Case Name: FRANK J. GUSTIN, Trustee in Bankruptcy of THOMAS MATHEWS, Respondent, v. ABIGAIL L. MATHEWS, Appellant
Court: Utah Supreme Court
Jurisdiction: Utah
Decision Date: 1902-10-25
Citations: 25 Utah 168
Docket Number: No. 1375
Parties: FRANK J. GUSTIN, Trustee in Bankruptcy of THOMAS MATHEWS, Respondent, v. ABIGAIL L. MATHEWS, Appellant.
Judges: BASKIN, I., and HART, District Judge, concur.
Reporter: Utah Reports
Volume: 25
Pages: 168–172

Head Matter:
FRANK J. GUSTIN, Trustee in Bankruptcy of THOMAS MATHEWS, Respondent, v. ABIGAIL L. MATHEWS, Appellant.
No. 1375.
(70 Pac. 402.)
1. Fraudulent Conveyance; Nominal Consideration.
A conveyance by a husband to his wife of all his property for a nominal consideration is invalid as to a creditor whose debt existed at the time, though not in judgment.
2. Same: Fraud of Grantee.
A conveyance by a husband to his wife of all his property for a nominal consideration is fraudulent as to his creditors, though the wife does not participate in any fraudulent intent.
3. Same: Constructive Fraud.
A conveyance by a husband to his wife of all his property for a nominal consideration is constructively fraudulent as to his creditors, and no actual fraud on the part of the grantor need be shown.
(Decided October 25, 1902.)
Appeal from the Third District Court, Salt Lake County.— Mon. 3. W. Stewart, Judge.
Action by the plaintiff, as trustee, to set aside a certain deed, executed by Mathews to his wife, on the ground that tbe conveyance was fraudulent as to bis creditors.. Prom a judgment in favor of tbe plaintiff, tbe defendant appealed.
AKKIUilED.
Messrs. Nye & Largeni for appellant.
Tbe contention of tbe appellant is tbat tbe deed to ber was made in good faitb. Tbe plaintiff alleges fraud, but defendant contends tbat tbe evidence fails to support any sueb allegation, nor does tbe plaintiff attempt to show tbat fraud existed in tbe mind of tbe grantor, tbat it was participated in by tbe defendant in any manner, or tbat sbe even knew anything about it. Such evidence is necessary. Priest v. Brown, 35 Pac. Eep. 325.
This transfer cannot be set aside for tbe fraud of tbe grantor, in wbicb tbe grantee did not participate, and there is no evidence tbat tbe grantee or even tbe grantor bad any knowledge or intention of fraud. Priest v. Brown, 35 Pae. Eep. 325; Bank v. Northrop, 22 N. J. Eq. 58; Poster v. Hall, 12 Pick. 89; Cohn v. Knox, 90 Cal. 273.
When a party relies upon fraud be must dearly prove it. Joyce v.. Joyce, 5 Cal. 163; Hangman v. Eandle, 13 Cal. 512; Bico v. Spencer, 21 Cal. 496; Brandolb v. Whitney, 54 Cal. 586; Estate v. Kidder, 66 Cal. 490.,
The person assailing a deed as fraudulent assumes tbe burden of proving tbat it was executed in bad faitb and tbat it left tbe grantor insolvent and without property to pay bis existing debts. Caine v. Larkin, 30 N. E. 106, and citations.
.A deed cannot be fraudulent against creditors who are not injured by its execution and who would not be benefited if it were declared void. 2 Am. and Eng. Ency. of Law, p. 255.
Edward McGurrin, Esq., for respondent.
Tbe defendant is tbe wife of ber grantor; tbe property involved in this action consists of a comer lot in tbe north western part of Salt Lake City, ten by twenty rods in dimension, fronting on two streets; the consideration recited in the deed and which both the grantor and grantee testify was actually paid, was one dollar; the effect of the transfer was to render the grantor insolvent. Under such circumstances this conveyance was fraudulent as against the creditors of the grantor existing at the time it was executed. Bank v. Barker, 12 Utah 13; Bohannon v. Combs, 79 Mo. 305; Story v. Lawrence, 58 Iowa 55; Houston v. Kilner, 113 Ill. 318.
Under such circumstances the defendant says that this transfer cannot be successfully attacked by a creditor of the grantor, unless it be shown that the grantee actually knew of and participated in the fraudulent intent of her grantor, and that it is not enough that the purpose of the grantor was fraudulent, that no consideration was paid for the transfer, and that by reason thereof the grantor was rendered insolvent. The cases cited by defendant do not support such contention, because in each of them an adequate and substantial consideration was paid nr received for the property conveyed. This conveyance was purely a voluntary one, and however innocent the grantee may have been of the fraud of her grantor, she cannot hold this property as against his creditors. Bank v. Barker, ante; If Am. and Eng. Ency. of Law (2 Ed.), 271.
Bank v. Barker, 12 Utah 13.

Opinion:
BARTCH, J.
This is an action brought by "the plaintiff, as trustee in bankruptcy of Thomas Mathews, to set aside and declare null and void a certain deed executed by Mathews to his wife, conveying a certain parcel of real estate, on the ground that the conveyance was fraudulent and void, and made'for the purpose of placing the property out of reach-of his creditors. From the evidence it appears, substantially, that the property conveyed and in controversy consists of a comer lot, ten by twenty rods, situate in the northwest portion of this city; that Thomas Mathews conveyed it to his 'wife, the defendant, for the sum of one dollar; that at the time of the conveyance a suit was pending against the grantor to collect a claim, for which judgment was afterwards recovered, and which judgment remains unsatisfied; that the price for which the property was conveyed was wholly inadequate; that at that time its assessed value was not less than $100, and the taxes thereon amounted to $6 or $7 per annum; that the grantor also conveyed to his wife another piece of property, worth $300, for one dollar; that, aside from the real estate so transferred, the grantor owned no property subject to execution or to the payment of the claims of his creditors; and that thereafter he filed a petition in bankruptcy, and was adjudged a bankrupt. When the plaintiff rested, the defendant moved for a non-suit on the ground of a failure to make out a case against her. The court overruled the motion, and, upon the defendant failing to offer any testimony, entered judgment in favor of the plaintiff, declaring the deed to be fraudulent and void, and directing that the property attempted to be conveyed be considered as a portion of the bankrupt's estate. This action of the court has been assigned as error.
The main contention of the appellant is that the conveyance cannot be set aside for the fraud of the grantor in which the grantee did not participate, and that there is no evidence that the grantee, or even the grantor, had any knowledge of or intention of fraud. This contention is not tenable under the facts of this ease. The deed was made for but a nominal consideration at a time when the grantor was unable to pay his debts. It must, therefore, be regarded' as a mere voluntary conveyance, without consideration, and void as to creditors whose claims existed at the time of its execution, whether reduced to judgment or not, and who-, because of such conveyance, would be hindered or delayed in the collection of their claims. While a man may make provision for his wife out of his estate by deed, donation, or otherwise, and ought to do so when he is solvent, yet if he attempts to thus dispose of bis property and effects at tbe expense of bis creditors, and to tbeir injury, bis conveyance, in tbe eye of tbe law, will be a fraud upon them; •and tbe fact, if it be a fact, that sucb a grantee did not participate in any fraud against tbe creditors, but accepted the instrument in good faitb, does not relieve tbe grantee from tbe effect and operation of a voluntary conveyance. In sucb case it is immaterial bow innocent tbe grantee was; tbe question is tbe intent of tbe grantor. Sucb a conveyance, under tbe circumstances of tbis case, is constructively fraudulent, and will be held void as to existing creditors, without proof of actual fraud. These principles, and questions like those herein presented, were fully discussed in Bank v. Barker, 12 Utah 13, 40 Pac. 765, and on tbe authority of that case this one must be affirmed, with costs, there being no reversible error in tbe record. It is so ordered.
BASKIN, I., and HART, District Judge, concur.