Case ID: ind_3/html/0273-01.html
Source: Caselaw Access Project
Author: {"author": "Smith, J. \n      Per Curiam.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Lynch and Others v. Raleigh and Others.
    A fraudulent conveyance of land made and received for the purpose of preventing its being subjected to the payment of an existing debt, but without any intention to defraud subsequent creditors, will not be set aside, in equity, upon the application of a creditor whose debt .was contracted after the deed of conveyance was made and recorded.
    Where a fraudulent conveyance of land has been made and received to avoid the payment of an existing debt, with an agreement for a reconveyance upon a repayment of the purchase-money and the expenses of improvements, a creditor of the grantor whose debt was contracted after the deed was made and recorded, if occupying the position of a junior mortgagee or creditor entitled to redeem, cannot institute proceedings for that purpose, after the death of the grantor, unless before his decease he obtained judgment against him, or an administrator has been appointed.
    
      Monday, May 24.
    ERROR to the Vanderburgh Circuit Court. ’
   Smith, J.

This was a bill in chancery filed by Raleigh and Byrne against Lynch and the unknown heirs of Thomas Donohoe.

The bill charges that during the years 1847 and 1848, Donohoe became indebted to the complainants, by several business transactions, to the amount of about 190 dollars; that in November, 1846, Donohoe was the owner of a certain tract of land, and being threatened with a suit in which he had reason to believe judgment to a large amount would be recovered against him, and there being a judgment against him on the docket of a justice of the peace which he wished to avoid payment of, he conveyed the land to Lynch by a deed which was duly recorded; that said deed was made voluntarily, without consideration, and to prevent the recovery of any judgment which might be rendered against him in said anticipated suit; and that there was an agreement between the parties that Lynch should reconvey the land to Donohoe.

It is also alleged that Donohoe continued to exercise acts of ownership over the land after the pretended sale, and that he died out of the state in 1848, leaving heirs whose place of residence is unknown. The object of the bill was to have the conveyance to Lynch set aside as fraudulent, and the land subjected to the payment of the debts of the complainants.

Lynch answered and denied that the deed was made voluntarily, without consideration, tie admits that there was, at the time, a judgment rendered by a justice of the peace against Donohoe and in favor of one Hall, for 8 cents and some costs; and he also admits that he agreed to reconvey the property to Donohoe upon his refunding to him the consideration he paid, and upon his paying him such sums as he should expend in improvements upon the land.

Several depositions were taken, but the only material facts they disclose, in addition to those that may be considered as established by the bill and answer, are, that Donohoe did give some directions respecting the cultivation and improvement of the land after the deed had been delivered to Lynch, and that both Donohoe and Lynch had admitted, at various times, that the sale was made with a view to prevent Hall from subjecting it to the payment of his judgment. There is no direct evidence as to the consideration of the deed, except the testimony of the subscribing witness, who states in his deposition, that he saw Lynch pay Donohoe a sum of money at the time the deed was executed, but did not know the amount.

The Court, on the hearing, rendered a decree conform-ably to- the prayer of the bill.

One objection made to the decree is, that it does not appear that the complainants had established their demands by a judgment at law. It may not be necessary for creditors to obtain a judgment before filing a bill to have a fraudulent conveyance set aside, when the debtor is deceased. O'Brien v. Coulter, 2 Blackf. 421.

A. L. Robinson, for the plaintiffs.

J. E. Blythe, for the defendants.

We think, however, the decree is not justified by the facts in evidence. The deed to Lynch was made and recorded before the debts of the complainants were contracted, and there is not the slightest evidence that it was made with any view to defraud subsequent creditors. Supposing it to be sufficiently proved that Lynch knew Donohoe’s object in selling to him was to avoid the payment of the costs on Hall’s judgment, though the land might, perhaps, be subjected to the payment of those costs, it would not follow that the conveyance would be voidable for debts subsequently contracted. See Abbott v. Hurd, 7 Blackf. 510.

The decree cannot be sustained on the ground that the conveyance should be considered a mortgage, the complainants occupying the position of junior mortgagees or creditors entitled to redeem, because they could not institute proceedings for that purpose without having previously procured a judgment, or without the appointment of an administrator.

Per Curiam.

The decree is reversed, and the cause remanded, with instructions to the Circuit Court to dismiss the bill.