Yeend v. Weeks , 104 Ala. 331 ( 1893 )

HARALSON, J .

1. When one makes a conveyance of Ms property on a consideration which is merely good, as contradistinguished from one which is valuable, it is without effect, inoperative and voidable against any debt the grantor may owe at the time of its execution ; and this, without reference to the good intentions of the parties, and the solvency or insolvency of the grantor, at the time of thfe execution of the conveyance: Such a conveyance, when not tainted.with actual fraud, is void only as to antecedent debts ; but if made with an intent to hinder, delay and defraud creditors, which is actual fraud, it is void as to subsequent, as well as to existing, creditors. — Dickson v. McLarney, 97 Ala. 383; Seals v. Robinson & Co., 75 Ala. 364 ; Kirksey v. Snedecor, 60 Ala. 197; Huggins v. Perrine, 30 Ala. 396.

2. Only those persons whose rights are interfered with — who are injured by conveyances alleged to be fraudulent — have the right to interfere to set them aside. Strangers have no interest, and therefore no right, to question their validity; and, between the parties and their privies, they are valid. When' one aggrieved by such a conveyance calls its validity in question, and moves to set it aside, the parties claiming under the gift . or conveyance may dispute his claim by demanding that he shall prove himself to be a creditor of the grantor or donor, with a valid, subsisting debt against him. The fact of primary importance in such a proceeding — whether it be to set aside the conveyance, as constructively fraudulent and therefore voidable as against past due debts, or actually fraudulent, and voidable as to future as well as to past obligations — is the existence of a debt, for the payment of which, except for the conveyance, the property transferred could be made liable. The grantee in the conveyance must have an opportunity to dispute the debt, and may plead any defense, not merely personal, which the grantor or debtor could have made against it. Troy v. Smith, 33 Ala. 469 ; Halfman v. Ellison, 51 Ala. 544 ; Pickett v. Pipkin, 64 Ala. 520 ; Lawson v. Ala. Warehouse, 73 Ala. 292, and authorities supra.

3. The decisions of this court also establish the principle, that “no alienee, grantee, or assignee is bound or affected by a judgment or decree rendered in a suit against the alienor, grantor, or assignor subsequent to the alienation, grant or assignment; for the plain reason-, that otherwise his rights óf-property - could' be divested without his consent; and the fraud or laches of the grantor, could work a forfeiture of estates he had created by the most solemn conveyances.” — Coles v. Allen, 64 Ala. 106 ; Donley v. McKiernan, 62 Ala. 34 ; Floyd v. Ritter, 56 Ala. 359. But, this principle does not, in any wise, conflict with that other, that where a judgment is rendered by a court of competent jurisdiction in the regular course of judicial proceeding, without fraud or collusion, it is conclusive evidence of the amount and existence of a debt at the time of its rendition, and that, in a proceeding by the plaintiff against the defendant and his grantee, to set aside an alleged fraudulent conveyance, such judgment whether rendered prior or subsequent to the conveyance, is competent evidence of the debt, and that the plaintiff therein stands in a relation to be affected or injured by the conveyance. As was said in Lawson v. Ala. Warehouse Co., 73 Ala. 293, “Tt is notevidence of an indebtedness existing at any time anterior to its rendition; and if the conveyance is impeached as merely voluntary, as wanting in a valuable consideration, if the time of rendition is subsequent to the conveyance, there must be other evidence than the judgment affords, to show the existence of the debt, when the conveyance was made. But if, as in the present case, the gift or conveyance is assailed as tainted with actual fraud, as having been made to hinder, delay or defraud existing creditors, it is void, not only as to such creditors, but as to subsequent creditors; and .the judgment, of itself, establishes the right of the creditor to impeach the gift or conveyance.’'

4. If then there is no more proof than the judgment itself — in the absence of fraud or collusion, as we have seen — it is evidence of the existence of a debt at the time of its rendition, and only at that time. This is sufficient to entitle the judgment creditor to impeach the fraudulent conveyance as tainted with actual fraud. In such case, the burden of proving the actual fraud would be upon the complainant. If the complainant, however, would use the judgment to the prejudice of a grantee in a. deed alleged to be only voluntary and constructively fraudulent, there must.be independent, distinct evidence of facts showing the cause .of action .which authorized the rendition of the judgment, and that it- is older than the conveyance. — Coles v. Allen, 64 Ala. 106. If the right out of which the judgment springs is older than the voluntary conveyance, the latter must yield to it, (Anderson v. Anderson, 64 Ala. 405) ; and, in such case, on a bill filed by the judgment creditor to set it aside, the burden is on the grantee to prove that he paid an adequate and valuable consideration. — Chipman v. Glennon, 96 Ala. 263 ; Page v. Francis, 97 Ala. 379; Moore v. Penn, 95 Ala. 200 ; Hamilton v. Blackwell, 60 Ala. 545. And, again, if the transferee be a near relation, fuller and more satisfactory proof is required, than when strangers are the contracting parties. — Thorington v. City Council of Montgomery , 88 Ala. 552.

5. It must be stated, in this connection, that an administration bond is a continuing obligation of security from the day of its execution to the termination of the administrator’s authority to act; and though-it antedates a voluntary conveyance, yet, the ascertainment of its breach, by proper judicial proceeding, begun and concluded after the execution of such conveyance, will, as between the judgment creditor and the grantor in the conveyance, relate back to the date of the bond, and be held to be a debt existing at that time. Such a bond is unlike a promissory note or other claim made upon a present consideration, after the execution of a voluntary conveyance. A contingent claim is as fully protected, as a claim that is certain and absolute. — Bibb v. Freeman, 59 Ala. 615; Anderson v. Anderson, 64 Ala. 405; Fearn v. Ward, 65 Ala. 33; Corr v. Shackelford, 68 Ala. 241; Kelly v. McGrath, 70 Ala. 80; Keel v. Larkin, 72 Ala. 500.

6. Another principle equally well settled is, that the liability of the surety on an administrator’s bond or other contingent obligation, makes him a creditor within the provisions of the statute of frauds, from the date of the contract, and though, generally, he has no cause of action until he has paid the debt, he is.entitled to protection against fraudulent conveyances executed by the principal debtor in the meantime. As was stated in Keel v. Larkin, 72 Ala. 500, supra, “The claim of the surety is considered as having existed — so far as to constitute him a creditor — at the time he incurred the contingent liability, being debitum in presentí, solvendum in futuro; his subsequent payment of the debt extending back by relation to that date, although no demand, or right of action technically accrues until a subsequent date. The surety is thus, in a certain sense, subrogated to the rights of the creditor, whose claim he has been compelled to pay.” This principle extends to sureties, as between themselves, where one has paid the joint obligation of all. The right of contribution between them, is founded on natural justice, is secured by statute, and may be enforced by summary proceedings. — Code, §§ 3149, 3151; Bragg v. Patterson, 85 Ala. 233 ; 1 Brandt on Suretyship and Guaranty, § 254.

7. Let us make application of these principles to this case. The record in the case of Dowty v. Hall, Weeks and 'Brown, was relevant to show, as it did., that a decree was rendered therein against said Weeks and Brown as sureties for $4,000. This decree was conclusive evidence of a debt existing at that time to Dowty, but it was not evidence of • an indebtedness to any other person than Dowty, nor of the existence of said debt, prior to its rendition.

The decree by itself, was no more evidence, as between Weeks and Brown, the sureties, to show that the defendant, Weeks, owed 'Brown anything, at the date of its rendition, than it was to show that Brown owed Weeks. Its only evidential foi’ce, apart from other evidence, was, that Weeks and Brown owed the plaintiff in the judgment or decree. But there was an agreement of counsel in writing on tne trial — to quote its language — ‘ ‘that the allegations contained in the 1st and 2d paragraphs of the original bill of complaint are true, and shall be taken as admitted on the final hearing of the cause, by the defendants, and that the bond set forth in the second paragraph of the complaint was executed on the 11th day of July, 1884.” These admissions cover the following facts : that complainant is the duly qualified administrator of George Brown, deceased; that Stephen Dowty died prior to the 11th July, 1884, and that John W. Hall, was his duly appointed administrator; that he gave bond, as such administrator, with Dorval W. Weeks and George Brown as sureties on said bond, and that the copy of the bond set out in the bill is a correct copy of the original which was duly executed. Said bond was introduced in evidence in place of the original. The introduction of this bond, in connection with the decree, was sufficient to show that the decree was authorized and was rendered on this bond, showing a debt to the plaintiff in the decree, existing, not only at its date, but, as for the rights of the complainant in this case, at the date of the approval of said bond, on the 11th day of July, 1884. This debt was owing, therefore, for the purposes of this bill, by said sureties to William Dowty, the only son and heir of Stephen Dowty, at the last named date. And, as between the sureties on said bond, their obligation to contribute to each other began, also, at that date. So, if it be shown that complainant’s intestate, Brown, paid the whole of said decree, after it was rendered against him and his co-surety, Weeks,that fact made Weeks a debtor to Brown, for one-half of the sum so paid, at the date of the bond, on which they were joint sureties, with interest from the time he paid the same.

8. For the purpose of showing that his intestate paid and satisfied this decree, the complainant offered in evidence a duly certified transcript of a judgment and the proceedings thereon, had in the circuit court of Baldwin county, the place of residence of said Weeks. This was a summary proceeding under the Code — section 3151— authorizing a surety, who has paid the debt of his principal, to recover of his co-surety his aliquot proportion of the debt. The complaint in the case set out the appointment of Hall — on the 11th July, 1884 — by the probate court of Baldwin county, as administrator on the estate of Stephen Dowty, his due and regular qualification as such; that he gave bond, which is set out, with said Weeks and Brown as his sureties; the filing of said bill by Wm. Dowty — the only heir-at-law and distributee of said Stephen Dowty — in the chancery court of Mobile county, on the 30th March, 1889, against said Hall as administrator, and said George Brown and Dorval W. Weeks as sureties on said bond, wherein complainant charged that certain devastavits and waste had been committed by said Hall in his administration of the estate of said Stephen Dowty; that in said chancery court, such proceedings were had as that on the 30th January, 1892, said court rendered a decree in said cause against the said Hall as administrator, and against the said Brown and Weeks, sureties on his administration bond, in thé sum $4,000; that thereafter execution issued on said decree out of said court against the said Hall and said Brown, which was levied on said Brown’s property, and to prevent the sale of his property so levied on, the said Brown paid $4,000 on said decree with interest from the date of its rendition, with costs, to Joseph Hodgson, who was receiver in the cause; and claiming the sum of $2,000, with interest thereon from January 30, 1892, he moved the court for judgment against said Dorval W. Weeks, as contribution from him as his co-surety. Of this proceeding, said Weeks had due and legal notice. On the trial of that motion — on the 30th of November, 1892 — a judgment was duly rendered against said Weeks in favor of complainant for the sum of $2,133.34.

9. The transcript of these proceedings against said Weeks, as to him, was proof of all that the complaint contains, and evidenced a debt against him in favor of Brown, at the date of its rendition, which related back and existed, for the purposes of this suit, to the date of said administration bond, (3 Brick.. Dig. 580, § 75), which debt the said Brown had paid in full. We thus have the case of a creditor with a valid subsisting debt, anterior to the execution of said fraudulent conveyances by said Weeks, the debtor. The bill is filed to set aside these conveyances on the two grounds : that they were constructively fraudulent — executed voluntarily and without consideration ; and actually fraudulent — executed to hinder, delay and defraud the complainant’s intestate, and to place the property of said Weeks beyond the reach of complainant’s intestate for contribution to said suretyship liability.

The burden of proving that these conveyances were not voluntary, but were made in good faith for an adequate consideration, as we have seen, was on the defendants. If actually and not constructively fraudulent, the burden was on the complainant. The complainant introduced no evidence except said administration bond, the record in the Dowty case, to prove the 'decree therein, and the transcript of the record of his case from the Baldwin circuit court; and these, with the effect as we have stated. The defendants, Weeks and wife, examined and introduced the deposition of two witnesses, besides their own.

10. In looking for the bona fides of these transactions, between this husband and his wife, the pertinent fact strikes us, that Weeks had been quietly living in Baldwin county for a long number of years, owning several hundred acres of land, engaged since 1872, with his brother, George, in the sheep and wool business. They owned, together, about 1,000 sheep — D. W., three-fourths and George, one-fourth of them. In March, 1889, the bill of Dowty against Hall, and Brown and himself, as sureties, was filed in Mobile chancery court, which resulted in said decree against them of $4,000, in January, 1892. He knew, of course, of the dangers that threatened him in that suretyship. In August, 1887, without any dissolution of the partnership between him and his brother, George, without any reasons assigned or shown for dissolving it, but continuing to reside at the same place, and without engaging in any other business, he sold and transferred to his wife, his interest in the flock' of sheep, for the recited consideration of $1,600, which was for money of hers, as he and Mrs. Weeks swore, which he had received and used about the year 1866. This bill of sale was executed and recorded with the formalities of a conveyance of land, and which, executed in August, 1887, was not recorded until August, 1889, several months after the bill by Dowty had been filed against him. If the bill in this case had not been filed, this bill'of sale, we are not slow to believe, would never have been brought to light. The wife, after its execution, as is shown, continued the business of sheep and wool culture with George Weeks, with no apparent change of possession or management of the property.'

But, the land as well as the sheep must be covered, and, accordingly, we find Weeks and wife, on the 16th of August, 1887, four days prior to the sheep transaction, conveying to Felix Andry, for the recited consideration of $1,000, the 560 acres of land which he owned. This deed was not acknowledged by the wife, separate and apart from her husband, and, if the lands conveyed constituted their homestead, it was ineffectual to pass the same to the extent allowed by law. A deed thus executed is void as to the homestead. This deed was recorded August 19th, 1887. Felix Andry re-conveyed these lands to Rosalie, the wife of said Weeks, on the 20th of September, 1887, for the recited consideration of $1,050, but the deed was not filed for record until the 10th of August, 1889. If Mrs. Weeks had the money with which to make this purchase, that fact was not shown. In November, 1890, Weeks and wife conveyed to their son, Jos. D. Weeks, forty acres of the same land they had conveyed to Andry and which he had re-conveyed to said Rosalie, for the nominal consideration of two dollars, and this conveyance did not find record until April, 1891.

If Andry had paid any consideration for the conveyance from Weeks and wife to him, and if Rosalie, in turn, had paid him any consideration for his conveyance to her, and if the transaction was a real and not a simulated one, he was very competent to prove these facts, and a failure to examine him is suggestive that the proof could not be made by him, if he should swear truthfully. And more striking and suggestive' still is the fact, that Weeks and wife were both examined in their behalf, and neither of them were questioned or deposed as to any fact, touching the consideration and bona fides of these conveyances of land. They denied in their answers the allegations of fraud, and averred that said conveyances were made in good faith for the considerations expressed in them, and yet, offered no proof to show the truth of the allegation, themselves being examined as witnesses.

11. The chancellor reviewing the testimony, reached the conclusion, that all of the conveyances of the personal and real property were part and parcel of one scheme to hinder, delay and defraud the complainant’s intestate; were voluntary and void as to him. We approve his finding on the facts.

He dismissed the bill, however, on the ground as stated, that it did not aver that Hall, the administrator of Stephen Dowty, was in default as such, or that he owed anything by virtue of his administration ; that the proceedings in said cause can not be evidence against any of the parties to this cause, except said Weeks ; that the other defendants are entitled to have their day in court, to controvert the issue (that of a devastavit by Hall) on which their liability depends, and the bill, by its averments, did not afford them that opportunity.

From what has been said, it will sufficiently appear in what the learned chancellor mistook the real issue in the cause, and wherein he erred. The real issue was, whether the complainant’s intestate was a creditor of said Weeks, either before or after the execution of said conveyances ; and whether the same were constructively or actually fraudulent. These issues as tendered by the complainant, the grantee had ample opportunities to contest.

The question of exemptions was not passed on, and if properly presented, is one which is not likely to be of difficult solution.

12. The application to the chancellor pending the submission to set it aside, did not state that the evidence proposed to be taken could be made and by.whom, nor any reason why it was not done before the submission of the cause, or any fact showing diligence; nor was it verified. It was within the discretion of the court to either grant or deny the application; but for the reasons stated, it was properly disallowed. — Magruder v. Campbell, 40 Ala. 611; Ex parte Ashurst, 100 Ala. 573.

Reversed and remanded.