Court Opinion

ID: 5142745
Source: CourtListenerOpinion
Date Created: 2022-01-01 17:20:23.37003+00
Date Added: 2024-06-11T08:24:37.840551
License: Public Domain

Clayton, J.
Several pixqiositions are assigned as error in this case, but they all grow out of and rest upon the holding of the court below that the transfer from the Fitzpatricks to McDonald, dated October 7, 1898, taken in connection with the agreement executed the next day, operated as a conveyance of the equity of redemption, and vested in McDonald & Co. absolute title- to the property in controversy. Fitzpatrick had been for a long time indebted to McDonald & Co., and the indebtedness was secured by a mortgage on the property in controversy, the validity of which is not questioned in- this suit. Foreclosure proceedings were instituted, and during the pendancy of that suit the mortgagor conveyed his equity of redemption to the mortgagee; the consideration undoubtedly being the indebtedness theretofore existing between the parties, secured by the morgtage referred to. And this is a valid consideration for a deed.
Considerable stress is laid by appellants upon the contention that the dismissal of the foreclosure suit operated as a cancellation of the mortgage, and therefore that the claim of appellees that the deed was only a conveyance of the equity of redemption *231falls. But appellants lose sight of the fact that the foreclosure suit was not dismissed until after the execution and delivery of the deed; and, if the deed be valid, it made the title of the mortgagee to the mortgaged property absolute, and there was nothing left in the foreclosure suit to be adjudicated.
The onty question in the case, therefore, is, was the deed from Fitzpatrick to McDonald, of date October 7th, taken in connection with the agreement of October 8th, fraudulent as against the creditors of Fitzpatrick? There is nothing in the deed itself from which any fraudulent intent can be inferred. But the agreement of October 8th is somewhat suspicious. It is not made to appear from the record who M. M. Beavers is, nor what interest, if any, he had in the controversy; but, to put the case in the strongest light for appellants, let it be assumed that he was the agent of Fitzpatrick, and secured the option to repurchase for him. So long as'a debtor acts in good faith, he may make any disposition of his property he sees fit. Fitzpatrick was admittedly insolvent. He had been indebted-to McDonald & Co. for several years in the sum of $8000, — $2,500, more than the agreed value of the property in controversy. He also was largely indebted to other parties, and to secure McDonald & Co., his largest creditor, he executed a mortgage to them on property less in value than the amount of their claim. This mortgage was not paid at maturity, and suit was brought to foreclose it. There is no question as to the validity of the claim of McDonald & Co., and they had undoubtedly the right to the satisfaction of their mortgage. This they could do in any way they might desire, so long as the transaction be not fraudulent. “A mere parol agreement that the debtor may repurchase the property whenever he is able will not vitiate the transfer, if no substantial interest is thereby reserved.” Bump, Fraud. Conv. 194, Nor do we think that the agreement that 25 per cent, of the rents should be paid to the grantor vitiates the sale. The *232only attempt to explain this provision is in the answer of McDonald, wherein it is stated that this was merely a matter of charity. There is nothing to prevent a creditor from being charitable to an insolvent debtor, after his claim has been paid; and, if the transfer be valid and for a sufficient consideration the charity of the creditor will not render it void. “It is not * * * every benefit conferred upon a debtor that renders a transfer fraudulent, but only such as are given in prejudice of the legal rights of creditors. Strict and inexorable as the law is upon the subject of frauds, it does not require that a purchaser shall either ignore or abrogate the impulses of natural affection, or of sympathy towards the unfortunate. If the transfer is valid and in good faith, there is no principle of the common law or construction of the- statute which prevents the grantee from aiding the debtor or his family, or disposing of his own as he pleases.”. Bump. Fraud. Conv. 197. It is true that the conveyance in this case placed the property of the' insolvent beyond the reach, of his other creditors. But the claim of McDonald & .Co. was just. They did not seek to take more property than would fairly cover their claim, and the fact that other creditors would lose their claims did not deprive McDonald & Co. of the right to resort to every lawful means to secure theirs.
Finding no error in the record, the judgment of the court below is affirmed.