New South Building & Loan Ass'n v. Reed

Harrison, J., delivered the opinion of the court. The court is of opinion that the two judgments asserted in the original bill in this cause, one in favor of The Enterprise Carriage Manufacturing Company, and the other in favor of [349] the Ohio Spiral Spring Buggy Company, constitute liens upon the real estate of D. V. Reed prior in dignity to the deed of trust upon said real estate in favor of the appellant Building-Association, dated and recorded April 17,1893. Both of these judgments -were rendered at the April term, 1893, of the Circuit Court for the city of Roanoke, which term began April 10, 1893. The judgments were rendered after the recordation of the deed of trust, but they operate as liens upon the real estate of the judgment debtor from the first day of the term of' the court at which they were rendered. This we have seen was before the deed of trust was recorded, and hence judgments rendered at that term have priority over thd deed of' trust recorded during the term. Code, sec. 3567; Hockman v. Hockman, 93 Va. 455. The court is further of opinion that the appellant Building-Association is not entitled to be subrogated to the liens existing upon the real estate of D. V. Reed at the time its loan was made, and upon which said loan was secured. This claim for subrogation is for affirmative relief. It was never made in the court below, but is suggested for the first time in the closing brief of counsel for appellant, filed a few days before the ease-was called for argument in this court. The cause was not conducted in the court below with reference to the contention now made as a means of relief, and even if it was proper to allow parties to be surprised by a new case made here for the first time, the evidence furnished no basis for the relief asked. The court is further of opinion that the deed of April 15,, 1891, from George A. Baker and wife, conveying to Mrs. M. O. Reed a certain lot of land in the city of Roanoke, on the corner of Mountain street and Franklin road, was not made at the instance of D. V. Reed, the husband of the grantee, with intent to hinder, delay, and defraud his creditors. The evidence shows that at the time of this conveyance, D. V. Reed had ample property to pay his debts, and that its execution in no.way prejudiced any creditor of D. V. Reed whose debt ex [350] isted at the time it was made. Nor is there any evidence or circumstance tending to show that the deed in question was intended to prejudice the rights of subsequent creditors of I). V. Reed. The deed was merely voluntary, and the appellants, whose debts were created after it was made and recorded, cannot subject the property thereby conveyed upon the ground that it was executed in fraud of their rights. Code, sec. 2459 ; Rose v. Brown, 11 W. Va. 122; Bank v. Wilson, 25 W. Va. 242. The court is further of opinion that D. V. Reed, having created the debts due to the appellants, could not thereafter lawfully divert his estate to the payment of purchase money due from his-wife on her separate real estate, or to the cost of improving said real estate, leaving his own debts unpaid, and without the means of payment. It is well settled that improvements put upon the wife’s separate realty by the husband in fraud of creditors, can be followed by the creditors on the premises where they are put, and the realty can, in favor of the creditors, be charged' with the value of such improvements. It would be contrary to the plainest principles of right and justice to permit an insolvent husband to divert his means, and invest it in improving his wife’s separate estate, which is not liable to his debts, and thus defeat the demands of his creditors. Rose v. Brown, 11 W. Va. 122; Bank v. Wilson, 25 W. Va. 242; Burt v. Timmons, 29 W. Va. 441. The contention on behalf of Mrs. Reed that the balance of purchase money on her lot, and the cost of improving the same, was paid by D. V. Reed with separate estate in his hands belonging to her, is not sustained by the evidence. It appears that about the year 1888 the proceeds of certain real estate in West Virginia belonging to Mrs. Reed, amounting to about $1,200, passed into the hands of D. V. Reed, without anything to show that it was intended as a loan, or that the husband and wife intended to occupy the relation of debtor and creditor in respect thereto. Under such circumstances the wife cannot prevail against the creditors of the husband. Spence v. Repass, 94 Va. 716. [351] Admitting, however, that D. Y. Reed was under obligation to account to his wife for this fund, as debtor to her separate estate, it is shown that all obligation on this account was more than discharged by the conveyance to Mrs. Reed, and the sub" sequent improvement, of certain real estate in the city of Roauoke, not in controversy in this ease, and by the payment for her, prior to the creation of the debts due appellants, of a large part of the purchase money for the lot in question. The court is further of opinion that the record does not show, with sufficient clearness to form the basis of a decree, what amount was paid by I). Y. Reed, after the creation of the debts due to appellants, in discharge of unsatisfied purchase money due on the house and lot in question belonging to Mrs. Reed, or what sum was paid by him, after that date, in discharge of the outstanding cost of making improvements upon said lot. The cause ought to have been recommitted to a commissioner, and these facts ascertained and reported to the court, and, when correctly determined, a decree entered, charging the property in question with the amount thus shown to have been diverted by D. Y. Reed from the just claims of his creditors. The lower court having held that there was no charge upon the house and lot belonging to Mrs. Reed, situated on the cor. ner of Mountain street and Franklin road, in the city of Roanoke, in favor of appellants, its decree must in this respect be reversed and set aside, and in all other respects affirmed, and the cause remanded to the Hustings Court for the City of Roanoke for further proceedings to be had in accordance with the views expressed in this opinion. Reversed.