Pennington v. Clifton

Perkins, J. Suit to quiet title of real estate. Complaint demurred to, demurrer sustained, and suit dismissed. Abel Pennington filed his complaint in the Hendricks Circuit Court, alleging that on the 7th day of April, 1854, [163] one Aaron Talbee obtained a judgment in the Putnam Circuit Court, in the state of Indiana, against Andrew Clifton and Stephen Elswick, for 500 dollars and costs taxed at 31 dollars, 80 cents; that by virtue of an execution on said judgment, the sheriff of Hendricks county sold the tract of land described in the complaint, as the property of said Andrew Clifton, said Abel Pennington becoming the purchaser at 667 dollars. The plaintiff further alleges that on the 15th of Jcmuary, 1852, one Jeremiah Fleece instituted a suit in the Hendricks Circuit Court against said Andrew Clifton, to recover a large sum of money, to-wit, as damages for a tort, committed by him, &c., and that on the 10th of March following, said Andrew, to defraud said Fleece out of any judgment he might recover, and to defraud his creditors generally, conveyed, without consideration, the land in question to one John Clifton, in secret trust for him, the grantor; that afterwards said suit of Fleece was compromised and settled; that afterwards, John Clifton, by the direction of Andrew, conveyed the land named to one John ■ Stewart, since deceased; that Stewart subsequently conveyed the same back to John Clifton; that these conveyances were without consideration, and a part of the scheme to render the original fraud of Andrew Clifton effective; and that said John, at the time of the sheriff’s sale, still held the land by the consent of Andrew, instead of conveying it back to him according to previous agreement, for the purpose of defrauding said Talbee out of the judgment he had subsequently obtained, as heretofore recited, against said Andreiv. It is inferable from the complaint, that Andrew had no other property. Pennington prays to have the title of John, to the land in question, declared void, and his own quieted as valid. We think the facts stated in the complaint show that John Clifton, at the time of the sheriff’s sale, held the legal title to the land in dispute without consideration, and under an agreement with Andrew, made for the purpose of defrauding creditors. Where a debtor is entitled to the [164] conveyance of the legal title to land, but abstains from receiving it, under an agreement with the person in possession of it, that it shall remain in him, in order that it may not be made subject to the payment of existing debts of the equitable owner, we think the land may be regarded as conveyed with intent to defraud, and hence, to be subject to execution under the clause of § 526, 2 R. S. p. 154, which enacts that “lands fraudulently conveyed with intent to delay or defraud creditors,” and probably, also, under that clause which enacts that lands, and any estate, or interest therein, holden by any one in trust for, or to the use of another, shall be so subject. We think the case falls within Tevis v. Doe, 3 Ind. R. 129. Such being the case, the creditor might have proceeded to settle the title before levy and sale; but he had his election to sell first, and let the purchaser take the legal proceedings to perfect the title if he preferred to do so. Scott v. Purcell, 7 Blackf. 66. A person having a right to damages for a tort, is a creditor, within our statute against fraudulent conveyances. 1 R. S. p. 302, § 17.—1 Ind. R. 336.—Rogers v. Evans, 3 id. 574. Counsel, in support of the decision of the Court below, urge, that at the time Andrew conveyed the land in question to John Clifton, he was not the debtor of Talbee, to give effect to whose judgment this suit was instituted; that he was, therefore, a subsequent creditor, and could not, nor can Pennington holding under him, be allowed to avail himself of the prior fraud in the conveyance. See Lynch v. Raleigh, 3 Ind. R. 273; also, 1 id. 378. This case does not involve that principle; for, as we have seen, after the claim of Fleece, to avoid the payment of which the conveyance was originally made, was settled, Andrew Clifton, the debtor and fraudulent grantor, still procured John Clifton, the fraudulent grantee, to retain the title for the purpose of defrauding Talbee. We hold, therefore, that he stood, as to Talbee, in the light of a grantor to defraud existing creditors. But the proposition of counsel cannot be admitted to be, [165] in its full extent, correct, for the authorities are numerous that a voluntary and colorable conveyance, which is accompanied in law by the presumption of a secret trust for the grantor, made “for the purpose of defrauding present creditors, is void, also, against subsequent creditors, because such a fraud is a continuing one.” Many authorities go farther than this. See them very well reviewed in 1 H. and W.’s Leading Cases, 3d ed., top p. 71. See, also, Whitman v. Woodward, 28 Maine R. 392; 1 R. S. pp. 302, 503; Barton v. Bryant, 2 Ind. R. 189. C. C. Nave and J. Witherow, for the appellant (1). J. S. Miller, H. C. Newcomb, J. S. Harvey, and J. S. Tarkington, for the appellees (2). Per Curiam. — The judgment is reversed with costs. Cause remanded, with leave to amend.