Clarke v. Black

The finding of the trial court conclusively negatives the allegations of the complaint, in so far as they aver that the conveyance to the defendant was in fact made in fraud of Edward E. Rogers, with intent to avoid the payment of a debt then due from the grantor to said Rogers, and for this reason was fraudulent. As to the remaining allegation of the complaint, namely, that the conveyance to the defendant was made without any valuable consideration therefor, and for this reason was fraudulent, the court finds that at the time of the conveyance the grantor was indebted to Rogers to an amount in excess of the value of her attachable property other than the land conveyed, that the land conveyed was subject to an attachment lien in a suit then pending between Rogers and the grantor for the enforcement of her debt to him, and states the facts which constitute the consideration upon which the conveyance was made by the grantor. These facts being ascertained and determined by the trial court, the conclusion therefrom, including the existence of constructive fraud and of a valuable consideration, is a question of law. Pettibone v. Stevens, 15 Conn. 19, 25; Winsted Hosiery Co. v.New Britain Knitting Co., 69 id. 565, 575.

If the conveyance to the defendant was made without a valuable consideration, the fact that such conveyance left the grantor without sufficient means to meet her existing indebtedness to Rogers might render the conveyance fraudulent, notwithstanding there was in fact no intent to defraud and no intent to avoid that indebtedness. QuinnipiacBrewing Co. v. Filzgibbons, 71 Conn. 80. On the other hand, if there was a valuable consideration for the conveyance, the bona fide transfer of the property upon such consideration might be valid, notwithstanding such transfer was calculated to hinder other creditors in the collection of their claims. Meade v. Smith, 16 Conn. 346, 358; WarnerGlove Co. v. Jennings, 58 id. 74, 82. A controlling question therefore, in determining the validity of the conclusion reached by the trial court, is this: was the consideration for the conveyance as set forth in the finding a valuable one? A good or meritorious consideration may be sufficient to support a conveyance by a grantor who is not indebted, or whose indebtedness is not unreasonably disproportioned to the value of the property conveyed; Salmon v. Bennett,1 Conn. 525; but where the conveyance leaves the grantor without sufficient property to meet existing debts, it cannot be supported as against those creditors unless the consideration is one which the law terms valuable. In general, a consideration may be valuable which involves the payment of money, satisfaction of some debt or binding obligation or duty, or some substantial benefit which is regarded as property, as, for instance, an intended marriage, or an understanding that the grantor shall be supported for life by the grantee. 1 Sw. Dig. (280), (281); Graves v. Atwood,52 Conn. 512, 516.

The answer to the question in the present case depends upon two transactions, related, but in a way distinct: first, the transaction in which Mrs. Black obtained from Mr. Black $3,500 upon the understanding between them as to the obligations thereby assumed by her, and used the money and invested the proceeds as stated in the finding; second, the subsequent conveyance of the land. As we read the finding, the first transaction is in substance this: In 1886 Mrs. Black obtained from Mr. Black $3,500 upon the understanding that she should use the money in her business until she had made sufficient to build a house, and that when the house was built she should turn it over to Mr. Black as his property; and that the proceeds of the business not required for this purpose should belong to Mrs. Black. In accordance with this understanding Mrs. Black used the $3,500 in her business, and at the end of ten years was able to and did build the house as contemplated by them. In 1896-7 she purchased the land in question, built upon it a house, and told Mr. Black she would convey it to him. We think that upon the completion of this transaction the relation of creditor and debtor existed between Mr. and Mrs. Black, and that Mr. Black was entitled to a conveyance of the house, or to damages in case of Mrs. Black's refusal to convey. That Mrs. Black gave no note or written obligation at the time she obtained Mr. Black's money, that there was no agreement made with reference to the repayment of said money, and that no interest was paid or calculated thereon, is immaterial. The transaction was not a loan of money upon interest. Mr. Black's property rights resulted from the acceptance and use of his money by Mrs. Black upon the understanding between them, her purchase of the land and building of the house with the proceeds and accretions of that money, and her promise to convey the land to him. The fact that Mr. and Mrs. Black were husband and wife is immaterial, except as explaining a transaction which might otherwise seem an improvident one on the part of Mr. Black. No rights of third parties are involved in the transaction, and it is not affected by the question of creditors of either Mr. or Mrs. Black. In a case such as this, the relation of husband and wife operates rather to emphasize the good faith and honesty of the transaction. Gilligan v. Lord, 51 Conn. 562, 567.

No claim is made that Mr. and Mrs. Black could not contract with each other in the manner detailed, and such a claim if made could not be maintained. Spitz's Appeal,56 Conn, 184, 186; Haussman v. Burnham, 59 id. 117, 132;Corr's Appeal, 62 id. 403, 409.

The plaintiff cites several decisions where it is held, as it was held in Paulk v. Cooke, 39 Conn. 566, 570, that the use by a husband of money which came to his wife and which under the law he is entitled to reduce to possession and use as his own property, does not constitute a valuable consideration for a subsequent transfer to his wife of large amounts of his own property for the purpose of placing it beyond the reach of creditors. It is evident that such decisions have no application to the facts in this case.

It thus appears that in 1897 the relation of debtor and creditor existed between Mr. and Mrs. Black, and that she was then bound to satisfy the claim of Mr. Black. The second transaction, namely, the conveyance to Mr. Black, took place some three years later, on September 28th, 1900. There is no significance in the delay in making the conveyance, as the court finds that the matter was put off without any special reason and that the transfer from Mrs. Black to the defendant was made in good faith and for the purposes aforesaid, that is, of satisfying her obligation to Mr. Black arising from the transaction above stated. The satisfaction of that obligation was the consideration of the transfer, and such a consideration is in law a valuable one. There can be no question of adequacy of consideration; land worth about $6,000 is a reasonable compensation for the loss of $3,500 and its use and profits for ten years. Such a transfer, in good faith, upon valuable and adequate consideration, might lawfully be made, although the parties knew of the Rogers claim and that the transfer might operate as a preference, and would be valid as against Rogers unless opportune proceedings in insolvency were commenced. That the parties supposed and understood that the intervening attachment of Rogers would in fact hold the land to the extent of any judgment Rogers might recover, and so to that extent affect the value of the property received by Mr. Black in satisfaction of his claim, only serves to illustrate the absolute good faith of the transaction which the court so unequivocally finds.

That the transfer of the land in question to Mr. Black was not fraudulent is the necessary legal conclusion from the facts found.

There is error, the judgment of the Superior Court is reversed and the cause remanded with instruction to render judgment for the defendants.

In this opinion the other judges concurred.