Tennent-Stribling Shoe Co. v. Davie

Woods, C. J., delivered the opinion of the court. In the latter part of March, 1897, the appellee, M. J. Davie, was the owner of a small mercantile business in the town of Macon, which was under the sole control and management of one R. M. Fruit, a son of Mrs. Davie by a former marriage. She was also the owner of two tracts of land, named and described in the pleadings, one of which, the larger, was under mortgage for the sum of $1,650, and the other, the smaller, was also under mortgage for the sum of $700. On March 29, 1897, Mrs. Davie conveyed both tracts of laud, by separate deeds, to Mrs. Manie R. Fruit, her daughter-in-law, the wife of said R. M. Fruit, for a recited consideration, in the one case, of $1,350, cash in hand paid, and the assumption by the vendee of the mortgage debt of $1,650, and for a recited consideration, in the other case, of $710, in hand paid, and the assumption by — 450 — the vendee of the $700 mortgage debt thereon. On the same day, the purchaser of these lands, Mrs. Manie R. Pruit, executed a mortgage on all the lands acquired as just stated, in favor of Mrs. Annie E. Fant, to secure an indebtedness of $1,650, evidenced by Mrs. Pruit’s promissory note of that date. Three days later, on April 1, R. M. Pruit, the son of Mrs. Davie, and her mercantile manager, sold the stock of goods in Macon to Mrs. M. E. Edwards, and delivered possession at once, Mrs. Edwards paying $500 cash down, and agreeing to pay the balance of the purchase price when the amount should be certainly ascertained by an inventory to be immediately taken. On the second day of April the appellants exhibited their bill in the chancery court of Noxubee county, charging that these several sales of the land, and that of the stock of goods, were all parts and parcel of a fraudulent scheme devised by R. M. Pruit to put Mrs. Davie’s property beyond the reach of her creditors, and that all the parties to these several transactions acted with knowledge'of this fraudulent purpose, and assisted in the attempt to thus carry it out. The bill prays cancellation of the conveyances of the lands, and an annullment of the sale of the stock of goods. All the parties answered, denying fraud or participation in, or knowledge of, any fraud, and averring that sales and purchases were made in good faith and for the considerations recited.' Much evidence was taken, and, on final hearing, the court below found that.the allegations of the bill touching the fraudulent character of the mortgage executed by Mrs. Pruit in favor of Mrs. Annie E. Fant, were not sustained, and that Mrs. Fant acted in good faith and without notice of any fraud on the part of Mrs. Davie or R. M. Pruit. The court also found that the allegations of the bill in regard to the sale of the stock of goods to Mrs. Edwards, were not.sustained by the evidence, and that Mrs. Edwards was a honafide purchaser for value and without notice of any fraudulent purpose on the part — 451 — of the seller. The court further found that the allegations of the bill as to the sale of the lands by Mrs. Davie to Mrs. Pruit, were sustained by the evidence as to the recited consideration of §710 in one of the conveyances from Mrs. Davie and Mrs. Pruit, the court being of opinion that this consideration of §710 was fictitious and simulated. The decree of the court accordingly dismissed the bill as to Mrs. Fant and Mrs. Edwards, taxing the complainants with two-thirds of the costs, and declared Mrs. Pruit’s title to the lands conveyed to her by Mrs. Davie null and void. From the decree in favor of Mrs. Fant and Mrs. Edwards the complainants -appeal; and from the decree vacating her title, Mrs. Pruit prosecutes a cross appeal. The gravamen of complainants’ bill was the formation of a fraudulent scheme, by Mrs. Davie and R. M. Pruit, to conceal her property by false and pretended conveyances and sales, whereby the property of Mrs. Davie would be placed beyond the reach of her creditors and the participation in that fraudulent scheme by the other respondents. It was not enough to charge this fraudulent scheme in vigorous phrase, nor enough to produce evidence to support the charge, which raised mere suspicion, but it rested upon complainants to clearly show the frauds charged by satisfactory evidence. Until that had been done, to the extent at least of making a -prima facie case, the duty was not upon the respondents to show that their purchases were made in good faith. Now, the findings and decree of the court below necessarily involved the proposition that the sweeping charges of the bill as to the fraudulent scheme therein set out, were not supported by the evidence, and the court only vacated the titles conveyed to Mrs. Pruit by Mrs. Davie, because, in the court’s opinion, the recited consideration in one of those conveyances of §710 was fictitious. We first dispose of the contention of appellants as to the fraudulent character of the sale of the stock of goods to Mrs. — 452 — Edwards. There is not one word in the transcript even tending to show that Mrs. Edwards or her husband, who represented her in that transaction, had any knowledge whatever of Mrs. Davie’s condition. On the contrary, it affirmatively appears that they had no knowledge of any sort. The simple facts are that R. M. Pruit proposed to sell to Mrs. Edwards because the-business, as conducted, was unprofitable, and Mrs. Edwards offered to buy, and did, on the next day, actually buy, at sixty cents on the dollar, and all this without Mrs. Davie ever being consulted, and without any knowledge of the contemplated sale, on her part, until after it had been made. That Mrs. Edwards paid $500 of the purchase price, at the time of sale, to W. B. Stewart, and the balance subsequently to Stewart, at Mrs. Davie’s direction, cannot be doubted, and that Stewart was her creditor, for loaned money and by indorsement in bank, in a sum far in excess of the purchase price of the goods, we have no doubt. The action of the court below in upholding this sale was correct. Indeed, we do not see how the court could have found otherwise. We come now to consider the action of the court in upholding Mrs. Fant’s rights as mortgagee, and in dismissing the bill as to her. In March, 1897, Mrs. Davie needed some money for her own individual uses, and she desired to raise additional funds to fling into the little mercantile maelstrom operated by her son. • Mrs. Pruit was then desirous to collect from Mrs. Davie an alleged debt of $710, before that, as is said, created by Mrs. Pruit having loaned to Mrs. Davie (out of a loan of $1,000, clearly shown to have been made Mrs. Pruit by the Georgia Building & Loan Association) said sum of $710. In this posture of affairs, it appears that both Mrs. Davie and Mrs. Pruit consulted A. C. Fant, Esq., a member of the Macon bar, and a brother of Mrs- Pruit and a nephew of Mrs. Davie, as to what should be done, and Mr. Fant undertook to effect a loan by which the desires of his aunt and sister would be met. The plan was this: He applied to his mother, Mrs. Annie E. Fant, — 453 — to help, and she agreed to borrow, and did borrow, from one N. H. Harrison, SI, 350, and mortgaged her own estate, wholly disconnected from any of the lands involved in this litigation, to secure the loan. This SI, 350 was to be loaned, and was loaned a few days later, to Mrs. Pruit,'it being agreed upon as a part of this plan that Mrs. Davie should convey her two tracts of land to Mrs. Pruit, one for SI,350 cash and the assumption of the mortgage debt on it of SI,650, and the other for the $710 claimed by Mrs. Pruit to be due her for loaned money, as already stated by us, and the assumption of a mortgage debt of $700 resting on that place. All this was accordingly done, whereby title to both tracts of land was vested in Mrs. Pruit and then conveyed in trust to Mrs. Annie E. Fant, to secure the loan of SI,350 made by her to Mrs. Pruitt. The $1,350 was undisputedly paid to Mrs. Davie under this arrangement, and the $710 debt of Mrs. Davie to Mrs. Pruit canceled, if it was a real debt. At the date of these transactions, it is important to note that neither of these three ladies had any knowledge of the condition of Mrs. Davie’s mercantile business conducted by her son, R. M. Pruit. It is also important to recall, in this connection, the evidence, which shows that Mr. A. C. Fant was the moving spirit in these transactions and that R. M. Pruit was not. In fact, R. M. Pruit was only informed of the arrangement after it had been considered by the parties and Mr. Fant, and he then advised his wife, Mrs. Manie R. Pruit, against it. We see nothing suspicious in the plan adopted, remembering what the objects to be attained were, as shown by the evidence, to wit: to enable Mrs. Pruit to collect her debt of $710, and to put Mrs. Davie in possession of some ready money. It is true all these persons are nearly related by blood, and that the several conveyances were executed in Mrs. Fant’s residence, and at, or about, the same time; but will these circumstances, thought to be suspicions, not only obviate the necessity of evidence to make good the charges of fraud, but overturn — 454 — all the answers denying all fraud, and the positive proofs demonstrating the good faith of these ladies 1 We think not. We have said that at this date none of these appellees knew anything of the real condition of Mrs. Davie’s mercantile business, and that Mrs. DaVie purposed flinging the bulk of the $1,350 into the little mercantile maelstrom where so much of her funds had already been swallowed up. But before putting in the last dollar she had on earth, Mrs. Davie prudently concluded to ascertain the condition of her business at the store. She did so, and there first learned that it was hopelessly ruined. She then wisely determined not to part with all she had left, and kept the money intended for the store to meet her daily wants. Without this money the store could not go on, and Stewart, a creditor for loans and indorsements to about $2,000, learning of the land sales, began to want his money, and the sale to Mrs. Edwards took place, as hereinbefore detailed, whereby Stewart was paid in part. In all these land transactions we find nothing that would am thorize a court of equity to cancel Mrs. Fant’s mortgage security, regardless of the validity or invalidity of the $710 debt claimed to be due from Mrs. Davie to Mrs. Pruit. The title to the lands was then in Mrs. Pruit, and Mrs. Eant’s conduct is free from all suspicion of fraud. We are thus brought to consider the cross appeal of Mrs. Pruit. The court below, in effect, found that there was no such scheme to defraud as that charged in the bill, but canceled Mrs. Pruit’s title to both tracts of land because a part of the consideration recited in one of the deeds of conveyance, viz., $710, was fictitious and simulated. We infer, from all the record, that this action was based upon a statement contained in Mrs. Pr.uit’s deposition that the $710 was loaned several years ago;' and the statement in Mr. Dent’s deposition that, at the time the loan of $1,000 was made by the Georgia Building & Loan Association, R.. M. Pruit, the husband of cross appellant, said that the* loan was desired in order to replace that — 455 — amount in the mercantile business, which had been taken out in building a house for Mrs. Pruit. It is manifest, from repeated examinations of the transcript, that Mrs. Pruit confounded this $710 loan with an earlier loan, made about 1891, of $571.65. She did make this last named loan in 1894, and she made the $710 loan in January, 1897. She was simply mistaken, and, woman-like, confused and confounded the two loans. That Mrs. Pruit actually loaned to Mrs. Davie’s mercantile business the $710 in January, 1897, is affirmed more than once by R. M. Pruit, and his deposition is distinctly shown to be true by Mrs. Davie’s check book, and by statements from the books of the Merchants’ & Farmers’ Bank. This fact is too plain to admit of controversy. Now, granting that R. M. Pruit said to Dent what is shown in Dent’s deposition, yet this may be readily reconciled with Pruit’s statements contained in his deposition that the $710 had not been paid out of the store, or otherwise, on March 29, when Mrs. Pruit purchased the lands from Mrs. Davie, and in this manner: In the fall of 1896, the $571.65 loan, with interest at 10 per cent, from 1894, was paid out of the store, in cash and merchandise, and the little business depleted to this extent, and this may have made, and doubtless did make, R. M. Pruit anxious to replace the considerable sum thus withdrawn from the mercantile business in paying for the erection of the house on Mrs. Pruit’s lot in Macon. This affords a just and reasonable explanation of Pruit’s statement to Dent, and is the only explanation reconcilable with the other evidence in the case. But not only R. M. Pruit says this was a lona fide debt of $710, Mrs. Pruit says so under oath, and though clearly mistaken as to date of this loan, she is powerfully corroborated by the documentary evidence furnished from the books of the bank. Where is the satisfactory evidence that this debt is fictitious ? We have failed to find it. The decree on direct appeal 'is affirmed, and on cross appeal is reversed and the cause remanded.