Walker v. Cady

Grant, J. (after stating the facts). 1. The bill of complaint sets forth very fully all the proceedings in the probate court, the appointment of complainant as administrator, the allowance of the claim of Jay Oady, the appeal to the circuit court, the recovery of verdict and judgment there, and the deficiency of assets. While there is no specific allegation that the bill is filed in Ms capacity of administrator, there exists no room for doubt that it is so filed, and that the defendants so understood. The point is too technical to require further comment. 2. There was competent evidence that the claim of Jay Oady existed at the time of the conveyance; that Alvah was not possessed of other property sufficient to pay it; and that the estate was not possessed of other assets. No other conclusion is possible from the record than that the dealings which formed the basis of the claim extended over several years prior to the conveyance. Mr. Walker and Jay Cady, Alvah’s son, testified that they knew of no property belonging to the estate except the land in controversy, and another piece of land, worth about $300, which, it is claimed, had also been conveyed by Alvah in fraud of creditors. This made a prima facie case of deficiency of assets, and there was no evidence to contradict it. The fact that he died in another State, and had lived there a short time previous to his death, creates no presumption that he left property there. This disposes of defenses Nos. 2, 3, and 5. 3. Jay Cady’s claim was allowed by the commissioners. An appeal was taken to the circuit court, wherein a verdict was rendered in his favor for $1,504.18, April 28th. Judgment was rendered upon the verdict May 2d. [25] On the same day, an order was entered granting 10 days in which to move for a new trial. The motion was made within the 10 days, and' subsequently denied. The bill of complaint was filed May 2d. While the extension of time within which to move for a new trial may have operated to stay the issuance of an execution, it did not suspend the right to file this bill. The claim had been adjudicated and allowed, and presumptively the judgment was valid, and would remain in force. A deficiency of assets existed. These two facts are the sole essentials to the institution of a suit by the administrator to set aside conveyances which are void as to creditors. 4. We find nothing in the evidence to show that this conveyance was made with the actual intent on the part of either Alvah or Allen to defraud Jay, or to place the land beyond the reach of creditors. No intent is necessary. The law regards the transaction as a fraud. Fellows v. Smith, 40 Mich. 689; Felker v. Chubb, 90 Mich. 24; Sweet v. Converse, 88 Mich. 8; Cutcheon v. Buchanan, Id. 594. The nature of Jay’s claim is not disclosed by the record, and is immaterial. It has been established by the proper judicial tribunal that Jay was in fact a creditor of Alvah at the time. The effect of the conveyance, if valid as against Jay, was to deprive him of the debt, and to convey to Allen property worth several times the actual consideration paid. The result of such a ruling would be that a debtor may convey all his property to another upon an agreement to support him during his life, or to pay him an annuity, and thus deprive creditors of any means to enforce their claims. May a man having land worth $10,000, possessed of no other property, and owing debts to the amount of $1,000, convey it to his son, to the exclusion of his creditors, upon the agreement that he will take care of him during his life or pay him an annuity for that purpose? I find no authority to support such a proposition, nor do I think there is any reason in it. This point is, in my judgment, ruled by Pursel v. Armstrong, 37 Mich. 326. [26] In that case an old man conveyed a farm of 240 acres to Ms son. The farm was worth $14,000. Five thousand dollars of the consideration was a promise on the part of the son to support his father and mother during their lives. After stating the facts, the court said: “Whatever gentlemen may suppose ought to he the rule, it is certain the law cannot he reconciled with such dealing. Indeed, nothing can he clearer than complainant’s right to claim an avoidance on account of the withdrawal of the property to make voluntary provision for the debtor and his family. The case is too clear to excuse particular discussion. It is sufficient to refer to a few cases.” Several authorities are then cited. The farm in that case was subject to a mortgage of $3,000. See, also, Stone v. Welling, 14 Mich. 514; Dixon v. Hill, 5 Mich. 404; Rynearson v. Turner, 52 Mich. 7; Blanchard v. Tyler, 12 Mich. 339; Herschfeldt v. George, 6 Mich. 456; Warner v. Whittaker, Id. 133. The law does not permit a debtor to put his property beyond the reach of his creditors. It gives him certain exemptions, but, beyond these, requires him to keep his property subject to the claim of existing creditors. Ionia County Savings Bank v. McLean, 84 Mich. 629. The law will protect the purchaser to the extent of the payments made in good faith, but will compel him to give up the remainder to answer the just claims against the vendor. In this way exact justice and equity can be done. Stalker v. McDonald, 6 Hill, 96; Pickett v. Barron, 29 Barb. 508. It is no defense on the part of the vendee to say that he was ignorant that his vendor was in debt, and thus he be permitted to take property worth $1,000 on the actual payment of only $50. Such a result would be a reproach to the law, and serve as a convenient cover for insolvent debtors to convey away their property, and secure for themselves a competency 5. Allen conveyed the land to his father, Francis, and the latter conveyed a portion of the land to defendant [27] Thomas W. Brainard. The deed to Brainard expressed a consideration of $250. The bill alleges and the proofs show that complainant, as administrator, notified Mr. Brainard, before his deed was executed, that he claimed the right to recover the property, explained to him the situation, and forbade his trespassing upon the land. Mr. Brainard then claimed that he had rented it. This notice was sufficient to warn Mr. Brainard, and to protect the rights of creditors." He was not a bona fide purchaser. It is significant that it is not alleged in the answer, which is signed by all the defendants except Rebecca and Jay, that the $250 or any other amount was paid. None of the defendants were sworn, nor was any evidence introduced by them touching the real merits of the controversy. Except as above modified, the decree will be affirmed, and the case remanded to the court below, with direction to take such further proofs as may be necessary touching payments, taxes, etc. The costs will be paid out of the estate. McGrath, C. J., and Long, J., concurred with Grant, J. Montgomery, J., concurred in the result. Hooker, J., did not sit.