Auburgh v. Lydston

Mr. Justice Smith delivered the opinion of the court. At the time the conveyance was made by Lydston to his wife, February 10,1891, he was indebted to appellant and others in large amounts and was in embarrassed circumstances. The property described in the deed was the only property he had, and he was therefore left with no property with which to meet his existing liabilities. It is not claimed by appellees that he received anything in the way of money or property from his wife in exchange for the house and lot which he conveyed to her. The papers executed between Lydston and his wife at the time the deed was made show that the only thing which he received for the transfer of his house and lot, and an ■ assignment of his furniture therein to his wife, was a paper in which she purports to release him from any further responsibility for her support. Clearly, then, the necessary effect of the deed was to hinder and delay the creditors of Lydston, whose debts then existed. Lydston must be held to have intended that the deed would have that effect. l£ If the act done will necessarily have the effect of hindering and delaying creditors, the law presumes that it was done with that fraudulent purpose and intent.” Harting v. Jockers, 136 Ill. 632; Moore v. Wood, et al., 100 Ill. 451; Emerson v. Bemis, 69 Ill. 537; Lukins v. Aird, 6 Wall. 78; Bump on Fraudulent Con., 246-282. The deed was then presumptively fraudulent as to appellant and other creditors whose debts existed when it was executed. There is another presumption as to conveyances from husband to wife when the grantor is financially embarrassed, and that is that they are presumed to be voluntary. Wait on Fraud. Conv., secs. 7, 94; Robbins v. Armstrong, 84 Va. 810. These presumptions throw the burden of establishing the fairness and good faith of the transaction upon the grantee, Lucy A. Lydston. The only answer made ¡¡by Mrs. Lydston to this situation disclosed by the record is the release from further support given by her at the time the conveyance was made; and therefore the final question in the case' is whether or not, under all the circumstances disclosed by the evidence, this release makes the transaction fair and honest, not only as between the parties to it but as to the creditors who were affected by it. We are of the opinion .that it does not relieve the transaction of its fraudulent character. If we consider the release in question as good in law and as constituting a valid consideration for the deed as between the husband and wife, which we regard as very doubtful, but express no opinion thereon, the transaction was necessarily a disposition of all the property Lydston had for bis own personal use and benefit. By the making of the deed he relieved himself of the burden of supporting his wife in the future, thus securing, to himself a continuing financial benefit, and at the same time withdrawing the property conveyed from his estate and from the reach of his creditors in the ordinary proceedings at law to collect their debts. It is undoubtedly true that Mrs. Lydston had a right to be supported by her husband, and no criticism is to be made of any reasonable provision for that purpose according to his state and condition in life, provided enough property is left for the payment of his debts. But, “ every man is bound to be just before he is generous,” and this rule will not tolerate the withdrawal of the whole of his estate, substantially, from the reach of his creditors and placing it in the hands of his wife, for her benefit or for his own benefit. Emerson v. Bemis, 69 Ill. 540. The conveyance of the property in question to Mrs. Lydston was directly calculated to delay and hinder the creditors of George ÍT. Lydston in the collection of their debts, and has had that effect. Lydston must be held to have intended the effect which his act has produced. The property described in the deed and the bill of complaint should be made subject to the payment of the debt of appellant as a prior creditor of Lydston. The decree must be reversed and the cause remanded for further .proceedings in conformity with this opinion. Reversed and remanded with directions.