Merrell v. Johnson

• Decision Date: 30 September 1880
• Parties: SAMUEL H. MERRELL et al.v.FANNIE D. JOHNSON et al.
• Court: Illinois Supreme Court

96 Ill. 224

1880 WL 10098 (Ill.)

SAMUEL H. MERRELL et al.

v.FANNIE D. JOHNSON et al.

Supreme Court of Illinois.

Filed at Springfield Sept. 30, 1880.

APPEAL from the Circuit Court of McLean county; the Hon. OWEN T. REEVES, Judge, presiding.

Messrs. TIPTON & RYAN, for the appellants:

A voluntary conveyance to a child when the grantor is largely indebted, is presumptive evidence of fraud, and a fraudulent intent will be presumed from the fact of indebtedness at the time. Moritz v. Hoffman, 35 Ill. 553; Bridgford et al. v. Riddle, 54 Id. 362.

By the statute, deeds made in fraud of creditors are absolutely void as to creditors and subsequent purchasers in good faith. Gould et al. v. Steinburg, 84 Ill. 173. This deed is a cloud upon the title of appellants, and should be so declared. Farnsworth v. Strasler, 12 Ill. 482; Gould et al. v. Steinburg, 84 Id. 170.

The conveyance of Johnson to his children, he being largely in debt at the time, including the debts or liabilities of appellants of $2400, is presumptive evidence of fraud, and a fraudulent intent will be presumed from the fact of such indebtedness. Moritz v. Hoffman, 35 Ill. 553; Jones v. Harvey, 3 Littell, 433.

Where a parent, when debts are pressing him, conveys all his property to his children by a voluntary conveyance, or for a consideration greatly less than its value, a strong presumption of fraud arises. Holbert v. Grant, 4 Monroe, 583; Trimble v. Ratcliff, 12 B. Monroe, 38; Morrell v. Schenick, 54 Ill. 269.

Fraud may be presumed from the circumstances and condition of the parties, and this goes further than the rule of law, which is that fraud must be proved, and not presumed. Story's Eq. Jur. sec. 190; Chesterfield v. Janssen, 1 Ves. 155, 156; Reed v. Noxen, 48 Ill. 323; Bullock v. Narrott, 49 Id. 62; Waddingham v. Loker, 44 Miss. 132; Motter v. Vandeveer, 5 C. E. Green (N. J.) 463; Mahony v. Hunter, 30 Ind. 246; Parker v. Phetteplace, 2 Cliff. 70; Baker v. Kline, 106 Mass. 61.

Fraud may be inferred from the evidence. Straus v. Kronert, 56 Ill. 254; Farmer v. Colvert, 44 Ind. 209.

Where the object of a grantor in making a conveyance was to hinder or delay his creditors, such instrument is not purged of the fraud because he may also have had some other purpose in view at the time of making it. Reed v. Noxen, 48 Ill. 323; Merry v. Bostwick, 13 Id. 210.

Insolvency does not mean an absolute inability of the debtor to pay his debts, at some future time, upon a settlement and winding up of all his affairs, but a present inability to pay in the ordinary course of business. Thompson v. Thomp son, 4 Cush. (Mass.) 127; Lee v. Kelburn, 13 Gray (Mass.) 594.

If a donor be indebted beyond his means of payment, his gift is a fraud against his creditors, and void as to them. And even where no dishonest purpose can be imputed to the donor, the gift will be set aside in favor of creditors. Such a gift is void as to all creditors. Ingram v. Phillipps, 5 Strobh (S. C.) 500; Richardson v. Rodus, 14 Rich. (S. C.) 95; Henderson v. Dodd, 1 Bailey (S. C. Eq.) 138.

A voluntary conveyance from a parent who is insolvent to his child, is prima facie fraudulent and void. Humbert v. Methodist Church, Wright (Ohio) 213.

A voluntary deed from an insolvent father to his minor son may be canceled on a bill filed by pre-existing creditors, and the property subjected to the debts of the father. Mixell et al. v. Lutz, 34 Ill. 387.

Mr. W. B. GARLOCK, for the appellees Fannie May and Lucy D. Johnson:

Upon the question of fraud, we cite Moritz v. Hoffman, 35 Ill. 553, relied upon by appellants. See, also, Wyck v. Seward et al. 6 Paige Ch. 62; Howe v. Ward, 4 Me. 195.

So, where a grantor may have intended to defraud his creditors, if the purchaser has paid a valuable consideration, before the deed can be attacked it must be shown by the evidence that he designed to aid in the fraud. The rule in such cases is that both parties must be shown to have intended to commit a fraud, before the deed can be avoided. Gridley v. Bingham, 51 Ill. 153; Myers v. Kensie, 26 Id. 36.

Under our statute, in order to declare a deed fraudulent and void, it must be conceived in some improper motive, as, collusion, guile and the like, with the intent to hinder, delay or defraud creditors, and both parties must join in this intent. Ewing v. Runkle, 20 Ill. 448; Wilson v. Prouson, Id. 85. In the arrangement spoken of, appellees had to assume the incumbrances upon the land; and a conveyance in consideration of the assumption of a valid lien upon the land, is for a valuable consideration. Dubbs v. Finley, 2 Pa. St. 397.

Messrs. BLOOMFIELD & HUGHES, also for the appellees:

There was a good and valuable consideration to support this deed. Dubbs v. Finley, 2 Pa. St. 397.

It can be shown there were other good and valuable considerations, even where the deed recites the consideration to be one dollar and natural love and affection. Harvey v. Alexander, 1 Rand. (Va.) 219.

Judicial sales make the deeds given, after the expiration of the right of redemption expires, muniments of title that relate back to the time the lien attached, and cut out all subsequent incumbrances. Stephens v. Illinois Mutual Fire Insurance Co. 43 Ill. 327; Blair et al. v. Chamblin et al. 39 Id. 527; Brown v. Kendall, 12 La. Ann. 347; Irvine v. Campbell, 6 Binn. (Pa.) 118.

Messrs. HENRY & COOK, for the appellants, in reply:

The rule is well settled that a voluntary conveyance to a child, when the grantor is largely indebted, raises a presumption of a fraudulent intent, and the burden of proving that the transaction or conveyance is bona fide is devolved upon the grantee. Ferguson v. Gilbert et al. 16 Ohio St. 96.

The fact that the children of Johnson were minors at the time of the making of this conveyance, does not change their moral obligation, or shift the onus or burden of proof. Starr v. Wright, 20 Ohio St. 106; White v. Brocaw, 14 Id. 339; Swift v. Holdridge, 10 Ohio, 231; Edgerton v. Wolf et al. 6 Gray, 457.

The recitals in the deed as to the consideration for the making of the deed are strong presumptive evidence of the fact, if they are not an absolute estoppel in favor of appellants, and the evidence of a family arrangement made by Johnson with his wife is not admissible for any purpose, much less to contradict the recitals in the deed. Stevens v. Cooper, 1 Johns. Ch. 428.

The children of Simeon Johnson, receiving the title without consideration, in contemplation of law, are privy to the fraud of their grantor, or, at least, will not be permitted in a court of equity to set up this conveyance as against his fraud. Mohawk Bank v. Atwater, 2 Paige Ch. 59.

A person largely indebted can not give away his property without ample provision for the payment of his debts. The suspicion of a fraudulent intention in making such gift may be removed by proper evidence, but the question always remains whether the conveyance operated to the prejudice of creditors. Such a gift is never upheld unless property is retained, clearly and beyond doubt, sufficient to pay all the donor's debts. Claflin v. Mess, 30 N. J. Eq. 212; Crumbaugh et al. v. Kugler et al. 2 Ohio St. 378, and authorities there cited.

Mr. JUSTICE CRAIG delivered the opinion of the Court:

This was a bill in equity, brought by Samuel H. Merrell and Rankin P. McPheeters, in the circuit court of McLean county, to set aside a deed executed on the 26th day of March, 1870, by Simeon T. Johnson to his three children, Laura Belle, Lucy M. and Fannie D. Johnson, conveying a tract of land in McLean county, consisting of two hundred acres.

It is charged in the bill that Johnson fraudulently and without consideration, except love and affection, and for the purpose of hindering, delaying and defrauding his creditors, conveyed the premises; that at the time of making the deed he was in embarrassed circumstances, and had no property liable to execution, except the lands conveyed.

It is also alleged that the title held by Robert McCart to the premises, which was obtained by a sale of the lands under certain judgments and decree of foreclosure obtained against Johnson, is a fraud upon the rights of complainants, and a cloud upon their title, and ought, in equity, to be removed.

The appellants, as appears from the record, filed in August, 1870, two bills in equity against Johnson, for the purpose of correcting an alleged mistake in two certain deeds which had been executed by Johnson, conveying certain lands in Moultrie county to them.

The summons was served on Johnson on the 22d day of August, 1870, and at the May term, 1871, of the Moultrie circuit court a default was taken, and a money decree rendered in each case against Johnson for $1200.

In July, 1871, executions issued on the judgments, and in October, 1871, they were...