Aultman, Miller & Co. v. Heiney

Day, J. The evidence is - voluminous, and it is not practicable to do more than set forth the material facts which, in our opinion, it establishes. On the fourteenth of July, 1877, the defendant, George W. Heiney, executed a promisory note to the plaintiffs for $100, on which they recovered judgment, March J, 1879, for [656] $116.44, and- attorney’s fees and costs, upon which, execution issued, and was returned December 12, 1879, unsatisfied, no property being found on which to levy. On the fourteenth day of October, 1870, the defendant, George W. Heiney, conveyed, by quit-claim, to his brother, Eli Heiney, of Marion county, Indiana, all the real estate by him then owned, including his homestead, being four hundred acres of land, the property now in controversy. The consideration of the conveyance was $10,000, which was about the actual value of the land. In payment of this sum, Eli Heiney assumed a mortgage upon the land for $5,000, canceled a bona fide indebtedness to himself from George W. Heiney for $2,895.78, and executed his note for $2,104.22, which he subsequently, and before the commencement of this suit, paid. At the time of this conveyance, George W. Heiney was indebted to various parties in a sum largely exceeding his ability to pay. Eli Heiney knew that his brother was indebted, but did not know that he was indebted to the plaintiffs, and did not know that he was insolvent. His purpose in purchasing the property was to obtain payment of the debt due himself, and not to hinder, delay, or defraud the creditors of George W. Heiney. The conveyance from George W. to Eli Heiney was filed for record, October, 29, 1878. On the thirtieth day of October, 1878, and before the possession of the property was changed, Eli Heiney conveyed the property in question to W. M. Davis, a brother-in-law of George W. Heiney, for the consideration of $10,500. Davis assumed the payment of the $5,000 mortgage, and executed three promissory notes, all dated October 30,1878. One for $1,000, due March 1,1878, one for $2,000, due March 1, 1880, and one for $2,500, due March 1, 1881. In November, 1878, the defendant, B. F. Heiney, then not quite twenty-one years of age, rented the farm from his uncle, and was to pay $800. On the eleventh day of October, 1879, Davis conveyed the land in question to B. F. Heiney, for the consideration of $10,500. B. F. Heiney assumed the payment of the $5,000 mortgage, and exe [657] exited two notes, one for $2,500, due October 11, 1881, and one for $3,000, due October 11, 1882. Davis has paid Eli Heiney the $2,500 note, and B. F, Heiney has paid him the other two notes for $1,000 and $2,000. There is one view of this case which, in our opinion is decisive of it, and it is the only view of it which we deem it necessary to consider. The petition alleges, and the proof shows, that the forty acres of land in question constituted the homestead of George W. Heiney. The evidence shows that the homestead was worth $2,800. The homestead was not liable for the unsecured debts of George W. Heiney, and conveyance of it could not be set aside as in fraud of the right of ci-editors. Delashmut v. Trau, 44 Iowa, 613; Officer & Pusey v. Evanc, 48 Id., 557; Griffin v. Sheley, 55 Id., 513; Baldwin v. O'Laughlin (Minn.), 11 N. W. Rep., 77. Deducting the value of the homestead and the amount of the incumbrance upon the pi’operty, there is left but $2,200, which is almost $700 less than the debt due Eli Heiney. Eli Heiney had a right, for the purpose of securing payment of the debt due him, to accept a conveyance from Geo. "W. Heiney, even although he knew that Geoi’ge W. Heiney was in debted to other creditors and was prompted by a fraudulent motive in making the conveyance; and the conveyance could not be set aside, merely by showing such knowledge, unless the grantee also participated in the fraud. See Chase v. Walters, 28 Iowa, 460, and cases cited in argument of the appellee. Under the foregoing authorities the conveyance of the property, other than the homestead, was clearly valid, as it was of less valxxe than the incumbrance upon it, and the debt due to Eli Heiney. Whatever may be the intent of a conveyance, it cannot be set aside as in fraud of creditox’S, xxnless it does, in fact, hinder or delay them in collecting their debts. Upon this sxibject in Baldwin v. O’Laughlin, supra, the following lan [658] guag-e is employed: “To make a debtor’s transfer of property fraudulent as respects bis creditors, there must be an attempt to defraud, express or implied, and an act, which, if allowed to stand, will actually defraud them by hindering, delaying, or preventing the collection of their claims. Whatever may be the debtor’s intent, when there is no act which will have this effect, the creditors are not damaged or defrauded.” Now as the property conveyed in this case, over and above tbe incumbrance thereon and the debt due Eli Heiney, constituted tbe homestead of George W. Heiney, and was not liable for bis debts, it follows that a conveyance of it did not hinder or delay his creditors, and that it cannot be set aside as fraudulent. See Delashmut v. Trau, Officer & Pusy v. Evans, Griffin v. Sheley, and Baldwin v. O'Laughlin, supra. As tbe conveyance to Eli Heiney was valid and entirely divested the title of George W. Heiney, it is unnecessary to inquire into the nature of the subsequent conveyances. The court erred in decreeing the conveyances to bo fraudulent. Reversed.