#### NORA McKILLIP v. FARMERS’ STATE BANK OF DES LACS, NORTH DAKOTA.

(151 N. W. 287.)

Deed — setting aside — on ground of fraud — proof — clear and convincing.

1. Where one seeks to set aside a deed on the ground of fraud, Ms proof must be clear and convincing.

Conveyance — old man to daughter — consideration — care during old ’ age — not necessity fraudulent.

2. A conveyance by an old and feeble man, of Ms homestead to his daughter *542in consideration of her caring for him in his old age, is not necessarily' fraudulent.

*541Note. — The question of the validity, as against creditors, of transfers of exempt property is treated in a note in 20 Am. Hep. 150.

*542Exempt property — transfer of by debtor — not fraudulent — creditors.

3. It is not a fraudulent act for a debtor to transfer to his wife or daughter exempt property to which his creditors could not have looked for the satisfaction of their claims.

Opinion filed February 16, 1915.

Appeal from tbe District Corfrt of Ward County, *Leighton,*J.

Action to determine adverse claims to real estate. Judgment for Plaintiff. Defendant appeals.

Affirmed.

Blaisdell, *Murphy & Blaisdell,*for appellant.

There was constructive fraud in tbe transfer of the' property in question. Tbe failure of an honest grantee to place bis deed of record is held to operate as an estoppel in favor of tbe creditors of tbe grantor. It is negligence, and constitutes constructive fraud. Smith v. Cleaver, 25 S. D. 351, 126 N. W. 589; Rev. Codes 1905, § 5294; ITopkins v. Joyce, 18 Wis. 443, 47 N. W. 722.

Tbe defendant bad a lien and could have maintained an independent action as plaintiff to enforce it. He has been brought into this action, and the court has power to do complete justice between tbe parties. Tbe nullity of tbe transfer is not based on tbe absence of another remedy, but on its fraudulent character. Probert v. McDonald, 2 S. D. 495, 39 Am. St. Rep. 796, 51 N. W. 21’2; Carson v. Stevens, 40 Neb. 112, 42 Am. St. Rep. 661, 58 N. W. 845, 58 N. W. 845; David Adler & Sons Clothing Co. v. Heilman, 55 Neb. 266, 75 N. W. 877.

Anything out of tbe usual course of business is a sign of fraud. McCarvel v. Wood, 68 Minn. 104, 70 N. W. 871.

That tbe plaintiff does not testify or personally appear in this case is a sign, and raises tbe presumption of fraud. 20 Cyc. 450; Man-bard Hardware Co. v. Rothschild, 121 Mich. 657, 80 N. W. 707; Pro-bert v. McDonald, 2 S. D. 495, 39 Am. St. Rep. 796, 51 N. W. 212.

*Balda, Aalcer & Greene*and *F. M. Oseth,*for respondent.

Tbe doctrine of constructive fraud is not only analogous to, but is based upon, tbe doctrine of estoppel *in pais;*since it arises only *543where, by tbe omission of a duty imposed by law upon one person, another has been actually and bona fide mislead to his prejudice. Rev. Codes 1905, § 5294; Smith v. Cleaver, 25 S. D. 351, 126 N. W. 589.

The presumption that services of a member of the family are gratuitous may be overcome by actions and appearance; it is entirely overcome and destroyed by a distinct agreement. Since a father may emancipate his minor child, it has been held, that if he so does, and enters into a bona fide contract with the child under such contract, such services are a sufficient consideration to support a conveyance by the father to the child as against the father’s creditors. 20 Cyc. 532, 533, and cases cited.

The transfer in this case was of exempt property, and therefore not open to question by grantor’s creditors. It was property to which the liens of creditors did not attach, and was beyond the reach of an execution. It was not possible to defraud creditors by transferring property to which they could not look for the collection of their claims. Olson v. O’Connor, 9 N. D. 504; Dalrymple v. Security Improv. Co. 11 N. D. 10, 88 N. W. 1033; Baldwin v. Rogers, 28 Minn. 544, 11 N. W. 77; Blake v. Boisjoli, 51 Minn. 296, 53 N. W. 637; Merchants’ Nat. Bank v. Kopplin, 1 Kan. App. 599, 42 Pac. 263; White Sewing Machine Co. v. Wooster, 74 Am. St. Rep. 100 and note, 66 Ark. 382, 50 S. W. 1000; Note to Ivettlesehlager v. Ferrick, 76 Am. St. Rep. 626.

Bbuce, J.

This is an action to determine adverse claims to real estate. Its direct object is to have the lien of an attachment set aside. This attachment was issued in an action not against the plaintiff and respondent, but against her father and grantor, Thomas McKillip, and the question to be determined is the validity of the conveyance to his daughter, and whether the land on which the attachment was levied belonged to the father and debtor, Thomas McKillip', or to his daughter, the plaintiff and respondent herein. The land was deeded to Nora McKillip, on the 15th day of March, 1910, and the attachment was levied on the 19th day of October, 1912. The question is, Was or was not the deed of March 15, 1910, a valid deed? In other words, was it issued for a good or valuable consideration, and was it free from actual or constructive fraud ? The trial court found that it was, and we are asked upon this appeal to reverse its findings.

The record «shows that in 1909 the plaintiff and respondent’s father *544sold and indorsed to tbe defendant bank a certain promissory note for $350, which was executed in his favor by one T. W. Young; that on said note becoming due and on April 20, 1911, and a year and twenty-five days after the date of the execution of the deed herein in question, the said plaintiff’s and respondent’s father and the said T. W. Young executed and delivered to the said bank a new note for $302.44, and which note was given for the purpose of taking up the indebtedness still due on the prior note. The record shows that at the time of the giving of the second note the said McKillip had some $500 worth of personal property, which he disposed of in 1912, a year after the giving of the last note and some two months before the recording of the deed by his daughter, which was on the 1st day of June, 1912. The whole contention of defendant is that it had no knowledge whatever of the existence of the deed until shortly after it was recorded, and that had it known of the deed it would never have accepted the note but would have sued McKillip on the former note, in payment of which the note of April 20, 1911, was given, and would have levied on his personal property and collected its claim in full.

The burden of proof is, of course, upon the defendant and appellant to prove its allegation of fraud, and such proof must be clear and convincing. Englert v. Dale, 25 N. D. 587, 142 N. W. 169. We find no such proof in the record before us. The deed, it is true, was not recorded until the 1st day of June, 1912. The writ of attachment, however, was not issued until the 19th day of October, 1912, nor was the action in which it was issued begun until such date. At the time of the execution of the deed to his daughter, the liability of Thomas McKillip to the defendant, the Farmers’ State Bank, was that of an indorser merely, and there appears to be nothing unusual in an old man deeding his homestead to his daughter, who has come to live with him and is taking care of him, even though he happens to be an indorser on a promissory note of $350 which he has sold to a bank, especially where he has some $500 worth of personal property which the record shows in this case to be the fact, and makes an agreement with his daughter for an interest in the crops for two years with which to take care of his possible indebtedness. There can be no doubt that the plaintiff, Nora McKillip, came from St. Paul to take care of her father, who appears to have been an old and feeble man and we are not prepared to *545doubt bis testimony that tbe deed was executed in consideration of tbe payment of a small sum of money and tbe agreement to care for and nurse bim. Conveyances of tbis kind by no means lack in bona fides, and bave been universally sustained even as against tbe father’s creditors. See 20 Cyc. 532, 533, and cases cited; Stevens v. Meyers, 14 N. D. 398, 104 N. W. 529.

It may be true that after tbe execution of tbe deed and in April, 1912, tbe plaintiff’s father disposed of bis personal property, but what, may we ask, bad tbe plaintiff to do with tbis *%*If she and her grantor were free from fraud or from fraudulent intent at tbe time of tbe original conveyance, and there was a valid consideration for such conveyance to her, tbe subsequent acts of her grantor are immaterial. Tbe defendant, it is to be remembered, was her father’s creditor, and not her own.

So, too, it is well to remember that tbe land was tbe homestead of tbe plaintiff’s father, and did not exceed $3,500 in value. It was therefore exempt from execution under tbe provisions of § 5049 Kev. Codes 1905, § 5605, Compiled Laws of 1913. Tbe courts have repeatedly held that it is not a fraudulent act for a debtor to transfer to bis wife or daughter exempt property to which bis creditors could not have looked for tbe satisfaction of their claims. “It was property,” said tbis ■court, in tbe case of Olson v. O’Connor, 9 N. D. 504, 510, 81 Am. St. Rep. 595, 84 N. W. 359, “to which tbe lien of tbe judgment did not attach, and was beyond tbe reach of an execution issued thereon. It was not possible to defraud bis creditors by transferring tbe title to bis wife, for it was property to which they could not look for tbe collection of tbe claims. For these reasons, even in a proper case, the transfer was not subject to attack.” See also Dalrymple v. Security Improv. Co. 11 N. D. 65-70, 88 N. W. 1033; Baldwin v. Rogers, 28 Minn. 544, 11 N. W. 77; Blake v. Boisjoli, 51 Minn. 296, 53 N. W. 637. “Tbe homestead is something toward which tbe eye of tbe creditor need never be turned. It is an element which may never enter into bis calculations in bis efforts to collect bis debt.” Monroe v. May, 9 Kan. 476. “A debtor cannot commit a fraud upon bis creditor by disposing of bis homestead. A debtor in tbe disposition of bis property •can commit a fraud upon bis creditor only by- disposing of such of bis property as tbe creditor has a legal right to look to for bis pay.” Hixon v. George, 18 Kan. 253. See also Wilson v. Taylor, 49 Kan. 774, 31 *546Pac. 697; Merchants’ Nat. Bank v. Kopplin, 1 Kan. App. 599, 42 Pac. 263; Wells v. Anderson, 97 Iowa, 201, 59 Am. St. Rep. 409, 66 N. W. 102; White Sewing Mach. Co. v. Wooster, 66 Ark. 382, 74 Am. St. Rep. 100, 50 S. W. 1000.

The judgment of the District Court is affirmed.