Scott v. Keane
| Decision Date | 28 June 1898 |
| Citation | 40 A. 1070,87 Md. 709 |
| Parties | SCOTT et al. v. KEANE. |
| Court | Maryland Court of Appeals |
Appeal from circuit court, Montgomery county.
Suit by Thomas T. Keane against John B. Scott and others. From a decree for plaintiff, defendants appeal. Affirmed.
Argued before MCSHERRY, C.J., and BRYAN, FOWLER, BRISCOE, PAGE ROBERTS, and BOYD, JJ.
Arthur W. Machen, Thos. Anderson, and W. Veirs Bouic, Jr., for appellants. Arthur Peter and Robert B. Peter, for appellee.
This is an appeal from the circuit court from Montgomery county setting aside a deed from John B. Scott to John D. Coughlan and one from Coughlan to Scott, conveying certain real estate in that county. They were executed on the 17th and 18th days of October, 1888, respectively, and filed for record the 19th of that month. It is admitted that Coughlan had no beneficial interest in the property; that the deed was made to him for a nominal consideration, which was not paid, with the understanding that it was to be reconveyed to Scott, subject to the uses and trusts hereinafter mentioned. In October 1893, Scott, who was in the hotel business in Washington City, commenced to deal with the appellee, who was in the meat business, and on the 24th of April, 1896, owed him an open account and two promissory notes, amounting in all to nearly $2,000. On the last-named day Scott failed, owing a large amount of money, and made an assignment for the benefit of his creditors. No bond having been given in this state as required by the statute, the appellee issued attachments levied upon the property included in these deeds, and obtained judgments of condemnation thereon. After thus acquiring a lien on Scott's interest in the property, this bill was filed, in which it was charged that the conveyances were made with the intention on the part of Scott of becoming subsequently indebted, and with the intent to hinder, delay, and defraud any one to whom he might thus become subsequently indebted. It is also alleged that the provision in the deed for the daughters is and was intended to be a mere subterfuge, and never was intended to create any interest in them. Most of the facts alleged in the bill are admitted in the answer, but it is distinctly denied that there was any intention to hinder, delay, or defraud subsequent creditors, or that Scott had any future indebtedness in contemplation. It is claimed that he was then in prosperous circumstances, and not in contemplation of insolvency, and that the deed was made to create a life estate in himself, with remainder to his two daughters, in accordance with his purpose when he purchased the property some months before these deeds were made.
There was no evidence taken, but the case was submitted on the bill, exhibits, and answers, together with an agreement that Scott was a widower when the deeds were made, having no children excepting the two daughters mentioned in the deed, but he shortly afterwards married again, and had one child by that marriage. The allegations of fraud being denied in the answer, the determination of the case must depend upon the construction and effect of the provisions in the deed to Scott, which are as follows:
There is no doubt about the right of subsequent creditors to have a voluntary deed set aside if made with the intention and design of defrauding those who should thereafter become creditors, although the grantor be solvent, or even free from debt, at the time the deed is executed; but the mere fact that the deed was voluntary does not give them the right to do so, but there must be something to convince the court that there was some fraudulent intent on the part of the grantor before it can be set aside on the ground of fraud. That fraudulent intent may, however, be ascertained in different ways. Sometimes the parties make such statements as convict them of fraud, but those cases are rare, because persons having fraudulent purposes in view are not apt to give expression to them in the presence of those likely to repeat them. The terms and provisions found in the conveyance itself oftentimes furnish strong evidence of fraud, and among such cases may be those where the grantor has reserved for himself control over his property, while nominally transferring it to a third person, or for his benefit, with a pretended purpose of making a settlement on him.
It is contended on the part of the appellants that there is no such thing as fraud in law, as affecting subsequent creditors, and that, inasmuch as no actual fraud is proven, the bill should be dismissed. They rely on the cases of Ward v. Hollins, 14 Md. 158, Kane v. Roberts, 40 Md. 590, and Matthai v. Heather, 57 Md. 483, as decisive of the question. But those cases do not decide that there may not be on the face of the deed itself such provisions as will, in contemplation of law, make it invalid, and there was nothing in any of those cases to raise that question, as the instruments attacked were of the ordinary and usual forms. In the case of Kane v. Roberts the court said the only question presented by the appeal was "whether a deed that is fraudulent and void against the grantor's existing creditors is also void against subsequent creditors when there is nothing in the deed itself and no evidence offered tending to prove that any fraud was intended against the latter"; thus strongly implying that the deed itself may be evidence of fraud against subsequent creditors, and there is no decision in this state which announces a contrary doctrine. It would be singular if there was, for we cannot understand the necessity for other evidence of fraud, if the deed itself contains such provisions in it as the law declares to be fraudulent.
Scott not only undertook to reserve to himself the right to retain possession of the property during his life, and to receive all the rents and benefits therefrom, without impeachment of waste, but the only interest he pretended to give others is that, after his death, he should hold it for the use and benefit of his two daughters, "unless the same shall be disposed of as hereinafter authorized." Without stopping to consider the meaning or effect of his making himself the trustee for his daughters after his death, in order to see what disposition of the property was "hereinafter authorized," we have only to refer to the subsequent provisions of the trust above quoted to ascertain that he is authorized to do what he pleases with it,--sell, lease mortgage, or devise it. It is equivalent to saying that he can dispose of it as may suit his pleasure, but, if he does not dispose of all of it, then his two daughters may have what is left, and, notwithstanding the vast powers reserved to himself, any creditors he may have can be...
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