Court Opinion

ID: 6995496
Source: CourtListenerOpinion
Date Created: 2022-07-24 03:32:29.925703+00
Date Added: 2024-06-11T16:09:42.229476
License: Public Domain

Mr. Presiding Justice Wall delivered the opinion oe the Court. This was a bill in chancery filed by the appellants against the appellees for the purpose of setting aside a conveyance of 160 acres of land by Thos. W. Hallock, who was then the debtor of appellants, to his sons, Thos. E. and William H. Hallock. This conveyance was for the consideration of an annual payment of $600 to the grantor during the joint lives of himself and wife, who also executed the deed, and to the survivor for life. It is conceded the conveyance is fraudulent in law unless the debtor retained sufficient property for the payment of all his existing indebtedness, but it is contended that the decree dismissing the bill may be sustained on the ground that the debtor did retain enough for that purpose. Hence, the arguments are mainly devoted to a discussion of the facts bearing upon this point, though it is also urged on behalf of appellants that proof shows there was a fraudulent intention to avoid the payment of their debts, so that there was not only constructive but actual fraud. The debt due appellants was an account on money borrowed by Thos. W. Hallock from their mother, Mary Ketcham, who died some four years before the filing of the bill, holding the notes of said Thos. W., amounting in the aggregate to over $5,000, besides interest. Mrs. Ketcham had lived for many years in the house of said Thos. W., who Avas her brother, and had paid the agreed sum of $96 per year to Mrs. Hallock for board and such care as she required. This conveyance Avas made about six months after her death. About two years later the appellants (avIio held the notes as the sole heirs of their mother), and Thos. W., made a settlement in which the amount due on these notes Avas computed, and in which there Avas an adjustment of extra compensation to Mrs. Hallock for the care of Mrs. Ketcham during her last years Avhen she Avas sick and needed extra attention, and the result was an allowance of $831 for all claims against the estate, and the surrender of a note of $50 given by Mrs. Hallock to Mrs. Ketcham, and the execution of a note for §5,000 by Thos. W. Hallock, payable to the appellants, the old notes being surrendered. It is urged that while this debt, as thus adjusted, was a valid legal demand, it is lacking in equity, for the reason that it consisted mainly of interest upon money borrowed many years before, and that in fairness and justice a greater allowance should have been made for the care and support of Mrs. Ketcham. There is no injustice or want of equity to be argued from the fact that the claim is largely' made up of interest. Having enjoyed the use of the money the debtor can not complain, even in a court of equity, on this account, when he has voluntarily adjusted the matter by giving his note for the balance found due. Mor is there occasion for complaint as to the extra allowance for the care and support of Mrs. Ketcham. This, also, was adjusted without fraud or unfairness of any sort, so far as appears. • It follows that the note of $5,000 must be treated by the court as it was treated by the parties, as a just and valid liabilitxr existing at the time the conveyance in question was executed. When suit was subsequently brought upon it no defense was interposed, and judgment was taken, upon which execution issued and was duly returned nulla bona, the defendant having scheduled, his personal property. An alias execution was issued and levied on these lands and then this bill was filed to set aside the said conveyance. The liabilities of Thos. W. Hallock at the time he made the deed amounted to about §8,500, including about §2,500 which he owed his wife. His assets, as estimated by himself, were then about $10,500. Of this sum §7,175 consisted of lands in which his wife had an inchoate right of dower. The balance consisted of cattle, horses, hogs, hay, wheat and farming implements. A part of the lands, which figure at §5,300 in the statement of assets, was afterward sold to one Schrisler for the recited consideration of §5,000, for which notes were given, and these notes, to the extent of §4,700, or §4,800, were afterward used in buying and improving property which was placed in the name of Mrs. Hallock and occupied by him and her as a residence, and in buying back 100 acres of the lands so sold, which lands so re-acquired were also conveyed to Mrs. Hallock. The balance of the lands (retained when the deed in question was made), valued at $1,875, in the statement of assets was conveyed to Elizabeth' Hallock, wife of James Hallock, another son of Thos. W., for $1,000, which was paid by the release of a debt of $352, due to said James from Thomas W„, and by paying $648 to Eeed & Mountz for the account of said Thomas W. The $875 balance of the estimated value of this land was given to James. The personal property was disposed of at various times and the proceeds so used that there was nothing subject to the execution first issued on the judgment in question. The face value of the assets exceeded the liabilities about $2,000, but this excess was subject to reduction on account of the inchoate right of dower of Mrs. Hallock in the lands which constituted nearly three-fourths of the assets. The actual value of a dower interest is usually difficult of ascertainment, and such an incumbrance would be very much in the way of a creditor seeking to collect a debt by the sale of lands, and would cause them to bring much less than their real value. There is also to be taken into account the delay to be sustained by the purchaser in waiting for the time of redemption to expire. These items, to say nothing of the cost and expenses of the proceedings, would, perhaps, amount to more than the excess of $2,000. Then there is to be considered the debtor’s exemption as to personal property, amounting to $400, and the necessary shrinkage in caring for and converting the rest into money. These matters all considered, it is apparent that whatever the debtor might have been able to accomplish by prompt and careful handing of his assets, in the way of paying his debts, it is quite improbable that his creditors could have realized their claim in full by legal proceedings. In order to establish the proposition that the grantor of a conveyance, constructively fraudulent, has retained enough to meet his liabilities, it is necessary to show that what was retained was abundantly ample to satisfy all creditors, and if there is reasonable doubt in that respect the conveyance must fall, for its effect is to hinder and delay creditors. The condition of the grantor must appear to be such that a prudent man, with an honest purpose and due regard for the rights of his creditors, could have made the conveyance, and where the situation is such that, at best, the property remaining is but a scant protection for creditors, the conveyance must he deemed invalid. Bump on Fraudulent Conveyances? Ch. 11. Tested thus, we are constrained to say, this conveyance can not be upheld. As to the charge of actual fraud there seems to be almost, if not quite, as much foundation. The grantor, though honestly conceding and providing for what he owed his wife, should not have placed, by the means already stated, so much property in her name, nor was he at liberty to make a present of §875 to his son James. These transactions, taken in connection with the disappearance of the personal property, induce the belief that the deed under consideration was made for the express purpose of hindering and delaying the collection of the Ketcham debt, as well as to secure a future support for the grantors. While all other debts were provided for, no effort was made to pay this, and on the contrary, a course was taken that, if upheld, would effectually prevent its collection. We are of opinion that the decree dismissing the bill was erroneous. It will therefore be reversed and the cause remanded.