Case Name: Miller v. Correll
Court: Supreme Court of Appeals of West Virginia
Jurisdiction: West Virginia
Decision Date: 1924-09-23
Citations: 97 W. Va. 215
Docket Number: 
Parties: Miller v. Correll.
Judges: 
Reporter: West Virginia Supreme Court
Volume: 97
Pages: 215–221

Head Matter:
CHARLESTON.
Miller v. Correll.
Submitted May 29, 1924.
Decided September 23, 1924.
1. Fraudulent Conveyances — Conveyance on Valuable Consideration not set Aside in Absence of Showing Grantee’s Knowledge of Fraudulent Design.
Where the evidence fails to show with reasonable certainty that the grantee in a deed had knowledge of a fraudulent design on the part of the grantor in selling the property, and it is proved that a valuable consideration passed to the grantor, the conveyance will not be set aside for alleged fraud at the suit of a creditor of such grantor, (p. 217).
(Fraudulent Conveyances, 2T C. J. § 175).
2. Same — Conveyance of Land Between Near Relatives not Badge of Fraud, Though May Affect Degree of Proof.
A conveyance of land between near relatives is not a badge of fraud when such conveyance is attacked by creditors, though it may require less proof to show fraud than where such relationship does not exist, (p. 219).
(Fraudulent Conveyances, 27 C. J. § 152).
3. Same — Retention of Possession of Real Estate by Grantor After Conveyance Only Prima Facie Evidence of Fraud.
The retention of the possession of real estate by the grantor after a conveyance thereof by deed is only prima facie evidence of fraud, which may be rebutted by proof, (p. 220).
(Fraudulent Conveyances, 27 C. J. § 294).
Note : Parenthetical references by Editors, C. J. — Cyc. Not part of syllabi.
Appeal from Circuit Court, Monroe County.
Suit by R. C. Miller against H. F. Correll and another. From a decree for plaintiff, defendants appeal.
Reversed, and bill dismissed.
Thomas N. Read, for appellants.
R. L. Clark, for appellee.

Opinion:
Miller, Judge :
The purpose of this suit was to have set aside a deed from the defendant II. F. Correll to his sister the defendant Anne Correll, alleged to have been executed to hinder, delay and defraud the creditors of the said EL F. Correll, and especially the plaintiff.
Plaintiff alleges in his bill, that in the month of April 1920, he sold to defendant H. F. Correll a tract of 106 acres of land for $3,000.00, of which $400.00 was paid in cash, the balance represented by three notes executed by defendant EL F. Correll, due in one, two and three years; that when the first and second purchase money notes were not paid at maturity, he advised Correll that he would proceed to sell the land under his vendor's lien, and that owing to the general depreciation of farm land in that vicinity, it was probable that the land would not' sell for enoug'h to satisfy the three notes above mentioned, and that he would look to defendant for any loss occasioned by such depreciation. It is further alleged that at the time plaintiff so advised Correll of his intention to sell the 106 acres, defendant was the owner of another tract of 95 acres in the vicinity, and that within a few days after such notice EL F. Correll sold and conveyed to his sister Anne Correll this tract, for the purported consideration of $4,000.00, but that no consideration in fact-passed from Anne Correll to her brother; and that the sole purpose of the transfer of the said land was to hinder, delay and defraud Correll's creditors, especially the plaintiff, of which fraudulent intent the defendant Anne Correll had notice before and at the time she purchased the land. Plaintiff alleges, that at the sale of the 106 acre tract, he purchased the same for $2,000.00, and thereby suffered a loss of $1,109.75, for which he recovered a decretal judgment in the decree confirming the sale of the land to him. It is also alleged that the defendant El. F. Correll is insolvent.
A certified copy of the deed from H. F. Correll to Anne Correll is filed as an exhibit to the bill, and prayed to be made a part thereof. Besides the 95 acres of land, the deed purports to convey "all the personal property belonging to the said parties of the first part," though no allegation in the bill mentions this fact. The bill also purports to exhibit the final decree in the vendor's lien suit, but we do not find it in the record here presented.
Tbe circuit court found tbat tbe transfer of tbe 95 acres of land was fraudulent and decreed a sale of tbe same.
Tbe main question presented bere is wbetber tbe defendant Anne Correll can be charged with participating in tbe fraud, if any there was, in tbe transfer of tbe property to her by tbe deed of her brother. If tbe grantor was guilty of fraud, did she know of bis fraudulent intent, or bad she knowledge of such facts as to put her on inquiry to ascertain tbe purpose of tbe¡ grantor in disposing of hi^ property? By her answer and depositions, she denies any knowledge of fraudulent intent on tbe part of her brother. She says she bought tbe land only to secure her brother's indebtedness to her, and tbat H. F. Correll told her tbat plaintiff bad agreed to take back tbe 106 acres in settlement of bis claim and that tbe matter was settled. Plaintiff himself, in bis deposition, says tbat in a conversation with Miss Correll, tbe last of April or tbe first of May, 1922, after tbe making of tbe deed to her on February 21st of tbat year, about three weeks after tbe institution of tbe vendor's lien suit, be told her "tbat rather than have any trouble tbat I would take tbe place back, and if be would deed it back tbat I wanted half of tbe wheat at first, but I bad agreed to take half of tbe wheat if be would deed it back to me and give me a right of way t'o tbe road like I bad it when I sold it to him and turn tbe place over to me, but be never did agree to give me tbe right of way positively, and be said be would come over and we would have tbe deed written by Mr. Sydenstricker, but be never did come and be bad a deed made up at Greenville, and I beard that be didn't deed me tbe right of way, or half of tbe wheat, and so I lust told her I wouldn't accept it, and then she said tbat if tbe wheat was all tbat was in tbe way tbat she would pay for tbe wheat herself, but she didn't know what be would do about tbe right of way to the road down tbat way, and tbat was all tbat was between us about me taking tbe place back." Miss Correll says she first learned tbat a satisfactory settlement bad not been reached between her brother and the plaintiff about tbe last of April. She then went to plaintiff's home, where tbe conversation about which plaintiff testified took place. She says she not only offered to pay for tbe half of tbe wheat, as plaintiff says, but also offered to pay some back taxes on the 106 acres, of which plaintiff was complaining. She says she went to plaintiff's home because she learned from her brother that plaintiff was threatening to institute some kind of suit against the Miller land. Plaintiff did not obtain a decree of sale in the vendor's lien suit until! at the July term of court, and the final decree in the cause was rendered November 14, 1922. In the meantime he made no attempt to proceed, by attachment or otherwise, ag-ainst the personal property conveyed by Correll to his sister by the deed of February 21st.
There is no attempt to show that Anne Correll knew of any controversy between her brother and plaintiff before she purchased the property in question. In his depositions plaintiff says that he guessed Miss Correll knew of her brother's indebtedness to him, but he could give no reason why she should have known even this fact, except that she ought to have known it. As soon as she learned that the vendor's lien suit was being brought, she went to plaintiff, on the occasion above mentioned, because, she says: "My brother was unable to go; his health was such that he was unable to make the journey, and he asked me to go to seel Mr. Miller, and Mr. Miller had practically agreed to have the land returned to him, conveyed to him by deed. ' ' This was more than two months after the conveyance of the 95 acres. We do not think that the evidence shows any knowledge of fraud by the defendant Anne Correll.
It appears that a valuable consideration passed to H. L. Correll for the conveyance of the 95 acres to his sister. She proves that at the time her brother owed her $920.31, evidenced by notes executed by him, some of them dated in 1918 and 1920'; that she paid her brother after the execution of the deed to her sums amounting to $288.21, and paid back taxes against the land, the sum of $67.03; that she assumed debts of her brother to another sister in the sum of $224.45; and that she executed to him her note for $2,500.00, to make up the balance of the purchase money. The consideration named in the deed was $4,000.00. Miss Correll, by her evidence accounts for exactly this amount.
While section 1 of chapter 74 of the Code declares to be void every conveyance made wth intent to hinder, delay or defraud creditors, it is therein provided that: ' ' This section shall not affect the title of a purchaser for valuable consideration, unless it appears that he had notice of' the fraudulent intent of his immediate grantor, or of the fraud rendering void the title of such grantor." Luzadder v. Heath, 79 W. Va. 202; 6 Enc. Dig. Va. & W. Va. Rep. 561.
It is said that transactions between brother and sister should be more closely scrutinized than if such relationship did not exist, when there is fraud charged. This is true; but relationship is not a badge of fraud, though it may require less proof to show fraud where such relationship exists. Bierne v. Ray, 37 W. Va. 571; Butler v. Thompson, 45 W. Va. 660; Colston v. Miller, 55 W. Va. 490; Wait on Fraudulent Conveyances, (3rd ed.) sec. 242; Bump on Fraudulent Conveyances, (4th ed.) sec. 67. Here there is very little evidence to charge the grantee with knowledge of fraudulent intent. On the contrary, we think she has cleared herself of such charge.
Plaintiff contends that the retention of real property by the grantor becomes a badge of fraud, when the conveyance is attacked by creditors of the grantor, and casts upon his grantee the burden of showing that such retention by him is a holding for the grantee in good faith. It is true that such possession is prima facie evidence of fraud. Bradley v. Martin, 28 W. Va. 773; Curtin v. Isaacsen, 36 W. Va. 391; Blackshire v. Pettit, 35 W. Va. 547; Klee v. Reitzenberger, 23 W. Va. 749. Miss Cornell's explanation of her brother's remaining on the land after his conveyance to her, is that he agreed to do so until a sale of the personal property could be made. Miss- Correll lived in another county, where she was engaged in teaching school. She says her brother was to remain on the farm, manage it, and take care of the live stock until it could be disposed of advantageously, and that this was a part of the consideration that led her to purchase the farm and the other property. She says Correll- had no interest in the land or stock whatever after the sale to her; that he was simply taking care of the farm and cattle; and that the cattle were sold as soon as they were in a condition for sale. Then the brother left the farm, removing to a western state, as he had for some time contemplated doing on account of ill health. On account of Miss Correll's occupation and the fact that she did not live in the vicinity of her farm, it was necessary that she secure some one to manage the farm and take care of the cattle and other personal property. Why not the brother, as long as he remained, in the state? He had been in charge of the property before the sale to his sister, and ought to be competent to look after her interests. In view of the other facts in evidence, and the absence of evidence of any actual fraud on the part of Anne Correll or knowledge of facts on her part to put her on inquiry, we think her explanation sufficient to overcome any badge of fraud raised by the fact that H. F. Correll remained on the farm until the personal property was disposed of.
The next point.made by plaintiff is that an absolute sale of personal property, with possession continuing in the seller, is fraudulent per se as to creditors, without other evidence of fraud. Is this true? In Poling v. Flanagan, 41 W. Va. 191, 194, Judge Brannon says: "The rule that the retention of possession of a chattel by the seller after absolute sale is per se fraud — that is, conclusive evidence of fraud — rendering the sale void as to subsequent purchasers and creditors of the seller, does not prevail here, but it is prima facié evidence of fraud, and will overthrow the sale as to purchasers and creditors unless circumstances of good faith are shown by the purchaser. I am relieved of any discussion of the subject by the elaborate discussions in Davis v. Turner, 4 Gratt. 422, and Bindley v. Martin, 28 W. Va. 773. In the former case the doctrine of fraud per se, op that such retention of possession is conclusive evidence of fraud, is repudiated, and the rule laid down that the 'retention of possession of personal property by the vendor after an absolute sale is prima faciei fraudulent, but the presumption may be rebutted by proof'." See, also, Curtin v. Isaacsen, supra.
Here the personal property is not involved. No attempt was Made to recover it and subject it to the defendant H. F. Cor-rell's debts when it could have been reached. The personal property in question consisted largely of live stock, which had to be taken care of on a farm, and it is only reasonable that Miss Correll would leave it on the land she had pur chased; and we do not think that the retention of possession by the vendor is any more evidence of fraud than the retention of thei land, in this case. Both the real and personal property were conveyed by the same instrument; and both were left together, where they were at the time of the conveyance. When the personal property was later sold at public auction, Miss Correll says she turned over to her brother a part of the proceeds thereof, in cash and notes, to the amount of $1,500.00, and that he credited her with that amount on her $2,500.00 note given him as a part of the consideration for the property conveyed to her. This latter statement is corroborated by a letter written her by the cashier of the Alderson National Bank, of Alderson, W. Va., advising her that the bank held her note, endorsed by H. F. Correll, for $2,500.00, with a credit of $1,500.00, and further stating: "We discounted this note for H. F. Correll, and thought it probably a good idea to let you know that we owned it. ' ' It appears that a small part of the personal property sold at the public sale did belong to H. F. Correll. Whatever acts of possession H. F. Correll may have exercised over the property, real and personal, conveyed to his sister, it was all turned over to her, or the proceeds thereof credited to her, six months before the. present suit was instituted.
It.is alleged that H. F. Correll was insolvent at the time of the institution of this suit. This is denied in the answer of each of the defendants. Miss Correll testified that he was not insolvent; and there is no proof to the contrary.
In view of the facts and circumstances disclosed by the evidence, we are of opinion that the circuit court erred in holding that the conveyance of the property in question was fraudulent. The decree will, therefore, be reversed, and the bill dismissed.
Reversed and bill dismissed.