Sword v. Scott

• Decision Date: 19 March 1943
• Citation: 169 S.W.2d 825,293 Ky. 630
• Parties: SWORD, Special Deputy Banking Com'r, v. SCOTT et al.
• Court: Kentucky Court of Appeals

169 S.W.2d 825

293 Ky. 630

SWORD, Special Deputy Banking Com'r, v. SCOTT et al.

Court of Appeals of Kentucky

March 19, 1943

Appeal from Circuit Court, Pike County; Monroe Fields, Judge.

Action by Rush Sword, Special Deputy Banking Commissioner liquidating the First State Bank of Elkhorn City, against Rushia R. Scott, her husband, and others to set aside a deed to named defendant as defrauding defendant husband's creditors and sell the land conveyed for satisfaction of his debt to the bank. From a judgment of dismissal, plaintiff appeals.

Affirmed.

V. R Bentley, of Pikeville, for appellant.

A. F Childers, of Pikeville, for appellees.

THOMAS Justice.

Prior to September 18, 1926, the Kanawha- Elkhorn Colleries Company, a foreign corporation, owned a 2,000-acre tract of land in Pike county. It became largely indebted to various creditors by whom actions were filed in the Pike circuit court against it, resulting in the sale of its property for the payment of its debts. The tract of land referred to did not bring at its separate sale two-thirds of its appraised value, leaving the right of redemption in the debtor. On the date indicated it conveyed its right of redemption (which had not expired) to appellee (a defendant below) Rushia R. Scott, whose husband was Frank R. Scott. Following that deed-- which was lodged for record with the Pike county clerk on September 29, 1926 --the amount of the bid reported by the master commissioner on the sale of the 2,000-acre tract was paid into the Pike circuit court, wherein the sale was ordered and was later distributed to the creditors of the corporation.

On December 6, 1926, Rushia R. Scott and her husband deeded to J. B. Ramey, the father of Rushia R. Scott, a one-half undivided interest in the tract of land--the other half having been conveyed on October 1, 1926, by the same parties to James M. Scott, the father of Frank R. Scott, in trust to secure the sum of $10,000 which it is claimed Frank R. Scott owed his father, and that deed was recorded on October 10, 1927. At the time of the purchase of the equity of redemption Frank R. Scott, the husband of appellee, was largely indebted and was insolvent, as all parties to this litigation concede. Among his creditors was the First State Bank of Elkhorn City, which held his various notes as maker and indorser. The bank later went into liquidation and the State Banking Commissioner took charge of its affairs for winding up purposes, with plaintiff and appellant, Rush Sword, as Special Deputy Commissioner. On October 27, 1938, he filed this action in the Pike circuit court against Frank R. Scott, Rushia R. Scott, James M. Scott, J. B. Ramey and wife, and the trustees of the Dickinson County Bank --the latter having acquired the half of the tract conveyed to James M. Scott. The petition, after setting out plaintiff's official position and the various conveyances referred to, alleged that the money forming the purchase price for the entire tract was furnished by Frank R. Scott, appellee's husband, and that the deed executed to her was a voluntary transfer of his property to his wife in fraud of his creditors, and the same is alleged with reference to the later conveyances to Ramey and the elder Scott.

Plaintiff then prayed that it be so adjudged and that the tract of land, or a sufficiency thereof, be sold to satisfy plaintiff's debt. None of the defendants were brought before the court by personal service, except Mr. and Mrs. Ramey, who were personally served, the others--being nonresidents--were before the court only by constructive service. However, appellee, on September 6, 1939, entered her appearance by filing an answer which denied the material averments of the petition, and in a separate paragraph pleaded the limitation of ten years prescribed in section 413.130 of K.R.S., and section 2519 in Baldwin's 1936 Revision of Carroll's Kentucky Statutes, saying in part that "No such action shall be brought ten years after the time of making the contract or the perpetration of the fraud." Plaintiff invoked section 413.190 of the same edition of K.R.S. and section 2531 of the same Kentucky Statutes in avoidance of the pleaded limitation, which section says: "If at the time any cause of action mentioned in the third article of this chapter accrues against a resident of this state he is absent therefrom, the period limited for the commencement of the action thereupon against him shall be computed from the time of his return to this state." (Our emphasis.) Plaintiff, therefore, alleged that at the time of the commission of the alleged fraud forming the basis of the action Frank R. Scott and wife were residents of Pike county, but which fact was put in issue by appellee's pleading.

The parties took voluminous evidence by depositions, after which the cause was submitted to the court and it dismissed the petition, to reverse which plaintiff prosecutes this appeal. We are convinced that the judgment was correct for two reasons: (1) that the evidence was sufficient to support the finding that the consideration for the purchase of the tract of land was not furnished by appellee's husband, Frank R. Scott, but by her father J. B. Ramey, and (2) that the plea of limitations should prevail, each of which will now be considered.

1. J B. Ramey and his daughter, the appellee, each testified that the consideration for the acquirement of the title to the tract of land under the 1926 transactions referred to was furnished by appellee's father, who at that time was in a flourishing financial condition, and whose enterprises consisted largely in coal mining operations, but who became a bankrupt four years thereafter. Their testimony is fortified by the fact that it is conceded and reiterated in brief for appellant that the husband, Frank R. Scott, was hopelessly insolvent at the time. Plaintiff, however, proved some circumstances--most of which were contradicted by appellee's proof-- tending to create suspicion that the husband may have furnished the consideration for the purchase of the tract. The court evidently found otherwise on that issue, and under the well settled rule of practice that a chancellor's finding of fact will not be disturbed by this court unless more than a mere doubt of the accuracy of such finding is generated by the proof, the factual issues as found by the chancellor will be accepted on appeal, we do not feel authorized to disturb the court's finding on this crucial issue. Such conclusion necessarily results in an affirmance of the judgment; but inasmuch as we are also convinced that the pleaded limitation is...