Fluke v. Sharum

Kirby, J., (after stating the facts). It is contended first that the testimony is not sufficient to show any knowledge upon the part of the grantee Abby Rebecca Anderson of Sam Fluke’s fraudulent intention to defeat the payment of his debts by the conveyance of the land. It is true the conveyance was made eight months before the marriage of Sam Fluke to Rebecca Anderson and that the deed recites a consideration of $300 paid. The great preponderance of the testimony shows however that that was an entirely inadequate consideration for the lands and from the statements of both Sam Fluke and Rebecca Anderson, who was Rebecca. Fluke at the time of the trial, it is extremely doubtful if any consideration was paid at all. The parties to the conveyance later married and the other conveyances were made from Sam Fluke to his wife of all his other property, leaving nothing from which the creditors could make their debts. He was indebted to the appellee .at the time of these first conveyances and evidently intended to defeat the collection of the debt by the different conveyances of his property and expressed a conclusion that he had done so to one of the witnesses, saying be bad “put bis stuff in bis wife’s name so Sbarum qould not reach it. ’ ’ (1) He was admittedly insolvent at the time this suit was ¡brought to set aside the conveyances, and being so, it was not necessary to show an execution issued upon the judgment with a nulla bona return thereon. (2) It is no longer necessary in suits to set aside fraudulent conveyances to first obtain a judgment at law in order to prove insolvency which can now be established by any competent testimony and only one suit is necessary, to obtain the proper relief. Section 6297, Kirby’s Digest and Euclid Ave. National Bank v. Judkins, 66 Ark. 489. (3) The rule is also that a voluntary transfer of property by one in debt is presumptively fraudulent as to existing creditors and if the debtor is insolvent or the gift will necessarily hinder, delay or defraud the donor’s existing creditors, then it is conclusively fraudulent. Miles v. Monroe, 96 Ark. 531; Brady v. Irby, 101 Ark. 573. (4) Mere inadequacy of price or consideration paid for lands .alleged to be fraudulently conveyed, is not sufficient to show that the grantee participated in the grantor ’s fraudulent intent and is affected by it. It is only “when the inadequacy of price is so gross that it shocks the • conscience and furnishes ¡satisfactory and decisive evidence of fraud, it will be ¡sufficient proof that the purchase is not bona fide” ¡as said by Pomeroy. Hershy v. Latham, 46 Ark. 550; Beebe Stave Co. v. Austin, 92 Ark. 248. (5) The testimony of the grossly inadequate price paid for the property is evidence .affecting the good faith of the purchaser from which it may be inferred as a fact that the purchaser knew of the fraudulent intent of his grantor and thus assisted in the commission of the fraud. Hogg v. Thurman, 90 Ark. 93; Beebe Stave Co. v. Austin, supra. (6) Here is shown such a grossly inadequate consideration paid for the lands first conveyed, according to the great preponderance of the testimony, and the evidence tending to show any consideration paid at all is of such, ¡an unsatisfactory and doubtful character, with the marriage of the grantee .to the. grantor following so shortly after the conveyance, and we are not able to say that the chancellor’s finding that the conveyance was voluntary and fraudulent is clearly against the preponderance of the testimony. (7) There is also sufficient testimony to sustain the chancellor’s finding that the grantor .allowed the tract of land conveyed to his wife by the clerk’s tax deed, to be sold for taxes and purchased and the certificate issued to his wife’s brother, who afterwards transferred it to her without any consideration paid or for a consideration paid by him with a fraudulent intent to evade the payment of appellee’s judgment. It was but a subterfuge as shown by the testimony and no more valid as a conveyance to deprive the creditor of his right to resort to the land, than if it had been made directly by the debtor husband to his wife. (8) There is a different question raised by the last conveyance of the southwest quarter of section 23, containing 160 acres, which was occupied by the debtor as ■his homestead at the time of the conveyance. A creditor can not complain of a voluntary conveyance by the debtor of his homestead, for the conveyance o.f his homestead by ■one entitled thereto can not be fraudulent as to his creditors. South Omaha Nat’l. Bank v. Boyd, 79 Ark. 215; United States Fidelity & Guaranty Co. v. Smith, 103 Ark. 145. It is not questioned that the said southwest quarter of the ¡section last conveyed, was the homestead of the debtor, Sam Fluke, at the time of the voluntary conveyance thereof to his wife in 1909, but only insisted that it was of the value of more than $2,500 at the time of such conveyance as the chancellor found. Seventy acres of the land were cleared ¡and in cultivation and the testimony tends to show that the whole tract was worth from $20 to $30 an acre, the cleared land being worth $30. Some witnesses placed the valuation at $15 to $20 for the uncleared and $35 to $40 an acre for the cleared lands. One witness testified that Sam Fluke himself priced the whole tract at $25 an acre in 1909. The debtor was entitled to a homestead not exceeding 160 acres of land with the improvements thereon to be selected by him, if the same did not exceed in value the sum of $2;500 and in any event to eighty acres, without regard to value. Section 3899, Kirby’s Digest. Section 4, article 9, Constitution of 1874. The last conveyance being of the homestead was valid without regard to the intent of 'the debtor or the fact that it was voluntarily made unless the lands exceeded in value the sum of $2,500 and valid as to eighty acres thereof in any event, and to so much more as would not make the acreage claimed of value greater than $2,500. The chancellor evidently found that the whole quar- ’ ter section last conveyed was worth more than the debtor was entitled to claim as a homestead and therefore set the conveyance aside as fraudulent, allowing him thirty days in which to make his selection of a homestead. The better practice doubtless would have been to have refused to set aside the conveyance as to eighty acres of the land or of so much more of the tract as the evidence showed to have been worth only $2,500 and decreed the sale of the other. The result will necessarily be the same upon the selection of the homestead and no prejudicial error could have resulted from the decree. Neither can we say that the chancellor’s finding that the grantee had not held the lands conveyed adversely is not supported by the testimony. There was no evidence tending to show adverse possession of the lands by her in fact. Martin v. Gregory, 86 Ark. 281; Baldwin v. Williams, 74 Ark. 317. Affirmed.