Case ID: dc_15/html/0188-01.html
Source: Caselaw Access Project
Author: {"author": "Mr. J ustice Merrick", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Dennis Quill vs. John G. Wolfe.
    Equity. No. 8,858.
    Decided July 8, 1885.
    Justices Hagner, James and Merrick sitting.
    Where a court of equity is asked to set aside a deed on the ground of fraud, and the answer denies all fraud and avers a valuable consideration to have been paid for the property, and in addition the witnesses relied upon by the complainant also deny the alleged fraud, the bill will be dismissed, although there be many circumstances of suspicion surrounding the transaction, for fraud must be proved; the court cannot, in the face of the rule that fraud is odious and not to be presumed, supply the deficiency of proof by presumption.
    STATEMENT OF THE CASE.
    Dennis Looney was largely indebted to tbe complainant, Dennis Qnill, wbicb indebtedness was secured by deed of trust on part of tbe real estate of Dennis Looney. Quill undertoot to foreclose tbe deed, and a long litigation ensued, beginning in February, 1882, and ending in 1884. Tbe result of tbe controversy was a decree for tbe sale of tbe land covered by tbe deed of trust, and tbe proceeds not satisfying tbe debt due Quill, there was a decree against Looney for tbe principal sum of $981.34.
    At tbis time Dennis Looney owned two other lots of land besides that in controversy, and, pending that suit,' be conveyed them to one Herlihy, a cousin of bis, Looney’s, wife. About a year afterwards Herlihy conveyed these two lots to tbe defendant John Gr. Wolfe, tbe son-in-law of Looney. At tbe time tbis conveyance was made, and for a number of years previous thereto, Wolfe bad resided with and was one of tbe family of Looney. Tbis bill was filed to subject one of those lots conveyed to Wolfe to tbe satisfaction of tbe debt due Quill; tbe bill alleged that no consideration was ever paid therefor either by Herlihy to Looney or by Wolfe to Herlihy, and that Looney had by tbis means conveyed ibis property with tbe intent tó defraud bis creditors, and especially Quill.
    
      A decree pro confesso was taken against Herlihy. The other defendants put in answers denying all fraud. Testimony was taken by the complainant, but the defendants took none.
    On the hearing in Special Term the court decreed in favor of the complainant, from which decree the defendant Wolfe appealed.
    E. B. Lewis for complainant:
    The evidence abundantly shows that this conveyance was made to hide the property from the pursuit of Looney’s creditors and principally from Quill.
    The proofs are full- — as full as it is possible to get in a case where a fraudulent disposition of property is made.
    Men about to commit fraud do not proclaim their intentions openly, but the acts they do are done quietly, and frequently'with every appearance of fairness on their face.
    The law, however, knowing the difficulties of getting at the intention of parties, permits a wider latitude of investigation and a closer scrutiny into the transactions of parties when fraud is charged, and recognizes certain acts, relations and conditions, to be indicia, evidences, or badges of fraud.
    The strongest indicia or badges of fraud recognized universally by all the courts appear in this case.
    1st. The transfer of all the debtor’s property. Bump on Fraud. Conv., p. 79 and note 2.
    2d. Embarrassed circumstances of the debtor when conveyance is made. Bump, p. 80, note 4.
    In order to affect vendee notice must be brought home to him, which is done in this case.
    3d. Pendency of a suit or expectancy of a suit. Idem, p. 81.
    4th. A false recital is a badge of fraud. Idem, p. 81. A false recital or statement of the consideration is a badge of fraud. Idem, p. 85.
    In this case the deeds from Looney to Herlihy and from Herlihy to Wolfe are made evidently with the intention of leaving the impression that the consideration was paid in cash, when no cash was paid, either by Herlihy or Wolfe for the land in controversy. Again, the answer, under oath, positively asserts that cash was paid, contrary to the fact.
    5. The retention of possession of the land and the exercise of unequivocal acts of ownership over it. Idem, p. 90.
    Selling to debtor’s son is a proof of fraud. Idem, p. 92. Phitteplace vs. Sales, 4 Mason, 312.
    Here the debtor’s wife collected the rents, after deed to Herlihy; we have a son-in-law instead of a son as grantee.
    6. Transactions out of the usual course of business. Idem, p. 92.
    (a.) Alienation of valuable property without payment, or security. Idem, p. 93, note 5. 1 Bland, 567.
    (b.) Immediate transfer to another in consideration of property conveyed to debtor’s wife. Idem, p. 93; Newman vs. Ardell, 448; 43 Barb.
    1. Unusual mode of payment.
    
      “ The facility with which fictitious payments may be fabricated renders it necessary for the ' grantee to produce all the proof which may reasonably be supposed to be in his power, of the reality and fairness of the transaction, and the want of clear proof is evidence of fraud. This requirement is not met by the mere proof of payment, without any attempt to show where the money came from, how it was obtained, whose it was, or what was done with it.” Bump, pp. 94, 95; King vs. Moon, 42 Mo., 551; Jackson vs. Mather, 1 Cow., 301.
    8. Absence of evidence. The omission of the grantee to testify or to produce the debtor or any other important witness, is the ground for an unfavorable presumption, and frequently exercises an important influence upon the final determination of the question of fraud. Bump, pp. 95, 96, note 1.
    9. Relationship, though not a badge of fraud, strengthens the presumption that may arise from other circumstances. “Son-in-law” is such a relation as is “cousin.” They are the persons with whom a secret trust is likely to exist.
    Whenever this confidential relation exists, the parties are held to a fuller and stricter proof of the consideration and of the fairness of the transaction. Bump, pp. 97, 98; Duvall vs. Waters, 1 Bland. 567.
    There must be good faith as well as a valuable consideration paid by the vendee in order to protect him. Bump, 230; Glen vs. Randall, 2 Md., ch. 220; Clemants vs. Moore, 6 Wall., 299.
    Though the vendee must know of the fraudulent intent, of the grantor, actual knowledge is not necessary. What will put a prudent man on inquiry is sufficient. Bump, 232. What notice is sufficient, see Bump, 478; Baker vs. Bliss, 39 N. Y., 70; Martel vs. Somers, 26 Texas, 551.
    Fraudulent grantee is a trustee for creditors, and can, as such, be held responsible. Bump, 567; Clements vs. Moore, 6 Wall., 299.
    It is respectfully submitted that there is no error in the decree of the court below.
    Willlam A. Cook and H. B. Moulton for defendants:
    The averments of the bill — if mere enunciations of information and belief can be regarded as allegations at all — are directly, fully and absolutely denied by the answers.
    The answer of Wolfe not only denies all statements of fraud, but goes further and presents a narrative of the purchase, consideration, etc.
    The answer of Looney also denies the statements as to fraud.
    Responsive as these answers are, in the absence of full and clear antagonistic evidence, or an accumulation of contradictory circumstances, equivalent to such evidence, they must be regarded as destructive to the bill. Seitz vs. Mitchell, 94 U. S., 582; Parkes vs. Phetteplace et al., 1 Wall., 684.
    But there is no contradictory evidence.
    The complainant, several months after the decree pro confesso against Herlihy, produced him as a witness ; but instead of sustaining the bill, his testimony refutes it, and corroborates the answer of "Wolfe, whatever may have been the purpose of the decree pro confesso against Herlihy and the subsequent use of him as a witness. And, in fact, the entire testimony corroborates the answer of Wolfe.
    Opposed to it there is not a single established fact and only faint and insufficient circumstances.
    The defendant took no testimony. His answer was full and complete. The witnesses he might have called were produced and examined by the complainant, thus rendering it unnecessary for the defendant to do so.
    But further examination of the case in this form is unnecessary.
    Nearly all the law applicable to the case is so fully, clearly and ably presented in an opinion of this court, delivered by Mr. Justice Hagner in Clarke vs. Krause et al., 2 Mackey, 559, that a mere reference to it is deemed sufficient.
   Mr. J ustice Merrick

delivered the opinion of the court.

This was a bill filed for the purpose of vacating as fraudulent a deed which was made by Looney to his brother-in-law, the brother-in-law selling the same property to John Gr. Wolfe. So far as one-half of the case is concerned the complainant has sustained it by evidence ; that is to say, he has very effectually and conclusively proved that Looney transferred the property in fraud of his creditors, to his brother-in-law, Patrick Herlihy.

But, unfortunately the .proof of that does not establish the plaintiff's right to recover, because that grantee transferred the property, in his turn, to John Gr. Wolfe,'the party against whom the bill is filed, and there is no proof in the case whatsoever, either by the answers or by any of the witnesses whom the complainant has convened for the purpose of establishing his demand, that Wolfe did not pay a bona fide consideration for the property ; nor is there any proof that he was implicated in the fraudulent designs of the original grantor to the original grantee.

It is true there are a great many circumstances of suspicion surrounding the case, and if we were.as private individuals, to indulge in those suspicions which prudent men are bound to entertain in order to guard themselves in ordinary transactions, we might come to the conclusion that the complainant has arrived at, that the second deed, as well as the first one, was fraudulent in law. But courts of justice are not allowed to indulge in speculation, but must adhere to the fixed rules of evidence made for the regulation of human affairs, and in the end they work much more substantial justice than does the indulgence of the caprice of the individual judgment of a man, however wise he may be, as applied to the particular instance.

Finding, then, that the answer of the defendant, John Gr. Wolfe, under his solemn oath, denies all fraud and avers a valuable consideration to have been paid for the property; finding that the very witnesses that the complainant has relied upon, while admitting there is fraud in the first grantee, with equal earnestness deny any fraud in the second grantee, the court is unable to see on what foundation in law the complainant can rely.

If he had pursued his inquiries into the fraud of the second grantee, with the same diligence of effort which he used to prove fraud in the first grantee, and as he might have done by the examination, possibly, of other witnesses and the arrangement of collateral facts, he might have established that which he has failed to establish.

The court cannot, by any suggestion or inference of facts, in the face of that rule of law which says that fraud is odious and not to be presumed, presume anything. The fraud must be proved, and the court cannot supply the deficiency of proof. The record, therefore, shows to us that he has failed in his contention and that the decree below must be reversed.