Peale v. Grossman

• Decision Date: 28 November 1911
• Citation: 73 S.E. 46,70 W.Va. 1
• Parties: PEALE et al. v. GROSSMAN et al.
• Court: West Virginia Supreme Court

73 S.E. 46

70 W.Va. 1

PEALE et al. v. GROSSMAN et al.

Supreme Court of Appeals of West Virginia.

November 28, 1911

Submitted January 26, 1910.

Syllabus by the Court.

Whether one is a prior or a subsequent creditor in relation to a voluntary conveyance must be ascertained solely by reference to the time the debt was contracted.

When a running or continuous account extends over the date of a voluntary conveyance, the creditor, as to the part of the indebtedness contracted prior to the conveyance, is a prior creditor, and, as to the part contracted subsequent to the conveyance, he is a subsequent creditor.

If payments are made on a running or continuous account, without particular application of the same thereto by direction of the paying debtor or act of the receiving creditor, the law applies the payments to the oldest items of the account.

One loses his position of prior creditor by accepting payments which lawfully go in full discharge of the indebtedness contracted prior to the voluntary conveyance.

A decree charging property with the payment of debts in favor of various creditors should specifically state the amount due to each creditor.

Appeal from Circuit Court, Kanawha County.

Bill by W. C. Peale and others, partners, against M. W. Grossman and others. From a decree for defendants, T. J. Peale, surviving partner, and others appeal. Affirmed and remanded, with a direction.

A Burlew and D. W. Taylor, for appellant Peale. Nash & Nash for appellant Sterling Paint & Glass Co. Price, Smith Spilman & Clay, for appellants Chicago Varnish Co. and others. Payne & Payne and Berkeley Minor, Jr., for appellees.

ROBINSON J.

This is a suit attacking conveyances to a wife as being in fraud of the husband's creditors. The chancellor found from the pleadings and proofs that the conveyances were not made in actual fraud, but that one of them conveying a lot of ground was voluntary and, therefore, void as to the debts contracted prior to its date; that all the debts claimed by the bill and petitions were contracted after this conveyance was made, except a debt of one of the petitioning creditors; that the wife furnished $1,800 of the money that paid for the lot and the improvements thereon from resources of her own, other than those of her husband; and that the improvements placed on the lot a considerable time after the conveyance are chargeable with the debts of the husband, claimed by plaintiff and the other petitioners, to the extent that his means went into those improvements, that is, to the amount of $1,325. Accordingly a decree was entered directing that the property be sold for the satisfaction of the debts to that amount, if not paid to that extent by the wife in a day given. From this decree plaintiff and other creditors have appealed. The main contention is that the court erred in not subjecting the property as a whole to the payment of the husband's debts.

The case is so similar to many that have received extended judicial discussion that it will serve no purpose to elaborate on facts like those which have time and again been reviewed in our cases and on well-settled principles in connection therewith. The books already contain full exposition of principles relating to voluntary and fraudulent conveyances. We have carefully weighed the evidence in connection with the familiar legal principles applicable thereto. It is enough to say that the evidence justifies the view of the case adopted in the decree. Therefore, the assignments and the cross assignment on this score are overruled. The decree is right as far as it goes. In one particular it should go further, but as to that we shall speak later.

Plaintiff claims that he is a prior creditor in relation to the conveyance of the lot. If it were so, his debt should have a better priority than that given in the decree; for the voluntary conveyance of the lot would then be void as to him. Because plaintiff's debt grows out of a running account extending from a date long before the conveyance to a date long thereafter, it is insisted that the balance finally remaining due on the account should be considered a debt prior to the conveyance, notwithstanding the various payments made on the account more than equal the items of indebtedness contracted prior to the date of the conveyance. Our statute settles this matter. Code 1906, c. 74, § 2. Judge Lucas, in Greer v. O'Brien, 36 W.Va. 277, 15 S.E. 74 gives a clear exposition of this statute. Therein it is held: "Under said act the courts of this state have no power to substitute subsequent creditors to the shoes of prior creditors, or to confound the two classes which the act was intended to make, and has made, absolutely distinct." In a running account extending over the date of a voluntary conveyance, part is contracted prior to the conveyance and part subsequent to the conveyance. The creditor is clearly a prior creditor as to part and a subsequent creditor as to part. The conveyance can only be considered void for voluntariness as to the part contracted prior to it. As to the other part it is valid, unless overthrown for actual fraud in relation thereto. As to this subsequent part, mere voluntariness will not avoid the conveyance. The statute defines the debts for which a voluntary conveyance must give way. It declares that a conveyance "not upon consideration deemed valuable in law, shall be void as to creditors whose debts shall have been contracted at the time it was made; but...