Prestidge v. Cooper

Chalmers, J., delivered the opinion of the court. In 1860, Robert Prestidge, in fraud of his creditors, made a voluntary conveyance of all his property, consisting of lands and slaves, to his two infant children, and at once recorded the deed. One month thereafter, he sold the same property to Cooper and another for a full price, receiving payment. These vendees took possession, and have since remained in possession, except as to a portion of the land, of which they were deprived by a superior title. Cooper, having acquired [77] the interest of bis partner, files tbis bill, alleging that Robert Prestidge being now dead, his daughter (his sole surviving child), who is now approaching her majority, is threatening to bring suit to recover the land by virtue of her title under the fraudulent conveyance. He files this bill quia timet to have said conveyance vacated and cancelled. He alleges that, at the time of his purchase, he had no actual knowledge of the existence of the fraudulent conveyance. But the depositions of his own witnesses leave this quite doubtful. Conceding that he Avas ignorant of it, and admitting that the strength of the opposing legal titles can be tested in this manner, it is evident that, under our statutes and decisions, he has no case. The various questions, as to the effect of a voluntary conveyance in fraud of creditors upon subsequent purchasers for value, with or without knowledge, Avhieh have so long and perplexingly agitated the courts in England and America, Avere put at rest in this State by the amendment to the Statute of Frauds, embodied in the Code of 1857. The prevailing English doctrine is, that a subsequent purchaser for value can avoid a previous voluntary fraudulent conveyance, even though he had actual knowledge of its existence before receiving the deed to himself, it being held that the first conveyance is absolutely void. In the United States, even in States whose statutes are a literal rescript of the English statutes of 13 & 27 Elizabeth, the general doctrine is, that the right of the subsequent purchaser to avoid the first conveyance will depend on whether he had notice of its existence at the date of his purchase. It was also held in England for a series of years, and perhaps has not yet been wholly abandoned, that the subsequent purchaser for value, whether with or without notice, might avoid an anterior voluntary conveyance, even though such anterior conveyance was Iona fide, made for love and affection, and without any intent to defraud creditors, upon the ground that the law treated such conveyances as ipso facto void as to creditors and purchasers. It is believed that this latter doctrine, so far as purchasers with notice are concerned, never received the sanction of the American courts, or, if so, to a very limited extent. 1 Story Eq. Jur. § 426 et seq. ; Lancas [78] ter v. Dolan, 1 Rawle, 231; Foster v. Walton, 5 Watts, 378; McGuire v. Miller, 15 Ala. 394; v. Wright, 3 Jones (N. C.) 290; Vanzant v. Davies, 6 Ohio St. 52; Fowler v. Stoneum, 11 Texas, 478 ; Cathcart v. Robinson, 5 Pet. 263. In order to set these questions at rest, our codifiers of 1857, in bringing forward the Statute of Frauds of 1822, added to it these words: “ Nor shall it, in any case (the statute), extend to creditors whose debts were contracted after such fraudulent act, unless made with intent to defraud them ; and, though a conveyance or contract be decreed void as to prior creditors, it shall not, on that account, be void as to subsequent creditors or purchasers.” Code of 1857, p. 359, art. 3 ; Code of 1871, § 2894. A previous clause of the act (art. 2, p. 358, Code of 1857 ; Code of 1871, § 2893) provides, that fraudulent conveyances shall be void where made to “ deceive those who shall purchase the same lands,” &c. It follows from these provisions that fraudulent conveyances are only void as to subsequent creditors, when made with intent to defraud such creditors, and that they cannot take advantage of a decree vacating such conveyances as to existing creditors. Subsequent purchasers stand upon the same footing. They can only attack a previous voluntary or fraudulent conveyance by showing that it was made with intent to defraud them, or, in other words, where the vendor, having first, with a view to entrap and defraud them, made a secret conveyance to another person, sells to them the same land. There is no pretence here that Prestidge’s conveyance to his children was with a view to defraud any subsequent purchaser. Both the allegations of the bill and the testimony show that it was executed solely with a view to defraud his then existing creditors; that, .becoming afterwards satisfied that he could not thus accomplish his object, he sold to the complainant, with a view of paying off one or more debts, which he provided for, and of pocketing the balance of the proceeds. Having already conveyed the legal title to his children b}r deed duly recorded, he had nothing which he could convey. If the complainant bought with actual knowledge of the children’s title, he cannot be heard to complain. If he bought without inquiry or examination of the records, it is his own [79] negligence or folly. The children had obtained a good title, except as against existing creditors. Decree reversed and bill dismissed. The appellee then filed a petition for reargument. Chalmers, J., delivered the opinion of the court on this petition. The petition for reargument suggests that, in point of fact and in accordance with the agreement at the time of purchase, all the purchase-money was paid over to the creditors of the vendor. The bill is not framed with this aspect, nor do we express any opinion as to whether such a payment of ordinary debts at large would affect the result; but, in order that the point may be properly presented, we will reverse and remand the cause, with leave to amend the bill.