Cunningham v. Dwyer

Bowie, C. J.,

delivered the opinion of this Court:

The appellee, claiming as a creditor of the appellant, Thomas A. Cunningham, filed his bill on the equity side of the Circuit Court for Baltimore city, against him and others, praying certain conveyances therein referred to may be declared null and void, and for other relief, not materia] to be considered in this appeal.

•The deeds assailed are dated the 14th .of September 1855, .and purport to he made in consideration of the sum of fiye .dollars, paid by the grantee, yyh.Q yas thp mother of the grantor,

It is alleged, that before and at the time of the execution of these instruments, the grantor was insolyent, and largely indebted to the complainant and others, by whom he was .sued, and these were executed fraudulently and \yithout consideration, for the purpose .of hindering, delaying and .defrauding the creditors pf the appellant, Thomas A. Cunningham.

The grantee, Abigail Cunningham, died in the year 1851, Letters testnmpntary yyere granted to her son, Thomas, who jyas appointed her executor by her will, dated the 9th o'f July 1,855, by yrhich the premises conyeyed to her, by the .deeds in question, passed, under a residuary .clause, to h,er .daughters, Spsan ⅜.'Cunningham and Abbie .E. Wright, po-defendants and appellants.

The answers of the appellant defendants put ip issue all the allegations affecting the validity of the deeds,

Thve controlling question in the .consideration of this appeal, is the prima, facie legal character of the deeds, which are assailed for fraud. IJpon this, the materiality of the .questions relating to the admissibility and effect of the testimony, essentially .depends; if the deeds were made for an adequate valuable consideration, it is immaterial whether the grantor was indebted or not, at th.e time of th,eir execution, The learned Judge yyho decided this case below, places this ppipt prominently in the foreground of his opinion thus : “These deeds, haying been executed by the defendant to his ■mother, for the consideration of fiye dollars only, must he treated as made for the consideration of loye and affection, and, fqr that reason, as purely voluntary, and therefore the .evidence adduced by the defendants for the purpose of proving these ¡deeds were rnade for an adequate pecuniary consideration, if it came from competent witnesses, could not he regarded, because ⅛ ⅛ offered to vary the consideration set forth in the deeds.” “Since the decision by the late Chancellor, in the case ,of Baxter vs. Sewell, 2 Md. Ch, Dec., 447, whose decree in that case was affirmed, and the opinion as delivered by him adopted by the Court of Appeals, in 3 Md, Hep., 334, the law must be considered as settled in thisjState upon this question.”

Before it could be determined whether an additional consideration could be proved, it was necessary to decide the character of the consideration expressed, At that stage of the inquiry, it was not a question of adequacy or inadequacy, as a badge of fraud, or whether the parties - to the deed were mother and son; although they stood in that relation to each other, they might also have been debtor and creditor, or bargainor and bargainee. The admissibility of evidence must be determined before its weight is considered.

The general principle of the common law, sanctioned by the Statute of Frauds, is, th#t it is not competent to contradict, alter or vary a written instrument by parol proof, but before this can be applied, it must be ascertained what is the character of the written instrument it is proposed by the evidence to affect.

The learned Judge, in adopting bis conclusion, did not advert to the distinction between the amount of the consideration, as a fact, which being grossly inadequate, if established, would be evidence of fraud, and the kind of consideration, which would determine whether the instrument belonged to the class of deeds known as “bargains and sales,” or “covenants to stand seized-to uses.” Considered merely as a fact, the amount would be evidence of fraud, but considered as a pecuniary consideration, it established the character of the deed as belonging to a class which would be preferred to volunteers, and the amount not being conclusive on the grantee or those claiming under her, it was, as we shall proceed to shew, from a review of the several cases on which Baxter vs. Sewell was based, competent to prove a larger consideration of the same kind.

After referring to a series of Maryland cases, to establish his position in Baxter vs. Sewell, concluding with Cole, Trustee, vs. Albers & Runge, the Chancellor adds; Ci In the last case, the doctrine of the inadmissibility of parol proof of a different consideration from that stated-in the instrument, was fully maintained, though it was allowed to the party, in that case, to offer evidence of the same kind of consideration, varying only in amount from that expressed.” Baxter vs. Sewell, 2 Md. Ch. Dec., 455.

It is thus apparent no new.rule was designed to be laid down, either by the Chancellor or the Court of Appeals, which affirmed his decree, upon the authorities cited by him. The case thus referred to and adopted by the Chancellor, itsshould be remembered, was the last in order of time of the decisions referred to, and made after great deliberation, with all the preceding cases in view. It may, therefore, be regarded as a leading case on the subject.

Speaking of the bill of sale, AeohbR, J., who delivered the opinion in Cole’s case, said: “The instrument would, in contemplation of law, be a deed of bargain and sale, standing on the consideration proved, in the same way as it would be if standing on the consideration expressed in the deed.” In the case of Betts vs. The Union Banle, the evidence could not be received, because by the disproof of the consideration expressed, the deed had been rendered inoperative and void, and parol evidence of a different consideration could not be received to set up the deed thus impeached. But here the "deed is not impeached or rendered inoperative and void, by. the evidence offered, but the evidence is adduced to rebut any idea of fraud, by showing not a different consideration, but the same kind of consideration, differing only in amount and the circumstances under which it assumed this shape.” Cole, Trustee, vs. Albers & Runge, 1 Gill, 423.

This language is singularly appropriate to the deeds now before us. The testimony offered by the appellants to sustain them, was not testimony, the effect of which would be to change the legal character, prima facie impressed by law on them. We are not called on to compare the facts in the «case of Baxter vs. Sewell with those in the present case, and declaro those deeds voluntary, because the Chancellor arrived at that conclusion, from facts which may he more or less similar; hut to examine the authorities relied on. hy the Chancellor in that case, and adhere to the principles established hy them. Of the two considerations expressed in the deed in Baxter vs. Sewell, the Chancellor held that of natural love and affection to he the real bona fide consideration, and the other (five dollars) to he nominal or feignedj and he would not permit the real to he changed hy setting up a different consideration under the feigned. Ho such alternative is presented here. The question in Umine is, what is the prima facie legal character of the deed ? If a deed of bargain and sale, then an additional consideration of the same kind may ho proved.

The Statute of the 13th Elizabeth avoids all gifts, conveyances, &c., of lands or chattels had or made with intent or purpose to delay or defraud creditors, with a proviso that it shall not extend to any estate or interest upon good consideration and bona fide lawfully conveyed or assured,, to any person not having, at the time any manner of notice or knowledge of such fraud.” “Good consideration” is construed to mean valuable consideration, as between existing creditors and. others, claiming under the debtor, hut the form of the conveyance or assurance is not otherwise affected. hy the statute. A consideration was not essential to a deed at common law, nor is it now necessary “inter partes,” although it is to render it valid as to all persons.' Cruise,Tit. Deed, ch. 2, secs. 38 and 39. If no consideration is expressed, one may he averred and proved. Stearns vs.Barrett, 1 Pick., 443, 449. 2 Coll. Ch. Cases, 76, 84. And where any consideration is expressed, it is held as a general rule, that any other consideration not inconsistent with that which is expressed, may he averred and proved. Vide note 1, Cruise, Tit. Deed, ch. 2, p. 322, and cases there cited. Cruise, Tit. Deed, ch. 2, p. 324, note 2.

The presumption of law is, that a deed made for a valuable consideration, however small, is bona fide. Fraud is not to be presumed. It may be desirable that all legal instruments wliicb might affect the rights of third persons, should show on their face the actual- c'on'siderations for'which they were made, although such a rule would be often extremely inconvenient and embarrassing; but there is no legal authority for such a proposition.- As fraud is often inferred from' circumstances, where an instrument prima facie valid between' the parties, is rendered doubtful by evidence of extrinsic facts, it seems almost a’n e fftial legal consequence, that all facts- not inconsisff- with the recitals of the deed, should be admitted to sü'stain it.- The tendency of this practice is, to’ make fraud a question of fact, not an inference of law,, and to open every case to the fullest investigation. If it was admissible in Cole vs. Albers & Runge, to prove that an instrument purporting to be a bill of sale for the nominal consideration of $10,000, was given to secure a debt of one-third that amount, and future advances to be made to that amount, because such etidence did not' change the character of the deed', it must be competent in this case to prove the actual am’oúnt received by the grantor from the grantee, in advances of money which he had agreed to secure by" deed, and to secure which the deed was executed in pursuance of the previous agreement to that effect. Such testimony would not have changed the legal character of the deed, and would therefore have been admissible, according to the principle of the preceding cases. But Cunningham’ testimony was further excepted to, upon the ground that, as executor of Abigail Cunningham, he is interested iff sustaining the deeds, because they convey certain leasehold property,- which (if sustained) will be assets in his hands, and entitle him to commissions on their appraised value. This objection seems to us well taken. The incompetency of a witness to establish a fact which increases his own funds, or those which certainly enure to his profit or advantage, is one of the first principles' of the law of evidence as it then stood. This disqualification has been removed since the hearing below.

(Decided June 16th, 1865.)

The Code, as amended, Art, 37, sec. 1, mates all persons admissible as witnesses, notwithstanding such persons may or shall hare an interest in the matter in question, or in the event of the trial of any issue.

The decision of the learned Judge below being, in our opinion, erroneous upon a most material point, it would not be consistent with equity and justice to affirm it for reasons which are since rendered legally insufficient; therefore, without affirming or reversing, we remand the cause, that further proceedings may be had in conformity with this opinion.

Cause remanded.