Mitchell v. Sawyer

• Decision Date: 25 January 1886
• Citation: 5 N.E. 109,115 Ill. 650
• Parties: MITCHELL and others v. SAWYER and others.
• Court: Illinois Supreme Court

115 Ill. 650

5 N.E. 109

MITCHELL and others

v.SAWYER and others.

Supreme Court of Illinois.

Filed January 25, 1886.

Error to appellate court.

Metcalf, Bradshaw & Yager, for plaintiffs in error.

Wise & Davis and R. S. Sawyer, for appellees.

SHELDON, J.

This was a creditors' bill, filed by the complainants, to set aside, as fraudulent and void as to creditors, two mortgages and a deed of lands described in the bill, made by James Mitchell. The circuit court decreed the relief sought. On appeal to the appellate court for the Fourth district, the decree was affirmed, and the defendants bring this writ of error.

It appears from the evidence that James Mitchell, in the year 1880, was indebted to the complainants in the sum of $1,033, and also to one tPeter Robertson in the sum of about $1,200. While so indebted he was the owner of a farm near Alton, of about 127 acres, some 15 acres of it coal land, and worth about ,9,700. He had also personal property and other real estate worth at least $2,500. On this farm Mitchell placed a mortgage to Sweetser & Priest of $1,000. On May 17, 1880, a mortgage on the land for $2,000 was made to his brother John Mitchell, and a like mortgage for $2,000 was made to John Hamilton, May 6, 1881; and on October 13, 1881, James Mitchell made a deed of the farm to his brother John Mitchell. It is this deed and mortgage to John Mitchell, and mortgage to John Hamilton, which the bill seeks to have set aside. James Mitchell had previously sold his other real estate of Hamilton and his brother John Mitchell, and the personal property had been passed to the son of James Mitchell; so that in 1882, when complainants and Robertson obtained judgments on James Mitchell's indebtedness to them, James Mitchell had disposed of all of his property, and executions on the judgments were returned, ‘No property found.’ Complainants and Robertson then each filed a creditor's bill to set aside the conveyances as fraudulent as to them, and the suits were tried together. As respects the mortgage to John Hamilton, it appears from the evidence that Hamilton was an intimate friend of James Mitchell and had lived in his family for years; that he is old and nearly blind; says himself that it is over 10 years since he could do much, and that in 1874 he was worth in the neighborhood of $3,000. He and Mitchell state that Hamilton had a note against Mitchell for $1,150; that, to secure its payment, Mitchell gave to Hamilton a mortgage on a lot in Upper Alton, and a chattel mortgage on personal property. This chattel mortgage seems to have covered all the personal property on the place. Afterwards there was an arrangement between them whereby those mortgages were taken up, a deed made to Hamilton of the lot in Upper Alton, and this $2, 000 mortgage on the farm was given to Hamilton. Just how the amount of the $2,000 was made up is confusedly and not satisfactorily explained. Mitchell states:

‘I had a settlement with Hamilton, and sold him the Upper Alton property for $750, and the chattels for $800. Whatever balance was due on the chattel property went in with the money [which he at the time got of Hamilton, not knowing how much] to make the $2,000.’

Mitchell and Hamilton agree that the Alton lot was taken at $750, and the chattel property valued at $800; the $1,150 note, with the interest on it, amounting at the time, they say, to some $1,500. The evidence is explicit that this $800, as the value of the personal property, was included in the $2,000 mortgage, and it is just as explicit that Hamilton sold the personalty to John Mitchell, the son of James Mitchell. Hamilton said that John had paid him at various times to the amount of $650, which he, Hamilton, paid to James Mitchell, as he promised at the time the property was turned over. It would seem, then, that this $2,000 mortgage was too large by at least the amount of this $800, which should have been deducted from instead of included in the $2,000; and if the mortgage was executed for too large a sum, to protect the property from creditors, it would be fraudulent and void as to them. Wooley v. fry, 30 Ill. 163;Upton v. Craig, 57 Ill. 259; Bump, Fraud. Conv. (Ed. 1872) 470.

Respecting the deed of James Mitchell to his brother John Mitchell, it appears that the latter resided in Pennsylvania, and James Mitchell testifies the consideration was $2,000 paid to him, and the deed was made subject to the mortgage of John Mitchell, for $2,000; that of Sweetser & Priest, for $1,000; and the mortgage Hamilton claimed to have, of $2,000. John Mitchell does not in the deed agree to pay the mortgages, but takes the land subject to them. The deed was made October 13, 1881. John Mitchell died in December, 1883. Ever since the making of the deed, James Mitchell has continued to reside on the land, as before. As to how he came thus to reside on the place, he testifies:

‘I came to reside on the place through a verbal promise my brother made to my wife that she should not be disturbed in the place as long as he lived or owned the place.’

And as to the proceeds from the place, he says:

‘Certain proceeds come through my son John, by an arrangement the old woman has to get certain proceeds of the place. There is no particular proceeds mentioned, and so far we have been getting what we needed through my son John here, that's managing the place. Whenever my wife or me wants a dollar, he has to let us have it,-I understand by instructions from his uncle, my brother.’

The son of James Mitchell, John Mitchell, who was living on the place with him at the time, testifies that about the middle of October, 1881, the agent of his uncle, John Mitchell, made a verbal lease of the land to him; that he was to pay one-half cent a bushel for all coal taken, and three dollars per acre for all cultivated land; that there was no specified time for paying rent,-‘the rent was to go to pay the indebtedness on the place, and to keep up the taxes and insurance; keep up the place until my uncle came around and we had a settlement;’ that his uncle had never been around since then, nor had he ever had a settlement with him; that he paid insurance, and paid Sweetser & Priest the interest regularly on their mortgage, but never paid Hamilton anything. It appears that over 200,000 tons of coal had been taken from the place since the making of the deed. John Mitchell left a will, whereby he devised the land in trust to permit his brother James and his present wife, during their lives and the life of the survivor, to use, occupy, and enjoy the land free from all rent, and not be liable in any manner for the debts of his brother, and after his death and that of his wife, then in trust for the use of John Mitchell, elder son of James, and his heirs, charged with the payment by John to his sister Margaret of $500, and with the further payment by said John to the executors of the testator of such sum as his brother James should be indebted to him at the time of his death. The inventory filed of the estate of the testator showed no indebtedness to the estate of either James Mitchell or his son John.

All this manifests very clearly, in our opinion, that notwithstanding the deed James Mitchell was to have a secret use in the property; and if there was the secret trust connected with the conveyance that James Mitchell was still to have the beneficial enjoyment, in whole or in part, of the property conveyed, this rendered the deed fraudulent and void as to creditors. Power v. Alston, 93 Ill. 590;Moore v. Wood, 100 Ill. 451. There are other badges of fraud which might be commented upon,...