Case ID: ohio-app_26/html/0508-01.html
Source: Caselaw Access Project
Author: {"author": "Lloyd, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

The State Exchange Bank of Stryker v. Royce et al.
    
      Conveyances — Deed and mortgage constructively fraudulent— Deed not delivered to wife by grantor-husband — Date of delivery is date of filing for record — Husband’s property insufficient to meet obligation to bank — Deed of husband and wife’s mortgage to son, without consideration.
    
    1. Where deed from husband to wife was not delivered personally by him to her, but was placed on record, date of delivery thereof was date when it was filed for record.
    2. Where evidence showed that husband, without sufficient property other than real estate, executed deed of all of his real estate to his wife without consideration and with knowledge on her part that he was indebted to bank, deed was constructively fraudulent and should be set aside.
    3. Where husband, without other property to fully satisfy debt to a creditor, deeded the property to his wife in fraud of creditor and thereafter wife executed mortgage without consideration to a son who had knowledge of his father’s affairs, and that deed to mother was without consideration, mortgage by wife should be set aside as constructively fraudulent.
    (Decided April 12, 1927.)
    Appeal: Court of Appeals for Williams count y.
    
      Mr. Edward G. Turner, attorney general, Mr. L. E. Laylin and Mr. J. A. Godown, for plaintiff.
    
      Mr. Leslie■ J. Arnold, Mr. E. G. Peck and Mr. Charles T. Stahl, for defendants.
   Lloyd, J.

On December 30, 1922, Clarence T. Royce, wbo died on April 12, 1926, executed a promissory note in tbe sum of $6,748, with interest at 6 per cent, per annum, maturing in 6 months thereafter, and delivered the same to the State Exchange Bank of Stryker, to whose order it was payable. It was a cognovit note, and judgment was taken thereon in the court of common pleas April 3, 1926.

Thereafter, on application of Robert R. Royce, as executor of the last will and testament of Clarence T. Royce, this judgment was suspended. Trial then being had, a verdict was returned by the jury for the amount due on said note. On September 2, 1926, judgment was entered upon this verdict in the sum of $7,496.87, with interest from April 20, 1926.

The action from which this appeal was taken was commenced in the court of common pleas on April 22, 1926, by the State Exchange Bank of Stryker, as plaintiff, against Sarah H. Royce, Robert R. Royce, and Robert Royce, executor of the last will and testament of Clarence T. Royce, deceased, as defendants. It was sought therein, and is here sought, to have vacated and set aside as in fraud of creditors a deed executed May 7, 1924, by Clarence T. Royce to his wife, Sarah H. Royce, for certain real estate in Stryker, which deed was recorded on December 16, 1924, and also to have declared null and void a mortgage subsequently given on this real estate by Sarah Royce to her son Robert. This deed recites a consideration of $1 and other valuable considerations, but her testimony shows that she had no property or independent income and gave nothing by way of consideration therefor.

Subsequent to the commencement of the action in the common pleas court, control of the business and property of the bank was taken for liquidation by the state superintendent of banks, and it was ordered by the court that the action proceed in the name, “State of Ohio, on relation of H. E Scott, as Superintendent of Banks of the State of Ohio.”

There was deposited by Clarence T. Royce, with his note to the bank, as collateral security, 95 shares of the capital stock of the Ohio Trent Coal, Coke & Amalgam Company, of the par value of $100 each. This company owned, according to the testimony of its president, Victory J. Fillamin, some 4,500 acres of coal and timber land in southern Illinois, and the plaintiff bank held a mortgage thereon for something like $80,000. He also testified that this company has about 32 acres of land in Toledo, upon which there is a mortgage of $105,000. From June, 1922, to March, 1923, Mr. Fillamin was also vice president of the plaintiff bank. In addition to the 95 shares of stock so deposited, Mr. Royce had 30 shares of stock of this company, and at the time of his decease he had, as shown by the statement of the executor of his estate filed in the probate court, $25 cash, $150 worth of Liberty bonds, and a promissory note of F. M. and H. F. Bruns, upon which $3,005 remained unpaid, but which in fact was valueless. Other than the above, and the real estate in question, which was said to be worth approximately $4,000, he had no property.

On April 16, 1926, Sarah H. Royce executed and delivered to her son Robert a note and mortgage for $3,500, the consideration therefor being, as stated by her, a promise on his part to take care of her and to pay to her the money as she needed it, and the evidence shows that thereafter he paid the hospital, funeral, and medical expenses incurred by the illness and death of his father, bills for groceries and rent, and other miscellaneous bills, aggregating, as he claims, $1,497.13.

Mrs. Royce testifies that her husband was taken to a hospital about Christinas time, 1925, and that shortly before that time she knew there was to be such a deed; that before going to the hospital Mr. Royce had told her that he was going to have the deed recorded. She also testifies that she knew that Mr. Royce had some notes at the bank which were unpaid, but did not know what they were, and Robert also states that he had knowledge of the unpaid note of his father held by the bank, but assumed that the collateral deposited therewith was sufficient to take care of it. He also states that he had knowledge of his father’s business during all of the time from 1922 until 1926. The common pleas court, upon the trial, found that the deed to Mrs. Royce was without consideration and was ■made with intent to hinder, delay, and defraud the creditors of the grantor, and also that the mortgage to Robert Royce was without consideration and was executed with like intent. So finding, that court decreed both of these instruments to be null and void and accordingly ordered them set aside and held for naught.

. Mrs. Royce says that she at no time saw the deed from Mr. Royce to herself; in other words, it was not delivered personally by him to her. The date of the delivery thereof to her would therefore be December 16, 1924, when the same was filed for record and recorded.

The only question before us, then, is whether on December 16, 1924, Clarence T. Royce was possessed of sufficient property, other than the real estate so conveyed, to satisfy his note to the bank, and this court is of the opinion that the evidence presented clearly shows that such was not his finaneial condition. The only property possessed by him at that time, which had any value, was the real estate here in controversy, except perhaps the few Liberty bonds to which we have referred, and as to those there is no evidence as to when he acquired them.

This being true, it is immaterial whether he personally intended thus to place this real estate beyond the reach of creditors. His assets being, otherwise insufficient to pay his debts, the deed to Mrs. Royce, being without consideration, and with knowledge on her part of the fact that her husband was indebted to the bank, was, to say the least, constructively fraudulent, and should be set aside. The mortgage given by her to her son Robert, being without any present consideration, and he also having, as he states, knowledge of his father’s affairs and of the fact that the deed to his mother was without consideration, should likewise and for similar reasons be set aside.

The court therefore finds and decrees this deed and this mortgage to be null and void, and orders that this cause be remanded to the court of common pleas for further proceedings.

Decree accordingly.

Richards and Williams, JJ., concur.