Thomson v. Hester

Chalmers, J., delivered the opinion of the court. On March 20, 1869, William Hester, being insolvent, and intending to prefer certain creditors, conveyed to L. K. Barber, by a conveyance absolute upon its face, and for the. nominal consideration of $31,000, all the property of which he was possessed, consisting of a plantation in Hinds County and another in Madison, with all the personal property on each, embracing large numbers of horses, cattle, etc., together with an undivided interest in large bodies of wild land in Adams, Yazoo, and Sunflower Counties in this state, and in the parish of East Feliciana, Louisiana. The conveyance was made in payment and satisfaction of a debt of $3,000 due to Barber, who was the brother-in-law of the grantor, and of a debt of $8,000 due to Marshal J. Smith, his commission merchant and confidential friend, and of an alleged debt of $19,900 due to the wife of the grantor. Barber at once made conveyances to Smith and Mrs. Hester of such undivided interests in the property as were agreed upon between the parties. The original deed to Barber was recorded; those executed by him to Smith and Mrs. Hester were not. The debts due by Hester to Smith and Barber were genuine; that alleged to be due to his wife was grossly exaggerated, and the conveyance to her was, therefore, in great part, voluntary and fraudulent. Appellant, Thomson, at this time, held a note against Hester, upon which there was due about $6,000, and which Hester — 666 — seems to have regarded as an unjust debt, because given, in part, for slaves. In October, 1869, Hester told Thomson that he (Hester) was broke ; that he intended to confess judgments in favor of Barber and Smith; and that the only chance for him .(Thomson) to realize anything on his claim was through an arrangement with Smith, who held a note against Thomson, upon which was due about $1,480. Acting upon the suggestion, Thomson, Smith, and Hester made an arrangement by which Smith surrendered his note for $1,480 against Thomson, and the latter transferred to Smith the note for $6,000 which he held against Hester. To partly compensate Thomson for the great loss sustained in the exchange, Hester executed to Thomson a new note for $1,400. The day after the $6,000 note of ^tester was transferred to Smith, Hester confessed j udgment on it in favor of Smith, and execution thereon having been levied upon the Hinds-county lands formerly owned by Hester, the same were bought in at the sale by Barber, in behalf of himself and Smith and Mrs. Hester, as he testifies, though the deed was made to him alone. By subsequent arrangements and conveyances between the parties Smith became the exclusive owner of the Madison-county plantation and personalty, Barber of the Louisiana lands, and Mrs. Hester of the Hinds-county plantation and personalty, and of the wild lands in other counties in this state. Several years afterwards Thomson recovered judgment against Hester on the note for $1,400 executed to him at the time of, or a few days after, the exchange of notes above detailed. Wulla-bona return having been had thereon, he filed this bill to attack and vacate the several conveyances by which Mrs. Hester had become the owner of the property in Hinds County, and to subject the same to his judgment. It is insisted that the bill will not lie, «because the note upon which his judgment is based was given after the execution of the deeds by which the property was conveyed first to Barber and then to Mrs. Hester, and that, therefore, Thomson, not — 667 — being a pre-existing creditor, cannot attack said conveyances. We are satisfied that the note was intended to keep alive, pro tanto, the original note, in part satisfaction of which it was given ; and it is well settled that the holder of a new note given in exchange for an old one may attack a conveyance which would be fraudulent as to the old one, upon the principle that a party loses no rights by a mere change in the form of his securities. Lowry v. Fisher, 2 Bush, 74; Gardner v. Baker, 25 Iowa, 848; Causler v. Salliss, 54 Miss. 449. It is urged that the doctrine does not apply here, because the old note was transferred in its entirety to Smith, who had the right to enforce it for the full amount due upon it; so that there could not be a. right in Thomson to enforce the smaller note as constituting part of the sum due on the first one. But both Smith and Hester testify that though judgment was to be, and was, confessed on the old note for the full amount in favor of Smith, it was never intended to collect it in full. They both say that it was to be held by Smith as a security, though •exactly what it was a security for is not apparent. But Thomson did not know this, and he was informed at the time he transferred it that judgment was to be confessed upon it. Through this confessed judgment Mrs. Hester now holds title. By his transfer Thomson must be held to have consented to all legal advantages which could inure to any purchaser or holder under the judgment, which he knew was to be confessed; and even though the s'cheme resulted in a fraud upon him, he is estopped to complain by the maxim Volenti non fit injuria If, therefore, Thomson actually transferred the note to Smith, he cannot now attack the use to which lie was advised the latter intended to apply it; and Mrs. Hester, as a sub-purchaser under the judgment, will be protected, by reason of such purchase, even though she paid nothing and. her original demand against her husband was fraudulent. The good title acquired under the judgment to which Thomson had consented will, as to him, cure the previous invalidities in her title. Fulton v. Woodman, 54 Miss. — 668 — ■ If, on the contrary, Smith had no real interest in the transaction, but simply lent the use of his name to enable Hester and wife to obtain title under a judgment based on an undisputed and bona-fide debt, and thereby bolster up and strengthen, as to .her, the conveyance previously derived through Barber, there is nothing to prevent Thomson from attacking such title. Repeated and careful perusals of the voluminous and complicated facts detailed in the record satisfy us that the latter theory is the true one. Though the parties protest to the contrary, we cannot but regard Smith as a mere figure-head, who permitted his name to be used for the benefit of Mrs. Hester. It is not denied that the books of his mercantile house in New Orleans demonstrate this fact, but it is said that the books were so kept by his partner in ignorance of the true nature of the transaction. It is singular that he remained in ignorance of the showing made by his books for seven or eight years, but no ignorance upon the part of the book-keeper can explain away the facts that the Thomson note for $1,480, which it is pretended was surrendered directly to Thomson, was in truth, by Smith & Co., transferred in writing to Hester, and then by Hester indorsed in blank; that forthwith Hester was charged with the exact amount of it on the books of Smith & Co., and on that same day he paid in the amount to the firm (with a slight excess) in cash, thus balancing the account and demonstrating that Smith had not lost or expended a cent’ in the matter, but had somehow become possessed of a note against Hester for $6,000 or more, upon which, the next day, a judgment was confessed. It is more remarkable still, if the note and confessed judgment belonged to Smith, that Hester should have paid the fee to the lawyer who drew it up, by a draft on Smith & Co., which was charged by them to Hester. The pretense that in all these matters Hester was acting as the agent of Barber and Smith is absurd in itself, and utterly overthrown by the facts in the record. It is, indeed, impossible to imagine what use Smith could have for a note on Hester. Hester had already conveyed to him and Barber, and to his own wife, every dollar’s worth of — 669 — property he owned, as Smith well knew, and by that conveyance had satisfied and paid every cent that he owed them. It is quite as difficult to discover what advantage could accrue to Barber or Smith by the levy of an execution upon, and a purchase by them of, land that already belonged to them by a conveyance many months older than the judgment. They say that it was done to prevent hostile attacks from adverse claimants. What danger they who had given up bona-fide debts could apprehend from such attacks, or how they strengthened their positions by a purchase under a junior judgment, we are unable to perceive. To Mrs. Hester, on the contrary, whose title was in great part fraudulent, the acquisition of a new one under a bona-fide debt was invaluable. Without pursuing further the numerous and complicated facts which .conduce to our opinion, our conclusion is that the whole scheme was devised by Hester for the express purpose of vesting in his wife a title which would be invulnerable; that Smith had no real interest in the matter; that Mrs. Hester acquired no new rights under it; and that her claim now stands in exactly the same position that it occupied when, on March 20, 1869, she received, through Barber, a conveyance of property grossly in excess of the debt due her. That debt was fixed by her husband at $19,900. It was probably less than one-fifth that amount, and in so far as the property exceeded in value the amount really due, it is subject to the claims of creditors. Gattman v. Willis, 53 Miss. 721. Mrs. Hester received from her father’s estate, at sundry times, various sums of money. This her husband had a right to repay to her, except that portion of it which was by her invested in slaves. The money received previous to the adoption of the Code of 1857 will bear legal' interest from the time of its reception until that Code went into effect, and one year afterwards; because, previous to that time, we had no law in this state restricting the right of the wife to demand interest from the husband to one year from the reception of it by him. Upon all sums received by the husband after that — 670 — Code took effect, she is entitled to one year’s legal interest, to wit, the interest accruing the year preceding the accounting. Code 1857, p. 337, art. 28; Code 1871, sec. 1790. She is entitled to no hire for the negroes, because none was by the husband received within one year of the accounting. We fell into the ei'ror, in Hill v. Bugg, 52 Miss. 397, of allowing a claim for negro hire received by the husband many years anterior to the accounting, and we now modify the opinion in that case in so far as it sanctions that result. The decree is reversed and cause remanded, with the following directions : The sales under the executions will be enjoined. An account will be taken of the amount due Mrs. Hester, on the principles herein announced. A decree will then be entered requiring her to pay the amounts due on the judgments, in the order of their priority, in some short time to be named, in default of which the land will be sold, and the proceeds applied, first, to the satisfaction of the amount found due her, and then to the judgments according to their priority. She Avill be alloAved to enforce the Eveline Harvey judgment to the extent only of $1,000 Avith interest; but if the $1,000 paid by her upon such judgment is allowed her in the accounting bpfore the commissioner, then such judgment will be treated as Avholly extinguished. Appellees Avill pay costs in both courts. Let decree be entered accordingly.