Court Opinion

ID: 7894347
Source: CourtListenerOpinion
Date Created: 2022-09-08 21:51:35.182708+00
Date Added: 2024-06-11T16:32:01.271278
License: Public Domain

The opinion of the court was delivered by
Smith, J;:
Defendants below were non-residents, and were never present in this state for a sufficient length of time to avail themselves of the statute of limitations. (Investment Co. v. Bergthold, 60 Kan. 813, 58 Pac. 469.)
Counsel for defendants in error contend that a suit in the nature of a creditor’s bill will not lié before a judgment has been rendered against the debtor, based on personal service and an execution returned unsatisfied. It is true that a general creditor, before his demand has been reduced to judgment, cannot maintain an equitable suit to set aside a fraudulent conveyance made'by his debtor. (Tennent v. Battey, 18 Kan. 324.)
In this case the creditor attached land of his debtor which, before the action was begun, had been transferred by- such debtor to another. It was attached as the property of the defendant in the action (the grantor), who was a non-resident and absent from *64the state. Service was had by publication, judgment rendered for 'the amount of the plaintiff’s demand, and the land ordered sold. The plaintiff in the attachment action went no further in that proceeding, but immediately brought this suit in equity to subject the attached land to the payment of his judgment. He might have sold the attached property under the order of the court after judgment, but in such case, the legal title being in a person other than the defendant, another action of some kind by the purchaser would have been necessary to determine the validity of the conveyance from the judgment debtor to the person claiming to own the land. The judgment obtained on service by publication was valid in all respects so far as the property seized was concerned. It was conclusive on all parties and privies to it, and could not be collaterally attacked. (National Bank v. Peters, 51 Kan. 62, 32 Pac. 637 ; Garrett v. Struble, 57 id. 508, 46 Pac. 943.)
If the remedy invoked in this case was denied to the plaintiff below, he could get no relief against the alleged fraudulent conveyance made by his debtor so long as the latter and his grantees avoided personal service of process. The suit had for its purpose the removal of obstacles in the way of the collection of the judgment interposed by the judgment debtor. An equitable interest in land is subject to attachment in this state. (Shanks v. Simon, 57 Kan. 385, 46 Pac. 774; Travis v. Supply Co., 42 id. 625, 22 Pac. 991.) It was to obtain the fruits of the seizure of this - equitable interest that the present suit was instituted. We have no doubt of the right of the plaintiff in error to maintain the action. (Gibbons v. Pemberton, 101 Mich. 397, 45 Am. St. Rep. 417; M. & T. Bank of Jersey City v. Dakin et al., 51 N. Y. 519.)
*65It was satisfactorily shown, and the court found, ' that at the time the land was conveyed by Commodore P. Lomax to his father-in-law the former was pressed by his creditors and was insolvent. The consideration expressed in the deed to Latimer was $8600, and the consideration written in the deeds from Latimer to Sarah E. Lomax, liis daughter, and to John N. and Hugh L. Lomax, his grandsons, aggregated $11,000. There was no proof that Latimer did not pay to his grantor the full value of the property. Counsel attacking the conveyance confess the fact that the only evidence relative to the consideration paid by any of the parties is found in these deeds. There was no showing that Latimer was not solvent, or that he had not paid to Lomax .the full consideration expressed. We are asked to presume a failure of consideration and fraudulent purpose on the part of Latimer by reason of his relationship to the other parties, and his transfer of the property to his grandsons, who were insolvent. This we cannot do. Fraud is not presumed. (Baughman, Sheriff, v. Penn, 33 Kan. 504, 6 Pac. 890.)
There was one link in the chain of conveyances which was not shown to be unsound. There was no proof that Latimer was not a bona fide purchaser for value. If Latimer was an innocent purchaser the fact that his grantees were insolvent, and were relatives of his and of Lomax, would not subject the land to the payment of the latter’s debts. (Bump, Fr. Conv. §499; Evans et ux. v. Nealis, Adm’r, 69 Ind. 148; Stewart v. Reed, 91 Pa. St. 287.) It is the law of this state that mere knowledge on the part of a vendee that the vendor is largely in debt will not render the sale fraudulent, although the purpose of the vendor was to defraud his creditors, unless the *66vendee was a participant in the fraud. (Baughman, Sheriff, v. Penn, supra; National Bank v. Jaffray, 41 Kan. 691, 21 Pac. 242; Bliss v. Couch, 46 id. 400, 26 Pac. 706.)
Certain badges or indicia of fraud are pointed out by the counsel for plaintiff in error, and this court is asked to hold that they raise a presumption of bad faith on the part of Latimer, which his grantees were required to rebut. It cannot be said that such indicia or suspicious circumstances create a presumption against the grantee of Lomax which, in themselves, are sufficient to overcome the presumption of good faith. The facts of relationship, hurried transfer of the property, insolvency-of the vendor, and increased consideration stated in the deeds made by Latimer, required that the transactions should have been scrutinized closely by the court, but it cannot be held that such earmarks of bad faith alone are sufficient to break down the presumption of good faith and honest dealing which accompanies every such transaction. In this case the presumption of the innocence of the transaction is fortified by the judgment of the court. The question of fraud arising from circumstances like those developed on the trial is one of fact.
The judgment of the court below will be affirmed.
All the Justices concurring.