Winn v. Barnett

Fisher, J., delivered the opinion of the court. The complainants, as administrators of the estate of R. M. Winn, deceased, filed this bill in the Yice-Chancery Court, at Yazoo City,, to recover certain slaves in the possession of and claimed by the defendant, on the ground that her title was, and is fraudulent and void, as to the creditors of the intestate. The allegations of the bill are as follows : — That J. R. Burrus,. as administrator of one Cheatham, in the year 1849, sold the slaves in controversy under an order of the Probate Court of Yazoo county, when Joshua T. Russell became the purchaser, and executed his note with the intestate, Winn, as security; that at or about the time of the sale by Burrus, there was an understanding between Russell and Winn, that the former should purchase the slaves for the benefit of the defendant, then the wife and now the widow of Winn; that Burrus accordingly executed the bill of sale conveying the slaves to the defendant; that Winn was at the time of this transaction greatly embarrassed, and that the bill of sale to the defendant was merely colorable and void, as to Winn’s [658] creditors, under the Statute of Frauds. The bill further alleges that Winn died, in 1853; that the complainants were appointed by the Probate Court of Yazoo county, his administrators; and that the estate has been regularly declared insolvent, and will still be so, even if the slaves should be treated as part of the estate. To this bill, containing these allegations, the defendant demurred, and the court overruled the demurrer. The defendant thereupon answered the bill, when both parties proceeding to take testimony, the cause was finally heard upon the merits, and a decree rendered for the complainants, from which this appeal has been prosecuted. It is not very material, so far as the result is concerned, whether we confine our examination to the questions arising upon the demurrer or extend the examination to the case, as it appears from the testimony, as the same defect will be found to exist in either aspect of •.the case. Let it be assumed, for the present, that the complain■ants, as administrators, could maintain a bill to set aside a disposition of property by their intestate, fraudulent as to his creditors, the question then arises whether the bill contains enough to show that the title of the defendant to the slaves in question, is void as to her' husband’s creditors. The principle which lies at the foundation of every judicial proceeding, at the instance of creditors to set aside a fraudulent disposition of property by their debtor, is either that the debts were contracted, or the credit gained upon the faith of such property. Hence, if it do not appear that the debts existed at the time the disposition of the property was made, the transaction cannot, as a general rule, be said to be fraudulent as to creditors, for the obvious reason that credit was not given upon the •faith of the property. It nowhere appears by the bill, that the ■debts now existing against Winn’s estate existed against him at the time the defendant’s title accrued. It is, therefore, difficult to see upon what principle the title must be held void under the Statute of Frauds. So far from this statute being intended to enlarge or extend the rule which previously existed, its object was to restrict the rule, and make it apply only to creditors who were hindered, delayed, and defrauded by the transaction alleged to be fraudulent. The general rule was, and is, that fraud vitiates every transaction into which it enters. The statute being enacted with [659] reference to this rule, declares that the conveyance or disposition of property by a debtor, with the design of hindering, delaying, or defrauding his creditors, shall only be treated as void (voidable is the correct word) as to those creditors who shall be thus hindered, delayed, or defrauded; leaving the conveyance, in all other respects, binding between the parties. Hutch. Code. It must follow, therefore, that persons who .were not creditors at the time the defendant’s title accrued to the slaves, were not and could not be defrauded, hindered, or delayed, in consequence of the transaction which led to the consummation of her title, in the collection of their debts. It is true, that it has been held in some cases, that where a conveyance by a debtor was fraudulent in its inception as to his creditors at the time, it will be so treated as to subsequent creditors. But these cases must rest upon one of two principles, the property was either so situated that it enabled the debtor to obtain credit upon the faith of it, or the fraudulent vendee was regarded as a trustee under the secret arrangement between the parties, and in virtue of such secret understanding, bound at least so far as his word or such contract could bind him, to account to the fraudulent vendor; and hence the creditor was allowed to be substituted to what was treated as the substantial interest of his debtor, and subject the property to the payment of his debt. In the present case, however, it is neither shown that the debts were contracted upon the faith of the property, nor that the defendant was in any manner a trustee for, or accountable to, her husband for the slaves. Treating the complainants, therefore, as merely representing creditors, they have shown no case entitling them to relief. Creditors could not be supposed to have given credit upon the faith of what their debtor did not own, or what it was not even in his power to pledge for the payment of his debts., But it is now not an open question in this court, that an administrator who stands in privity as to the acts of his intestate, cannot maintain a bill to annul that which was binding upon the deceased in his lifetime, and there is in addition, still another reason why such a bill could not be maintained by an administrator. The transaction was only voidable as to creditors who were in some manner injured by it, and as to the parties and all [660] others the transaction was valid and binding. An administrator could, under any view, only represent such creditors as had a right to assail the deed; the recovery could, therefore, only be had for the benefit of such creditors. The property, in that event, would not be recovered for the general purposes of the administration, but only to satisfy specified debts. The creditors having this right elect to waive it, and hence the litigation would only be useless. Upon the whole case, we are satisfied that the safe rule is as it has been settled — to leave the remedy in the hands of such creditors as have a right to question the validity of the alleged fraudulent transfer of the property. But it is said that the creditor thus proceeding must first have recovered his judgment and exhausted his remedy at law. This may be true as a general rule. But when an estate has been declared insolvent, the debt must be established by the Probate Court, if not already reduced to a judgment, and this action of the Probate Court, so far as the mere establishment of the debt is concerned, is as much a judgment as if rendered by the Circuit Court, and the other proceedings of the court (Probate Court) will either show how much has been, or can, at most, be paid on the debt. Such proceedings as to the balance of the claim, would be treated as a “ nulla bona” as to a balance due on an execution at law. The same fact is virtually established, to wit, that no other means or property are in the hands of the administrator with which to satisfy such balance. Decree reversed, and bill dismissed.