JACKSON and others.
(Oircuie Court, D. Oregon. November 1,1882.)
AMENmffiNT ON FINAL HEARING.
An amendincntallowed to the bill on the l1nal hearing. stating the nIne of the matter in dispute to be over $500. A voluntary conveyance of real property by a husband to his wi.fe through the intervention of her father, which left him unable to pay his debts, or if made for a valuable consideration, as claimed, it being also made with the intent to hinder and delay creditors, to the knowledge of the wife, held. fraudulent.
2. FRAUDULENT CONVEYANCE.
S. PROMISlIl 0,. WIFlIl TO HUSBAND.
At common law a husband and wife cannot contract with one another, and therefore the promi8e of the wife to release her right of dower in certain property of the husband's is not a valuable consideration for a conveyance by him to her of other property.
·· BILL BY JUDGMENT CREDITOR TO
SET ASIDlIl CoNVlIlYANCE.
The assignee of a promissory note brought an action against the maker, in this court, and had judgment therein, and then brought a suit to set aside a certain conveyance of the judgment dehtor to his wife &II fraudulent. Held, that the wife was entitled to shOW as a defense to the suit that the jUdgment was void for want of jurisdiction in the court to pronounce it.
6. ACTION IN THE NATIONAL COURTS BY THE ASSIGNEE 0,. A PROMISSORY NOTlll.
The allsignee of a promissory note may now sue in the national courts without reference to the citizenship of his assignor, (18 St. 470;) and if the assignment is absolutely and legally made, the motive which induced it in nl> way affects the right of the assignee to sue in said courts.
8. CoNVEYANCE TO HINDER, ETC., CREDITORS-GOOD BETWEEN THE PARTJES.
In Equity. Suit to set aside cl1nveyance. M. W. Fechheimer and Hpnry Ach, for plaintiff. T. B. Handley, for the defendants Beauchamp and Mary Jackson. DEADY, J. This suit is brought by Thomas Collinson, a citizen of California, against Eugene S. Jackson and Mary Jackson, his wife, . and Tilden Beauchamp, her father, all citizens of Oregon, to set aside two certain conveyances of over 160 acres of real property, situated in Washington county, Oregon, as being made to hinder, delay, and defraud the creditors of said Eugene Jackson. The case was heard upon the bill, the answer of the defendants Mary Jackson and Beauchamp, and the replication thereto and the testimony. As against v.14,no.6-20
'i'On January 1,1878. audfor some months before, the defendant Eugene S. Jacksonw!ls indebted to the firm of Hotaling & Co., liquor dealers in Portland, inth-e sum :of $2,443.86,for "good$" before that time' sold and delivered to him, while engaged in the saloon business at Amity and Independence; and being so indebted he gave his note therefor, payable to the order of said firril. ofleday after date, 'with interest at 1 pel' centum per month. Afterwards, bet \veenJanuary 28 and July 18, 1878, Jackson made, three payments on this note, amounting to $I,322.I8,-the last on'e, of nomirrallY'$I,OOO, consisting of & Co. h:;td a the conveyance of his saloon at IndependencEl, on, which mortgage, and for which they nave not yet beeri:able to reil1ize $500. On April 28, 1880, Hotaling & CO. assigned ,this note to the plaintiff, 'whobrought an actiorl,th'ereon 'a:g11Inst the defendant Eugene,s.Jacksouin this court, and on May for want.of an answer, for the On December 29. 1877, Jacks'onconveye4 the preJ1l1ses, in controversy to his, 'Yife's the defendant Beauchamp, f.or the nominal consi1eration of $l,OOO"and in trust that ilewouldconvey the to the defendant' Mal)' Jackson,which he did 'on: the same day for' the nominal consideratibn of, $5. At the date of these conveyances' Jackson apart frOm this propertj, was rn faHing: .circumstances, and. his.· pay :the debt of lWtlwng& Co. ThJ;lY, consisted at an liia father:tj estate, being the ulldi rea,l propetty in Washington county, which he sold on No"emb 13r 21,1,878, to his brother, William R. Jackson, for $1,000; the saloon property at
COLLINSON· ,V.' JAOImON.
worth not to exceed $500; the stock in the saloon at A.mity, worth it may be, and froUj. to $1,500 of saloon worth to nothing, than 25 cents on, the dollar,. in alL, at and certainly the very highest est,imate,. $2,215; out of which it is not probable that more than $1,200 c'ould ha\'e been made on execution;
By the laws of this state (Or. Laws, p.523, §§ 51, 55) it pro· 'Vided, as in chapter 5 of 13 Eliz., that every conveyaQ,ce of any estate in lands the intent to hinder, delay, or defraud creditors of their '.·'," · demands,· · · as against the person so hindered, delayed, or,defraudedi, shall be void/' exceptjnthe case of a purchaser fora valuable consideration, withQu,t notice of the fraud or fraudulent intent; . Upon thefl}.ctsstated.the reasonable inference is that the anceto the ,wife through the ·father·in-law wail made with the intent to hinder, delay" and defraud the creditors of Jackson; and neither the wife nor father-in-law being purchasers for a valuable considera,tion, itis declared void by the statute as against sueh creditors. Bump, Fraud. Conv. But, in addition to this, there can be no dOrtbt from the evidence that Jackson actually intended, by this conveyance to his wife. to 'put the property beyond the reach of his ,creditors, and so he and. his attorney now admit and testify; ,and that she was fully True, she denies aware of his purpose and actively participated hi. this now· but without. reason or probability. Besides, the transaction is covered with the usual badges ·of fraud. The conveyance to Beauchamp, made upbna mere nominal consideration furnished by the grantor, falsely recites that the consideration was $1,000; and the consideration of $5, upon which the conveyance to the wife purports to have been made, was also fl1rnished her for the occasion by her husband. The pains taken to disguise the trl1e nature of the transaction is only explainable on the theory that all parties to it were aware that a fraud was intended; . The two conveyances, although made at the same time andplace.....:Beal1champ·s honse-were desif:'tned1ywitnessed by different·persons, and acknowledged before different officers, and ftledfof record,ondiffellent,daysjSo ItS to create the impression that they were independent and unrelated acts, and not the componentpal't$: '<If &, prc(Jonberted scheme to put the property into his. wife's namewitb the intent to prevent his oreditors from reaching the,saDl&,as"asthe fact. InadditiQn to,thase there is the suspicious circumstance that the conveyances w;e118 made to' near relations--,the father-hl-law and wife Conv. 54. "Aftet:tbis lpropertywas
. FEDERAL REPORTER.
thus conveyed to the wife,-in February, 1880,-she left her husband and has since obtained a divorce from him; and this circumstance seems to have prompted him to disclose the true nature of the transaction to his creditors, in the hope, as he testifies, that if he cannot have the benefit of the property himself by holding it in the name of a l"1£e, it may go to the payment of his debts. The defendant Mary Jackson joined in the conveyance by her husband of his interest in his father's estate and that of the saloon property at Independenile, and thereby relinquished her right of dower therein; and she testifies that when the premises in question were conveyed to her, that it was done in pursuance of a verbal agreement then made between herself and husband, by which she promised, when thereafter requested, to join him in the conveyances of the other property above mentioned. And it is now claimed that this promise to r.elinquish her dower was a suffi·cient consideration to support the conveyance to her. The first answer to this proposition is that the evidence does not support it; and the second is that the promise, if proven, is void, because made by a wife to her husband, (Pittman v. Pittman, 4 Or. 299; Elfelt v. Hinch, 5 Or. 257,) and because it was not in writing. Code of Civil Proc. § 775, Bub. 6. And being a void promise, it could not be enforced, and therefore it was not a valuable consideration moving from the grantee at the time of the conveyance, although it was subsequently performed. Bump, Fraud. Conv. 220, 222, 225. In Howe v. Wildes, 34 Me. 570, it was held thltt the note of afeme COl'6rt was not a valuable consideration although paid when due, and that, therefore, a conveyance by a son to his mother upon the consideri:ttion of her note was voluntary and void as against his creditors. But the conclusive answer to this :claim is that, let the consideration for the conveyance to the wife be ever so valuable, she took it with .full knowledge of her. husband's intent to thereby hinder and delay if not defraud his creditors, and was therefore a party thereto. Again, if. this conveyance had be:en made in consideration of an actl;lal release of the right of dower in property worth not to exceed 1,.5 00, the gross inadequ,acy of. price would itself be a badge of fraud. The property conveyed:ilS admitted to be worth not $3,000, of the conveyance was only, about 32 and. tl1e llu89andat the years of age. His expectation of life was about 30 years, and the wife's butliitle more, if any. The value, then, of this right of dower at the date of the conveyance was very trifling compared with the value of theprop!3rtyconveyed, and is ha.rdly worth estimating. The
net income of $500 for a few years, receivable 26 years hence, and discounted to its present value, would nearly represent the alleged consideration for the conveyance. But the defendant Mary Jackson further contends, by an allega. tion in her answer and in the argument, that this bill cannot be maintained, because, as she alleges, the judgment which it is brought in aid of is. void for want of jurisdiction in the court that gave it over the subject-matter, in that the parties to whom the note was made could not maintain an action upon it in this court, and assigned it, if at all, t,o "the complainant' herein for the purpose of bringing such action in this court." Without stopping to determine .whether this allegation is not a plea in abatement which is waived by an answer to the merits, (Dowell v. Cardwell, 4 Sawy. 230,) the question raised by it will be considered. ,But before doing so it ls, proper to dispose of the point made by the plaintiff that the defendant,cannot attack this judgment collaterally. I think she can; and that the case falls within the rule that when the right of, a third person may be affected collaterally by a judgment procured by .fraud .or collusion of the paxties thereto, or which for any reason is erroneOU8 and void; and he cannot bring a writ of error to reverse the same,_ he may 801lege and prove or show its invalidity in any proceeding in which it is Bought to be used to his prejudice. Freeman, Judgm. §§ 835-7. The evidence upon this point is defective. It only appears therHrom that the firm of Hotaling & Co. consists of. two persons,-one a resident of San Francisco and the other of Porthi.nd,-bllt what the nationality or citizenship of either ·ofthem is does not otherwise or further appear. But it is altogether immaterial whether the could have maintained an action upon this note or not. True, under section 11 of the judiciary act of 1789, (1 St. 78,) the assignee of a contract, except aforeign bill of exchange, cQuld !;lot sue in the national (Jourts unles8 the assignor could have But under section 1 of the judiciary act of 1875, (18 St. 470,}this rest.riction upon the right of an assignee of a promissory note has been removed, and he may now sue in this court without refe.rell.ce to the of bis assignor. Nor is it material, if true, tblltt assignment to the plaintiff was made for the purpos.e' or with· a vie"w of enabling him to sue on the note in this court. If the assignment was actually made and the interest 01 the assignor absolutely vested in the assignee with(}ut any agr.eement or understanding to return it or account to the assignor for the proceeds. the mQtive or purpose Qf
310 the latter in making the assignment does, not affect the right of the, assignee, to sue in this 'Court; This is well established, both upon reason and authority. Newby v. Or. Central By. Co. 1 Sawy. 63; De Laveiqja'v. Williams,5 Saw-yo 573; Hoyt v. Wright,4 FED. REP. 168 ; Marion V. Ellis, 10 FED. REP.,4JO. In Newbyv. Or. Central Ry. Co. supra, in considering a similar objection to the plaintiff's right to sue herein, as the assignee ,of two of the defendaut's bonds, the oourtsaid: it appears that the complainant has the legal title to or interest in these bonds, then this plea is insufficient.·They are payable to bearer, and the title to them. passes by delivery, unless the contrary is shown. The motive with which they were delivered to the complainant or he received them makes no difference in this respect. Parties have a clear right to become the owners of property, real or personal, by purchase or gift, for the express, purpose of maintaining a suit in this court concerning the same." And in De Laveaga v. Williams,Bupm, in which there was a plea. in llibatement that the plaintiff was not the actual owner of the premises sued for, alid that the conveyance to him was merelycolorl' a:ble, to give the court jurisdiction, Mr. Justice FIELD said : "There is no doubt, that the sole of the deed to the complainant was to give this court jurisdiction, and that the grantor has borne and the expenses of the suit. But neither of these facts renders the deed inoper. ,The defendants are not in a position to question, ative to transfer the the right of the grantor to give away the property if he chooses to do so. And the court will not, at the suggestion of 8 stranger to the title, inquil'einto the motives Which induced the grantor to part with his interest. It is sufficient the instrument executed is valid' in law. and that the grantee is of the class under the laws of congress to proceed in the federal courts for the pr9tection of his rights. , It is when the conveyance is executed, to, give the court jurisdiction, and is accompanied with an agreement to retransproper1:;r at the request of the grantor upon the termination of the litifer gation, that the proceeding will be treated as a fraud upon the court. Such was 'the case of Barney v; Baltimore Oity, upon which the defendants rely. 6 WalL 280. Here there was no such agreement, and it will be optional with. the complainant to .retransfer or. retain. the property."
The allegation or plea, therefore, in this case is absolutely imma,. terial," for it does not go so far as to aver that the assignment was not bond fide, and only, colorable, but simply that the motive in making it was to give this court jurisdiction. · , lnthe evidence there is an attempt to prove this, but it is insufficient. The circumstances relied on as $howing. that the fre ,t4at the conpideration therdo.
was merely noIYlinal-oD.El' that the 'assignor paid the expenses'oithe suit: But these arauot Incqusisten,t transfer, and they signify nothing when taken IDiconnection with the testimony of the assignor and assignee, who both'state that the' transfer was, absolute, and that there is no understalldingor agreeinent by" which the assignor is to have any of ,the contents of the note 0): the fruits,of the litigation. It follows that the, court had jurisdiction of the action on the note, and that the judgment ,therein is 'valid and binding on all thedefend.ants herein for the purposes of this 'the plaintiff is therefore entitled to have the conveyances of Decenibe1'29, 1877, to the defendants Beauchamp and Mary Jackson, so far as they hinder and delay him front obtaining satisfaction of his judgnlerit, set aside and held for naught. But' it is a mistake to 'suppose that the property, or aby portion of it remaining after the satisfaction ()£the judgment, will revert to the husbii.nd. As between him and bis wife, the conveyances are good and vest the title in her., They are not void, but only voidable at the'suit of a creditor who is thereby prevented from the collection ofbisdebt, and then only so far, as to' enable him to collect it. In re Estes, 7Sawy. 460. If, there' is any surplus Of the property, oithe proceeds thereof, after satisfying the judgment of the plaintiff and the costs of this'suit, as it is proba.ble there will be, it belongs to the wife. ,;.Adecree will be entered setting aside the conveyancesll.sto 'the' plailitiff,and directing the master to sell the property, or so much thereof as may be necessary to satisfy the' plaintiff's judgment arid' the costs oHhis suit and the execution of the decree herein, aondpay the remainder of the proceeds', if any t to the defendant' Mary Jackson. ·
(Circuit Uourt, D., KaTl,8a8.Npvember TerIl1. 1882.).
' . ,
CONTRACT-No RELIEF . ,The general rule is' that a court of eqliity will not Interfere itr behalf of 'either pa-rty to a contr.act fraudulent as to bpth parties, either.to ,t1}e &mn,C, ,or a breach thereof. . ' !' '" '.
,SAME RULE:. '" ",: . ' , · 'A' corporation may oeguiity 6f fraud,and if through its b08l'd Of direct6rS'it . enters'intb a fraudulent contraCt. it is subject to ,the TtUe state<V:"
2. SAllE-CORPORATIONS BOUND BY