Case ID: ky_83/html/0032-01.html
Source: Caselaw Access Project
Author: {"author": "JUDGE LEWIS", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Case 6 — PETITION EQUITY
    December 2, 1884.
    Matthews v. Albritton, &c.
    APPEAL PROM GRAVES CIRCUIT COURT.
    'When a deed is made to one person and the consideration is paid by another no use or trust results in favor of tlie latter ns between the parties; but if the property is in fact held in secret trust for the party paying the consideration, his creditors may subject it to the payment of their debts, whether created prior or subsequent to the execution of the deed.
    fD. G. PARK eor appellant.
    
      ,1. Where one party, pays the consideration for land and takes the title in the name of another, under an express agreement made at the time that the party receiving the title shall hold the property in trust for the use and benefit of the party paying the purchase money, the property is subject to the debts of the cestui que trust at the suit of a creditor, although his debt was created subsequent to the purchase and agreement. (General Statutes, chapter 63, article 1, section 21; Oro-, zier v. Young, 3 Moil., 159; Doyle v. Sleeper, 1 Dana, 548; Huffman ■v. Thomas, 2 Duvall, 106, 107; 4 Ky. Law Rep., 527-28.)
    
      2. Such a trust may be shown by parol in favor of a creditor of the cestui que trust. (Browne on Statute of Frauds, sections 82, 103; 1 Perry on Trusts, section 216.)
    
      ■Z. Even if the agreement was within the Statute of Frauds, the trustee having held under the trust and recognized it until the property was attached, it should be subjected. (Browne on Statute of Frauds, sections 122, 130; Crawford v. "Wood, 6 Bush, 203; Clay’s Heirs v. Marshall’s Heirs, 5 B. Mon., 269, 272; McG-rum v. Preston, 5 J. J. Mar., 335; Galway v. Shields, 27 Amer. Bep., 352; Bedinger v. "Whittamore, 2 J. J. Mar., 563; Lewis v. "Whitnell, 5 Mon., 191.)
    
      ■4. Is the alleged agreement within the Statute of Frauds? (Perry on Trusts, volume 1, sections 75, 78, 79; Browne on Statute of Frauds, sections 80, 81; Chiles v. "Woodson, 2 Bibb, 71.)
    'W. W. BOBEBTSON eor appellees.
    "When a deed is made to one person and the consideration is paid by another, no use or trust results in favor of the latter. (General Statutes, chapter 63, section 19; Grant’s Guardian v. Grant, 4 Ky. Law Bep.; Mannen v. Bradbury, Ibid., 951; 3 Bush; 5 Bush; 7 Bush.) If the person paying the consideration can not enforce the trust, his creditor can not do so.
   JUDGE LEWIS

DELIVERED THE OPINION OE THE COURT.

Appellant brought this action to subject real property, the legal title of which is in appellee J. E. Albritton, to the satisfaction of a judgment against appellee R. T. Albritton, upon which an execution was issued and returned no property found.

It is stated substantially in the original and .amended petitions that the property in question was bid for and purchased at a public sale by J. E. Albritton, who received a deed therefor, but that the purchase price was actually paid by R. T. Albritton; "that the conveyance was without any consideration from the former, but under an agreement between "them it was made to him, and he has ever since the •sale held the property in secret trust for the use of the latter, who is the real and beneficial owner.

. The question presented by the appeal is, whether-the statements contained in the original and amended petitions being taken as true, the property is subject-to the payment of appellant’s debt which was created, since the execution of the deed to J. E. Albritton j and the 'determination of that question depends upon the proper meaning and application of section 19, article 1, chapter 63, General Statutes, which is asfollows:

“When a deed shall be made to one person and the consideration shall be paid by another, no use or trust shall result in favor of the latter; but this shall not extend to any case in which the grantee shall havetaken a deed in his own name without the consent; of the person paying the consideration, or where the-, grantee, in violation of some trust, shall have purchased the land deeded with the effects of another.”

Before the adoption of the Revised Statutes, which, contained a provision the same as the section quoted, when a deed was made conveying real property to one person, the consideration therefor being paid by another, a trust resulted in favor of the latter which he might enforce, although the deed was so made in. pursuance of an agreement between them. And then, of course, there was no question of the right of creditors by proper proceedings to subject the property thus held to the payment of debts of the cestui que trust, whether existing at the time or created subsequent to the deed. Now, however, no use or trust results except in the two cases mentioned in section 19. And the question arises whether the change of the law wras intended to apply to and affect the* rights of creditors as they previously existed, or to' be restricted in' its application to the parties to the; transaction.

The reason for the change, so far as the parties themselves are concerned, is apparent. For generally the object and effect of an agreement whereby the legal title to real property is vested in one party, while the; consideration is paid by another, is to defraud creditors; and purchasers. Hence, it is now declared not to b& the policy of the law to uphold and enforce a secret; trust in favor of a person paying the consideration,,, who voluntarily consents for the legal title to be in another. But there is no reason why a creditor should, be denied relief in equity whenever property for which his debtor has paid the consideration, and of which he has the actual use and benefit, is by a fraudulent, arrangement placed beyond the reach of legal process.. And unless it was the intention of the Legislature to> extend the application of section 19 to creditors, and thus take from them a remedy they once undoubtedly had, it should not be done.

By section 20 it is provided, in express terms, that; such deeds shall be deemed fraudulent as against existing debts and liabilities. But it does not necessarily follow that the Legislature intended thereby to sanction such transactions as against debts and liabilities; of the cestui que trust subsequently created. For if it be made to appear at any time that real property for which a party* has paid the consideration is in fact held in secret trust for his use, and that he does have the use and enjoyment of it, there is no reason why it should not be made subject to his debts and liabilities. •thougb. created subsequent to the deed under which it is held. If fraudulent in the beginning as to existing ■debts and liabilities, the transaction continues fraudulent so long as the property is held in the same manner and for the same purpose.

It is not in terms provided in section 19, nor can 'it be fairly implied, that the Legislature intended to deprive the creditor of the right to subject property thus held, and, in our opinion, upon the statement of facts alleged by appellant, he was entitled to the relief sought, and the court erred in sustaining the demurrer to the original and amended petitions.

Wherefore, the judgment is reversed and cause .remanded.