Deniston v. Phillips

McCulloch, C. J. James Deniston lived in Clay County, Arkansas, and died there on March 19,1913, leaving ¡surviving his widow and eleven children, the issue of his two marriages. He owned lands in that county, and in the year 1897 he executed three deeds, one to his daughter Isabel, conveying a tract of 80 acres, and another to his wife, conveying a quarter section, .and another to E. N. Royal, 'conveying a tract containing 80 acres. Those deeds were never recorded during the life time of of James Deniston, ¡and a few days before his death he caused the Royal deed to 'be destroyed. The two deeds to his wife .and to his daughter Isabel were recorded shortly after his death. The plaintiffs, who .are some of the surviving children of J ames Deniston, instituted suit .against the widow ■and the daughter, Isabel Harmon, to cancel the two deeds ■which had been placed of record. They allege in the complaint that the deeds were never delivered by James Deniston, -and in addition thereto that James Deniston was liable as security on a bond at the time he executed the deeds .and that the deeds were executed with fraudulent purpose of placing his property beyond the reach of his -creditors. The deed to Mrs. Deniston, the widow, ■fails to accurately describe the lands, in that mention of the township and range i-s omitted. Mrs. Deniston filed a cross-complaint asking for reformation of the deed so as to accurately describe the lands. She alleged and attempted to prove that the deed was executed by her husband, not as a gift, but for a valuable consideration, and that the same was delivered to her .and should be reformed so as to conform to the intention of the parties to the conveyance. (1) The case was heard by the chancellor upon the testimony of witnesses presented in the form of depositions .and the court rendered a decree granting the relief prayed for in the original -complaint. The decree awards dower in the lands to the widow an-d'-orders a sale for partition by the heirs. This appeal presents a question of fact, and under the practice in chancery cases- it becomes our duty only to determine whether or not the findings of the chancellor upon the issues of fact are in accord with the preponderance of the evidence. Unless against the preponderance of the evidence, it is our d-uty to sustain the findings of the chancellor. The case presents a typical family quarrel in which a portion of the heirs of James Deniston are arrayed on one side -and his widow and the one other heir are arrayed on the -other. Mo-st of the testimony relates to declarations made by James Deniston -during his lifetime-an-d alleged -controversies and contradictory statements made by the children in their dealings with each other concerning'the validity of the deed after his death. The facts are undisputed that James Deniston executed the three deeds hereinbefore mentioned in the year 1897, and the evidence is sufficient to warrant the conclusion that he executed the deeds in .anticipation of a liability on a bond which he had signed as surety. The Boyal deed was, as before stated, destroyed at the direction of James Deniston a few days before he died, and the other two deeds were found among his other papers at the time of his death. Mrs. Harmon claims that her father delivered her deed to her about two and a half years before he died, and that she kept it in her possession about six months, when it was placed in a valise or satchel of her father’s with other valuable papers when they were moving, in order to take care of it, and that she let it remain in that place until’ after her father died. She lived with her father and claims that she received the rent of the land, though other evidence shows that the rents were paid over to her father from year to year. She was living with her father, it seems, at the time of his death. (2) James Deniston, a few days before his death, sent for a neighboring justice of the peace and had Ms ■wife or some of Ms children to get out the bundle of deeds, and he directed the justice of the peace to destroy the Boyal deed and also to destroy a paper pertaining to his membership in .a certain lodge. The justice of the peace, Squire Hill, testified to those facts .and stated that he saw the deed to the widow, Mrs. Deniston, hut that he did not see at that time the deed of Mrs. Harmon. His testimony does not seem to be altogether clear on the subject and is not conclusive of the fact that the deed to Mr.s. Harmon was not in the bundle which he was called upon to examine ¡at that time. On the contrary, the evidence is quite conclusive that the deed to Mrs. Harmon was in that bundle. At any rate, Squire Hill was not given any directions to destroy that deed, but he states that James Deniston gave directions to put the other deeds and papers back in the place from which they had been taken. Deniston gave no directions for the destruction of any papers except the Boyal deed and what the witnesses call the lodge paper. The conclusion is irresistible that, regardless of the motives wMch ' originally prompted James Deniston to convey the lands to his wife and Ms daughter Isabel, it was Ms intention up to the time of Ms death to leave those deeds intact. There is doulbt on the question of an actual delivery, but we are of the opinion that the preponderance of the evidence is to the effect that there was delivery of each of those deeds. Mrs. Deniston and Mrs. Harmon both testified positively that each of the deeds was delivered, and there is no direct testimony in conflict therewith. About the only testimony of any force against the theory of delivery of the deeds is that the deeds were actually found among the papers of James DeMston after his death, and that during his lifetime he often spoke of the transaction as merely 'an effort on his part to get his lands out of his own name us to escape the reach of his creditors. Now, we think that the fact that James Deniston referred to the lands as having been conveyed away beyond the reach of Ms creditors .affords very strong proof that he treated the deeds as having been delivered; and that, together with the positive testimony of the two grantees that the deeds were in fact delivered constitutes -sufficient evidence of the delivery -so as to pass the title. Our conclusion is that the best and most satisfactory evidence in the case is to the effect that James Deniston delivered the deeds with the intention of passing the title to the respective tracts of land to his wife and daughter. (3) Now, the other question relating to the intention of Deniston to convey the lands in fraud of Ms creditors remains to be disposed of. A statute of this State authorizes a sMt to be brought for the benefit of the heir of a decedent to cancel a deed executed for the purpose of defrauding creditors. Kirby’s Digest, § 81; Moore v. Waldstein, 74 Ark. 273. The evidence tends, as we have .already stated, to show that the original purpose of the conveyance was to place the lands beyond the reach of Deniston’s creditors, at least, that such was the design as to the deed of Mrs. Harmon. But the -evidence shows that the deed was not delivered, if it was delivered at all, until long afterwards, and there is no evidence at all in the record that at the time of of the alleged delivery of the deed Deniston was indebted to anyone or that he had any purpose of defrauding creditors. On the contrary, the evidence 'Showed that the deed to Royal was destroyed because the reason for the conveyance had ceased to exist. In other words, that there w¡as no longer any creditors to defraud, .and that, therefore, the fraudulent deed of conveyance to Royal could ibe destroyed. Our conclusion, therefore, on that branch of the case is that the decree of t'he chancellor cannot be sustained on the ground that it was a fraudulent conveyance; for even if the original execution of the deed wias grounded in fraud, the title passed at the time of the delivery, and if there was no fraudulent design at that time and no creditors to suffer by reason of the conveyance, it cannot be set aside because of the original intention of the grantor at the time he executed the deed. (4) The deed to Mrs. Deniston should have been reformed. It was not a deed of gift, but one, according to the evidence, made for a valuable consideration. Mrs. Deniston, testified that she conveyed another tract of land to her husband and that she furnished money to purchase this particular land that was conveyed to her, but that her husband took the title in his own name, and that the intention of this conveyance was to place the title in her, where it rightfully belonged. There is very little, if any, dispute about the truth of her statements, and under those circumstances she was entitled to a reformation of the deed so as to carry out the agreement and do justice between the parties. Equity treats that as done which ought to have been done, and according to that well known maxim this deed .should be reformed. The decree of the chancellor is therefore reversed, and the cause is remanded with directions to dismiss the complaint of the plaintiffs for want of equity and to grant the prayer of the cross-complaint of Mrs. Deniston for a reformation of the deed to her. It is so ordered.