Merchants' Bank v. Page

• Decision Date: 26 February 1925
• Docket Number: 10.
• Citation: 128 A. 272,147 Md. 607
• Parties: MERCHANTS' BANK v. PAGE.
• Court: Maryland Court of Appeals

128 A. 272

147 Md. 607

MERCHANTS' BANK v. PAGE.

No. 10.

Court of Appeals of Maryland

February 26, 1925

Appeal from Circuit Court, Wicomico County, in Equity; Joseph L Bailey, Judge.

"To be officially reported."

Proceeding by George W. Page, receiver of the Bank of White Haven against the Merchants' Bank, to set aside mortgage as in fraud of creditors. From a decree granting relief, defendant appeals. Affirmed.

Argued before BOND, C.J., and URNER, ADKINS, DIGGES, PARKE, and WALSH, JJ.

Alexander M. Jackson, of Salisbury, for appellant.

Amos W W. Woodcock, of Salisbury (Woodcock & Webb, of Salisbury, on the brief), for appellee.

BOND C.J.

This is a proceeding to set aside a mortgage as in fraud of the creditors of the mortgagor, under the Fraudulent Conveyance Act (Acts 1920, c. 395). All the citations of statutory provisions in this opinion refer to that act. The question to be decided is whether a mortgage given by a wife on all her assets to repay money fraudulently obtained by her husband thus forestalling criminal prosecution of the husband, may be avoided at the suit of a creditor of the wife herself.

Under an order of the circuit court of Wicomico county passed on December 14, 1921, the bank commissioner of the state became receiver of the Bank of White Haven of that county, and among the assets of the bank which came into his hands were found unpaid notes made by Hilton W. Robertson and his brother, Raymond Robertson, both of Washington, District of Columbia, and indorsed by Louise R. Robertson, the wife of Hilton W. Robertson. In her answer in this proceeding the wife admits liability on the indorsements. The husband was also indebted to the Merchants' Bank of Washington for money fraudulently obtained by him from that bank, and steps had been taken looking to criminal prosecution, when on December 29, 1921, the wife gave her note for $10,000 of the indebtedness and, with her husband, executed a mortgage on real property owned by her at White Haven to secure payment of it. This was all the property which Mrs. Robertson owned. On a bill in equity by the bank commissioner, the court below passed a decree setting aside the mortgage as in defraud of the wife's own creditors, and the present appeal is taken from that decree.

The evidence does not show an actual promise by the Merchants' Bank to stifle prosecution of Robertson in consideration of the wife's note and mortgage; the notes representing the husband's previous fraudulent transactions were merely canceled and surrendered in exchange. Whether this amounts to the compounding of a crime which furnishes in itself no legal consideration (Wildey v. Collier, 7 Md. 273, 61 Am. Dec. 346; Gotwalt v. Neal, 25 Md. 434; [ Colby v. Title Ins. Co., 160 Cal. 632, 117 P. 913, 35 L. R. A. (N. S.) 813] Ann. Cas. 1913A, 522), has been questioned; but the decision on the question seems unnecessary to the decision of the case. An antecedent debt is fair consideration for a conveyance. Section 3b of the Act. And a debtor may pay such a debt, even with all his property, and as to creditors it would be nothing more than the creation of a preference of one of them, not to be reached in this kind of proceeding. Castleberg v. Wheeler, 68 Md. 266, 275, 12 A. 3; Crane v. Barkdoll, 59 Md. 534, 535; Fuller v. Brewster, 53 Md. 358. The additional facts that the debtor had defrauded the...