U.S. Supreme Court
Horbach v. Hill, 112 U.S. 144 (1884)
Horbach v. Hill
Argued October 23, 1884
Decided November 3, 1884
112 U.S. 144
Whether an agreement for a reconveyance of real estate, conveyed by deed in fee simple, on the repayment of the purchase money and the performance of other conditions, is a mortgage is to be determined by the accompanying circumstances which explain the object of the agreement.
A creditor of a grantor of real estate, attacking the conveyance as made to defraud creditors, should show affirmatively that he was a creditor of the grantor when the alleged fraudulent conveyance was made.
This is a suit to set aside a sale of certain real property in Omaha, Nebraska, to John A. Horbach, the defendant in the court below, the appellant here, by one John A. Parker, Senior, on the ground that it was made to hinder, delay, and defraud the latter's creditors, of whom the complainant claims to be one. The material facts, briefly stated, are as follows:
In March, 1871, one John A. Parker, Jr., died at Omaha intestate, possessed of certain unimproved real property in that city. He also held a deed of seventeen other lots there which he had purchased of his father in September, 1870. At the time of the purchase, he executed to his father an agreement stating that, on a final accounting of all business between them, including the purchase of the seventeen lots, he found himself indebted to his father in $8,734, to be paid to him, or to certain creditors to be named, within one year, and agreeing, in case he should be relieved from two certain bonds of $3,000 and upwards, to reconvey the lots to his father for a like consideration, and the expenses incurred on them, the amount to be credited on his indebtedness. He left at his death no personal estate of any value, and his debts were considerable, among others one of over $1,000 to Horbach. His father, who was his sole heir at law and his largest creditor, resided in Virginia, and upon his son's death went to Omaha to attend his funeral. Whilst there, on the 20th of March, 1871, he sold his interest in the estate of his son, and his interest under the chanrobles.com-redchanrobles.com-red
agreement to reconvey the seventeen lots, to Horbach for $6,000, and executed to him a deed of the lots standing in the name of the deceased, and assigned to him the agreement. He also sold and assigned to him the claim against the estate mentioned in the agreement, Horbach agreeing for the claim to pay the debts in Omaha due to himself and others, amounting to a sum not exceeding $2,200.
In May, 1871, Horbach, as a creditor of the estate of the deceased, was appointed its administrator, and qualified. There being no personal effects with which to pay the debts, the real property of the deceased, including the seventeen lots, were sold at auction under orders of the proper court, and were purchased by different parties, one of whom, named Kennedy, bought the seventeen lots. The sales were reported to the court and confirmed. The proceeds were applied in due course of administration, and in November, 1874, the administrator was exonerated by the court from liability, and his bond cancelled. Subsequently Horbach purchased at advanced prices portions of the property thus sold, among others fifteen of the seventeen lots.
In December, 1877, Edward B. Hill, the complainant in this suit, recovered in the District Court of Nebraska a judgment by default against John A. Parker, Sr., for $3,244 and costs, purporting to be owing upon the promissory note described in the petition of the plaintiff. This petition is not in the record, and therefore it does not appear whether Parker was liable as maker or as endorser, or when the note was made, or when it matured. There was no personal service of process upon him, nor did he enter his appearance in the case; the service was by publication. The judgment, reciting that it appearing to the court that the attachment proceedings therein were regular and in conformity to law, ordered the sheriff to sell the real estate attached. What that real estate was does not appear, and that it included the seventeen lots can only be inferred from the fact that under the judgment and order they were sold with other real property and conveyed to the complainant. In August, 1878, this suit was brought by him, claiming title to the premises thus purchased and alleging that the conveyance to Horbach chanrobles.com-redchanrobles.com-red
by John A. Parker, Sr., in March, 1871, was made to hinder, delay, and defraud the latter's creditors; that the administration was taken under an agreement to manage and manipulate the estate for his benefit, and that the sales by the administrator were without consideration and fictitious, being in fact made for himself. It therefore prayed that the conveyance by Parker, Sr., to Horbach be adjudged void, and that the complainant be decreed to be the owner in fee of the property. The averments were traversed by the answer, which also set up the agreement to reconvey the seventeen lots. A replication being filed, testimony was taken. The case was then referred to a master "to report on the law and facts as shown by the pleadings and proofs." He held and reported that, except as to the seventeen lots, the purchases at the administrator's sale were valid; that as to them the complainant acquired title under his attachment proceedings; that the deceased, as to them, was mortgagee; that the deed of Parker, Sr., to Horbach was made when he was largely in debt to the complainant and others, and for the purpose of hindering, delaying, and defrauding his creditors, and that Horbach knew this; that the purchase of those lots by Kennedy at the administrator's sale was in good faith, but with notice that the title of the deceased was that of mortgagee only, and that hence no title was acquired, and that no title passed through Kennedy to Horbach because of like notice, and therefore the complainant was entitled to a decree to quiet his title. Exceptions were taken to the report, but they were overruled, and it was confirmed and a decree entered adjudging that the seventeen lots were at the commencement of the suit, the property of the complainant, and directing the defendant to convey the same to him, and, in default thereof, that the decree should stand in lieu of such conveyance, and that the defendant should be barred of all interest in the property, and deliver possession thereof to the complainant. From this decree this appeal is brought. chanrobles.com-redchanrobles.com-red