Gannard v. Eslava

PHELAN, J. It is objected to tbe decree in tbis case, tbat Octavia Gannard and Tuskena Gannard, wbo were nonresident minors, were not properly before tbe court; and tbe ground relied upon to sustain tbe objection is, tbat it does not appear, tbat in tbe publication wbicb was made, there was any abstract of tbe contents of tbe bill, pursuant to Rule 17, Olay’s Dig. 614, and tbe statute of 1845, Acts, p. 18. Tbe insufficiency of tbe brief of tbe bill, wbicb tbe rule requires to accompany tbe order of publication, or even its entire omission, cannot be urged for tbe first time in this court. McGowan v. Branch Bank of Mobile, 7 Ala. Rep. 823; Cowart v. Harrod, 12 Ala. 265. They answered by guardians ad litem regularly appointed, and it sufficiently appears tbat tbeir interests were protected. Tbe objection, tbat there is a misjoinder of complainants, we consider untenable. All three of tbe complainants held separate portions of tbe land sold by Gannard originally to Eslava, with warranty, and by him resold to tbe other two with warranty. If Eslava was a creditor, by reason of tbe covenant of warranty in Gannard’s deed, so, bkewise, were tbe other two, wbo purchased with covenant of warranty from Eslava, and were, with him, ousted by title paramount to tbat of Gannard. They all bad tbe right to look to Gannard for indemnity, by suit on bis covenant, and any cause wbicb would authorize one to go into a court of equity as a creditor, would equally permit him to join tbe others, or tbe others to join him. Tbis is for tbe benefit of Gannard, and all concerned, to avoid multiplicity of suits, one of tbe beneficent — 741 — objects of chancery jurisdiction. Although the complainants are many, the relief sought is, as far as respects the defendants, one in character. Brown v. Bates, 10 Ala. Rep. 432; Story Eq. PL § 99, et seq. 'Where all the creditors have a common interest, as here, in all the objects of the bill, they may sue jointly. Story Eq. PI. % 104. This brings us to the two main questions in the case: 1. Does the covenant of warranty, in the deed of Gannard to Eslava of 3d October, 1835, make him a debtor as of that date to Eslava, and to purchasers with warranty from Esla-va, who have been ousted by title paramount to that of Gan-nard ? 2. Will a voluntary conveyance be treated as void under the statute of frauds against an existing creditor, even in the absence of actual fraud ? Upon the first of these points, we think it clear, both from reason and on authority, that the covenantee in a deed for land, containing a general covenant of warranty, is a “ creditor” of the covenantor from the making of the deed, within the meaning of the statute of frauds, (Clay’s Dig. 254, § 2,) in all cases where there is a paramount outstanding title, by which he may be or actually is afterwards evicted. The debt created by such a deed from the warrantor to the warrantee, differs in no essential particular from the debt created by a bond with condition. In both cases it is “ debitum in prresentí, solvendum in futuro” upon a contingency. The deed is in substance but a bond for the purchase money, with the condition that the penalty of the bond shall be paid if the grantee be evicted, or that the grantor shall refund to the grantee whatever sum it may become necessary for him to pay out, in the purchase of a paramount outstanding title, to save himself from such eviction. Under the second section of the statute of frauds, any one is a creditor, who has a right by law to demand, either presently, or upon some future contingency, the fulfillment of any obligation or contract. To give the statute a less extensive meaning, would be to destroy its chief excellence. Roberts on Prauds 459, says; “It cannot be said, that an obligor in a bond, before the pecuniary demand arises by the — 742 — forfeiture, can be ignorant of his liability or danger, so as to exempt him from the imputation of fraudulent intent upon this statute of Elizabeth. And, indeed, if the construction of this statute can properly be influenced by technical reasoning, it may be remarked, that there is a present debt existing at law immediately upon the execution of the bond, the condition being a condition subsequent only, and operating merely upon the remedy, without in any manner changing, diminishing, or qualifying the debt itself.” Sutherland, J., in Jackson v. Seward, 5 Cowen, 71, says: “ The question of creditor or not cannot turn on the ground of contingent liability, when considering this act, (statute of frauds). If it should, all endorsers and sureties would be deprived of its protection.” It is argued, that the English statute and the New York statute contain the words, “creditors and others,” and that our statute contains the word creditors only: and that therefore the English and New York cases upon this point rest on a broader basis than our statute. In cases where the effort was to set aside voluntary conveyances, as fraudulent, when they were made pending actions for torts against the makers, and before judgment recovered, and in some other cases, some stress seems to have been laid on the words, “ and others.” Jackson v. Myers, 18 John. 427; Lewkner v. Freeman, Prec. in Ch. 105; 3 Coke, 82; Taylor v. Jones, 2 Atkins, 600. In commenting on the case in 2 Atkins, Taylor v. Jones, Mr. Lomax, in his Digest, Vol. 2, 341, uses this language: “ The omission of these words, “ and others,” in the act of assembly of Virginia, has not, however, according to the generally received impressions of the legal profession, varied the construction of the statute in this particular. We have in our act retained that expression of the statute of Elizabeth which is equally comprehensive: “ the person or persons, &c., whose debts, suits, demands, &c., shall be disturbed,” &c. The same remark will apply to the statute of Alabama, which is an exact copy of the Virginia statute. Besides, it will be found, that both the English and New York cases expressly decide, that a person whose debt was at first contingent, is not the less a creditor, according to the statute, on that account; the word others is not invoked in aid of such. Boberts on E. 459; 5 — 743 — Cowen, 71; East India Co. v. Clavel, Free, in Ch. 377; 10 Vesey, 360; 4 Greenleaf, 195. Many authorities are cited by the counsel for the plaintiffs in error, to show that the word creditors, as contained in our registration acts, (Clay’s Dig. 256, §'5; ib. 502, § 2), and our act “ to prevent the sacrifice of real estate,” (Clay’s Dig. 194, § 10), is construed to mean judgment creditors; and that the same word, as used in the bankrupt acts of England, is held not to. extend to creditors whose debts are contingent. This is all true; but the same reasoning which would uphold such a construction of the word in these statutes, would forbid it when we come to consider the great object of the statute of frauds, namely, the prevention of every sort of dishonest contrivance to defraud any and every kind of honest creditor. Although ordinarily none other than judgment creditors can proceed in equity, to set aside a conveyance void for fraud, yet the idea has never received countenance from any quarter, that a person must be a judgment creditor, before a deed can be concocted against him that shall be fraudulent and void as to his debt. We take it, therefore, to be sound law, that a covenantee in a deed with general warranty, is a creditor, within the meaning of the statute of frauds, at the date of the deed, whenever there is then existing an outstanding paramount title to that of his covenantor; in other words, that a liability, though contingent, is an existing debt, in view of the statute of frauds. This brings us to the question, whether a voluntary conveyance is good, in any case, against an existing creditor; or, can a man who owes a debt make a transfer of his property to his wife and children, from natural love and affection, which shall make such property no longer liable for that debt ? ■ The doctrine was laid down explicitly for a long time, by a number of very eminent English judges and chancellors, that such a thing could not be done. Lord. Hardwicke, in Townsend v. Windham, 2 Vesey, 10, uses this language; “ I know no case on the 13th Eliz. where a man, indebted at the time, makes a voluntary conveyance to a child, and dies indebted, but that it shall be considered a — 744 — part of bis estate, for tbe benefit of bis creditors.” Roberts on F. 24. Mr. Roberts, in bis admirable treatise on tbe statutes of frauds, observes; “It is worthy of remark, that tbe whole strain of Lord Coke’s reasoning in tbe last mentioned case, (Twyne’s case, tbe great leading case on this subject), shows it to be bis opinion, that tbe statute 13 Eliz. should be so construed, as to make it substantially operative to tbe benefit and protection of bona fide creditors; insomuch that a motive abstractly good and moral shall, by tbe presumption arising upon this statute, be intended fraudulent, whenever tbe grantor stands indebted at the time, against bis bona fide creditors.” Roberts on F. 449. Tbe plain and simple rule then prevailed, that, as to existing creditors, every mere voluntary conveyance was void, without respect to tbe motive with which it was made; and that as to subsequent creditors, it would be held void, or not, according to tbe actual intent with which it was made, to be gathered from all tbe surrounding circumstances. This rule became relaxed in England, so far as to leave tbe actual intent to govern, as to the validity of voluntary conveyances, in all cases, and thus have been introduced many nice distinctions and perplexing inquiries. The same relaxation of tbe old rule has been followed by many of tbe courts of this countiy, and, among others, by tbe Supireme Court of the United States, and is countenanced by eminent law writers. This whole subjéct, and tbe authorities which relate to it, have been lately examined with care by my brother Chilton, in tbe case of Foote & Wife v. Cobb, 18 Ala. Rep. 585; and I refer to bis opinion, as an able vindication of tbe correctness of tbe rule. That opinion, and tbe opinion of Chief Justice Saffold, in tbe case of Miller v. Thompson, 3 Porter, 196, in which tbe law was first settled this way in this state, will be found together to contain a full exposition of tbe authorities on this subject, and to them I refer. One only suggestion of my own. Those who discard tbe old rule, urge strongly the claims of wives and children for whom provision has been made in good faith, against those creditors who have allowed their debts to become old and stale. Against such generally, it may be remarked, the sta — 745 — tute of ^imitations is, and was intended to be, an ample protection for Avives and children and every one else. But what will those Avho are influenced by their sympathy for wives and children, do AAÚth cases like the present, where the liability of the settlor is a contingent liability,'and the debt of the creditor is a contingent debt, dependent upon the condition of a bond or the covenant in a deed. The debtor may be beggared by a forfeited bond or a broken covenant, years and years after its execution, without a shadow of blame on his part, and shall he remain so, while the wife and children of his covenantor live, perhaps, in ease and affluence, upon the mere bounty of the man who has all along been bound in law and conscience to make good his 'losses ? It only remains to apply these principles to the facts of the case. We are quite pursuaded, by the .testimony in the cause, that Dr. Gannard, at the time he transferred the fifty shares of stock in the Merchants’ Insurance Company of Mobile, to his Avife and children, did not intend to commit a fraud upon his creditors. We have no question-but that he Avas governed by correct motives in what he did. He was then a man of ample fortune; the Avitnesses say, he was worth a hundred thousand dollars, or thereabouts, and free from debt, and nothing was more reasonable and proper than that he should make a provision and advancement not more extensive than this for his Avife and children. There is some proof that he left Mobile clandestinely, after making sale of all his property, and that he did so to avoid suits that were threatened by his first wife’s relations. This proof we think is satisfactorily repelled. We find no actual fraud, in the transfer of stock to his wife and children.. There is proof, that previous to the deed to Eslava, Dr. Gannard held in the Bank of Mobile seventy shares of stock; of this, six shares were in the name of his wife, Susanna Gannard, 'nine in his name as trustee for his wife, and twelve shares he held as trustee for his children, Octavia Gannard and Tuskena Gannard, six for each. On the 7th May, 1836, a little over seven months after the date of his deed to Eslava, Dr. Gannard sold at public auction these seventy shares of stock in the Bank of Mobile, at one hundred and twenty-five — 746 — dollars the share, and oil the same day, 7th May 1836, he transferred fifty shares of stock which he had held since 1834, in the Merchants’ Insurance Company of Mobile, to his wife and children, thus: sixteen shares to his daughter Octavia; sixteen to his son Tuskena, and eighteen to his wife, Susanna Gannard. The dividends on this stock from 1836 to 1850, were drawn by Guesnard and Lopez, as the attorneys of the holders. The proof is, that at the time of this transfer, the stock of the Merchants’ Insurance Company was ranging from ninety dollars to par. So far as respects the stock held in the name of Mrs. Gan-nard, we are all of opinion, that although a gift from her husband to her separate use, which would hold good as against his representatives, it is nevertheless one which he may resume at any time during his life, and which will consequently be held subject to the claims of creditors. 5 Metcalf, 280; 2 Story’s Rep. 316. As respects the stock transferred to the children, in the Merchants’ Insurance Company of Mobile, my own mind is convinced from the proof, that this was, to the extent of the funds realized from the sale of the stock of the children in the Bank of Mobile, only a re-investment for their benefit, and should be so held. That it was not an original gift from their father, as of that date, and therefore subject to the claim of Eslava as pre-existing; but that it was a purchase with their money, which it will be their right hereafter to pursue and recover, if it is taken from them in this proceeding, unless they elect to proceed against the Bank of Mobile for the original stock in that bank. My brethren differ from me on the force of the proof to this point, and holding the transfer of Merchants’ Insurance Company stock to be a gift as of that date, and not an investment of the money of the children, agree in condeming this stock likewise to the satisfaction of the claims of creditors. It only remains to add, that the decree of the court below is affirmed. We have been requested by the counsel for plaintiffs in error, to reconsider the decision of this court in the case of Baker et al. v. The Heirs of Chastang, 18 Ala. 417, on two points: — 747 — 1. That a married woman cannot, bj • virtue of tbe statute of tbis State, (Olay’s Dig. 596, § 1,) make a valid will of real estate; 2. That tbe admitting of such a will to probate, by. tbe Orphans’ Court, is not conclusive of tbe right of a married woman to devise her real estate, and that tbe beir, notwithstanding tbe probate of tbe will, may deny its efficacy as a muniment of title, as against bis title by descent. Tbe contrary propositions were relied on in that action to make good tbe deed of Gannard to Eslava, as against tbe heirs of tbe first Mrs. Gannard, who was a Gbastang, and who devised to her husband tbe real estate in controversy in that suit, and whose will was probated by tbe Orphans’ Court of Mobile. Agreeably to tbe request of tbe counsel, we have carefully reconsidered tbe decision in that case, on tbe points in question, and are fully satisfied with that decision, and deem it needless to do more than refer to the reasoning and authorities of tbe opinion in that case, as conclusive of tbe same points presented by tbe answer of tbe defendants in tbis case.