Lloyd v. Fulton

Mr. Justice Swayne delivered the opinion of the court. All the testimony in this case was taken by the appellee. He was complainant in the suit. Only two witnesses were examined, — himself, and his brother-in-law James S. Hamilton. There is no discrepancy in their statements. The facts lie within narrow limits. Fulton, the appellee, married Virginia F. Hamilton, the daughter of Thomas N. Hamilton, in the year 1851. Her father was a man of very large fortune.' Fulton received by her, before and after her father’s' death, more than $100,000. He had himself, at the time of his marriage, substantially nothing. His father-in-law died intestate in 1859. Before and after his marriage, Fulton promised'his father-in-law. to settle his wife’s fortune upon her. After his father-in-law’s death, he made the same promise to her brother, James S. Hamilton, *484 who administered upon his father’s estate. Nothing in fulfilment of -these promises was done by Fulton until the 14th of September, 1864. On that day he executed to Jaines S. Hamilton the deed made a part of the bill. It conveyed the premises in controversy in trust for the sole and separate use of the wife of the appellee and her children. The deed contained, among other things, a provision, that, if Hamilton should die, resign, or be removed from the trusteeship, she might appoint her husband, or any other fit person, as trustee in his place. On the same day Hamilton resigned, and Fulton was appointed. On the 16th of May, 1861, Fulton executed to James Lloyd two notes of $5,000 each, one payable on the 1st of September following, the other on the 1st of September, .1862. There was due on these notes, at the date of the trust-deed, $11,780. Fulton then owed to other persons not exceeding $2,000. This was the extent of his indebtedness. The aggregate of his liabilities was less than $14,000. He retained in his hands property worth $86,000, besides non-enumerated articles worth $20,000 in Confederate currency. The point of depreciation which- that currency had then reached is not shown. The property reserved was of greater value than that conveyed. After the execution of the deed, he was able to pay •the notes. In 1862 he offered to pay them in Confederate currency, which was then but little depreciated. Payment in that medium was refused. His ability to pay continued until 1866. In thac year he embarked in the enterprise of raising cotton in Arkansas. The result wrecked his fortune, and ruined him. He has since been unable to pay the notes. Suit was commenced against him upon the notes in February, 1868; and in May,-1871, judgment was recovered for $10,000 with interest, amounting to $6,447.81 and costs.. Execution was issued and levied upon the trust-property described in the bill. This suit was brought to enjoin the sale, and the Circuit Court decreed 1 in favor of the complainant. The provision of the English Statute of Frauds, touching promises made in consideration of marriage, is in force- in Georgia. The promise of Fulton to Thomas N. Hamilton before the marriage was, therefore, void. Browne’s Stat. Frauds, 220, 514. *485 His promise after the marriage was without consideration, and therefore of no validity. The same remark applies to the like promise to James S. Hamilton, the administrator. The principle of the wife’s equity has no application to this case. Wicks v. Clarke, 3 Ed. Ch. 63. The trust-deed was clearly a voluntary conveyance. Lloyd was a prior creditor. Was the deed good against him? This question is the core of the controversy between the parties. Formerly, according to the rule of English jurisprudence, such deeds, as against such creditors, were void. Townsend v. Windham, 2 Ves. 10. The same principle was applied in such cases in this country. Read v. Livingston, 3 J. C. R. 481. It has bqen overruled in the English courts. Lush v. Wilkinson, 5 Ves. 384; Townsend v. Westocot, 2 Beav. 345; Gale v. Williamson, 8 M. & W. 410; Shares v. Rogers, 3 B. & A. 96; Freeman v. Pope, 5 Ch. App. Cases Eq. 544, 545. It has been also overruled by this court (Hinde's Lessee v. Longworth, 11 Wheat. 213; Kehr v. Smith, 20 Wall. 35) and in most of the States of our Union. The State adjudications to this effect are too numerous to be cited. We shall refer to a few of them. How v. Ward, 4 Me. 195; Moritz v. Hoffman, 35 Ill. 553; Leroy v. Wilmarth, 9 Allen, 382; Miller v. Wilson, 15 Ohio, 108; Young v. White, 25 Miss. 146; Taylor v. Ewbank, 3 Marsh. 329; Salmon v. Bennett, 1 Conn. 525; Worthington v. Shipley, 5 Gill, 449; Townsend v. Maynard, 45 Penn. 199. Such is also the law of the State whence this case came to this court. Weed v. Davis, 25 Ga. 686. It is a rule of property there; and this court is therefore bound to apply it, in the case in hand, as if we were sitting as a local court in that State. Jud. Act of 1789, sect. 34; Olcott v. Bynum et al., 17 Wall. 44. The rule as now established is, that prior indebtedness is only presumptive and not conclusive proof of fraud, and this, presumption may be explained and rebutted. Fraud is always a question of fact with reference to the intention of the grantoi*. Where there is no fraud, there is no infirmity in the deed. Every case depends upon its circumstances, and is to be carefully scrutinized; But the vital question is always -the good faith of the transaction. There is no other test. *486 Perhaps no more striking illustration can be found of the application of this principle, and of the opposition its establishment encountered, than is presented in the several cases of Van Wick v. Seward. On the 6th of November, 1817, Seward assigned a judgment to Van Wick, and gave him a guaranty that it was collectible. The judgment was a lien upon lands fairly to be presumed more than sufficient to satisfy it. On the 16th. of April, 1818, Seward conveyed all his real estate, consisting of a farm of .two hundred acres, to his son. The ■consideration of the deed was the payment of a specified sum to each of two daughters of the grantor, and an annuity for life of $500 to the grantor himself, who was then aged and infirm. The, lands bound by the lien of the judgment were sold under execution, and bought in by Van Wick for a nominal sum. He thereupon .sued Seward upon his guaranty, and recovered a judgment, which was docketed on the 13th of September,' 1820. Van Wick thereupon sold under execution and bought in the farm which Seward had conveyed to his son, and brought an .action of ejectment to recover possession. The jury found that there was no actual fraud. The Supreme Court, nevertheless, upon the ground that the liability was prior to the deed, following the ruling of Chancellor Kent in Reed v. Livingston, gave judgment for the plaintiff’s lessor. Jackson v. Seward, 5 Cow. 67. This judgment, upon grounds chiefly technical, was reversed by the Court of Errors of New York. Seward v. Jackson, 8 Cow. 423. Van Wick thereupon filed a bill in. equity to avoid the deed. Chancellor Walworth concurred with the jury in the prior case as to the absence of fraud; and upon that ground, and the further ground of the circumstances of the sale of the property covered by the lien of the judgment, dismissed the bill. Van Wick v. Seward, 6 Paige, 63. The Court of Errors, upon appeal, affirmed this decree by a majority of one. The vote was fourteen to fifteen. Van Wick v. Seward, 18 Wend. 375. So ended the litigation. Perhaps in no case was the subject more elaborately examined. This case was fatal to the old rule. We think the new one more consonant to fight and justice, and founded in the better reason. In Miller v. Wilson, 15 Ohio, 108, the doctrine of this case *487 was expressly affirmed by tbe Supreme Court of Ohio, tbougb tbe result' upon tbe 'facts was in favor of the- creditors. Tbe facts of tbe case in band are more favorable for tbe support of tbe deed than those in Van Wick v. Seward. Here tbe debtor reserved property worth more than twice and a half tbe amount of bis. debts. He expected and intended to pay all be owed. He continued able to do so until be lost bis means by tbe hazards of business. Tbe creditor rested supine for a long time. He did not take bis judgment until more than eight years after the second note matured, and more than six years after tbe execution of tbe trust-deed. More than seven years bad elapsed when tbe levy was made. Tbe validity of tbe deed was then challenged for tbe first time. Tbe creditor quietly looked pn until after misfortune bad deprived tbe debtor of tbe . ample means of payment which be bad reserved, and now seeks to wrest from tbe wife tbe small remnant of property which her husband acquired by means derived wholly from her estate, and which, in part fulfilment of bis promise repeatedly made both before and after bis marriage, be endeavored'to secure to her and her children. Tbe evidence, as it stands in tbe record, satisfies us of tbe ■ honesty of tbe transaction on bis part. Tbe non-payment and tbe inability to pay are tbe results, not of fraud, but of acci.dent and misfortune. When Fulton executed tbe deed, be did what be then bad tbe right to do, and was morally, tbougb not legally, bound to do. Tbe proofs would not warrant us in bolding that tbe settlement does not rest upon a basis of good faith, or that it is not' free from the taint of any dishonest purpose. The decree of the Circuit Court is affirmed.