Simon v. Reynolds-Davis Grocery Co.

Wood, J., (after stating the facts). The testimony on behalf of the appellees, tended to show that the land in controversy, was worth from twenty-one hundre'd and fifty dollars ($2,150) to twenty-five hundred dollars ($2,500). The court might have found from the testi-mony of the Avitnesses for the appellees, that the land was worth as much as twenty-five hundred dollars ($2,500), at the time the deed in controversy was executed. From the testimony of about the same number of disinterested Avitnesses on behalf of the appellants, the court might have found that the land in controversy, was worth a great deal less than the value placed upon it by the witnesses for the appellees. The question of the value of the land at the time of the execution of the deed in controversy, was one of fact, and the finding of the chancellor in this respect, in our opinion, is not clearly against the preponderance of the eAddence. Assuming that the land was worth as much as twenty-five' hundred dollars ($2,500), and the grantees would have paid for it as much as eighteen hundred and fifty dollars ($1,850), the highest price shown by testimony of any of the witnesses on behalf of appellants, then there would have been a difference of six hundred and fifty dollars ($650) that the creditors of Phil Simon would have been entitled to, out of his landed estate. . If the value of the land was but twenty-one hundred and fifty dollars ($2,150), there would have been a difference of but three hundred dollars ($300) between the price paid and the actual value of the land, to which the creditors would have been entitled. The mere difference between the actual value of the land, according to the testimony of the appellees, and the price paid for same, would not alone be sufficient to show that there was any intent to defraud the creditors of Phil Simon in the conveyance made by him to his sons. But when this is considered in connection with the other facts in evidence it can not be said -that the chancellor erred in finding that the conveyance was made with the intent to defraud creditors. For the undisputed evidence shows, and it is admitted, that the appellant, Phil Simon, at the time the convey-ance was made, owed the appellees the amounts claimed by them respectively, and that suits were pending against him on these claims at the time he made the conveyance, and that judgments were thereafter obtained for the several amounts claimed. For the appellant, Phil Simon, under these circumstances, to' sell all the land he owned, except his homestead, to his sons, for an amount considerably less than the value of the land, was a strong badge of fraud. It matters not that Phil Simon used the whole or a part of the proceeds of the sale, in payment on his debts, for he was unable to pay his debts and was insolvent, and the fact that the conveyance was made to his sons under such circumstances, would warrant the conclusion that he was making the conveyance in order to put the property in the hands of his children, and to give them the benefit of the difference between the price paid by them and the real value of the land. This court has often held that “conveyances made to members of the household and near relatives of any 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.” (Wilkes v. Vaugh, 73 Ark. 174; McConnell v. Hopkins, 86 Ark. 225; Morgan v. Kendrick, 91 Ark. 394-399.) To the extent that the price paid was less than the value of the land, the conveyance, so far as creditors are concerned, must be held to be voluntary and without consideration. As was said in George E. Priest against Abraham W. Conklin and Hunter C. Conklin, Administrators, 38 Ill. App. 180, where an embarrassed debtor conveyed a farm that was under mortgage, to his son: “If the farm was worth no more than the incumbrances, he (the son) could abandon the title and suffer no loss. If it should be of greater value, then such excess would be a gift from his father.” In Leonard v. Flood, 68 Ark. 162, we said: “Where an embarrassed debtor conveys his property to his son, the circumstance is such as to raise a suspicion of fraud, in a suit by his creditors attacking the conveyance as fraudulent, and to cast upon him the burden of showing a consideration.” While the burden of proof is upon the plaintiff who alleges fraud, to show it, yet that burden has been discharged, where, as in this case, he shows that an embarrassed debtor, pending a suit against him by his creditors, has made conveyance of all the land he owned, except, his homestead, to his sons, for a consideration which upon the face of the conveyance appears to be a grossly inadequate one. Such circumstances are sufficient to raise a suspicion of fraud and to cast a doubt upon the legality of the transaction, and the burden is then on the one holding under the deed to show a consideration. (Leonard v. Flood, supra.) The testimony of the appellants is not in entire accord as to the amount of the consideration that was paid for the lands. The testimony further shows, that although the deed was made on the 20th of August, 1910, it was withheld from the record until the 17th day of November, 1910, and then entered upon the records, just before judgments were rendered in favor of the appellees against appellant, Phil' Simon. The testimony also showed, that although the lands had been conveyed from Phil Simon to bis sons on August 20, 1910, he continued to pay the taxes on them in 1911. The testimony of Geo. R. Woo'd on behalf of the appellees, shows that Phil Simon, when he was attempting to borrow fifteen hundred dollars ($1,500) on the property, afterwards conveyed to his sons, represented to the cashier of the Citizens Bank, from whom he obtained the money, that the property was worth from two thousand to twenty-five hundred dollars. In his testimony given in this case, to sustain the conveyance, he states that the property was worth about fourteen hundred dollars ($1,400). Phil Simon testified, that when he made the application to borrow the fifteen hundred dollars ($1,500) from the Citizens Bank, he might have told the cashier that the land was worth two thousand to twenty-five hundred dollars. He said he did not recollect telling bim that, but might have done so, as he was “needing money very bad.” It thus appears that appellant, Phil Simon, is in the unfortunate attitude of being willing to make representations and shape bis testimony to suit his own selfish interests, regardless of the real facts. The testimony of such a witness should not be entitled to much consideration in a case where his own interest is involved. We are of the opinion, that when the record is considered as a whole, the findings of the chancellor are sustained by the clear preponderance of the evidence and that his decree is in all things correct, and the same is therefore affirmed.