Severs v. Dodson

• Decision Date: 18 November 1895
• Citation: 34 A. 7,53 N.J.E. 633
• Parties: SEVERS et al. v. DODSON et al.
• Court: New Jersey Supreme Court

34 A. 7

53 N.J.E. 633

SEVERS et al.

v. DODSON et al.

Courts of Errors and Appeals of New Jersey.

Nov. 18, 1895.

(Syllabus by the Court.)

Appeal from court of chancery; Bird, Vice Chancellor.

Bill by Truman M. Dodson and others against James Severs and others. Decree for plaintiffs. Defendants appeal. Reversed.

G. D. W. Vroom and Wm. M. Lanning, for appellants.

John H. Backus, for respondents.

BEASLEY, C. J. This bill was filed by the respondents, as creditors at large, to set aside a conveyance made by their debtor, to his granddaughter. The grounds taken before the vice chancellor on the part of such complainants was that the transfer of the property was in pursuance of a scheme to defraud and delay creditors, or, failing in that contention, it was insisted that the conveyance was, at all events, without consideration, and was, therefore, constructively fraudulent as against existing debts, to which class it was alleged the claim sought to be enforced belonged. By way of answering these grounds, the defendants contended that there was no fraud; that the conveyance was not voluntary; and that, if the transaction was a mere gift, nevertheless, it was equitable and legal, inasmuch as it was not an arrangement hostile to creditors. The vice chancellor's consideration of the facts led him to the conclusions that the deed was voluntary, and that there was no actual fraud in the affair; but that, as the debt in question was in existence at the time of the gift, such conveyance should be annulled in accordance with the rule established in the case of Haston v. Castner, 31 N. J. Eq. 703. The result was a decree setting aside the conveyance and ordering the land to be sold, the proceeds to be applied to the payment of the debt due the complainants, the amount of which was ascertained by the court.

With respect to the facts that the conveyance was purely voluntary, and that it was not tainted with fraud, the opinion of this court is in all respects in accord with that of the vice chancellor. This part of the case is deemed so plain as to render all discussion of the subject utterly superfluous, but we think that the other essential fact, viz. that the complainants were creditors at the time of the transfer of the property, so far from being proved, was negatived by the evidence. On this subject the uncontested facts were these: The deed of gift was dated the 3d day of April, 1886, and at that time the donor, one James Taylor, was the accommodation indorser for one Davis, who was in debt to the complainants. From time to time these notes were renewed as they fell due, the old ones being regularly taken up, and new ones substituted. None of this paper was dishonored before the making of the conveyance in question, the first of them being protested about a year after that event. The inquiry, therefore, arises whether this situation placed this case within the operation of the rule defined in Haston v. Castner, already cited. The doctrine propounded in that authority is this: That if a person be indebted to another at the time of a voluntary settlement made by him, such disposition is presumed to be fraudulent with respect to such debt, and no circumstances will suffice to repel the legal presumption of fraud. This doctrine, after full consideration, was established by this court, and it is not intended, on this occasion, to modify it in any degree. It is true that the propriety of the principle has been much discussed and much doubted both in England and in this country, and such investigation has exhibited great contrariety in judicial opinion; but, as the question is not deemed to be an open one in this state, it would be but to supererogate to review that line of authorities. Accepting, then, as a datum, that the gift now in question is void as respects contemporaneous creditors, the only interrogatory here apposite is, did the complainants belong to such class? This question, we think, must be answered in the negative. At the time in question they were not creditors of the donor. It is readily admitted that they were such in a sense that entitled them to the remedies provided in the act for the prevention of frauds and perjuries. They can undoubtedly set aside conveyances and transfers of property made to defeat their just claims. But at present we are not called upon to construe the statute itself, our present function being to construe the rule of evidence that this court has superinduced upon the statute. This discrimination has not always been made, and the omission has confused the subject. The act invalidates certain transfers of property infected with fraud. The rule now being considered relates to the proof of such fraud, declaring that the contemporaneousness of the gift and the debt establishes it for certain purposes, and to a definite extent. We have said the complainants' case does not fall within this evidential rule, the reason being that they were not creditors of the donor. The latter was an accommodation indorser of current notes, and the situation did not constitute him a debtor. His assumptions might not have ripened into debts. Whether they would have that effect was altogether contingent. It is obvious that to bring this case within the principle in question it is necessary to amplify very greatly its scope, for its terms "existing debts" would have to be metamorphosed into "existing liabilities." Such a change would be so fundamental as to deprive the principle itself of all semblance of reason or expediency. When a man is in debt, especially if such debts be due, it is certainly not irrational to infer, if he give away his property, that the intention was to defeat such claims; but such deduction would seem to be most extravagant if, instead of a present indebtedness, he has incurred a mere liability as a warrantor of title, as a tort feasor, or as surety on an administrator's bond. If such responsibilities as these latter, which may, in the long run, be transformed into debts, should have the effect of invalidating voluntary settlements of property, then such settlements would be the most uncertain of legal transactions. It is plain that by force of so absurd a principle all donations would, in a measure, be made contingent, and would many times remain so beyond the lives of the donor and donee. The...