Shaw v. Shaw

• Decision Date: 18 January 1894
• Citation: 24 S.W. 630
• Parties: SHAW et al. v. SHAW et al.
• Court: Kentucky Court of Appeals

24 S.W. 630

SHAW et al. v. SHAW et al.

Court of Appeals of Kentucky.

January 18, 1894

Appeal from circuit court, Christian county.

"Not to be officially reported."

Action by George W. Shaw, in his own right and as administrator of the estate of Thomas H. Shaw, deceased, and James Shaw against Mollie E. Shaw and others, for settlement of such estate, and to foreclose a mortgage executed by deceased and his wife, Mollie E. Shaw, to George W. and James Shaw, in which a certain creditor intervened, and alleged that the mortgage was fraudulent as to creditors. From a judgment canceling the mortgage so far as it affected the rights of creditors, and giving the widow of deceased, defendant Mollie E. Shaw, the right of homestead in the property, plaintiffs appeal. Reversed.

Petree & Downer, for appellants.

J. I Landes and W. R. Howell, for appellees.

PRYOR J.

On the 2d of January, in the year 1891, Thomas H. Shaw and his wife Mollie E. Shaw, executed and delivered to his brothers George W. Shaw and James Shaw, a mortgage on a house and lot in the town of Fairfield, in Christian county. The mortgage on its face purports to secure an indebtedness by the mortgagor to his brothers, evidenced by notes that are filed with this action, brought for a settlement of Thomas Shaw's estate and a foreclosure of the mortgage. Thomas Shaw having died, one of the appellants, George W. Shaw, administered on his estate, and as administrator and in his own right, in conjunction with James Shaw, the brother, is seeking to collect the mortgage debt. A creditor intervened by petition to be made a party to the action in which the mortgage is assailed as fraudulent, and upon the facts the chancellor below canceled the mortgage in so far as it affected the rights of creditors. It is proven that the purpose on the part of the two brothers was to save the home of their brother, Thomas Shaw, by securing their debts in preference to those of other creditors; but the validity of the notes for which the mortgage was executed is not assailed, or rather the testimony relied on to establish fraud, if conceded to be true, is not inconsistent with the legal right of the two brothers to secure their indebtedness. While they deny it was their purpose to have this mortgage executed to secure their brother in a home, if such statements were made, and the notes valid, the transaction should be upheld in a court of equity. Their brother had left his home in Fairfield, and removed to the state of Tennessee, and in his insolvent condition they might well have supposed that creditors would seize his property, and thereby deprive him of a home, as well as obtain a preference over their claims. Under such circumstances the right to preference existed, subject to be defeated by a proceeding within six months, claiming a transfer of all the debtor's estate for creditors under the act of 1856, or a similar enactment now in force. The execution of the notes by the debtor is not questioned, and because some part of the indebtedness had been secured by a former mortgage is no reason for denying the right of the appellants to obtain additional security. We have no doubt the brothers made their trip to Tennessee for the purpose of having the mortgage executed, and to place themselves in a position so that when other creditors attempted to make their debts their own claims would have priority, and to enable them, if they saw proper, to leave their brother in the possession of the home if they became the owners. This is not fraudulent, and, the appellees failing to attack the mortgage within six months, their claim must be held subordinate to the mortgage lien.

It is argued the court below had no jurisdiction to entertain this charge of fraud without a return of "no property found." There was no demurrer to the petition, but an answer filed, placing in issue the averments of fraud by the creditor, and in this sort of case this court has very properly held the defense has waived the right to raise such a question. See Barton v. Barton, 80 Ky. 212. "It will be admitted," say counsel, "that a court of equity has no jurisdiction to set aside a fraudulent conveyance by the creditor unless he has first pursued his legal remedy." Such an admission would likely result in establishing the proposition that a failure to demur does...