Robins, Fry & Co. v. Wooten

TYSON, J. The bill in-this -case -seeks to have certain deeds -declared fraudulent. The complainants’ predecessor was a creditor-of Council B. Wooten, the alleged fraudulent grantor. The only other creditor which Wooten is shown to have had at the time of the execution of his deeds was one Mrs. Steele. Her debt was evidenced by a promissory note upon which she had brought suit 'shortly before the deeds were made by Wooten. It may be conceded for. the purposes of this case, that the debtor Wooten’s deeds were fraudulent as against the complainants and Mrs. Steele, his only then existing creditors. After the execution of the several conveyances here assailed, Mrs. Steele reduced her debt to judgment and accepted in settlement of it a note and mortgage upon the lands, executed by W. A. Wooten, the alleged- fraudulent grantee, a portion-of which mortgage debt was paid by him, and'the balance by -draft drawn by .C. B. Wooten in her favor upon the complainants. Thi-s draft was drawn, and paid by the complainants about two years -after the execution of the alleged deeds, • and constitutes practically the debt which . complainants seek to enforce by their bill, the debt due them by.C. B. Wooten when he executed the deed disposing of the lands having been paid by W. A. Wooten, the alleged fraudulent grantee. It is not insisted by-the complainants in this court that they acquired any of Mrs. Steele’s rights which she-may have had to have declared the conveyances fraudulent and void. Indeed if such insistence was made it could avail them nothing, for the reason that Mrs. Steele ratified the transaction. A short history of the transaction between W. A. Wooten and the complainants- will suffice to show a confirmation by them of his title to the lands sought to be subjected by the bill. Complainants and their predecessors in business were for many years commission merchants in [the [377] city of M-obile. For twenty years Council B. Wooten, the alleged fraudulent grantor, had been doing business with thein' by borrowing money and obtaining supplies from them for the purpose of making crops upon his plantations, which indebtedness he paid by shipping his cotton crops to them, which were sold by them and applied to his indebtedness. At the end of the year 1887, O. B. Wooten was indebted to the complainants in the sum of $11,389.47, a portion of which was secured by a mortgage upon the lands here sought to be condemned. On the 17th day of February, 1888, one month and three days' after the execution of the deeds by C. B. Wooten to Shade Wooten, and some two months prior to the execution of the deed by Shade Wooten to W. A. Wooten, the .account of C. B. Wooten was closed, and the balance, $11,389:47, was'paid by charging $6,011:34 to- the account of- W. A.-Wooten, and the balance complainants. took his* and .0. " B. Wooten’s note for, due' November 17th, 1888, 'reciting in the nóte that “it is agreed "that when this note" is paid it 'shall be placed as a credit on "a mortgage debt still due Robins, Burgess & Oo. by C. B. Wooten.” The complainants, instead of making advances to- C. B. Wooten for' the years 1888 and 1889 for the purpose of'making crops upon these lands, made them to W. A. Wooten,' he shipping them the crops' raised by him for the puropse of paying the advances and the $6,000 -which had been charged to him as’a part of C. B.’s indebtedness to them; and in the spring of 1890 he paid to them the balance due "for advances, etc., for the previous years, discharging his entire debt. Also on May 17th, 1890, C. W. Hooper & Oo. paid to the complainants the note which was to go as'a credit upon the mortgage debt, and on December 11-th, 1890, W. A. Wooten paid to Hooper & Co. this note and had the mortgage transferred to him. The evidence discloses without conflict that -complainants at the time they paid the draft of C. B. Wooten to Mrs. Steele in" 1890, knew" that W. A. Wooten claimed to -own these lands, and also at the time that they received from Hooper & -Co. the payment of his note; to say noth [378] ing of tlie irresistible conclusion that they had knowledge that he was to become the owner of the lands at the time that he assumed C. B. Wooten’s indebtedness to them in February, 1888, and had actual knowledge that he had so acquired title during the year 1888, after which they received the cotton crops raised upon them during the years 1888 and 1889, a part of which went to pay and discharge a portion of the $6,000 charged to him. It is true that Fry, the main witness for complainants, does testify that he never heard of the 'Conveyance of C. B. Wooten to Shade Wooten, but lie nowhere in his testimony expressly disclaims knowledge that W. A. Wooten claimed to own the lands. It is utterly immaterial whether he had any actual knowledge of the deed from'C. B. to Shade if he knew that W. A., who is.the grantee of Shade, was claiming to own the lands and he dealt with him recognizing the validity of his title. All of these deeds were on record, and it is incredible that credit to the extent of ’ $16,000 would have been extended by the complainants to W. A. Wooten during the year 1888, and a credit of $15,000 during the year 1889, without some knowledge of his ability to pay, and some inquiry into the state of his title to 'the lands which he was occupying, and upon which he was making crops, the only resource to which the complainants could look for the payment of their debts. The conclusion is therefore irresistible, applying the rules which govern ordinary prudent men in the conduct of business affairs, that the complainants knew all along that W. A. Wooten claimed title to these lands; that they dealt with him as the owner, recognizing the validity of his title, and ought not in equity and good conscience to be allowed to retain the $11,000 which he paid to them, and at the same time assert the invalidity of his title. A fraudulent conveyance is merely voidable, and 'consequently capable of confirmation either by assent at the time or by subsequent ratification.’ As said by Mr. Bump in his work on Fraudulent Conveyances, section 456: “Although a creditor is not a party to a fraudulent transfer, yet he may subsequently elect [379] to confirm it, for any one may dispense with a provision of the law 'Which was made for his own protection. But before there can be any binding confirmation, he must have notice or knowledge of the facts which constitute the fraud. If he has, however, been guilty of negligence in. availing himself of information within his reach, constructive notice may be imputed to him. Mere notice without any action on the part of the. creditor or mere acquiescence by taking no present measures to interfere with the transfer, does not amount to a confirmation, for he can be precluded from assailing the transfer only on the ground of estoppel or agreement; there must be a benefit conferred upon him, or a disadvantage suffered by the grantee such as can bind the conscience of the former or clothe his act with the character of a contract. * * * But if with notice of the fraud either actual or constructive, he makes any agreement upon consideration confirming the transfer, or any statement or agreement to that effect, upon the faith of which the grantee acts as he would not otherwise do, or under such circumstances that his subsequent assertion or his rights as a creditor, if permitted, would operate as a fraud, he will be held to have confirmed the transfer. The confirmation need not be direct and express, but may be implied from the manner in which the parties, deal with the property.” See also Oliver v. King, 8 De Gex, M. & G. 110; Phillips v. Wooster, 36 N. Y. 412; Beaupre v. Noyes, 138 U. S. 401; Freeland v. Freeland, 102 Mass. 477; Butler v. Hildreth, 5 Metc. 49; Snow v. Lang, 2 Allen 18; Harvey v. Varney, 98 Mass. 118; Morgan v. Abbott, 20 N. E. 165; Warren v. Williams, 52 Me. 349; Butler v. O’Brien, 5 Ala. 316. In Kahn v. Peter, 104 Ala. 523, the creditor advised the making of the conveyance, and afterwards sought to have it declared fraudulent. lie was held to be es-topped upon the ground 'that lie had assented to it. Confessedly a subsequent ratification or confirmation of a fraudulent conveyance with notice or knowledge of all the facts, is the equivalent of an assent or concurrence to its being made in the first instance. Omnis [380] ratihabitio rctrotrahitnr et mandato priori a’quipartur. Having once confirmed or ratified the title of W. A. Wooten to the land and accepted from him his assumption of the debt of C. B. Wooten, which he after-wards discharged, it is of no consequence that the debt 'here sought to be enforced by the complainants arose subsequently to such confirmation or ratification. If this conveyance was good as 'against the complainants as a prior creditor, it ought to be held good against them as a subsequent' creditor: This point was expressly ruled in the case of Pell v. Treadwell, b Wend. 661. The decree of the chancery court' is- reversed, and a decree will be here rendered dismissing the bill. Reversed and rendered.