Court Opinion

ID: 6813902
Source: CourtListenerOpinion
Date Created: 2022-07-23 18:58:12.113496+00
Date Added: 2024-06-11T16:03:46.460983
License: Public Domain

Sims, J.,
dissenting:
I agree with what is said in the majority opinion as to these causes being construed to be a creditors’ suit; as to the further proceedings which should be had therein, with respect to parties; and with what is said in the majority opinion as to the necessity of the liability of S. A. Horton being reduced to judgment (or of some lien thereafter being fixed on her real estate), before such real estate can be decreed to be sold.
I also agree with the conclusion stated in the majority opinion that the deed from Nelson P. Horton to W. H. Horton, although fraudulent as to the creditors of the former, could not be set aside as fraudulent and void as against the creditors of the latter, because even if the property conveyed were within the jurisdiction of the court below there is an entire absence of proof in these causes of such fraudulent intent attending the execution of such deed'.
But While this is true, I do not think it follows that the payment of the notes in question, given by W. H. Horton to Nelson P. Horton, for the deferred payments of purchase money for the land conveyed by said deed, can be enforced *375against the estate of W. H. Horton to the detriment of others who are creditors of such estate. That question, I think, depends upon what was in fact the understanding and agreement between Nelson P. Horton and W. H. Horton at the time such notes were given as to the character and extent of the obligation of such notes.
These causes do not involve the setting aside of the deed aforesaid. The court below had no jurisdiction, indeed, so to do, the land conveyed being in another State. And they do not in any aspect, accurately speaking, involve the question whether said deed was or was not fraudulent and void as against the creditors of W. H. Horton; but the question does arise incidentially, whether such deed was or was not' in fact, in accordance with the true intention of the parties thereto, a. hiere camouflage, a mere semblance of a sale and purchase which did not then in truth occur. The pivotal question is whether the said notes were intended by the parties thereto to be and were executed and delivered as the unconditional personal obligations of the said W. H. Horton.
The testimony in these causes, when read in the light of the circumstances which surrounded said brothers as disclosed by the record, clearly satisfies my mind that said notes were not intended by either of said brothers, when they were executed and delivered, to create unconditional personal obligations of W. H. Horton to Nelson P. Horton. It was clearly not then intended by either of them that such notes were ever to pass out of the hands of Nelson P. Horton, except to be returned to W. H. Horton. Nelson P. Horton himself states that the agreement between him and his said brother, when the notes were given, was that he (Nelson P. Horton) * * was buying the store,” (of W. H. Horton), “was going to take charge of it;” and in answer to the question, “How were you to pay for it?” answered, “In those notes.” (Record, page 129.) I think the pre*376ponderance of the evidence establishes that what W. H. Horton said to his wife in reference to the deed of trust which she was induced to execute, namely, “Mrs. Horton, it does not involve anything of ours,” also characterizes the true nature of said notes in accordance with the mutual intention of both of said brothers when the notes were given, and that such intention continued so long as W. H. Horton was living (record, page 211). I think the testimony of Thos. L. Horton (record, page 77), Will Frazier (record, page 105), Nelson P. Horton (record, pages 128, 139), Hester Horton (record, page 169), and S. A. Horton (record, pages 206, 211), establishes by a preponderance of the evidence that, notwithstanding the execution and delivery of said deed, the real estate thereby conveyed, as between Nelson P. Horton and W. H. Horton, was still to be considered to be and was the property of Nelson P. Horton, and was intended ‘to continue to remain his until such time as Nelson P. Horton should be liberated from his troubles in Tennessee. That it was agreed between the brothers that when so liberated Nelson P. Horton would come to Big Stone Gap and then buy the stock of goods of W. H. Horton there; and that, if W. H. Plorton had not meanwhile sold said real estate for the benefit of Nelson P. Horton, the said W. H. Horton would then take said real estate in exchange for said stock of goods upon a purchase then to be made—the value of the stock of goods to be then ascertained by inventory of it (see Nelson P. Horton’s statement as to inventory, page 129, record); and that in such case the notes aforesaid were to be delivered up to W. H. Horton by Nelson P. Horton.- That purchase of the stock of goods and actual transfer of the ownership of said real estate never took place on account of the death of W. H. Horton.
That is to say, the said notes were not .absolute but conditional obligations. The condition upon which they were *377to become absolute was the subsequent purchase by Nelson P. Horton of said stock of goods. That condition was never .performed.
Therefore, as between Nelson P. Horton and W. H. Horton, the said notes never were or became valid and binding obligations of the latter to the former. And since the creditors of W. H. Horton stand in his shoes, the same is true •as' to them, and such notes are not binding obligations against W. H. Horton’s estate, unless made so bj>- their having come into the hands of a bona fide holder thereof for value, unaffected with notice of their true character.
As to the latter question :
The notes were entrusted by W. H. Horton to the keeping of his said brother. The evidence shows clearly that thei notes were so entrusted to Nelson P. Horton for the fraudulent purpose, it is true, of deceiving certain parties in the event that they should sue and obtain judgment or judgments against the latter. But those parties never sued or recovered such judgments, are not before the court in these causes, and the notes were not entrusted to Nelson P. Horton to be by him in any event sold or assigned to any one. It was practically a year after such notes were given him, and some eight months after the death of W. H. Horton, that Nelson P. Horton first conceived the purpose or design to sell the notes before maturity. W. H. Horton was no party to such purpose or design, and it was consummated by Nelson P. Horton in fraud of the rights of W. H. Horton, as fixed by the understanding between the two brothers aforesaid, and hence it would have been in fraud of W. H. Horton had he been then living, and, being after his death, was in fraud of the creditors of the latter. It was from-such fraudulent transfer of said notes that the threatened Injury to such creditors arises; not from their original ■execution and delivery to Nelson P. Horton, or from the execution and delivery of said deed. Had the latter kept *378faith with his brother and retained such notes in his hands for such purpose only as that for which they were given, the controversy in these causes over their validity as obligations against the estate of W. H. Horton could never have arisen. That that purpose was fraudulent is therefore immaterial in these causes. And since W. H. Horton was not a party to such fraudulent transfer, no question of his being in pa\ri delicto can properly arise or affect the question we have under consideration.
Now, upon the question whether the appellant, J. H. Catron, was a bona fide purchaser for value of said notes without notice of their true character:
It is not clear from the evidence whether one of the notes was or was not past due when bought by said Catron. But if we assume that none of them were past due when such purchase was made, yet they were bought after the death of W. H. Horton, when his estate was believed to be solvent, at such a large discount (being $800 on a total principal of $4,000, or one-fifth thereof), and under such other circumstances attending the negotiations for the purchase as should have aroused the suspicion of said Catron and put him upon inquiry; and, on well settled principles, Catron had constructive notice of the real character of and infirmity in the notes aforesaid, when he purchased them—as the commissioner in these causes in substance found by his report and as the decree complained of held. See Code, Sec. 2841-a, subsec. 52, cl. 4; Piedmont Bank V. Hatcher, 94 Va: 229, 231, 26 S. E. 505; Andrews v. Fidelity Co., 103 Va. 196, 204, 48 S. E. 884.
That the bill does not allege or tender the issue that said notes were not in. fact valid personal obligations of W. H. Horton is immaterial, it being a general creditors’ suit, since the practice is well established that creditors, whose debts are reported or asserted before a commissioner acting under a decree of reference for the ascertainment of debts, may *379make defenses and obligations to other claims asserted as debts before the commissioner which are not made in the bill, and that such defenses and obligations do not require formal pleadings but may be put in issue by notice given during the taking of depositions, or before the commissioner or court, in any manner which is sufficient to substantially raise the issue before the commissioner or the court; and the issue may be raised before the court for the first time by an exception or exceptions to the commissioner’s report. The latter was done by appellants, creditors of the estate of W. H. Horton, by their exceptions to the commissioner’s report in these causes.
For the foregoing reasons, I am of opinion that there was no error in the decree complained of, in so far as it held that said notes are not enforceable against the estate of W. H. Horton, and to that extent, as I think, it should be-affirmed.
For the foregoing reasons, I am constrained to dissent from the majority opinion.