Doolittle v. Bagwell , 199 Ga. 155 ( 1945 )

1. A petition seeking to cancel deeds of record, showing that the grantor for the purpose of hindering, delaying, and defrauding his creditors, conveyed his property to members of his family, including the plaintiffs, who went into possession under deeds properly executed and recorded, was properly dismissed on demurrer, although the petition alleged that "the deeds were not delivered."

(a) He who would have equity must do equity.

2. The petition in this case cannot be construed to be a suit for accounting.

No. 15102. MARCH 7, 1945. Mrs. Nettie Lou Bagwell Doolittle and Mrs. L. R. Ahern Jr. filed a suit in two counts against H. O. Bagwell individually and as executor of the estate of A. B. Bagwell. Count 1 alleged: That A. B. Bagwell died in December, 1934, and Mrs. A. B. Bagwell died on August 19, 1943, and the defendant H. O. Bagwell has been executor of the estate of A. B. Bagwell for more than twelve months preceding the filing of the suit; that the defendant, as an individual and as executor of the estate of A. B. Bagwell, is in possession of certain lands, which he refuses and fails to administer and divide among the heirs at law; that on January 4, 1922, A. B. Bagwell, in order to protect himself from some indebtedness contracted in real-estate business, executed a deed to the lands to H. O. Bagwell and Mrs. A. B. Bagwell, and also executed a deed to the plaintiff, Mrs. Nettie Lou Bagwell Doolittle, and Mrs. Essie L. Embry, daughters of the grantor, to 95 acres of land; and also executed a deed to 80 acres of land to S. I. Bagwell (copies of the deeds being attached to the petition); that S. I. Bagwell is dead, and the plaintiff, Mrs. L. R. Ahern Jr., a daughter of S. I. Bagwell, is his only living heir, and is the granddaughter of A. B. Bagwell; that Mrs. Essie L. Embry has died, leaving no husband or child; that the three deeds from A. B. Bagwell were not delivered, although he had them recorded on December 15, 1930; that, although there was a consideration stated in the deeds, there was no valuable consideration; that the plaintiffs have not claimed the properties deeded to them, and Mrs. A. B. Bagwell, the wife of A. B. Bagwell, held all the property and received the rents and profits therefrom until her death, in accordance with the will of A. B. Bagwell, which had been probated in the court of ordinary of Carroll County, Georgia; that the defendant, as executor of the estate of A. B. Bagwell, should be required to dispose of all the lands held by him and the lands deeded to the plaintiff, Mrs. Nettie Lou Bagwell Doolittle, and the land deeded to S. I. Bagwell, and administer the properties under the will of A. B. Bagwell, and divide the properties in accordance with the will; and the plaintiffs agree to surrender the properties deeded to Mrs. Nettie Lou Bagwell and Mrs. Essie L. Embry and the property deeded to S. I. Bagwell for the purpose of disposition by the executor in accordance with the provisions of the will of A. B. Bagwell. The prayers of count 1 are: (a) that all the properties be decreed to be the property of the estate of A. B. Bagwell; (b) that the defendant, as executor of the estate of A. B. Bagwell, be required to sell and dispose of the property and make distribution to the plaintiffs of one-third each of the estate; and (c) for general relief.

Count 2 is similar to count 1, with the additional allegation that, at the time the three deeds were executed, each of the grantees executed a deed to the properties to A. B. Bagwell, and the deeds were delivered to A. B. Bagwell, but were never recorded; and the defendant, H. O. Bagwell, and S. I. Bagwell received the deeds as executors under the will of A. B. Bagwell, and the properties described in the deeds belong to the estate of A. B. Bagwell. The prayers of count 2 are: (a) that the plaintiffs have judgment against H. O. Bagwell, individually and as executor of the estate of A. B. Bagwell, for one-third each of the estate of A. B. Bagwell, and that the judgment be declared a special lien on the properties, and that the plaintiffs have a general judgment against H. O. Bagwell, individually and as executor of the estate of A. B. Bagwell; and (b) for general relief.

The defendant, individually and as executor of the estate of A. B. Bagwell, filed identical general demurrers to the petition on the following grounds: 1. No cause of action is set forth. (a) It appears on the face of the petition that no cause of action should be sustained as plead, and for that reason the petition should be stricken. (b) A court of equity will not lend its aid to either party to a contract, or privies thereto, founded upon an immoral or illegal consideration, and for that reason said petition should be dismissed. (c) No facts are alleged to entitle the plaintiffs to the relief prayed for. 2. There is a misjoinder of parties defendant. (a) There is a want of necessary parties. 3. The petition is multifarious. (a) There is a misjoinder of causes of action. (b) The petitioners have a full, complete, and adequate remedy at law. 4. There is no equity in the petition. Exception is taken to a judgment sustaining the general demurrers. 1. The petition in this case seeks to have canceled certain deeds executed on January 4, 1922, and to have the property distributed in accordance with the terms of a will executed on December 8, 1920, by the grantor in the deeds. The petition alleges that the deeds were executed for the purpose of hindering, delaying, and defrauding creditors of the grantor. It is alleged that the deeds "were not delivered." The petition makes the allegation that the "petitioners hereby agree to surrender the property mentioned in the last two deeds for the disposition by said executor in terms and compliance with the provision of the will" — the property thus agreed to be surrendered being that portion of the property to which the plaintiffs would be entitled under the terms of the deeds executed January 4, 1922. The petition, therefore, presents a situation in which the deceased grantor executed deeds to the members of his family, including the plaintiffs or those under whom they derive title, conveying all of his creditors. for the purpose of hindering, delaying, and defrauding his creditors. The formal execution of the deeds and the language of the attestation clause raise a prima facie presumption that the deeds were delivered. Bourquin v. Bourquin, 110 Ga. 440, 446 (35 S.E. 710); Mays v. Fletcher, 137 Ga. 27 (2), 28 (72 S.E. 408). The fact that the deeds were duly recorded also raises a prima facie presumption of delivery. Henderson v. Kemp, 155 Ga. 489,492 (117 S.E. 244). We recognize that these facts raise presumptions only, and ordinarily would not authorize the sustaining of a general demurrer. We have in the instant case the further allegation that the plaintiffs went into possession of that portion of the property to which they were entitled under the terms of the deeds sought to be canceled. This is true for the reason that, construing the petition most strongly against the plaintiffs, as must be done (Krueger v. MacDougald,148 Ga. 429, 96 S.E. 867; James v. Maddox, 153 Ga. 208,111 S.E. 731; Moore v. Moore, 188 Ga. 303, 4 S.E.2d 18), they certainly could not agree to surrender possession if they were not in possession. We are confronted with the question whether a petition, simply alleging that deeds "were not delivered," should be dismissed on general demurrer when all of the facts above stated appear in the petition. We recognize the rule, "The doctrine that the grantor in a deed made for the purpose of hindering, delaying, or defrauding his creditors, or one claiming in his right, can not be heard to question the validity of such deed, does not apply where the deed was not in fact delivered," as enunciated in Lowry v. Lowry, 150 Ga. 324 (103 S.E. 813), and followed in Morris v. Morris,171 Ga. 642 (156 S.E. 256); Clowers v. Clemons, 185 Ga. 567,570 (196 S.E. 28); and Allen v. Bemis, 193 Ga. 556 (3), 564 (19 S.E.2d 516). The author of this opinion, speaking for himself, does not commit himself as to the soundness of this rule, but simply states that we are bound by the rule. The precise question here is whether or not, when the petition alleges a conveyance to hinder, delay, and defraud creditors, properly executed, duly recorded, under the terms of which the grantees went into possession of the property, it should or should not be dismissed on general demurrer simply because the petition contains the bare statement, "the deeds were not delivered."

This court, in Tune v. Beeland, 131 Ga. 528, 539 (62 S.E. 976), said: "The law brands as fraudulent every conveyance made with intention to delay or defraud creditors, where such intention is known to the party taking. Civil Code, § 2695 (2). The courts will not set aside a conveyance to hinder, delay, or defraud creditors, at the instance of the grantor. Watkins v.Nugen, 118 Ga. 375 (45 S.E. 260). When a suitor applies for equitable relief, he must come into court with clean hands with respect to the matters concerning which he asks such relief."

Anderson v. Anderson, 150 Ga. 142 (103 S. e. 160), was a case in which it was sought to cancel a deed made for the purpose of hindering and defrauding creditors. The petition contained the allegation, "and the same [deed] was never delivered to the said defendant." A general demurrer to the petition was sustained. This court affirmed the judgment, and in the opinion said: "A general demurrer admits facts well pleaded, but not the legal conclusions deduced therefrom by the pleader. In passing upon such demurrer to a petition, all the allegations therein should be considered; and if in view of the entire petition the petitioner is not entitled to the relief sought, the petition is subject to general demurrer. It is evident from the petition here, considered in its entirety, that the petitioner voluntarily executed and delivered the deed which he prays that the defendants be required to produce and which he seeks to have cancelled."

Count 2 of the petition makes the allegation that, at the time the deeds in question were executed, the grantees executed quitclaim deeds to the grantor, which were not placed of record. Surely it can not be contended that the grantees in the deeds could convey the property by quitclaim deed back to the grantor, unless first he had effectually conveyed the property to them. This allegation makes perfectly clear the full participation of both the grantor and the grantees in the scheme to hinder, delay, and defraud creditors. The contention of the plaintiffs in error in this case would make it possible for any dishonest debtor to convey all of his property to the members of his family, have the deed duly recorded, put the members of his family in possession of the property, and simply keep manual possession of the deed until such time as his indebtedness had become barred by the statute of limitations, and then call upon a court of equity to cancel the deed of record, and thereby assist him in reaping the benefit of his dishonest conduct. Such a result as this is repugnant to the very word equity. We are unwilling to lay down a rule that would accomplish this result.

We are also of the opinion that the petition in this case runs squarely into the rule laid down in the Code, § 37-104: "He who would have equity must do equity, and give effect to all equitable rights in the other party respecting the subject-matter of the suit." While the plaintiffs express their desire and willingness to surrender to the executor the land in their possession, they do not allege that they have surrendered, or even that they are willing to surrender, the rents and profits accruing during the time that the property has been in their possession.

2. This is not a suit for accounting. See Spence v. Brown,198 Ga. 566 (32 S.E.2d 297). It follows that there was no error in sustaining the general demurrer to the petition.

Judgment affirmed. All the Justices concur, except Duckworth,J., who dissents.