Court Opinion

ID: 6737153
Source: CourtListenerOpinion
Date Created: 2022-07-20 23:19:22.556667+00
Date Added: 2024-06-11T16:01:49.693876
License: Public Domain

Goss, J.
(on petition for rehearing filed May 21, 1914). Counsel for Mary Rutherford has filed what, speaking mildly, may be called a *107vigorous petition for rehearing. Counsel protests against the conclusion that the transfers are to be deemed fraudulent.
He insists that fraud is dependent upon the intent of the grantor at the time of the grant, and that a fraudulent intent in the grantor must be found to have existed in fact, before the transfer, can be held to have been fraudulent, and that, as the trial judge has found that the conveyances were not in fact made with intent of the grantor to defraud, :such transfers cannot be held fraudulent under §§ 6637 and 6640, Pev. Codes 1905. He calls attention also to the fact that in 1895 the California statute (corresponding to our § 6640) was amended by adding thereto: “provided, however, that any transfer or encumbrance upon property, made or given voluntarily or without a valuable consideration, by a party, while insolvent or in contemplation of insolvency, shall be fraudulent and void as to existing creditors.” Prior to such amendment the California statutes under discussion were identical with our own, and the courts of that state held, as our court has held in Stevens v. Meyers, 14 N. D. 398, 104 N. W. 529, that under the mandate of the statute (our present § 6640) “the question of intent is always one of fact; it must be alleged, proved, and found in order to avoid the transfer.” Such is the interpretation to be given to § 6640. Counsel asserts that this court is astray in following Shiels v. Nathan, 12 Cal. App. 604, 108 Pac. 34, because that opinion was based upon the California statute as so amended.
That a conveyance may be held to be fraudulent the question of fact arises on the intent; and the determination thereof involves a question of fact, and not of law. Such is our statute and such its construction under Stevens v. Meyers, supra. And under § 8173 the intent to defraud must be present under the express terms of that portion of the statute so prescribing, as well as under that portion thereof having reference to an estate so conveyed, “that by law the deeds or conveyances are void as against creditors.” The issue thus presented, on trial de novo is one of fact, and to be determined as such under the evidence, with the usual presumptions to be drawn therefrom. And each case of alleged fraudulent transfer must stand largely on its own facts. What is said in Stevens v. Meyers, supra, concerning an attachment levied some four months after a transfer, and wherein it was necessary to prove intent to cheat and defraud creditors of the transferrer, must *108have reference to the facts of that case, and read in the light of its-facts. Those before us disclose a grantor and owner of much property, with approaching dissolution close at hand, desirous of transferring-all his property to his wife for the only possible purpose of vesting his estate in her after his death, and avoiding administration or probate proceedings thereon, and with a debt of considerable size outstanding and unpaid, for which he made no provision for payment. This transfer was made after the owner had been informed “that the instrument would be perfectly good if the debts were paid.” Whether this statement be construed as a caution given him that the transfers would not be valid if there were outstanding debts, and the conveyance to be made did not provide for their payment; or -whether the conveyance was made to-the wife for her to thereafter pay the debts to remove any chance of invalidity, is immaterial, except that, in the latter case, the present refusal of the wife to pay would evidence an actual intent on her part to now defraud decedent’s creditors, and discredit her present declared claim of having no fraudulent intent toward her husband’s creditors-at the time she accepted the conveyance, and the persistence of her defense in this equitable action, built around averred absence of intent on the decedent’s part and her own as well, — -a defense that is more unequitable than meritorious, inasmuch as this court has left the door-open for her to establish, if she has it, her alleged defense of payment in full — but emphasize the necessity of care in determining the fact of whether the conveyance should be held fraudulent or not, that an open door to defraud may not be established by this precedent. “Evidence of the fraudulent use subsequently made of a deed or mortgage may be shown to prove the fraudulent intent with which the instrument was made.” Moore, Fraudulent Conveyances, § 926.
That the fraudulent intent is to be established ^as a fact, undqr § 6640, does not bar application of the usual presumptions of fact from the evidence. Bigelow, Fraudulent Conveyances, 1911 ed. 78, 79, and note. The evidence concerning intent should be weighed no differently than usual in cases where the. intent must be found. Even in criminal cases, where the presence of an- intent constitutes the gist of the-crime, and the absence thereof establishes innocence, intent nevertheless is determined by the application- of presumptions 'of fact to facts in evidence, and it is therefore proper to. instruct the jury that the law *109■will- permit them to assume that, iu the absence of evidence to the contrary, one is presumed to intend the natural and probable consequences ■of his voluntary acts; and that, in determining intent, such presumption may be considered with the evidence of intent. Such presumption has equal application here in determining the fact of the presence of the fraudulent intent at the time of the transfer, the rule being as applicable in cases triable by a court as in those determinable by a jury.
There is evidence determinative of intent, besides the fact of tho voluntary conveyance made without consideration, which fact in itself, by the terms of § 6640, is insufficient to establish a prima facie ■case of fraudulent transfer.' The grantor intentionally transferred title to, and control of, every vestige of his property, and this without having made any provision for the payment of his debts, unless it be construed under the evidence that he intended his wife to pay his debts •out of the property transferred to her. It cannot be said that the grantor supposed he had no debts, as, under the record, he is presumed to have known that he was owing this claim, and, with such knowledge, voluntarily alienated all his property. He could not in his lifetime, after this transfer, be heard to say that he did not know the effect of such alienation would be to “obstruct the enforcement by legal process of his creditor’s right to take the property affected by,the transfer” (Rev. Codes 1905, § 6629), as, when proof is made of the intentional act, the law, in the absence of evidence to the contrary, presumes that the person acting intended the natural and probable consequences of his act, voluntarily creating his • insolvency. Nor does the fact that the grant was a death-bed transfer change the situation from the ordinary voluntary transfer without valuable consideration by a debtor of all his property to his wife. This transaction is to be regarded in no different light because the debtor, shortly thereafter, died, than it would be regarded had he recovered and were still living. The subsequent fact of death cannot change the nature of the transfer from fraudulent to valid. If this transfer was fraudulent during the period after delivery of the deeds to the death of the grantor, it still remains a fraudulent transfer. If it be contended that a grantor in extremis is not in all probability-in such a frame of mind as to intentionally defraud, and •that the transfer is therefore valid, it follows that no transfer made under such circumstances could ever be attacked successfully, should he *110recover. Such a presumption must at best be a mere speculation, dependent largely upon the individual characteristics of the grantor, and whether his anxiety to reimburse his creditors would outweigh, or, on the other hand, be subordinated to, his desire to leave his property beyond their reach, and for the benefit of the family surrounding thedeatkbed, desire for adequate property provision for whom might naturally induce a disregard by the grantor, even under such circumstances, of the rights of his creditors to his property. On the whole, it. would seem that the transfer should be regarded as though intentionally made under ordinary circumstances, with knowledge of debts unpaid, and with the usual presumptions of fact and law applying. If' deceased were still alive, and both he and his wife were contending that this property should not be applied to his debts, because at the time of the transfer he honestly believed that his death would soon occur, and the transfer was so made as a provision for his family, notwithstanding his admitted insolvency and his knowledge of the effect of the transfer upon the rights of his creditors at the time that he executed a conveyance, all precedent would condemn the transfer as fraudulent as to existing creditors. And to sustain the contention of the widow under the facts before us is in practical effect the equivalent of repealing to that extent Rev. Codes 1905, § 8173, under which the administrator-seeks this property. If this transfer is not fraudulent as to creditors, one thus made a considerable time before death is not fraudulent. If this decedent can clothe his wife in this manner with ownership of his estate freed from his debts, there is force in the contention of the administrator, that all one needs to do to provide for his family after-death is to so manage his business affairs that he may die seized of much real estate, while keeping his debts unsecured, no matter what their amount, and then, shortly before death, deed it over to his family, thereby avoiding not only administration of his estate, but the payment of his honest debts, although their payment might consume the entire property. The size of the claim in relation to the property transferred must be largely immaterial, as the right of the creditor to payment is the same whether the estate comprises one or ten sections. Sec. 8173 takes care of any inequality of the debt to the estate, by providing that only so much of the estate as is necessary to pay the debt may be *111taken, and to all the world beside the creditor, or the administrator acting for him, the conveyance is valid.
But counsel contends that the California precedent we have followed has been influenced by the 1895 amendment thereto, adding the provision, that any transfer or encumbrance of property, made or given “voluntarily, or without valuable consideration by a party while insolvent or in contemplation of insolvency, shall be fraudulent and void as to existing creditors.” Counsel contends that this statute influenced the decision of Shiels v. Nathan, 12 Cal. App. 604, 108 Pac. 34, and that, in following that precedent, we are indirectly following a case based upon construction of a statute, and when we have no corresponding statutory provision. Counsel’s contention is without foundation, and contrary to the California decisions. If the opinion in Shiels v. Nathan be taken at its face, it is based entirely and alone upon that court’s construction of § 1589, Code Civil Procedure of California, identical with § 8173, Rev. Codes 1905. In Shiels v. Nathan, the court is careful not to base its decision upon the 1895 amendment, as appears from the following excerpt from the opinion, foimd at pag’e 621 of 12 Cal. App., at page 41 of 108 Pac.: “Whether § 1589, Code Civil Procedure, is to be given the same effect as § 3442 of the Civil Code [containing the 1895 amendment], need not be decided.” The court refrains from placing its decision upon the statute as amended, but, instead, announces that it is following Emmons v. Barton, 109 Cal. 662, 42 Pac. 303. By reference to that ease we find a decision filed November 7th, 1895, presumably upon an appeal taken before the statute of 1895 was enacted, and upon a transfer made in 1890, five years before the amendment. Hence, Emmons v. Barton, supra, must have been decided without reference to the 1895 amendment. It holds: “Pronounced insolvency at the time of the grant would no doubt be a strong circumstance tending to show fraudulent intent, and in the absence of other controlling facts it would he sufficient to justify a finding of such intentand is again quoted in Shiels v. Nathan, as the presumption of fact applying when, as there stated, “by the conveyance he rendered himself insolvent. Strictly he was not insolvent when he made the conveyance, but, coincidentally with and by that act he became insolvent. And this we think brings the case within the *112rule in Emmons v. Barton, supra, and justifies the finding that the conveyance was with fraudulent intent to defraud his creditors.” No cases cited by counsel conflict with or modify Emmons v. Barton, or Shiels v. Nathan, supra. Nor is this precedent based upon any except statutes identical with our own. Nor does our holding conflict with or overrule in any particular Stevens v. Meyers, 14 N. D. 398, 104 N. W. 529. Colorado has an exact duplicate of our § 6640, Rev. Codes 1905 in § 2033, Mills’s Anno. Stat. of 1891, or § 3073, Mills’s Anno. Stat. of 1912, construed in Wells v. Schuster-Hax Nat. Bank, 23 Colo. 534, 48 Pac. 809, reviewing decisions of that state. After quoting that statute the court says: “It may be and doubtless is true that no corrupt motive prompted Hosea in making the settlement [gift of real estate as a settlement for a daughter by her father] ; nor was there any participation in the wrongful intent, if any, upon the part of the grantee. But where, as here, the conveyance is in the nature of a gift, it is not necessary to show participation in the fraud by the grantee.” Knapp v. Day, 4 Colo. App. 21, 34 Pac. 1008.
Minnesota has our statute § 6640. See Revised Laws of Minnesota of 1905, § 3500; Gen. Stat. Minn, of 1913, § 7015, construed by the Federal circuit court of appeals of that district, in Hessian v. Patten, 83 C. C. A. 545, 154 Fed. 829, in which it is declared: “A voluntary conveyance by an insolvent grantor is fraudulent in itself because such a deed cannot be made without hindering and defrauding his creditors;” having reference to a voluntary conveyance without a valuable consideration, and citing, among others, the case of McCord v. Knowlton, 79 Minn. 299, 82 N. W. 589.
This is clearly a gift by the husband to the wife, made in the form of deed, instead of a will, to avoid necessity of probate or administration. For all purposes she has no equities or interest in the property except it be subject to creditors. No good reason in fact or law exists why it should be treated in equity, as to existing creditors, other than as a will or devise, if the fact of the death of donor be considered at all.
Petition is denied.