Court Opinion

ID: 7947118
Source: CourtListenerOpinion
Date Created: 2022-09-08 23:21:50.389749+00
Date Added: 2024-06-11T16:33:58.473221
License: Public Domain

Ostrander, J.
(concurring). Borne facts are herein stated which are not called to attention in the opinion of Mr. Justice Bird. The principal defendant had a run*603ning, open account with plaintiff, the first debit item thereof being entered December 9,190?; the last, July 31, 1908. The total debits amounted to $110.44 February 29, 1908, and were balanced by a cash credit of like amount. Beginning March 21, 1908, the debit items are continued with two credits, one of May 14,1908, $54.34, one of June 15, 1908, $55.72. The payment of May 14th left a balance unpaid of $37.19, and the payment of June 15th a balance of $98.62 But the payment of'May 14th was equal to the indebtedness existing April 29, 1908. She conveyed property to the garnishee defendant April 29, 1908; the deeds being recorded July 29, 1908. Plaintiff learned of the conveyances in January, 1909. The plaintiff was therefor a creditor of the principal defendant when the property was transferred, and has ever since been her creditor. There is testimony tending to prove that before and after the conveyances to the garnishee defendant were made, plaintiff extended credit to the principal defendant, relying upon her apparent ownership of property as heir of her deceased mother and upon the representation of the principal defendant that the estate was solvent. It was property of the said estate which was conveyed to the garnishee defendant.
In Cole v. Brown, 114 Mich. 396 (72 N. W. 247, 68 Am. St. Rep. 491), this court adopted the rule that, where the creditor’s judgment is for items of indebtedness, some of which were incurred before and some after the conveyance of the debtor’s property, the conveyance of property is presumptively fraudulent as to the debt then existing and valid as to indebtedness subsequently contracted, following the rule of the Pennsylvania courts. The court was there dealing with a case where there was no actual intent to defraud any creditor, existing or subsequent. See, also, Barkworth v. Palmer, 118 Mich. 50 (76 N. W. 151). Appling the rule in this case, it is evident that the judgment of the plaintiff is wholly for an indebtedness ^contracted after the conveyances in question were made by the debtor. The question is whether the rule stated *604ought to be applied. It should be applied, unless the fact that the creditor had no knowledge or notice that the debtor had transferred her property forbids its application. The whole doctrine of the fraudulent character of property transfers, as against creditors, where there is no actual intent to defraud, rests upon the idea that property is the basis of credit, and that, presumptively, credit is extended in reliance upon what the debtor possesses.
A secret transfer of property by a debtor, who thereafter increases his debts, or contracts others, upon the appearance that he still owns that which he has conveyed away, may be convincing evidence of an intention on his part to defaud. If such an intention, as to a particular creditor, is found to exist, no more is required. It is plain, however, that in such a case the plaintiff’s recovery will be based upon actual, and not presumptive, fraud. I agree, therefore, with the conclusion stated by Mr. Justice Bird. Plaintiff’s recovery, being for a debt contracted after the debtor transferred her property, cannot be sustained because the court in the charge applied the rule of presumptive fraud, and did not submit to the jury the question whether the purpose of the conveyances, in the light of all the facts, was fraudulent as to plaintiff, a subsequent creditor.
McAlvay and Stone, JJ., concurred with Ostrander, J.