Ayers v. Wolcott

Holcomb, J. This cause comes here by appeal, and is now submitted on rehearing. The former decision, reversing the decree — 713 — of tbe trial court in favor of tbe defendants, is found in Ayers v. Wolcott, 62 Nebr., 805. Tbe case need not here be restated. Tbe petition, a creditors’ bill, is framed on tbe theory tbat tbe several conveyances of real estate wbicb it is sought to have vacated, and the real estate therein described subjected to tbe satisfaction of the plaintiff’s debt, were made and delivered in fraud of the rights of tbe existing creditors of tbe grantor, O. S. Wol-cott. Tbe other defendants, bis four children, who were grantees of different tracts of real estate, each answered separately and-by proof undertook to uphold tbe conveyance made to each grantee, respectively. It is conclusively shown by tbe evidence tbat tbe conveyances made to the defendants Walter and Donzella Wolcott, respectively, were executed and delivered prior to tbe incurring of tbe indebtedness afterwards reduced to tbe judgment wbicb is made tbe basis of'this action. Tbe rule seems to be well settled tbat, to set aside a conveyance on tbe ground tbat it is fraudulent as to subsequent creditors, such creditors must allege and prove tbat such conveyance was made with intent to defraud subsequent creditors and in contemplation of such future indebtedness. Kemper v. Renshaw, 58 Nebr., 513; Rockford Watch Co. v. Manifold, 36 Nebr., 801; Graham v. Estate of Townsend, 62 Nebr., 364; Leasure v. Forquer, 27 Ore., 334, 41 Pac. Rep., 665; Burton v. Platter, 53 Fed. Rep., 901; Petree v. Brotherton,* 32 N. E. Rep. [Ind.], 300; Harlan v. Maglaughlin, 90 Pa. St., 293. Tbe rule is also well established and invariable to tbe effect tbat tbe allegations of a pleading and tbe proofs thereunder must agree. Traver v. Shaefle, 33 Nebr., 531; Clarke v. Omaha & S. W. R. Co., 5 Nebr., 314; Imhoff v. House, 36 Nebr., 28. Inasmuch as tbe appellant’s rights, whatever they may be, must be determined by tbe rule of law as applicable to conveyances made to defraud subsequent creditors, it follows tbat the allegations in tbe petition tbat tbe conveyances were — 714 — made with intent to defraud existing creditors are not sufficient to sustain a decree in plaintiff’s favor under the proofs as to the two defendants mentioned, and therefore the decree of the trial court dismissing the action, at least as to them, was proper. It may also be said that the evidence as to these defendants is, probably, sufficient to support the decree of the trial court in their favor. Treating the petition as stating a good cause of action as to subsequent creditors, they were not, under the evidence, grantees under conveyances wholly voluntary and without consideration. They each received but a small quantity of land, compared with the total amount conveyed by the senior Wolcott to all his children. Donzella obtained but eighty acres and Walter a quarter section. The evidence justifies the inference that each had an equitable interest in the land conveyed, by reason of having advanced the purchase money at the time title was acquired in the name of the senior Wolcott, and that the latter held but the naked legal title. Ther(> is, we think, sufficient evidence to support the finding and decree of the trial court, which apparently went on the theory that none of the several transactions were fraudulent as to the plaintiff as a creditor of the senior Wolcott, the grantor. As to these two defendants the evidence, we think, warrants the inference that the specific tracts of land included in the conveyances to them, respectively, were equitably theirs, as the beneficial owners and that the conveyances made by the parents were bona-fide transactions, having the effect of merging the legal and equitable estates in the true owners. While the question may not be entirely free from doubt, we are disposed to the view that as to these two defendants it can not be said that the decree of the trial court is so unsupported by competent evidence as to be clearly wrong. The bulk of the ranch property, all lying in a body, save the eighty-acre tract conveyed to Donzella, was conveyed to the two sons, George and Keuben, by separate instruments of conveyance. These defendants were at the — 715 — time ostensibly in possession and control of all the land conveyed to them, — used and farmed it for stock and agricultural purposes. It is manifest tlie elder Wolcott possessed a substantial interest in the property and held the legal title until the delivery of the conveyances to the defendants. It is equally clear that the credit was extended on the faith of his ownership of such lands. While all .the conveyances were executed at the same time, the delivery to the two sons last named was not made until several days subsequent to the incurring of the indebtedness which it is sought to have satisfied by these proceedings. While delivery is .presumed to be on the date of the execution of such an instrument, this presumption may be overcome, and delivery shown to have been made at another time. It thus appears that the transaction by which the ranch property, with the exceptions mentioned, was conveyed to George and Reuben was not completed until a time subsequent to the date the grantor had incurred the liability in favor of the plaintiff, and that as to them the plaintiff or his predecessor in title was an existing creditor. As to these two grantees, then, the petition and the proofs conform, and the defendants’ rights must be determined under the rules with respect to conveyances of real estate which have the effect of hindering, delaying or defrauding existing creditors. Where such conveyances are executed in favor of relatives, it is a well-recognized rule in this state that it devolves upon such grantees to show by satisfactory evidence the bona fides of the transaction. Fisher v. Herron, 22 Nebr., 183; Bartlett v. Cheesbrough, 23 Nebr., 767; Plummer v. Rummel, 26 Nebr., 142; National Bank of Commerce v. Chapman, 50 Nebr., 484; Blair State Bank v. Bunn, 61 Nebr., 464. That the elder Wolcott made the conveyances in anticipation of incurring the indebtedness which was contracted the second day thereafter, we think there can he no rational doubt, as was held in the first opinion. It is obvipus that at the time he incurred the indebtedness he was not only the owner and holder of the legal title to all this property, but — 716 — was in fact the real owner of much, if not all, of it, and voluntarily conveyed all Ms interest therein, without an adequate consideration. It is, probably, true the grantees had an equitable claim to some of the property, inasmuch as they, with the senior Wolcott, had by their joint labor and accumulations acquired the property; the legal title always being transferred to the father. Had the grantees been contented with a bona-fide adjustment of their respective interests in the property and a division thereof in conformity with such interests, leaving to the elder Wol-cott that which was rightfully his, an entirely different question would be presented. The father was without question the absolute owner, legally and equitably, of much of the property, and had such substantial interest and ownership therein as to render a voluntary conveyance thereof fraudulent as to his creditors. He could not, in Mav or good conscience, by the method adopted, deprive himself of all his property in this real estate without a consideration and thereby deprive his creditors of their just demands. The sons must have known, and undoubtedly did know, that in the purchase of the horses for which the indebtedness was incurred, and of which purchase they were the beneficiaries, and the conveyance of the ranch property to them, the senior Wolcott had rendered himself insolvent and unable to meet his liabilities, and that such transfers were in fact a fraud upon his creditors, who had sold him the horses relying on the faith of his ownership of the real estate in controversy. They have not, as is rightfully held in the former opinion they should do, established as the law requires them to do the bona fieles of the transactions which are attacked by these proceedings. That opinion discusses the facts sufficiently, and the conclusions therein reached as to the defendants Reuben and. George, in our opinion, are the only ones that can be justly arrived at, and should be adhered to. The former decision is therefore modified to the extent of affirming the decree of the trial court as to the defendants — 717 — Walter Wolcott and Donzella Burke, née Wolcott; otherwise it is adhered to. ' Judgment accobdingly. Footnotes [*] 133 Ind., 692; opinion filed October 27, 1892. Motion for rehearing overruled March 9, 1893.