Wilks v. Vaughan

Hill, C. J., (after stating the facts.) 1. The facts fairly established that Vaughan, Sanders and Wilks were jointly in control of the property turned over to them by W. J. Sanders, that Wilks joined in and approved of the conveyances disposing of it, and that in the management of the mill Wilks was an active participant. The positive testimony of Vaughan and A. Sanders that every dollar received from the W. J. Sanders property and business went to pay the W. J. Sanders debt, and not a cent to themselves, together with the showing they made of the accounts between the parties, was sufficient to overcome the vague and uncertain testimony introduced by Wilks tending to prove that they had used the proceeds of this property for their own benefit. This state of facts lifts the case entirely from the principle of the case of Euclid Avenue National Bank v. Judkins, 66 Ark. 486, which is invoked in behalf of Wilks. It is insisted that the relation of sureties to W. J. Sanders still existed, notwithstanding the direct note to the bank. It can make no difference to Wilks which way it is treated. If treated as a joint debtor, this doctrine is applicable: “It is true that for the purpose of contribution each joint debtor is regarded as the principal debtor for that part of the debt which he ought to pay, and as surety for his co-debtor as to that part of the debt which ought to be discharged by him.” McGee v. Russell, 49 Ark. 105. If treated as sureties for W. J. Sanders, then his condition is not bettered, for section 7314 of Sandels & Hill’s Digest would be directly applicable. The judgment for contribution was right. 2. Having paid the judgment to the bank, appellees became subrogated to all its rights against Wilks. “The right of subrogation does not arise from contract, though it may be defeated by it. It is the machinery adopted by courts of justice to enforce fair dealings towards those secondarily bound for a debt, not only as against principals and creditors, but amongst cosureties themselves. The latter must share with each other every plank in the shipwreck.” Fishback v. Weaver, 34 Ark. 569. Vaughan and Anderson Sanders having become subrogated to the rights of the bank, then the conveyances of Wilks are to be tested as if the bank was the plaintiff in this action. The conveyances were all made after the debt was incurred to the bank, and only a short time before judgment thereon — some a few days, and the farthest less than three months. Wilks was practically denuded of all his property after they were made. Were they fraudulent as to the bank, and through it as to these appellees? It must be said, in fairness to Wilks, that plausible, and, in some instances, almost convincing, explanations of these transfers are made. It is thoroughly settled in equity jurisprudence that conveyances made to members of the household and near relatives of an embarrassed debtor are looked upon with suspicion and scrutinized with care; and when they are voluntary, they are prima facie fraudulent, and when the embarrassment of the debtor proceeds to financial wreck, they are presumed conclusively to be fraudulent as to existing creditors. Baldwin v. Johnston, 8 Ark. 260; Reeves v. Sherwood, 45 Ark. 520; Hershy v. Latham, 46 Ark. 542; Driggs v. Norwood, 50 Ark. 42; Campbell v. Jones, 52 Ark. 492. Certainly, these conveyances, made so shortly before this judgment, divesting the debtor of all tangible assets, to near relatives, were sufficient to cast the burden of proving the good faith upon the parties to them. The chancellor has held them fraudulent, and this court cannot pronounce that finding contrary to the preponderance of the evidence; in fact, it is in accordance with it. 3. The chancellor found the conveyance as to the Zimri Vaughan and Samuel Dane places, 133 acres, not fraudulent because a homestead. If this was a homestead, under the rule of Campbell v. Jones, 52 Ark. 493, the conveyances could not be fraudulent. The evidence brings the case fairly within the rule of Robinson v. Swearingen, 55 Ark. 55, towit: “A debtor, entitled to claim a farm as exempt, does not lose the right by a temporary absence for purposes of trade, where there was never an intention to change his residence, but a fixed and unqualified intention to preserve it.” The chancellor was right in holding that the homestead had not been abandoned. 4. The remaining question is: Was Wilks entitled to increase his homestead, while not residing upon it, to the maximum area, and to hold it against this judgment rendered before he returned to it? The Supreme Court of Texas has construed the homestead exemption to permit the debtor to purchase adjoining land bringing the homestead to the maximum area without subjecting the newly-acquired land to the lien of existing judgments. Campbell v. Macmanus, 32 Tex. 442; Campbell v. Macmanus, 37 Tex. 267. Allowing the additional land to fall into th"e homestead impressed with the homestead exemption against existing judgment liens is going farther in liberal construction than merely allowing the additional land, up to the maximum area, to fall into the homestead, and become impressed with the homestead character, whether the debtor is actually residing on it or temporarily absent. The law recognizes no difference between the homestead actually occupied and the homestead not occupied personally by the debtor during absence for business or other reasons calling for a temporary absence — be it long or short — with intention of returning. The only statute touching it is section 3714, Sandels & Hill’s Digest, which provides that where the homestead consists of more than the maximum area, and the debtor is not residing upon it, he must select his homestead from the land levied upon before sale. In Tillar v. Bass, 57 Ark. 179, this court said this statute did not undertake to say what should constitute a homestead. When a debtor conveys land, all or part of which is his homestead, and the conveyance is attacked as 'fraudulent, he may in that action defend against the alleged fraudulency of the conveyance, and in the alternative claim and select his homestead, to guard against the event of it being adjudged a fraudulent conveyance and set aside. Turner v. Vaughan, 33 Ark. 454; Carmack v. Lovett, 44 Ark. 180. This was, in substance, Wilks’ defense; and his homestead right was allowed to prevail against the conveyances of it adjudged fraudulent except as to the increased part thereof. He was entitled to make this selection, and have it set apart, as there was nothing to show that it offended against the rule forbidding capricious and unreasonable selection, as declared in Sparks v. Day, 61 Ark. 571. The decree is reversed, in so far as it subjected the 26 acres of the Emily Kenyon tract selected as part of the homestead to the judgment herein rendered, and the case is remanded, with instructions to enter a decree in accordance with this opinion. In all other respects the decree is affirmed.