McCrory v. Donald
McCrory v. Donald
Opinion of the Court
delivered the opinion of the court.
R. M. McCrory was engaged in business at Paehuta, Miss., in the year 1908, and prior thereto, and subsequent thereto, until the year 1911, when he was thrown into bankruptcy by his creditors. In October, 1908, R. M. McCrory, being then the owner of considerable real estate, executed a voluntary deed of conveyance to his wife Mrs. Bessie McCrory, conveying lands in Jasper and Clarke counties, Miss., and in Choctaw county, Ala. The deeds to Mrs. McCrory were not filed for the record until the fall of the year 1910, when they were filed for record and recorded. Thereupon Winner, Klein & Co., a firm of wholesale merchants, filed a creditors’ bill in the chancery court of Clarke county to have said conveyances set aside and canceled as being a fraud against the creditors of R. M. McCrory. They invited other creditors to'join in the creditors’ bill. Shortly after this bill was filed- McCrory was adjudged a bankrupt, and B. H. Donald, trustee in bankruptcy, intervened in this suit on behalf of the creditors, the petition for ntervention setting out McCrory’s bankruptcy, the appointment of Donald as trustee, and the schedules of indebtedness and schedules of property of said bank
The appellant presents the following contentions: First, that the supreme court of Alabama has decided-the precise questions at issue between the same parties, and that the judgment of that court is conclusive in this controversy; second, that there is no evidence on which a finding of any intent to defraud can be based; third, that it was error to permit B. H. Donald, trustee, to intervene to prosecuted the suit; fourth, it was error to' disturb the conveyances when it was not shown that the grantor owed a subsisting debt that the creditor •could assert against him; fifth, that it was error to decree a fee-simple title to the property which was in the appellee, without ascertaining the amount, if anything, due, and ordering the property sold to pay it.
As to the first proposition, we do not understand that the decree of the Alabama court arising over a contest of the sale of land situated in Alabama is binding upon either party in a contest in Mississippi oyer lands conveyed and situated in Mississippi, because there is sc difference of subject-matter, and of law. The laws of éach state must necessarily determine the validity or legality of conveyances of land within its own borders, and each state enacts statutes upon this subject, and has its own policy and line of decisions as to whether such conveyances are valid contracts or not. In addition to
As to the second proposition, we think the record contains sufficient evidence to warrant the chancellor in finding as a fact that McCrory intended to defraud his creditors because his conveyances were kept from the record. McCrory apparently remained in possession of the property, exercised acts of ownership over it, and, according to some of the evidence, made representations that he was the owner, and proceeded to incur large indebtedness, knowing that he had made such conveyance and concealing it from his creditors. The fact that the appellant permitted her husband to remain in possession and control of the property so as to mislead his creditors is, in itself, evidence to be considered by the court, in connection with the fact that the deed was not recorded, and she made no sufficient effort to see that it was recorded.
We do not think it was error for the court to permit the trustee in bankruptcy to intervene on behalf of all of the creditors of E. M. McCrory. Indeed, we think it was proper for the trustee to intervene to the end that the creditors of the bankrupt would each get a fair proportion of the assets properly belonging to McCrory and subject to his debts.
In answer to the fourth proposition we think that the conveyance in this case must be considered as having been executed and becoming effective only on the date of its recordation. The appellant is the wife of the bankrupt, E. M. McCrory, and was at the time of the conveyance. Section 2522, Code of 1906 (section 2056,
“A transfer or conveyance of goods and chattels, or lands, or any lease of lands, between husband and wife, shall not be valid as against any third person, unless the transfer or conveyance be in writing and acknowledged and filed for record as a mortgage or deed of trust is required to be; and possession of the property shall not be equivalent to filing the writing for record, but, to affect third persons, the writing must be filed for record.”
So far as the creditors of E-. M. McCrory are concerned, this deed had no effect until it was filed for record. The statute has been construed in numerous decisions of this court, and all of them hold that such conveyances are not effectual to affect the interest of any third person until acknowledged and actually filed for record. Being then a conveyance, for the purposes of this suit, as of the date of its recordation, the creditors were not subsequent creditors, but were existing creditors, and the deed 'being a voluntary conveyance without consideration could be set aside by the creditors.
In reference to the fifth proposition, in which it is urged it is error to decree the fee-simple title to the property in question to the trustee in bankruptcy without ascertaining the amount due the respective creditors, we find the federal act of bankruptcy (U. S. Comp. St., sections 9585-9656) vests title to the property of the bankrupt in the trustee. The bankrupt court has jurisdiction to determine the amount due each creditor by the bankrupt, and what amount and what properties of his assets shall go to each particular creditor, and in case the property brought more than enough to pay the creditors, the bankrupt court would make the proper disposition of the funds, or, if the bankrupt or his wife should satisfy the creditors by paying into the bankruptcy court sufficient funds to pay
Affirmed.
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- 1. Judgment. Foreign adjudication. Matter concluded. Where a husband conveyed his lands to his wife at the same time, both in this state and the state of Alabama, the fact that the Alabama courts refused to set aside the conveyance as to lands in that state as a fraud upon his creditors, was not binding upon the courts of this state in a similar suit as to the lands in this state, the subject-matter and the law being different. 2. Fkaudulent Conveyances. Evidence. Sufficiency. In a suit to set aside a conveyance by a debtor to his wife as a fraud upon his creditors, the fact that he remained in possession of the property, exercised ownership, made representations that he was the owner and concealed, such conveyance from his creditors by not recording his deed, was sufficient to justify a finding by the chancellor that he intended to defraud his creditors. 3. BANKRUPTCY. Suit to set aside fraudulent conveyances. Intervention. Where after a suit was brought against a debtor to set aside a conveyance made by him to his wife, as a fraud upon his creditors, he went into bankruptcy, it was proper for the court to permit the trustee in bankruptcy to intervene on behalf of all the creditors of the bankrupt, to the end that such creditors should get' a fair proportion of the assets of the bankrupt. 4. Fraudulent Conveyances. 'Subsisting indebtedness. Since sections. 2522 of the Code of 1906 (Hemingway’s Code, section 2056), expressly require a conveyance between the husband and wife to be recorded before it shall take effect, so far as any third party is concerned, a setting aside of a conveyance from a husband to his wife as fraudulent was not erroneous merely because when the conveyance was made the husband was not shown to have been indebted, where it is shown that he was indebted before such conveyance was recorded. 5. Bankruptcy. Suits to set aside fraudulent conveyances. Determination of amount due creditors. Where in a suit to avoid a fraudulent conveyance the defendant was adjudged a bankrupt and the trustee intervened, the state court properly adjudged title to be in the trustee without ascertaining the amount due creditors since the Federal act of bankruptcy (U. S. Comp. St., sections 9585, 9656) vest title to the property of the bankrupt in the trustee and the bankrupt court has jurisdiction to determine the amount due creditors.