Summary
In De Bardeleben Coal Corp. v. Parker, 164 Miss. 728, 144 So. 474 (1932), the Mississippi Supreme Court held that a moral obligation will not support a conveyance as against the grantor's creditors.
Summary of this case from Dehmer v. TempleOpinion
No. 30256.
November 21, 1932. Suggestion of Error Overruled January 2, 1933.
1. TRUSTS.
Where money is loaned for purchase of property by another in his own name, no resulting trust arises in favor of lender.
2. DESCENT AND DISTRIBUTION.
Heir is not personally liable for decedent's debt, absent written promise to pay it.
3. DESCENT AND DISTRIBUTION. Heir's oral agreement to recognize, without probate, claim against decedent's estate barred by limitations did not render heir liable for decedent's debt, but constituted only a "moral obligation."
"Moral obligation" is an obligation which of its own potency is not, has not been, and will not be, enforceable either in law or in equity against the particular obligor involved.
4. FRAUDULENT CONVEYANCES.
Heir's nonactionable moral obligation to pay decedent's debt will not support conveyance as against heir's legal creditors.
5. DESCENT AND DISTRIBUTION. Fraudulent conveyances
Neither undistributed personalty in administrator's hands nor transferred homestead can be reached by bill filed by creditor of distributee-grantor.
ON SUGGESTION OF ERROR. (Division B. Jan. 2, 1933.) [ 145 So. 341. No. 30256.]1. HOMESTEAD.
Judgment lien does not attach to exempt homestead, and exemptionist can convey homestead unaffected by enrolled judgment (Code 1930, section 1777).
2. HOMESTEAD.
Where homestead, at time of conveyance, was occupied as such, judgment lien did not extend to it and did not attach thereto when exemptionist moved (Code 1930, section 1777).
APPEAL from chancery court of Union county. HON. JAMES A. FINLEY, Chancellor.
Chas. Lee Crum, of New Albany, for appellant.
The undisputed facts render the sale fraudulent as to appellant.
Sec. 407, Code of 1930; Robinson v. McShane, 140 So. 725; Golden v. Goode, 76 Miss. 400, 24 So. 905; Ames v. Gorroh, 76 Miss. 187, 23 So. 768; Bourn v. Bourn, 140 So. 518.
The deed is both void and fraudulent as to appellant under the statute.
Sections 1765, 1778, Code of 1930; McGrath v. Sinclair, 55 Miss. 89; Columbia Mut. Life v. Jones, 133 So. 149; Johnson v. Hunt, 79 Miss. 631, 31 So. 205; Kipperdorf v. Wolfe, 12 So. 26; Lewis v. White, 13 So. 349.
The unrecorded deed made by the debtor to his mother is entirely "void" as to appellant.
Sections 2135, 2146, 2147 and 2148, Code of 1930; Nugent v. Piebastch, 61 Miss. 402; Sack v. Gilmer, 149 Miss. 296, 115 So. 339; Lewis v. White, 69 Miss. 352, 13 So. 349; Loughridge v. Rowland, 52 Miss. 546; Zokoski v. McIntyre, 93 Miss. 806, 47 So. 435.
This being a creditor's bill (sec. 407, Code of 1930), on which an attachment was issued and levied under section 173, Code of 1930, et seq., the appellant acquired a lien on the lands levied on from the date of the levy.
Slatterly v. Lumber Co., 125 Miss. 229, 87 So. 888.
The courts hold that a resulting or constructive trust must be established as a defense by clear, full convincing and satisfactory evidence and beyond a reasonable doubt, that the proof must take the matter out of the realm of conjecture, must be unequivocal, clear and undoubted, and if the evidence rests in parole, it must be received with great caution, especially after the death of the alleged trustee, as in this case.
39 Cyc. 166; Logan v. Johnson, 72 Miss. 185, 16 So. 231; Stevens v. Fitzpatrick, 218 Mo. 708.
A resulting trust is sometimes called a constructive trust, but such trust, by whatever name called, does not arise by agreement of the parties, but fraud, either active or constructive, is an essential element of constructive or resulting trusts.
39 Cyc. 169.
It is well settled that where money is advanced by way of a loan to be used by the borrower in the purchase of property in his own name no resulting trust arises in favor of the lender.
39 Cyc. 135.
In order to create a resulting or constructive trust it is absolutely indispensable that the payment should be actually made by the beneficiary, or that an absolute obligation should be incurred by him, as a part of the original transaction, at or before the time of the conveyance.
Pomeroy Equity Jurisprudence (3 Ed.), 1992.
It must be clearly proved that the trust funds were invested in the land. It will not be sufficient to show that the trustee was in possession of the funds, and while in possession of the funds he purchased the land; for in such case no presumption arises that the lands were purchased with such funds. If the trust money was mingled with other monies of the trustee so as to be indistinguishable, and the trustee has made investments generally with the money in his possession, the cestui que trust cannot claim a lien on the specific property, or funds constituting the investment.
6 Thompson on Real Property, sec. 4934; Ferris v. Van Wechten, 73 N.Y. 113.
Do sections 2146, 2147 and 2148, Code of 1930, or either of them, apply to the sale of exempt homesteads? For it is apparent that if either of these sections apply to recording a deed conveying exempt homesteads, the suggestion of error should be sustained. If neither of these sections with reference to filing deeds for record apply to deeds conveying homesteads that are exempt under the law, then this suggestion of error should be overruled.
If a lien exists at all on this twenty-four-acre tract by virtue of the levy of the attachment writ, it exists from the date of the levy.
Secs. 174 and 175, Code of 1930; Slattery v. Renoudet, 125 Miss. 229, 87 So. 888.
A conveyance of land shall not be good against . . . any creditor, unless it be acknowledged by the party who executed it . . . and lodged with the clerk of the chancery court of the county in which the lands are situated to be recorded.
Section 2146, Code of 1930.
All conveyances of lands "shall be void as to all creditors and subsequent purchasers for a valuable consideration without notice, unless they are acknowledged or proved and lodged with the clerk of the chancery court of the proper county to be recorded.
Section 2147, Code of 1930.
The word "creditor" embraces any creditor who has acquired a lien on the property conveyed before he has knowledge of the existence of the deed conveying the same.
Loughridge v. Rowland, 52 Miss. 546; Sack v. Gilmer, 115 So. 339.
When an exemptionist ceases to permanently reside on his homestead it becomes liable to his debts, or ceases to be exempt.
Section 1776, Code of 1930.
Stephens Stephens, of New Albany, for appellee.
While the deed executed by W.E. Parker to Mary Parker on March 3, 1930, only recites a consideration of love and affection and ten dollars, it is averred in appellee's answer to the original bill and amended bills, that there were other consideration in that appellee had a large claim against the estate of her deceased husband, N.J. Parker, which was then being administered, for money that her said husband had invested in the land mentioned in the deed, and it was agreed between the adult heirs of the said N.J. Parker, including W.E. Parker, that they would convey their interest in said land to appellee in consideration of the fact that she would not attempt to collect her said claim against said estate, which we submit was valid consideration for the execution of the deed.
By the return of the officer executing the process in this cause this appellee was in possession of all the property at the time said process was executed. This was sufficient notice to appellant of appellee's claim to the land.
51 Miss. 795.
None of the assets of the estate of N.J. Parker, deceased, should be subjected to the payment of the debts of any of the heirs of this estate until the amount of money due the ward of appellee is fully paid.
N.J. Parker did not only invest the money of this appellee in the land involved in this suit, except the tract shown to be heavily mortgaged, but invested about three thousand seven hundred dollars belonging to the estate of her said ward, and thus her claim to said property is far superior to that of appellant and should be protected in this proceeding.
During the months of December, 1929, and January, 1930, W.E. Parker became indebted to appellant in the sum of four hundred forty-one dollars and eighty-six cents for coal purchased by Parker from appellant. At that time Parker was the owner of an undivided one-seventh interest in certain real estate described in the bill, and which interest had been inherited by Parker from his father, N.J. Parker, who died on November 15, 1929. W.E. Parker was also a distributee in like proportion in the personal estate of his deceased father but which personal estate is still in the course of administration.
On March 3, 1930, W.E. Parker conveyed to his mother, Mrs. Mary Parker, his entire interest in the said lands, the sole consideration for the conveyance being as follows: In the fall of 1922, Mrs. Mary Parker loaned to her husband, N.J. Parker, the money with which to purchase the said lands, it being understood, so far as the record shows, that the property was to be purchased in the name of the husband and thereafter so held. The adult heirs at law of N.J. Parker, including W.E. Parker, were made acquainted with the fact that the land was purchased by money loaned by the mother, Mrs. Mary Parker, and the said heirs agreed with her that she need not probate or attempt to probate her claim for said money against the estate, and that in lieu thereof, the heirs would deed the lands to the mother, and it was in accordance with this agreement, and for this sole consideration, that the deed of March 3, 1930, by W.E. Parker to his mother was made.
The debt due by W.E. Parker to appellant not having been paid, and there being no remaining property out of which appellant could recover its debt, a creditor's bill was filed by appellant on February 10, 1931, the prayer of which was that the conveyance by W.E. Parker to his mother should be set aside as without valid consideration and therefore in fraud of creditors. The court on the final hearing dismissed the bill and denied any relief.
It is not claimed in the testimony or in the argument that any such facts existed as would raise a constructive trust in behalf of the mother, the appellee, in respect to said lands; but it is argued that there was a resulting trust in her favor because she had furnished the money with which the lands were purchased. This contention is not well founded, for it is the settled rule that, where money is advanced by way of a loan to be used by the borrower in the purchase of property in his own name, no resulting trust arises in favor of the lender. 39 Cyc. 135.
The suggestion is made in the argument by appellee, although no authority is cited to that effect, that the oral agreement by the adult heirs to recognize and admit the debt and to convey the land in discharge thereof is a sufficient consideration to support the deed in favor of the mother and to justify the preference made to her over the creditors of the heirs. There is thus presented the question whether a moral obligation is a sufficient consideration to support a deed as against a complaining creditor whose debt has legal existence. This is the question, because obviously the heir W.E. Parker, did not personally owe any part of the debt due by his father to his mother, and he could be made personally liable for it only by an agreement or promise in writing, which does not appear here. And the heir, W.E. Parker, could not be made liable by his oral agreement that his mother need not probate her claim against the estate of his father, because it appears from the statement of the facts that the debt of the father to the mother for the money loaned had become barred by the statute of limitations at the time of the death of the father; and since it is the duty of an administrator to raise the defense of the statute of limitations against any barred claim which is attempted to be probated, the mother's claim had become in law a dead claim, unenforceable against the estate, and could therefore, of its own force, never be made more than a moral obligation against any heir or distributee.
What we mean by the term "moral obligation," in the connection in which we are now considering the subject, is an obligation which of its own potency is not, has not been, and will not be, enforceable either in law or in equity against the particular obligor involved. It is said that there is a conflict of authority as to whether such an obligation is a sufficient consideration to sustain a conveyance of property against the creditors of the grantor, but the annotators have considered that the case, Cock v. Oakley, 50 Miss. 628, 631, has aligned this court with those holding in the negative. 27 C.J., p. 527. See, also, 13 C.J., p. 538; 12 R.C.L., p. 576. If the case cited has not definitely decided the point, as stated, we now expressly so decide, and hold that a nonactionable moral obligation will not, as a consideration, support a conveyance as against a legal creditor of the grantor. To so determine is, in our opinion, not only in accord with established general principles, but to hold otherwise would introduce impractical and impolitic features into the administration of justice in respect to the character of transactions we are here considering.
We conclude, therefore, that the court was in error in dismissing the bill in its entirety. We are of the opinion, however, that, in so far as the bill sought to subject the personal property in the hands of the administrator or to reach the twenty-four acres which was shown to be the homestead of the grantor, W.E. Parker, and which is particularly described in the second amended bill, the decree is correct and as to those two items is affirmed. As to all the lands other than the said twenty-four acres, the decree is reversed and the cause is remanded.
Affirmed in part, and in part reversed and remanded.
It is stated in the suggestion of error that if sections 2146, 2147, and 2148, Code 1930, or either of them, apply to the sale of an exempt homestead, the suggestion of error should be sustained; but if neither of these sections with reference to filing deeds for record apply to deeds conveying homesteads that are exempt under the law, then the suggestion of error should be overruled.
It may be that the said sections apply to conveyances of homesteads under certain conditions, but we are of the opinion that they do not apply to the case made by this record. At the time the exempt homestead was conveyed it was occupied by the exemptionist, and the judgment creditor had no rights affected by such conveyance. A judgment lien does not apply to an exempt homestead, and under the law of this state the exemptionist can convey his homestead unaffected by enrolled judgments. See section 1777, Code 1930. As the homestead was occupied at the time of the conveyance as a homestead, the judgment lien did not extend to it, and when the occupant moved away from the homestead it had already been conveyed, and title vested in the grantee of the deed. There was nothing for the judgment to attach to. Johnson et al. v. Cole Manufacturing Co., 144 Miss. 482, 110 So. 428, 429. In that case we said: "We are of the opinion that these sections give no lien until the judgment is enrolled; that it is the enrollment of the judgment that creates the lien; and that the judgment roll is not merely for the purpose of giving notice of a preexisting lien. There being no lien until the enrollment of the judgment on the property of the Johnson-Harlow Lumber Company, title passed by the deed of trust to the trustee and by the sale thereunder to Johnson. In other words, the Cole Manufacturing Company had no legal title or lien that affected the title, and it is immaterial whether Johnson had knowledge of the judgment or not. The judgment did not attach to the property under the circumstances stated. See Hughes v. Lacock, 63 Miss. 112; Planters' Bank of Tennessee v. Conger et al., 20 Miss. (12 Smedes M.), 527; Wyatt v. Beaty, 10 Smedes M. (18 Miss.), 463; Hamilton Shoe Co. v. Walker, 67 Miss. 197, 6 So. 713."
Suggestion of error overruled.