Smith v. Pattison

Citations

• 84 Md. 341
• 35 A. 963
• 1896 Md. LEXIS 110

Syllabus

<p>Fraudulent Conveyances—Burden of Proof to Show Bona Fides of a Conveyance When the Grantor is Adjudicated an Insolvent— Vacating Sale of Property by a Person in Contemplation of Insolvency.</p> <p>When a conveyance of property is assailed as being in fraud of creditors and void as to them, it must generally be shown by the party attacking the deed that the transaction was not bona fide, and that the grantee participated in the fraudulent purpose of the grantor.</p> <p>But under Code, Art. 47, sec. 24, amended by the Act of 1896, chap. 446, when a transfer of property is made by a person who is after-wards adjudicated an insolvent, within the time prescribed, such transfer is held to be prima facie in fraud of the creditors of the grantor, and the burden of proof is thrown upon the grantor and grantee to show the bona fides of the transaction.</p> <p>On December 27, 1895, J. sold his stock of goods to his father, both parties being country merchants in villages a few miles apart. The price named was $5,700, and at the time of the transaction the father borrowed from another son, L., there present, $2,300, and paid the sum to J., together with a check for $300, and promissory notes for the balance. J. then and there paid to his brother L. $2,000, which he owed him. On January 7, 1896, L. bought from J. for $2,000 in cash, the promissory notes given to J. by his father, amounting to $3,113. On January 15, J. applied for the benefit of the insolvent laws, returning in -his inventory about $700 worth of goods, but no money, and showing a list of debts amounting to $6,000. Held, upon the facts,</p> <p>1st. That the sale was made by J. for the purpose of defrauding his creditors.</p> <p>2nd. That the vendee had- notice of this fraudulent purpose and was not a' bona fide purchaser.</p> <p>3rd. That the sale should he set aside upon the application of the trustee in insolvency of J.</p>