Duncan v. Lum
Duncan v. Lum
Opinion of the Court
The bill is filed by a trustee in bankruptcy to enforce a constructive trust in certain real estate owned by the bankrupt’s wife, the allegation being that a part of the purchase money therefor, and much valuable improvement, were paid for with the bankrupt’s money as a mere gift to the wife, while he was indebted to the American Trust & Savings Bank, and that $1,000 of that original debt still remains. The appeal is by the complainant trustee from a decree denying relief and dismissing the bill of complaint. The bill shows that in October, 1905, the-bankrupt, Lum, became indebted to said bank for his indorsement of a proinissory note executed by the Lum Machine & Supply Company, and thereafter delivered to said bank as payee. The evidence shows without dispute that Lum, as president of the machine company, applied to the bank for a loan for his company, which the bank agreed to make upon Lum’s personal indorsement of the paper. The note was then made to the hank as payee, signed by the machine company, indorsed on the back by Lnm, and discounted by the bank in the usual way, the proceeds being credited to the account of the machine company. This note has been continuously renewed, always with Lum’s personal indorsement. Of the original consideration, $1,000' remains unpaid, together with $2,700 incorporated in the note about 1910. Lum gave to his wife, during the year 1906, about $14,000, of which $700 was applied on a purchase-money note for the lot, and about $11,000 was put in permanent improvements thereon. The bill does not charge a fraudulent intent as to subsequent creditors, on the part of Lum, and the American Trust & Savings Bank is the only creditor as to whom the bankrupt’s gifts to his wife are alleged to be fraudulent and void because voluntary.
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The respondents defend the propriety of the dismissal of the bill upon two grounds: First, the bankrupt’s indorsement of the original and renewal notes was not binding upon him, because it was a promise to answer for the debt or default'of the machine.company, and contained no written statement of the consideration therefor, as required by the statute of frauds; and, second, the original debt was discharged by the renewal notes, and the last renewal note (here counted on) was not a subsisting debt when the gifts in question were made. These contentions are without merit.
Complainant’s right to relief is not dependent qn the intention of Lum in making the gifts to his wife, nor upon his insolvency at that time. Seals v. Robinson, 75 Ala. 363, 369.
On the undisputed facts of the case, the complainant trustee is entitled to the relief prayed for, and the lot in question must be subjected to the satisfaction of the claim of the American Trust & Savings Bank to the extent of $1,000 and accrued interest.
Let the decree of the chancery court be reversed’, and a decree here rendered accordingly.
Reversed and rendered.
Reference
- Full Case Name
- DUNCAN v. LUM Et Al.
- Cited By
- 2 cases
- Status
- Published