Smyth v. Hall

McOlaiN, J. — ■

The facts conceded by the appellant are that defendant Catharine Hall, who was drawing a pension from the federal government as a soldier’s widow, in 1897 entered into a contract for the purchase of one hundred and sixty acres of land from one Brown for the agreed price of $2,400, and paid $216 of that amount out of her pension ( money. Afterwards she sold the coal rights under eighty acres of the land for cash, and used $1,050 of the proceeds in making a further payment, and then received a deed for the premises,- subject' to a purchase-money mortgage for $1,380. Of the one hundred and sixty-acre tract, forty acres became her homestead, on which she resided with her children; and in January, 1902, she conveyed the remaining one hundred and twenty acres to defendant O. R. Hall, one *629 of ber sons, in consideration of tbe cancellation of ber note to tbe son for $300, tbe payment of $720 in cash, and tbe assumption of tbe purchase-money mortgage on tbe entire tract. Tbe contention of appellant is that this conveyance was in fraud of creditors, and be seeks to have it set aside,/ and tbe land subjected to tbe payment of judgments held by him against Catharine Hall. Counsel for appellant argue two grounds on which tbe decree of tbe lower court in favor of defendant O. B. Hall might have been predicated: Hirst, that tbe land was exempt, as procured by pension money, under tbe provisions of Code, section 4009; second, that tbe evidence does not show that O. B.. Hall accepted the conveyance to assist bis mother in putting ber property out of tbe reach of her creditors; and they question tbe correctness of tbe decree of tbe trial court, as predicated on either of these two grounds.

l. exemptions: quired with money. I. Prior to tbe enactment of chapter 23 of tbe acts of the Twentieth General Assembly, section 1 of which is sub-tantially embodied in section 4009 of tbe Code, it was held in this State by a divided court, and confessedly against the weight of authority in other States, that the exemption of pension money provided for in tbe federal statutes (Rev. St., section 4747 [U. S. Comp. St. p. 3279]) operated to exempt also property purchased with pension money. Crow v. Brown, 81 Iowa, 344; Crow v. Brown, 86 Iowa, 741. By the subsequent enactment of ’the provision above referred to, this rule is now statutory, and it has been held "that it operates to exempt property for which that acquired by pension money is exchanged, no other funds being invested in the acquisition of the new property. Smith v. Hill, 83 Iowa, 684. But it does not operate to exempt the increase or produce derived from the property which is exempt as procured with 'pension money. Diamond v. Palmer, 79 Iowa, 578; Haefer v. Mullison, 90 Iowa, 372. And see Marquardt v. Mason, 87 Iowa, 136; Cook v. Allee, 119 Iowa, 226; Manning v. Spry, *630 121 Iowa, 191. In this case Catharine Iiall’s original interest in the land was acquired exclusively by the investment of pension money. The only subsequent payment made by her on the land was with proceeds of a sale of part thereof; chat is, the right to take coal therefrom. This was an in-lorest in the land, and not personal property resulting from the use of the land. We suppose it would not be questioned that if Catharine Hall had been able to sell a portion of the land at an increased price, and the proceeds had been sufficient to pay off the remainder of the purchase money, she would have held the remaining portion of the land exempt as acquired by pension money. And this case is analogous to that; the portion of the land sold being an interest therein consisting of coal rights, instead of a specified number of acres in fee. We reach the conclusion, therefore, on this branch of the case, that the entire interest which Cath-arine Hall had in the one hundred and sixty-acre tract purchased from Brown (that is, the entire ownership of the tract, subject to the - purchase-money mortgage) was exempt, as’ acquired by pension money, and might be conveyed by her free from- liability for her debts. Marquardt v. Mason, 87 Iowa, 136.

II. But a consideration of the evidence relied upon as tending to show fraud on the part of O. B. Hall in accepting a conveyance of tire one hundred and twenty-acre tract from his mother leads to the same result. As already stated, it is established beyond reasonable controversy that 0. II. Hall paid his mother $720 in cash, and surrendered a note which he held against her for $300, assuming the purchase-money mortgage. And it is equally well established that this was the reasonable value of the land at the time he purchased it. Counsel for appellant marshal the circumstances disclosed by the testimony of the witnesses, as tending to show that the cash payment was by money not actually belonging to O. B. Hall, but in reality .the proceeds of property belonging to Catharine Hall and her other sons, who were indebted with *631 ber to tbe plaintiff. But we think that, the evidence preponderates in support of the contention for appellees that this money belonged to O. R. Hall in his'own right, as the proceeds of live stock acquired by him with his own earnings. It will be impossible to set out the evidence relating to the various transactions for the purpose of supporting this conclusion, but it' is reached after a careful examination of the entire record.

2' denUof proof, The validity of the note for $300 which O. R. Hall surrendered to his mother as a part of the consideration for the purchase is also questioned; but we have no difficulty in reaching the conclusion that this note was valid, representing an indebtedness for services rendered in improving the farm while it belonged to Catharine Hall.

The burden of proving a fraudulent purpose on the part of O. R. Hall in accepting this conveyance, to assist his mother in defrauding plaintiff and other creditors, was, of course, on the plaintiff. Counsel urge that the evidence, taken together, shows a fraudulent scheme from the beginning, by which the brothers of O. R. Hall induced their mother to sign notes, which were negotiated for cash, and the proceeds used in various ways until she became practically bankrupt, with the purpose that this son, who did not become liable for such indebtedness, should ultimately acquire the property in his own name, and thus work a fraud upon creditors. .But mere suspicion of fraud is not enough to require the setting aside of a conveyance made for an adequate consideration, and.the evidence on which plaintiff relies can hardly be said to raise more than a mere suspicion. The transactions referred to by counsel are reasonably explained . by the testimony as consistent with the entire good faith of O. R. Hall, and we reach the conclusion that no fraudulent purpose on his part was established.

The decree of the lower court is therefore affirmed.