Court Opinion

ID: 6546855
Source: CourtListenerOpinion
Date Created: 2022-07-19 22:20:16.304118+00
Date Added: 2024-06-11T15:55:59.486567
License: Public Domain

Wood, J., (after stating the facts.) The testimony clearly shows that J. A. McConnell, while in debt, and contemplating other debts to be contracted by him, conveyed all of his real estate, subject to execution, to his wife. He, however, remained in possession of the property, and continued to control and manage the same as before the conveyance. After the deeds were made he or she could have had same recorded at any time. But they did not do so until the property was levied upon and was about to be sold for his debt. The property continued on the tax books in his name, and he paid the taxes. He built the hotel after the transfer, borrowed money from various parties which was expended on the building, and contracted debts to the amount qf $3,000 in its construction. These were all in his name. After the hotel was completed, he was the proprietor, and controlled and managed same. Mrs. McConnell only to a few friends communicated the fact that she owned the property. But there was in no respect a visible change of ownership. He rented the property and collected the rents. In short, to the outside world he appeared to be the owner of the property. The conveyance was entirely voluntary. The appellee accepted the note because she considered J. A. McConnell solvent and the owner of the real property in his náme. ’ She would not have accepted the note without his name signed to it. She did not know as to the solvency of the other signers. Fie “had considerable property around him, and was handling _ considerable money, and was thought to be good for his debts.” It was shown, moreover, that' J. A. McConnell after the conveyance spoke of the Grand View Hotel property as his own. But when the attorney of appellee was trying to get him to pay appellee’s judgment, and when execution was threatened, he told the attorney that “he was not as sure as he thought he was.” All this, and much more evidence in the record that it is unnecessary for us to review, convinces us that the judgment of the chancellor setting aside the conveyances was correct. The law applicable to the facts proved in this record has been often declared by this court. Here was a voluntary conveyance by a husband to his wife under circumstances that, to say the least, cast grave suspicion upon the good faith of the transaction, and placed the burden upon appellant R. S. McConnell to- show that the conveyance was not executed, for a fraudulent purpose. See cases cited in appellee’s brief and especially Hershy v. Latham, 46 Ark. 542; Leonhard v. Flood, 68 Ark. 162; Wilks v. Vaughan, 73 Ark. 174. In the latter case we said: “It is thoroughly settled in equity jurisprudence that conveyances made to members of the household and near relatives of an embarrassed debtor are looked upon with suspicion and scrutinized with care; and when they are voluntary, they are prima facie fraudulent, and when the embarrassment of the debtor proceeds to financial wreck, they are presumed conclusively to be fraudulent as to existing creditors.” The facts in the record warranted the conclusion that the deeds made by McConnell to his wife were by her kept from the record in accordance with an understanding and mutual plan on their part to give him good credit on the basis of his apparent ownership of the property, and then to defeat his creditors in the collection of their debts by spreading the deeds on the record in time'to prevent the sale of the property for the payment of these debts. The law will not allow such subterfuges to circumvent creditors in the collection of their debts. Even if it could be said that the parties to the deed, under such circumstances, did not intend any actual fraud, the law will treat such conveyances as fraudulent and void any way, because the effect of such conduct operates as a gross fraud upon creditors. Bunch v. Schaer, 66 Ark. 104, and cases cited. The court below found that the conveyances were made in secret trust for the benefit of J. A. McConnell. Such finding is strongly supported by the evidence. And such conveyances are “conclusively fraudulent against creditors injured thereby.” 20 Cyc. 562 and cases cited. Sparks v. Mack, 31 Ark. 671. Decree affirmed.