|31 Ky.L.Rptr. 137|
|Court of Appeals of Kentucky.|
|POTTER ET AL. v. POTTER'S RECEIVER ET AL.|
|May 1, 1907.|
|ACTION: Reversed and remanded.|
Appeal from Circuit Court, Clay County.
"Not to be officially reported."
Action by R. G. Potter's receiver and others against N. C. Potter and others.
From a judgment for plaintiffs, defendants appeal.
On March 29, 1878, R. G. Potter executed a deed of assignment to his brother, James G. Potter, for the benefit of his creditors. R. G. Potter owned at the time something over 200 tracts of land in Clay and adjoining counties. He had considerable personal property, and had a number of accounts, judgments, and notes due him. He was at the time building the county jail under a contract with the county. For several years his habits had been very bad as to drinking, and he had become greatly involved. Among other things, he owed a large amount to his father's estate, and the land which he had gotten from his father's estate was the best part of his property; the other tracts being scattered about and not then in demand by buyers. James G. Potter qualified as trustee, and a suit was filed in the Clay circuit court to settle the trust, both by him and by the creditors. The two suits were consolidated. R. G. Potter was a man of considerable business capacity, but James G. Potter, the assignee, was not a man of much capacity. So R. G. Potter, as agent for the assignee, managed the estate, while James G. Potter was trustee, but in April, 1879, James G. Potter was removed on motion of the creditors, and L. A. Byron was appointed as receiver in the cases. Byron accepted the trust and executed bond and continued to discharge the trust until his death in 1898, whereupon a successor was appointed for him, who is still acting. In December, 1879, upon the joint petition of R. G. Potter and N. C. Potter, his wife, by a judgment of the Clay circuit court, she was authorized to act as a feme sole under the statute then in force. The court, in the suit to settle the assigned estate of R. G. Potter, made orders directing the sale of different tracts of land, and N. C. Potter at these sales purchased a number of tracts. The sales were reported to the court and confirmed and deeds were executed to her; the last of the deeds being made about the year 1891. The court also, upon the report of the assignee Byron, made orders directing the sale of notes, judgments, and accounts which the assignee was unable to collect. There were a number of these sales at which N. C. Potter was the purchaser. She executed bond. The sales were reported and confirmed, and the judgments, notes, and accounts were turned over to her by Byron. R. G. Potter died in 1896, and this suit was brought on September 24, 1902, by a number of general creditors of R. G. Potter whose debts were created before the assignment of 1878, against N. C. Potter, in which they alleged the facts above stated; that no part of their debts had been paid; that R. G. Potter had died without children; that N. C. Potter was under the disability of coverture; that she had converted to her own use the notes, accounts and judgments above referred to; that R. G. Potter was the purchaser of these claims when sold in the suit to settle the estate; that with the proceeds of these claims and other property which he had withheld from the assignee he had purchased the tracts of land referred to, and without consideration, under some arrangement with his wife, had the property conveyed to her; that at the time of his death he was the owner; and that N. C. Potter held the land in trust for them. They prayed that the property be subjected to their claims. They also alleged that there were two tracts of land belonging to R. G. Potter which had not been sold and on which he resided. They prayed that this land be subjected to their claims, and that N. C. Potter be required to elect whether she would take dower or homestead, praying that she be required to pay rent from the death of R. G. Potter. N. C. Potter filed an answer in which she controverted all the allegations of the petition, and set out fully the proceedings in the suit to settle the assigned estate, pleading that she purchased the property herself, and that it was her property. On final hearing the circuit court held that the order empowering Mrs. Potter to trade as a feme sole was void, and that all the property deeded to her was subject to the debts of the plaintiffs. From this judgment, she appeals.
The active plaintiffs in this case as a rule reside in Clay county. It was upon their motion that Byron was appointed in the place of James G. Potter. They were Byron's securities in his bond as receiver, and no complaint was made of any action of Byron while he lived. No exception was filed to any sale at which Mrs. Potter bought. No objection was made to the conveyances being made to her, or of the assignment to her of the notes, accounts, and judgments. The suit before us was not brought until something like 20 years after the purchases in question were made, some of them being made more than 20 years, and some a little less. Ten of the tracts of land were bought by a man named Simpson in 1879 before she became a feme sole, and were transferred to her by Simpson in 1890, but no objection was made to the confirmation of the sale to Simpson or the making of the deed to her. The last deed to her was made more than 10 years before this suit was brought. The plaintiffs took an active interest in the suit to settle the assigned estate until it was held by the court that the debt due to the estate of R. G. Potter's father was a preferred claim. But, after this decision was rendered, they appear to have taken less interest in the proceeding, as this took the cream of the estate, and it was apparent that as land was then selling there would be little left for the general creditors.
The first question to be considered is: Was the judgment making Mrs. Potter a feme sole valid? The judgment was entered at a special term of the Clay circuit court held in December, 1879. The papers of the case are lost, and have been lost for many years. The only part of the record that can be found is this entry on the minute book, which is signed by the judge: "N. C. Potter, etc., on petition ex parte. Affidavit of J. W. Stivers filed; also copy of notice and submitted." Stivers was then the deputy clerk, and is now one of the plaintiff's attorneys. The entry is in his handwriting. The judgment rendered in the proceeding is as follows: "Clay Circuit Court, December Special Term, 1879, Decr. 15, 1879. R. G. Potter and N. C. Potter, On Petition. This cause having been submitted and it appearing that publication has been made as required by statute, and it further appearing that this application is not made to hinder and delay the creditors of R. G. Potter, and that his creditors will not be injured thereby: It is adjudged that the female plaintiff be empowered to use, enjoy, sell and convey, for her own benefit, any property she may own, or may hereafter acquire, free from the claims or debts of her husband; to make contracts, sue and be sued as a single woman; and to trade in her own name; and to dispose of her property by will or deed; provided, that her property shall at all times be subject to her debts and liabilities; and that this case is stricken from the docket." There appears on the order book this order calling the special term: "Order for Special Term, Clay Circuit Court. State of Kentucky, Clay Circuit Court--Sct: The business of the Clay circuit court requiring, in the opinion of the undersigned, it is ordered that a special term of said court be held at the courthouse in Manchester for the trial of equity cases, commencing on the third Monday in December, next, and continuing three days, should the business require, and the clerk will give notice thereof as required by law, and will file this order in his office. Given under my hand this 22nd day of Nov., 1879. W. H. Randall, Judge." Under the statute then in force the special term was regularly constituted, and the circuit judge had jurisdiction thereat "for the trial of chancery" cases. It was not necessary then that the order calling the term should specify what causes were to be tried. The court sat for a number of days and disposed of the docket of the court containing about 148 cases. It was not material whether the petition of Potter and wife was filed before the special term was called or after. When it was filed, and the proper notice had been given, all persons were required to take notice that the special term had been called, and that such cases might be disposed of at it. Not only so, but, if the case did not stand for trial until the next regular term, the judgment would be merely premature. To enter a judgment in a case before it stands for trial is, under the Code, only a clerical misprision, which may be corrected by motion made not later than the first three days of the succeeding term. As no motion was made by any creditor to set aside the judgment, it cannot now be assailed. When a judgment is attacked collaterally, especially when it is as old as this, the presumption is indulged that the proceedings were regular.
The proof does not sustain the charge that the property in controversy belonged to R. G. Potter and was conveyed to N. C. Potter by contrivance to defeat his creditors. The proof for her is that she had a thousand dollars when her husband assigned; that an old friend gave her $500, and lent her $400 more. Her attorney shows that she realized something like $2,000 from the notes, accounts, and judgments which she bought. It also appears from the record that the land sold low at the commissioner's sales, and that she sold off a large part of the land which she purchased, and by this means was finally enabled to pay for the land which she kept. Timbered lands in eastern Kentucky were then low. They have very much advanced in price in the last five or six years, but her whole property now, according to the evidence, is worth only $10,000 or $12,000. One hundred and twenty-two executions were issued upon sale bonds against her and her sureties. This shows how she struggled along to meet her obligations, and to save for herself some part of the estate. It is true that her husband, R. G. Potter, when he was sober, assisted her to some extent, and that some timber was sold from the land after she bought it, which went to help pay for other lands. But Potter was very dissipated, and there is no question under the proof that, if he had had control of the property, he would have wasted all of it. It is not necessarily a fraud on his creditors that a husband should assist his wife in caring for her property, or help her in its management. There is no proof in the record that Potter put into this land any means of his, or that he kept back from his assignee any part of his estate. No such complaint was made at the time when the persons who are now complaining had every opportunity to know the facts. They selected Mr. Byron, and now no one imputes any fault to him. He was a man of high character, and from his reports in the record was thoroughly cognizant of every fact about the estate. Potter could not have deceived Mr. Byron if he had wished to, and there is no evidence that he attempted to do so at any time. They are both dead now, and the plaintiffs, who waited until after they were dead to bring their suit, are met with the presumption that the dead did right. The proof satisfies us that Mrs. Potter was made a feme sole because of the bad habits of her husband, that she might buy in the property and do business in her own name, so that she should not come to want. From the nature of the case, all the creditors must have well understood this when she bought the property and the sales to her were confirmed by the court from time to time.
By section 2519, Ky. St. 1903, no action for relief for fraud or mistake can be brought 10 years after the time of making the contract or the perpetration of the fraud. All the deeds attacked were made more than 10 years before the suit was brought. It is true that limitation is not pleaded. It probably was not pleaded on the idea that the plaintiffs averred that the land was the property of R. G. Potter and was held by N. C. Potter for him, and that, therefore, the statute did not apply. But, however this may be, a court of equity, where the statute of limitations is not applicable for any reason, will still refuse to enforce stale demands. Where the plaintiff has slept upon his rights, where death has removed some of the parties to the transaction, and time has obscured evidence, a court of equity will refuse relief upon the mere lapse of time and the staleness of the claim for the peace of society. In the case at bar we have not only the lapse of time, but other facts of no little force. When these lands were bought by Mrs. Potter 20 years ago or over, or bought by others who assigned their bids to her, it was uncertain what the future would bring forth for timbered lands in eastern Kentucky. Mrs. Potter had faith. In the last five or six years there has been a great advance in the price of such lands, and we think that it is a fair conclusion from this record that, if this advance had not occurred, this suit would not have been brought. The plaintiffs acquiesced in Mrs. Potter buying and holding these lands and paying the taxes on them as long as the lands were low. They then knew every fact that they know now, or had the means to know them. After acquiescence for years in her ownership of the lands, they cannot be permitted when the lands have advanced in price to revoke the election they then made. Their claim is stale, and will not be enforced by the chancellor.
As to the homestead of R. G. Potter which has been in the possession of N. C. Potter since his death, the wife is not affected by the deed of assignment, as she did not sign that instrument, and all such rights in the homestead as she had before continue in her yet. She may claim her homestead in the family residence, and take dower in the other lands. The plaintiffs may have the homestead sold subject to her right of occupancy, or, if she prefers to take dower in it, subject to her right of dower. But in neither case is she liable for rents, as she is entitled to hold "the mansion house, yard, garden, the stable and lot on which it stands, and an orchard, if there is one adjoining any of the premises aforesaid, without charge therefor, until dower is assigned her." On the return of the case such orders may be made in regard to this property as may be proper. Mrs. Potter will recover her cost in the circuit court in the action as the entire cost has been made in the controversy over the property conveyed to her.
Judgment reversed and cause remanded for a judgment dismissing the petition in so far as it seeks to subject any of the property conveyed to N. C. Potter, and for further proceedings consistent herewith.
POTTER ET AL. v. POTTER'S RECEIVER ET AL.
101 S.W. 905, 31 Ky.L.Rptr. 137
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