Pace's Trustee v. Pace

• Decision Date: 02 February 1915
• Parties: PACE'S TRUSTEE v. PACE ET UX.
• Court: Kentucky Court of Appeals

172 S.W. 925

162 Ky. 457

PACE'S TRUSTEE v. PACE ET UX.

Court of Appeals of Kentucky.

February 2, 1915

Appeal from Circuit Court, Calloway County.

Action by the trustee in bankruptcy of Henry Huse Pace against Henry Huse Pace and M. E. Pace, his wife. From a judgment dismissing the petition, plaintiff appeals. Affirmed.

J. R Grogan, of Paducah, and A. D. Thompson, of Murray, for appellant.

John Ryan, of Murray, for appellees.

HANNAH J.

In 1905 H. H. Pace bought a tract of land in Calloway county, and in 1908 he conveyed it to his wife, M. E. Pace. Subsequently, in 1909, 1910, and 1911, Pace became involved in financial difficulties, and in 1912 he filed a petition in bankruptcy and was duly adjudicated a bankrupt.

The trustee of the estate of H. H. Pace in bankruptcy instituted this action in the Calloway circuit court against Mrs. Pace and the bankrupt, seeking to subject the tract of land mentioned to the payment of Pace's obligations. At the August term, 1913, the court rendered a judgment declaring the conveyance made by Pace to his wife in 1908 only constructively fraudulent, and holding it valid as against obligations incurred after its execution; but, that being without consideration, it was invalid as against obligations created prior to its execution. The court directed the parties to take proof relative to and ascertain the obligations of Pace existing in 1908, when the conveyance was executed. It was then shown that while living in Tennessee in 1898, Pace had contracted two debts; (1) A note of $106.05 executed May 23, 1898, and an open account for $11.04, due November 28, 1898--and these were all the debts Pace owed at the time he conveyed the land to his wife. These claims had been filed and allowed in the bankruptcy proceeding, and, when filed herein, the defendants pleaded the Tennessee limitation of six years. The court held this plea sufficient and adjudged that the petition be dismissed, and the plaintiff appeals.

1. Appellant trustee contends that neither Pace nor his wife had a right to invoke the statute of limitations as a defense against the attack upon the conveyance made by Pace to Mrs. Pace. As to Pace, appellant contends that, having failed to interpose a plea of the statute when proof of claim was filed by the Tennessee creditor in the bankruptcy proceeding, he will not be permitted to do so in this action.

It has been held that a claim barred by the statute of limitations is not a provable claim within the purview of the act of Congress relating to bankruptcy. (In re Lipman [D. C.] 94 F. 353; In re Resler [[D. C.] 95 F. 804); and it has also been held that it is the duty of the trustee to plead the statute in behalf of the other creditors. (94 F. 353; In re Wooten [D. C.] 118 F. 670). But whether it was the duty of the bankrupt or of his trustee to have filed exceptions to such claim when presented, and whether the bankrupt, having failed to file such exceptions in the bankruptcy proceeding, is estopped from interposing such plea in the present action, is here unnecessary to be considered, for Mrs. Pace, as grantee in the deed attacked as fraudulent, had an unquestioned right to invoke the statute of limitations in respect of the antecedent liabilities of the grantor, as a defense to the action, in so far as it affected her.

2. The conveyance from Pace to his wife, as the trial court properly held, was voidable only as against any debts which the grantor owed at the time of the execution of the conveyance. Dugan's Ex'x v. Daugherty, 146 Ky. 187...