Duhme & Co. vs. Young, &c. to his wife, of property purchased and paid for by him, so far as the creditors, to whom he is then indebted, are concerned; and also, if prior creditors are entitled to relief, will those holding debts created subsequent to the conveyance be allowed to come in and participate in the relief granted to prior creditors. This question arises from the fact, that, of the various debts held by appellants against intestate at his death, the debt for one thousand five hundred and eighty-two dollars and fourteen cents, evidenced by the note of May, 1849, is the only one which had been contracted prior to the date of the deed to Willey's wife. It was formerly held, by some of the most enlightened judges of England and America, that if a voluntary settlement be made on the wife, or children of a grantor, who is indebted at the time of the settlement, it was presumed to be fraudulent, and no circumstance would permit the pre-existing debts to be affected by the settlement. And in Read vs. Livingston (3 Johnson's C. R., 481), Chancellor Kent, at the conclusion of an elaborate opinion, declared, as the settled doctrine on the subject, "that fraud in a voluntary settlement was an inference of law, and ought to be so, so far as it concerned existing debts. But as to subsequent debts, there was no such necessary legal presumption, and there must be proof of fraud in fact; and an indebtment at the time, though not amounting to insolvency, must be such as to warrant the conclusion." This opinion has been overruled in New York, and the doctrine, thus broadly laid down, almost universally exploded. A voluntary deed, made to a wife or child, with the fraudulent intent as to existing debts, or with a design to future indebtedness, would be pronounced void, both as to prior and subsequent creditors, because of the ill-faith Duhme & Co. vs. Young, &c. and corrupt motive. But subsequent creditors cannot impeach it upon the mere ground that it was voluntary. It must be shown to have been fraudulent, or made with a view to future debts. The rational and true doctrine on the question is laid down by Judge Story (Story's Equity, section 362), as follows: "The mere fact of indebtment at the time does not, per se, constitute a substantive ground to avoid a voluntary conveyance for fraud, even in regard to prior creditors." The question, whether it is fraudulent or not, is to be ascertained, not from the mere fact of indebtment at the time, but from all the circumstances of the case; and if the circumstances do not establish fraud, the voluntary conveyance is deemed to be above all exception. The language of the court in the case in which these principles are enunciated is as follows: "A deed from a parent to a child for the consideration of love and affection is not absolutely void as against creditors. It may be so under circumstances; but the mere fact of being indebted to a small amount would not make the deed fraudulent, if it could be shown that the grantor was in prosperous circumstances and unembarrassed, and that the gift to a child was a reasonable provision according to his state and condition in life, and leaving enough for the payment of the debts of the grantor. The want of a valuable consideration may be a badge of fraud, but it is only presumptive, and not conclusive evidence of it, and may be met and rebutted by evidence on the other side." And he further remarks: "This language, it should be remembered, was used in a case where the conveyance was sought to be set aside by persons claiming as judgment creditors upon antecedent debts." Duhme & Co. vs. Young, &c. The doctrine upon the subject, as settled by this court, and we see no reason for a departure from it, is, if the grantor, at the time of making the settlement, is insolvent or in doubtful circumstances, the conveyance would be within the statute of frauds and void; "but if he be not indebted to such an extent as that the conveyance will deprive the creditors of an ample fund for the payment of their debts, a good consideration will be sufficient to support the deed, although voluntary, for it is free from the imputation of fraud." In Enders vs. Williams, 1 Met., 347, it is said: "A distinction, however, has been made, so far as creditors are concerned, between a voluntary conveyance to the grantor's children and to strangers. In the former case, where there is no actual fraudulent intent, and the gift is a reasonable advancement to the child, considering the donor's condition in life, and there is ample estate left unencumbered for the payment of his debts, then such conveyance will be valid even against antecedent creditors." In the case at bar, it is not alleged that there were any debts owing by intestate at the time the conveyance was made to his wife; and it appears, from the notes sued on, that but one of the debts now claimed and sued for had been then contracted, and, from what is exhibited in the record, the husband had ample unencumbered estate to pay that debt. Indeed, it is not alleged that the deed was procured to be made to the wife with any design on the part of the husband to prevent his creditors from collecting their debts, or with any fraudulent purpose. And, although Curry proves the deed was made to the wife by intestate's vendor, by his express direction, the charge is not made of a fraudulent intent on his part; that there was not a sufficiency of unencumbered property left to Duhme & Co. vs. Young, &c. pay the debts of intestate, nor that the settlement was unreasonable, considering the donor's condition in life. The allegations of the petition, if there were no other difficulties in the way, were insufficient to set aside the conveyance of the land. It should be observed, that the conveyance in this case was not made by Willey to his wife, but by his vendor; and, in Doyle and others vs. Sleeper and Alsop, 1 Dana, 531, this court held, that the statute was never applied to purchases by a debtor, but has been construed to operate only on conveyances by him (which see, and authorities cited to sustain the position). But, for reasons before stated, there was no error in the judgment prejudicial to appellants. A cross-appeal has been allowed, but no brief has been furnished; consequently, the cross-appeal will not be considered, but the same is dismissed, and judgment affirmed on original appeal. Hackett vs. Schad. CASE 89-PETITION ORDINARY-MAY 26. Hackett vs. Schad. APPEAL FROM JEFFERSON COURT OF COMMON PLEAS. 1. Although a partial failure of consideration was, before the adoption of the Code of Practice, not pleadable to an action on a note, yet it might have been remediable in equity. 2. The Code requires all defenses, equitable as well as legal, to be pleaded to an action at law; and an equitable right, thus available, may be lost unless thus litigated; consequently, whenever the court saw that there was a partial, and only partial, failure of consideration, it ought to have considered the equitable defenses by transferring the case to the equity side of the docket, and, by a commissioner or otherwise, have ascertained the extent of the failure, and given credit for it in the judgment. I. & J. CALDWEll, CITED 1 Parsons on Contracts, p. 386, sec. 14. For Appellant, 1 Met. (Ky.), 229; Griswold, &c., vs. Taylor's adm'r. 3 Met., 30; Robinson vs. Bright's ex'r. 3 Monroe, 290; Bedal vs. Stith. MUIR & BIJUR, CITED 1 Littell, 121; Overstreet vs. Phillips, &c. 4 Mar., 532; Rudd vs. Hanna. 3 Mon., 290; Bedal vs. Stith. 4 Bibb, 249; French vs. Orear. For Appellee, JUDGE ROBERTSON DELIVERED THE OPINION OF THE COURT: For the consideration of twelve hundred dollars paid in advance, J. C. Johnson, owning a life estate in a house and appurtenant grounds, in the city of Louis VOL. III-23 |