Court Opinion

ID: 6542801
Source: CourtListenerOpinion
Date Created: 2022-07-19 22:17:08.207848+00
Date Added: 2024-06-11T15:55:52.814356
License: Public Domain

Mansfield, J.  1. when gift not fraudulent. 1. There is no error in the decree ap- - . - .. . . * , pealed from, so far as it relates to the town lot. The evidence fails to show that the defendant R. S. Chaytor or the firm of Chaytor & Dunn were indebted to any one at the time that property was conveyed to Mrs. Chaytor. And the mortgage upon it was executed several years prior to the date of the plaintiffs’ judgment, and was given to secure the payment of an undisputed and subsisting debt. The right of Snodgrass to a foreclosure was therefore clear.  2. When vendor's possession fraudulent. 2. But on the facts appearing in the record the plaintiffs -were not without a claim to relief as to the other property .mentioned in the complaint. The answers of Chaytor and Snodgrass deny that any fraudulent purpose was entertained in the sale to the latter of the stock of merchandise. But there is no denial of the allegation made in the complaint that Chaytor was then largely indebted to the plaintiffs and to other persons. And the proof shows that he remained in the actual possession of the goods and continued his personal management and supervision of the business. A presumption of fraud was thus raised which it devolved upon Snodgrass to overcome by proving that he paid a valuable •consideration for the transfer of the goods. Driggs’ Bank v. Norwood, 50 Ark., 42 ; Valley Distilling Co. v. Atkins, ib., 289; Norton v. McNutt, ante, p. 59. He offered no testimony whatever conducing to show .such payment. He did not testify in the cause himself, and •Chaytor, whose deposition was taken, made no statement from which an inference can be drawn that the sale rested upon any valuable consideration. Both of them aver in their pleadings that “ a valuable and adequate consideration” existed. But they are silent as to what it consisted •of. And the prima facie case made by the plaintiffs against the good faith of the transaction is opposed by nothing, except the fact that the business was conducted in the name •of Snodgrass, and the statement of an employee of Chaytor’s in its management that it was his understanding that the merchandise belonged to Snodgrass; that “all the family •supplies and most of the dry goods taken from the store were charged to Mrs. Chaytor; and that when the business was embarrassed, Snodgrass was always appealed to for assistance. Little weight is to be given to these facts in view of the relationship existing between the parties and the other circumstances of the case. We think the charge of fraud in the sale to Snodgrass is sustained by the proof. ’ This entitled the plaintiffs to have-the conveyance of the goods to him cancelled. Jones, McDowell & Co. v. A. M. & Agricultural Co., 38 Ark., 17, and cases cited; Hunt v. Weiner, 39 Ark., 73.  s. creditor’s lien acquired by filing complaint. The execution issued against Chaytor was returned without a levy, and there is no indication in the record that the goods were seized under any other process. But the filing-of this complaint and service of the summons issued upon it created a lien in favor of the plaintiffs on so much of the merchandise transferred to Snodgrass as was then in existence*. And they should have an order for the sale of this, so far as it can now be identified.  4. Gift fraudulentwKen. 3. It is admitted that the lands purchased of Feazel were-_ _ paid for entirely with funds belonging to R. S. Chaytor.. And that, at the date of their conveyance to his wife, the indebtedness of Chaytor to the plaintiffs and others continued to be large. He could not therefore have made a voluntary-conveyance of his property that would not have been presumptively fraudulent. And as the evidence fails to show that he had any other property whatever, except such as was-then held in the name of Snodgrass, the presumption of fraud attaching to such a conveyance would have been conclusive. Driggs’ Bank v. Norwood, 50 Ark., 42; Norton v. McNutt, ante, p. 59.  6. judgment islienonequitabie estate when, The purchase in the name of his wife can stand on no bet— . _ . . rr ter footing ; for the law regards it as in effect a conveyance-from himself. Bennett v. Hutson, 33 Ark., 762. But where-land is thus purchased by a husband and conveyed to his-wife in frapd of his creditors, the latter would not be benefited by treating the conveyance to her as void; since the title would then remain in the grantor. And equity will therefore treat the wife in such case as a trustee for the benefit of the husband’s creditors. Hershy v. Latham, 42 Ark., 305; Belford v. Crane, 84 Am. Dec., 155; Freeman on Executions, sec. 136. Applying this doctrine to the present case, an. estate in the lands purchased of Feazel resulted to Chaytor on the execution of the deed to his wife. The estate which he-thus acquired was subject to sale on execution under our" statute, and the purchaser would have taken, not only the beneficial interest in the lands, but also the legal title. Hershy v. Latham, 42 Ark., supra; Mansf. Dig., sec. 3001; Bennett v. Hutson, 33 Ark., supra. It follows, necessarily, we think, under the statute of this State providing for judgment liens, that the lands in controversy, while held by Mrs. Chaytor,,. were subject to a lien existing by virtue of the plaintiffs’1 judgment. Mansf. Dig., sec. 3917. This conclusion is supported by adjudicated cases directly in point, and is sustained indirectly by many authorities. See Haleys v. Williams, 19 Am. Dec., 743; Thomas v. Walker, 6 Humph., 93; McKee v. Gilchrist, 3 Watts, 230; Freeman on Judgments,, sec. 350; Freeman on Executions, sec. 136. Such a lien could not, however, be asserted against “bona fide purchasers or encumbrancers, who have acted upon the apparent title of the fraudulent vendee and without notice actual or implied of the fraud.” Freeman on Execution, sec. 136. But Mims & Moores were not suc]j purchasers. They bought subsequent to the judgment and with notice that the plaintiffs intended to institute proceedings to subject the-lands to its payment. As against them the plaintiffs are therefore entitled to the relief prayed for. The record presents for decision no other question. But it discloses other-facts which it is proper to notice before remanding the cause. It appears that on the sale to Mims & Moores a lien was-expressly reserved in the deed for the payment of the two-notes executed for the purchase money. These notes were soon^ after indorsed by Mrs. Chaytor, to whose order they were made payable, and were delivered by her husband to Wolf & Brother in payment of a. debt. This occurred after the recovery of the plaintiff’s judgment against Chaytor Sc. Dunn but before the institution of this suit. Under the, statute (Mansf. Dig., sec. 474) giving to the assignee of a note for the purchase money of land the benefit of the vendor's-lien where such lien is expressed or appears on the face off the deed, Wolf& Brother were thus placed in the attitude of intervening mortgagees; and if they were innocent encumbrancers without notice of the plaintiffs’ equitable right against Mims & Moores, they acquired a lien prior to that of the plaintiffs to the extent of the amount due on the notes. The plaintiffs should be permitted to make Wolf & Brother parties or to proceed subject to the rights of the latter, as they may elect. The decree of foreclosure is affirmed. In other re&pects the judgment is reversed, and the cause remanded for pro'Ceedings in accordance with this opinion.