Plaintiff v. Petitioner

• Decision Date: 01 February 1916
• Citation: 77 W.Va. 551
• Parties: Ridenour et al. v. Roach et als.
• Court: West Virginia Supreme Court

77 W.Va. 551

Ridenour et al.

v.Roach et als.

Supreme Court of Appeals of West Virginia.

Submitted January 25, 1916.

Decided February 1, 1916.

1. Fraudulent Conveyances Suit to Set Aside Burden of Proof

Fraud Payment.

In a suit to set aside a conveyance, as made with intent to defraud creditors, proof of the gramtor's fraud casts the burden upon the grantee to prove actual payment of a valuable consideration, (p. 554).

2. Same Proof of Fraud Circumstantial Evidence.

Fraud may be proven, as well on the part of the grantee as the grantor, by circumstantial evidence, and may be legally inferred from such established facts and circumstances as will lead a reasonable man to conclude that the purpose was to defraud the grantor's creditors, (p. 555).

3. Same Fraud of Creditors' Secret Reservation.

A secret reservation by an insolvent grantor of a material interest in the land granted, is a fraud in law as to his creditors, (p. 552).

4. Appeal and Error Erroneous Decree Correction on Appeal

Fraudulent Conveyances.

A decree setting aside a fraudulent conveyance in so far only as it affects the rights of plaintiffs and directing a sale of the property, and application of the proceeds to payment of costs and plaintiffs' debt, but wThich is erroneous only in that it directs the residue of proceeds, if any, to be paid to the grantor, instead of the grantee, will be corrected on appeal, in that respect, and then affirmed, with costs to appellees, (p. 556).

Appeal from Circuit Court, Doddridge County. Suit by 0. E. Ridenour and others against O. A. Roach and others. From decree for plaintiffs, Lorraine Davis appeals.

Modified and Affirmed.

C. N. Pew, and J. V. Blair, for appellants.

A. F. McCue and R. Roy Waugh, for appellees.

Williams, President:

At the suit of O. E. Ridenour and G. B. Skidmore, partners, and creditors of 0. A. Roach, the circuit court of Doddridge county set aside a conveyance of real estate made by said Roach to Lorraine Davis, on the ground that it was made for the purpose of hindering, delaying and defrauding said creditors in the collection of their debt, and Davis has appealed.

All the parties reside in Upshur county. The real estate conveyed is the oil and gas underlying a tract of 87 acres of land in Doddridge county, with the privilege of mining and removing the same. It was all the real estate said Roach owned and was then leased for oil and gas to the Hope Natural Gas Company. Plaintiffs had recovered a judgment against Roach in a justice's court in Upshur county, on 18th of November, 1913, for $253.28, and execution thereon had been returned "no property found." An abstract of the judgment was docketed in the county court clerk's office of Doddridge county on February 6, 1914; and the deed from Roach and wife to Davis bore date 2nd of February, 1914, was acknowledged on the 3rd, and recorded in the county court clerk's office of Doddridge county on February 4, 1914, two days before the docketing of the judgment. It recites a consideration of $100.00 in cash.

The bill avers that Roach wyas insolvent when he made the conveyance that he made it for the sole purpose of hindering, delaying and defrauding plaintiffs in the collection of their judgment; and that the grantee Davis had knowledge of such fraudulent intent, These averments are denied in the answers of Roach and Davis, the latter averring that he is a bona fide purchaser and had no knowledge of Roach's indebtedness to plaintiffs.

There is no direct and positive proof of the fraud alleged, which is true of most cases of this character, and the decision depends upon whether or not certain suspicious facts and circumstances, proven to exist, are sufficient to justify the reasonable inference of a fraudulent purpose on the part of Davis to assist Roach, in putting his property out of the reach of his creditors. It is proven that Roach was insolvent, that the property conveyed to Davis was all the property he then owned, and that his intent was to defeat plaintiffs in the collection of their debt. The proof of Davis's knowledge of such fraudulent intent is not quite so clearly proven, but depends upon deductions to be made from suspicious facts and circumstances, not explained by his testimony. They are as follows, viz.: Davis was an unmarried man, he owned and operated a box factory in the town of Buckhannon and boarded with Mrs. Roach, wife of 0. A. Roach, who conducted a boarding house. He frequently employed 0. A. Roach to work for him. He had never dealt in oil property before, and bought the property in this instance without seeing it. He knew it was under lease at the time he bought, yet he knew nothing of the terms of the lease and made no inquiry regarding it before purchasing. The Hope Natural Gas Company owned the lease and was paying a delay rental of $25.00 a quarter, still he did not notify it that he had become the owner and entitled to the rentals. The deed makes no reservation to Roach of any of the rentals, yet Davis admits that Roach collected, and retained, the first quarterly rental of $25.00 falling due after the conveyance, and says it was done in accordance with their understanding at the time of the purchase, that it was a part of the consideration. This of itself proves a fraud in law. The deed mentions only the consideration of $100.00 cash. Even though a valuable consideration is paid by the purchaser to an insolvent debtor, the secret reservation of a material benefit by the grantor to himself is a fraud in law. Sims v. Gaines, 64 Ala. 392; Page v. Francis, 67 Ala. 379; Deane v. Skinner, 42 Iowa 418; Macomber v. Peck, 39 Iowa 351; Scott v. Hartman, 26 N. J. Eq. 89; and Lukins v. Aird, 6 Wall. 78. Immediately after it was acknowledged, Roach took the deed to West Union, in Doddridge county, and had it admitted to record and advanced the recordation fees. Davis and Roach both say, however, that Davis repaid him the expenses of recording the deed., Davis also handed Roach $3.00 after his return, to pay the expenses of the trip. This tends to show unusual haste to have the deed recorded. He conld have mailed it to the clerk at a cost of not more than ten or fifteen cents. Davis says his box factory was all the property he owned; that it is worth about $8,000.00; that his yearly business amounted to from $18,000.00 to $24,000.00, but that he ran it on very close margin, and was often hard pressed for money to carry it on; that shortly before the 1st of February, 1914, a number of his employees had struck because he had not paid them. Some of them brought suits against him, but the suits were later settled and he paid them. He admits he did not get the money with which to pay them until the 6th of February, two days after the conveyance and the alleged payment of the $100.00 cash. He is unable to tell where he got the money to make the cash payment. The oil lease bore date July 11th, 1905, and was for a period of ten years, and as much longer as oil or gas was produced, and provided for a delay rental of $25.00 per quarter, payable in advance, until a well was drilled or the lease was abandoned. The delay rental had been paid regularly, and at the time of the purchase the lease was...