Merchants' National Bank v. Lyon

Mr. Justice Craig delivered the opinion of the court: The Merchants’ National Bank, the complainant in the original bill and the appellee in the Appellate Court, assigned no cross-errors in that court to the findings of the trial court that there was no equity in the bill so far as it attacked the validity of the conveyance by George W. Lyon to Weston Arnold of the property known as Jefferson Park and the lots referred to as being in Peoria fair subdivision, thus sustaining the exceptions to the master’s report and dismissing the bill so far as it related to said conveyance. Neither were cross-errors assigned as to the finding of the court that A. V. Thomas was a dona fide purchaser of the Washington street property and complainant was entitled to no equity against said property, hence that portion of the decree must be understood to be acquiesced in and is not before this court for review. Did the Appellate Court err in reversing the decree of the circuit court and directing that court to dismiss the bill? The only question to be determined is whether the conveyances from George W. Lyon to Aaron Lyon for the Lincoln Place, Selby Park and homestead properties were fraudulent as to the creditors of George W. Lyon and were without consideration. The evidence shows that George W. Lyon dealt quite extensively in real estate in Peoria and also was engaged in other business enterprises. He was a single man, and resided with his father, Aaron Lyon. Aaron Lyon was a man eighty years of agé when he testified in the case. He had had a vigorous mind until his wife died, about ten years before, since which time his memory had not been good. _ He was regarded as a man of means, having inherited, in 1880, $40,000 from John B. Lyon, of Boston. He was able to collect some rents, but for the past fifteen or twenty years George W. Lyon had bought and sold and leased property for him and assisted him in loaning money. For several years, at different times, Aaron Lyon had loaned George W. Lyon'money when he required it in his real estate business, and had taken the latter’s notes, and Aaron Lyon had also become security for George W. Lyon on notes at banks and in some of his business transactions. It also appears in evidence that a settlement was had between Aaron Lyon and George W. Lyon in November, 1889, and it was found that George W. Lyon was indebted to Aaron Lyon, for money borrowed and upon notes upon which his father was security, in the sum of about $22,000, independently of a judgment in favor of W. L. Pierce & Co. against George W. Lyod for $2153, which was a lien upon the homestead, and also for a mortgage upon the homestead for $2380. It was then agreed that George W. Lyon should convey the real estate in question to his father, said. Aaron Lyon, the net value of which was estimated to be about $12,000, which was to be accepted by Aaron Lyon in full settlement of all notes and indebtedness then held by Aaron Lyon against George W. Lyon, and Aaron Lyon agreed to pay and satisfy all notes upon which Aaron Lyon was security for George W. Lyon, and Aaron Lyon agreed to pay the W. L. Pierce & Co. judgment, and he was also to pay the mortgage on the homestead. ' The conveyances were made and executed by George W. Lyon to Aaron Lyon, and Aaron Lyon surrendered to his son the notes held, and assumed the payment of the notes upon which he was security. George W. and Aaron Lyon filed sworn answers denying that the conveyances from George W. to Aaron Lyon were fraudulent or designed to cover up the lands or lots, or the title thereto, to prevent complainant from recovering the amount of its said judgment, and denied that George W. Lyon fraudulently retained equitable interests and trusts therein that should be subjected to complainant’s judgment. Theodore Miller and Weston Arnold also filed answers under oath. The answer of George W. Lyon admits that November 29, 1889, he conveyed, by warranty deed, to his father, Aaron Lyon, certain lots in Lincoln Place subdivision, the consideration being placed in the deed at $5000, but avers that the actual consideration for the deed was that Aaron Lyon agreed that a certain indebtedness which the defendant then owed on á note held by the German-American National Bank of Peoria for the sum of $4600 and interest should be paid by Aaron Lyon from the proceeds of eight certain consolidated bonds of the Boston, Concord and Montreal Railroad Company, each for the face value of $1000, which had been pledged for the payment of said indebtedness by George W. Lyon, who had borrowed the bonds from his father, Aaron Lyon, the owner of the same; and also that Aaron Lyon would cancel a certain indebtedness which he held against George, amounting to $800 or $900, and that Aaron Lyon afterward, in March, 1890, paid and discharged the indebtedness to the bank from and out of the proceeds of the sale of the bonds, to the amount of $4836.14, and took up and canceled the note. The answer denies that the real estate described in the deed of November 29, 1889, is. under the absolute control of George W. Lyon, but avers that whatever control he had over the property or any property of Aaron Lyon since the date of said conveyance or conveyances has been as the agent, only, of his father and with his father’s consent and direction, his father being a man of the age of eighty years and not' sufficiently vigorous to conduct his own business, and that he relied on him, George W. Lyon, in caring for and managing his (Aaron Lyon’s) property; admits that on the 9th day of November, 1889, he conveyed to his father, Aaron Lyon, for the express consideration of $2000, the tract of land described as the Selby Park property; that the same still stands in the name of Aaron Lyon, but denies the same is subject to the control of defendant, or is held in trust by Aaron Lyon for the use and benefit of defendant, but avers that the actual consideration for the conveyance, and certain other conveyances of the same date, .and of certain real estate on Washington street, in the city of Peoria, was the payment and satisfaction by Aaron Lyon of two certain promissory notes which Aaron Lyon held against defendant, and which amounted, principal and interest, at the time to the sum of $7551.13, and that the deed was subject to a mortgage of $8000 on the property conveyed; admits that the title to lot 3, in block 92, in Monson & Sanford’s addition to Peoria, (the homestead,) remained in defendant George W. Lyon until about the third day of October, 1891, when the defendant, for an expressed consideration of one dollar, (no money in fact being paid,) conveyed the same to his father, Aaron Lyon; avers the fact to be that in February, 1891, Aaron Lyon purchased and had assigned to him a certain judgment obtained in the circuit court of Peoria county in favor of W. L. Pierce & Co. against the defendant for §2153 and costs, which was a lien upon any real estate defendant had at that time, and that he conveyed the homestead property subject to a mortgage upon the same amounting to about §2200; avers the property was not worth to exceed §2600, and that Aaron Lyon assumed the mortgage encumbrance and agreed to pay the same; denies that the conveyances, or any of them, were fraudulent or designed to fraudulently cover up the same so as to prevent complainant from recovering the amount of its judgment. The answer of Aaron Lyon was under oath, and corroborates substantially the statements and averments of the answer of George W. Lyon. He answers the special interrogatories and gives detailed statements of the deeds and the considerations therefor. He says that the consideration for the Selby Park and the Washington street property conveyances, dated November 9, 1889, was the surrender to George W. Lyon of two promissory notes which he (Aaron) held against him,—one dated January 5, 1884, for the sum of §1600, and interest thereon at eight per cent, and the other dated January 20, 1889, for §4983, and interest thereon at eight per cent per annum, both amounting, principal and interest, to §7551.13; that these notes were surrendered up and canceled. These conveyances appear to have been accepted by Aaron Lyon as absolute, and there is nothing indicating to us that any secret trust existed. The sworn answers of both George W. and Aaron Lyon deny that George W. Lyon retains any equitable interests and trusts in the lands and premises, or that said conveyances were designed to cover up the same to prevent the complainant from recovering the amount of its judgment. When the complainant requires the answer of a defendant under oath, and he so answers, it can only be overcome by the evidence of two witnesses, or by the evidence of one and circumstances equal in weight to that of another. (Myers v. Kinzie, 26 Ill. 36; Phelps v. White, 18 id. 41.) Have the sworn answers of George W. Lyon and" Aaron Lyon been overcome by the evidence of two witnesses, or that of one and circumstances equal to that of another? A careful examination of complainant’s evidence fails to show that the conveyances to Aaron Lyon were fraudulent or without consideration, and the sworn answers are not overcome. The testimony shows that Aaron Lyon was security for his son on several notes at the German National Bank, and paid one note of $4600 from the proceeds of bonds loaned to George and which were held as collateral by the bank. The fact that the notes that Aaron Lyon stated, in his answer, he surrendered up were not produced at the trial is regarded as a suspicious circumstance by complainant’s counsel. The attorney who drew the answers of George W. Lyon and Aaron Lyon, testifies that he had the notes before him when he drew the answers, and they were described in the same. George W. Lyon swears that he had them until he took them to his attorney to use in preparing the answers, and that he afterwards took them home and laid them on a dresser; that the housekeeper threw some papers out on the ash pile in the rear of the house, and she told him they had blown on the floor and she threw them out there, and he wrnnt and hunted, and found a receipt that had been given him about the same time, but found no other papers. The sworn answers not being overcome by the testimony of complainant, it must be held that Aaron Lyon was a purchaser for value and entitled to hold the property conveyed to him by George W. Lyon. The fact that George W. Lyon and Aaron Lyon were related does not prove fraud. As was said in Wightman v. Hart, 37 Ill. 123: “Nor does the fact that Albert and Charles were relatives prove fraud. It may be a circumstance to excite suspicion, but of itself is not proof. Nor do we think, in connection with other circumstances, that it overcomes the sworn answer responsive to the allegations of the bill.” The surrender and cancellation of these notes and an account of $890 were a good consideration for the deeds. Besides, Aaron Lyon, who was security on notes with George W. Lyon, was jointly liable thereon, and he agreed to and did assume and treat them as his own, which was a good consideration. Every tract of land deeded was encumbered by mortgage, and the deeds from George W. Lyon to Aaron Lyon were made subject to these mortgages. The value of the property deeded Aaron Lyon, the evidence shows, was about $11,000, and the indebtedness due from George W. Lyon to his father was upwards of $13,000, so that it appears Aaron Lyon actually paid more than the propérty was worth at the time the conveyances were made. George W. Lyon had a right to prefer Aaron Lyon. He had a right to turn out property in satisfaction of or to create a lien upon it for the security of a particular debt. In Farwell v. Nilsson, 133 Ill. 45, this court said (p. 48): “The right of a debtor to pay one creditor in preference to another, or to turn out property in satisfaction of or to create a lien upon it for the security of a particular debt, in preference to and to the exclusion of other liabilities, always existed at common law.” Complainant made Aaron Lyon its own witness and is bound by fiis testimony. He testified: Q. “Was there any property of any kind included in any of the deeds from George to yon that was not absolutely sold by him to you in payment of his indebtedness to you? A. “That was the understanding. Q. “Was not that the fact? A. “Yes, sir. As near as I can come at it from the old stubs, George W. Lyon was owing me in November, 1889, at the time of the settlement, about $17,000 or $18,000. I think the property deeded to me was worth less than the amount of his indebtedness to me.” The sworn answers of George ‘W’. Lyon, Aaron Lyon and Weston Arnold, and. their testimony, deny all fraud and deny there was a secret trust, and not being overcome must be taken as true. We fail to find any sufficient testimony in the record, on the part of the complainant, which overcomes this evidence. Fraud being alleged, it must be established by a preponderance of the evidence. That was not done here. We think the judgment of the Appellate Court was correct, and it will be affirmed. Judgment afflrmed.