Akers v. Gillentine

FELTS, J.

Complainant filed the bill herein to obtain reimbursement for over $4,000' which he paid as surety on the bond of W. T. Gillentine, guardian for the latter’s two minor sons, J ack Gillentine and Bay Gillentine. He also sought to impress with a trust a tract of land of 96 acres referred to as the Dyer tract which he alleged had been purchased by the guardian with the funds of his wards. He further sought to set aside as a fraudulent conveyance a deed by which W. T. Gillentine had conveyed the Dyer tract and another tract of land to his wife Yera Gillentine.

The bill averred that complainant had signed the bond as surety of the guardian on January 16, 1933, in the sum of $4,000. The guardian received for his wards two notes of $1,000 each, one belonging to his minor son J ack Gillentine and the other to his minor son Bay Gillentine. Both of these notes were dated April 9, 1932, one due in nine months and the other in eighteen months from date.

It was further averred that W. T. Gillentine had transferred the Bay Gillentine note to the City Bank & Trust Company of McMinnville as collateral security to a note of W. T. Gillentine and wife Yera Gillentine in the sum of $1,250; that the proceeds of their $1,250 note had been used to purchase the Dyer tract of land; and that the Bay Gillentine note had later been paid to the bank and the proceeds applied in part payment of the $1,250 note.

The hill alleged that the guardian had never accounted for the proceeds of either of the two notes of his wards and had never made any settlement as guardian. It further averred that on January 29, 1939, W. T. Gil-lentine, being insolvent, conveyed the Dyer tract and another tract of land to his wife Vera Gillentine; that this conveyance was without any consideration and was made to defraud his creditors; and that his wife knew of his fraudulent purpose and participated therein.

It was further averred that in June, 1941, Jack Gillen-tine and Eay Gillentine had brought suit against the guardian, complainant as his surety, and the City Bank & Trust Company; that in 1947 the suit was dismissed as to the bank and a decree entered against the guardian and the surety; and that on April 30, 1947, the complainant as such surety had had to pay $4,395.68 in satisfaction of that decree.

The present bill was filed May 28, 1947. It was later amended so as to allege that complainant had.no knowledge of the guardian’s misappropriations of the funds of his wards or the guardian’s fraudulent conveyance to his wife until the bringing of the suit by the wards in June, 1941.

Pursuant to a prayer of the bill an attachment issued and was levied upon the land and publication was made for defendants W. T. Gillentine and wife, both of whom were nonresidents of Tennessee residing in Michigan. He filed a plea in abatement averring that he was a nonresident and owned no property in this state. Mrs. Gil-lentine demurred to the bill setting up the statutes of limitation of three, six, and seven years in bar of the suit aeninst her.

The Chancellor sustained the plea in abatement and the demurrer and dismissed the bill. Upon appeal, by complainant, the Supreme Court, opinion by Mr. Justice Burnett filed February —, 1948, Tenn. Sup., 231 S. W. (2d) 369, held that the bill alleged a case of constructive trust by averring that the proceeds of the property of the wards had gone into the purchase of the land, that upon this theory the statute of six years would not begin to run until June, 1941, when Mrs. Grillentine’s holding was discovered to be adverse; and the Court reversed the Chancellor’s decree and remanded the cause for answers and proof.

On the remand an answer was filed. W. T. Gillentine did not deny his defalcation or make any defense to the bill. Mrs. Gillentine denied that any of the funds of the wards had gone into the purchase of the land and denied that the conveyance to her had been made without consideration and denied that such conveyance was fraudulent. She also set up a plea of the statute of limitations of seven years as a bar of the suit to set aside the conveyance.

Proof was taken by depositions and the cause was heard by the Chancellor. He filed his opinion embodying his findings of fact and conclusions of law. He found that complainant had failed to prove that the proceeds of the Bay Gillentine note were applied to the purchase of the Dyer tract of land. He also found that this note was not pledged to the bank as collateral security to the $1,250 note of W. T. Gillentine and Mrs. Vera Gillentine. He therefore concluded that no trust could be impressed upon the land. He entered a decree dismissing complainant’s bill.

Complainant appealed and insists that the Chancellor should have entered a decree for him against W. T. Gil-lentine for $4,395.68 with interest and should have found and decreed that the conveyance made on January 29, 1939, by W. T. Gillentine to Vera Gillentine was fraudulent and void and should have set aside this conveyance and subjected the land to the satisfaction of complainant’s debt against W. T. Gillentine.

Of course complainant is entitled to. a decree against W. T. Gillentine for the amount complainant was forced to pay on account of Gillentine’s defalcation.

We do not understand that appellant challenges the finding of the Chancellor that the Bay Gillentine note was not pledged to the bank and that no part of the proceeds of this note directly or indirectly went into the purchase of any part of this land. Nor do we think appellant could successfully challenge this finding. The only witness who knew anything about the transaction was Walling and on cross examination his testimony was that the Bay Gillentine note was not pledged to the bank.

Also we are constrained, to hold that the statute of seven years barred this suit insofar as it sought to set aside the deed to Mrs. Gillentine as a fraudulent conveyance. As we have seen, this deed was made and recorded on the 29th day of January, 1939. The statute of limitations of seven years began to run from that date and the bar was complete on January 30, 1946 more than a year before the present bill was filed.

Mrs. Gillentine’s nonresidence did not suspend or affect the running of the seven years statute of limitations. This is so because the bill could have been filed in Warren County and complete relief had at any time notwithstanding her nonresidence. Such is the holding of Boro v. Hidell, 122 Tenn. 80, 120 S. W. 961, 965, 135 Am. St. Rep. 857.

This case also holds that even though the conveyance was fraudulent and the vendor fraudulenty concealed the cause of action, such concealment by the vendor would not prevent the seven year' statute of limitations from running in favor of the vendee It was there said: ‘ . . . That the statute of limitations protects a fraudulent vendee is clear under the authorities (Porter’s Lessee v. Cocke, [7 Tenn. 30, Peck 30 ], supra; York v. Bright, [23 Tenn. 312], 4 Humph. 312; Ramsey v. Quillen, [73 Tenn. 184], 5 Lea 184; Mulloy v. Paul, 2 Tenn. Ch., 155); and that the concealment of the cause of action by the vendor or principal will not prevent the running of the statute of limitations in favor of such fraudulent ven-dee is fully sustained by Howell v. Thompson, 95 Tenn. 396, 404, 32 S. W. 309, et seq.; Bates v. Prehle, 151 U. S. 149, 162, 14 S. Ct. 277, 38 L. Ed. 106.”

It results that the decree of the Chancellor will be modified as above indicated and as so modified will be affirmed. A decree will be entered here for complainant against W. T. Grillentine for $4,395.68 with interest from April 30, 1947, together with all the costs of the cause. In all other respects the bill will be dismissed. The costs of the appeal are adjudged against complainant and will be paid out of the deposit made by him with the clerk and master in lieu of an appeal bond.

Howell and Hickerson, JJ., concur.