Opinion
Opinion delivered October 1, 1928.
1. EXECUTORS AND ADMINISTRATORS — FRAUDULENT CONVEYANCE OF DECEDENT. — Crawford Moses' Dig., 70, has been construed to change the common law to the extent of allowing a deed by the decedent in fraud of creditors to be set aside for the benefit of the heirs at law of the deceased. 2. FRAUDULENT CONVEYANCES — PRESUMPTION OF FRAUD. — There is no conclusive presumption of fraud under Crawford Moses' Dig., 70, as to existing creditors, where a solvent debtor executes a voluntary conveyance of his property to near relatives. 3. FRAUDULENT CONVEYANCE — EFFECT OF VOLUNTARY CONVEYANCE. — Where decedent's son purchased farm machinery on a joint note of himself and decedent, and thereafter the seller obtained a judgment against decedent and his son, decedent's conveyance of property to the son could not hinder or delay the creditor, since he could levy on the property. 4. EXECUTORS AND ADMINISTRATORS — SETTING ASIDE FRAUDULENT CONVEYANCE. — Since Crawford Moses' Dig., 70, giving an executor or administrator of any fraudulent grantor, who has conveyed property with intent to defraud his creditors, the right to apply to have a deed of realty set aside, was intended for the benefit of the heirs at law of such grantor, an administrator was not authorized to bring such an action against the wishes of such heirs. 5. PARENT AND CHILD — DIVISION OF PROPERTY. — A parent of sound mind had a right to make a division of his property between his children, and such division will not be set aside for inequality.
Appeal from Arkansas Chancery Court, Southern District; H.R. Lucas, Chancellor; affirmed.
R. W. Wilson, T. J. Moher, Sam T. Poe, Tom Poe and McDonald Poe, for appellant.
Peyton D. Moncrief, A. G. Meehan and John W. Moncrief, for appellee.
STATEMENT BY THE COURT.
This is a suit by R. L. Ives in his own name and as administrator of the estate of A. H. Ives, deceased, against B. B. Ives, Mrs. Rose Comstock, H. J. Kampman and H.R. Ives, to set aside deeds made by A. H. Ives in his lifetime to staid defendants, on the ground that they were made in fraud of the rights of the creditors of said A. H. Ives, deceased.
A. H. Ives died in Arkansas County, Arkansas, on May 6, 1926, at the advanced age of eighty-six years. The real property which is the subject-matter of this lawsuit is alleged to be worth $50,000, and its value is variously estimated by the witnesses as from $35,000 to $60,000. R. L. Ives, oldest son of A. H. Ives, applied for and was granted letters of administration upon the estate of his father, and subsequently brought this suit against the defendants, two of whom were also children of said A. H. Ives, deceased, and the remaining defendants were a grandson and an attorney of the decedent. The property belonging to the estate of said A. H. Ives, deceased, was appraised, and the appraisement, filed on January 14, 1927, showed the property to be of the value of about $50,000. The complaint alleges that the personal property of said decedent was of the value of $5,000. The inventory and appraisement do not show a list and the value of the personal property, but allege it to be farm machinery and other farm property and some notes due the decedent.
The claim of the Anderson Engine Foundry Company in the sum of $3,111.94 was duly probated. This claim was based upon a judgment for that amount against A. H. Ives and B. B. Ives. On July 21, 1917, A. H. Ives executed a will in which his son, B. B. Ives, was the principal beneficiary, and in which the other defendants received small devises. This will was admitted to probate, and B. B. Ives was appointed executor. Prior to the time he made the conveyance to his children, A. H. Ives owned a large quantity of real estate in Arkansas County. He conveyed most of this to B. B. Ives by deed in February, 1924, and the balance was conveyed by him to his daughter and grandson. The consideration in the deeds to B. B. Ives and to Mrs. Bose Comstock was love and affection and future support. Other claims, amounting in the aggregate to less than one hundred dollars, were probated against the estate of A. H. Ives, deceased. Other facts will be stated or referred to in the opinion.
The chancellor found the issues in favor of the defendants, and the complaint was dismissed for want of equity. The case is here on appeal.
(after stating the facts). This suit is based upon 70 of Crawford Moses' Digest, which gives the executor or administrator of any fraudulent grantor, who, by deed, shall have conveyed an interest in land with intent to defraud his creditors in the collection of their just demands, the right to apply to a court of chancery to have the same set aside for the use and benefit of the heirs-at-law of the fraudulent grantor. This statute has been construed to change the common law to the extent of allowing the fraudulent deed to be set aside for the benefit of the heirs-at-law of the deceased. Moore v. Waldstein, 74 Ark. 273, 85 S.W. 416; Johnson v. Johnson, 106 Ark. 9, 152 S.W. 1017; Deniston v. Phillips, 121 Ark. 550, 180 S.W. 911; Davis v. Davis, 142 Ark. 311, 218 S.W. 827; and Murphy v. Murphy, 165 Ark. 246, 262 S.W. 677.
Counsel for the plaintiff seek to reverse the decree on the ground that the Anderson Engine Foundry Company was an existing creditor, and that there was a conclusive presumption of fraud when A. H. Ives conveyed his property to his children without paying that claim. They invoke the well-settled rule in equity that conveyances made to near relatives of an embarrassed debtor are looked upon with suspicion; and, when they are voluntary, they are prima facie fraudulent; and, when the embarrassment of the debtor proceeds to financial wreck, they are conclusively presumed to be fraudulent as to existing creditors. Wilks v. Vaughan, 73 Ark. 174, 83 S.W. 913; Home Life Accident Co. v. Schichtl, 172 Ark. 31, 287 S.W. 769; and Gavin v. Scott, 172 Ark. 234, 288 S.W. 391.
In the two cases last cited it was held that there is no conclusive presumption of fraud as to existing creditors, where a grantor executed a voluntary conveyance, if he was not at the time insolvent.
The record shows that the Anderson Engine Foundry Company obtained a judgment against A. H. Ives and B. B. Ives. While there was a joint liability in the premises, B. B. Ives had purchased the machinery, and A. H. Ives had signed his note. The record shows that the principal part of the property of A. H. Ives was conveyed by him to his son, B. B. Ives. Hence there is nothing in the record to show that the creditor was at all hindered or delayed in the collection of its debts. It could have levied upon the land or personal property because the bulk of it was conveyed by A. H. Ives to B. B. Ives. Being the joint liability of A. H. Ives and B. B. Ives, in the very nature of things a conveyance by A. H. Ives to B. B. Ives could not hinder a creditor of A. H. Ives and B. B. Ives jointly in the collection of his debt.
Besides that, the statute upon which this suit is based was passed for the benefit of the heirs-at-law of a decedent. Now A. H. Ives had given nearly all his property to two of his children, who are named defendants in the action. They both resisted the present suit, and R. L. Ives, having no interest whatever in the property, had no right to maintain the action. It will be noted that the creditors are not parties to the action and are not seeking to set aside the conveyances as being fraudulent. The record shows that the Anderson Engine Foundry Company was the principal creditor of the estate. The other claims probated did not amount to a hundred dollars. Under these circumstances R. L. Ives, having no interest in his father's estate, could not maintain the action for the benefit of his brother and sister, who were the other heirs-at-law of A. H. Ives, and who alone had any interest in his estate, against their will in the matter.
R. L. Ives cannot maintain the suit in his own name, because the overwhelming proof shows that A. H. Ives was a man of strong mind and character, and knew what he was about when he conveyed his property to his children. In a will which he had executed some years before he expressly stated that he had given his oldest son, R. L. Ives, his share of the estate, and therefore had only made a small provision for him in his will. The record in this case shows that A. H. Ives executed the deeds in question because he wanted to settle his estate in his lifetime. Whether he had divided his property equally and justly between his children makes no difference. He had a right to prefer one to another. The evidence shows clearly and unmistakably that he was of sound mind when he made the conveyances, and under these circumstances R. L. Ives could not set them aside as having been procured by undue influence.
Therefore the decree will be affirmed.