Case Name: Hickman's Ex'or and al. v. Trout and al.
Court: Supreme Court of Appeals of Virginia
Jurisdiction: Virginia
Decision Date: 1887-06-16
Citations: 83 Va. 478
Docket Number: 
Parties: Hickman’s Ex’or and al. v. Trout and al.
Judges: 
Reporter: Virginia Reports
Volume: 83
Pages: 478–503

Head Matter:
Wytheville.
Hickman’s Ex’or and al. v. Trout and al.
June 16th, 1887.
1. Fraudulent Conveyances&emdash;Burden of proof.&emdash;Fraud must be clearly proved. Burden of proof rests on the alleger. It may be proved by circumstances. When the evidence shows a prima facie case of fraud, the burden shifts to the upholder of the transaction to establish its fairness. The grantee must be proved to have had notice of grantor’s fraudulent intent.
2. Idem&emdash;Indicia of fraud.&emdash;The usual badges of fraud are: Gross inadequacy of price; no security taken for the purchase money ; unusual length of credit; bonds taken at long periods ; conveyance in payment of alleged antecedent indebtedness of father to son residing together; threats and pendency of suits ; concealment of the transaction ; keeping the deed unacknowledged and unrecorded for considerable time ; grantor remaining in possession as before the conveyance. Any of these facts may make a case of prima facie fraud, calling on the parties for explanation.
3. Idem&emdash; Case at bar.&emdash;Whereto these indicia are added the absence of itemized accounts, vouchers, &c., contradictions in testimony of grantor and grantee, the want of means in grantee to create the alleged indebtedness of grantor to grantee, and the failure to examine as witnesses persons having opportunities to know the facts ,• these things combined&emdash;
Held :
To establish the fraudulency of the conveyance as to both grantor and grantee.
Argued at Staunton. Decided at Wytheville.
Appeal from decree of circuit court of Shenandoah •county, rendered April 10th, 1885, in the chancery suit wherein Jíohn T. Hickman’s executor and George A. Hupp are complainants, and Isaac Trout and James S. Trout are defendants. At the hearing the circuit court dismissed the bill with costs, and the complainants obtained an appeal and supersedeas. Opinion states the case.
Walton & Walton and Barton & Boyd, for the appellants.
Williams & Bro. and H. O. Mien, for the appellees.

Opinion:
Richardson, J.,
delivered the opinion of the court.
The object of this suit, brought in April, 1873, was to set aside as fraudulent and void, a deed executed February 5th, 1872, and acknowledged March 7th, 1873, by the grantor, the said Isaac Trout, and recorded March 28th, 1873, and purporting to convey to the said James S. Trout all the grantor's real estate for the professed consideration of $3,000, whereof $500 is recited to have been paid in hand, $500 evidenced by bond payable on demand, and the residue evidenced by four bonds, each for $500, payable in four, six, eight, and nine years, respectively, with interest from their dates; and also to enforce upon the said real estate the liens of two judgments against the said Isaac Trout, obtained and docketed in said county in 1873, after the recordation of said deed.; the first being in favor of the said Hickman for $2,455.34, with interest from May 8th, 1871, and $10.45 costs, and the second in favor of said Hupp for $750, with interest from January 1st, 1861, and $7.95 costs, subject to certain credits.
The bill alleged that said conveyance was made with intent to hinder, delay, and defraud the complainants and other creditors of the grantor, and that the grantee was privy to such intent; and the bill alleged divers circumstances as evidence of the fraud charged.. Each of the defendants answered separately, denying tlie alleged fraudulent intent, and insisting that the conveyance was made-for valuable consideration and in good. faith. By both sides depositions were taken constituting a voluminous record. A recital of the evidence would be impracticable and useless. However, as the result of a careful' examination of the whole mass, we are satisfied that the following pregnant facts are well established and are decisive of the case.
On its face, the deed purports to be executed by Isaac Trout and wife, though he alone signed it; which may indicate that, in the inception of the transaction, a conveyance was in contemplation, free from the incumbrance of dower. The usual lien for the deferred payments is not reserved; and no other security is taken therefor. The estate conveyed consists of a tract of sixty-three and one-half acres, a lot of five acres, and a house and lot in the-town of Woodstock. The clear preponderance of evidence is that this real estate in the aggregate was, at the time of its conveyance, worth, free from incumbrance, $5,500. As much as this, Isaac Trout, the grantor, had been offered ; and he demanded even more. The grantor was seventy-two years old, and his wife only a few years younger. The-grantor and grantee were father and son; the latter being a widower without children, thirty-six years old, engaged in running a village newspaper in Woodstock; and since 1866, boarded himself and one and sometimes more of his apprentices at his father's house. He was possessed of limited means, apparently inadequate to pay for the real estate conveyed to him.
Isaac Trout was, at the time of this conveyance, and had long been, indebted beyond his means of paying, and was • much harrassed with duns and threatened with suits by his creditors, and only kept them off by promising, fropi time to time, to sell his property and pay his debts; and. these circumstances were known to his son and grantee. One witness (Dr. Irwin) testified that he had made Isaac Trout, the grantor, a standing offer of §4,000 for the sixty-three and a half acres alone from 1866 till the fall of 1872.
The deed in question, made February 5th, 1872, was only acknowledged the seventh of March, 1873, and then before Justice Graybill, a near relative of the parties, who was told, as he testifies, "in a careless sort of way," "to keep the matter private." Ho apparent change in the possession of the property took place after the execution of the deed. Witnesses depose that after its execution the grantee attended to this property as still being his father's, and. as late as the fall of 1872 spoke of his father's unwillingness to trade any part of the sixty-three and a half acre tract for part of the witness' land, but said he desired to sell one hundred fine trees off it. Isaac Trout, being old and in feeble health, did not attend to his outdoor business, and his son, the said James 8. Trout, attended to the farm and had the fences and the house in town repaired.
In March, 1873, the complainants placed their claims in the hand of attorneys, who instituted actions thereon. On the twenty-fifth of March, 1873, the counsel for the Trouts informed those attorneys, by letter, that Isaac Trout had sold his real estate to his son, and that if pressed, the matter must be settled by law. On the twenty-eighth of March, 1873, the deed was recorded. "By. direction," a lawyer named McKay had written several deeds for the separate pieces of property. But, "under the advice of a lawyer," James S. Trout deposed that he (James), in order to'avoid the stamp tax, wrote the deed in question incorporating the several deeds in one. Heither of these lawyers deposed in the case. James 8. Trout himself had studied the law and had practiced awhile.
On the important question of the payment of the alleged consideration of §3,000, the answer of Isaac Trout sets out that at the time of bis sale of bis real estate to bis son be owed bis said son a considerable sum of money, and he files with bis answer a statement thereof, wbicb is as -follows :
Amount of taxes paid by J. S. Trout for I. Trout
from 1868 to 1872, - $126 81
Amount paid for hire of bands, - - ' - 345 00
Amount paid by him to J. P. Nelson, - - 60 00
Amount paid on store account for clothing for Mr. and Mrs. Isaac Trout, and money drawn from the Herald office, from 1866 to 1871, 425 00
April, 1871.—Amount paid Williams & Bro. on judgment of Mary Mclntruff, - - 222 17
April 29, 1871.—Amount paid on claim of Clower & H.,...... 20 83
Amount paid for supplies, pork, beef, flour, etc., • for 1871-2, - - - - - 450 00
July 3, 1874.—Amount paid on Copperfield grant, 46 38
July 3, 1874.—Amount paid Walton & Walton on judgment of George Halen, - 190 00
July 13, 1874.—Amount paid on same, - - 58 17
Amount paid Hottel & Painter on old mill acc't, 100 00
$2,044 36
It will be observed that of this sum of $2,044.36 no itemized accounts are filed, and no memorandum of any settlement, and no credits are allowed for board of grantee and bis apprentices. . In bis deposition, wbicb was taken November 30th, 1874, James S. Trout, in answer to questions on cross-examination, deposes:
Q,u. 38. "How much did your father owe you at the time of signing the deed? Give the amounts and items and dates, and produce all the evidences of such indebted ness as you may have in your possession or under your control."
Ans. " Money advanced for taxes, $126.81; the tax bills are herewith produced, No. 1 to No. 9, (they are not in the record), represent the amount paid before signing the deed, and the $126.81 the whole amount paid for taxes before and since; amount paid for hire of hands from 1866, $345, but a small part of this paid since; this is by account kept both by father and myself. Amount of note paid J. P. Nelson—I don't think I have this note. Amount of money drawn from Herald office, and clothing settled for at stores for Mr. and Mrs. Isaac Trout from 1866 to 1871, $425. These accounts are at Campbell, Danner & Ott's, J. W. Danner's, Danner & Bro.'s, S. A. Danner's, Heller & Bro.'s, Heller & Coffman's, Fravel & Lacey's, &c., Cobb & McCann's, E. L. Cobb's, and B. Smith's, and moneys evidenced by Herald office. Amount paid Williams & Bro. on Mclntruff judgment, $222.17, April, 1871. See the judgment marked satisfied. Amount paid Clower & Hockman, $20.83, April 29th, 1871, evidenced by books of Williams & Bro."
Qu. 39. "Have you no vouchers for the payment of moneys from the Herald office, and for accounts of merchants showing the payment of the same to or on account of Isaac Trout ? "
Ans. "These merchants' accounts were charged to me in my general account, and moneys furnished from the Herald office, both by myself and my different partners, without vouchers, further than charging to me on the Herald books."
Qu. 40. "Do the entries either upon the mercantile books or the Herald books show other than charge's against you? " Ans. " I think they sometimes specify for whom."
Qu. 41. " Can you tell the number of times they specify for whom, and the amounts, if any are so specified in either of the said two kinds of accounts ? "
Ans. I cannot tell how many, for it was generally understood that I supplied everything, both money and necessaries generally for the family, for my father, and the general, running account was kept against me individually."
Q,u. 42. " Will you produce your book in which you kept, your entries of account between yourself and father for examination ? "
Ans. " The only accounts kept between us, as in regular-form, was the one kept by my father for moneys for hire of his hands, and the commencement of the account for supplies, which was found too inconvenient to keep by him and discontinued. The statement of account between us. was taken from the Herald books and merchants' accounts rendered from time to time, and the receipts for moneys-paid on judgments."
Q,u. 43. " Wrhen was the statement of account to which you referred in your examination in chief made up. and-from what sources ? "
Ans. "It was made up a short time before the purchase-of the land; I don't know how long; that part of it paid before 1872. I made up my statement of that portion of the account due me prior to the purchase from a settlement between my father a.nd myself some time prior to-my purchase, and that portion of the account due after the-purchase from the receipts and judgments and a statement, of account kept from the time of the purchase."
And in answer to question 45, he said: "I had other-dealings with my father; I was boarding with him and had one apprentice-boy generally with me; and furnished most of the supplies for a short time, and all since 1866,"" &c.
Qu. 48. "You have spoken of a settlement having been made between yourself and your father some time prior to-the sale of the land to you, what items entered in that settlement, and what was the result of it ? "
Ans. "The items specified in answer 38. The result was a balance due me on two first payments, that is, of $500 •cash in hand and $500 on demand, I think; according to my recollection it amounted to $1,100 and something. I forget the amount."
Qu. 49. " Then you paid no money down at the execution •of the deed ? "
Ans. " The money was paid down before."
Qu. 50. " How long before the date of the deed did the settlement take place ? "
Ans. " But a short time; I disremember exactly."
Notwithstanding the facts thus brought out on his cross-examination, this grantee-witness, in his answer to the bill, which was sworn to twenty-fourth February, 1874, states that " the cash payment of $500 was bona fide, and he has paid off the first bond of $500, payable on demand in full; and on a fair settlement and adjustment of accounts between himself and the said Isaac Trout, there will, he believes, be a large balance in this defendant's favor to be credited on the bonds not yet due, and that at the time of the purchase of said real estate by this defendant, it was understood and agreed between him and said Isaac Trout he should have such credit."
Yet in his deposition Isaac Trout, on cross-examination, deposes:
Qu. 87. "How many bonds were executed?"
Ans. "Six."
Qu. 88. "A bond was then executed for the dower payment?"
Ans. "Yes. We had made no settlement."
Qu. 91. "How long did you hold the six bonds before .you and James had a settlement ?"
Ans. "I think a month or so; that is, the two first bonds."
Now observe: The statement of account which makes James S. Trout, the grantee, the creditor of Isaac Trout, the grantor, in the sum of $2,044.36, was sworn to by Isaac Trout before J. H. Graybill, J. P., on the first of December, 1874, and, as stated and sworn to, was filed with and as part of the answer of said Isaac Trout as above stated. That account, as we have shown,' is not itemized. Does-James S. Trout, in his aforesaid answer to question 38, or in any other way, explain it with the least degree of satisfaction? Taking it that the items are stated in the order-in which the transactions occurred, it clearly appears therefrom that only a comparatively small portion of it is subsequent to the date of the deed. Or, to state it differently, the first item, any part of which can, from the-account as stated, be claimed to be after the date of the deed, which is February 5th, 1872, is the sum in gross of $450 for supplies in " 1871-2." How much of this charge was for supplies furnished after February 5th, 1872, the-date of the deed, is in no way explained by anything in the record. But concede for the sake of the argument that half of it, or $225, was subsequently furnished, and add to that sum the remaining four charges in the account, to-wit: $46.33, $190, $58.17, and $100, which, with the $225, would make $619.50, which', subtracted from $2,044.36, would leave due Jas. S. Trout at the date of his alleged purchase the sum of $1,424.81. Why, then, did James S. Trout, according to his statement, make a cash payment of $500, and execute five bonds for $500 each for the deferred payments, when, if his statement be true, he only owed his father of the purchase price of $3,000 the sum of' $1,575.19; or, taking the statement of Isaac Trout as true,, why were "six bonds," covering the whole alleged purchase price, executed ?
Again: At the trial of an action between James S. Trout and J. S. Erwin, which involved the question of the ownership of this land, or of some timber cut therefrom, Judge- Bird was one of the witnesses. Judge Bird was also examined as a witness in this case, and deposed that at one of the trials " James S. Trout testified that he had paid the whole cash payment, $500, in money; that he counted it out to his father, and had executed his bonds for the deferred instalments;" and that at the same-trial Isaac Trout testified that " his son, James, had paid him only about $300 in money and that the balance of the $500 he had paid in provisions furnished the family."
Dr. Irwin testified in this case that " James S. Trout said that he had made a down payment of $500 in cash and executed bonds for the deferred instalments," and that "Isaac Trout said in his evidence that James had paid him only $300 or $325 in money or cash, and had been supplying the family with provisions." It is impossible to reconcile these variant and wholly inconsistent statements with each other, or to make any honest deductions therefrom, the base-rock upon which to erect a superstructure clothed with the characteristics of common honesty and fair dealing. The record discloses many other and important instances of inconsistencies and of contradiction between the sworn statements of the grantor and grantee equally repulsive to all our ideas of' good faith and fair dealing.
The record also contains evidence that money obtained by James S. Trout from the sale of timber and crops from this land before his purchase was used to effect the alleged payments claimed by James S. Trout to have been made by him for his purchase. But the record contains no evidence of itemized accounts, books of accounts, or receipts for money paid by James S. for Isaac Trout. Hor is there any attempt to separate and distinguish those items, which, by James S. Trout's statement in his aforesaid answer to question 38, were made before, 'from those which were made after, his alleged purchase. By that account as set forth in that statement, and attempted to be proved, as we have seen, the grantee claims not only to have paid the down payment of $500, which in the deed is recited as having been " paid cash in hand," and the $500 which is recited therein as being evidenced by bond payable on demand, but also to have arranged the payment of two of the bonds of $500 each, payable in four and six years, respectively, after the date of the deed, or two-thirds of the purchase money. This much he could not have owed according to the aforesaid facts drawn out on his cross-examination. But, for the sake of the argument, grant it; what then became of the two remaining bonds due with interest in eight and nine years, respectively, after their date? Are they left for the complainants whose debts have been standing so long unpaid ? Not so. On the contrary, Isaac Trout claims that, by endorsement made on said two bonds on the fourteenth of February, 1872, he assigned them both—one to Henry Trout, his brother, and the other to William D. Trout, his nephew—in part payment of debts he owed them; though as late as twenty-first April, 1875, when his deposition was taken, he still retained these two bonds, and, for aught appearing in the record, he yet retains them, and Henry and William Trout are ignorant of the alleged assignment.
Again, there is no evidence to show that the grantee possessed the means to create the debt claimed to be due him from his father, the grantor. He sold his share of the newspaper in April, 1871. He was then in debt and needed money, and endeavored to sell the bonds given him for his said interest at a discount. But none of this money is traced to the alleged land purchase in question. He had previously bought all his father's personal property, valued at $150, which personal effects remained in unchanged possession. The grantee with one, and sometimes more, of his apprentices boarded from 1866 to 1872 with the grantor. This board, in the nature of things, must have •been quite equal to the alleged indebtedness from grantor to grantee; yet, while charges for that period for money advanced for the payment of the grantor's taxes and debts, and for supplies generally are clumped together, without itemization, against the grantor, there is no reckoning as to the grantor's board account against the grantee. In the family of the grantor during this period lived the widowed sister of the grantee; but neither she, nor any of his apprentices, nor the storekeepers from whom he professes to have purchased the supplies for the grantor, nor the law.yers to whom he claimed to have paid money for him, were examined as witnesses; but without proper vouchers, receipts, itemized accounts, and books of entry, the grantee undertakes, with such help as he could obtain from his aged father, the grantor, whose vague recollection is apparent from the inconsistencies in his statements, to establish the fact that he, in good faith, paid and was entitled to credit for the $2,044.36 as set forth in the statement filed •with the answer of his co-defendant, the grantor, Isaac Trout, which statement was not sworn to until December 1st, 1874.
Not until the tenth of April, 1885, did this cause come on for final hearing. Then both plaintiffs and defendants, by their counsel, having in open court waived an issue, and the issue being thus dispensed with, the circuit court decreed that the complainants' bill be dismissed, with costs to the defendants. From that decree the complainants obtained an appeal and supersedeas.
After careful consideration of the facts established by the proof contained in the record, we are unable to come to any conclusion other than that the deed whereby Isaac Trout conveyed his real estate to his son, James S. Trout, for the pretended consideration of $3,000 was made with the intent to hinder, delay and defraud the appellants and other creditors of Isaac Trout. We have arrived at this con elusion, only after a painstaking investigation, keeping in-view tkat tke presumption is always in favor of innocence, and tkat tke courts skould ke far from leaning to tke conclusion of fraud, and keeping also in yiew tke principle tkat fraud must ke distinctly alleged and clearly proved as alleged. Tke facts constituting tke fraud must ke clealy and conclusively proved. And tke kurden of proof is on kim wko alleges tke fraud.
It is not, kowever, necessary, in order to ascertain fraud,, tkat direct, affirmative, or positive proof of fraud skall ke produced. Concerning tke actions of men, and especially wken prompted ky tke secret, unexpressed, kidden motives of tke actors, demonstration certainly is not attainakle, nor is it required. As is tke case witk respect to knowledge on otker matters, fraud may ke inferred from facts tkat are estaklisked. It is enougk if facts ke estaklisked from wkick it would ke impossikle for tke mind fairly and reasonakly to conclude anytking otker tkan tkat tkere must kave keen fraud in tke transaction.
"A deduction of fraud," says Ckancellor Kent (2 Kent's Com. 4841, "may ke made not only from deceptive assertions and false representations, wkick may ke trivial in tkemselves, kut may in a given case ke often, decisive of a. fraudulent design."
Wkile tke proof of fraud rests on tke alleger, yet tke kurden may ke skifted from tke party impeacking tketransaction to tke party upkolding it; as wkere tke evidence skows a prima facie case of fraud, tke kurden of' skowing tkat tke transaction was fair lies upon kim wkoseeks to upkold it. And if from tke relations of tke parties, and tke surrounding circumstances, a doukt is tkrown around tke payment in good faitk of tke consideration for tke conveyance of property, tke grantee must prove tke payment of tke consideration, or tke existence and bona fldes of tke dekts, if tke conveyance was made to pay debts due to the grantee. But to vitiate a conveyance on the ground that it was made with intent to defraud the grantor's creditors, the grantee must have had notice of the grantor's intent. Garland v. Rives, 4 Rand. 282.
These principles are quite familiar and well settled and need no labored citation of authorities. See Kerr on F. & M., 196 et seq.; Bump. on F. C., 36; Johnson v. Wagner, 76 Va. 589; Knight v. Copits, 23 W. Va. 639; Martin & Gilbert v. Rexroad, 15 W. Va. 512; Herring v. Wickham, 29 Gratt. 632.
Certain circumstances are often referred to as indicia of fraud, because they are usually found in cases where fraud exists. Even a single one of them may be sufficient to stamp the transaction as fraudulent. When several are found in the same transaction, strong and clear evidence will be required of the upholder of the transaction to repel the conclusion of fraudulent intent. In the case here, as has been shown in summing up the facts established by the evidence, quite a number of the usual badges of fraud are found grouped together and left unexplained. These are s gross inadequacy of price; no security taken for the purchase money; unusual length of credit for the deferred instalments; bonds taken payable at long periods when the pretence is that the deferred instalments evidenced by them had already been satisfied in the main by antecedent debts due by the obligee to the obligor;. the conveyance made in payment of alleged indebtedness of father to son residing together as members of one family; the indebtedness and insolvency of the grantor, and well known to the grantee; the threats and pendency of suits; the secrecy and concealment of the transaction; keeping the deed unacknowledged and unrecorded for over a year; grantor remaining in possession as before the conveyance, and cautioning the kinsman justice, who took the acknowledgment, to keep the- matter private, and the relation between grantor and grantee. Surely, these facts make so strong a prima facie case of fraud as to put on the grantee, not only in behalf of common fairness, but in self-vindication, the burden of repelling the conclusion to which they irresistibly lead, that of fraudulent design by the grantor, fully known to and participated in by the grantee. Such, we say, is the irresistible influence from the facts estab - lished; and to repel such inference there was need of the most indisputable proof of the good faith of the transaction, and of the Ibona fide existence of the debts in satisfaction of which the conveyance was, for over two-thirds of the alleged consideration, claimed to have been executed. Such rebutting evidence, however, the parties seeking to uphold the deed, utterly failed to produce. The absence of itemized accounts, vouchers, &c., the inconsistencies and contradictions in the testimony of the grantor and the grantee, the want of means in the grantee to create the alleged indebtedness of the grantor to him, and the failure to examine as witnesses other persons who had ample opportunities of knowing the facts, and by whom the transaction might in all probability have been upheld if fair—all these things, however trivial taken separately, yet, taken together, they constitute a chain of circumstances powerfully increasing the impression of fraud, which the contemplation of the indicia aforesaid has already been stamped on the mind; and that impression becomes so strong as to lead necessarily to the conclusion of the presence of fraud in the transaction.
Finally, it would really seem to the careful and impartial investigator of the mass of testimony presented by the record that very seldom has there been brought into a court for consideration a case where fraudulent intent in the execution of a conveyance of property has been more clearly established wholly by circumstantial evidence. Therefore, we are of opinion that the circuit court of Shenandoah erred in decreeing that the complainants' bill be dismissed, with costs to the defendants, and that the said decree should be reversed and annulled, and such decree entered here, declaring said conveyance from Isaac Trout to James S. Trout fraudulent and void as to the appellants and other creditors of said Isaac Trout, as the said circuit court should have entered.