Duncan, Ford & Elder v. Custard

Johnson, President: The first question presented is: Were the two deeds, one from Custard to Duster and the other from Duster and wife to Ellen Ii. Custard, fraudulent as to the creditors of said S. R. Custard? There is no evidence in the record, that Custard owed any debts at the daté of the said two deeds, or at the recording of the first May 14, 1874. The second deed was recorded on the 4th of June, 1874. Dut from the allegations of the hill not controverted in the answer it appears, that Custard owned a store in Kanawha county; that the goods, for which the judgments were recovered, were, after the store had been transferred by said deeds, put into the said store, and the said Custard still remained in possession thereof; that Custard two days after the recordation of the deed from himself to Duster bought in Cincinnati, Ohio, of Duncan, Eord & Elder the bill of goods, for which their judgment was recovered. It appears from the deposition of Duncan, that he commenced to deal with their firm in 1872; that at the time he obtained the credit he represented to them, that he was the owner of real estate in the said county of Kanawha near his store; that on the strength of these representations the firm gave him credit; and that when he bought the last bill from them, on the 16th day of May, 1874, they supposed he was as responsible as any man, whose name appeared on their books. That he gave them no intimation that he had conveyed away his property, but bought the goods as if he were in the same financial condition he was when he had previously bought goods of them. The answer does not controvert the fact, that nothing was paid for the property, when the deeds were executed, but sets up as a fact, that it was paid for by money received from Ellen’s father under his will, a copy of which was exhibited with the answer. There was a general replication to the answer and there is no proof in the record that the legacy, the amount of which is not specified in the will, was ever paid, or that one dollar of it was used by Silas D. — 737 — Custard. The conveyance therefore must be regarded as voluntary. This Court has distinctly held, that if it is shown, that there was mala fides or fraud in fact in the transaction, whether the actual fraudulent intent relates to existing creditors or is directed exclusively against subsequent creditors, the effect is precisely the same, and subsequent creditors may for such fraud successfully impeach the conveyance. And such fraud may be made to appear by circumstantial evidence. It seems to me that the defendants have scarcely resisted the charge of fraud. The only defence against it they did not attempt to prove. The deeds under the circumstances of the case were properly declared fraudulent; and the conveyance being-voluntary, it was immaterial whether or not the grantee had notice of the fraud. The next question is: Were the priorities properly fixed in the decree? The bill alleges, that all the judgments recovered were docketed, but does not state when. This allegation of the bill is not controverted by any of the answers filed; and the commissioner has not reported, whether the judgments were or were not docketed. He was required in general terms to ascertain the liens and priorities on the property conveyed by the said two deeds in the bill mentioned. It is well settled, that the grantee in a trust-deed is a purchaser for valuable consideration. (Wickham v. Martin, 13 Gratt. 427; Evans v. Greenhow, 15 Gratt. 153; Weinburg v. Rempe, 15 W. Va. 831.) Section 5 of chapter 74 of the Code of 1868 provides, that every contract for the sale of real estate and every deed conveying an estate or term in real estate or goods and chattels “ shall be void as to creditors and subsequent purchasers for valuable consideration without notice, until and except from the time it is duly admitted to record, in the county wherein the property embraced in such contract or deed may be.” Section 7 of chapter 139 of the Code provides, that “no judgment shall be a lien on real estate as against a purchaser thereof for valuable consideration without notice, unless it be docketed according to the third and fourth sections of this chapter in the county, wherein such real estate is, either within ninety days next after the date of the judgment, or — 738 — before a deed therefor to such purchaser is delivered for record.” The statute of 1882 fixes the period after date of the judgment before recordation at sixty days. In Renick v. Ludington, 14 W. Va. 367, it was held, that where various judgments are rendered against a debtor, and the j unior judgments are docketed and the senior undocketed, and in this state of things the debtor conveys a part of the land to a purchaser for valuable consideration without notice of the undocketed judgments, and the docketed judgment-liens are not discharged, the liens of the undocketed judgments being the oldest must be discharged out of the proceeds of the unsold lauds, although the effect might be to require the holders of the docketed judgments to resort in whole or in part to the laud so conveyed for satisfaction of their judgment-liens. It follows, that if the judgments were docketed before the deeds of trust were recorded, the judgments would take precedence over the liens of the trust-deeds even on the land conveyed by such trust-deeds. The deeds charged in the bill to be fraudulent being in fact so, this cause as to all the liens stands, as if the said deeds had never been executed, because before the conveyance the husband owned them, and both husband and wife joined in executing the trust-deeds. It is claimed that Buster lost his priority, because he was the grantee in the first fraudulent deed. This does not follow. He is a purchaser for valuable.consideration ; and it is not charged in the bill, and no proof shows, that he had notice of any fraudulent intent in Silas H. Custard,' the grantor. But at the time all the trust-deeds were executed, it was supposed that the title to the land was in Ellen B. Custard. Then all the trust-lieiis are on an equal footing if the judgments were not docketed prior to their recordation; and whether the judgment-liens are prior as to the land conveyed by the trust-deeds does not appear, as there is ho evidence, when the judgments wore docketed. If the judgments are undocketed, they must be satisfied out of the personal property, if any, and the unsold lands, that is, lands which have not been conveyed by trust or other deeds, according to their respective dates, and out of the proceeds of the lands, on which the trust-deeds are liens, after the trust-liens have been satisfied. — 739 — The commissioner- must have treated the judgments as undocketed, for he puts the trust-liens first, which is right under any circumstances, as the Montgomery trust and the Buster trust were recorded before any of the judgments were recorded. The Montgomery trust was recorded March 20, 1875, and the Buster trust March 30, 1875, and the Bowles trust on July 8, 1876. The Arnold judgment was rendered on October 29, 1875, the Duncan, Lord & Elder judgment on November 19, 1875, aiidthe McLean judgment on November 28, 1876. The judgments must all be satisfied, if there is sufficient for the purpose out of the property of Silas It. Custard, on which the deeds of trust are not liens, according to their respective dates. (Renick v. Ludington, 14 W. Va. 367). The three deeds of trust must be satisfied out of the tract of land, on which they are liens, in the order of their record-ation, if the judgments were not.docketed. If the two first judgments were docketed before July 8,1876, and there was not sufficient other property of the debtor, out of which to satisfy them, they would take precedence of the Bowie trust, as it was not recorded until July 8, 1876. The McLean judgment could take none of the proceeds of the “Brannon place” until after the two elder judgments, and the three .trusts were satisfied. The exception to the commissioner’s report that it failed to ascertain whether the judgments were docketed and when, ought to have been sustained. The exception that the commissioner ought to have ascertained the rents and profits should not have been sustained, because he reports, that no evidence was brought before him on the subject. If the debtor and his wife, who were more interested in that matter than anybody else, did not choose to present evidence of that fact, the commissioner could not he expected to hunt up evidence thereof. The other exceptions were properly overruled. It is also assigned as error that two docket-fees were charged. This was not error; for the two causes were ■heard together, and the plaintiffs failing in one, which they insti+uted, were properly charged with a docket-fee, and also failing in the suit brought against them were properly charged with a docket-fee in that suit. This being a matter of costs, — 740 — this Court would not reverse the decree for that error it it existed. It is also assigned as error, that the court in the order of sale did not require the sale to be advertised in a newspaper, as it was manifest from the record that the land ordered to be sold was of greater value than five hundred dollars. Section 1 of chapter 151 of the Acts of 1872-3 require, “ that whenever a court shall hereafter decree the sale of real estate, if it appear to the court, that such real estate is of the value of five hundred dollars or more, it shall prescribe in the decree, that such sale, shall be advertised in a newspaper by the commissioner or person appointed to make the sale. It shall always be advertised in a newspaper published in the the county, if one be published therein, where the real estate to be sold is situated.” This statute is mandatory; and it was error not to require thé land to be so advertised, if it appeared to the court that its value was over five hundred dollars. I think from the record that it did so appear to the court. It only ordered one tract of land to be sold to pay about two thousand dollars of debts. It the debtor wishes to avoid the expense of advertising in a newspaper, he should by affidavits or otherwise satisfy the court that the property is not worth five hundred dollars. The decree in this cause does not direct the commissioner to advertise the sale at all. Another error, which appears on the face of the decree, is that the two deeds declared fraudulent were cancelled in toto. It should only have declared them void as to the creditors of the grantor, Silas R. Custard, (Murdock v. Welles, 9 W. Va. 552). It was error as we have before seen to postpone the Buster debt to that of Bowles. Unless it was perfectly clear to the court, that the one tract of land decreed to be sold was sufficient to pay all the liens, the court should have ordered all of the personal property, if any, and lands sufficient to pay the liens. So that it would not he necessary to report back a deficiency and have another sale, and thus sell the defendant’s property by piecemeal, with all the attendant costs and burdens of such proceedings. The decree appealed from is reversed with costs to the ap — 741 — pellants, and these causes are remanded with instructions to refer the first of them to a commissioner, to fix the liens and their priorities as herein indicated, and for further proceedings. Reversed. Remanded.