Case ID: tenn_25/html/0509-01.html
Source: Caselaw Access Project
Author: {"author": "Green, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Trotter vs. Watson.
    1. A sale of property for a full price, -with a view to hinder and delay creditors, is fraudulent and void as against creditors, if the purchaser have a knowledge of and participate in such design.
    2. The declarations of the vendor of property, with reference to the ownership of the property, the possession of which he holds, inconsistently with the terms of the deed, are admissible evidence as part of res gesta; secns, where his possession is compatible with the terms of the deed.
    This is an action of trover by Watson, trustee, against Trotter, sheriff, for the sale of property by execution which had been conveyed to plaintiff, in trust; was brought in the circuit court of Fayette, and a verdict and judgment rendered in favor of the plaintiff for the value of the property sold, by Judge Dunlap and a jury of Fayette county.
    The defendant filed his bill of exceptions, and appealed.
    
      J. C. Humphreys, for plaintiff in error.
    1. The court erred in charging the jury, that the declarations of Read, after the making of the deed, were not competent, except to impeach his credit. Such declarations, it is insisted, were competent testimony on the point of fraud.— See 2 Phillips Ev. by Cowen & Hill 602-3, and the cases there referred to. The case of Perry vs. Smith, 4 Yer. 323, is not opposed, because, there, the possession of the property conveyed “accompanied the deed or bill of sale.” Nor does it sustain the decision of the Judge, that the possession by Reddick of the property embraced in the trust deed, was allowable until default in payment as fixed by the deed. Reddick remained in possession of the land, also, which he had absolutely conveyed at the same time in the course of the same transaction, to Read, the preferred beneficiary in the trust deed, between whom and Reddick the whole was agreed and accomplished. Reddick’s declarations, which were excluded by the Judge as evidence of fraud, related to this deed also. Yet if this deed was fraudulent the other was also.— Howe vs. Reed, 3 Fairfield 515; Jackson vs. Zimmerman, 12 Wend. 299; 2 Stark. Ev. 493, Note A, 7 Am. from 3 London Edition; see also Jackson vs. Mather, 7 Cowen 301.
    2. Again: the court erred, in charging-the jury, that badges of fraud were repelled by proof of “a bona fide valuable consideration. — The 3rd section of theStat. of Frauds, 1801, ch. 25, saves any estate or interest,”&c., “which shall be upon good consideration and bona fide lawfully conveyed or assured,” &c.
    In the case of Callen vs. Thompson, 3 Yer. 478, and Maney vs. Killough, 7 Yer. 446, the court say: “the presumption of fraud is repelled by proof of fairness in the transaction, and a full and adequate consideration paid.” This was said in reference to the presumption of fraud arising from possession by the vendor after an absolute sale, and in cases of mortgage after default of payment. “This,” say the court, “we think, is thé view in which' this question ought to be presented to a jury.” — See also Darwin vs. Handley, 3 Yer. 504.
    One of the evidences of fraud in the case at bar, is, that Reddick remained in possession of the land after the conveyance, which was absolute, and of the property embraced by the trust deed, after default in payment.
    In Twyne’s case, the alienation was fraudulent, because, as was decided, though upon- good consideration, it was not bona fide.
    “If a purchaser gives a full and fair price, and takes possession, yet, if it be done for the purpose of defeating creditors in their pending execution, it is an act fraudulent and void.” — Lord Mansfield, in Worsely vs. De Matters, 1 Bur. 474-5; see, also, 4 Kent 464, Note A, 4th Ed.; and Peck vs. Carmichael, 9 Yer. 325.
    It is insisted, the proof shows that the design of the parties was to defeat Reddick’s creditors; but the court was of opinion, it was necessary only that there should be “a bona fide valuable consideration.” Bona fide means in good faith, actually, in reality; — as used by the Judge, it refers to and qualifies consideration. And the charge is, that the conveyance is valid, if there was a really valuable consideration— such is the true meaning of the words, and the grammatical construction of the sentence; so they would seem obviously to be understood, and so they were manifestly used by the Judge and understood by the jury.
    In the case of Darwin vs. Handley, 3 Yer. 504, the court say: “It lay upon Lewis to prove the consideration moving to the execution of the deed, fair and bona fide.” “2d, that the deed was intended to secure him, Lewis, and had no intent to cover the property of Faris or any part of it, to hinder and delay his creditors.” Here, this court states, that it is not sufficient that the consideration should be bona fide; and here, also, the words being similarly used, we are shown they refer to and qualify ‘consideration.’ ”
    3. The charge was erroneous, in stating, that, if it was agreed Reddick was to have any part of the property conveyed, or the product thereof, for his own use, it would be evidence of fraud, and the deed void.
    It is insisted, this would not be merely an evidence of fraud, which, if not repelled, would make the deed void, but that it would be the essence of fraud and conclusive of its invalidity.
    4. The trust deed embraced Reddick’s growing crop of corn; this he continued in possession of before and after the time of payment, and after it was matured and gathered, and he used and consumed quantities of it in the support of his stock, family and servants; a part in the feed of the horses that worked his gin for toll, which toll cotton he had otherwise disposed of, and part of which he sent off to market, falsely marked, to escape his creditors. The deed was, on that account, void. — Simpson vs. Mitchell, 8 Yer. 417.
    5. It is insisted, upon the testimony, that the design of both conveyances was to defrand. Reddick’s creditors, and this participated in by Read; and, lastly, that there is not proof of the alleged indebtedness of Reddick to Read.
    
      L. H. Coe, for the defendant in error.
   Green, J.

delivered the opinion of the court.

This is an action of trover, brought by Watson against Trotter, for a negro man slave and a cotton gin. The property sued for was conveyed by B. F. Reddick to Watson, in trust, to secure certain debts therein mentioned. Before the period specified in the deed for the trustee to take possession of and sell the property under the deed, several judgments in behalf of other creditors were obtained against Reddick, upon which executions issued, and were levied by a deputy of Trotter, the defendant below, (who is sheriff of Fayette county;) upon the property in dispute, and the same was sold. This suit is brought by Watson, the trustee, against the sheriff, to recover the property so seized and sold.

On the trial in the circuit court there was much evidence introduced, for the purpose of attacking the deed of trust, as having been made to defraud creditors.

The court charged the jury: “That if the deed were made for the benefit of Reddick, or to hinder, delay, or defeat creditors, it would be void; that if the property sued for were converted by the defendant, the plaintiff, if the property belonged to him, would be entitled to recover, unless the deed were shown to be fraudulent; that there were what was called badges of fraud — conveying all a man’s property, or a deed to a relative, were badges of fraud; that another deed between the same persons about the same time, which was fraudulent, would be a badge of fraud as to the deed in question. So, if the property conveyed remained in the possession of the debtor after the time appointed by the deed for payment, it would be a badge of fraud; and that these badges of fraud might be rebutted, by proving that the deed was made for a bona fide valuable consideration.”

The foregoing paragraph of the charge of his honor, the circuit Judge, is objected to as erroneous. Il is insisted that the concluding sentence in which it is said, “these badges of fraud may be rebutted by proving that the deed was made for a bona fide valuable consideration,” asserts that, if a full price was paid for the property, that would rebut the evidence of fraud deducible from all the badges of it, which had been enumerated by the court.

It is certainly true, if this be the sense and meaning of the charge, it would be erroneous; for, although a full price may have been paid, if the deed was designed to defeat creditors, it would be fraudulent and void. But we do not understand the court as tbe counsel for tbe plaintiff in error construes it. His honor had stated in the beginning of the paragraph, that if the deed were made for the benefit of Reddick, or to hinder, delay or defeat his creditors, it would be void. After making that statement, he goes on to tell the jury what were the badges of fraud; and concludes by saying they may be rebutted by proof that the deed was made for a bona fide valuable consideration. We must take into view the entire paragraph, in order to see clearly the meaning of its several parts; and when the Judge says that proof of a bona fide valuable consideration will rebut the badges of fraud, we are not to understand him as saying, that the mere payment of the value of the property will repel the conclusion that the deed could be fraudulent. On the contrary, he told them it would be void if made for the benefit of Reddick, or to hinder, delay or to defeat his creditors. This is stating the true doctrine broadly, and he cannot be supposed to intend to contradict it in the concluding sentence.

But what is the true import of the sentence objected to, if taken alone? The Judge says that badges of fraud are repelled by proof that the deed was made for a “bona fide valuable consideration.” If considerations of good faith and value paid, moved the parties to make the deed, how can it be assumed that they were under the influence of corrupt, fraudulent motives? If the intent was to hinder, delay and defeat creditors, it was not bona fide. Therefore, the meaning of the sentence objected to is, that if the deed be proved to have been made in good faith for a valuable consideration, such evidence rebuts and repels all inferences from the existence of the facts, usually considered badges of fraud.

2. It is also objected, that the court told the jury, that evidence of Reddick’s statements, after the execution of the deed, were not evidence, except so far as they might affect his credibility as a witness in the cause.

In this statement there is no error. If a party make a deed and retain the'possession of the property, inconsistently with the terms of the deed, his statements in reference to the ownership, or contract or terms upon which he holds possession of the property, may be received as part of the res gesta. In such case, his possession of the property is a badge of fraud, which of itself connects him with the claimant in the suspicion of a confederacy to defeat creditors. His declarations, therefore, in relation to the property, and the character of his possession of it, become part of the thing doing, and, as such, is evidence. But here, the party who made the deed was rightfully in possession when the declarations were made. However fraudulent the purpose was, if the cestui que trust had no knowledge of it, and consequent participation in it, he could not be affected by it. And if he had permitted Reddick to retain possession until the time appointed for payment, such possession was consistent with the deed, and furnished no evidence of fraud. Under such circumstances, to permit the declarations of Reddick, after the deed was made, to be evidence to defeat it, would render it unsafe for any man to purchase property from one who may be in debt. For, after a sale, however fair, and the reception of the consideration, he might, by his declarations, defeat the purchaser’s title, and cause the property, he had fairly sold, to pay one of his own debts. Such a doctrine would furnish temptation to bad men, to make false statements for their own interest.

The jury found a verdict for the plaintiff; and, in view of the conflicting proof upon this record, they certainly have not acted rashly. We cannot, therefore, disturb the verdict.

Affirm the judgment.