Millington v. Hill, Fontaine & Co.

• Decision Date: 02 October 1886
• Citation: 1 S.W. 547,47 Ark. 301
• Parties: MILLINGTON v. HILL, FONTAINE & CO
• Court: Arkansas Supreme Court

1 S.W. 547

47 Ark. 301

MILLINGTON v. HILL, FONTAINE & CO

Supreme Court of Arkansas

October 2, 1886

APPEAL from Desha Circuit Court in Chancery, Hon. JOHN A. WILLIAMS Circuit Judge.

Decree reversed.

W. M Randolph for Appellant.

1. There is no evidence showing the conveyance by Bolton to be fraudulent, certainly none such as required by the rules in 18 Ark. 123, 138, 141, etc.

There can be no escape from the proposition that the decree in Galbreath's suit in Tennessee has established the validity of the sale of the land by Seth W. Bolton to Mrs. Millington. Doe v. Oliver, 2 Smith's Leading Cases top pp. 787, 788, 795, 796, (6 Am. ed., pp. 667, 668); Edwards v. Stewart, 15 Barbour, 67; Bellinger v Craigue, 31 Barbour, 534; Stevens v. Miller, 13 Gray, 283; Regina v. Hartington, 4 Ellis, & Bl., 788, 794, etc.

2. Galbreath is estopped from pursuing the land or denying Mrs. Millington's title to it, because he has collected and had the benefit of the money she paid for it. 5 Ala. (N. S.), 316; 2 Minn. 291.

The same principle is decided in Rennick v. The Bank of Chillicothe, 8 Ohio (Hammond), p. 530; Okie v. Kelly, 12 Penn. St. (2 Jones), 323; Raplee v. Stewart, 27 N.Y. 310, and many other cases.

And see generally on the question Fitch v. Baldwin, 17 Johnson, 161; Rodermund v. Clark, 46 N.Y. 354; Tuite v. Stevens, 98 Mass. 305.

3. Mrs. Millington is subrogated to the position of Galbreath to the extent to which she has paid his debt, and upon all the authorities, as her money has gone to pay Galbreath's debt against Bolton, which she never owed, she is entitled to the benefit of this present suit of Galbreath's, and to have her money repaid her out of the proceeds of the sale of the land Galbreath is pursuing. 2 Brock. (C. C.), 168; 6 Wall., 299; 57 Miss. 548; 66 N.Y. 363; 11 Wis. 380; 55 Cal. 31; 96 Ill. 224.

4. The mortgages to Hill, Fontaine & Co., were void for usury in their inception, 41 Ark. 331, and Mrs. Millington can set up this plea. 4 Peters, 229, 230; Ib., 205; 35 Ark. 217.

L. Leatherman also for Appellant.

Creditor must show judgment, execution, and return nulla bona. 11 Ark. 718; 12 Ark. 387; 18 Ark. 589.

Simply showing outstanding indebtedness, the insolvency of the debtor, and that he intended to defraud, hinder or delay his creditors, it is not sufficient unless it is shown that the purchaser participated in the fraudulent design. Bump. on Fraud. Con., p. 194; Galbreath, Stewart & Co. v. Cook and wife, 30 Ark. 417; Kelly on Cont. of Married Women, top p. 146.

The purchaser must knowingly participate with a view of aiding the debtor in his purpose of defrauding his creditors. 41 Ark. 325; Rob. on Fraud. Con., 520, 527; 101 U. S. Rep., 499; 104 U. S. Rep., 77.

A conveyance is not necessarily fraudulent because its effect is to hinder and delay creditors. It must be made for that purpose, and the grantee must be privy to the fraudulent design. Splawn v. Martin, 17 Ark. 152; 18 Ark. 123, 124.

Presumptions and circumstances of fraud are expelled by proof of fair consideration. Fraud is never presumed, but must be proven. Circumstances of mere suspicion leading to no certain result are not sufficient proof of fraud. Daniel & Straus v. Vaccaro, 41 Ark. 325; Bump. on Fraud. Con., (2d), p. 584.

Accepting deed by Mrs. Millington from S.W. Bolton does not estop her from setting up usury and any other valid defense against the Carder debt. 30 Ark. 393; 52 Pa. 400; Hilliard on Vendors, 55.

Chancellor erred in sustaining the demurrer to the plea of usury. If usurious, the note of Bolton to Carder is absolutely void under Constitution of 1874, art. 19, sec. 13. German Bank v. Deshon, 41 Ark. --; 2 Yer. (Tenn.), 350; Ford v. Hancock, 36 Ark. 252; 32 Ark. 362, 365; 3 Johns. Ch. Rep., 206, 9 Id., 197.

Where part is usurious all is void--the note as well as the trust deed securing it. Marks v. McGehee, 35 Ark. 217; 56 Barb. 430; 24 Iowa 441; 2 N.H. 333. A subsequent security, given for a loan originally usurious, however remote or often renewed, is void. 3 How. (U. S.), 62; 54 Ga. 554; 3 N. Y. (6 Tiff.), 55; 9 Iowa 354. If a promissory note be made on a usurious contract, it will be void, even in the hands of a bona fide holder for a valuable consideration. 4 Mass. 156; 2 Bag., 23; 8 Conn. 669; 2 N.H. 410. One agreeing to pay, or give new security for, the usurious note of another, may avoid it for original usury. 35 Barb. 96; 12 Iowa 364.

The law of Tennessee does not govern this contract though made in Tennessee. The land is in Arkansas, and the law of this state should prevail. 1 Jones on Mort., 661; 10 Mass. 430, 21; 24 Iowa 9; 6 Hill, 93; 41 Ark. 419.

She should be subrogated to the purchase of Galbreath's judgment, or be entitled to assignment of the judgment as a resulting trust, and in either case to have the remainder of the proceeds of the acceptances, over and above the amount paid for Galbreath's judgment, to-wit, $ 282.60, credited on the Bolton debt to Hill, Fontaine & Co. 15 Am. Dec., 553; 43 Am. Dec., 562.

Her part of the legacy has not been paid, nor barred by the statute of limitations. She was a minor at the death of her father, the testator; married before she became of lawful age, and is yet married; at no time sui juris.

The land stands as a security for the amount paid on it by Mrs. Millington. 3 Coop. Chy., 711; Bump. Fr. Conv., 590; 6 Wall., 299; 18 U.S. 686; 1 Johns. Chy., 478; 3 Ohio St. 246; Rob. on Fr. Con., 520, 527; 3 B. Mon., 50.

Bigelow & Hill for Appellees.

The evidence fully establishes the fact that the conveyance was fraudulent. But it is said, that as matter of law, it must be shown that the grantee participated in the fraud, or at least knew of the grantor's fraudulent design. We submit to the court--

1. That this question has been distinctly and finally decided by the supreme court of Tennessee, in the case of Galbreath v. Bolton, Millington, et al., and is res adjudicata.

2. If, however, the question should be opened to inquiry by this court, we submit that the proof is clear and abundant to show that Wade Millington did have notice of, and did participate in, the fraudulent design of Seth W. Bolton, when she accepted the deed from him.

The conveyance of the land being fraudulent as to creditors, and the fraudulent design having been participated in by the grantee, Mrs. Millington, the creditors so defrauded can follow the land, and the consideration paid where one has been paid, and a court of equity will not aid a fraudulent vendee in recovering back the purchase money any more than a court of law. Equity will only aid such a vendee where there has been no active fraud on his or her part. Galbreath had a right, therefore, to go for both the lands fraudulently conveyed and for the consideration actually paid, until his debt was fully satisfied. R. R. Co. v. Sonter, 13 Wall., 517; Bean v. Smith, 2 Mason, 252, 298; Pettus v. Smith, 4 Rich. Eq., 197; Strike v. McDonald, 2 Har. & G., 191; Strike's case, 1 Bland, 57, 80; Williamson v. Goodwyn, 9 Gratt., 503; Brooks v. Caughran, 3 Head, 464.

The court properly sustained the demurrer to Mrs. M.'s plea of usury in the debts secured by the mortgages to Hill, F., & Co. The plea of usury is personal, and does not extend to strangers collaterally affected. See 6 Lea, 346, 347; 32 Ark. 346; Nance v. Gregory et al., 6 Lea, 343; Sellers v. Botsford, 11 Mich. 59; Bank v. Rineud, 1 Mich. 84; Spaulding v. Davis, 51 Vt. 79; Conover v. Hobart, 24 N. J. Eq., 120; Bridge v. Hoffard, 15 Mass. 103; Reading v. Weston, 7 Conn. 413; Stephens v. Munn, 8 Ind. 352; Pickett v. The N. Bank, 32 Ark. 346.

The legacy was a bequest upon a condition subsequent, and the right of action for the money was in the executor and not in the persons to whom this money was to be distributed under the will.

Any suit is barred by the statute of limitations, as appears upon the face of the cross-bill.

The devise of the land and acceptance by the devisee, upon condition that he pay a stipulated sum, creates a personal liability on the part of the devisee, upon which an action at law can be maintained without an express promise. Gridley v. Gridley, 24 N.Y. 130; Spraker v. Van Alstine, 18 Wend., 200; McLochlan v. McLochlan, 9 Page, 534; Lord v. Lord, 22 Conn. 595; Parish v. Whitney, 3 Gray, 516; Redf. on Wills, part 2, p. 686, sec. 50. This sort of devise does not create any charge on the land.

OPINION

COCKRILL, C. J.

This appeal grows out of the successful effort of certain judgment and mortgage creditors of Seth W. Bolton to subject a plantation in Desha county, which he had conveyed to his sister, Mrs. Millington, to the payment of their respective claims. This suit was begun by a creditor's bill filed by W. B. Galbreath, a judgment creditor, to which the other judgment and mortgage creditors, Mrs. Millington and her husband, and the administrator of S.W. Bolton, were made parties. Cross-bills were filed by the defendant creditors to settle the priorities of their liens, and by Mrs. Millington to assert the priority over all, of her claims. The plantation was unoccupied and not in cultivation when the bill was filed, and a receiver was appointed by the court to lease the place and collect the rents. Upon the hearing, the court found that Mrs. Millington's purchase was a fraud upon the rights of Bolton's creditors, marshalled the liens, made a distribution of the fund raised by the receiver, and condemned the lands to be sold to pay off the residue of the claims charged against them. Mrs. Millington and her husband alone appeal.

The history of the transactions connected with the purchase of the plantation, is as follows:

In 1876, Seth W. Bolton resided in Desha county, and was the owner of the plantation in dispute. He...