Herschfeldt v. George

Martin Ch. J.: The conveyances to Sally George were fraudulent and void, as against the complainant. That of the Hamtramck property was entirely without consideration, and appears to have been solicited by her, and procured for the support of herself and children, and under circumstances which, we think, show a purpose of keeping it from the reach of John George, then Paul J.’s creditor. That of the west half of lot 61, in Detroit, was alike voluntary, and, as is claimed, for the purpose of securing a homestead, except that a partial consideration — the sum of four hundred dollars — was paid by the wife 'to the husband at the time of its execution. However laudable it may be in the husband to make provision for the support of his wife and family — and it is certainly not mefely laudable, but a duty, when it can honestly be done — yet the law will not suffer it at the expense of creditors, when its operation is fraudulent, or when the design to defraud them is apparent. As far as we can ascertain the facts from the pleadings and proofs, at the time these conveyances were made by the defendants to Train and Zender, Paul was indebted to John George, his brother, in about the sum of one thousand seven hundred dollars, and a most bitter hostility existed between them — so great, that no communication or conversation passed; an intensity of hatred, between brothers, that warrants and impels us to the conclusion that the conveyances were made for the purpose of placing the property beyond his reach. The value of the property, at this time, appears to have been about equal to the amount of the debt, and although the defendants insist, in their answers, [466] that at that time Paul J. was not insolvent, and was indebted only to his brother, and to one or two others in small amounts, and had sufficient assets, open and visible, and within reach, to pay every creditor abundantly, without any reference to said real estate, yet this averment, although put in issue, Avas not substantiated by proof, nor Avas any offered to establish its truth. It was settled in this state, in Beach v. White, in accordance with the general rule of equity, that a deed which is fraudulent as to existing creditors, is fraudulent as to subsequent creditors. — See Walk. Ch. 496. To this rule there may be exceptions, as when the debt sought to be collected was contracted long after the fraudulent conveyance, or after the embarrassment which existed when it was executed had passed aAvay, or a new embarrassment had occurred from subsequent causes, and the like; but the present case comes within none of the exceptions. It is true that voluntary conveyances’ are not necessarily fraudulent, even when made by a person indebted at the time. A man always has the right to dispose of his property as suits himself, provided he acts in good faith. But if he is largely indebted at the time, and such conveyance embraces the larger, or any considerable, portion of his property, such conveyance will be deemed fraudulent as to creditors. It is good when made without any fraudulent intent, and by a person not indebted at the time, or, if indebted, whose debts are so small in amount, when compared Avith the means still retained by him to pay them, as to repel all presumption of fraud on their account. — See Beach v. White, Walk. Ch. 496; Cutter v. Griswold, Ibid. 437. In March, 1852, we find that a reconciliation took place between John and Paul George, and then deeds passed between them, concerning the property in question, and John conveyed to Paul the lands which in August before he had conveyed to Train and Zender, from whom Sally George [467] derives her title. The deed from Train to her of the Hamtramck property was executed in August, 1851, and that from Zender in July, 1852. Shortly after this deed of July, 1852, we find Paul George expanding his business, and becoming suddenly and very heavily indebted to various houses in New York, and, among others, to this complainant, in some one thousand nine hundred dollars; and we find that at the time he contracted these debts, he represented himself to be the owner of the very property in question, for he could have referred to no other. This expansion of business was followed in less than six months by his mortgaging this very property, but without his wife joining, to John George, for the indebtedness which existed when the deeds to Train and Zender were executed, and which now amounted to one thousand seven hundred and eighty dollars, and by his making a general assignment of his property for the benefit of his creditors. His debts at this time amounted to nearly ten thousand dollars, besides that owing to John, and the nominal value of his assets to only about four thousand, while their real value turned out to be only about four hundred or five hundred dollars. These things are entirely unexplained, and taken in connection with the other facts of the case, manifest, beyond question, that Paul .George meditated fraud, whether his wife was cognizant of it or not. Certainly if there is any case where a voluntary conveyance, and a cotemporary indebtedness of the grantor, make out a prima facie ease for the creditor, this is that case; and it was the duty of the defendants, if they would prevent its becoming conclusive upon them, to have rebutted it by showing that the pecuniary circumstances of the grantor at the time were such as to repel the presumption of fraud. The conveyance of the Hamtramck property can not, then, for a moment, be sustained. But it is thought that that of the west half of lot 61, in Detroit, stands upon a different footing. It seems that four hundred dollars of [468] money belonging to Sally George was given to Paul upon its execution; but it is not claimed that this was all, nor the material consideration which produced the conveyance to her. The real reason appears to have been, as now claimed in the answers, to secure it as a homestead. So far as relates to the four hundred dollars, the property is shown to have been worth at the time some one thousand five hundred to one thousand eight hundred dollars. This inadequate consideration, under the circumstances, will not sustain the deed as against creditors, although it will sustain it for her protection, so far as to secure to her the re-payment of that sum. The reason, or rather the pretence, that the property was conveyed to the wife to secure a homestead, can be of little value to determine the object of these conveyances to be bona fide, when we find that, as a part of the same transaction, although consummated at a different time, the Hamtramck property was conveyed without consideration and without explanation, and that, immediately subsequent, this sudden expansion of his business occurred, which as suddenly and disastrously collapsed. Why should this attempt to secure this Detroit property as a homestead be first made at the particular juncture of Paul’s quarrel with John, and be consummated just before this expansion of his business, and the contracting of these ^debts? But if the reasons be true, the claim of the property as a homestead, securedj by this | conveyance, can not avail these defendants. The law was never intended to be executed by parties in this manner. A homestead not to exceed forty acres, or a city or village lot not to exceed in value one thousand five hundred dollars, is exempt from execution; but such exemption must be claimed, and this value ascertained, at the time of the levy, or at least after it, and before sale. To hold that such exemption can be claimed at any other time, or in any other manner, than such as is contemplated by the statute, would open the door to the most monstrous frauds. If the claim can be made months [469] and years before a levy, and if the value at the time of the claim is to determine its value at the time of the levy, thousands of dollars may thereby, through rise in value, and the squandering of money in improvements and ornaments, be sealed up beyond the reach of creditors. The law never intended such a result. But a homestead can not be secured by alienation of the property. No one but the debtor can claim it, — his grantee can not. If it was her property, it was not liable to be taken on- execution for his debts; if it was not, her pretended title can be of no avail to him for the purposes of exemption. As owner, she can not claim it to be under the Exemption Act, against his debts — having conveyed it, the title is good as between him and her, although void as to creditors; and he can not claim it as exempt, for no title remains in him upon which to base such a claim. — See Wisner v. Farnham, 2 Mich. 472. The decree of the court below must be affirmed, with costs. Manning J. concurred.