Pennington v. Seal

SiMRARL, J., delivered the opinion of the court: In proceedings had in the chancery court to settle the accounts final of William Seal, guardian of the plaintiff in error, Pennington, a decree was rendered in favor of Pennington, for $2,316.13. A writ oi fieri facias, issued upon the decree, was levied upon the lands described in the pleadings. After the levy, Pennington brought his bill in chancery, to vacate and set aside a conveyance., made by William Seal, to his son and daughter, as obscuring the title, so that the property might bring its value when sold. The date of the decree was September 12, 1857. The complainant alleges — 524 — that the liability of the guardian, for which the decree passed, was incurred prior to 1863, and that on the 24th of March, 1868, William Seal, the debtor, who was then, and still is insolvent, conveyed to his son and daughter, for the consideration of natural love and affection, the northwest quarter of section 24, township 3, range 3, west, and west half of section 13, township 3, range 3, west. William Seal was appointed guardian in 1857. The testimony shows, that money, of the ward, came to the hands of the guardian, and before the late war was loaned out to persons then deemed by him to be entirely solvent. These loans, made prior to 1863, indeed prior to the war, were without the sanction .and approval of the probate court. We are satisfied that the guardian, in this matter, was actuated by good faith and pure motives, and but for the calamities of the war, the borrowers in all probability would have been able to return the money. If a trustee, whether his duties are defined by the law or by instructions given- by an individual who may appoint him, is under a duty to follow the directions of the law, or the instructions given by the person who appoints him; and if he exceeds his authority, or disobeys the rules prescribed to him, he acts at his peril, and undertakes responsibility for the consequences. The law required that Pennington should consult the probate court and obtain its sanction and approval of the loan of the ward’s money. If he made loans without such sanction and authoritj1-, he assumed responsibility for the outcome. If the fund was lost by insolvency, he must make it good. Such is his responsibility, and such manifestly was the theory of law upon which the chancery court proceeded in making up its decree. The creditor who may set aside a voluntary conveyance, must be such at the date of the conveyance. As to him it is void in law. That is to say, the law assumes or presumes that it is void, and the grantee or donee must establish the circumstances which repel the presumption of fraudulent intent. The conveyance is already under condemnation, — 525 — until the grantee shall prove facts which will give it validity; as that the donee was in prosperous circumstances, and retained ample and abundant means to discharge all of his pecuniary obligations, the gift being reasonable, and apparently in no serious degree endangering a putting in hazard existing creditors. This principle was thoroughly examined on authority, and distinctly laid down in Kolheimer v. Wilson, 46 Miss. Rep., 346, which has been subsequently followed. It is just and proper, and subserves the interests and exigencies of families. It allows settlements, and advancements, for the wife or children, where the circumstances of the husband or father will admit of it; where the gift or advancement in the circumstances is reasonable, and ample property is retained to meet all the obligations and liabilities of the grantor or donor. But when the conveyance of March, 1868, was made by Wm. Seal, he was embarrassed and insolvent, and could not. extend bounties to his children, at the expense of his creditors. 'Was Pennington a creditor of Wm. Seal at the date of the conveyance? Prom a collection of cases, in 1 American Leading Cases, 37, the principle established by them, under the statute- of 13 Elizabeth, ch. 5, and similar American statuses, is that a liberal construction must be put upon them, in allowing the character of creditor. Hence, a person, liable contingently, as an accommodation endorser, before the dishonor of the note, was a creditor. Hammet v. Dundass, 4 Barr., 178. A surety is a creditor of the principal obligor, and of his co-sureties from the time the obligation is entered into. Williams et al. v. Banks, 11 Md. Rep., 242; 1 Am. Law Cases (supra,), 10 Vesey, 360. A warren tor, if at the date of the deed a paramount title was outstanding, is from the date of the conveyance, a debtor to the warrantee. Gannard v. Eslara, 20 Ala. Rep., 740. A trustee becomes a debtor from the time he receives the trust funds. McLemore v. Nuckolls, 37 Ala., 674. So a covenant in a guaranty of the — 526 — collectibility of a judgment, dated 6th of November, 1817, constituted the covenantor a debtor, as against the conveyance made 16th April, 1818. See also Bump on Fraudulent Conveyances, 488, 489, 490. We are of opinion, under the interpretation placed upon the statute of 13 Elizabeth, and similar and identical American statutes, including our own, (Code, 1857, pp. 358, 359,] that William Seal was the debtor of Pennington long anterior to the conveyance made to the son and daughter. The answer of William Seal, sets up that only half of section 13 (the west half], and four acres in the east corner of the northwest qr. of sec. 24, were conveyed to his son, Thos. J,, and his daughter, Ellen G. Seal. He avers that the west half of section 13, included his homestead of 240 acres, the improvements being mostly in the southwest quarter, and 80 acres on the south side of the northwest quarter. ' That his intent was only to convey the 240 acres, which constituted his homestead, but by mistake of himself or the draftsman of the deed, the northwest quarter of section 13 was included, when only 80 acres off of the south side of that quarter was to have been included. That so soon as the mistake was discovered, being desirous ©f disposing of his lands, and correcting the mistake, he sold and conveyed, in July 1868, the 80 acres to his son, for $800.00, and in the deed referred to the mistake in the former one to his son and daughter. That he still lives upon and occupies the premises as his homestead, and claims if the conveyance to his son and daughter should be set aside, he is still entitled to the homestead. The description in the deed from Wra. Seal to his son and daughter, filed with the answer, corresponds with the description therein given. The answer of Thomas J. and Ellen G. Seal, avers that the conveyance to them was in good faith, was only intended to embrace the two hundred and forty acres, the homestead of their father, but that after it was ascertained that it embraced more than that, the purchase was made in July, — 527 — of eighty acres off of the north end of the N. W. quarter of sec. 13, for the consideration of $800.00. In his deposition, Wm. Seal, states that he sold, several years ago, the S. E. quarter of sec. 13, to Thos. B. Gatewood. The deed is in the record. That, with the agreement of counsel in respect to it, makes that sale valid, as against Pennington’s decree. The depositions prove that the deed to Thomas and Ellen Seal, contains more land than was intended to be conveyed. The rb-argument of this case, was, awarded by the court, ma sponte, to re-examine the question of Whether, William Seal, could vindicate a claim to the homestead exemption, in lands which he had conveyed for a moral consideration, love and affection, to his son and daughter. The exemption of the homestead is dependant upon the facts that the debtor claimant is the head of a family, and resides upon the premises. He is entitled to continue the occupancy of his home in spite of his judgment creditor. The conveyance by the father, Wm. Seal, to his son and daughter, being voluntary, was void, as against Pennington his creditor. The property, so far as liability to existing creditors was concerned, was William Seals’, with the same completeness, and effect, as though the conveyance had never been made. Seal stood before his creditor as owner of the property, and might assert his right to the homestead, with the same force as though he had not made the fraudulent conveyance. It is averred in the pleadings, and proved that he and his wife, continued to reside upon the premises as their home. The occupancy continued, notwithstanding, the deed to his children. The homestead exemption is dependent upon the condition of occupancy, and is lost by the abandonment. Nor does it matter under the statute of 1857, and the amendment of 1885, that the abandonment of the possession and occupancy, was to a purchaser for a valuable consideration. Whitworth v. Lyons, 39 Miss. Rep., 467. Nor does It matter, so far as the creditor is concerned, by — 528 — what sort of title the debtor occupies. By attempting the sale, the creditor affirms that his debtor has a saleable interest. The law means, that, that interest should not be taken away, and the debtor disturbed in his possession by sale under judicial process. Seal met all the conditions required by statute to perfect his right to the exemption. In Phipps v. Lessley, (decided at this term,) we held that the increased exemption, by the statute of 1865, could not be allowed to pre-existing creditors. The right of Wm. Seal should then be measured by the statute of 1857. Subject to the homestead exemption, all the lands embraced in the ■voluntary conveyance, made, by Wm. Seal to his son and daughter, of March, 1868, is liable to Pennington’s decree, unless the mistake made by Wm. Seal in putting into that deed eighty acres more than was intended, and which mistake was rectified, or attempted to be rectified by the subsequent sale of the eighty acres, relieves that much from such liability. This point in the case is not free from embarrassment. It is true as urged by counsel, that the voluntary conveyance to the son and daughter, passed the legal title to all the land included in it, to the son and daughter. But it is conceded by the parties to that deed, that more land was in the deed than was intended. The mode of rectification was that the son should become the purchaser of the excess, at its fair value, an4 accept a deed from his father, explanatory of the transaction. The daughter acqiesced in the arrangement. Treating it as a mistake, and that the parties were willing to correct it, and adopted a mode which seems to have been satisfactory to all; it is not unjust or unreasonable that the son, who paid a valuable consideration, should be permitted to enjoy the privilege and protection of a Iona fide purchaser. If the mode of adjustment had been, that the son and daughter should re-convey the excess to the father, and he should then sell and convey to his son Thomas, and had been — 529 — so consummated, it would be difficult to put any other construction upon it, than that Thomas was a Iona fide purchaser if there were no intentional fraud, or fraud in fact. A court of equity which looks more at the substance, than the forms of dealings, ought to give effect to the arrangement actually made, if it was fair and free from fraud. We are brought to the conclusion that William Seal, ought to be allowed his exemption, according to the statute of 1857. That the eighty acres of land named in the deed of July, 1868, from William Seal to his son Thomas, is not subject to Pennington’s decree. The decree of the chancery court is reversed, and the cause remanded for further proceedings in accordance with this opinion.