Court Opinion

ID: 3269013
Source: CourtListenerOpinion
Date Created: 2016-07-05 16:37:25.054267+00
Date Added: 2024-06-11T07:41:18.005331
License: Public Domain

It seems to me that much confusion will result from the application of the rule in the Wilks v. Vaughan case to the facts in the case at bar, and that of the Home Life  Accident Co. v. Schichtl, *Page 239 
As I understand the rule in the Wilks-Vaughan case, there is a conclusive presumption of fraud as to existing creditors if the grantor, at the time, is greatly embarrassed or so largely indebted that his conveyance necessarily has the effect to hinder and delay creditors. This seems to be the interpretation placed upon it in the present case, but the application seems to be wholly at variance with that in the Schichtl case.
In the present case, the voluntary conveyance was made more than two years prior to the rendition of the judgment sought to be enforced against the debtor. The conveyance was held to be fraudulent because it necessarily had the effect to hinder and defraud existing creditors. In the Schichtl case, the conveyance was made only seven days before the rendition of the judgment against the debtor, and his embarrassment proceeded to financial wreck just as soon as his property could be sold under the foreclosure decree. The court in that case seems to have proceeded upon the theory that, in addition to showing that the conveyance was a voluntary one and that the party seeking to impeach it was at the time a creditor of the grantor, the additional fact of insolvency at the time must be shown. In other words, that the conveyance necessarily had the effect to hinder and defraud existing creditors in the collection of their debts was not sufficient. But it is insisted that, because the creditor in the Schichtl case had a mortgage on certain lands of the grantor, who made the voluntary conveyance, this placed him in the attitude of a subsequent creditor.
As it appears from our dissent in the Schichtl case, this holding is directly opposed to the rule announced in the Mallory case, and there has been no express overruling of the latter case. There might be some reason in holding that a mortgagee whose mortgage is not due should be considered in the nature of a subsequent creditor where the debt is shown to be fully secured by the mortgage, for then the debtor might be in the same condition legally as if he were free from debt. To my mind, *Page 240 
the case it quite different where the mortgagee is seeking to foreclose his mortgage and thereby collect his mortgage debt. In such a case the mortgagee is trying by every means available to him to collect a past-due indebtedness, and should be considered an existing creditor. If I am correct in my reasoning in the matter, a contrary or different application has been made of a settled principle of equity in these two cases which calls for a dissent on my part in this case because the application is different from that made by the majority in the Schichtl case.