Court Opinion

ID: 6274453
Source: CourtListenerOpinion
Date Created: 2022-02-18 15:55:14.136987+00
Date Added: 2024-06-11T09:00:00.790426
License: Public Domain

Opinion by
Smith, J.,
When a party to a written instrument seeks to vary its terms by parol testimony on the ground that, by reason of fraud, accident or mistake, it does not contain the actual agreement of the parties, or that its execution was induced by a contemporaneous oral agreement of such a character that its enforcement would operate as a fraud on him, the evidence to support his allegations must be clear, precise and indubitable. But when one not a party to the instrument seeks to defeat its effect on some right claimed by him, on the ground that, through collusion between the parties, it was executed with the design and used for the purpose of defrauding him, an entirely different question is presented. Here the object of the complaining party is not to vary the terms of the instrument, but to defeat its alleged fraudulent purpose; and with respect to this end it is not material what the real contract may have been, or what may have induced the execution of the written one. There is no attempt to impeach the validity of the instrument, or its effect, as between the parties to it; the only matter in dispute is the purpose of its execution, in relation to the rights of others who, through a fraudulent design, may be affected by it. In the former case, there is an appeal to the equitable powers of the court, and the evidence must be such as to overcome the presumption in favor of the instrument, arising from the signature of the party, and to move a chancellor to decree its reformation. In the latter case, the demand is based on a right existing at law, and the evidence to maintain this is of a different measure from that required to sustain the equitable claim in the former case. There is no presumption, arising from the signature of the complaining party, to be overcome. While fraud is not to be presumed, but must be proved, the fraud here alleged is to be proved like any other matter of fact in a proceeding at law, by the preponderance of testimony, and this must, in general, be determined by a jury: *608Miles v. Lewis, 115 Pa. 580; Ferris v. Irons, 83 Pa. 179; Painter v. Drum, 40 Pa. 467.
While a debtor may not dispose of his property in fraud of his creditors, he may legally, aside from the federal bankrupt law, prefer one creditor to another, by either payment in cash or a transfer of property. The satisfaction of the debt due to one is not a fraud on others; nor is it unlawful for one creditor to accept satisfaction or to seize or exhaust the debtor’s means for that purpose although other claims are thus defeated. When, the paramount purpose is the payment of the debt, matters incidental to its recovery will not arrest or defeat the creditor’s remedy. Yet there may be circumstances connected with such payment that serve as indicia of a design fraudulent as against other creditors. “ What evidence will be sufficient for that purpose will of course depend on the circumstances of each case. It may be of excess of amount in a judgment, of inadequate price in a conveyance, a reservation of advantage to the grantor as in Bentz v. Rockey, 69 Pa. 71, or of giving the debtor a weapon to force other creditors to a compromise as in Bunn v. Ahl, 29 Pa. 387, or the more common case of hindering and delaying them altogether. It may be said, as a general rule, that to impeach the payment or securing of an actual debt there should be evidence tending to show either, first, some other advantage or benefit to the debtor beyond the discharge of his obligation; or, secondly, some other benefit to the creditor beyond mere payment of his debt; or, lastly, some injury to the other creditors beyond mere postponement to the debt preferred:” Werner v. Zierfuss, 162 Pa. 360; Snayberger v. Fahl, 195 Pa. 336. In Werner v. Zierfuss the trial judge instructed the jury that “ even though there may have been an honest indebtedness for' cash advanced by Zierfuss, yet if at the time he tookit for the purpose of assisting Gross to hinder or defraud his other creditors, it was a fraudulent judgment and would be void ; ” and after calling attention to the distinction between the necessary effect of a preference and an intent to hinder, he continued: “ The effect would be of course, to hinder any other creditors and prevent their getting their money, but I would have the right to do that, and you would have the right to take the judgment; but where a judgment is confessed not for the purpose of protecting me, but *609where the intent is to defeat the other creditors, and not for the protection of my debt, then the judgment would be void.”
The Supreme Court, after quoting tin's, said, affirming the judgment: “This is the language of all our cases. None of them afford any basis for the contention that payment of an actual debt closes inquiry into the fraudulent intent of such payment, but only that such intent cannot be found without additional evidence,” Montgomery Web Co. v. Dienelt, 133 Pa. 585, is another illustration of a payment fraudulent as against an unpaid creditor.
In the case before us, the plaintiff alleges that the judgment confessed by her husband to the defendant, on which his interest in the land was first sold, was given with intent to hinder and delay the collection of his debt to her. We have already indicated the principles on which the controversy on this point is to be decided. Whether there was an indebtedness by Meyers to his wife, the collection of which was hindered or delayed by the judgment given to his sister and the sale of his land thereunder; with what intent this judgment was given ; whether its consideration was real or colorable, — whether, as alleged, it was given in discharge of an indebtedness previously contracted, for which he was legally bound; and whether circumstances existed, of the character defined in Werner v. Zierfuss, supra, indicating a fraudulent purpose in giving the judgment, were, upon the evidence in the case, questions to be determined by .the jury.
All the specifications of error are sustained and the judgment is reversed with a venire de novo.