VALIDITY OF A TRANSFER FROM AN INSOLVENT HUSBAND TO HIS WIFE.

Court of Appeals for Morrow County.

#### Edward J. Gould v. Joannah Cooper et al.

Decided July 11, 1919.

*Debtor and Creditor*— Conveyances *Not Subject to Attack Because One Creditor Has Been Preferred Over Another, When*— Bona *Pides of the Transaction*— Knowledge *of the Tendee*— Section 11106.

1. A conveyance by a debtor to a creditor in payment of a valid claim is not invalidated by the fact that it was made with intent to delay, hinder or defraud other creditors, where such intent was not known to or in any way participated in by the vendee.

2. A conveyance by a husband to his wife, in payment of a debt owing to the wife, may excite suspicion and become the subject of scrutiny where there are other creditors than the wife at the time the transfer is made, but if made in good faith in payment of a *bona fide*indebtedness then existing and the excess in the value of the property over her claim is not such as to charge her with notice of a fraudulent transfer on the part of the husband, no presumption of fraud will be inferred on account of the relationship.

*8. G.*Kingman, *J. C. Williamson*.and *Ingle A. Morris*for plaintiffs and cross-petitioners except tbe Buckeye State Building & Loan Company.

*Wilson & Hector*for tbe Buckeye State Building & Loan Company.

*W. P. Maloney*for tbe defendants, Cooper et al.

Houck, J.

This ease is bere on appeal from tbe common pleas court of Morrow county, Obio.

Tbe defendants, Ellsworth E. Cooper and Joannab Cooper, are husband and wife and were at-the time of tbe transactions hereinafter referred to.

Tbe plaintiffs and cross-petitioners aver that on and prior to *242the 22d day of July, 1916, the defendants, Ellsworth E. Cooper and Harry Cooper, were indebted to them in the sum of about $1,400: that on said 22d day of July, 1916, the said Ellsworth E. Cooper was the owner of 100 aeres of land, the same being situated in Congress township, Morrow county, Ohio; that on said 22d day of July, 1916, he, the said Ellsworth E. Cooper, conveyed to his wife, Joannah Cooper, said land, for the purpose and with the intent to hinder, delay and defraud the creditors of the said Ellsworth E. Cooper, and especially these plaintiffs and cross-petitioners (save and except the defendant and cross-petitioner, The Buckeye State Building & Loan Company).

We find no answer of the defendants, Ellsworth E. Cooper, Joannah Cooper and Harry Cooper, or either of them, on file, and therefore in the trial of said cause the defense of each and all of them was considered in the nature of a general denial.

The evidence presented is before us in transcript form, and we have read same with care.

The burden of proof in this case is upon the plaintiffs. They must establish by the weight of the evidence each and all of the material allegations in their petition. This they have not done. The material and essential allegations in the petition are:

(a) Was the transfer made without a legal consideration?

(b) Was the transfer of the property in question made for the purpose and with intent to defraud the creditors of the said Ellsworth E. Cooper?

(c) Did the purchaser, Joannah Cooper, know of the other indebtedness of Ellsworth E. Cooper, or did she have knowledge of any intention on his part to defraud his creditors at the time said deed was executed and delivered to her?

These questions must be answered in the light of the evidence and the law applicable to same..

The weight of the evidence is clearly in favor of the defendant, Joannah Cooper.

The law applicable to the proven facts, leads us to but one conclusion, and that is, that there is an absolute failure, on the *243part of plaintiffs to establish the claims made by them, or either of them.

We hold the rule of law in this state is well settled that a conveyance by a debtor to his creditor, in payment of his claim, is not invalidated by the fact that it was made with an intent on the part of the vendor to delay, hinder, or defraud the creditors of said vendor, where such intent' was not known to, or in any way participated in by the vendee.

The evidence offered fails to show any knowledge on the part of Joannah Cooper of any fraudulent intent on the part of her husband at the time he deeded her the farm now in controversy.

It follows, that unless the evidence shows that Cooper made this conveyance to his wife with the design, intent and purpose to prefer one or more creditors to the exclusion in whole or in part of others, or that it was a transfer made by Cooper with intent to hinder, delay or defraud creditors of the said Cooper, and that his wife, the transferee, knew these facts at the time same ivas made, the deed in question must be held good. ■

We hold, that applying the provisions of Section 11105. of the General Code of Ohio to the conceded facts, in the present case, that it is decisive of it in favor of the defendant, Joannah Cooper.

While the transaction complained of is between husband and wife, yet under our statutory law, in Ohio, a husband or wife may enter into any engagement or transaction with the other, or with any other person, -which either might if unmarried.

And a deed, conveying real estate, máde by a husband to his wife, based upon an alleged indebtedness from husband to wife, where there are other creditors than the wife, at the time of such transfer, as in the present case, miay excite some suspicion and thus cause a court to carefully scrutinize it, yet from such relationship alone no presumption of fraud can or will be inferred.

A husband may convey property to his wife to pay a debt to her, in preference to his other creditors. And the only restriction on such preference is that it must be made in good faith, in payment of a tona *fide*indebtedness then existing between said husband and wife.

*244And, the bad faith on the part of the husband, at the time of such transfer, if any existed, must be unknown to the wife, otherwise it invalidates the conveyance made under such circumstances.

The undisputed evidence, in the case now under consideration, is that at the time of the execution of the deed, from Cooper to his wife, that he owed her about $4,500; that a mortgage for $3,500 ivas held by the Buckeye State Building *&*Loan Company, and that- the Avife assumed this mortgage. The value of the property conveyed was about that of the indebtedness of Cooper to his wife and the mortgage assumed by her, the same being, as claimed by the wife, to be the consideration for said one hundred acres of land described in said deed.

However, the mere fact that property conveyed to a wife, under such state of facts and circumstances, as in this case, although the value of said property may be in excess of the claimed consideration paid, where there is not such an excess in value as would have a tendency to affect her with notice of any fraudulent intent on the part of her husband, she can not be charged with such notice as the laAv requires in such cases.

Upon the facts and the law, the issues in this case are found in favor of the defendant, Joannah Cooper, and judgment is here entered in her favor.

The petition of plaintiffs is dismissed; also the cross-petitions filed' herein are dismissed. The costs are taxed against the plaintiffs and cross-petitioners herein, save and except the Buckeye State Building & Loan Company.

Judgment and decree accordingly.

Shields, J., and Patterson, J., concur.