Court Opinion

ID: 4912911
Source: CourtListenerOpinion
Date Created: 2021-09-22 00:00:45.678242+00
Date Added: 2024-06-11T08:13:43.899402
License: Public Domain

THOMPSON, J.:
I concur in the judgment of affirmance of the decree rendered in this cause in the Court below.
The question raised in this case is simply one of fact — ■ whether the parties to the conveyance complained of were guilty of an actual fraud ; or, whether those facts and circumstances existed, and attended the transaction, which work the same mischief, ’and which in contemplation of *317law are deemed badges of fraud, or presumptions of ill faith, and from which the law, upon principles of public policy, deduces a fraudulent intent, and declares the contract void as to creditors — in other- words, whether the transaction is tainted by fraud in fact, or fraud by construction of law.
It was remarked by Ld. Ch. Elden, in the case of Mortlock vs. Buller, (10 Ves. R., 306,) that the Court has never ventured to lay down, as a general proposition, what shall constitute fraud ; nor does it seem jiossible that any fixed and., invariable rule can be established on this point, which would not be liable to be circumvented, and utterly defeated by new schemes, which the fertility of man’s inventive genius would contrive. The question of fraud is one of motive and intent, and can rarely, if ever, be considered as a single fact, but a conclusion to be inferred from all the circumstances of the case. In the proof, however, the same general rule prevails in equity, as at law ; it is not to be presumed, but must be proved.
The counsel for the appellants has argued this case upon the assumption, that in a Court of Equity, fraud may be jiresumed, and that in this a diversity exists between such tribunal and a Cdurt of law. In this, the counsel has laid down the position too broadly. I am aware that fraud is always secret; that where pei’sons design to commit it, they do not publish their motives and intentions, for this would be to defeat the end they aim at; and I am also fully aware how difficult it is to demonstrate the intention from the overt acts and conduct of the parties ; yet these difficulties furnish no reason for the assertion of the power, by a Judge, guided by no more certain rule than his own arbitrary conclusions, to presume a fraudulent intent from what has been called the moral evidence, but which, however, may more correctly be termed his own vague sus*318picions of the nature and character of the transaction, unassisted and uncontrolled by any certain and fixed principles. In such case, every transaction would be dependent on the peculiar notions of the Judge, as to what would constitute good or ill faith. The fairest transaction, in the view of a suspicious mind, might be deemed fraudulent, while to another mind of an opposite cast, a course of conduct justly obnoxious to censure, would escape with impunity.
When it is said that fraud may he presumed in a Court of equity, when the same presumptions will not be entertained in a Court of law, it is to be understood, that in some peculiar and particular cases there exist exceptions to the general rule before laid down. The subjects of these exceptions will be found in those two species of fraud which are mentioned in the classification of Ld. Ch. Hardwicke in the case of Chesterfield vs. Jansen, (2 Ves. R., 155,) as the second and third kinds of fraud. The learned Chancellor thus classifies the different kinds of fraud :
“ First, then, fraud, which is cloVus mafois, may be ac~ “ tual, arising from facts and circumstances of imposition, “ which is the plainest case.
“ Secondly, it may be apparent from the intrinsic nature “ and subject of the bargain itself, such as no man in his “ senses, and not under delusion, would make on the one “ hand, and as no honest and fair man'accept on the other, “ which are unequitable and unconscientious bargains.
“3. A third kind of fraud is that which may be presu- “ med from the circumstances and condition of the parties “ contracting ; and this goes further than the rule of law, £t which is, that it must be proved, not presumed. But it £t is wisely established in this Court to prevent taking sur- ££ reptitious advantage of the weakness or necessity of anil other, which, knowingly to do, is equally against con- *319“ science as- to take advantage of Ms ignorance ; a person “is equally unable to judge for himself in one as in the- “ other. '
“ 4. A fourth kind of fraud maybe collected or inferred,. “ in the consideration of this Court, from the nature and “ circumstances of the transaction as being an imposition “ and deceit upon the other persons not parties to the frau- “ dulent agreement.
“ 5. The last head of fraud on which there has been re- “ lief, is that which infects catching bargains with heirs, “ reversioners or expectants, in the life of the father, &e., “ agajust which relief always extends. These have been “ generally mixed cases, compounded of all, or several spe- “ cies of fraud, there being sometimes proof of actual fraud, “ which is decisive.”
It will be apparent, from this quotation, that the presumptions arising from the intention, Or moral evidence, as it has been termed, are alone applicable to those cases which arise under the second and third divisions, and to those under the fifth, which partake of the nature of the two former; in all other cases, the general rule must prevail. And even in the excepted cases referred to, Courts of equity are as little warranted as Courts of law in imputing of presuming fraud, upon the mere arbitrary notions of the Judge, but,under each head certain bounds and limits, have been established, within which the discretion of the Judge is-to be exercised, and which are already as widely extended as is consistent with a due regard to the inviolability of the right to contract. It seems hardly necessary to add that this case does not come within any of the exceptions, but is to be" determined by the application of the géneral rule; and those marks, badges or presumptions of fraud, which are inferred by law, are, and must be, *320deduced from facts, which, it allows to be rebutted by evidence.
The facts and circumstances of this case, as .drawn from the evidence, may be succinctly stated as follows :
It appears that in March, 1S39, the respondent, Lube Lott, being then and before that time, largely indebted to the appellants and others, (although it does not appear that he was actually insolvent,) and having determined to remove to the Republic of Texas, made a sale of all his property, real and personal, to Mrs. Mary Thomas, his moth-' er-in-law, for the sum of $9,600, which said sum appears to have been the full value of the property conveyed, and was paid partly in cash upon the execution of the conveyance, partly in the promissory notes of the vendor, and for the residue the vendee, Mrs. Thomas, gave her own notes, which were subsequently paid. That immediately upon the sale and conveyance before mentioned, Mrs. Thomas toolc possession of the property conveyed, removing her slaves and other property, to the farm purchased of Lott, and exercised dominion and control over the same as owner, and for hej’ sole and exclusive use and benefit, until the period of her death, which occurred in 1846. It further appears, that a part of the property sold consisted of eight pre-emption claims, and that it was stipulated in relation to these by a separate agreement, that i/it should happen that any of these claims should not be located and entered, then the vendor, Lott, should indemnify the vendee to the value thereof in serving her as an overseer, orto employ one for her at his expense ; that entries of some of these claims wore not effected, and that Lott, in conformity with his agreement, reimbursed Mrs'. Thomas by services in the capacity of overseer, but the jorecisc times when this service commenced and when it terminated are not stated ; it is stated in Lott’s answer, that he was so employed for *321several years ; and that afterwards he was induced to abandon his design of removing to Texas, by the entreaties of his mother-in-law, and by her promise to provide liberally for his children in her will, which, as it further appears she did, by devising and bequeathing to them her entire estate.
The evidence is full that Mrs. Thomas was most tenderly attached to her daughter, Mrs. Lott, and also to her son-in-law, the defendant Lott, and that she always opposed most earnestly the removal to Texas, especially as she considered herself too far advanced in life to accompany them.
The appellants became judgment creditors in 1841, and filed their bill seeking to set aside the conveyance on the ground of fraud, in 1847," after the. death of Mrs. Thomas, The counsel for appellants, besides the argument before referred to, following the allegations of the bill of complaint, contended for, an inference of fraud deducible from the following circumstances : — 1. The relationship by affinity between the vendor and Mrs. Thomas, the vendee ; 2. The large indebtedness of Lott to complainants and others at the time of the sale ; 3. The actual or presumed knowledge of Mrs. Thomas of the fact of such indebtedness, and of a design to assist Lott in a fraud upon bis creditors ; 4. That the sale was not made upon a good and valuable consideration; and 5. That possession did not accompany and follow the conveyance, but continued in the vendor.
The fact of the relationship between the parties is not per se a badge or mark of fraud. I am not aware of any principle of equity which regards a sale and conveyance by-one relative to another, standing alone, as a circumstance of suspicion. Combined witb other circumstances, it may serve to elucidate, explain, or give color to a transaction, such as a sale at a considerable under value, &c., &c. (Copes vs. Middleton, 2 Madd. R., 409,) If it is *322combined with the ground subsequently alleged, of the large indebtedness of the vendor, it is .still not of any importance ; nor do -the facts taken in connection amount to a badge or mark of fraud. And even if the two preceding facts be combined with the allegation of an actual knowledge, on the part of Mrs. Thomas, of the indebtedness and embarrassment of Luke Lott, (assuming such allegation to have been maintained by proof,) it will not make 'out a case of fraud. In Barrow vs. Bailey, (5 Florida R. 25,) this Court held ££ That one in failing circumstances, or c£ even insolvent, has a right to sell or assign his property, ££ except as against pre-existing liens, for the purpose of “ paying his debts ; and if he has the right to sell, of course “ any one has the corresponding right to j^rchase. The ££ only limitation upon the exercise of these rights is, that “ the sale and purchase be in good faith and for a valuable C£- consideration. If the appellant’s purchase falls within “ this rule — if he purchased from the vendor in good faith “and for a'fair price — it is perfectly immaterial whether ££ said vendor was embarrassed, or insolvent, or other- ££ wise, or whether the condition of his affairs was or was “ not known to the vendee.”
But there is no evidence of any knowledge on thepart of Mrs. Thomas of the condition of her son-in-law’s pecuniary affairs; and if Lott entertained within - his own heart any design to defraud his creditors, there is no proof in the record before us that Mrs. Thomas knew of it, much less participated with him in carrying it into execution. It was a fact to be proved by the complainants, and the respondents might well have relied on the maxim, idem est non esse et non wppa/ra/re ; but there is affirmative proof, tending to negative the fact of knowledge of Lott’s indebtedness — there is proof that at some period subsequent to the sale, she reproached Lott for having kept the circum*323stance of his indebtedness concealed from her. It is supposed by the counsel for complainants that a presumption of. knowledge arises from the relationship between Mrs. Thomas and Lott, and he cites the case of Barrow vs. Bailey as authority for such position* But there is a misapprehension of the decision of the Court. In the case cited, there was an admission in the answer of Barrow as to a correspondence between himself and his brothor-in-law in relation to the pecuniary embarrassment of the latter, the substance of which correspondence was claimed to have been set forth in the answer, hut the letters themselves were not produced in evidence, as they should have been, and the Court, in tbe absence of the letters, assumed that Doggett had been as full and unreserved in his com munitions with his brother-in-law as he had been to the witnesses, who were strangers, and especially as Mr. Barrow had, during the correspondence, required full and particular information as to his correspondent’s pecuniary condition, and what ho expected and hoped for. See 5 Florida R., 22, 23.
. As to the fourth ground taken, that is fully and flatly contradicted by the evidence in the record. There is no evidence that the property sold and conveyed was rated at an under value, and the proof is full that the consideration agreed upon was fully paid. That the money paid did not reach the hands of Lott’s creditors, in discharge of their respective claims, but was in fact lost at the gaming table, was no fault of Mrs. Thomas, and tbe consequence thereof, or tbe punishment therefor, should not be visited or inflicted upon her or her divisees and legatees, the children of Luke Lott.
It is next assumed that the transaction is fraudulent because possession did not accompany and follow the deed-, but remained unchanged in Luke Lott. Is this true in. *324point of fact ? The answer of Lott is in strict response to the bill in this particular, and not only stands un contradicted, but is supported by the testimony of the other witnesses, John F. O. Thomas, Mrs. Hudson and Mrs. Carraway. He avers a delivery of possession by himself, and an acceptance by Mrs. Thomas, immediately upon the sale and conveyance, and that Mrs. Thomas removed her other personal property to the farm purchased from Lott, and continued to occupy and possess it, and all the property thereon and attached thereto, exercising full and completo dominion over all for herself as owner.
It is, however, supposed that the evidence establishes a possession by Lott in common witli Mrs. Thomas,, continued from tbe time of sale ; but I do not concur with the the counsel in this view. Lott having sold off all his property, with the design of going to Texas, it was most natural and reasonable that he should be the guest of bis wife’s mother until bis affairs were so arranged as to enable him fo execute his intention. The testimony negatives positively auy control oVer or interference with the property by him until his term of service commenced as her overseer, and then also the evidence is clear that he never exceeded the usual control of an overseer, hut always preserved that character, conforming to the directions and orders of Mrs. Thomas.
When this term of service commenced as overseer, I have before remarked, does not appear; but it was to commence, according to tbe agreement for the sale of the preemption claims, so soon as it was ascertained that the contingency happened of a failure to effect entries of said claims in the land office, or of some of them. From the very nature of the case, some time must necessarily elapse before this could be ascertained, whether he should either serve as overseer,, or provide her one, if he did not wish to *325be detained in the prosecution of his purpose to remove to Texas ; and hence it was to be performed at some future timo. It does not appear at whose instance this stipulation was inserted in the agreement, but I think the conjecture suggested at the bar, that it was insisted upon by llrs, Thomas, with a view to retard and put obstacles in the way of, if not wholly thwart, Lott’s removal, with his wife and children, a very reasonable and probable presumption. There was no continuance in possession by Lott in the capacity of owner and proprietor, bnt the change was so open and notorious to the neighbors that it seems to have been observed by all. There was no agreement that Lott was to have any use and benefit from the property as lessee or hirer; no agreement that he should continue in the possession ; no demsuvi irrvperium / no united or common possession ; in fact, no such continuation of possession from which a secret trust or reservation in favor of the vendor can he inferred.
In the case of Gibson vs. Love, decided in this Court, (4 Florida R., 217,) cited at the bar, a slave had been sold in discharge of a precedent debt due from the vendor to the vendee, bnt it was stipulated and agreed that the slave should continue in the possession of the vendor, as before the sale, and for his ease and convenience, he promising to pay the vendee a hire equal to the legal rate of interest on the price agreed upon. The Court properly held that the continuation of possession by the vendor was not sufficiently explained by the evidence to repel the inference of fraud which, in contemplation of law, was deducible therefrom 5 that the appropriate evidence to rebut the presumption, is an explantion of the intention, to show either that it is consistent with the deed, or is unavoidable, &c. The want of analogy between the case cited and the case at bar, is oh*326vious. Here there is no retention of possession by the vendor, either alone or jointly" with his vendee.
With respect to the allegation in the appellant’s bill of complaint, of the pecuniary inability of Mrs. Thomas to make the purchase of Lott, it will be sufficient to say that the effort to sustain it by proof was very feeble. One witness only was examined upon the point, and his statement is very vague and indefinite. He says she was not wealthy, but was iir comfortable circumstances. The sequel, however, sustains her ability. It is proved that she paid for the property in full, and this is amply sufficient to negtive the allegation of the bill.
Upon the whole case, I am perfectly satisfied that the appellants, who were complainants in the Court below, have utterly failed to make out a case for relief, and that the Court below committed no error in the rendition of the decree dismissing the bill of complaint.
SEMMES, J., in assenting to the judgment of the Court, was understood to adopt the reasons contained in the 'Opinion delivered by Justice Thompson.
Per totam curiam. Judgment affirmed with costs.