Phebus v. Fourth and First National Bank

*58 Opinion op the Court by Drury, Commissioner Reversing. The appellants,' -whom we will call the defendants, have appealed from a judgment in favor of the appellee, whom we will call the plaintiff. By this judgment, an attachment levied upon two tracts of land deeded to the defendant, Alice R. Phebus, and situated in Fulton county, Kentucky, was sustained, and this land was ordered sold in satisfaction thereof. On March 21, 1921, the defendant, G. W. Phebus, Jr., executed a note to the Dahnke-Walker Milling Company, of Union City, Tennessee. This note was by the milling company assigned to the plaintiff as collateral security for a loan it had made the milling company. The plaintiff sued G. W. Phebus, Jr., on this note in the chancery court of Obion county, Tennessee, and recovered a judgment for $1,-305.34. Execution was issued on this judgment in Tennessee, and returned “.no property found.”. On June 15, 1922, plaintiff began this action in the Fulton circuit court upon that judgment, alleging in its petition that the defendant, Alice R. Phebus, was the owner of the two tracts of land above mentioned, which it alleged was by her husband bought and paid for, but deeded to his -wife to.defraud his creditors. These two tracts of land contain 83% acres, and were conveyed to Mrs. Phebus on November 29, 1921. G. W. Phebus, Jr., was either insolvent when he executed this note to the milling company, or he became so shortly thereafter. His wife had considerable property, which her husband managed and looked after for her. He rented her land from her, and in addition to the sums he owed her for rent, she had loaned him money to the extent of about $8,000.00, about $6,000.00 of which she obtained by placing liens on her land. He owed his wife, so she says, about $16,000.00, and in April, 1921, he turned over to her two notes of uncertain value, but. aggregating in face value about $19,000.00. These notes were exchanged for some stock in the Alabama Hand & Improvement Company. The stock was traded to one Bruner for two notes secured by liens on land belonging to L. E. Davidson, and the surrender of these notes to Davidson was the consideration for the conveyance of the 83% acres of land in question to Mrs. Phebus. It is this conveyance that is attacked as fraudulent. It is insisted that there was no consideration for the trans *59 fer by defendant Phebns of these notes to his wife, and that the transfer was, therefore, fraudulent. In the recent case of Bishop v. People’s Deposit Bank, 210 Ky. 296, 272 S. W. —, this court said: “A debtor has the right to pay a bona fide creditor, and a transfer of property to the extent of a bona fide debt is not fraudulent. By section 1910, Kentucky Statutes, all such transfers made with the intent to prefer one creditor to another may be adjudged to inure to the benefit of all the creditors, but the petition for this purpose must be filed within six ‘months thereafter.” If plaintiff had attacked this transfer within six months it would have been treated as an assignment for the benefit of the creditors of Mr. Phebus. It was clearly a preference, but it was not so attacked, and- as it is not without consideration, it cannot be attacked under either section 1906 or section 1907. See Granberry v. Pierce, 151 Ky. 794, 152 S. W. 938; Koch v. Hall, 188 Ky. 378, 221 S. W. 1077; City Nat. Bank v. Anderson, 182 Ky. 76, 206 S. W. 159; Hickman Bank & Trust Co. v. Pickard & Mayberry, 207 Ky. 772, 270 S. W. 30. The judgment is, therefore, reversed, and the cause remanded for consistent proceedings.