Sneed v. Davis

• Decision Date: 07 December 1938
• Citation: 135 Fla. 271,184 So. 865
• Parties: SNEED et al v. DAVIS.
• Court: Florida Supreme Court

184 So. 865

135 Fla. 271

SNEED et al v. DAVIS.

Florida Supreme Court, Division A.

December 7, 1938

Suit by Coma E. Davis, as trustee in bankruptcy of the estate of William F. Sneed, against Mary E. Sneed, joined by her husband, William F. Sneed, and others to cancel an alleged transfer of stock and to subject the entire certificates of stock to the payment of a claim of a judgment creditor. From an order holding the answer insufficient to state a defense defendants appeal.

Reversed and remanded. Appeal from Circuit Court, Polk County; W. J Barker, Judge.

COUNSEL

D. O Rogers and Carver & Langston, all of Lakeland, for appellants.

Huffaker & Edwards, of Bartow, for appellee.

OPINION

BUFORD Justice.

In an amended bill of complaint it is alleged in effect:

'1. That complainant is the Trustee in bankruptcy of the estate of the defendant William F. Sneed, Sr.;

'2. That in 1923 William F. Sneed, Sr., purchased 100 shares of the capital stock of the Mine & Mill Supply Company, a corporation; that the stock was issued to William F. Sneed, Sr.; that on July 16, 1929, Sneed surrendered the stock to the corporation which at Sneed's request re-issued to Sneed 10 shares of capital stock in such corporation and issued at the same time 30 shares of such stock to Mary E. Sneed, the wife of William F. Sneed, Sr., 30 shares to Helen Sneed Rockford, the daughter of William F. Sneed, Sr., and 30 shares of such stock to William F. Sneed, Jr., the son of William F. Sneed, Sr., that subsequent to such time William F. Sneed, Sr., surrendered one share of his stock to the corporation; that at a still later time the corporation reduced its capital stock fifty percent and thereupon issued to William F. Sneed 4 1/2 shares of stock in lieu of his 9 shares of stock, issued to Helen Sneed Rockford 15 shares of stock in lieu of her 30 shares of stock; issued to William F. Sneed, Jr., 15 shares of stock in lieu of his 30 shares of stock, and issued to Mary E. Sneed 15 shares of stock in lieu of her 30 shares of stock; that the wife and children paid no consideration to William F. Sneed, Sr., at the time the 90 shares of stock were issued to them; that such wife and children at the time the 45 shares of stock were issued to them paid no consideration to William F. Sneed, Sr., or to anyone for such stock; and that in each instance the transfer of such stock was a gift and was fraudulent as to the then creditors of William F. Sneed, Sr.

'3. That at the time of the stock transfer in question by Sneed to the members of his family he was indebted to the First National Bank on a note in the sum of $11,400; that the note was renewed from time to time at 90 day intervals; that after the failure of the bank one of its Receivers obtained a judgment on December 17, 1930, against Sneed for $8,838.96; that thereafter the Franklin Liquidating Company acquired for value the judgment by assignment and that on August 20, 1937, it filed its claim on said judgment before the Referee in Bankruptcy who thereupon allowed the claim for $12,376.21, it being as shown by the answer the only claim filed in such bankruptcy proceedings.

'4. That on July 16, 1929, when William F. Sneed, Sr., surrendered to the Mine & Mill Supply Company the 100 shares of stock and had the 90 shares of stock reissued to members of his family, he was insolvent; that such transfers were made without any consideration and for the purpose of defrauding his creditors; that they were made secretly and without the knowledge or consent of the Bank and that the subsequent dealings with and transfers of such stock were made in like manner by William F. Sneed, Sr., who prior to and since July 16, 1929, has been insolvent.

'5. That according to the schedule filed by the bankrupt there are no assets whatsoever to apply on the claims of the Franklin Liquidating Company or on other claims which may be filed in such proceedings; that the voluntary transfer of the said stock by Sneed to his wife and children was and is void as against the Bank and its assignee and that the plaintiff is entitled to have such stock transferred to him as assets of the estate for the payment of the claim against the bankrupt.

'6. That the 49 1/2 shares of stock stand on record on the stock book of the Mine & Mill Supply Company as follows:

4 1/2 shares in the name of William F. Sneed, Sr.

15 shares in the name of William F. Sneed, Jr.

30 shares in the name of Mary E. Sneed.'

The purpose of the suit was to cancel the alleged transfer of stock and to subject the entire certificates of stock to the payment of the claim of Franklin Liquidating Company, as assignee of the Bank, a judgment creditor.

Answer was filed, containing, along with other allegations, the following:

'Further answering the asid paragraph of the saib Bill of Complaint, these defendants say that on July 16, 1929, at which time the stock in question was transferred, William F. Sneed, Sr., was the head of a family residing in the State of Florida within the meaning of the provisions of Section 1, Article 9 [10] of the Constitution of the State of Florida; that at such time the defendant William F. Sneed, Sr., resided in the City of Lakeland, Florida, together with his family, consisting of his wife and others; that at such time there was exempt to him, among other things, One Thousand Dollars' worth of personal property; that on July 16, 1929, at the time the transfers in question were made, the defendant William F. Sneed, Sr., owned no property of value other than the stock in question and that the same at such time, together with such other personal property as William F. Sneed, Sr., owned was in value worth less than One Thousand Dollars and that the right, title and interest of William F. Sneed, Sr., in and to such property was exempt from forced sale under process of any Court and that by reason thereof neither the said Bank nor its successors in interest were entitled to look to such stock as assets out of which to satisfy any claim it might have as against William F. Sneed, Sr.

'Further answering the Amended Bill of Complaint, these defendants say that they are without knowledge as to whether the plaintiff is advised that the 49 1/2 shares of stock of Mine & Mill Supply Company stand of record on the stock book of the corporation as follows: 4 1/2 shares in the name of William F. Sneed, Sr., 15 shares of the stock in said William F. Sneed, Jr., and 30 shares in the name of Mary E. Sneed; but do say, as a matter of fact they do so stand of record on the stock book of said corporation.

'Further answering, these defendants specifically deny that the plaintiff has a clear right or any right to have the 4 1/2 shares of stock issued to the said William F. Sneed, Sr., transferred and assigned to him as an agent for the benefit of the creditors of said estate but say that, as a matter of fact, the said stock stands of record on the books of such corporation in the name of William F. Sneed, Sr., the such stock has so stood in the name of William F. Sneed, Sr. for such a long period of time and the plaintiff's rights, if any, against such 4 1/2 shares of stock was subject to an execution at law.

'Further answering, these defendants say that William F. Sneed, Sr., has filed a petition in the Federal Court, in and for the Southern District of Florida, Tampa Division, to be adjudicated a bankrupt; that he, as such bankrupt, is entitled to legal exemption and that he in his petition for bankruptcy and in other proceedings thereunder, is claiming the 4 1/2 shares of stock in question as being a parcel of his homestead exemptions and that the matter of the rights of the creditors of William F. Sneed, Sr., in so far as such 4 1/2 shares of stock is concerned, is being handled by and is under the jurisdiction of the bankruptcy court proper.'

Plaintiff filed motion for decree on bill and answer.

The answer was held insufficient to state a defense and from the order so holding, appeal is taken.

We have quoted only a portion of the answer because in the paragraphs quoted we find a complete defense to the amended bill of complaint.

Section 1 of Article 10 of our constitution is familiar to every student and there is no need to quote it here. Under its terms personal property is as effectively exempt from forced sale as is real estate.

The motion for decree on bill and answer admits the allegations of the answer which are well pleaded. Therefore it admits:

'1. That William F. Sneed, Sr., at the time of the transfer was the head of a family residing in the State of Florida, within the meaning of Section 1, Article 10 of the Florida Constitution.

'2. That there was exempt to William F. Sneed, Sr., at such time within the meaning of such Section and Article $1000.00 worth of personal property.

'3. That the said stock, together with all other personalty owned at such time by William F. Sneed, Sr., was worth less than $1000.00.'

We are dealing with the rights of the parties as of the date of the first re-issue of the stock involved, July 16, 1929, and not considering what their respective rights might have been at some later day, had not this re-issue been accomplished at that time. The general applicable rule is stated in 27 C.J. 438, as follows:

'According to the weight of authority a debtor in disposing of property can commit a fraud on creditors only by disposing of such property as the creditor has a legal right to look to for satisfaction of his claim, and hence a sale, gift or other disposition of property which is by law absolutely exempt from the payment of the owner's debts cannot be impeached by creditors as in fraud of their rights. Creditors have no right to complain of dealings with property which the law does not...