Spuck v. Logan
| Decision Date | 02 April 1903 |
| Parties | SPUCK et al. v. LOGAN et al. |
| Court | Maryland Court of Appeals |
Appeal from Circuit Court No. 2 of Baltimore City; Pere L. Wickes Judge.
Action by David Logan and another, trading as Logan & Uhl, against Christian Spuck and others. From a decree in favor of plaintiffs, defendants appeal. Affirmed.
Argued before BRISCOE, SCHMUCKER, BOYD, PEARCE, and JONES, JJ.
Robert H. Smith, for appellants.
S.S Field, for appellees.
This is an appeal from a decree declaring certain deeds fraudulent and void as against the appellees, who are creditors of Christian Spuck, and directing a sale of the property mentioned therein. On the 11th day of January, 1898, Spuck and wife conveyed two ground rents in the city of Baltimore to Solomon Haas, and on April 30th of that year Haas and wife conveyed them to William Deehring, one of the appellants, in pursuance of the original arrangement made between them when deed of January 11th was made. Each of those deeds recites a consideration of $850, but it was admitted that no consideration was in fact paid at the time of the execution or delivery of either of them, and it is conclusively shown by the testimony that the transfers were made to prevent one Charles H. Snack from recovering against Spuck on any judgment he might obtain in a suit for damages instituted on March 1, 1898. Deehring, Haas, and Spuck admit that such was the object of the deeds, and that no consideration was in fact paid. Snack, who had been in the employ of Spuck claimed he was injured by reason of the latter negligently allowing the machine which Snack was operating to become in an unsafe, dangerous, and unsuitable condition, which he claims resulted in the loss of his arm, and he claimed $10,000 damages in the declaration filed by him. That suit was never tried, and is still pending in one of the courts of Baltimore City. On October 3, 1899, Deehring loaned Spuck $400, for which he took his note, payable one year after date, and on October 3, 1900, a new note was given, payable 12 months after date. Deehring owned a leasehold interest in one of the lots, and he agreed with Spuck in December, 1900, to purchase the two ground rents for $850--$450 in cash and the cancellation of the $400 note. The cash was paid, and the note surrendered, and there seems to be no doubt about the price named being a fair estimate of the value of the property. Deehring and wife and Spuck and wife then conveyed the two lots to J.W. Oast by deed dated December 19, 1900, in which the consideration recited was $5, and the same day Oast conveyed them to Deehring and his wife, the same consideration being mentioned in that deed. Mr. Strohmeyer, who drew these deeds, testified that: "While examining the title, I discovered that there had never been a lease executed for the ground rent which was intended to be conveyed to Mr. Deehring, and for the purpose of wiping out any flaw by putting the property in fee in Mr. Deehring I suggested that Mr. and Mrs. Spuck and Mr. and Mrs. Deehring convey to Mr. Oast, by which deed all the interest of all the parties was conveyed to Mr. Oast, and then a deed by Mr. Oast to Mr. and Mrs. Deehring." He also said that the original conveyance by Spuck and wife to Deehring "was an assignment of a leasehold interest in one of these lots, subject to a ground rent of "$26.26," and in reply to the interrogatory, "Had any leasehold interest been previously created?" replied, "No, sir, there had not."
The principal question presented by the record may be thus stated: As the deeds executed in 1898 were confessedly made by or at the instance of Spuck, and accepted by Deehring for the express purpose of preventing any recovery by Snack for damages alleged to have been sustained by him for the injury he held Spuck responsible for, and as the title was thus kept in Deehring until December 19, 1900 (although Spuck regularly collected the ground rents and acted as owner,) are the deeds of the latter date fraudulent, so far as the appellees are concerned, conceding that full consideration was then paid for the lots conveyed? A number of questions are involved in this case, but, inasmuch as it would not afford the appellees relief to set aside the two deeds of 1898 unless those executed in 1900 can be, the validity of the latter is the important inquiry. It will be well to first ascertain the relation that existed between Spuck and the appellees. The latter obtained a judgment against the former before this bill was filed on an account running from January 1, 1898, to February 5, 1901. In the early part of the account the course of dealing seemed to be that for purchases made one month Spuck paid the appellees the next month. That was apparently continued for some time, although the indebtedness was growing. On January 1, 1898, there was a balance from the previous year of $305.84, which was paid that month, but an indebtedness of $383.43 was incurred that day, which was paid in February, and the balances struck in the account filed were as follows: December 31, 1898, $574.61, which was the amount of purchases in that month; June 30, 1899. $741,60, the amount purchased in June; January 1, 1900, $785.07, which is $135.51 more than the purchases during the previous December; and finally, on February 5, 1901, there was a balance of $1,031.32, on which $6.95 was paid in October. There never was a time from January 1, 1898, to the filing of this bill, when the appellees were not creditors of Spuck, and on December 19, 1900 (the date of the last deed), he owed them $923.85. It cannot be said, therefore, that the appellees were not subsisting creditors of Spuck when he made the deed of January 11, 1898, although the amount owing to them at that time was subsequently paid. But before it was paid Spuck had in the meantime incurred other indebtedness to them for a larger amount, and that course of dealing continued between them until finally Spuck was indebted to the appellees in the sum stated. If that was all, we would find difficulty in reaching the conclusion contended for by the appellants that the appellees were merely subsequent creditors. In Paulk v. Cooke, 39 Conn. 572, it was contended that the debts which existed at the time of the conveyance attacked was made had been paid with one exception, and that a voluntary conveyance could only be impeached by existing, and not by subsequent, creditors, but that court thus replied: In Wait on Fraud.Con. § 103, that author, in speaking of the subject, says, "The case should be treated as if the prior indebtedness had continued throughout, or as a case of a continued or unbroken indebtedness." In this case there is all the more reason to adopt that rule, as Spuck was indebted to the appellees (not merely to new parties) constantly, and without interruption, from January 1, 1898, and to say that under those circumstances they must be denied any rights that subsisting creditors have against a fraudulent conveyance would be protecting fraud by a distinction that should not be made in favor of the guilty against the defrauded.
But, if such distinction could be made, it would not avail the appellants. There can be no doubt that whatever fraud was committed on January 11, 1898, when the first deed was made, continued up to the execution of the deeds of December 19, 1900. The real ownership of those lots was in Spuck during all that time. He collected the rents, and did everything an owner of ground rents could do. Deehring does not pretend to have had any interest in them, and he held them to protect Spuck from Snack, and professed to the world to have paid their value for them when he had not paid a dollar. He does not claim that the $400 represented by the note was intended to be applied to the purchase of them, but, on the contrary, he swore that was a loan. He was during all that time concealing the true ownership of the property, with the confessed intention of hindering one asserting a claim against Spuck. In effect he, by the deed to him, said, "This is my property, and I have paid $850 for it," when in fact it was Spuck's property, and he had paid nothing for it. During the whole time he thus held the property the fraud was as great as it was the day it was begun by the transfer of the property; in fact it was probably more injurious, as other people were likely to be affected by it. During the latter part of 1899 and in 1900 Spuck was getting more in debt to the appellees, and, as we have seen, he owed them on December 19, 1900, $923.85. In Jones v. King, 86 Ill. 229, it is said the rule is settled that, where the conveyance is merely colorable, and a secret trust and confidence exists for the benefit of the grantor, it is void not only against prior but subsequent creditors; and the reason of the rule is given in a quotation from Bump on Fraudulent Conveyances that "it is in such case a continuing fraud, and may actually operate as such, as well in reference to debts contracted after as before the conveyance." See, also, 14 Am. & Eng.Ency. of Law, 268. There would seem, therefore, to be no room to doubt that the deeds of 1898 were not only liable to be successfully attacked by creditors of Spuck in existence when they were made, but could be by any persons who became such creditors while the title to the lots were held under those deeds, or either of them.
In 14 Ency. of Law, 266, it is said: ...
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