Case ID: ohio-app_19/html/0207-01.html
Source: Caselaw Access Project
Author: {"author": "Richards, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Goodrick, Admr., v. Sheets.
    
      Deeds — Gift not invalidated by grantor's subsequent insolvency, when.
    
    A deed o£ gift by one who is solvent, though indebted, is not rendered invalid by the grantor’s subsequent insolvency, when that insolvency was not foreseen by the parties, nor produced by the conveyance.
    Fraudulent Conveyances, 27 C. J. §158 (Anno.).
    (Decided December 8, 1924.)
    Appeal: Court of Appeals for Wood county.
    
      Mr. G. L. Foster, for plaintiff.
    
      Mr. Benjamin F. James, for defendant.
   Richards, J.

The plaintiff is the administrator of William Sheets, deceased, who departed this life on October 19, 1922. On April 4, 1922, William Sheets executed a deed, of gift to his wife of forty acres of land, and this action was brought by the administrator, on behalf of the creditors, to set aside that conveyance.

At the time of the conveyance, William Sheets was the owner of 110 acres of land in Wood county, and his debts then amounted to $1,700. He was planning to execute a mortgage atíd borrow that amount, but his wife, Cornelia Sheets, declined to sign the mortgage unless he would execute to her a deed for 40 acres of the land. By reason of her insistence, he executed the deed for 40 acres, retaining 70 acres of land. The value of this 70 acres, at tibe time of the execution of that deed, is shown by witnesses whose testimony varies, one of the witnesses giving the value at $150 per acre, another at $165 per acre, and another at $175. It is perfectly apparent under the testimony tihat after the execution of this deed the property of William ¡Sheets consisted of real estate worth from $10,000 to $12,000.

A month or two after making the deed he borrowed $1,700 on a mortgage, as contemplated, using a small part of that sum to pay existing debts, and a considerable part in the payment of a hospital bill and other expenses of sickness incurred by him, it having developed that he was afflicted with cancer. Some considerable time after the execution of the deed his sons became financially involved and he obligated himself to meet their liabilities.

Shortly after the death of William Sheets, an action was brought for the purpose of partitioning the 70 acres of land which he owned at the time of his death. The land was appraised in that proceeding at $7,150, and sold for $5,185, and the entire amount realized on the sale was exhausted in the payment of costs, and liens secured by way of mortgages, and judgments, and the dower of the widow. These liens were obtained by creditors who became such subsequent to the execution of the deed to Mrs. Sheets, and the sale in partition left unpaid most of the indebtedness existing at the time of the execution of that deed.

No evidence was introduced tending to show any actual fraud either on the part of William Sheets or ’Cornelia Sheets in connection with the execution of the deed to her. It is, however, insisted, in view of the fact that he was then indebted in the amount of $1,700 and the eonveyanee to her was a deed of gift, that the conveyance is constructively fraudulent and must be set aside. We cannot assent to that argument. His indebtedness amounted only to $1,700, and by the most conservative estimate his assets at the time of the conveyance amounted to more than six times the debts. Even if we should count as a part of his debts the $1,700 which he borrowed subsequent to the execution of the deed, his assets would still be more than three times the amount of his indebtedness, and these facts dearly show that the conveyance was not even constructively fraudulent.

The rather unusual facts appear in this case that after the execution of the deed the remaining property of William Sheets rapidly depreciated in value and his indebtedness rapidly increased, but néither of those facts was foreseen or within the contemplation of the parties at the time of the execution of the deed. A deed of gift by one who is solvent, though indebted, is not rendered invalid by the grantor’s subsequent insolvency, when that» insolvency was not foreseen by the parties, nor produced by the conveyance, and this holding is not inconsistent with the principle that one who is indebted cannot justly make a gift of his property without retaining ample assets to meet his indebtedness.

Counsel for plaintiff relies on Crumbaugh v. Kugler, 2 Ohio St., 374. But in that case the property retained by the debtor amounted to only $48,000, while his debts, at the lowest calculation, amounted to $42,000, and probably to $47,000. The value of the property in that case was thus a very small percentage above tjhe amount of the indebtedness, and not ample' to meet the debts, while in the case at bar the value of the property retained was several times the amount of the1 indebtedness.

The principles involved are very clearly announced in the case of Hunt v. Spencer, 20 Kan., 126.

Finding neither actual nor constructive fraud in this case, a decree will be rendered for the defendant.

Decree for defendant.

Chittenden and Kinkade, JJ., concur.