Weaver v. Owens

Thayer, J. The ppellant, as such administrator, on the twenty-fourth day of September, 1886, commenced an action in — 303 — said Circuit Court against the said W. F. Owens, upon a promissory note executed by him to the said Hans Weaver in his lifetime. A writ of attachment was issued in the action, and certain property belonging to said Owens was attached by virtue thereof. Owens died on the following day after the action was commenced; he, as a matter of fact, committed suicide. The action was continued against Owens’ said administrator, and a judgment for the sum of $3,000 and costs was recovered therein, and an order granted to sell the attached property. Said property was sold in accordance with said order, and $002.71 realized therefrom. Subsequently a general execution was issued upon the judgment, which having been returned unsatisfied, the appellant brought a suit against the respondent to set aside as fraudulent a certain deed to lots 1 and 2, block 53 B, in railroad addition to the city of Boseburg, Oregon, executed by one W. H. Kearnan to the respondent on the fourteenth day of February, 1885, in' which suit said Johnson, as such administrator, was included as a defendant, but failed to interpose a defense therein. The appellant alleged in his complaint in said suit that on said fourteenth day of February, 1885, and prior thereto, the said W. F. Owens was largely indebted to Hans Weaver, appellant’s testator, and to other parties, and that at said date, and at all times thereafter, was wholly insolvent; that the said Owens purchased the said lots from said Kearnan, well knowing his insolvent condition, and caused the deed thereto to be made to the respondent, his daughter, who was only about fifteen years of age, and who at the time was residing with her father, being supported by him; that said W. F. Owens caused the said property to. be so conveyed, with intent to cheat, hinder, delay, and defraud the said Hans Weaver, and his other creditors, and for the express purpose of preventing the said property from becoming liable to the payment of his debts; that the respondent did not furnish the purchase money for said property, or any part thereof, and has no interest whatever therein, other than to hold the legal title for the benefit of her father. — 304 — The respondent by her guardian ad litem filed an answer to the complaint denying all the material allegations therein contained. The case coming on for hearing before the said Circuit Court upon the allegations and the proofs taken therein, the said court found that it was not true that said Owens caused the said deed to be so executed; and that the respondent was entitled to a decree dismissing the complaint, which is the decree appealed from herein. The appellant’s counsel insist that upon the complaint, and the testimony coming here with the transcript, that a decree should have been given in the appellant’s favor for the relief claimed in his complaint. Said counsel have submitted a list of authorities in support of their position, but the question to be determined is purely one of fact. The law adjudges that certain facts and circumstances in such cases are indicia of fraud; but the intent must be proved and found as a fact by the jury, where the case is tried by a jury, and by the court, when it is to be determined by the latter. The fraudulent intent is seldom susceptible of direct proof, but facts and circumstances must be established from which it can be reasonably inferred. The statute declares that the fraudulent intent shall be deemed a question of fact and not of law. (Code, § 3062.) Hence the same rules of proof apply to other cases involving questions of a similar nature. The allegation must be established by a preponderance of evidence. Nor will the establishment of the fact that the conveyance was made with the intent to defraud creditors be alone sufficient to entitle a plaintiff to relief; he must aver and prove that he was hindered, delayed, and defrauded. The language of the statute is that the fraudulent act “ as against the person so hindered, delayed, or defrauded shall be void.” ■ (Concluding part of § 3059 of the Code.) The plaintiff must allege and show, not only that the defendant did the act with the intent mentioned, but that he was so hindered, delayed, or defrauded. The complaint in the suit herein contains no allegations of the value of the lots referred to, or that Owens paid any money therefor, nor that the appellant’s testator was in any manner injuriously affected in consequence of the transaction. How can — 305 — it be known from the complaint, or from the proofs as to that matter, whether Hans Weaver was not cognizant of the fact that W. F. Owens had the deed to the lots executed to the daughter, and acquiesced in it when he executed the bond on the twenty-seventh day of March, 1885, out of which the indebtedness to him is supposed to have arisen? There is no allegation in the complaint that it was done secretly or clandestinely;, or that Weaver was ignorant of the fact; and the-evidence discloses that Owens talked freely with other parties of his having purchased the property for his daughter. It appears from the proofs that Owens wanted credit at the bank, and as collateral security for balances from overdrafts he executed bonds to the bank, and said Hans Weaver, K.. Phipps, and others became sureties for him thereon. The first bond was ’ for the sum of ten thousand dollars, which, was executed some time prior to the fourteenth day of February, 1885. The amount of the bond was placed to Owens’ credit upon the books of the bank, and he drew checks, drafts, and orders against it. The amount of his account varied from time to time; on the said fourteenth day of February the amount of balance on an overdraft was nearly seven thousand dollars. Subsequently, and on the twenty-seventh day of March, 1885, this bond was surrendered up, and another, for the sum of fifteen thousand dollars, was executed by the same parties and put in its place. Owens continued his account with the bank, which amounted, debit and credit, at the time of his death to fifty thousand dollars. The balances, I suppose, were made up daily, and the amount against him at his death was upon drafts, etc., drawn within the three or four months next prior thereto. How much that balance was does not appear from the briefs of counsel,, but it will not be presumed to have exceeded the penalty named in the new bond. The inquiry then is, did Owens with intent to defraud Weaver out of his claim, on account of his becoming surety for him on these bonds, or either of them, cause the said two lots to be conveyed to his daughter as alleged? That question must be solved like any other question of fact. The reply must come from the proofs. It cannot be answered by meta — 306 — physical reasoning drawn from supposed facts or adjudged cases. Every case involving such a question must be determined by its own peculiar circumstances. The abstruse distinctions made by courts in cases before them can be of very little assistance to us; we must take the facts established by the proofs in this case, and draw such inferences and conclusions as our knowledge of human affairs and our best judgment dictates. That, in my opinion, is the only proper course to be pursued. We sit here in this matter more in the capacity of a jury than of a court; and we should consider it in the light of that understanding of the dealings and transactions of men in general, which is gained from observation and experience. The evidence upon the part of the appellant given in support of the allegation of a fraudulent intent upon the part of Owens in having the lots deeded to his daughter is very slight and inconclusive. The deposition of J. J. Thornton, a witness on behalf of the appellant, shows that witness and his father had a mortgage on the lots for two hundred and fifty dollars; that witness met Owens and Kearnan in the court-house looking over papers, the mortgage he “reckoned,” and Mr. Owens told him that he would pay the mortgage, and to let it run until the time run out; that he did not know what was the consideration paid to Kearnan for the property, “only what Kearnan told him.” Upon being asked what Kearnan told him he answered, under objection, that if he had not forgotten it was eight hundred dollars. The deposition of A. W. Caulfield, another witness for the appellant, shows that he, witness, performed labor on the building on the lots, but the time he could not specify; that Owens hired him to do the work and paid him; that it was after the reported sale from Kearnan that Owens said he had bought the lots; that he supposed Owens was in possession of the property; that he seemed to have control of it; but about that same time he claimed that he had given the lots to Esther. He remarked that Effie, the oldest girl, was displeased because he had given Esther the Kearnan house, which was a better house than the — 307 — one he had given her; that he said this at the time witness was working on the house; that he judged from what he had heard that Esther, on the fourteenth day of February, 1885, was about fifteen years of age; that she lived with her parents. This is the substance of the entire evidence regarding Owens’ purchase of the lots for the daughter. Copy of the deed was given in proof, and formally recites a consideration of eight hundred dollars as paid, but does not state by whom paid, and it appears therefrom that the deed was filed for record September 23, 1886. The note upon which the judgment was recovered in the action was for the payment of three thousand dollars, and bears the same date of the filing of the deed for record. All the other evidence in the case was addressed to the question of Owens’ financial condition, and I agree fully with the circuit judge, “that as to whether Owens was insolvent on February 14, 1885, I am unable to find from the evidence in the case.” The deposition of W. S. Humphrey, a witness for the appellant, shows that on or about the fourteenth day of February, 1885, said Owens was indebted to the banking firm of Humphrey and Flint, of which witness was a member, nearly seven thousand dollars; that the indebtedness accrued by checks, drafts, and orders drawn on the firm by Owens, and paid by them; that the checks, etc., were not paid on Owens’ individual security, but under a bond upon which "Weaver, Phipps, and others were security as before mentioned; that witness did not know what property Owens possessed at that time. Upon' cross-examination witness was asked: “Whether it were not a fact that Mr. Owens had an account with you in the bank, and that he had paid in and drawn out since the fourteenth day of February, 1885, a large amount more than he was owing you at that date?” To which the witness answered: “Yes, sir; I would think that he had; I could not say.” The witness was also asked the following: “ Has he not paid in and drawn out as much as fifty thousand dollars from that time to the time of his death?” To which the witness answered: “I should think he had.” The deposition of W. S. Hamilton, a witness for the appel — 308 — lant, shows that Owens was indebted to S. Hamilton, on the fourteenth day of February, 1885, upon a promissory note, to the amount of twelve thousand dollars; that four thousand dollars of the principal' of the note was paid in August or September, 1886; that the balance remained unpaid; that the note was given January 29, 1884, and that Hans Weaver signed it as security; that Owens had no property on the fourteenth day of February, 1885, that witness was certain of; that witness had a conversation with Owens about the purchase of the lots shortly after he purchased them, and that Owens said that part of the consideration was a plow and a wagon; that he turned them in on the trade. Upon his cross-examination the witness stated that Owens was in the commission merchant business; was doing a large business in buying grain, wool, and such things; that as far as witness knew, Owens continued to do business and pay demands-» against him until a very short time before his death. The said C. W. Johnson, administrator of Owens’ estate, was called by appellant as a witness, and testified, that the value of the assets of the said estate, as appraised, amounted to $25,598.41, against which there had been filed counter-claims amounting to $5,987.93; that none of the assets were real, property, but consisted almost wholly of notes and accounts; that he supposed three or four thousand dollars would be collected ; that the reason the amount as appraised could not be collected was principally because the books were kept in such a way; that while the accounts appear to be straight, it would be proven that they are almost wholly erroneous; that the liabilities of the estate, so far as claims against it had been presented, amounted to $61,026.42, and he was reasonably satisfied that there was at least $40,000 of outstanding claims which had not been presented. The witness was asked to state from the books, letters, papers, and other data in his possession, whether or not said Owens was solvent on the fourteenth day of February, 1885. To which he made answer that he was reasonably satisfied Owens at said date was entirely insolvent. This testimony, however, was clearly incompetent. — 309 — The witness upon cross-examination stated that he did not know of any debt due to Hans Weaver at that time which had not been paid, nor any debt that Hans Weaver, or his administrator since his death, had paid for Owens as security or otherwise; The deposition of Asher Marks, a witness for the respondent, shows that witness had known said Owens since childhood, twenty-five or thirty years; that his business was grain and wool, etc., commission merchant; that he had had financial dealings with Owens since the fourteenth day of February, 1885; that during that time Owens had been indebted to him in the course of his business dealings with him as much as ten or fifteen thousand dollars; that the various sums of indebtedness since that time together would probably amount to twenty-five or thirty thousand dollars, and that Owens paid the same; that he had fair opportunities, in some respects, of knowing the manner in which Owens conducted his business, and that he thought he was solvent at as late a period as February, 1886. In answer to questions upon cross-examination, the witness stated that he knew enough of Owens’ solvency at that time not to be afraid to trust him; that he could not swear Owens was solvent, but it was his judgment that he was; that from what he had ascertained about Owens’ affairs since his death, it appears he was not solvent February, 1886. Witness thought that Owens had, on the fourteenth day of February, 1885, in notes, accounts, stock, cattle, and everything he had, property to the value of twenty thousand dollars; that from the amount of Owens’ liabilities, ascertained at his death, witness was of the opinion that he could not have been solvent in February, 1885, or at any time thereafter. Upon redirect examination, the witness was asked the following question: “ Do you not know that he (referring to Owens) paid off all claims presented to him up to within a year of his death?” To which he answered: “I think he did.” Also the following: “Do you know of any debt that he owed that he did not pay off when demanded up to within a year of his death?” To which the witness answered: “I do not; he always paid me.” — 310 — The witness gave further testimony upon that point, and others were called who testified substantially to the same effect. From all the evidence in the case it may be inferred that Owens carried on the business in which he was engaged for a number of years upon a large scale; that he had the confidence of the community, obtained extensive credit, and conducted his business mainly upon borrowed capital; that he was not lacking in energy, was not addicted to any vices, met his engagements with reasonable promptness, but was generally unthrifty, and signally failed in the end. His financial course was by no means a commendable one, though it is the same that thousands have followed. It is a course pursued by a class of vain and ambitious persons, devoid of caution, prudence, and foresight, and which is certain to terminate in monetary disaster. Such persons are not actuated by dishonest motives; they intend to be upright, though their necessities often force them to do acts of a suspicious character. They are always hopeful and sanguine, and their faith in their ultimate success never fails until they are overwhelmed with ruin. W. F. Owens probably never intended to wrong any one. He conceived that it was his mission to do good, and he doubtless expected, not only to liquidate all his liabilities, but also to acquire such a fortune as would enable him to be a benefactor, and in my opinion it would be unkind and uncharitable to conclude that he swapped the plow and wagon for the lots, and took the deed in his daughter's name, with intent to cheat his surety, Weaver, or any oue else; nor can such intention be gathered fairly from the evidence. It appears therefrom that Owens, at the time the lots were purchased and the deed executed, was at the height of his imaginary success; he was receiving and paying out large sums of money amounting to thousands of dollars, compared to which the eight hundred dollars, purchase price of the lots, was a very small trifle. There is not a lisp of testimony in the case showing that he ever attempted to dispose of any of his other property, consisting of land, cattle, notes, and accounts, appraised after his death at more than twenty-five thousand dollars, to delay or defraud his creditors. His credit was good at the time; and he — 311 — made no effort to conceal what he did. The deed, it is true, was not put upon record when executed, but if it had been it would not practically have imparted any notice. The recording of a deed will enable a subsequent purchaser of the property to ascertain the condition of the title, because he will search the records and find out; but as to third persons generally, it affords no notice in fact. In a town of the size of Eoseburg such matters are learned much more readily from gossip than from the county records. It seems to me that to require a court to believe from the facts and circumstances of this case that Owens had the deed to the lots executed to his daughter, with the intent of preventing the property from becoming liable to the payment of his debts, overtaxes credulity. It is not a case where a debtor has voluntarily disposed of a material part of his property, seriously affecting his ability to pay his debts; nor one in which he has diminished his capital by settling upon members of his family such a portion of it as to cripple his business operations. It was a trivial advancement to his daughter, similar to one which he had previously made to an elder daughter, an act which Hans Weaver would undoubtedly have commended, and very probably did approve of. If Owens had purchased a piano and given it to the girl, no creditor, nor probably the administrator of any creditor, would have objected to it; and yet the grounds for charging it to .have been done with a fraudulent intent, as against Owens’ creditors, would have been equally tenable. There are no facts from which the inference of an intent upon the part of Owens to defraud his creditors can be drawn, except that he was indebted at the time, was, as a matter of fact, insolvent, and the advancement was a voluntary settlement. Such an inference might be justified, if the cost of the lots had been a considerable portion of Owens’ property; but as it included only the paltry sum of eight hundred dollars, made up of a plow and wagon, and the assumption of a mortgage upon the property for two hundred and fifty dollars; that the transaction took place before the actual debt in question accrued, during which time Owens received and disbursed thousands of dollars; and that no general intention is — 312 — shown on his part to defraud his creditors, such an inference to my mind would be absurd. The inference in such cases must be founded on facts legally proved, and such a deduction from those facts as are warranted, among other things, by a consideration of the particular propensities or passions of the person whose act is in question. (Code, § 773.) W. F. Owens certainly exhibited no propensity to dispose of all his property, or any material part thereof, so as to prevent it from being applied to the payment of his debts. If he had entertained any such disposition, he would not have been likely to have paid the four thousand dollars to S. Hamilton in August or September, 1886, a year and a half or more after the lots were deeded; nor have paid in at the bank the seven thousand dollars overdraft, which had been drawn when the deed was executed, and the various sums to Asher Marks and others. If such had been the bent of his mind, he would not probably have stopped with securing to his own use and benefit the little dab of property which the lots constituted. I am very strongly impressed with the belief, from all the facts and circumstances as shown herein, that the charge in the complaint of the fraudulent intent upon the part of Owens in the affair considered is not sustained ; and that the findings of the Circuit Court cannot be disturbed unless we abandon that course in which intuitive sense and reason are the safest and surest guides to truth, and follow the tortious pathway of vagary. It is not a question of law we are dealing with, but, as said in the outset, a pure question of fact; and the deductions to be drawn are those which our reason makes from the facts proved, without an express direction of the law to that effect. (Code, § 771.) I am of the opinion that the decree appealed from should be affirmed. Lord, C. J.—Upon the facts as presented by this record, I concur in the result.