Court Opinion

ID: 8256665
Source: CourtListenerOpinion
Date Created: 2022-10-16 15:32:22.396641+00
Date Added: 2024-06-11T16:43:01.031509
License: Public Domain

Mr. Justice Fisher
delivered the opinion of the court.
The appellees filed this bill in the superior court of chancery to foreclose a mortgage executed by Richard Christmas and William B. Norfleet, to Henry and Thomas H. Christmas, on the 11th of February, 1840, to secure them in the payment of certain promissory notes therein specified, which notes, it' is alleged, were transferred to the complainants, in virtue of which they claim to be the equitable assignees of the mortgage.
The contest is between the complainants as equitable assignees of the mortgage, and the appellants as judgment creditors of Henry and Thomas H. Christmas. Executions *281having issued upon the judgment of these creditors, were levied upon a portion of the slaves embraced in the mortgage. The bill charges that the mortgaged property will not be more than sufficient to pay the notes held by the complainants, and therefore prays that the several executions, so far as said property is concerned, may be perpetually enjoined.
The answers of the several defendants interested in this part of the controversy, allege that the mortgage and the transaction out of which it grew, were made and designed by the' several parties thereto, to hinder, delay, and defraud the creditors of the said Henry and Thomas H. Christmas, and hence it is void as to their creditors.
The facts as disclosed by the pleadings of the parties are these: Henry and Thomas H. Christmas on the 11th of February, 1840, sold to Richard Christmas and William B. Nor-fleet a plantation, slaves, and other personal property thereon, in Madison county, for the sum of $80,000. About $20,000 of which sum was paid in cash at the time. To secure the payment of the balance, the notes and mortgage now in controversy were given. It is very clearly established that the sum agreed to be paid, was a full and fair price for the property. But it is alleged and proved by the depositions taken in the cause, that the vendors, notwithstanding the sale, continued in the uninterrupted possession, control, and management of the property, treating and using it in all respects as absolute owners do their property. They appear thus to have been in possession at the time the bill was filed. It is further established by the evidence, that the vendors, Henry and Thomas H. Christmas, were at the time of the sale, not only embarrassed, but were actually insolvent. Suits for large amounts were then depending in the United States court at Jackson, and in the circuit court of Madison county. The same allegation is made in regard to Richard Christmas, and it may be said, sustained by the same proof. Norfleet is shown to have been entirely destitute of means. . ^
Under this statement of the facts, there can be but little difficulty in applying the principles of law which must be decisive of the controversy. It is now too well settled to admit of argu*282rnent, that an absolute conveyance of property by a person at the time largely indebted, especially when this indebtedness is about to ripen into judgments, and his subsequent possession and continued enjoyment of the property create such a presumption of fraud, as to require clear and satisfactory proof of the fairness of the transaction. This presumption becomes the stronger when it appears that the conveyance was made, as in this instance, to near relatives, who were themselves at the time laboring under equal, if not greater, embarrassments. The fact that a full price was agreed to be paid for the property, is not alone sufficient to rebut the presumption of fraud. The facts affording the evidence in this respect must be explained. The possession and acts indicating absolute ownership, must be shown to be consistent with the title of the parties, or the bona ftdes of the transaction. There is nothing in the whole evidence which negatives the presumption of Henry and Thomas H. Christmas having received and appropriated to their own use the entire income of the property.
We are, therefore, of opinion that the fraud is fully established.
The complainants under the decision in the case of Douglass et al. v. The Farmers Bank of Virginia, 11 S. & M. 469, occupy no better situation than the parties through whom they claim title. The fact that they are innocent purchasers in transactions of this kind, is not sufficient to give them the benefit of the mortgage against creditors whose claims are equally meritorious. One creditor can only acquire an advantage over another by a lien created by law, or a preference given by the debtor, entirely free from all fraud.
Decree reversed, and bill dismissed, so far as it affects the judgment creditors of Henry and Thomas H. Christmas.