Single, 62 Wis. 380, 22 N.W. 569; Slattery v. Slattery, 120 Iowa 717, 95 N.W. 201; Turner v. Warren, 160 Pa. 336, 28 A. 781; Catlin Coal Co. v. Lloyd, 180 Ill. 398, 72 Am. St. 216, 54 N.E. 214; Respass v. Jones, 102 N.C. 5, 8 S.E. 770; Chezum v. McBride, 21 Wash. 558, 58 P. 1067; Moelle v. Sherwood, 148 U.S. 21, 13 S.Ct. 426, 37 L.Ed. 350.)

The pretended gift of this property by Hack McMillan to his wife, Lillie McMillan, was in fraud of the defendant and void. (Bank of Orofino v. Wellman, 26 Idaho 425, 143 P. 1169; Printz v. Brown, 31 Idaho 443, 174 P. 1012; Glover v. Brown, 32 Idaho 426, 184 P. 649; Moody v. Beggs, 33 Idaho 535, 196 P. 306; Scharff v. McGaugh, 205 Mo. 344, 103 S.W. 550; Harkness v. Smith, 3 Idaho 221, 28 P. 423; California Consol. Min. Co. v. Manley, 10 Idaho 786, 81 P. 50; Dill v. Carver, 70 Wash. 103, 126 P. 86; Bannock National Bank v. Automobile Accessories Co., 37 Idaho 787, 219 P. 200; Humbird Lumber Co. v. Doran, 24 Idaho 507, 135 P. 66; Clifford v. Lake, 33 Idaho 77, 190 P. 714.)

Harris, Stinson & Harris, Jas. A. Stinson and J. W. Galloway, for Respondent.

A husband, not insolvent and in the exercise of good faith, may convey community property to his wife as a gift and the same will thereupon become her separate property. (C. S., sec. 4656; McKeehan v. Vollmer-Clearwater Co., Ltd., 30 Idaho 505, Ann. Cas. 1918E, 1197, 166 P. 256; Printz v. Brown, 31 Idaho 443, 174 P. 1012.)

A party seeking to set aside a gift deed from a husband to his wife on the ground that the husband was insolvent at the time the gift was made must allege and prove insolvency. (Tainter v. Broderick Land etc. Co., 177 Cal. 664, 171 P. 679; Wagner v. Law, 3 Wash. 500, 28 Am. St. 56, 28 P. 1109, 15 L. R. A. 784; Albertoli v. Branham, 80 Cal. 631, 13 Am. St. 200, 22 P. 404; Fox v. Lipe, 14 Colo. App. 258, 59 P. 850; Malagamba v. McLean, 89 Ore. 307, 173 P. 1175; Moritz v. Hoffman, 35 Ill. 553.)

The name of the grantee in a deed may be changed after the execution and either before or after delivery with the consent of the grantors or their agent. Especially is this true when change is necessary to make deed conform to the original intention of parties. (Abbott v. Abbott, 189 Ill. 488, 82 Am. St. 470, 59 N.E. 958; Lee v. Butler, 167 Mass. 426, 57 Am. St. 466, 46 N.E. 52; Thummel v. Holden, 149 Mo. 677, 51 S.W. 404; Daniel, Negotiable Instruments, 5th ed., par. 1403; McClure v. Little, 15 Utah 379, 62 Am. St. 938, 49 P. 298; Osborn v. Hall, 160 Ind. 153, 66 N.E. 457.)

WM. E. LEE, J. William A. Lee, C. J., and Budge, Givens and Taylor, JJ., concur.

OPINION

WM. E. LEE, J.

While indebted to appellant, on or about October 31, 1919, H. T. McMillan, husband of respondent, entered into a contract for the purchase of the real property involved in this action, which belonged to one Adams, title to which was in George W. Waters and his son, and testified that it was understood between Waters, Adams and himself that the land should be conveyed to respondent. The indebtedness of H. T. McMillan consisted of the principal and interest of a note for $ 3,100, payment of which had been secured by a mortgage on 320 acres of other land, and a note for $ 1,900, payment of which had been secured by a mortgage on a number of horses. In May, 1920, some of the interest having been paid and the horses having been sold with appellant's consent, something like $ 1,300 was paid to appellant and a new note for $ 5,737, payment of which was secured by a mortgage on the 320 acres, was executed and delivered to appellant. The note for $ 5,737 represented the entire indebtedness due from H. T. McMillan to appellant. It was either in satisfaction of the entire prior indebtedness or a renewal thereof. About three years thereafter the mortgage was foreclosed and the land bought in by appellant for $ 5,000. A deficiency judgment was entered, to satisfy which the property in controversy was sold under execution. The property purchased from Adams was a gift to respondent from her husband. It was intended as a home for her and they agreed that it be and remain her separate property.

Respondent brought her action to quiet her title. Appellant answered, denied the allegations of the complaint and set up, among other things, that the transfer to respondent was made in fraud of himself, a creditor, and therefore void. The cause was tried to the court without a jury, and findings were made in favor of respondent. Decree was entered quieting her title, from which this appeal is taken. The assignments of error are that the evidence is insufficient to support the findings, that the conclusions and decree are contrary to law and the evidence and that the court erred in its failure to make certain findings.

It is the general rule that a transfer of property with intent to defraud a creditor is void as against creditors; but it is recognized that a man may in good faith convey his property to his wife or anybody else, and it is no concern of his creditors if he still retains sufficient property to satisfy their legal demands. (Moritz v. Hoffman, 35 Ill. 553; Wagner v. Law, 3 Wash. 500, 28 Am. St. 56, 28 P. 1109, 15 L. R. A. 784; Fox v. Lipe, 14 Colo. App. 258, 59 P. 850; Kain v. Larkin, 131 N.Y. 300, 30 N.E. 105.) Many other decisions could be cited in support of this rule. In order to set aside a conveyance as fraudulent, there must be fraud on the part of the vendor and injury to the creditor. (12 R. C. L. 491, sec. 24.)

It is contended that the burden of proof was on respondent to show that H. T. McMillan was solvent, that he had other property sufficient to satisfy his debt when the transfer was made to her. Whatever the general rule may be with respect to the burden of proof in actions to set aside conveyances alleged to be in fraud of creditors, it must be kept in mind that this action is by a secured creditor, one who held mortgage security for the payment of his debt. The transfer in no manner endangered the mortgage security. The creditor neither alleged nor proved that the mortgaged property was not of sufficient value to pay the debt when the installment payments for the purchase of the land were made and the gift was made to respondent. In such a case, to make it necessary for the grantee to prove that the donor was solvent when the transfer was made, we are of the opinion that it is not sufficient for a secured creditor to merely prove the transfer, the debt, and the subsequent foreclosure and deficiency judgment.

Neither a gift from a man to his wife nor a...