1. A deed which a man caused to be made to his wife for lands
whereon they resided will not be set aside at the instance of his
subsequent creditors, it appearing that at its date, and when he
paid for the lands and the improvements which he afterwards erected
thereon, his property largely exceeded his debts, and that there
was no intent to defraud.
2. A misdescription of the lands will not defeat the wife's
right to them, to the exclusion of those creditors, there being no
doubt as to the lands intended to be conveyed.
The First National Bank of Quincy, Illinois, recovered against
William Y. Williams and others, in the Circuit Court of Lewis
County, Missouri, three judgments -- one on the 10th of May, 1873,
upon their note dated June 19, 1871, and the others on the 5th of
March, 1874, upon their notes dated, respectively, June 3, July 3,
and July 19, 1471.
The La Grange Savings Bank of Missouri recovered, May 12, 1873,
in the same court, against him and others, two judgments, upon
their two notes -- one for $1,635.25, dated Aug. 14, 1871; the
other, upon a note, dated Feb. 1, 1872.
Upon these various judgments executions were issued, and levied
upon a tract of land in that county, containing forty-two acres,
which Williams and his family occupied as their residence. The
legal title to it was at that time in his wife, it having been
conveyed to her by deed dated Feb. 11, 1868, and duly filed for
record on the 24th of that month. The deed did not accurately
describe the metes and bounds of the property intended to be
conveyed, and, in order to correct the description, another deed
was made to her on the 13th of December,
Page 106 U. S. 261
1871, and duly filed for record on the 6th of the succeeding
month. The property so levied on, with all the improvements
thereon, was sold at public auction, and Uri S. Penfield became the
purchaser at the sum of twenty-five dollars, "in trust for the use
and benefit of the execution creditors." It was by the sheriff
conveyed to him accordingly. As to the balance due upon the
judgments, the executions were returned unsatisfied.
This suit was commenced on the 30th of June, 1875. It proceeds
upon these grounds: that Williams purchased and paid for the
property with his own means, and caused the title to be placed in
the name of his wife with the fraudulent intent to hinder and delay
his creditors; that after the conveyance, he being insolvent, and
in expectation of contracting future debts, and with intent to
hinder, delay, and defraud his creditors, existing and future, and
for the purpose of placing his means beyond their reach, did, to
their injury, and with her knowledge, consent, and approval, make,
solely by his own means, valuable, permanent, and expensive
improvements on the land; that she accepted the conveyance with
knowledge and notice of the fraud imputed to him, and confederated
with him to cheat and hinder his creditors by withholding from them
as well the land as all the moneys invested in improving it.
The prayer of the bill is that the conveyance to her be declared
inoperative against his creditors; that the title to the land be
vested in Penfield, in trust for the execution creditors, and the
possession thereof adjudged to him for their use and benefit, and
that if the deed cannot be declared inoperative, as to creditors,
then that the amount expended by Williams in improving the land be
declared a charge and an encumbrance thereon in their favor.
The material allegations of the bill are denied in the answer of
Williams and wife.
The circuit court, upon final hearing, decreed that all the
right, title, and interest of Williams and wife in the land be,
without further conveyance, vested in Penfield in trust for the
banks, and that possession be forthwith delivered to him. From that
decree this appeal was taken.
Page 106 U. S. 262
MR. JUSTICE HARLAN, after stating the facts, delivered the
opinion of the Court.
A very careful scrutiny of the record has brought our minds to
the conclusion that the decree cannot be sustained. That the land
described in the conveyances to Mrs. Williams was purchased and
paid for by her husband, with his means exclusively, and that the
purchase was made with the intention of immediately improving the
land and making it the permanent residence of himself and family,
are facts clearly established by the evidence. Indeed they are
substantially admitted in the answer of both Williams and his wife.
But the evidence falls far short of establishing fraud upon the
part of Williams, either in causing the conveyance to be made to
his wife or in using his means, to the extent that he did, in
improving the land. The facts are entirely consistent with an
honest purpose to deal fairly with any creditors he then had or
might thereafter have in the ordinary course of his business. It is
true that Williams was somewhat indebted at the time of this
voluntary settlement upon his wife, but his indebtedness was not
such in amount or character as, taking into consideration the value
of his other property interests, rendered it unjust to creditors,
existing or future, that he should, out of his income or estate,
provide a home for his family by improving the land in question.
When the conveyance was made to the wife, as well as during all the
period when the land was being improved by the erection of a
dwelling and other houses thereon, he had, according to weight of
evidence, property which creditors could reach exceeding in value
all his existing indebtedness by several thousand dollars. He was
engaged in active business, with fair prospects, good credit, and,
as we may infer from the record, of an unsullied reputation. His
indebtedness existing at the time of the settlement upon the wife,
as well as that which arose during the period of the improvements,
was subsequently, and without unreasonable delay, fully discharged
by him. The improvements were commenced in 1868, and were all, with
trifling exceptions, completed and paid for before the close of the
summer of 1869. So far as the record discloses, no creditor who was
such when the settlement was made or while the improvements were
going on was hindered materially by the withdrawal by Williams from
his means or business of the sums necessary to pay for the land and
the improvements. Those who seek in this suit to impeach the
original settlement or to reach the means invested by the husband
in improving the wife's land
Page 106 U. S. 263
became creditors of the former some time after the improvements
(with slight exceptions not worth mentioning) had been made and
paid for. If they trusted the husband in the belief that he owned
the land, it was negligent in them so to do, for the conveyance of
February 11, 1868, duly acknowledged, was filed for record within a
few days after its execution. The circumstance that the original
deed did not give an accurate description of the land intended to
be conveyed ought not to be permitted to defeat the original
settlement upon the wife, this because the description was such as
to leave no one in serious doubt that the land intended to be
conveyed was the identical land now in dispute. There is no
intimation in the pleadings that the banks supposed, when
contracting with Williams or when accepting from others commercial
paper upon which his name appeared, that the deed of February 11,
1868, described land other than that upon which Williams, after
that date, resided. On the contrary, the amended bill proceeds in
part upon the ground, distinctly stated, that the land intended to
be conveyed by that deed was the land now in dispute, and that the
only purpose of the deed of December 13, 1871, was to correct the
erroneous description in the deed of 1868.
An effort in made to show that some of the debts, evidenced by
the notes, upon which the banks obtained judgment existed when the
conveyance of 1868 was executed or when the improvements in
question were made. But the evidence furnishes no basis for such a
contention except as to the note for $1,635.25, executed August 14,
1871, by G. H. Simpson, W. Y. Williams, and R. N. Blackwood, and
held by the La Grange Savings Bank. As to that note, the president
of the bank states that in it was merged a prior note for $800 or
$1,000, given by the parties last named in 1866 or 1867. But his
evidence shows that he is not at all clear or positive in his
recollections upon the subject, and according to the decided
preponderance of testimony, Williams was not a party to the note,
which, it is claimed, was merged in that of August 14, 1871. The
proof upon this point renders it quite certain that no part of the
debt evidenced by that note existed against Williams until, as
surety for Simpson, he signed that note.
The principles of law which must determine the rights of the
parties are well established by the decisions of the Supreme Court
of Missouri. In
Pepper v. Carter, 11 Mo. 540, that
court,
Page 106 U. S. 264
after remarking that the question as to what would render a
voluntary conveyance void as to creditors under the Statute of
Elizabeth, from which the Missouri statute was borrowed, had
undergone much discussion and been the subject of contradictory
opinions, said:
"Some would make an indebtedness
per se evidence of
fraud against existing creditors; others would leave every
conveyance of the kind to be judged by its own circumstances, and
from them infer the existence or nonexistence of fraud in each
particular transaction. Without determining the question as to
existing creditors, we may safely affirm that all the cases will
warrant the opinion that a voluntary conveyance as to subsequent
creditors, although the party be embarrassed at the time of its
execution, is not fraudulent
per se as to them, but the
fact, whether it is fraudulent or not, is to be determined from all
the circumstances. I do not say that the fact of indebtedness is
not to weigh in the consideration of the question of fraud in such
cases, but that it is not conclusive."
In the latter case of
Payne v. Stanton, 59 Mo. 159, the
same court, while quoting approvingly the language just cited from
Pepper v. Carter, said that the
"doctrine is well settled that a voluntary conveyance by a
person in debt is not, as to subsequent creditors, fraudulent
per se. To make it fraudulent as to subsequent creditors,
there must be proof of actual or intentional fraud. As to creditors
existing at the time, if the effect and operation of the conveyance
are to hinder or defraud them, it may as to them be justly regarded
as invalid, but no such reason can be urged in behalf of those who
become creditors afterwards."
These decisions control the present case. Neither the conveyance
to the wife nor the withdrawal of the husband's means from his
business for the purpose of improving the land settled upon the
wife had the effect and operation to hinder or defraud his then
existing creditors. Nor does the evidence justify the conclusion
that the conveyance was executed, or the improvements made, with an
intent to hinder or defraud either existing or subsequent
creditors. Giving full weight to all the circumstances, there is no
reason to impute fraud to the husband.
Decree is reversed with directions to dismiss the
bill.
