Court Opinion

ID: 7993357
Source: CourtListenerOpinion
Date Created: 2022-09-09 01:33:51.729986+00
Date Added: 2024-06-11T16:35:27.305684
License: Public Domain

Ethridge, J.,
delivered the opinion of the court.
R. M. McCrory was engaged in business at Paehuta, Miss., in the year 1908, and prior thereto, and subsequent thereto, until the year 1911, when he was thrown into bankruptcy by his creditors. In October, 1908, R. M. McCrory, being then the owner of considerable real estate, executed a voluntary deed of conveyance to his wife Mrs. Bessie McCrory, conveying lands in Jasper and Clarke counties, Miss., and in Choctaw county, Ala. The deeds to Mrs. McCrory were not filed for the record until the fall of the year 1910, when they were filed for record and recorded. Thereupon Winner, Klein & Co., a firm of wholesale merchants, filed a creditors’ bill in the chancery court of Clarke county to have said conveyances set aside and canceled as being a fraud against the creditors of R. M. McCrory. They invited other creditors to'join in the creditors’ bill. Shortly after this bill was filed- McCrory was adjudged a bankrupt, and B. H. Donald, trustee in bankruptcy, intervened in this suit on behalf of the creditors, the petition for ntervention setting out McCrory’s bankruptcy, the appointment of Donald as trustee, and the schedules of indebtedness and schedules of property of said bank*267rupt being set forth. There seems to have been no answer filed to the petition nor any objection made thereto at the time, and the court entered an order permitting Donald to intervene. It appears in evidence that at the time of making the deeds from R. M. Mc-Crory to his wife, that R.- M. McCrory was not in debt to any considerable extent, if at all, but. subsequent to making this deed to his- wife and prior to the recording of the deeds in Mississippi, McCrory made large accounts for merchandise on credit, and at the time of the filing of the creditors’ bill was largely indebted to "Winner, Klein & Co., and also made numerous other creditors. The deed made to Mrs. McCrory to some of the property situated in the state of Alabama seems to have been promptly recorded there. Subsequent, however, to the recording of the Alabama deed, and prior to the filing of the Mississippi deed for record, Mrs. McCrory bought and paid for other real estate in Alabama, and a creditors’ bill was filed in the court in the state of Alabama seeking to set aside the Alabama conveyances, which suit resulted in the Alabama supreme court holding that the deed made in October, 1908, to the Alabama property, which appears to have been made at the same time as the deed to the Mississippi property, the Alabama deed having been promptly recorded, and McCrory not being then indebted to the complainants, that the sale of the lands to Mrs. McCrory by R; M. McCrory as to the Alabama lands conveyed in 1908 are not fraudulent, but that the property subsequently purchased was fraudulent as to the creditors because .proof was adjudged sufficient to show that it was paid for with the means of R. M. McCrory, fraudulently concealed from his creditors. See McCrory v. Donald, 192 Ala. 312, 68 So. 306. It appeared in evidence from the records introduced from the bankrupt court that Mc-Crory was indebted to creditors in about the sum of fourteen thousand dollars, and that the only property he then had, would amount to- little more than two *268thousand dollars, being -wholly insufficient to satisfy the demands of his creditors. It further appears from the evidence of some of the creditors that they did not know of the conveyance, and that R. M. McCrory had represented that he was the owner of said property, and that the goods were sold to-him on the faith of his ownership of the property, and that he was apparently in possession of the property, receiving the rents and dealing with it as though it were his property. The chancellor entered a decree at the conclusion of the testimony cancelling the conveya'nces to the appellant, and vesting the title to the land so conveyed in the appellee, Donald, as trustee in bankruptcy.
The appellant presents the following contentions: First, that the supreme court of Alabama has decided-the precise questions at issue between the same parties, and that the judgment of that court is conclusive in this controversy; second, that there is no evidence on which a finding of any intent to defraud can be based; third, that it was error to permit B. H. Donald, trustee, to intervene to prosecuted the suit; fourth, it was error to' disturb the conveyances when it was not shown that the grantor owed a subsisting debt that the creditor •could assert against him; fifth, that it was error to decree a fee-simple title to the property which was in the appellee, without ascertaining the amount, if anything, due, and ordering the property sold to pay it.
As to the first proposition, we do not understand that the decree of the Alabama court arising over a contest of the sale of land situated in Alabama is binding upon either party in a contest in Mississippi oyer lands conveyed and situated in Mississippi, because there is sc difference of subject-matter, and of law. The laws of éach state must necessarily determine the validity or legality of conveyances of land within its own borders, and each state enacts statutes upon this subject, and has its own policy and line of decisions as to whether such conveyances are valid contracts or not. In addition to *269this the conveyance in Alabama was promptly recorded, while the Mississippi conveyance was not recorded. It rather appears from the decisions of the Alabama court referred to that the fact of prompt recordation was influential, if not determinative, of the validity of the conveyance of the Alabama land in 1908, and that the Alabama lands purchased subsequent to the incurring of debts by E. M. McCrory was set aside in Alabama as a fraud on creditors.
As to the second proposition, we think the record contains sufficient evidence to warrant the chancellor in finding as a fact that McCrory intended to defraud his creditors because his conveyances were kept from the record. McCrory apparently remained in possession of the property, exercised acts of ownership over it, and, according to some of the evidence, made representations that he was the owner, and proceeded to incur large indebtedness, knowing that he had made such conveyance and concealing it from his creditors. The fact that the appellant permitted her husband to remain in possession and control of the property so as to mislead his creditors is, in itself, evidence to be considered by the court, in connection with the fact that the deed was not recorded, and she made no sufficient effort to see that it was recorded.
We do not think it was error for the court to permit the trustee in bankruptcy to intervene on behalf of all of the creditors of E. M. McCrory. Indeed, we think it was proper for the trustee to intervene to the end that the creditors of the bankrupt would each get a fair proportion of the assets properly belonging to McCrory and subject to his debts.
In answer to the fourth proposition we think that the conveyance in this case must be considered as having been executed and becoming effective only on the date of its recordation. The appellant is the wife of the bankrupt, E. M. McCrory, and was at the time of the conveyance. Section 2522, Code of 1906 (section 2056, *270Hemingway’s Code), expressly requires a recording of the instrument before it shall take effect so far as any third party is concerned. This section in full reads as follows:
“A transfer or conveyance of goods and chattels, or lands, or any lease of lands, between husband and wife, shall not be valid as against any third person, unless the transfer or conveyance be in writing and acknowledged and filed for record as a mortgage or deed of trust is required to be; and possession of the property shall not be equivalent to filing the writing for record, but, to affect third persons, the writing must be filed for record.”
So far as the creditors of E-. M. McCrory are concerned, this deed had no effect until it was filed for record. The statute has been construed in numerous decisions of this court, and all of them hold that such conveyances are not effectual to affect the interest of any third person until acknowledged and actually filed for record. Being then a conveyance, for the purposes of this suit, as of the date of its recordation, the creditors were not subsequent creditors, but were existing creditors, and the deed 'being a voluntary conveyance without consideration could be set aside by the creditors.
In reference to the fifth proposition, in which it is urged it is error to decree the fee-simple title to the property in question to the trustee in bankruptcy without ascertaining the amount due the respective creditors, we find the federal act of bankruptcy (U. S. Comp. St., sections 9585-9656) vests title to the property of the bankrupt in the trustee. The bankrupt court has jurisdiction to determine the amount due each creditor by the bankrupt, and what amount and what properties of his assets shall go to each particular creditor, and in case the property brought more than enough to pay the creditors, the bankrupt court would make the proper disposition of the funds, or, if the bankrupt or his wife should satisfy the creditors by paying into the bankruptcy court sufficient funds to pay *271all debts, tbe court could make proper order conveying tbe property back to tbe appellant or to tbe bankrupt, according to right and justice of tbe case. It was not tbe duty of tbe chancery court to ascertain and enter into a controversy or bearing to ascertain tbe rights between tbe respective creditors and tbe bankrupt, but tbe chancery court made proper order. It follows from 4vhat is said that tbe judgment of the court below is affirmed.

Affirmed.