Reehling v. Byers

Mr. Justice Gordon

delivered the opinion of the court,

“A volunteer,” says the learned judge of the court below, “ who buys with notice of the intended fraud, cannot hold the property against the creditor whose debt has been delayed or hindered, even although he may have paid its full value. But when a creditor takes the property to secure his dobt, the transaction is not void, although he may have full notice that the debtor prefers him to his other creditors, and that other creditors must lose in consequence of such preference. Indeed, where property conveyed is not worth more than the existing indebtedness, it would be difficult to conceive a case in which fraud, under the statute of 13 Eliz. could be established. But when, as in the case before us, a note is held by the vendee and applied only in part payment for the property, and cash is paid for what is due in excess of the note, and the jury is of opinion that the cash payment is not bona fide, but made only to deceive and cover up a fraud upon the creditors of the vendor, what is the effect ? I instruct ■ you that it would render the whole transaction void, because fraud vitiates everything it touches, and although you may be of opinion that the note was honestly held, yet if you shall further believe from the evidence that the money was not honestly paid, then the purchase would be fraudulent and void against the creditors of W. H. Taylor.” With the above, as a general statement of the law governing cases of fraud arising under the statute of 13 Eliz., no fault can be found; the difficulty arises in its application to the case in hand. It does not seem to be questioned but that Isaac Taylor was a bona fide creditor of his son, W. H. Taylor, and, as such, the learned court concedes, his son might have preferred him over other creditors, even though he had full notice of such preference. It follows, if Isaac Taylor’s motive in the purchase of the property in controversy was the security of his own debt, his purchase cannot be impeached, though he may have paid the difference between the amount of the note due him and the price agreed upon for the property in money. In this we must look to the motive of the creditor, .and if that was honest and lawful, the intent of his debtor does not enter into the question. As was said by Mr. Justice Coulter, in Scott v. Heilager, 2 Harris 238: “ One man cannot be prejudiced by the fraud of another, of which he has no notice nor opportunity of receiving notice.” It is true, indeed, if the intention of the parties was not only to secure the note due to the father, but also to put the balance of the property into such a shape that it could not be reached by the son’s creditors, then, as to such creditors, the whole transaction would be void. But of such intention we can find no evidence. The defendants offered to prove, and did prove, that William H. Taylor said, “ I wouldn’t have sold it,” that is, the property in controversy, “ only to get out of paying the bail-money to Brinton.” This was all very well, in order to show the motive by which William H. was actuated in the transfer of his property, but it does not affect Isaac unless he knew of this fraudulent design at the time of the consummation of the sale. So well did the counsel for the defendants know that this evidence, standing alone, would come to nothing, that the offer under which it was admitted, was supplemented by a proposition to prove a fraudulent collusion between William H. Taylor and his father. . No effort, however, was made to fulfil this proposition; hence, the proof adduced was but an isolated link in a proposed chain of evidence which was never completed, and, therefore, utterly worthless, and so the court should have treated it: Battles v. Laudenslager, 3 Norris 446. Not only was there no evidence that this alleged fraudulent intention of William H. Taylor had been communicated to his father, either before or after the sale, but it was not even shown that the father knew that his son had been sued on the Brinton note, in which he was surety for A. B. Kurtz. Indeed, for aught that appears, he was wholly ignorant of the claim which, it is now said, he colluded with his son to avoid. But, as we have already intimated, had he known the fact of his son’s suretyship for Kurtz, and that Brinton was about to obtain judgment, that would not have rendered his purchase void if in making it his intent was to secure his own debt, and not to hinder, delay or defraud Brinton. So, that Isaac Taylor borrowed part of the money,, to pay out the balance of the purchase-money, from his daughter, Mrs. Meredith, was of no kind of significance. What if this money were that which she had just received from her brother, and was part of that which he had that day received from his father ? Her claim was an honest one; no one doubts that fact; one on which she had a right to receive the money paid to her, and there surely was nothing wrong in her loaning it to her father. -It is a mere trifling wdth the principles of justice to allow a circumstance such as this, in itself so fair and proper, to be used to stamp a transaction, otherwise honest and lawful, with the character of fraud. Business dealings between parents and children, and other near relatives, are not per se fraudulent. They must be treated just as are the transactions between ordinary debtors and creditors. As in the latter case, where the bona tides of such transactions are attacked, the fraud alleged must be clearly and distinctly proved, so likewise in the former.

We have but to say in conclusion, that as there was, in this case, not even a sinctilla of evidence tending to involve the assignor of the plaintiff in the alleged fraud, the court should have affirmed the plaintiff’s first point, that is, “that, under all the evidence given in this case, the verdict should be for the plaintiff.”

The judgment is reversed, and a new venire ordered.