McConville v. National Valley Bank

Cardwell, J., delivered the opinion of the court. The object of this suit was to set aside a deed made by a husband to his wife of all property owned by him, upon the ground that it was made without valuable consideration, and for the purpose of hindering, delaying, and defrauding his creditors, and to subject the property conveyed to the payment of the debts of the husband. The grantor, D. L). McConville, had for a number of years been engaged in the mercantile business in the city of Lynch-burg, and, about two months prior to the execution of the deed attacked in this suit, he and-his wife conveyed to W. E. Garbee and wife jointly a house and lot in Lynchburg, where he had theretofore resided and conducted his business, for a consideration of $2,688, evidenced by eighty-four negotiable notes for $82 each, payable at intervals of one month from April 5, 1897, to D. D. McConville, and secured by a deed of trust on the property conveyed, and, on the 17th of June, 1897, he executed the deed in question to appellant, E. M. McConville, conveying to her his entire property, including the eighty-four notes of ~W. E. Garbee, above mentioned. This deed was made but two days before the rendering of the judgment in favor of appellee, the National Valley Bank, upon the note of one B. E. Hughes for the sum of $504.14, with interest from the 22d day of April, 1897, endorsed by D. D. McConville and the Traders Bank of Lynchburg, and about two weeks before the filing of a commissioner’s report fixing the liability of D. D. McConville to Boy C. Brown, appellee, as surety for B. E. Hughes, on his bond as guardian for Boy C. Brown and others, at the sum of $1,904.47, with interest. — 11 — Besides certain debts outstanding against D. D. McConville, amounting to $1,475, assumed by tbe grantee, Mrs. McOonville, tbe consideration set out in tbe deed is tbe alleged indebtedness of D. D. McConville to bis wife, stated as follows: By amount collected by tbe said D. D. McConville for tbe said Eleanor M. McConville, bis wife, from James Henderson, R. D. Yancey, trustee......... $ 800 00 Interest for three years.............................. 144 00 -$ 944 00 2. By rent collected by tbe said McConville, as trustee for bis wife, from bouse on Twelfth street.......$ 840 00 With accumulated interest (estimated)............... 300 00 - 1,140 00 3. By rent collected (of Ed. Roetblein, agent) for said party of tbe second part.........................$1,300 00 With interest (estimated)............................ 100 00 - 1,400 00 4. By rent collected from a bouse in Camp Davis.....$1,000 00 With interest for five years.......................... 300 00 - 1;300 00 5. By amount collected from bouse on Diamond Hill.. . 48 00 The rents, with estimated interest, claimed to have been collected, aggregate $3,888, which, with tbe Henderson debt, with three years’ interest, $944, makes $4,832, tbe consideration set out in tbe deed other than tbe assumption by tbe wife of tbe debts of tbe husband above mentioned. Upon tbe bearing of tbe cause, tbe court below, by its decree appealed from, held that tbe deed was, except to tbe extent of tbe debts assumed to be paid by Mrs. McOonville, not upon consideration deemed valuable in law, and was made with intent to binder and defraud tbe creditors of D. X). McOonville, and annulled tbe deed as to tbe debts of tbe appellees, tbe National Yalley Bank and Boy O. Brown, except as to tbe $1,475, tbe amount of tbe debts assumed to be paid by Mrs. McOonville. Tbe appellant, Mrs. McOonville, contends that, in setting aside and annulling tbe deed as to tbe rents alleged to have been collected by her husband, and tbe amount of tbe Henderson — 12 — debt, the Circuit Court erred on two grounds: First, because the evidence shows that D. D. McGonville collected and used in his business her money, pursuant to an understanding between them that he would either return the money or convey her his real estate; second, that the legal title to her property (from which it is alleged the rents were received) stood in the name of her husband, as trustee; that he collected her money, not as her agent, but as her trustee, in which capacity he was vested with the legal right and authority to collect it, and that she, being the beneficiary of those trusts, has the right to require the payment of the sums collected by him. It is true that two pieces of the real estate referred to were conveyed to the husband as trustee for his wife, but under the terms of the deeds he only held the bare legal title, and the wife is given the absolute ownership, with authority to use, possess, and enjoy the property, and to receive the rents, issues and profits -thereof to her own use, and with full power to convey or mortgage it by a deed in which her husband united. It cannot be said, therefore, that the rents collected, if any, from these two pieces of property by I). D. McGonville were received by him in trust for his wife, and unless the evidence shows that the money collected by him from this source was to be returned to her under some contemporaneous contract or agreement to that effect, the wife could not require repayment of it to her. Where the husband collects and uses the wife’s money with her knowledge and consent, the law does not imply a promise of repayment, as would be the case if they were strangers, but presumes that the receipt and use .of her money and her property, or its proceeds, was a gift of them by her to her husband and not a loan. Throckmorton v. Throckmorton, 91 Va. 42, and authorities cited. Where the husband conveys his property to his wife, the presumption of law is that the conveyance was voluntary, and the burden of proof that it was made upon valuable consideration — 13 — rests upon those claiming under it. Flynn, &c., v. Jackson, 93 Va. 346. It appears that about February, 1892, D. D. McConville became very desirous to get out of the business in which he was engaged, and took in with him one W. E. Garbee, with the understanding and expectation that Garbee would ultimately take the entire business off of his hands. .At that time, while the evidence does not show any large indebtedness of McConville as principal, he was surety for B. E. Hughes as guardian, as above stated, for the Brown children, upon a bond in the penalty of $10,000, and it was known by McConville that B. E. Hughes was insolvent. As we have seen, but a short time before the deed to his wife, the building in which he lived and in which his business was conducted was conveyed by him to Garbee and wife, who had been living with him since February, 1892, but the proceeds of that sale were also embraced in the conveyance to his wife. Appellant, to sustain her contention that the rents specified in the deed in question were collected by her husband with the understanding that he would repay the money or convey his property to her, introduced three witnesses, W. E. Garbee and wife, and one Mrs. D. J. Williams, a niece of appellant. They agree in fixing January 1, 1892, as the time when they first heard of the alleged understanding, but they also say that they heard that it had already existed for some time. All of them say that their information in respect to it was derived from McConville and the appellant; that they frequently heard them speak of it. Hone of them can state the terms of the alleged understanding riiore specifically than that “ she tendered him her means to help him go out of business, with the understanding that he would repay her or deed her his property.” They do not know what sums of money she let him have, when she let him have them, for what purpose they were used, nor what property he was to convey to her. — 14 — Whether the testimony of these witnesses as to the declarations of McConville and his wife with reference to the alleged understanding is admissible or not, it is unnecessary, in this case, to decide, for if it be conceded that it is admissible, it is too vague, indefinite, and uncertain to overcome the presumption of law that the receipt and use of the rents by McConville from his wife’s property was a gift by her to him, and not a loan. Therefore, as to any rents that he may have collected from her property, it is the ordinary case of the husband collecting and receiving his -wife’s money, and using it with her knowledge and consent, without any promise for its repayment. We are of opinion that the Corporation Court did not err in holding that the deed of McConville to his wife was fraudulent and void as to appellees, in so far as it rested upon the alleged indebtedness of McConville to his wife for the money specified in the deed as due her for rents received from her property. ■ With reference to the money stated in the deed to be due by McConville to his wife on account of the collection by him of the debt due by James Henderson, the case is different. The proof shows that this debt was secured on Henderson’s property to McConville as trustee for his wife. True, it does not appear just what were the terms of this trust, but it being due to McConville as trustee for his wife, he alone could collect it, and did collect it, and the mere fact that his wife was present when the money was received by him in order that she might unite with her husband in releasing the deed of trust securing it, does not divest the fund of its trust feature. McConville having received it as trustee for her, it was not incumbent upon her to prove a promise or agreement on his part to account to her for it. Equity would have compelled him to do this. But the evidence shows that McConville did not receive from the “ Henderson” debt $800. The amount he actually received, according to the proof, was $715.29, on the 11th day of August, 1894. For this sum, with interest thereon from August 11, 1894, the deed in — 15 — question rests upon a valuable consideration, and therefore the decree in so far as it holds to the contrary is erroneous. It will be in this respect reversed, bnt in all other respects affirmed, and the cause remanded to the Corporation Court to be further proceeded in as will appear necessary in accordance with this opinion. Reversed.