Opinion
12-05-1878
KING'S ex'ors & als. v. MALONE & als.
Collier and Budd, for the appellants. Jones & Bernard, Sam. D. Davies and Gregory, for the appellees.
M, a few days before his death, made a deed, by which, in consideration, as expressed in the deed, of $1,000, he conveyed to his children, R and E, four hundred acres of land. M's estate proved to be insolvent, and C and C, two of his creditors, filed a creditor's bill against R and E to set aside the deed as made without consideration deemed valuable in law. R and E answered, insisting the deed was on valuable consideration, R claiming his father was indebted to him for services which he states, in more than $1,500, and E that he owed her, for money loaned him at different times, more than $500. Whilst this suit was pending R and E conveyed to their counsel, J & B, one undivided third of the land in consideration of services rendered and to be rendered in said suit, with this condition: " This deed is intended to pass no title whatsoever to said parties of the second part unless they succeed in establishing the title of said parties of the first part to the tract of land hereinbefore mentioned." This case was decided in favor of the defendants.
K, another creditor of M, then filed a bill against R and E and J & B, charging that the deed to R and E was without valuable consideration, and was intended to defraud the creditors of M; and the defendants had notice of the fraud. All of them deny notice of an intention of M to defraud his creditors. R and E rely upon the same grounds stated in the former case; and J & B insist that the condition on which the deed was made to them had been performed, and they were purchasers for value. This court held:
1. That upon the evidence in this cause the deed to R and E was made without reference to any indebtedness of M to R and E, if any such existed, but upon a consideration not deemed valuable in law, and was therefore void as to the creditors of M at the date of the deed.
2. That the condition annexed to the deed to J & B was not performed by the decree in favor of R and E in the suit of C and C; but as creditors of M not parties to that suit were not bound by the decree, the condition extended to any other suit brought by such creditor; and as in this case the court held the deed to R and E void as to the creditors of M, J & B had no title to the undivided third of the land under the deed to them.
In the spring of the year 1868, Daniel Malone, of the county of Dinwiddie, died intestate, and in May of that year Alexander Donnan qualified as his administrator. In September, 1868, Roberts' executor instituted a creditor's suit in equity against the administrator and heirs of Malone for a settlement of the account of the administrator, and to subject the real estate to the payment of the debts of the deceased. In this suit the lands were sold, and in May, 1871, a commissioner made a report showing that the debts amounted to $13,171.48, and the assets to $5,842.04. This sum was apportioned among the creditors, by the decree of the court of December 8th, 1870. But upon appeal from this decree by John J. Crawford and C. W. Coker, who claimed to be judgment creditors of Daniel Malone, this decree was reversed.
Among the creditors named in said report were John J. Crawford, whose debts were stated at $3,510.17; C. W. Coker, whose debt was stated at $692.43, and Wiley King, whose debt was $721.79. In November, 1871, Crawford and Coker, for themselves and all other creditors of Daniel Malone who would come in and contribute to the expense of the suit, filed their bill in the circuit court of Dinwiddie against R. G. Malone and Ella V. Malone, to set aside a deed for four hundred acres of land, made to them by their father, Daniel Malone, a few days before his death. They set out their debts, which they stated were due long before said deed was made. They charge that the deed, though upon the nominal consideration of $1,000, was a mere gift, and wholly without consideration deemed valuable in law, and is as to plaintiffs' debts wholly void. They call upon the defendants to state when and where and in whose presence the $1,000 specified in the deed was paid. They pray that all necessary accounts may be taken, that the said deed may be declared void, the land sold and the proceeds applied to the debts of Daniel Malone, contracted before the date thereof.
At the October term, 1872, the defendants answered the bill separately. They each deny that the deed was without consideration deemed valuable in law, or that the conveyance of the land was a mere gift to them. Robert G. Malone says that his father was indebted to him in an amount at least equal to $1,500, for services rendered during a period of about two years and a half immediately preceding the date of said deed, at the request of the grantor, for which services so rendered said grantor frequently promised the respondent to pay him what they were worth; that these services were rendered in said county of Dinwiddie at the mill and upon the farm of said grantor; and after charging the defendant all advancements made for board, were worth over and above such charge at least $1,500; and the said grantor informed the defendant at the time of the execution of the deed that the land thereby conveyed to him and his sister, Ella V. Malone, was deeded to them in consideration of what he owed to the defendant and his said sister.
Ella V. Malone said that at the time of the execution of the deed the grantor was justly indebted to her in a sum exceeding $500, for sundry sums of money theretofore borrowed by said grantor from her, and which he had promised to pay her. She further avers that at the time of making the deed the grantor was justly indebted to Robert G. Malone in a sum considerably in excess of $1,000 for services rendered by him to said grantor, at his request, in his mill and on his farm in the county of Dinwiddie, during a period of two or three years immediately preceding the date of the deed. And she avers that the said grantor, being so indebted to herself and Robert G. Malone, made the deed upon such consideration, and not as charged in the plaintiffs' bill. She says she is unable at this time to speak with greater particularity as to the loans of money before stated to have been made by her to the grantor, than to say that at one time she loaned to him the sum of $450, and at a subsequent time the sum of $50, and that said loans were made several years prior to the date of said deed, at the grantor's residence and in the presence of her mother, now the widow of said grantor. She does not recollect the exact amount of or circumstances under which other loans were made by her, except that at no one time did she lend to him as much as $50, and they were generally made in the presence of her mother at the residence of the grantor in the deed.
At the April term, 1873, an order was made in the cause for the plaintiffs to appear on the first day of the next term of the court to show cause why, at said term of the court, the court should not dispose of the matter of controversy in the case. And at the said next term, the plaintiffs having been served with notice of the order and failing to appear, and having failed to offer any evidence whatever in support of the charges in the bill that the deed aforesaid was without consideration deemed valuable in law, and the court being of opinion that said conveyance was made upon a legal and valuable consideration, dismissed the bill with costs.
The defendants in the above-named suit having employed R. H. Jones and George S. Bernard as their counsel, by deed bearing date the 27th of September, 1872, Robert G. Malone and wife and Ella V. Malone made a deed to said Jones & Bernard, by which, " in consideration of their professional services rendered and to be rendered to said parties of the first part in defending a certain chancery suit now pending in the circuit court of Dinwiddie county, in which J. J. Crawford and C. W. Coker, who sue for, & c., are parties plaintiffs and they are defendants," " they grant to said Jones & Bernard one-third interest (undivided) in the tract of land conveyed to them by Daniel Malone," & c. " This deed is made subject to the dower right of the widow of said Daniel Malone in said land, and is intended to pass no title whatsoever to said parties of the second part unless they succeed in establishing the title of said parties of the first part to the tract of land hereinbefore mentioned."
In May, 1874, the executors of Wiley King filed a creditor's bill in the circuit court of Dinwiddie, in which, after referring to the previous suits and the condition of Daniel Malone's estate, they state, upon appeal by Crawford and Coker, the decree in the case of Roberts' adm'r v. Malone's adm'r and heirs was reversed, and it was held that the judgments which had been confessed by Daniel Malone in favor of these parties were valid liens on the real estate, and that after satisfying these judgments there will be little left for a pro rata distribution among the other creditors. They charge that the deed made by Daniel Malone to Robert G. and Ella V. Malone was wholly without consideration deemed valuable in law, and was intended to hinder, delay and defraud the creditors of Daniel Malone, among whom were complainants, and that said grantees had notice of such fraudulent intent. They set out the deed from Robert G. Malone and wife and Ella V. Malone to Jones & Bernard, and charge that said Jones & Bernard purchased the said interest in said land with full notice of all the facts connected with the conveyance sought hereby to be set aside. They state that said Jones & Bernard have filed their bill against Robert G. and Ella V. Malone for a sale of said land, and that a decree has been made appointing commissioners to sell it. And making Robert G. Malone and wife, Ella V. Malone, Jones & Bernard, and the said commissioners parties defendants, they call upon them to answer fully, and pray that all proper accounts may be taken, that the deed from Daniel Malone to Robert G. and Ella V. Malone may be set aside, and that the land may be subjected to the payment of the claims of the creditors of Daniel Malone, and for general relief.
The defendants Robert G. and Ella V. Malone again answered separately. They deny that the deed to them was without consideration deemed valuable in law, and was intended to delay and defraud Daniel Malone's creditors, and that they had notice of such fraudulent intent on the part of their father. On the contrary, they aver that Daniel Malone, being indebted to each of them, in perfect good faith made the conveyance for the purpose of satisfying and discharging his indebtedness. They refer to the case of Crawford and Coker against them and the decree in that case, and file a copy of the record; and they say that in their answers in that case they fully stated the grounds on which they held their title to said lands under said deed; and they especially refer to and adopt said answers as a part of their answers in this case.
They further say that, believing their title to the land to be valid, they made the contract with Messrs. Jones & Bernard, said compensation to be contingent upon said attorneys defending said suit (which they then believed was the only suit which would or could be brought against them calling in question the validity of said deed) to a successful termination; and accordingly the deed dated September 27th, 1872, was executed. To said Jones & Bernard as their counsel they fully and freely communicated all they knew touching the transaction between themselves and their father, and their said counsel embodied all that was so communicated in their answers filed in that case.
Messrs. Jones & Bernard filed a joint answer. They utterly deny that they were purchasers from Robert G. and Ella V. Malone of an undivided one-third interest in the real estate conveyed by Daniel Malone to said Robert G. and Ella V. Malone with full notice of the alleged fraud rendering void the title of said Robert G. and Ella V. Malone. They say they were counsel of Crawford and Coker in the suit of Malone's creditors against Malone's administrator and others. During the period of their connection with said suit, which was brief, ending with the decree rendered adverse to said Crawford and Coker on the 8th of December, 1870, these defendants saw nothing in said suit which cast a shadow of suspicion upon said deed, nor did they hear anything except a mere opinion expressed that said deed might be successfully attacked as in fraud of the creditors of Daniel Malone. Several months after the suit of Crawford and Coker against Robert G. and Ella V. Malone was brought these defendants were retained as counsel to defend said suit, and in the freedom of a professional interview had with said Robert G. Malone and his sister, Ella V., these defendants heard from the lips of their said clients their respective statement of the facts of their case, to-wit: the consideration of said deed, in what it consisted, and other matters of defence to the allegations of the bill of said Crawford and Coker, which charged no fraud in the deed aforesaid, but simply that it was upon a consideration not deemed valuable in law. These statements of facts said Robert G. and Ella V. Malone declared their ability to prove by legal evidence, and these defendants as their counsel reduced them to writing and embodied them in their respective answers filed in said suit; the said answers setting forth everything heard from them at that interview, or at any other time, touching said deed, and all that was ever brought to their attention touching the subject, except the expression of opinion aforesaid, if an opinion expressed with no mention of facts as the ground therefor should be considered as calling attention to a matter of the kind in controversy. With the foregoing information touching the matter they made with their clients the contract set forth in the deed of 27th of September, 1872, which they then believed and still believe was in all respects fair and legal, and in nowise to the prejudice of the rights of Daniel Malone's creditors.
They further say that from September, 1868, to October, 1871, the case of Malone's creditors against Malone's administrator and heirs was pending, which was a general creditor's bill for the administration of the assets of the deceased, and no creditor had sought to impugn the deed of April 9th, 1868. On the 13th of October, 1871, Crawford and Coker commenced their suit aforesaid, but did not allege any fraud in the parties to the deed. At the October term Robert G. and Ella V. Malone filed their answers. Neither the plaintiffs nor any creditor disputed one word of these answers, or produced the slightest proof in support of the bill in said case, although it stood on the docket of the court for a year after these answers were filed, and for two consecutive terms of the court after the deed to these defendants was admitted to record in the county where the deceased resided, and where most of his creditors reside. In view of these facts they insist that whatever be the true state of facts between Daniel Malone and Robert G. and Ella V. Malone--as to which they know nothing except as hereinbefore stated--these defendants are innocent purchasers for value of the undivided one-third interest conveyed to them by the deed of September 27th, 1872; and that the condition upon which they took their title under said deed being fulfilled by the decree in the said suit of Crawford and Coker for, & c., against Malone and al., at the October term, 1873, these defendants now hold an absolute fee simple in the proceeds of sale of said land.
A number of witnesses were examined, and among them John T. Crawford and John P. Tucker, who were present when the deed from Daniel Malone to Robert G. and Ella V. Malone was prepared and executed, and there were others who spoke as to the services of Robert G. Malone for his father. This evidence is referred to by Judge Burks in his opinion.
The cause came on to be heard at the October term, 1874, when the court being of opinion that the deed of April 9th, 1868, from Daniel Malone to Robert G. and Ella V. Malone was upon a legal and valuable consideration, and that the plaintiffs charge of fraud was not sustained, dismissed the bill with costs. And thereupon the plaintiffs applied to a judge of this court for an appeal; which was awarded.
Collier and Budd, for the appellants.
Jones & Bernard, Sam. D. Davies and Gregory, for the appellees.
OPINION
BURKS, J.
The court is of opinion that the deed of conveyance, in the bill and proceedings mentioned, from Daniel Malone to the appellees, Robert G. Malone and Ella V. Malone, if not made with actual intent of the parties to hinder, delay, and defraud creditors, was, at least, not upon consideration deemed valuable in law, and is therefore void as to the appellants and other creditors of the grantor, whose debts had been contracted and were in existence at the time said deed was made.
The conveyance is by an insolvent debtor to his children, made in his last illness and a few days only before his death. The circumstances attending the preparation and execution of the deed are in proof, and indicate very plainly that there was no valuable consideration for the conveyance.
It seems that the grantor had become aware of his insolvency and desired to secure to some of his creditors a preference in the payment of their debts. This he effected by a writing, which he caused to be prepared, empowering his son, Robert G. Malone, as his attorney in fact, to confess judgments in behalf of these creditors.
After this instrument had been executed, acknowledged and certified for recordation, provision was made for the children by the deed of conveyance aforesaid. The consideration expressed is one thousand dollars. The testimony of the witnesses present when the deed was executed shows that this was not the true consideration, and that the grantor, in the perplexity of the situation, was influenced rather by the promptings of paternal affection than by the stern demands of justice and duty. If there had been any consideration of value for the deed, then was the time to disclose it. He did not pretend that there was any; that he had received or was to receive any money or other thing from his children, or that he was indebted to them on any account and desired to pay them in land. On the contrary, after the power of attorney had been executed, and the business, which the witnesses Crawford and Tucker had been summoned to transact, had been concluded, his thoughts, in his distress, turning to his children, he inquired of Crawford if he did not think they should have something, remarking that they had been with him and had been dutiful children. Crawford gave an evasive reply, and proceeded to draw the deed as he was directed. When he reached that part of the deed where the consideration was to be expressed he inquired of the grantor what it should be. The reply was that it did not matter. Crawford suggested that it should be expressed to be for natural love and affection. Tucker remarked that it had better be a money consideration, and suggested $1,000 as the amount to be inserted, to which the grantor assented, saying that would do. It is quite obvious that but for the interposition of Tucker the consideration expressed would have been love and affection, and it would have been, no doubt, a truthful expression.
But, notwithstanding this proof, the appellees, Robert G. Malone and Ella V. Malone, in their answers to the bill, deny that the deed to them was either voluntary or made with intent to hinder, delay, and defraud their father's creditors, and each claims that there was a valuable consideration for the conveyance.
The daughter says that her father at the date of the deed was indebted to her for money lent by her at different times, the sums aggregating more than $500; and this was the consideration for the deed as far as she was concerned.
The son claims that the father was largely indebted to him for services rendered in attending to his farm and mills, and that the value of these services was the consideration for the deed as to him.
The averments of the particulars of consideration are not responsive to any allegations of the bill, and therefore not evidence for the respondents. They are of no force unless proved.
No proof was offered by the daughter in support of her answer. The only money her father owed to her was not money lent, but for a legacy left her by Isaiah Goodwyn, of whose will her father was executor, and it was proved that after her father's death she collected this legacy from his administrator.
There was some evidence adduced by the son in support of his claim. It appears that he and his wife and child and sister, all, lived with their father, and, it is to be inferred, were supported by him. Their board was certainly furnished by him. The son superintended the farm and mills of his father. His attention was given mostly to the mills, and his services would seem to have been rather in the capacity of manager than laborer. The work at the mills seems to have been done principally by a negro hireling under the direction of the son. These services continued for some two and a half years. Two witnesses, introduced by him, say that they think his services were worth from seventy-five dollars to one hundred dollars per month. On the other hand, two witnesses, examined by the complainants, estimate his services at about twenty-five dollars per month. One of them says that the saw-mill did not run on an average more than one day in a week, and the estimate they make for the board about equals their estimate for the services. No contract between the father and son is proved, and no admission by the father of any indebtedness on his part to his son. Indeed, one of the witnesses for the defendants says that he did not think Robert G. Malone was employed by his father at all--that he worked as a son for his father--that if there was any bargain between them he knew nothing about it; and so said all the witnesses. There was no proof of any accounts kept or rendered, bonds or notes taken, demands made, settlements sought or had, or receipts or vouchers given or received.
Consider this proof in connection with what took place at the time the deed was made, and we are warranted in the conclusion that there was no contract or understanding between the father and son that the latter was to receive any more for his services than the support of himself and his family. In cases like the present, as stated in the opinion delivered during the present term in Harshberger's adm'r v. Alger & wife, where there is absence of direct proof of any express contract, the question always is, Can it be reasonably inferred that pecuniary compensation was in the view of the parties at the time the services were rendered? and the solution of that question depends on a consideration of all the circumstances of the case, the relation between the parties being one of these circumstances. (See the authorities referred to in the case cited supra, p. 52.)
The reasonable inference from all the circumstances in this case would seem to be, that it was never contemplated by the parties that the son should receive any other or further compensation than the board and support of himself and his family; and if the father had been really indebted to the son, as now claimed, and had intended to discharge that indebtedness, in whole or in part, by the deed which was made, it is almost certain that, in his condition, he would not have left the matter in doubt, but would have plainly declared his purpose, if not on the face of the deed, at least in the presence of the witnesses at the time the deed was made.
The court is further of opinion that under the proofs in this cause the appellees, Robert H. Jones, Jr., and George S. Bernard, acquired no such title under the deed of September 27, 1872, as protects the interest therein mentioned from the claims of the appellants and other creditors of Daniel Malone, deceased, whose debts existed at the date of the deed aforesaid to Robert G. Malone and Ella V. Malone.
Jones & Bernard are intelligent lawyers, and were of counsel for some of the parties in the suit, styled in the proceedings in this cause, Malone's creditors v. Malone's adm'r & others, and in that suit, if not by other means, must have learned that the estate of Daniel Malone was insolvent, and that he was insolvent when he made the deed to his children. They were afterwards retained as counsel for these children to defend their interests in the suit instituted by John J. Crawford and C. W. Coker. These last-named parties were creditors of Daniel Malone, and the object of their suit was to set aside the deed from Daniel Malone to his children on the ground that it was voluntary and void as to the grantor's creditors. The answers of the defendants were drawn by these attorneys. The fee they were to receive for their services was contingent upon the success of the defence and was the sole consideration for the deed of September 27, 1872. They, moreover, admit in their answer that before they took the deed they had heard the opinion expressed that the deed from Daniel Malone to his children might be successfully attacked as in fraud of the creditors of said Daniel Malone.
It is not necessary to decide whether these facts and circumstances were sufficient to affect Jones & Bernard with notice of the true character of the last-mentioned deed; for, if not sufficient, it is still a question how far they can be treated as purchasers at all under the deed from their grantors. Have they ever acquired any vested interest under said deed? The deed recites the consideration to be " professional services rendered and to be rendered to the parties of the first part (Robert G. Malone and Ella V. Malone) in defending a certain chancery suit now pending in the circuit court of Dinwiddie county, in which J. J. Crawford and C. W. Coker, who sue for, & c., are parties plaintiff," and it is declared on the face of the deed that it " is intended to pass no title whatsoever to said parties of the second part (R. H. Jones, Jr., and George S. Bernard) unless they succeed in establishing the title of said parties of the first part to the tract of land hereinbefore conveyed."
This is a deed with a condition precedent. The title conveyed is not to vest unless and until the condition be performed. The condition is, that Jones & Bernard shall succeed in establishing the title of Robert G. Malone and Ella V. Malone to the tract of land conveyed to them by their father, Daniel Malone. Has the condition been performed? Have Jones & Bernard succeeded in establishing the title referred to? We think they have not.
The condition, it is admitted, must be construed with reference to the suit mentioned in the deed. The record of that suit is made a part of the record of this. Looking to it, we find it was what is familiarly known as a creditor's suit; that is, a suit instituted by the complainants, Crawford and Coker, in their own names and on behalf of themselves and all other creditors of Daniel Malone, deceased, who might come in and contribute to the costs of the suit. In that suit all the creditors of Daniel Malone might have become parties on the record either by petitions filed for the purpose, or by an order directing an account of the debts of said decedent, and in either case they might have been bound by any decree made in the cause. It was, no doubt, supposed by Jones & Bernard, when they were retained, and also by their clients, that such was the nature of the suit and such would be the result, and hence the condition in the deed, that no title was to pass to them unless they succeeded in establishing the title of their grantors. The undertaking was substantially a defence of the title of Robert G. Malone and Ella V. Malone against the assaults of any and all of the creditors of Daniel Malone, and the vesting of the title in Jones & Bernard was made to depend on the success of such defence. In no other way could the title of the Malones be said to be established as against the claims of the creditors. Crawford and Coker were bound by the decree rendered in the suit instituted by them. No other creditors were affected thereby. It could not be said of the other creditors, not parties to the suit, that the title had been established or pronounced valid as to them. On the contrary, the decision of this court is, that it is not valid as to them; and the title of the Malone's failing, the title of their grantees under the conditional grant fails also.
The court is therefore of opinion that the decree of the circuit court of Dinwiddie county is erroneous and must be reversed, the deeds aforesaid be set aside, and the cause remanded for further proceedings to be had, in order to a final decree, in conformity with this opinion.
We will add that we are not to be understood as intending, by anything said in this opinion, to impugn the motives of Messrs. Jones & Bernard in taking the deed which they did from their grantors; and there is nothing in the conclusion we have reached in this case that should affect injuriously the high character of these gentlemen.
ANDERSON, J., dissented.
The decree was as follows:
This day came again the parties by their counsel, and the court having maturely considered the transcript of the record of the decree aforesaid and the argaments of counsel, is of opinion, for reasons stated in writing and filed with the record, that the deed of conveyance, in the bill and proceedings mentioned, from Daniel Malone to the appellees, Robert G. Malone and Ella V. Malone, if not made with actual intent of the parties thereto to hinder, delay, and defraud the creditors of the said Daniel Malone, was, at least, not upon consideration deemed valuable in law, and is therefore void as to the appellants and other creditors of the grantor, whose debts had been contracted and were in existence at the time said deed was executed.
The court is further of opinion that, under the proofs in this cause, the appellees, Robert H. Jones, Jr., and George S. Bernard, acquired no such title under the deed of September 27, 1872, also in the bill and proceedings mentioned, as protects the interests therein mentioned from the claims of the appellants and other creditors of the said Daniel Malone, whose debts existed at the date of the deed first aforesaid to the said Robert G. Malone and Ella V. Malone.
The court is therefore of opinion that the said decree of the circuit court of Dinwiddie county is erroneous. The said circuit court, instead of dismissing the bill of the appellants (complainants in said circuit court), should have set aside and annulled the deeds aforesaid, and after ascertaining, by reference to a commissioner for the purpose, the debts of said Daniel Malone, deceased, and the priorities, if any, among them, (not including, however, among said debts the debts claimed by J. J. Crawford and C. W. Coker in the bill filed by them against R. G. Malone and others, set out in the record in this cause,) should have proceeded to subject the land conveyed by said deeds to the payment of said debts, observing priorities, if any. It is therefore decreed and ordered that the said decree be reversed and annulled, and that the appellees, Robert G. Malone, Ella V. Malone, Robert H. Jones, Jr., and George S. Bernard, pay to the appellants their costs by them expended in the prosecution of their appeal aforesaid here; and it is further decreed and ordered that this cause be remanded to the said circuit court of Dinwiddie county, with directions to said circuit court to set aside and annul the two several deeds aforesaid, and further to proceed, in order to final decree, in conformity with the opinion and principles hereinbefore expressed and declared; all of which is ordered to be certified to the said circuit court.
DECREE REVERSED.