Morrisette v. Cook & Bernheimer Co.

Prentis, J., delivered the opinion of the court. On March 27, 1915, T. N. Morrisette conveyed to his wife, Alvilla Morrisette, the appellant, all of his real estate in the city of Norfolk, said to be of the value of $2,280, reciting the consideration to be “the sum of five dollars in hand paid, the receipt of which is hereby acknowledged, and other valuable considerations.” The property was conveyed with general warranty, and the deed contained the usual covenants of title. This deed was attacked by the appellees, creditors of Morrisette, upon the ground that it was made upon consideration not deemed valuable in law, was voluntary, and made with intent to hinder, delay and defraud his creditors. The bill alleged that the conveyance deprived Morrisette of the means of paying his debts, prevented his creditors from resorting thereto for the payment of his debts, and caused him to become and remain insolvent. Morrisette conducted a bar room in Norfolk, and at the time of the conveyance was indebted to three of the appellees in the sum of $637.57. At the time of his death, a little over ten months later, his indebtedness to these creditors amounted to $1,084.96. After the conveyance and until his death, Morrisette continued his business, purchasing more goods from them and making payments on their running accounts, and this suit was instituted to recover the balance due thereon. At his death, as appears from the inventory, his entire estate consisted of his bar fixtures and stock, appraised at $321; one horse and buggy, at $150; and cash in bank $6; aggregating $477. . The trial court decreed the conveyance to be null and void, and set it aside upon- the ground that it was not made upon consideration deemed valuable in law, and that it was made with intent to hinder, delay and defraud the creditors of Morrisette. From that decree this appeal was taken. — 591 — The contention for the appellant is that the conveyance was voluntary and not based upon valuable consideration, she having so admitted in her answer to the bill, that the debts were contracted at- a date subsequent to such conveyance, and that the evidence does not justify the decree of the court that the conveyance was fraudulent; and therefore, under section 2459 of the Code, the bill should have been dismissed. Section 2459 thus relied upon provides: “Every gift, conveyance, assignment, transfer, or charge, which is not upon consideration deemed valuable in law, or which is upon consideration of marriage, shall be void as to creditors, whose debts shall have been contracted at the time it was made, but shall nto, on that account merely, be void as to creditors whose debts shall have been contracted or as to purchasers who shall' have purchásed after it was made; and though it be decreed to be void as to a prior creditor, because voluntary or upon consideration of marriage it shall not, for that cause, be decreed to be void as to subsequent creditors or purchasers.” The claim of appellant rests, then, upon the proposition that this is merely a voluntary deed, and that though void as to creditors whose debts were contracted before it was made, in the absence of actual proof of fraud, it is valid as to creditors whose debts were contracted after the conveyance. On the other hand, the claim of appellees is, that the deed is not merely voluntary but actually fraudulent, and therefore void as to them under section 2458, which provides that, “Every gift, conveyance, assignment, or transfer of, or charge upon, any estate, real or personal, every suit commenced, or decree, judgment, or execution suffered or obtained, and every bond or other writing given with intent to delay, hinder, or defraud creditors, purchasers, or other nersons of or from "what they are or may be lawfully — 592 — entitled to, shall, as to such creditors, purchasers, or other persons, their representatives, or assigns, be void.” The controlling question is, whether under the facts recited the decree should be in favor of the creditors alleging the fraud, or in favor of the wife claiming that there was no fraud. There are certain well-established doctrines affecting the question, which are admitted by all: Among them are, that such transactions between husband and wife, as a matter of public policy, are presumed to be fraudulent, because of the temptation to commit frauds upon creditors and the ease with which they may be perpetrated; and that this presumption must be overcome by evidence; that where a husband who is indebted conveys his property to his wife, the wife must prove the good faith of the transaction by clear and satisfactory evidence; that if the deed be tainted with actual fraud, it is void as to all creditors, whether existing or subsequent; that when post nuptial settlements are assailed by creditors, they must be upheld by proof; and that the answer of the wife is not evidence, but must be sustained by proper proof. Darden v. Ferguson, 2 Va. Dec. 496, 27 S. E. 435; Fink Bro. & Co. v. Denny, 75 Va. 668; Johnson v. Wagner, 76 Va. 590; Witz, Biedler & Co. v. Osburn, 83 Va. 230, 2 S. E. 33; Rixey’s Adm’r v. Deitrick, 85 Va. 45, 6 S. E. 615; Crowder v. Garber, 97 Va. 567, 34 S. E. 470; Runkle v. Runkle, 98 Va. 664, 37 S. E. 279; Robinson v. Bass, 100 Va. 190, 40 S. E. 660; Lee v. Willis, 101 Va. 191, 43 S. E. 354; Baker v. Watts, 101 Va. 707, 44 S. E. 929; Rankin v. Goodwin, 103 Va. 83, 48 S. E. 521; Kline v. Kline, 103 Va. 265, 48 S. E. 882; Richardson v. Pierce, 105 Va. 630, 54 S. E. 480; Sledge v. Reed, 112 Va. 203, 70 S. E. 523; Eason v. Lyons, 114 Va. 390, 76 S. E. 957; Johnson v. Ables, 119 Va. 596, 89 S. E. 908. In this case the deed did not purport to be a voluntary conveyance, but recited a valuable consideration, and the main contention of the appellant is based upon the fact, — 593 — shown by the admission in the answer, that the deed affirmed a falsehood and concealed the truth, and that notwithstanding its recital of a valuable consideration no consideration passed. If in this case, when the deed was attacked, instead of admitting that the recital of a valuable consideration in the deed was untrue, the grantee had by her answer undertaken to sustain the deed by alleging that she had paid full value for the property conveyed, then by an unbroken line of decisions it is clear that the burden would have been upon her to establish that fact. .The proposition here is, that because of the circumstance which the law infers in the absence of proof to the contrary and which fact she admitted in her answer, namely, that the recital of a valuable consideration in the deed the amount of which was undisclosed, was false and deceptive, therefore the burden of proof changes as to creditors whose debts were contracted after the conveyance. It is doubtless true under section 2459, that if there is nothing before the court except a voluntary conveyance, then that such a conveyance cannot be successfully attacked by subsequent creditors. Counsel for the appellant argue with convincing force that by virtue of section 2459 subsequent creditors cannot prevail when they attack a conveyance which is merely voluntary and not fraudulent. Dr. Lile, in his Notes to Volume 3, Minor’s Institutes, on page 26, thus construes the section: “Hence, at present with us, a gift of a chattel being without valuable consideration is always void as to existing creditors of the donor; but as to subsequent creditors actual fraud must be proved. The voluntary character of the transaction may be one element in the proof of fraud, but not sufficient proof, because the statute says it shall not be.” Pickrell v. Reynolds (Chancery Court, city of Richmond), 6 Va. Law Journal (May, 1882), 308; Lockhard v. Beckley, 10 W. Va. 88; Greer v. O’Brien, 36 W. Va. — 594 — 277, 15 S. E. 74, and Peale v. Grossman, 70 W. Va. 1, 73 S. E. 46, Ann. Cas. 1913 C, 1373, also sustain this view. ■ The evidence here, however, shows much more than a conveyance which is merely voluntary; that is, we have a conveyance to his wife from a grantor who was indebted at the time, which was in fact voluntary though it falsely purported to be for a valuable consideration, such debtor being engaged in a business which was to be prohibited by law within about eighteen months (because it had then been determined that the sale of intoxicating liquors would be prohibited in the State on the 1st of November, 1916); his bar fixtures and business stand were therefore depreciating in value, while his debts, instead of diminishing, materially increased soon after the conveyance, and as the trial judge determined the evidence submitted does not clearly and satisfactorily prove that the grantor had reserved sufficient property to pay his debts. In Greer v. O’Brien, supra, which is among the cases relied on by the appellant, this is said: “This proposition must be taken in connection with the facts of the case itself (referring to Rogers v. Verlander, 30 W. Va. 851, 5 S. E. 847), as set out in the opinion, which disclose that the deed assailed purported to be for valuable consideration, and was not on its face a voluntary conveyance; thus obviously indicating on the part of the grantor an intent to withdraw from the reach of existing creditors all the property so conveyed. As applied to the case then in hand, therefore, the proposition is correct, because the misrepresentation on the face of the deed supplied that ‘additional circumstance’ of covin which, as we have seen, was insisted upon in Lockhard v. Beckley, supra (10 W. Va. 87), in which it was held that mere indebtedness at the time of making a dead, voluntary on its face, is not a circumstance to impeach the deed, except when accompanied by other badges of fraud. ” We have, then, in this case this particular badge of fraud, this additional circumstance, in a transaction by which a — 595 — husband, indebted at the time, conveys the major portion of his property to his wife, by a deed which falsely recites a valuable consideration, the amount of which was not disclosed by the deed, and which was in fact voluntary. Such facts appearing in a suit promptly instituted by subsequent creditors, in the absence of satisfactory explanation, are sufficient to sustain a decree that the conveyance is fraudulent and hence void as to such subsequent creditors. In the case of Eason v. Lyons, 114 Va. 390, 76 S. E. 957, there was a deed from a husband to a wife which was voluntary on its face, and the wife attempted to sustain it by showing that it was in fact a conveyance of her own property for which she had furnished the purchase money, and this court determined that the burden was upon the wife. Here we have a deed purporting to be for a valuable consideration, which the wife discredits by admitting that it was voluntary. If such an admission can change the burden of proof in such cases, then an easy way to defeat subsequent creditors, even where there is actual fraud, has been discovered. Under the circumstances of this case, the conveyance to Mrs. Morrisette, in the absence of satisfactory proof to the contrary, must be held to be tainted with fraud, and therefore void both as to existing and subsequent creditors. The burden was upon her to repel the presumption arising out of the admitted facts. Even if we had doubt about this, however, the case should be affirmed, because of the salutary doctrine that an appellate court will not reverse the decree of a trial court, which is entitled to great weight, unless satisfied that it is wrong. The burden is upon the party complaining to show error and to satisfy the appellate court of such error. Shipman v. Fletcher, 91 Va. 487, 22 S. E. 458; Smith v. Smith, 92 Va. 696, 24 S. E. 280. For the reasons indicated, the decree will be affirmed. Affirmed.