Montgomery's Executors v. Kirksey

CHILTON, C. L —1. As to the first charge: We may leave out of view the relationship of the parties, as constituting one of the conditions upon which the judge predicated the conclusion of fraud, in this charge; for, if this was an error, it was favorable to the appellants, requiring the jury to find that all the parties to the deed were related, when, in our opinion, aside from the relationship of the parties, if the jury found the other facts hypothetically stated in the charge to exist, they might well have been instructed to find the deed fraudulent. The relationship of the parties, upon a question of fraud in fact, was a circumstance which might properly enough go to the jury to be considered by them, in connection with the other facts in the cause, in ascertaining the quo animo the deed was made; but it furnishes no predicate for a legal presumption or conclusion. The charge, stripped of this superfluous matter, presents [185] the question, whether a deed, made by an insolvent, of all his property, to a trustee, in trust for the payment of some of his debts, leaving other debts unprovided for, and containing stipulations beneficial to the grantor — namely, that he should retain the property, the use of which is valuable, for several months until the law-day, and for such longer period as the parties secured may postpone the sale ; 'and that the surplus, after satisfying the secured debts and the expenses, should be refunded to the grantor — is not, as a conclusion of law, fraudulent and void, if these facts were known to the parties to it? We do not hesitate to say, that had all these facts appeared upon the face of the deed, or been returned by a special verdict of a jury, we should feel constrained to hold, irrespective of the intention of the parties, that the deed was fraudulent and void in law as against the creditors not provided for. It is not permissible for any one thus to avail himself of a part of his indebtedness to tie up all his property and exempt it from liability for his other debts,'while ¡he has' the temporary benefit of the use of it and a contingent residuum. Such assignments, when these facts appeared on their face, have uniformly been declared fraudulent in law. That the facts do not appear on their face, only puts the party upon whom the burden of proving fraud is devolved to the necessity of otherwise establishing their existence, and of showing that the beneficiaries were cognizant of them. Several adjudged cases of this court show that such deeds cannot be upheld.—Gazzam v. Poyntz, 4 Ala. 382; Hindman v. Dill, 11 ib. 689; 7 ib. 770; 6 ib. 178; 12 ib. 102; 5 ib. 324; 10 ib. 731. There was, therefore, no error in the first charge given by the court, of which the appellants could complain. As to the second charge : We are not at all sure that it was warranted by the proof disclosed by the bill of exceptions. It is said, the proof tended to show that the property, after the sale under the deed of trust, and the purchase by Hugh Montgomery, went back to the possession of William Montgomery, “ with the permission for him to get a subsistence for himself and family, but to turn over to Hugh Montgomery all beyond this; and that the property was to be under the general supervision and control of James Montgomery, as the agent of Hugh.” There was other evidence, [186] tending to prove that William Montgomery, from the date of the deed until the time of the levy, controlled the property in all respects as his own ; that it had been taken into possession of James Montgomery for a short time — a day or two— before the expiration of three years, for the purpose of avoiding the three years’ statute as to loans the evidence of which is not recorded, but was returned to William Montgomery without making any new arrangement, and had been under' his exclusive management and in his possession ever since. The proof conduced to show, that the cotton which was the subject of controversy was raised by these slaves, on land purchased by James Montgomery, as agent of Hugh Montgomery, and paid for by him out of cotton crops raised by the slaves. Such being the proof, when stated in the strongest light for the appellee, we are much inclined to doubt whether it raises any question as to the three years’ possession under a pretended loan. If the deed was bona fide, and the purchase by Hugh Montgomery of the slaves and other property was fairly and honestly made, he had as much right to contract with his son, the defendant in the execution, to take possession of the property and work it on land which he would purchase, retaining a subsistence for himself and family as a compensation for his care and trouble, as he had to employ an overseer in the same way, or for a stated compensation. The uncertainty as to the amount of the compensation by way of maintenance, is a circumstance to which the jury may look in determining whether this was not a part of a scheme designed to secure the property to the son, to the exclusion of his creditors ; but, if all the previous transactions by which Hugh Montgomery acquired the property are bona fide, the fact of'relationship may serve to explain why the same degree of particularity as to compensation was not observed as would be likely to have obtained had the father dealt with a stranger. Neither can any presumption of fraud be predicated upon the isolated fact, that the property went back into the possession of William Montgomery immediately after the sale. The rule which makes the retention of personal' property by the vendor prima facie evidence of fraud, does not apply to sales made at public auction after notice, as in this case. If, [187] then, there was an agreement that William should retain the slaves and farm of Hugh, and deliver over the proceeds to the agent of Hugh, which might remain after deducting a subsistence for himself and family, and there was no fraud in the acquisition of the property in Hugh, the statute above alluded to respecting possessions under loans for three years has nothing to do with the ease. But, conceding that the facts brought the property into that category, we are still of opinion, the second charge was erroneous, as to the alleged interruptions of the possession by Hugh Montgomery, through his authorized agent, taking possession before the expiration at any time of three years’ continuous possession. The object of the statute doubtless was, to prevent persons from obtaining collusive credit, or lulling their existing creditors into false security, by the possession of property apparently their own, and upon the faith of the liability .'of which, from long continued possession, to the satisfaction of the possessor’s engagements, his creditors may well be deemed to have reposed. An actual, bona fide change of the 'possession, before the expiration.of the three years, cuts off the statute at this point, and the loanee’s subsequent possession as to its duration must date from the time the property is returned to him. Nor is it material that this change was designed to avoid the effect of the statute. The owner had a right to avoid it, and by an open, ostensible act, retake his property and resume his dominion and control over it. Nor has the law fixed upon any specific period of time which the owner must retain the possession before its return, in order to constitute it such an interruption of the possession • as shall preclude the operation of the statute. A mere constructive possession will not suffice; that the owner has all the while, and it is what the statute strikes at when it is opposed to the claims of the actual possessor’s creditors. Nor will we say that a momentary interruption will suffice; but, if the possession be actually and bona fide changed for a day, or two days, we see no reason why such change should not be as available as one month, or one year. The charge assumes, that if the change of possession was by an arrangement between the parties, or collusive, &c. Now the parties might honestly have [188] so arranged, without any intention of deluding or defrauding creditors or purchasers ; and if it was bona fide, it could not affect the rights of the lender. From -these considerations, we are of opinion, the second charge was erroneous, — that the first charge asked by the appellant should have befflu given as asked, and that the qualification superadded by the court was erroneous; for, in our view, it. was. wholly immaterial, (conceding the facts stated in this charge, tq b"e;true, and the validity of the trust deed,) whether William Iked oir.lhe same farm with Hugh or James Montgomery,-or lived'-lipón, and cultivated a place separated from theirs. The second charge prayed for by the appellant should have been given. It-by no means follows, because the law says, that if William. Montgomery has retained possession of the slaves for more than three years on a pretended loan, these slaves shall be liable to his debts, that other property belonging to him, the product of the labor of tbe slaves, but which has not been in his possession three years, shall be liable. The property is separate and distinct. There is no such necessary connection between the slaves and the cotton which their labor has contributed in part to produce, as that the one must occupy the condition of the other. As between tbe loanee and the actual possessor, the property belongs to the former, notwithstanding three years have elapsed without claim made, &c., as required by the statute. Its produce may, by the agreement of tlic parties, occupy the same status. The creditor’s right .is, to subject the property which has remained with his debtor for three years; and if he chooses to pass by that, and levy upon other property which has not been held for this period, we know of no principle which authorizes him to transfer his lien in this way, upon the idea that property which he might have subjected contributed to produce that levied upon. For the error we have mentioned, the judgment of the Circuit Court must be reversed, and the cause remanded. Buce, J., did not sit in this case, having been of counsel before his election to the bench.