Low v. Ivy

Opinion by

Orlad y, J.,

On the trial of a sheriff’s interpleader, which was framed to determine the title to certain personal property, it was developed that the title of the plaintiff in the issue depended upon the legal effect of a verbal agreement which was the basis of his claim, and stated by him to be as follows: “ In consideration of the indebtedness of Richard Ivy through the mortgages that I hold and the judgments, an arrangement was made, or an agreement with Richard Ivy, by which all the income from the farm was to be turned over to me, I to find the sale for the same. Richard Ivy to have from the farm ‘ his living,’ and anything above or any profits, to be applied on this indebtedness on these judgments.” Two cases were tried together and verdicts were returned in favor of the claimant, the appellee.

Myron I. Low held a mortgage against the farm of Richard Ivy, which was in the occupancy of the mortgagor, and by him conducted as a dairy farm.

Myron I. Low knew that Richard Ivy was insolvent at the time of making the agreement in controversy, and that the executions of Edward Ivy were founded upon an indebtedness which antedated the verbal agreement.

The original title of Low to the personal property was not questioned, but it was urged that the secret agreement for the use of the farm and the personal property was a fraud upon the appellant. Under the arrangement as made between Richard Ivy and Myron I. Low the first item to be deducted from the returns of the business was, as stated by Ivy, “ what it would take to keep the family and feed the stock,” or, “ his living,” as stated by Low, and “ anything above, or any profits, were to be applied to the indebtedness ” of Ivy to Low. The “ living ” was without any limitation as to the size of his family, character of expenditures whether lavish or frugal, the management of the farm, repairs or improvements to the property, which were, as far as the evidence discloses, left for the decision of the insolvent debtor. The counsel for the defendant in the issue requested the court to charge the jury that “ if they believe the agreement between Myron I. Low and Richard Ivy was made in part to protect Richard Ivy, an insolvent debtor from his creditors, and Edward Ivy was one of such creditors, the agreement is fraudulent; and the plaintiff cannot recover in this case,” which was refused by the court.

In case of a sale of personal property, where the rights of creditor's are concerned, it must be bona fide for a sufficient consideration. The vendor must reserve to himself no rights, interest, privilege, profit, or advantage that cannot be reached by execution. The want of these requisites will vitiate the sale and render it null and void as to the creditors: Sanders v. Wagonseller, 19 Pa. 248; Hennon v. McClane, 88 Pa. 219; Shakely v. Guthrie, 2 Pa. Superior Ct. 414; Downing v. Gault, 8 Pa. Superior Ct. 53. If this arrangement, as it is called, was made in part to protect Richard Ivy from his creditors by covering up all of his personal property, so as to enable him to secure his “ living ” from it, until it was rendered valueless by time and use, the effect on the creditors would be the same as if Low had sold to Ivy on similar terms, and, if found to be true it would be void and vitiated by the fraud in law. The point submitted should have been affirmed. The judgment is reversed and a v. f. d. n. awarded.