Detroit & Security Trust Co. v. Gitre

[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] This is a bill, filed February 25, 1930, in aid of execution. The court accepted defendants' testimony, which was substantially undisputed, and dismissed the bill.

On July 9, 1929, plaintiffs brought suit against Lester Gitre for rent due on a lease expiring in 1932. About October 11th the attorneys, Lester Gitre, and his son Stanley had a conference, in which Lester proposed surrender of the lease and his own discharge from further liability on it. The offer was refused, plaintiffs' attorney insisting on the obligations of the lease, pointing out that Lester was financially responsible through ownership of a large number of lots in Gitre Park subdivision in Detroit, and that plaintiffs would look to the lots for satisfaction of the rent due and to become due.

On November 5th, Lester conveyed, partly to Stanley and partly to his nephew Delos, the Gitre Park lots and other property in Michigan, California, and Canada. There was some indefinite testimony of his retaining a piece of land near Niles, Michigan, which he later sold, but the property was not identified as to character, value, or time of sale sufficiently to warrant its consideration here in mitigation of the effect of the conveyances at bar.

Plaintiffs levied on the Gitre Park lots which, in his pleadings, Stanley stated are worth $100,000. The separate value of the lots deeded to Stanley and Delos respectively was not shown. Plaintiffs claimed the transfers were in fraud of creditors. Defendants claimed they were bona fide and for valuable and adequate consideration. Lester Gitre did not testify. As the conveyances present different considerations, they will be treated separately.

Delos Gitre Deeds Delos claims to hold as trustee for his father, George Gitre. In 1926, George transferred these Gitre Park lots to Lester in at least partial fraud of creditors. On the same day, Lester deeded them back to George. George said he held the deeds unrecorded to prevent his wife and her children from taking an interest in them. When Lester became financially involved in 1929 and something had to be done about the record title, instead of recording the deeds a new conveyance was made from Lester to Delos in verbal trust for George, in order to escape the wife's claim. The unrecorded deeds were destroyed by the attorney who conducted the conveyances. The trust has become written by the pleadings in this case.

The testimony did not show that Lester was given credit by plaintiffs upon the strength of the record title of these lots, and the question of the rights of the parties, had such credit been given, is not before us. Nor are we here concerned with the rights of George's wife. We agree with counsel for George and Delos Gitre that, through the unrecorded deeds, George had title, it was not restored to Lester by the destruction of the deeds, and George is still the owner of the lots.Tabor v. Tabor, 136 Mich. 255. As Lester did not own the lots, they are not subject to execution against him.

As to this property the decree will be affirmed, but without costs.

Stanley Gitre Deeds Defendants claimed they paid fair consideration for these conveyances, running both from Stanley and his mother to Lester. The deeds covered several lots in Ontario as well as those in Gitre Park. The claimed considerations were:

First: Debt owing by Lester to Stanley for work. Stanley was born in 1907. From the time he was 14 years old he worked in his father's drug stores after school, Saturdays, and during vacations, receiving board and room and wages of $18, increasing to $35 per week, until about 1925. He attended school and a military academy until he was about 18, when he was sick for approximately six months, and then worked on his father's poultry farm until it was sold, some seven months after Stanley became of age. He said his father promised him for his labor a $12,000 drug store and the $70,000 chicken farm. On receiving the deeds in 1929, he released his father from the oral agreement and all claims for labor and otherwise. The value of his services was not shown.

Second: Debt owing by Lester to his wife for labor. When Lester and Mrs. Gitre were married, they were poor and Mrs. Gitre worked for their mutual benefit, aiding her husband in accumulating his property. She took boarders and roomers to finance an education for him and later worked in the drug stores. She claimed the value of her services as part consideration for the transfer to Stanley, but offered no evidence of their worth.

Lester and his wife were not happy together. Mrs. Gitre had filed suit for divorce in 1926, and later discontinued it. She testified that, in connection with the reconciliation in 1926, Lester promised to put all of his property in their joint names. However, no conveyances were actually made to her, as in the cases relied on by defendants, and the oral agreement neither gave her title nor created a debt from her husband to her. Third: Property settlement on wife. In connection with the conveyances on November 5, 1929, Lester and Stanley executed an agreement, not referred to in the deeds, reciting that Lester was about to remove from the city, wanted to permanently provide for the support of his wife, Stanley was willing to assume the burden in consideration of the transfer of the property, that the transfer was accordingly made, Stanley agreed to support his mother for the balance of her life, the obligation to be charged against the real estate conveyed, and Stanley should always hold at least $10,000 in fair value of the real estate for the protection of Lester and the mother in the faithful performance of the agreement of support. Mrs. Gitre executed a consent to the instrument, in full of all her claims for dower, alimony, support, and share in the real estate and property accumulated by Lester and herself through their joint efforts.

Fourth: Defendants claimed Stanley gave his father $390 and Mrs. Gitre gave him $1,500 to invest in some lots with the understanding that title would be taken in their joint names, but Lester did not do this, and the property was later disposed of by him.

Plaintiffs made a prima facie case under 3 Comp. Laws 1929, § 14617, and the burden then rested on defendants to show that the conveyances were bona fide. This means that defendants had the burden of producing credible evidence of a bona fide conveyance. It is true that when such showing is made the presumption vanishes and is not to be weighed against the evidence (Schick v. Levine, 247 Mich. 595;Corbett v. Williams, 248 Mich. 541), but this does not relieve defendants of the burden of producing evidence of the existence of every essential of good faith.

From the sequence of events, it is plain that both Lester and Stanley intended to put the property beyond plaintiffs' reach. Their evident purpose was to make a property settlement with Mrs. Gitre, provide for Stanley, and leave plaintiffs' claim unpaid.

Where no rights of creditors intervene, a transfer from father to son in payment of services is lawful and the adequacy of the consideration unimportant. Even a gift is legal. But where creditors are interested, the transaction is subject to close scrutiny and the fairness of the consideration material. Where it assumes to be in payment of an antecedent debt, the consideration must be not "disproportionately small as compared with the value of the property or obligation obtained." 3. Comp. Laws 1929, § 13394.

There was no evidence of the value of the services performed by Stanley nor of the worth of the property received by him from which the fairness of the consideration may be found. The proposition that the services of a schoolboy have been of sufficient value to his father to constitute an adequate consideration for the properties Stanley claimed his father agreed to convey to him is so far outside the ordinary run of human experience that the court cannot take judicial notice of the adequacy, but affirmative evidence would be required to justify a holding that it was fair. First National Bank v.Engel, 245 Mich. 185. Defendants did not sustain the burden on this item of consideration.

Aside from the fact that there was no evidence of their value, the services performed by Mrs. Gitre for her husband afforded no consideration for the transfer. The right of a married woman to the "earnings acquired by any such married woman as the result of her personal efforts," 3 Comp. Laws 1929, § 13061, covers services performed by her for others than the family as well as apart from her household duties. Gregory v. Oakland Motor Car Co.,181 Mich. 101; Sorensen v. Sorensen, 211 Mich. 429; Inre Moon's Estate, 219 Mich. 104. The statute does not convert the marital relationship into a business partnership nor raise a money debt from husband to wife for her services to him, even though they take her outside the strict ambit of the domestic circle, and consist of aid to him in his business.

Nor did the agreement of the son to support the mother furnish a consideration for the transfer. The contract purported to release Lester Gitre from performance of a future duty to his wife, so he would retain the continuing benefit of his property, a benefit which belongs to his creditors. Aside from the exemptions allowed by law, all property of a debtor is subject to the claims of creditors, and those claims cannot be defeated by a conveyance which secures to the grantor the future fruits of the property. Walker v. Cady, 106 Mich. 21;Rynearson v. Turner, 52 Mich. 7; 27 C. J. p. 559; Annis v.Bonar, 86 Ill. 128; Bank of Versailles v. Guthrey, 127 Mo. 189 (29 S.W. 1004, 48 Am. St. Rep. 621).

In view of the court's acceptance of defendants' testimony and the failure of plaintiffs to present circumstances which tend to contradict the cash items of $390 and $1,500, respectively, they must be held proved. However, it was not shown that the Ontario real estate is not ample to compensate for these advances and they cannot be allowed as against the Gitre Park lots.

As to the conveyances to Stanley Gitre, the decree will be reversed and one may be entered subjecting the property to plaintiffs' levy, with costs against both Lester and Stanley.

Attachment Proceedings On March 3, 1930, plaintiffs commenced another action against Lester Gitre for rent due and to become due under the lease, and levied an attachment on the Gitre Park lots. Stanley Gitre filed petition for dissolution of attachment under 3 Comp. Laws 1929, § 14810, which changed the former law, 3 Comp. Laws 1915, § 13075, to permit such petition to be filed by "any other person not a party to the suit" whose property is attached. After partial hearing, counsel stipulated that the testimony given in the chancery suit be used as a basis for determination of the petition. On finding Stanley's title good, the court dissolved the attachment and plaintiffs review by certiorari, submitted herewith.

Counsel raised many points as to practice, which need not be considered because, as we have found that Lester Gitre's deed to Stanley is void as to creditors, it follows that the order dissolving the attachment will be set aside, with costs.

BUTZEL, C.J., and WIEST, CLARK, McDONALD, POTTER, SHARPE, and NORTH, JJ., concurred.