Ames v. Dorroh

Terral, J., delivered the opinion of the court. J. F. Ames and others, the children and widow of C. B. Ames, deceased, filed their bill in the chancery court of Noxubee county against Ella H. Patty, Z. T. Dorroh, J. L. Patty, and Mrs. A. L. Jarnagin, to set aside certain alleged'fraudulent conveyances, and to subject certain property therein described to the alleged equities of complainants. The bill alleges that C. B. Ames, in August, 1888, conveyed all his property, by voluntary conveyance, to his widow and children, the complainants herein, and immediately departed this life; that said (3. B. Ames, in December, 1883, became one of the bondsmen, in the sum of $15,000, of R. C. Patty, as clerk of the chancery court of said Noxubee county for the term of four years, commencing the first Monday of January, 1884, and that in December, 1887, said C. B. Ames again became one of the bondsmen, in the sum of $15,000, of said R. C. Patty, as chancery clerk of said Noxubee county for the ensuing term of office of four years, commencing on the first Monday of January, 1888; that said R. C. Patty was the clerk of the chancery court of said Noxubee county continuously from the first Monday of January, 1884, until the 31st day of December, 1890, when he departed this life, utterly insolvent; that, commencing in January, 1887, certain matters of trust were committed to said R. C. Patty, by virtue of his said office of chancery clerk aforesaid, by which he became liable on his official bond for his defaults in said matters of trust in the sum of $7,776.69, and that complainants have been compelled' to pay said sum of $7,776.69 to discharge the obligation their said ancestor, C. B. Ames, assumed on behalf of said R. (3. Patty. — 194 — The bill further alleges that R. C. Patty, on the 25th day of December, 1883, in consideration of natural love and affection, and of one dollar, executed a conveyance to his wife, Ella H. Patty, of the west -J of the northwest \ of section 25, and northeast J- of section 26, of township 15, range 17 east, in said Noxubee county, but that said deed of conveyance was not filed for record until the 1st day of January, 1885 (a copy of which is filed as exhibit E to the bill); that, on the 10th of August, 1887, said E. C. Patty, and the co-heirs of said R. C. Patty in the estate of his deceased father, John W. Patty, in making-partition of said estate of his deceased father, and for the purpose of executing the agreement for the partition thereof between them, conveyed to said Ella H. Patty, as the share of said R. C. Patty therein, and for the recited consideration of $2,000, “ that certain lot in block seven in the town of Macon, in said county and state, conveyed to their ancestor, John W. Patty, by a deed from E. H. Cogburn, dated October 10, 1879, and recorded on page 333 et seq. of book 12 of the records of deeds of said county ” (a copy of which conveyance is filed as exhibit F to said bill); that on July 1, 1891, Mrs. Ella H. Patty became the administratrix of the estate of said R. C. Patty, deceased, with Z. T. Dorroh and J. L. Patty as her sureties on her administration bond; that on the 4:th of October, 1893, a suit was brought against Ella H. Patty and her said sureties on said bond; that on the 31st of March, 1894:, Ella H. Patty executed, for the benefit of said Dorroh and Patty, her said sureties, and to save them harmless on her said administration bond aforesaid, a trust deed on the real property described in exhibits E and F to complainants’ bill; that on the 27th day of May, 1895, said trust deed was foreclosed, when Z. T. Dorroh and Mrs. A. L. Jarnagin purchased the property described in exhibit F to the bill of complaint, and Z. T. Dorroh and J. L. Patty purchased the property described in exhibit E to the bill of complaint; that the conveyances (copies of which are marked as exhibits E and F to the — 195 — bill of complaint) were voluntary and were executed without valuable consideration, and were, therefore, void as to the creditors of said R. C. Patty, and that Z. T. Dorroh and J. L. Patty and Mrs. A. L. Jarnagin had notice of the pendency of this suit before the purchase of said property at said trust sale. aforesaid, and that each of them had actual notice before said sale of the claim of complainants in reference to said property, as set out in their bill in this behalf. The complainants allege that the conveyances of the property described in exhibits E and F to the bill of complaint, are fraudulent in law-as to them, because, as they say, they were voluntary and without consideration, and because, at the time of their execution, C. B. Ames, their ancestor, had in equity a right to look to said property in exoneration of his suretyship of said R. C. Patty, and the bill prays that they be exonerated of the payment of said $7,776.69, by subjecting the property described in exhibits E and F to its reimbursement to them, and that the conveyances of said property to Mrs. Patty, and by Mrs. Patty to Dorroh and Patty, and all subsequent conveyances thereof, be canceled. The respondents say they are bona fide purchasers of said property described in exhibits E and F to the complainants’ bill, and they especially insist that the conveyances of the said property, described in exhibit F, to Ella H. Patty, was for a valuable consideration, and that both' it and the conveyance of the property described in exhibit E were made long before any defaults occurred on the part of R. C. Patty as a fiduciary in the trusts confided to him, and when the said R. C. Patty was solvent, and that said conveyances to said Ella H. Patty are good and valid in law, and that the respondents have the legal title and equity superior to that of the complainants in and to said property; that even if the conveyance set out as exhibit F to complainants’ bill had been without consideration, yet said R. C. Patty, at the time of its execution, was amply able, in conformity with the law of the — 196 — land, to make such a gift to his wife without injury to his creditors, and that the same is good and valid in law. It. appeared from the evidence that defaults of said R. C. Patty, to the extent of several thousand dollars, occurred in .1887, and before the first Monday of January, 1888, and that defaults for the remainder of the sum, aggregating $7,776.69, occurred after the execution of the bond of said R. C. Patty as chancery clerk, in December, 1887. By the laws of the state of Mississippi the official bond of R. C. Patty, as clerk of the chancery court of Noxubee county, operated as a security for the guardianship and other fiducial trusts committed to him by the chancery court of said county, and he and his sureties were liable thereon. It is a settled rule of law that the surety on a guardian, administration, or other fiducial obligation, is, in contemplation of the statute of frauds, a creditor of the principal in such bond from the date of its execution, though no default occurs until long afterwards. The liability, whenever happeiiing, relates back to the date of the contract; and so it must be in this case, that C. B. Ames was a creditor of R. C. Patty for all sums of money subsequently paid by complainants for defaults of said Patty occurring after December 24, 1883, and before the first Monday of January, 1888. Choteau v. Jones, 50 Am. Dec., 463; Greer v. Wright, 52 Am. Dec., 117; Fend v. Weeks (104 Ala.); 53 Am. St. Rep., 50.. In equity, every person who gives no specific security for the payment of his debts is deemed as holding his property in trust for his creditors, and any conveyance of it by him, without consideration, or mala 'fide if upon consideration, is void as to his creditors, and, as to them, he is considered the owner of such property, and all grantees thereof, ,who take as volunteers, or without consideration, or who take the same with notice of the trust, are considered in equity trustee esa maleficio of such property, and may be made to answer to creditors for said property or for its value. Heath v. Page, 63 Pa. St., 108; Bump on Fraud. Con., p. 14. — 197 — That the conveyance by Mr. to Mrs. Patty of the property described in exhibit E was voluntary and without consideration is plain, and we think it equally clear that the conveyance of the property described in exhibit E was voluntary and without consideration. Ii is true R. C. Patty was owing Mrs. Patty $2,000, but no acquittance was given therefor, nor was there any understanding that the conveyance .was to discharge said debt. It is impossible for Patty to have paid his wife a debt of $2,000 by conveying property to her, except with her consent. Her right was to have the $2,000, unless she had consented to take property in payment of it. There is no evidence of such consent in this case. The claim that Patty was able to make a gift of these properties to his wife, as being a suitable provision for her, because he had ample other property to discharge all his debts, cannot be maintained. A debtor being unable to pay a debt when called upon by the creditor, a presumption arises that he could not have done so at any previous time, and any intervening conveyances of property is considered fraudulent and void, and it is incumbent on the party holding such property, and insisting upon such claim, to show that such debtor, at the time of conveyance, retained other specific property, readily accessible, and ample for the discharge of all his debts, and this burden has not been met in this case. Edmunds v. Mister, 58 Miss., 776; Hagerman v. Buchanan, 14 Am. St. R., 750; Wilson v. Kohlheim, 46 Miss., 366-367. The respondents are volunteers; they are not bona fide purchasers for value. They had notice of the equity of complainants before the sale under their trust deed, and the prior-equity of complainants give them the better right to enforce the trust, which equity, for their protection, impresses upon the property in controversy. Bump Fraud. Con., 483. Where conveyances are set aside as fraudulent as to existing creditors, it usually follows that such conveyances fail as to subsequent creditors, and, under the circumstances of this case, we are of the opinion that the conveyances herein attacked — 198 — are void as to the complainants to the full-sum of $7,776.69, paid by them. Thompson v. Dougherty, 12 S. & R., 448; Coolidge v. Melvin, 42 N. H., 510; Agerman v. Buchanan, 14 Am. St. Rep., 732; Carlisle v. Rich, 8 N. H., 44; Bump on Fraud. Con., 314.; Id., 317. Wherefore the decree of the chancery court is reversed, and the case is remanded, to he proceeded in according to the principles herein announced..