In all cases of assignments for the benefit of creditors, where the sole or surviving assignee has died or moved beyond the jurisdiction of the courts of the state, the superior courts of this state shall have full power and authority, upon the petition of two or more of the parties interested in such assignment and on such notice as the court shall direct, in a summary manner, to appoint a new assignee or assignees in the place of the deceased or nonresident assignee; and the new assignee shall have all the authority and responsibilities of the deceased or nonresident assignee; and all laws or enactments shall be as applicable and in as full force in respect to the new as to the old assignee; and the court may in its discretion require a bond and security of such assignee.
(Ga. L. 1861, p. 32, § 1; Code 1868, § 2296; Code 1873, § 2322; Code 1882, § 2322; Civil Code 1895, § 3166; Civil Code 1910, § 3746; Code 1933, § 28-320.)
RESEARCH REFERENCES
Am. Jur. 2d.
- 6 Am. Jur. 2d, Assignments for Benefit of Creditors, § 86.
C.J.S.- 21 C.J.S., Creditor and Debtor, § 43 et seq.
ALR.
- Death of principal defendant as abating or dissolving garnishment or attachment, 21 A.L.R. 272; 131 A.L.R. 1146.
Jurisdiction to garnish debt as affected by previous assignment by principal defendant to a nonresident served constructively, 39 A.L.R. 1465.
ARTICLE 4 UNIFORM VOIDABLE TRANSACTIONS ACT
Cross references.
- Provision that plaintiff may state claim for money and claim to set aside fraudulent conveyance without first obtaining judgment establishing claim for money, § 9-11-18.
Form of complaint on claim for debt and to set aside fraudulent conveyance, § 9-11-113.
Rights of unsecured creditors of seller of goods which have been identified to contract for sale, § 11-2-402.
Attack by creditors on transactions between husband and wife, § 19-3-10.
Gifts void as against creditors and bonafide purchasers, § 44-5-88.
Wrongful sale or removal of mortgaged property, § 44-14-6.
Editor's notes.- Ga. L. 2015, p. 996, § 1-1/SB 65, not codified by the General Assembly, provides that: "(a) This Act shall be known and may be cited as the 'Debtor-Creditor Uniform Law Modernization Act of 2015.'
"(b) To promote consistency among the states, it is the intent of the General Assembly to modernize certain existing uniform laws promulgated by the Uniform Law Commission affecting debtor and creditor rights, responsibilities, and relationships and other federally recognized laws affecting such rights, responsibilities, and relationships."
Ga. L. 2015, p. 996, § 7-1(d)/SB 65, not codified by the General Assembly, provides that: "(d) The amendments made by Parts 4A and 4B of this Act shall:
"(1) Apply to a transfer made or obligation incurred on or after July 1, 2015;
"(2) Not apply to a transfer made or obligation incurred before July 1, 2015;
"(3) Not apply to a right of action that has accrued before July 1, 2015; and
"(4) For purposes of this subsection, a transfer is made and an obligation is incurred at the time provided in Code Section 18-7-76."
Law reviews.- For article surveying domestic relations law in 1984-85, see 37 Mercer L. Rev. 221 (1985). For article, "Preparing the Georgia Farmer (or Other Small Entrepreneur) for Bankruptcy," see 22 Ga. St. B.J. 186 (1986). For note discussing fraudulent conveyances by debtors, see 12 Ga. L. Rev. 814 (1978). For comment on Downs v. Powell, 215 Ga. 62, 108 S.E.2d 715 (1959), see 11 Mercer L. Rev. 241 (1959).
JUDICIAL DECISIONSANALYSIS
General Consideration
Editor's notes.
- In light of the similarity of the statutory provisions, decisions under former Civil Code 1863, §§ 1952 and 1954, former Code 1873, §§ 1944 and 1952, former Civil Code 1895, §§ 2687, 2726, 2727, and 2695, former Civil Code 1910, §§ 3220, 3223, 3224, 3225 and 3230, former Code 1933, §§ 28-101, 28-102, 28-103, 28-104, 28-201, 28-202 and 28-203, and former Code Sections §§ 18-2-20 through18-2-25 are included in the annotations for this article.
Fraudulent Conveyance Act was based on the statute of Elizabeth (13 Eliz. Chap. 5). Chattanooga Fed. Sav. & Loan Ass'n v. Northwest Recreational Activities, Inc., 4 Bankr. 36 (Bankr. N.D. Ga. 1980) (decided under former Code 1933, § 28-201).
For discussion of history of former Code 1868, § 1944, see Westmoreland v. Powell, 59 Ga. 256 (1877) (decided under former Code 1868, § 1944); McDowell v. McMurria, 107 Ga. 812, 33 S.E. 709, 73 Am. St. R. 155 (1899); Boswell v. Boswell, 147 Ga. 734, 95 S.E. 247 (1918) (decided under former Civil Code 1895, § 2695);(decided under former Civil Code 1910, § 3224).
Former Civil Code 1910, § 3224 referred to creditors at time of conveyance. Mitchell v. Langley, 148 Ga. 244, 96 S.E. 430 (1918) (decided under former Civil Code 1910, § 3224); Gormley v. Askew, 177 Ga. 554, 170 S.E. 674 (1933);(decided under former Civil Code 1910, § 3224).
Applicability.
- Fraudulent Conveyance Act applied to conveyance of own property intended to delay or defraud, known to taker. Jones v. Foster, 150 Ga. 277, 103 S.E. 491 (1920) (decided under former Civil Code 1910, § 3224).
Before conveyance by insolvent debtor can be attacked by debtor's creditor, it must appear that the insolvent debtor actually parted with some valuable asset which belonged to the debtor, and which, if title had been retained, might have been subjected to debts. S.T. & W.A. Dewees Co. v. Paul B. Carter & Co., 190 Ga. 68, 8 S.E.2d 376 (1940) (decided under former Code 1933, § 28-201).
This rule applies with equal force in determining character and the purpose of the transaction between an individual and a corporation controlled by the individual. S.T. & W.A. Dewees Co. v. Paul B. Carter & Co., 190 Ga. 68, 8 S.E.2d 376 (1940) (decided under former Code 1933, § 28-201).
As to claims against one corporation whose property has been purchased by another, the general law would apply, prohibiting any transaction in fraud of creditors, and preventing an assignment by an insolvent wherein it or stockholders reserved any benefit or trust. Hawkins v. Central of Ga. Ry., 119 Ga. 159, 46 S.E. 82 (1903) (decided under former Civil Code 1895, § 2695); White v. Atlanta, B. & A.R.R., 5 Ga. App. 308, 63 S.E. 234 (1908);(decided under former Civil Code 1895, § 2695).
Former § 18-2-22 did not apply to an assent to probate of a will since such assent did not operate as an assignment or conveyance of any property interest subject to execution or levy by the plaintiff because the plaintiff's judgment was not entered until several months after the assent was given. Moody v. Davis, 234 Ga. App. 146, 505 S.E.2d 844 (1998) (decided under former § 18-2-22).
Word "others" as used in the phrase "creditors and others" includes plaintiffs with claims against debtors "liable as tortfeasors, or otherwise . . . for an unascertained damage to person or property, so far as fraudulent conveyances are concerned." Rolleston v. Cherry, 237 Ga. App. 733, 521 S.E.2d 1, cert. denied, 528 U.S. 1046, 120 S. Ct. 580, 145 L. Ed. 2d 482 (1999) (decided under former § 18-2-22); Bonner v. Smith, 247 Ga. App. 419, 543 S.E.2d 457 (2000);(decided under former § 18-2-22).
Plaintiff in trover is protected. Banks v. McCandless, 119 Ga. 793, 47 S.E. 332 (1904) (decided under former Civil Code 1895, § 2687).
Conditions for transfer invalid.- Transfer is invalid against creditors, and therefore a trustee in bankruptcy if: (1) debtor conveys property with intent to delay or defraud debtor's creditors; and (2) recipient of property knows of debtor's intention to defraud. Loeb v. Dante, 1 Bankr. 547 (Bankr. N.D. Ga. 1979) (decided under former Code 1933, 28-201).
Invalidation.- Invalidation is permitted whenever: (1) bona fide creditor of debtor exists at time of transfer; (2) debtor and transferee intended conveyance as a gift rather than a sale; and (3) debtor is insolvent at time of transfer or rendered insolvent as a result of transfer. Loeb v. Dante, 1 Bankr. 547 (Bankr. N.D. Ga. 1979) (decided under former Code 1933, § 28-201).
Meaning of "delay."- "Delay" cannot be construed to include situations in which debtor files reorganization petition in bankruptcy and obtains protection of automatic stay to suspend creditors from recovering possession of collateral; the automatic stay of an otherwise proper petition is not a delay prohibited or contemplated. Chattanooga Fed. Sav. & Loan Ass'n v. Northwest Recreational Activities, Inc., 4 Bankr. 36 (Bankr. N.D. Ga. 1980) (decided under former Code 1933, § 28-201).
Distinction between equitable and legal remedies.
- Equitable remedy of setting aside the conveyance for satisfaction of the original debt is completely different from the right at law to recover damages for the fraud of the conveyance itself, and judgment creditors are not required to give up their right to satisfy the judgment debt by getting the conveyance set aside, in order to get damages for the fraud. Kesler v. Veal, 182 Ga. App. 444, 356 S.E.2d 254, modified on other grounds, 257 Ga. 677, 362 S.E.2d 214 (1987) (decided under former § 18-2-22).
Remedy available to one reducing claim to judgment lien.- Former Code 1933, §§ 28-101, 28-102, 28-201, and 28-202 provided creditors with the right to set aside fraudulent transfers, and this remedy was available to any creditor at the time of transfer who thereafter reduces the creditor's claim to a judgment lien. United States v. Hickox, 356 F.2d 969 (5th Cir. 1966) (decided under former Code 1933, §§ 28-101, 28-102, 28-201, and 28-202 ).
Time of acquisition of lien.
- Creditor, who brings suit to prevent a debtor from carrying into effect a threat to convey away all of the debtor's property for purpose of defeating claims of such creditor, acquires a lien from commencement of suit to prevent such fraudulent conveyance, and after service of process. Law v. Coleman, 173 Ga. 68, 159 S.E. 679 (1931) (decided under former Civil Code 1910).
Status of trustee in bankruptcy.- Condition precedent to filing action was that only judgment creditors can void certain acts. Section 544(b) of the Bankruptcy Code provides trustee with status of a hypothetical judgment creditor. Therefore, this condition precedent is satisfied in suit by trustee alleging fraudulent conveyance of real property by debtor to debtor's spouse. Pettigrew v. Graham, 16 Bankr. 606 (Bankr. N.D. Ga. 1981) (decided under former Code 1933, § 28-201).
Remedy under bankruptcy law.
- When a creditor has been injured by fraudulent or other willful misconduct by the debtor, the appropriate remedy under bankruptcy law as to the debtor is an exception to or a denial of a discharge. As to another creditor which may have willfully participated in the misconduct, the appropriate remedy under bankruptcy law is an adjudication of the relative priorities between the wrongdoer and the other innocent creditors. Sandersville Prod. Credit Ass'n v. Douthit, 47 Bankr. 428 (M.D. Ga. 1985) (decided under former § 18-2-22).
Denial of discharge in bankruptcy.
- Determination that bankruptcy debtor made the subject transfers to the debtor's wife in an intentional effort to perpetrate fraud and conceal assets may constitute a sufficient legal basis for denying the debtor's discharge pursuant to 11 U.S.C. § 727(a)(2)(A). Sikes v. Norton, 185 Bankr. 945 (Bankr. N.D. Ga. 1995) (decided under former § 18-2-22).
Right of trustee in bankruptcy to avoid transfer.
- Trustee in bankruptcy may avoid any transfer of property by bankrupt which any creditor of bankrupt might have avoided; and this right of trustee extends to all transfers made and accepted in fraud of creditors, regardless of whether transactions occurred within four months prior to bankruptcy or not. Sullivan v. Ginsberg, 180 Ga. 840, 181 S.E. 163 (1935) (decided under former Code 1933, § 28-201).
When an insolvent debtor did not receive equivalent value in exchange for a transfer, the transfer could be avoided. Ragsdale v. South Fulton Mach. Works, Inc. (In re Whitacre Sunbelt, Inc.), 200 Bankr. 422 (Bankr. N.D. Ga. 1996) (decided under former § 18-2-22).
In spite of fraudulence of conveyance, subsequent creditor who sustains no harm is denied relief.
- One may make a conveyance with actual intent to defraud future creditor or to defeat debt which, though contemplated, is not yet in actual existence; and, unless creditor is hurt by such conveyance, relief will be denied. Roach v. Roach, 212 Ga. 40, 90 S.E.2d 423 (1955) (decided under former Code 1933).
Tort claim against vendor.
- One having tort claim against vendor may, in proper case, attack a conveyance as fraudulent. Foremost Dairies, Inc. v. Kelley, 51 Ga. App. 722, 181 S.E. 204 (1935) (decided under former Code 1933, § 28-203).
Alimony claims.
- Words "and others" appearing in former Code 1933, § 28-201 bring a claim for alimony within the statute's provisions. McGahee v. McGahee, 204 Ga. 91, 48 S.E.2d 675 (1948) (decided under former Code 1933, § 28-201).
One suing for alimony may obtain relief against fraudulent conveyance by spouse, as such person, if not a creditor in the ordinary sense, is within phrase "and others." Von Kamp v. Gary, 204 Ga. 875, 52 S.E.2d 591 (1949) (decided under former Code 1933, § 28-201).
Conveyances in pursuance of common scheme.
- Fact that value of property covered by several conveyances was largely in excess of debt due petitioner did not afford ground for demurrer as all of the conveyances were executed in pursuance of a common scheme and could be attacked without reference to the amount of the judgment creditor's debt as compared to the value of property conveyed. Peoples Loan Co. v. Allen, 199 Ga. 537, 34 S.E.2d 811 (1945) (decided under former Code 1933, § 28-201).
Deed to secure debt also subject to attack.
- Conveyance of property for present valuable consideration may be void as to creditors and a deed to secure debt is as much open to attack for fraud as an absolute conveyance. Burkhalter v. Glennville Bank, 184 Ga. 147, 190 S.E. 644 (1937) (decided under former Code 1933, § 28-201); Peoples Loan Co. v. Allen, 199 Ga. 537, 34 S.E.2d 811 (1945);(decided under former Code 1933, § 28-201).
Plaintiff claiming equitable title and contending defendant's conveyance was fraudulent.
- Plaintiff suing for land on equitable title, and contending that defendant's conveyance was fraudulent and voluntary, held not to be within the statutes. Wommack v. Wommack, 150 Ga. 401, 104 S.E. 421 (1920) (decided under former Civil Code 1910, § 3224).
Sale under power of land set aside as year's support.
- Former Civil Code 1910, § 3220 was inapplicable to restrain sale under power in security deeds, when equity in lands was set apart as year's support. Redman v. Thaxton, 167 Ga. 646, 146 S.E. 445 (1929) (decided under former Civil Code 1910, § 3220).
Effect on parties of deed void as to creditors.
- Deed void as to creditors may, nevertheless, be good between the parties. Jones v. Dougherty, 10 Ga. 273 (1851) (decided under former law).
Deed made to defraud creditors, though void as to creditors was good between grantor and grantee, and former after executing such deed has no title to property thereby conveyed, and therefore cannot have title set apart and exempted as a homestead under the laws of this state. McDowell v. McMurria, 107 Ga. 812, 33 S.E. 709, 73 Am. St. R. 155 (1899) (decided under former Civil Code 1895, § 2695).
Conveyances, though void as to creditors and other persons designated, are good between parties to the conveyances and all persons other than creditors or persons having rightful claims against the grantor for which those people are entitled to judgment. Gunn v. Chapman, 166 Ga. 279, 142 S.E. 873 (1928) (decided under former law).
Under the 1882 provisions, the law was designed solely to protect rights of creditors, and consequently rendered a fraudulent transfer void only as against them, and make no provision whatever in regard to its effect between the parties to the transfer. McCranie v. Cobb, 174 Ga. 370, 162 S.E. 692 (1932) (decided under former law).
Though deed be made to defraud creditors, neither vendor nor those in privity with vendor will be allowed to set up this fact to defeat action of ejectment brought by vendee as the deed is good as between parties thereto and those in privity with them, though void as to creditors. McCranie v. Cobb, 174 Ga. 370, 162 S.E. 692 (1932) (decided under former law).
When deed is made to defraud creditors, it is good as between parties thereto and those in privity with them, though void as to creditors. Fuller v. Fuller, 213 Ga. 103, 97 S.E.2d 306 (1957) (decided under former law).
Grantor of fraudulent conveyance may not have it set aside.
- Courts will not set aside a conveyance to hinder, delay, or defraud creditors at instance of grantor. Watkins v. Nugen, 118 Ga. 375, 45 S.E. 260 (1903) (decided under former law); Tune v. Beeland, 131 Ga. 528, 62 S.E. 976 (1908);(decided under former law).
Action by administrator of grantor of fraudulent conveyance.
- When a debtor, to defraud creditors conveys the debtor's property to another, the debtor's administrator cannot maintain an equitable action against such grantee to recover the property for the purpose of paying the creditors of the decedent. Crosby v. De Graffenreid, 19 Ga. 290 (1856) (decided under former law); Boswell v. Boswell, 147 Ga. 734, 95 S.E. 247 (1918);(decided under former law).
Applicability of doctrine that grantor in fraudulent deed cannot question deed's validity.
- Doctrine that grantor in deed made for purpose of hindering, delaying, or defrauding the debtor's creditors, or one claiming in the debtor's right, cannot be heard to question the validity of such deed, does not apply when the deed was not in fact delivered. Allen v. Bemis, 193 Ga. 556, 19 S.E.2d 516 (1942) (decided under former law); Fuller v. Fuller, 211 Ga. 201, 84 S.E.2d 665 (1954);(decided under former law).
Cited in Hightower v. Mustian, 8 Ga. 506 (1850); Burnside v. Terry, 51 Ga. 186 (1874); Planters' & Miners' Bank v. Willeo Cotton Mills, 60 Ga. 168 (1878); Heflin v. Kiser & Co., 88 Ga. 306, 14 S.E. 585 (1892); Lamkin v. Clary, 103 Ga. 631, 30 S.E. 596 (1898); Ernest v. Merritt, 107 Ga. 61, 32 S.E. 898 (1899); Oglesby v. Walton & Co., 118 Ga. 203, 44 S.E. 990 (1903); Hinkle v. James Smith & Son, 133 Ga. 255, 65 S.E. 427 (1909); Fourth Nat'l Bank v. Consolidated Steamboat Co., 12 Ga. App. 864, 76 S.E. 1057 (1913); Pincus v. S. H. Meinhard & Bro., 139 Ga. 365, 77 S.E. 82 (1913); Adams v. First Nat'l Bank, 147 Ga. 470, 94 S.E. 568 (1917); Jones v. Foster, 150 Ga. 277, 103 S.E. 491 (1920); Mobley v. Merchants & Planters Bank, 157 Ga. 658, 122 S.E. 233 (1924); Jackson v. B.T. Kight & Sons, 159 Ga. 584, 126 S.E. 379 (1925); Gunn v. Chapman, 166 Ga. 279, 142 S.E. 873 (1928); Davenport & Broadhurst v. Wood, 166 Ga. 365, 143 S.E. 398 (1928); Young v. Cochran Banking Co., 166 Ga. 877, 144 S.E. 652 (1928); Peck v. Calhoun, 38 Ga. App. 764, 145 S.E. 528 (1928); Seagraves v. Couch & Jackson, 163 Ga. 38, 147 S.E. 61 (1929); Walker v. Martin, 170 Ga. 447, 153 S.E. 41 (1930); Parker v. Pender, 174 Ga. 579, 163 S.E. 506 (1932); Rowe v. Cole, 176 Ga. 592, 168 S.E. 882 (1933); Bandy v. Taylor Iron Works & Supply Co., 177 Ga. 455, 170 S.E. 368 (1933); Strobel v. Gormley, 50 Ga. App. 358, 178 S.E. 192 (1935); Stonecypher v. Elliott, 181 Ga. 438, 182 S.E. 587 (1935); Killebrew v. Smith, 182 Ga. 117, 184 S.E. 714 (1936); Ayer v. First Nat'l Bank & Trust Co., 182 Ga. 765, 187 S.E. 27 (1936), overruled on other grounds, Worthen v. State, 2019 Ga. LEXIS 22 (Ga. 2019); Segars v. Virginia-Carolina Chem. Corp., 56 Ga. App. 597, 193 S.E. 786 (1937); New England Mut. Life Ins. Co. v. Childs, 185 Ga. 198, 194 S.E. 561 (1937); Tucker v. Talmadge, 186 Ga. 798, 198 S.E. 726 (1938); Armour Fertilizer Works v. Maxwell, 186 Ga. 801, 199 S.E. 120 (1938); Owen v. S.P. Richards Paper Co., 188 Ga. 258, 3 S.E.2d 660 (1939); Beavers v. Le Sueur, 188 Ga. 393, 3 S.E.2d 667 (1939); Dwight v. Acme Lumber & Supply Co., 189 Ga. 473, 6 S.E.2d 586 (1939); Cunningham v. Avakian, 192 Ga. 391, 15 S.E.2d 493 (1941); Caldwell v. Northwest Atlanta Bank, 194 Ga. 370, 21 S.E.2d 619 (1942); First Nat'l Bank v. Carmichael, 198 Ga. 309, 31 S.E.2d 811 (1944); Stubbs v. Fulton Nat'l Bank, 146 F.2d 558 (5th Cir. 1945); United States v. Phillips, 59 F. Supp. 1006 (S.D. Ga. 1945); Hoard v. Maddox, 202 Ga. 274, 42 S.E.2d 744 (1947); Williams v. Russell, 82 Ga. App. 529, 61 S.E.2d 567 (1950); Mitchell v. Waller, 83 Ga. App. 7, 62 S.E.2d 383 (1950); Bank of LaFayette v. Giles, 208 Ga. 674, 69 S.E.2d 78 (1952); Johnston v. Clement A. Evans & Co., 111 Ga. App. 659, 143 S.E.2d 38 (1965); Kamlapat v. Purvis-Wade Carpet Mills, 112 Ga. App. 781, 146 S.E.2d 138 (1965); Leachman v. Cobb Dev. Co., 229 Ga. 207, 190 S.E.2d 537 (1972); United Bldg. Supply, Inc. v. Atlanta Dry Wall Co., 231 Ga. 554, 203 S.E.2d 159 (1974); Valley View Church of God in Christ, Inc. v. King, 236 Ga. 337, 223 S.E.2d 701 (1976); Jones v. Milligan, 238 Ga. 440, 233 S.E.2d 202 (1977); American Nat'l Bank & Trust Co. v. Davis, 241 Ga. 333, 245 S.E.2d 291 (1978); Ingram v. Warren, 244 Ga. 189, 259 S.E.2d 448 (1979); Silverman v. Morton Gruber & Assocs., 244 Ga. 396, 260 S.E.2d 92 (1979); Nicholson v. Merken, 477 F. Supp. 97 (N.D. Ga. 1979); Duncan v. First Nat'l Bank, 597 F.2d 51 (5th Cir. 1979); Southern Educators Assocs. v. Silver, 245 Ga. 520, 284 S.E.2d 3 (1981); Aiken v. Citizens & S. Bank, 249 Ga. 481, 291 S.E.2d 717 (1982); Sheppard v. Tribble Heating & Air Conditioning, Inc., 163 Ga. App. 732, 294 S.E.2d 572 (1982); Pettigrew v. Graham, 747 F.2d 1383 (11th Cir. 1984); Artrac Corp. v. Austin Kelley Adv., Inc., 197 Ga. App. 772, 399 S.E.2d 529 (1990); Dime Savs. Bank v. Sandy Springs Assocs., 261 Ga. 485, 405 S.E.2d 491 (1991); Ray v. Atkins, 205 Ga. App. 85, 421 S.E.2d 317 (1992); In re Munford, Inc., 172 Bankr. 404 (Bankr. N.D. Ga. 1993); Merrell v. Beckwith, 263 Ga. 779, 439 S.E.2d 488 (1994); Smith v. Travis Pruitt & Assocs., 265 Ga. 347, 455 S.E.2d 586 (1995); Dearing v. A.R. III, Inc., 266 Ga. 301, 466 S.E.2d 565 (1996); Integon Indem. Corp. v. Henry Medical Ctr., Inc., 235 Ga. App. 97, 508 S.E.2d 476 (1998); Brown v. Cooper, 237 Ga. App. 348, 514 S.E.2d 857 (1999); Hadlock v. Anderson, 246 Ga. App. 291, 540 S.E.2d 282 (2000).
Construction
Liberal construction.
- Though this provision is strict, courts will give liberal construction to the statute's provisions. Duncan v. Freeman, 152 Ga. 332, 110 S.E. 5 (1921) (decided under former Code 1863, § 1954).
Construction in pari materia with
§ 18-2-23. - Former Civil Code 1910, §§ 3224 and 3225 (see now O.C.G.A. §§ 18-2-23 and18-2-59), the innocent subsequent purchaser statute, being in pari materia, were to be construed together. Warren v. Citizens Nat'l Bank, 145 Ga. 503, 89 S.E. 520 (1916); FDIC v. United States, 654 F. Supp. 794 (N.D. Ga. 1986) (decided under former O.C.G.A. § 18-2-23).
Direct cause of action against transferee.
- Former O.C.G.A. § 18-2-22 does not, either by the statute's terms or by implication, create a direct cause of action in tort against the transferee for the transferor's negligence in a completely separate transaction. Brown Transp. Corp. v. Street, 194 Ga. App. 717, 391 S.E.2d 699 (1990) (decided under former O.C.G.A. § 18-2-22).
Basis for general and punitive damages.
- If there is evidence of bad faith, actual fraud, or conspiracy on the part of the taking party or transferee in receiving assets fraudulently conveyed to the transferee by the debtor, an award of general and punitive damages against the transferee may be upheld. Lawson v. Athens Auto Supply & Elec., Inc., 200 Ga. App. 609, 409 S.E.2d 60, cert. denied, 200 Ga. App. 895, 409 S.E.2d 60 (1991) (decided under former O.C.G.A. § 18-2-22).
Assignment for Benefit of Creditors
Creditor refusing to accept assignment as satisfaction.
- Assignment by insolvent debtor for the benefit of the debtor's creditors, provided they would take property thereby conveyed in full satisfaction of their claims, is not binding on a creditor who refuses to accept the property. McBride & Co. v. Bohanan, 50 Ga. 527 (1874) (decided under former law); Miller v. Conklin & Co., 17 Ga. 430, 63 Am. Dec. 248 (1855);(decided under former law).
Assignment for benefit of some creditors to exclusion of others.
- Insolvent debtor may make assignment of the debtor's property in trust, bona fide, for benefit of one or more creditors to exclusion of others, provided no trust or benefit is reserved to assignor, or any person for the debtor. Embry & Fisher v. Clapp, 38 Ga. 245 (1868) (decided under former law).
Insolvent debtor may make assignment of property in trust, for benefit of one or more creditors, to exclusion of others, so long as no trust or benefit is reserved for the assignor, or any person for the debtor. Embry & Fisher v. Clapp, 38 Ga. 245 (1868) (decided under former law).
Validity of out-of-state assignment of property located within state.
- Assignment by debtor for equal benefit of all debtor's creditors was valid and violated no law or public policy of this state. Therefore, such assignment lawfully made in South Carolina by a resident thereof will pass personal assets found in Georgia. Miller v. Kernaghan, 56 Ga. 155 (1876) (decided under former law).
Reservation of Benefit or Trust
Subject to attack by interested party in direct or collateral proceeding.
- Assignment or transfer by insolvent debtor of any kind or character of property, when any trust or benefit is reserved to an assignor, is fraudulent and void. Being void, such transfer or assignment may be attacked by a party interested, in either a direct or collateral legal proceeding, when the proceeding is sought to be set up. Coleman & Burden Co. v. Rice, 115 Ga. 510, 42 S.E. 5 (1902) (decided under former Civil Code 1895, § 2695).
Retention of life estate in conveyed property invalidates conveyance.
- If it be agreed between an insolvent debtor and purchaser of property from a debtor, that the debtor shall remain in possession thereof during the debtor's life, it is such a reservation of benefit to the debtor as may avoid conveyance. Barber v. Terrell, 54 Ga. 146 (1875) (decided under the Act of 1818).
Agreement to return grantor's property if debt paid.
- Fact that grantor may have executed deed to claimant with understanding that if grantor paid the indebtedness to claimant "he could get his land back" was not such a reservation of benefit in grantor as would invalidate the conveyance. Johnson v. Sherrer, 185 Ga. 340, 195 S.E. 149 (1938) (decided under former Code 1933, § 28-201).
Deed to creditor containing reversionary clause.
- Stipulation in deed by debtor to creditor stating: "It is understood that should said grantee depart this life before grantor, then above-described property is to revert back to said grantor and become his property as if this deed had not been made," did not render the deed void as being repugnant. Davie v. Tanner, 150 Ga. 770, 105 S.E. 355 (1920) (decided under former Civil Code 1910, § 3224).
Assignment with provision requiring return of surplus is valid.
- Assignment by insolvent bank to pay existing debt to creditor is not void because the amount of effects assigned is larger than would be reasonably sufficient to pay the debt and because there is a stipulation that the excess shall be returned to the bank. Carey v. Giles, 10 Ga. 9 (1851) (decided under the Act of 1818).
Deed to land given by insolvent debtor to creditor in trust to secure payment of debt, which deed provides that if debt is not paid in four months creditor may sell land at public outcry, and reimburse the creditor out of proceeds for the debtor's debt, cost, and expenses, and that the debtor is to pay balance, if any, to grantor, is not, on account of such provision for payment of balance, void. The law would give that direction to the balance without the provision. Lay v. Seago, 47 Ga. 82 (1872) (decided under the Act of 1818).
Loan with pledged collateral when collateral value exceeded debt.
- When transaction was in nature of a loan and pledge of collateral to secure the loan, although amount of collateral exceeded amount of debt it was intended to secure, no such prohibited trust was thereby created. Booth v. Atlanta Clearing-House Ass'n, 132 Ga. 100, 63 S.E. 907 (1909) (decided under the Act of 1818).
Transaction purporting to secure creditor for money advanced to named person.
- When security deed involved was not in trust or for benefit of or on behalf of creditors, but was a transaction purporting to secure a creditor for money stated to have been advanced or loaned to a named person, it was not such a transaction as is declared to be void. Jones v. Edwards, 177 Ga. 723, 171 S.E. 285 (1933) (decided under former Civil Code 1910, § 3223).
Execution of release of retained benefits and acceptance by assignee.
- Even if assignment, as originally executed, was violative of provisions it would not be so after the execution of endorsement releasing benefit and its acceptance by assignee. John J. Cohen & Sons v. Summers, 54 Ga. 501 (1875) (decided under former Civil Code 1863, § 1952).
Transfer of a mortgage to an alimony trust for the benefit of assignor's wife who was seeking a divorce was a fraudulent transfer under the circumstances of the case. FDIC v. United States, 654 F. Supp. 794 (N.D. Ga. 1986) (decided under former O.C.G.A. § 18-2-23).
Bona Fide Purchasers
Must be without notice or grounds for reasonable suspicion.
- To be protected, purchaser must be without notice or grounds for reasonable suspicion - not simply without knowledge. Nicol & Davidson v. Crittenden, 55 Ga. 497 (1875) (decided under former Civil Code 1863, § 1952).
Bona fide purchaser holding under fraudulent conveyance.
- Law protects bona fide purchasers even when those purchasers hold under fraudulent conveyance, when those purchasers have purchased for a valuable consideration and without notice or reasonable grounds for suspicion. Thornton v. Carver, 80 Ga. 397, 6 S.E. 915 (1888) (decided under former law).
Bona fide purchaser, without notice of promissory note and mortgage to secure the note, who buys before the debt becomes due, is protected against defense that mortgage was made by the debtor in anticipation of bankruptcy and to defraud the debtor's creditors. Murray & Co. v. Jones, 50 Ga. 109 (1873) (decided under former law).
Innocent purchaser at sale intended to defraud creditors not affected by fraud of seller, though property be attached in purchaser's hands before it is paid for, and before negotiable notes given for price have passed to innocent holders. Nicol & Davidson v. Crittenden, 55 Ga. 497 (1875) (decided under former Civil Code 1863, § 1952).
Bona fide sale without fraudulent intent not invalid.
- Bona fide sale of property, not made to hinder, delay, or defraud creditors, is not rendered invalid because vendor may have been insolvent at time. Burkhalter v. Glennville Bank, 184 Ga. 147, 190 S.E. 644 (1937) (decided under former Code 1933, § 28-201).
Bona fide conveyance by debtor is not void because made when insolvent, and this is so with respect to conveyances by corporations and artificial persons as well. Thornton v. Lane, 11 Ga. 459 (1852) (decided under former law); Hadden v. McQueen, 138 Ga. 406, 75 S.E. 333 (1912);(decided under former law).
Purchaser of very inconsiderable portion of insolvent debtor's property.
- Rule that sale of all of insolvent debtor's property is a badge of fraud does not apply in contest between creditors and one who has purchased a very inconsiderable portion thereof, especially when enough was left, at the time, to pay debts. Scott v. Winship, 20 Ga. 429 (1856) (decided under former law).
Fraudulent Intent - Generally
Party relying on former Code 1933, § 28-201) must establish two elements: (1) the requisite intent of the grantor; and (2) grantee's knowledge of grantor's intent; the second element may be established either by proof of actual knowledge or by proof of circumstances sufficient to put grantee on inquiry. Stokes v. McRae, 247 Ga. 658, 278 S.E.2d 393 (1981) (decided under former Code 1933, § 28-201).
Proof of bad faith, actual fraud, or conspiracy required.
- Legislature did not intend the taking party to be liable for general and punitive damages based solely upon the fraudulent conveyance without proof of bad faith, actual fraud, or conspiracy on the party's part. Kesler v. Veal, 257 Ga. 677, 362 S.E.2d 214 (1987) (decided under former O.C.G.A. § 18-2-22).
Act done by debtor merely to delay creditor may amount to fraud. Von Kamp v. Gary, 204 Ga. 875, 52 S.E.2d 591 (1949) (decided under former Code 1933, § 28-101).
Badges of fraud do not in themselves constitute fraud; but are only signs or indicia from which it may be inferred as a matter of evidence; and they are subject to explanation. Burkhalter v. Glennville Bank, 184 Ga. 147, 190 S.E. 644 (1937) (decided under former Code 1933, § 28-201).
Fraudulent intent to be inferred from facts.
- It is impossible that a sale can defraud creditors, unless the sale was made with fraudulent intent; and the nature of intent will not be presumed as a matter of law, but must be inferred by the jury from the facts in evidence. Nicol & Davidson v. Crittenden, 55 Ga. 497 (1875) (decided under former Civil Code 1863, § 1952); Almand v. Thomas, 148 Ga. 369, 96 S.E. 962 (1918);(decided under former law).
Inference or presumption of fraud.
- That a given act was followed necessarily by delay to creditors, however strong a circumstance to be weighed by the jury, is not ground for presuming as a matter of law that it was intended to have that effect. Nicol & Davidson v. Crittenden, 55 Ga. 497 (1875) (decided under former Civil Code 1863, § 1952).
Fraud may be inferred from sale pending litigation and from vendor's retention of property. Bozikis v. Anestos, 33 Ga. App. 422, 126 S.E. 555 (1925) (decided under former Civil Code 1910, § 3224).
Insolvency of the debtor is determined by ascertaining whether the debtor retained sufficient assets to satisfy the debtor's obligations after the transfers. Rolleston v. Cherry, 237 Ga. App. 733, 521 S.E.2d 1, cert. denied, 528 U.S. 1046, 120 S. Ct. 580, 145 L. Ed. 2d 482 (1999) (decided under former O.C.G.A. § 18-2-22).
Insolvency of debtor need not be shown. Anderson Oil Co. v. Benton Oil Co., 246 Ga. 304, 271 S.E.2d 207 (1980) (decided under former Code 1933, § 28-201).
Applicability of former paragraph (2).
- Former Code 1933, § 28-201(2) may be applied in a proper case either to a deed based on valuable consideration or to a voluntary conveyance, regardless of whether the grantor was solvent or insolvent. Von Kamp v. Gary, 204 Ga. 875, 52 S.E.2d 591 (1949) (decided under former Code 1933, § 28-201).
Conveyance by insolvent intended to defraud creditors.
- Creditor, or third person, may pay full and fair price to insolvent debtor for property, yet if transaction was made with intention to delay or defraud creditors of the creditors' rights, it is void as to those creditors. Peck v. Land, 2 Ga. 1 (1847) (decided under the Act of 1818).
Circumstances sufficient to set aside fraudulent conveyance.
- To invalidate conveyance of property as one made with intent to delay or defraud creditors, it is essential that it was made with such intention on the part of the debtor and that such intention be known to the party to whom conveyance is made. Pekor-Cook Jewelry Co. v. Schwartz, 67 Ga. App. 738, 21 S.E.2d 440 (1942) (decided under former Code 1933, § 28-201).
When a sale, other than between husband and wife, is attacked as having been made to hinder, delay, or defraud creditors, it is necessary to show that the grantor had such intention in making the sale, and that the intention was known to the grantee or circumstances were sufficient to put the grantee on inquiry. Avary v. Avary, 202 Ga. 22, 41 S.E.2d 314 (1947) (decided under former Code 1933, § 28-201).
In case wherein plaintiff seeks cancellation of deed as having been made in fraud of creditor, it is ordinarily not necessary for the plaintiff to show more than that there is a liability to the plaintiff for which judgment is prayed, and that conveyance was made with intent to defraud the plaintiff with reference to such liability, and that such intention was known to the parties taking or that the parties had reasonable cause to suspect that intention. Von Kamp v. Gary, 204 Ga. 875, 52 S.E.2d 591 (1949) (decided under former Code 1933, § 28-201).
Insolvency irrelevant in determining validity.
- Deed may be set aside when the deed was made with design and intent to hinder, delay, or defraud creditors, which intent may be found to have existed whether or not the grantor was or is insolvent. Keeter v. Bank of Ellijay, 190 Ga. 525, 9 S.E.2d 761 (1940) (decided under former Code 1933, § 28-201).
Conveyance with fraudulent intent made for valuable consideration.
- When a conveyance is made with intent to hinder, delay, or defraud a creditor, and this fact is known to a grantee, or a grantee has a reasonable ground to suspect that such was the intention of the grantor, the conveyance is void as against the creditor, even though it is given on a valuable consideration. Durham Iron Co. v. Durham, 62 Ga. App. 361, 7 S.E.2d 804 (1940) (decided under former Code 1933, § 28-201).
Intention to hinder, delay, or defraud creditors may exist, though debtor is not insolvent.
- Deed may be set aside when the deed was made with design and intention to hinder, delay, or defraud creditors, and such intention may be found to have existed even though the grantor was not and is not insolvent. Mercantile Nat'l Bank v. Aldridge, 233 Ga. 318, 210 S.E.2d 791 (1974) (decided under former Code 1933, § 28-201).
Claim denied for failure to show intent.
- Given the undisputed testimony of the former property owner and the owner's spouse that a house was conveyed to an irrevocable trust for estate planning purposes, there were no circumstances from which a jury could infer that they acted with an intent to defraud creditors based on this transaction; therefore, the trial court properly granted summary judgment to the owner and the owner's spouse as to a fraudulent conveyance claim. Albee v. Krasnoff, 255 Ga. App. 738, 566 S.E.2d 455 (2002) (decided under former § 18-2-22).
Acquisition of property in name of third party fraudulent as to existing creditors.
- If an insolvent debtor, for purpose of hindering, delaying, and defrauding creditors, uses the debtor's assets in purchase of property, taking title in name of third person, who has full knowledge of purpose of transaction, such transaction is fraudulent as to existing creditors. Harper v. Atlanta Milling Co., 203 Ga. 608, 48 S.E.2d 89 (1948) (decided under former Code 1933, § 28-201).
Mortgage fraudulently withheld from record to protect mortgagor's credit.
- Mortgage given for valuable consideration more than four months before the petition was filed was held fraudulent and void as to creditors because the mortgage was fraudulently withheld from the record until the day the petition was filed. National Bank v. Shackelford, 239 U.S. 81, 36 S. Ct. 17, 60 L. Ed. 158 (1915) (decided under former Civil Code 1910, § 3224).
When mortgage is made and accepted with understanding between parties that the mortgage will be withheld from record for purpose of protecting financial credit of mortgagor, such agreement may amount to fraud as against subsequent creditors, depending upon intention of parties to be determined as an issue of fact. Sullivan v. Ginsberg, 180 Ga. 840, 181 S.E. 163 (1935) (decided under former Code 1933, § 28-201).
Mortgages withheld from record, by secret agreement between bankrupt and creditor, inducing other creditors to sell goods to bankrupt is a fraudulent conveyance. Clayton v. Exchange Bank, 121 F. 630 (5th Cir.), cert. denied, 191 U.S. 567, 24 S. Ct. 840, 48 L. Ed. 305 (1903) (decided under former Civil Code 1895, §§ 2726 and 2727).
Mortgage given for loan to pay some creditors and defraud others.- When bankrupt, with knowledge of insolvency, mortgaged bankrupt's entire stock of goods and pledged bankrupt's choses in action for large loan secured by demand note, and used proceeds to pay three creditors, leaving considerable number unprotected, and lender had reasonable grounds for suspicion that transfer was made with intent to delay bankrupt's other creditors, it was invalid. In re Walden Bros. Clothing Co., 199 F. 315 (N.D. Ga. 1912), aff'd, 204 F. 372 (5th Cir. 1913) (decided under former Civil Code 1910, § 3224).
One extending credit subsequent to and with notice of conveyance.
- When undisputed evidence produced by creditor showed that creditor had knowledge of defendant's conveyance of real estate to spouse, prior to time creditor renewed defendant's loan, creditor clearly did not rely on defendant's ownership of such real estate when it subsequently extended defendant credit, and as subsequent creditor with notice, could not void conveyance as fraudulent. Peachtree Bank & Trust Co. v. Atha, 151 Ga. App. 565, 260 S.E.2d 559 (1979) (decided under former Code 1933, § 28-201).
Transaction between parent and child.
- Mere fact that transaction occurred between parent and child does not of itself establish fraud; there must be some other badge of fraud in connection therewith. Martin v. Martin, 180 Ga. 782, 180 S.E. 851 (1935) (decided under former Code 1933, § 28-201).
Party seeking to set aside transfer of house from parent to daughter did not meet the party's burden of proving intent to delay or defraud creditors. Nelson v. United States, 821 F. Supp. 1496 (M.D. Ga. 1993) (decided under former § 18-2-33).
Reacquisition of conveyed property by corporation controlled by debtor.
- When insolvent debtor executed deed to secure indebtedness, which indebtedness at all times greatly exceeded value of security given, and lien was foreclosed by grantee, and at sale the property was bought by grantee, fact that such grantee purchaser may have subsequently conveyed property to corporation of which debtor was president and treasurer would not render such subsequent sale void as against creditors of debtor, where no attack is made upon validity of foreclosure sale, and when it appears that consideration of purchase by corporation was furnished wholly by corporation, and not by debtor. S.T. & W.A. Dewees Co. v. Paul B. Carter & Co., 190 Ga. 68, 8 S.E.2d 376 (1940) (decided under former Code 1933, § 28-201).
Conveyance to creditor and immediate reconveyance to debtor's spouse.- See Curtis v. Wortsman, 25 F. 893 (S.D. Ga. 1885) (decided under former Civil Code 1863, § 1952).
Purchase by attorney from client of judgment or execution.
- Purchase by attorney at law, from client or client's agent, of a judgment or execution belonging to client in hands of attorney for collection, is presumptively invalid as against client's creditors. Stubinger v. Frey, 116 Ga. 396, 42 S.E. 713 (1902) (decided under former Civil Code 1895, § 2695).
Agreement by purchaser of insolvent partnership's assets to employ partner.
- Mere fact that in a sale by insolvent partnership of all the partnership's assets there is an agreement by purchasers to employ one partner at stipulated compensation per month to manage business, will not per se render sale void as against creditors. If there was no intention to defraud, delay, or hinder the creditors, and if sale was for full value above and beyond agreement for employment, the transaction was valid. Cribb & Co. v. Bagley & Rivers, 83 Ga. 105, 10 S.E. 194 (1889) (decided under former Civil Code 1863, § 1952); McKenzie v. Thomas, 118 Ga. 728, 45 S.E. 610 (1903);(decided under former Civil Code 1895, § 2695).
Conveyance of property of value larger than debt to be paid.
- Conveyance of effects in amount larger than debt to be paid does not make assignment void; but it is a badge of fraud to be considered by jury. Banks v. Clapp, 12 Ga. 514 (1853) (decided under the Act of 1818).
Conveyance to oneself as trustee.
- Making of deed by one as an individual to oneself in that person's representative capacity, the deed being for land in which the person has a contingent remainder, is, on insolvency, sufficient evidence on which to base a verdict that the deed was executed with the intent to hinder and delay collection of the grantor's other debts. Eberhardt v. Bennett, 163 Ga. 796, 137 S.E. 64 (1927) (decided under former Civil Code 1910, § 3224).
Deed by trustee with power of sale created in fraudulent transfer.
- If assignment or transfer was prohibited and is made to named trustee with power of sale, an execution of power conveys no title to purchaser, and a deed purporting to convey to the purchaser any part of property so transferred is likewise void. Coleman & Burden Co. v. Rice, 115 Ga. 510, 42 S.E. 5 (1902) (decided under former Civil Code 1895, § 2695).
Conveyance made with fraudulent intent, known to grantee.
- Absolute deed made with intent to delay or defraud creditors, though made also to secure debt, is void as against creditors if grantee takes the deed with notice of fraudulent intention. Palmour & Smith v. Johnson, 84 Ga. 91, 10 S.E. 500 (1889) (decided under former Civil Code 1863, § 1952); McLendon v. Reynolds Grocery Co., 160 Ga. 763, 129 S.E. 65 (1925);(decided under former Civil Code 1910, § 3224).
Under former Code 1933, § 28-320 (see now O.C.G.A. § 18-2-59), a conveyance of real estate had or made with intent to delay or defraud creditors, with such intent known to party taking, is invalid as to existing creditors. Citizens & S. Nat'l Bank v. Kontz, 185 Ga. 131, 194 S.E. 536 (1937) (decided under former Code 1933, § 28-201).
Every conveyance of property made with intent to delay or defraud creditors of grantor is void against such creditors when the grantee has knowledge of such intention or reasonable ground to suspect that intention. Hilburn v. Hightower, 178 Ga. 534, 173 S.E. 389 (1934); Cunningham v. Avakian, 187 Ga. 575, 1 S.E.2d 433 (1939) (decided under former Civil Code 1910, § 3224).
Deed is void as to creditors when made for purpose of hindering, delaying, or defrauding creditors in collection of the creditors' debts, and when grantee in taking the deed has knowledge of such fraudulent intent or reasonable ground to suspect it. Taylor v. Gates, 206 Ga. 880, 59 S.E.2d 365 (1950) (decided under former Code 1933, § 28-201).
Transaction upheld.
- The kind of transaction, based upon valuable consideration, which will be upheld is "a bona fide transaction on valuable consideration, and without notice or grounds for reasonable suspicion." Conley v. Buck, 100 Ga. 187, 28 S.E. 97 (1897) (decided under former Civil Code 1895, § 2695).
Charge requiring finding of intent to "delay, hinder, and defraud."
- In trial of action by creditor to set aside and cancel a fraudulent conveyance, it was inaccurate and therefore erroneous to charge that if debtor made conveyance with intention to "delay, hinder, and defraud" the creditors, it would be void. The acts voiding the conveyance should have been stated disjunctively as stating the acts conjunctively imposed upon creditor a greater burden than the law does. Evans v. Coleman, 101 Ga. 152, 28 S.E. 645 (1897) (decided under former Civil Code 1895, § 2695).
Verdict finding no intent to defraud, but an intent to delay creditors, is not void for inconsistency and uncertainty; debtor who attempts to postpone time of payment endeavors to deprive the debtor's creditors of a valuable right, and it matters not what the debtor's motive may be. Monroe Mercantile Co. v. Arnold & McCord, 108 Ga. 449, 34 S.E. 176 (1899) (decided under former Civil Code 1933, § 2695).
Inadequate Consideration
Inference of fraud in transfer.
- Great inadequacy of consideration in transfer of property creates strong inference that the transfer was fraudulent. United States v. McMahan, 392 F. Supp. 1159 (N.D. Ga. 1975), aff'd, 556 F.2d 362 (5th Cir. 1977), rev'd in part on other grounds, 569 F.2d 889 (5th Cir. 1978) (decided under former Code 1933, § 28-201).
Conveyance for inadequate consideration, when insolvent or causing insolvency.
- If at time of conveyance, for greatly inadequate consideration, defendant was insolvent, or if such transfer rendered defendant insolvent as to defendant's creditors, such conveyance was fraudulent within meaning of former Code 1933, § 28-320 (see now O.C.G.A. § 18-2-59), and, as such, may be set aside. United States v. McMahan, 392 F. Supp. 1159 (N.D. Ga. 1975), aff'd, 556 F.2d 362 (5th Cir. 1977), rev'd in part on other grounds, 569 F.2d 889 (5th Cir. 1978) (decided under former Code 1933, § 28-201).
Inadequate price, accompanied by other doubtful and suspicious circumstances.- While inadequacy of price alone is not sufficient grounds to set aside a conveyance in a court of equity, that circumstance, taken in consideration and in connection with others of a doubtful and suspicious nature, may afford such a strong presumption of fraud so as to authorize a court to set it aside. United States v. McMahan, 392 F. Supp. 1159 (N.D. Ga. 1975), aff'd, 556 F.2d 362 (5th Cir. 1977), rev'd in part on other grounds, 569 F.2d 889 (5th Cir. 1978) (decided under former Code 1933, § 28-201).
Inadequacy of consideration in otherwise good faith conveyance.
- When one honestly and in good faith purchases property from another, the mere fact that the consideration paid was inadequate will not authorize creditor of grantor, who afterwards obtains judgment against latter, to subject property to satisfaction of creditor's judgment. Childers v. Ackerman Constr. Co., 211 Ga. 350, 86 S.E.2d 227 (1955) (decided under former Code 1933, § 28-201).
Consideration deemed adequate.
- Severance payments to corporate officers did not lack consideration when the corporation was assured that the officers would not leave without providing the corporation recourse in the event their leaving frustrated its plans to sell its stock. Munford v. Valuation Research Corp., 98 F.3d 604 (11th Cir. 1996), cert. denied, 522 U.S. 1068, 118 S. Ct. 738, 139 L. Ed. 2d 675 (1998) (decided under former § 18-2-22).
Retention of Possession by Debtor
Possession retained by vendor after absolute sale of real property is prima facie evidence of fraud, although it may be explained and rebutted. Hilburn v. Hightower, 178 Ga. 534, 173 S.E. 389 (1934) (decided under former Civil Code 1910, § 3224).
Possession of property, real or personal, remaining with vendor after an absolute conveyance is evidence of fraud. Peck v. Land, 2 Ga. 1, 46 Am. Dec. 368 (1847) (decided under the Act of 1818); Fleming v. Townsend, 6 Ga. 103, 50 Am. Dec. 318 (1849); Perkins, Hopkins & White v. Patten, 10 Ga. 241 (1851) (decided under former law); Smith v. McDonald, 25 Ga. 377 (1858); Stephens v. Southern Cotton Oil Co., 147 Ga. 410, 94 S.E. 245 (1917) (decided under former law); Virginia-Carolina Chem. Co. v. Hollis, 23 Ga. App. 634, 99 S.E. 154 (1919); Greene v. Matthews, 31 Ga. App. 265, 120 S.E. 434 (1923) (decided under former law);(decided under former law);(decided under former Civil Code 1910, § 3224);(decided under former Civil Code 1910, § 3224).
Possession of personal property remaining with vendor after absolute conveyance is evidence of fraud, when such possession is not satisfactorily explained. Scruggs v. Blackshear Mfg. Co., 45 Ga. App. 855, 166 S.E. 249 (1932) (decided under former Civil Code 1910, § 3224).
If debtor, shortly after conveying to claimant absolutely, is in possession of premises, and so continues until levy is made, debtor's possession, in absence of evidence to show when or how it commenced, may be presumed to have existed at date of conveyance; and such continuous possession, unexplained, is a badge of fraud. Collins v. Taggart, 57 Ga. 355 (1876) (decided under former Civil Code 1863, § 1952).
Possession retained by grantor in security deed.
- Possession remaining with grantor after absolute conveyance is evidence of fraud; but the same is not true of possession retained by grantor in security deed. Burkhalter v. Glennville Bank, 184 Ga. 147, 190 S.E. 644 (1937) (decided under former Code 1933, § 28-201).
Delivery delayed for several months after sale to allow clearing up mortgage.
- Fact that it was a few months after execution and delivery of bill of sale before the defendant delivered possession of property sold to the claimant, property being under mortgage and it taking some time to clear property up before delivery to the claimant, did not tend to render bill of sale void on account of fraud or show any fraudulent intent upon the part of parties thereto. Foremost Dairies, Inc. v. Kelley, 51 Ga. App. 722, 181 S.E. 204 (1935) (decided under former Code 1933, § 28-203).
Retention of possession by grantor after conveyance in trust for spouse and children.
- When personal property is conveyed by spouse to trustee for benefit of the other spouse and children, subsequent possession by spouse being consistent with object of deed is not evidence of fraud. Clayton v. Brown, 17 Ga. 217 (1855) (decided under former law).
When mortgagee purchasing at foreclosure sale allows mortgagor to retain possession.
- When creditor forecloses a mortgage and purchases mortgaged property at sheriff's sale and suffers property so purchased to remain in possession of mortgagor after sale, such retention of possession, by mortgagor, is a badge of fraud as against other judgment creditors. Williams v. C. & G.H. Kelsey & Halsted, 6 Ga. 365 (1849) (decided under former law).
Grantee's Notice of Fraud
Transaction carried out so as to excite suspicion of its fairness.
- See Hoffer v. Gladden, 75 Ga. 532 (1885) (decided under former Civil Code 1863, § 1952).
Suspicion alone insufficient.
- Contrary to trial court's conclusion, reasonable grounds for suspicion alone do not suffice to render a subsequent purchaser's title void, and when buyer acquired automobile for value, and had no notice that seller's title was obtained through fraud, the buyer received good title. Hall v. Hidy, 263 Ga. 422, 435 S.E.2d 215 (1993) (decided under former § 18-2-23).
Fraudulent conveyance void as to grantor and grantee having notice.
- If a defendant sells property in order to prevent defendant's creditors from making their claims out of it, the sale will be void as to defendant; and if at time of sale the purchaser has reasonable ground to suspect that such is the defendant's object, the sale will be void also as to the purchaser. Smith v. Wellborn, 75 Ga. 799 (1885) (decided under former Civil Code 1863, § 1952); Virginia-Carolina Chem. Co. v. Hollis, 23 Ga. App. 634, 99 S.E. 154 (1919); Greene v. Matthews, 31 Ga. App. 265, 120 S.E. 434 (1923) (decided under former Civil Code 1910, § 3224);(decided under former Civil Code 1910, § 3224).
Fraudulent intent of grantor of which grantee had no notice.
- Fraudulent intent in execution of a deed, upon part of grantor, which was unknown to grantee and which grantee had no reasonable ground to suspect, will not vitiate grantee's title. Hollis v. Sales, 103 Ga. 75, 29 S.E. 482 (1897) (decided under former law).
Child, who testified, uncontradicted, did not know why the child's parent gave the child the house, had no actual knowledge of the parent's intent to delay or defraud the parent's creditors. Nelson v. United States, 821 F. Supp. 1496 (M.D. Ga. 1993) (decided under former § 18-2-33).
Grantee having reasonable ground to suspect spouse's fraudulent intent.- It is not necessary to prove that both husband and wife joined to hinder, delay, and defraud other creditors in collection of their debts, if it can be shown that wife had reasonable ground to suspect that her husband's purpose was to hinder, delay, and defraud other creditors in collection of their debts. United States v. McMahan, 392 F. Supp. 1159 (N.D. Ga. 1975), aff'd, 556 F.2d 362 (5th Cir. 1977), rev'd in part on other grounds, 569 F.2d 889 (5th Cir. 1978) (decided under former Code 1933, § 28-201).
Conveyance for consideration, but with known fraudulent intent.
- Fact that transaction is based upon valuable consideration does not save the transaction from attack on ground of fraud when party taking has knowledge of such fraud or ground for reasonable suspicion. Sullivan v. Ginsberg, 180 Ga. 840, 181 S.E. 163 (1935) (decided under former Code 1933, § 28-201).
Conveyance of property, made with intention of hindering, delaying, or defrauding creditors, is void as against creditors; if transaction is bona fide and for valuable consideration, and party taking has no notice or ground for reasonable suspicion of intention to hinder, delay, or defraud creditors, it is valid, but if party taking has notice of intention of maker to hinder, delay, or defraud creditors, or has ground for reasonable suspicion of such intention, the conveyance is void as against creditors of maker. Gardner v. Day, 182 Ga. 113, 184 S.E. 710 (1936) (decided under former law).
Conveyance intended to defeat recovery of alimony.
- Under former Code 1933, §§ 28-101 and 28-201 (see now O.C.G.A. §§ 18-2-1 and18-2-59), one may bring equitable proceeding to cancel and set aside a conveyance of property made by spouse with intent to defeat recovery of alimony, and such proceeding will lie against grantee of spouse who took with knowledge of such intention or with reasonable grounds to suspect such intent. A different result was not required by former Code 1933, § 30-112 (see now O.C.G.A. § 19-5-7), as relating to filing of lis pendens notice, since the grantee is not an innocent purchaser. Wood v. McGahee, 211 Ga. 913, 89 S.E.2d 634 (1955) (decided under former Code 1933, § 28-201).
Under provisions of former Code 1933, § 28-320 (see now O.C.G.A. § 18-2-59), a deed executed by husband living separate and apart from his wife, conveying certain of his property to another with intent and purpose of defeating wife's right to alimony, is invalid as to wife if grantee knew or had grounds for reasonable suspicion that such was the purpose of grantor, even though deed was made to secure or in payment of valid preexisting debt due by husband to grantee. McCallie v. McCallie, 192 Ga. 699, 16 S.E.2d 562 (1941) (decided under former Code 1933, § 28-201).
Action to set aside conveyance of grantee's notice of fraudulent intent.
- See Webb-Crawford Co. v. Bozeman, 178 Ga. 328, 173 S.E. 144 (1934) (decided under former Civil Code 1910, § 3224).
Charge requiring that grantee take "with no suspicion even" of fraudulent intent was error. Norton v. Neely Co., 148 Ga. 652, 98 S.E. 76 (1919) (decided under former law).
Insolvency of Debtor
Test for insolvency.
- Test for determining whether a debtor was insolvent, within the meaning of paragraph (3) of former Code 1933, § 28-201, was whether the value of the debtor's remaining property was sufficient to pay in full all of the debtor's debts, and the value of the debtor's remaining property must be determined as of the date the conveyance sought to be set aside was made. Goodman v. Lewis, 247 Ga. 605, 277 S.E.2d 908 (1981) (decided under former Code 1933, § 28-201).
Evidence of insolvency.
- Defendant's solvency at time of allegedly fraudulent conveyance is relevant, but evidence should be restricted to defendant's financial condition at time of conveyance. Warren v. Citizens Nat'l Bank, 145 Ga. 503, 89 S.E. 520 (1916) (decided under former Civil Code 1910, §§ 3224 and 3225).
Plaintiff may prove insolvency of debtor.
- On trial of issue whether conveyance is fraudulent against creditors, plaintiff may prove insolvency of debtor at time of sale. Tillman v. Fontaine, 98 Ga. 672, 27 S.E. 149 (1896) (decided under former law).
Insolvency means inability to pay debts as the debts fall due. Loeb v. Dante, 1 Bankr. 547 (Bankr. N.D. Ga. 1979) (decided under former Code 1933, § 28-201).
Solvency determined by sufficiency of property to discharge all debts.
- Unless one's property, whether real or personal, tangible or intangible, leviable or nonleviable, is insufficient in value to discharge all one's debts, one can in no proper sense be termed insolvent. Keeter v. Bank of Ellijay, 190 Ga. 525, 9 S.E.2d 761 (1940) (decided under former Code 1933, § 28-201).
Debtor is insolvent, if after voluntary deed or conveyance, property left or retained by the debtor is not ample to pay the debtor's existing debts. Chambers v. Citizens & S. Nat'l Bank, 242 Ga. 498, 249 S.E.2d 214 (1978) (decided under former Code 1933, § 28-201); Barclay v. First Nat'l Bank, 265 Ga. 744, 462 S.E.2d 374 (1995); Cavin v. Brown, 246 Ga. App. 40, 538 S.E.2d 802 (2000) (decided under former § 18-2-22);(decided under former § 18-2-22).
Under paragraph (3) of former Code 1933, § 28-201, a debtor was insolvent when property left or retained by the debtor after voluntary conveyance is insufficient to pay the debtor's existing debts. Moister v. Waters, 8 Bankr. 163 (Bankr. N.D. Ga. 1981) (decided under former Code 1933, § 28-201).
Time of insolvency.
- Solvency is to be tested by value of property at time of making of voluntary deed, rather than at time of transferor's death. Wallace v. Williams, 212 Ga. 692, 95 S.E.2d 369 (1956) (decided under former Code 1933, § 28-201).
Deduction of exempt property or homestead.
- In determining whether property left or retained by debtor making conveyance to spouse is sufficient to pay existing debts and liabilities, property in which debtor is entitled to exemption or homestead, but which had not been exempted, is not to be deducted, unless jury should find as a fact that debtor, at time of conveyance, intended to exempt that property. Mitchell v. Weekes, 179 Ga. 886, 177 S.E. 737 (1934) (decided under former Civil Code 1910, § 3224).
Suretyship obligations on debts not matured at time of conveyance.- In testing the solvency of one who has made a voluntary conveyance of property, one's endorsements or suretyship on obligations of others, not matured at time of conveyance, should not be counted as one's debts when it does not appear that one's contingent liability was at that time likely to become absolute or in fact became so. Moister v. Waters, 8 Bankr. 163 (Bankr. N.D. Ga. 1981) (decided under former Code 1933, § 28-201).
Insolvency of debtor is conclusively shown by the fact that debtor is in the process of obtaining a discharge in bankruptcy at the time of the fraudulent conveyance. Brown v. Citizens & S. Nat'l Bank, 168 Ga. App. 385, 308 S.E.2d 850 (1983), rev'd on other grounds, 253 Ga. 119, 317 S.E.2d 180 (1984) (decided under former § 18-2-22).
Insolvency of debtor not conclusive of fraudulence of conveyance.
- While insolvency of grantor is a pertinent matter for consideration in determining whether transfer or conveyance is fraudulent, it is only a circumstance, and is not conclusive. Burkhalter v. Glennville Bank, 184 Ga. 147, 190 S.E. 644 (1937) (decided under former Code 1933, § 28-201).
Conveyances Between Relatives and Spouses
Spouses bear burden of showing fairness of transaction.
- For transactions between spouses which are attacked for fraud by the creditors of either, a burden to show fairness of the transactions is placed on the spouses; in other relationships such as business and social relationships this rule does not apply and the burden is on the party seeking to set aside the deed. However, regardless of the placing of the burden, the relationship between the parties is a circumstance to be considered in actions attacking transactions for fraud. Stokes v. McRae, 247 Ga. 658, 278 S.E.2d 393 (1981) (decided under former Code 1933, § 28-201).
Transactions between near relatives.
- Transactions between near relatives, as brothers-in-law, are to be scanned with care and scrutinized closely, and slight evidence of fraud between the relatives may be sufficient to set aside the transaction. Hilburn v. Hightower, 178 Ga. 534, 173 S.E. 389 (1934) (decided under former Civil Code 1910, § 3224).
Transactions between relatives are to be scanned with care and scrutinized closely, and slight evidence of fraud shown between the relatives may be sufficient to set aside the transaction. McLendon v. Reynolds Grocery Co., 160 Ga. 763, 129 S.E. 65 (1925) (decided under former Civil Code 1910, § 3224); Scruggs v. Blackshear Mfg. Co., 45 Ga. App. 855, 166 S.E. 249 (1932);(decided under former Civil Code 1910, § 3224).
Mere fact of close relationship, unless marital, unsupported by other circumstances.
- While transactions between near relatives are to be scrupulously inspected, and the law permits evidence of relationship to give additional weight to other circumstances, and thus to bear heavily upon transactions between them; mere fact of relationship, unsupported by other circumstances, will not authorize finding that transaction even between persons closely related, unless husband and wife, are fraudulent. Webb-Crawford Co. v. Bozeman, 178 Ga. 328, 173 S.E. 144 (1934) (decided under former Civil Code 1910, § 3224).
When sale is attacked as in contravention statute and as having been made to hinder, delay, or defraud creditors, burden was on plaintiff to establish plaintiff's contentions under same rules as were applicable to all other civil cases; and proof of near relationship other than that of husband and wife, without more, is not sufficient to constitute a badge of fraud. Webb-Crawford Co. v. Bozeman, 178 Ga. 328, 173 S.E. 144 (1934) (decided under former Civil Code 1910, § 3224).
Proof of near relationship between parties to deed, other than that of husband and wife, without more, is not sufficient to show fraud. McCallie v. McCallie, 192 Ga. 699, 16 S.E.2d 562 (1941) (decided under former Code 1933, § 28-201).
Conveyance by husband to wife.- In conveyance from husband and wife, the utmost good faith must be made to appear, and wife must show with great clearness that she was a bona fide purchaser, and that she had no reason to believe that transfer was made to delay or defraud creditors of her husband. Curtis v. Wortsman, 25 F. 893 (S.D. Ga. 1885) (decided under former Civil Code 1863, § 1952).
Voluntary conveyance to spouse not void if grantor retains ample property to pay existing debts and liabilities. Mitchell v. Weekes, 179 Ga. 886, 177 S.E. 737 (1934) (decided under former Civil Code 1910, § 3224).
Husband's transfer of 100% interest in the marital residence to his wife less than one year before he filed a bankruptcy petition was a fraudulent transfer. Ellenberg v. Bouldin, 196 Bankr. 202 (Bankr. N.D. Ga. 1996) (decided under former § 18-2-22).
Conveyance by husband to wife will not be set aside as fraudulent unless the conveyance was shown to have been made with intent to defraud creditors and the wife was shown to have had knowledge or some reasonable notice or suspicion of such intent. United States v. McMahan, 392 F. Supp. 1159 (N.D. Ga. 1975), aff'd, 556 F.2d 362 (5th Cir. 1977), rev'd in part on other grounds, 569 F.2d 889 (5th Cir. 1978) (decided under former Code 1933, § 28-201).
Transfer of funds from husband to wife.
- Evidence showed that taxpayer fraudulently transferred funds to his wife, when he deposited receipts from his legal practice into bank accounts and wrote checks on the accounts payable to his wife, who then deposited the checks into her own account and wrote checks on that account to pay mortgage and other "household" expenses. United States v. Tranakos, 778 F. Supp. 1220 (N.D. Ga. 1991) (decided under former § 18-2-22).
Conveyance to wife and children.
- Settlement in favor of wife and children, or either, will be supported, if made in good faith and with no intent to defraud creditors; but one by debtor in greatly embarrassed circumstances of the bulk of the debtor's estate, leaving but a pittance, insufficient for debts, cannot be supported. Clayton v. Brown, 30 Ga. 490 (1860) (decided under former law); Reese v. Shell, 95 Ga. 749, 22 S.E. 580 (1895) (decided under former Civil Code 1863, § 1952).
Facts subjecting conveyance by husband to wife to attack.
- See Mattox v. West, 194 Ga. 310, 21 S.E.2d 428 (1942) (decided under former Code 1933, § 28-201).
Fraudulent conveyance to wife who insures for own benefit.
- See St. Paul Fire Ins. & Co. v. Brunswick Grocery Co., 113 Ga. 786, 39 S.E. 483 (1901) (decided under former Civil Code 1895, § 2695).
Burden of proof.
- While absolute conveyance from husband to wife for valuable consideration will not be set aside at instance of creditor upon ground of fraud unless wife knew of fraud or had "ground for reasonable suspicion" thereof, burden is not upon creditor, as in other cases, to prove fraudulent scheme. Cotton States Fertilizer Co. v. Childs, 179 Ga. 23, 174 S.E. 708 (1934) (decided under former Civil Code 1910, § 3230).
Whenever transaction between husband and wife is attacked by husband's creditors for fraud, if wife claims the property purchased or received, onus is upon her to make fair showing about whole transaction, particularly where conveyance was a gift. Spiegel v. Ross, 188 F. Supp. 812 (N.D. Ga. 1960) (decided under former Code 1933, § 28-201).
In case where wife sets up title to property levied upon under deed from her husband, and his creditor attacks same upon ground that it was a fraudulent conveyance, intended to hinder, delay, and defraud such creditor, the law does not put upon creditor the burden of establishing fraud in the conveyance. On the contrary, it puts burden upon husband and wife, who must show that transaction as a whole is free from fraud. Moore v. Loganville Mercantile Co., 184 Ga. 351, 191 S.E. 121 (1937) (decided under former law).
Spouse preferring payment to spouse who has loaned money.- Since wife, having loaned money to her husband, is a general creditor, husband may prefer payment to his wife over any other unsecured creditor, paying her in property or money without such payment being fraudulent, provided the property so conveyed be reasonably proportioned to amount of the debt. United States v. McMahan, 392 F. Supp. 1159 (N.D. Ga. 1975), aff'd, 556 F.2d 362 (5th Cir. 1977), rev'd in part on other grounds, 569 F.2d 889 (5th Cir. 1978) (decided under former Code 1933, § 28-201).
While husband has right to prefer his wife to other unsecured creditors and pay her with property or money, provided property conveyed in satisfaction of her debt is reasonably proportioned to amount of debt, a conveyance by him to her of property in a sum grossly in excess of amount due her, amounts to conveyance made with intent to delay and defraud creditors notwithstanding both husband's and wife's claims to have acted in good faith in the transaction. United States v. McMahan, 392 F. Supp. 1159 (N.D. Ga. 1975), aff'd, 556 F.2d 362 (5th Cir. 1977), rev'd in part on other grounds, 569 F.2d 889 (5th Cir. 1978) (decided under former Code 1933, § 28-201).
Jury charges relating to spousal conveyances.
- See Almond v. Gairdner & Arnold, 76 Ga. 699 (1886) (decided under former Civil Code 1863, § 1952).
When there was some evidence that defendant's wife paid part of purchase price of property conveyed to her by her husband, trial court, in charging on setting aside of conveyances made with intention of defrauding creditors, should add phrase, "and such intention known to party taking." Baker v. Goddard, 205 Ga. 477, 53 S.E.2d 754 (1949) (decided under former Code 1933, § 28-201).
For proper jury charge on validity of conveyance to creditor-spouse, see Pharr v. Pharr, 206 Ga. 354, 57 S.E.2d 177 (1950) (decided under former Code 1933, § 28-201).
Husband conveyed automobile to wife for valuable consideration when wife advanced $2000 toward car purchase and made payments to creditor's credit union. Brown v. Citizens & S. Nat'l Bank, 253 Ga. 119, 317 S.E.2d 180 (1984) (decided under former § 18-2-22).
Constructive trust finding not valid when transferor's intent fraudulent.
- In divorce action, jury decision that transfer of real property from husband to wife created a constructive trust in favor of husband should have been excluded by judgment notwithstanding the verdict when transfer was made with the intent and purpose of defrauding husband's creditors, and there was no issue of fact as to the intent and purpose of the husband at the time of the transfer. Carden v. Carden, 253 Ga. 546, 322 S.E.2d 226 (1984) (decided under former § 18-2-22).
Conveyance to son with knowledge of impending bankruptcy.- Evidence of an intent to defraud creditors is shown by circumstantial evidence that son, who knew that his family members were soon to declare bankruptcy, had their valuable assets transferred to the son with the intent to keep such assets within the family at the expense of the creditors. Gower v. Cohn, 643 F.2d 1146 (5th Cir. 1981) (decided under former Code 1933, § 28-201).
Transfer of property from Chapter 7 debtor to spouse.
- Settlement of a bona fide family controversy and waiver of further claims for alimony or property division was a valuable consideration for post-nuptial agreements between a Chapter 7 debtor and the debtor's spouse, and the transfer of property to the spouse was not a fraudulent conveyance. Tidwell v. Galbreath, 207 Bankr. 309 (Bankr. M.D. Ga. 1997) (decided under former § 18-2-22).
Conveyance challenge estopped.
- Chapter 7 trustee was estopped from challenging conveyance of collateral as fraudulent under state law because of secured creditor's prepetition agreement with debtor, in which it agreed not to contest debtor's conveyance of debtor's home to debtor's parent. Harris v. Huff, 160 Bankr. 256 (Bankr. M.D. Ga. 1993) (decided under former § 18-2-22).
Voluntary Conveyances
Voluntary deed is one totally without consideration.
- Voluntary conveyance or deed is one without any valuable consideration, and a valuable consideration is founded on money, or something convertible into money, or having a value in money. Stokes v. McRae, 247 Ga. 658, 278 S.E.2d 393 (1981) (decided under former Code 1933, § 28-201).
Former paragraph (3) was mandatory and admits of no exception. King v. Poole, 61 Ga. 373 (1878) (decided under former Civil Code 1863, § 1952).
Transfers not for valuable consideration.- Statute allows creditors to avoid certain transfers made by debtor which were not for valuable consideration. Moister v. Eidson, 10 Bankr. 432 (Bankr. N.D. Ga. 1981) (decided under former law).
Test for satisfaction of former paragraph (3).
- There were two elements which must be established in order to meet the test of paragraph (3) of former Code 1933, § 28-201: the debtor must: (1) convey by a voluntary deed, not for a valuable consideration; and (2) be insolvent at the time of the conveyance. Stokes v. McRae, 247 Ga. 658, 278 S.E.2d 393 (1981) (decided under former Code 1933, § 28-201); Ambase Int'l Corp. v. Bank S., N.A., 196 Ga. App. 336, 395 S.E.2d 904 (1990);(decided under former § 18-2-22).
Intention of parties.
- Whether conveyance is in fact voluntary depends upon intention of parties as ascertained from facts and circumstances at time of the conveyance's execution. Pharr v. Pharr, 206 Ga. 354, 57 S.E.2d 177 (1950) (decided under former Code 1933, § 28-201).
Showing of fraudulent intent not prerequisite.
- While under paragraph (1) of former Code 1933, § 28-201, fraudulent intent of debtor was necessary to cancellation, it need not be shown when a voluntary conveyance was rendered void under paragraph (3) of that section. Neal v. Stapleton, 203 Ga. 236, 46 S.E.2d 130 (1948) superseded by statute, Citizens Bank of Mass. V. Grand Street Parkway, LLC et al, 21 Mass. L. Rep. 594 (2006) (decided under former Code 1933, § 28-201); Mercantile Nat'l Bank v. Aldridge, 233 Ga. 318, 210 S.E.2d 791 (1974); Drake v. Dennis, 209 Bankr. 20 (Bankr. S.D. Ga. 1996) (decided under former Code 1933, § 28-201);(decided under former § 18-2-22).
Retention of sufficient property to pay debts.
- Good faith voluntary conveyance is valid if debtor retains sufficient property to pay debts. Weed v. Davis, 25 Ga. 684 (1858) (decided under former law).
Nonfraudulent conveyance, before bankruptcy, of small part of estate.
- Voluntary conveyance by bankrupt to children before adjudication of bankruptcy is not void when there was no intent to defraud and property conveyed formed inconsiderable part of grantor's estate. Adams v. Collier, 122 U.S. 382, 7 S. Ct. 1208, 30 L. Ed. 1207 (1887) (decided under former law).
Voluntary deed executed when insolvent or rendering debtor insolvent.
- Voluntary deed by debtor may be set aside by debtor's creditor if debtor was insolvent when deed was executed, or was thereby rendered insolvent. Downs v. Powell, 215 Ga. 62, 108 S.E.2d 715 (1959) (decided under former Code 1933, § 28-201).
Voluntary conveyance from insolvent debtor to wife.
- If husband, insolvent at time and having no property subject to demands of judgment creditors, makes gift of property to his wife, such gift would be void as against creditors, whether or not wife had knowledge or notice of husband's fraudulent intent. Garner v. State Banking Co., 150 Ga. 6, 102 S.E. 442 (1920) (decided under former Civil Code 1910, § 3224); Oxford v. Hasty, 213 Ga. App. 539, 445 S.E.2d 276 (1994);(decided under former § 18-2-22).
Voluntary conveyance by insolvent debtor not binding on creditors.
- Voluntary conveyance by insolvent debtor, based on no consideration either by payment of debt or otherwise, will not bind other creditors, and this is true irrespective of any fraudulent purpose on part of debtor, or any knowledge on part of creditor as to such purpose. Moncrief Furnace Co. v. Northwest Atlanta Bank, 193 Ga. 440, 19 S.E.2d 155 (1942) (decided under former law).
Voluntary conveyance with intent to defraud creditors.
- When tort-feasor made voluntary conveyance with intent to delay or defraud party damaged, such conveyance is void as to that party whether or not volunteer grantee had notice of fraudulent intent. Westmoreland v. Powell, 59 Ga. 256 (1877) (decided under former Civil Code 1863, § 1952).
Voluntary conveyance by solvent or insolvent debtor, made with intent to delay or defraud the debtor's creditor in collection of the debt, is void as to the creditor, irrespective of notice or grounds of suspicion to party taking conveyance. Citizens & S. Nat'l Bank v. Kontz, 185 Ga. 131, 194 S.E. 536 (1937) (decided under former Code 1933, § 28-201).
Voluntary deed was void as to creditors, though grantor was not insolvent at time of execution, if the grantor's purpose in so doing is to hinder, delay, or defraud creditors, whether donee knew of fraudulent intention or not. Peoples Loan Co. v. Allen, 199 Ga. 537, 34 S.E.2d 811 (1945) (decided under former Code 1933, § 28-201); Hyde v. Atlanta Woolen Mills Corp., 204 Ga. 450, 50 S.E.2d 52 (1948);(decided under former law).
Applicability of statute to conveyance by insolvent shareholder of insolvent national bank.
- See Duncan v. Freeman, 152 Ga. 332, 110 S.E. 5 (1921) (decided under former Code 1933, § 28-201).
Conveyance in consideration of promise to care for grantor for life is not voluntary, but is for valuable consideration. Avary v. Avary, 202 Ga. 22, 41 S.E.2d 314 (1947) (decided under former Code 1933, § 28-201).
Conveyance in consideration of love, affection, and $5.00.
- Deed by father to the father's children, reciting as consideration love, affection, and $5.00, is not on its face a voluntary conveyance; whether such conveyance is in fact voluntary depends upon intention of parties as ascertained from facts and circumstances at time of execution. Glenn v. Tankersley, 187 Ga. 129, 200 S.E. 709 (1938), later appeal sub nom. Bussell v. Glenn, 197 Ga. 816, 30 S.E.2d 617 (1944) (decided under former Code 1933, § 28-201).
Deed reciting consideration of "$5.00 and love and affection" is not, on the deed's face, a voluntary conveyance. Avary v. Avary, 202 Ga. 22, 41 S.E.2d 314 (1947) (decided under former Code 1933, § 28-201).
Husband's deed to wife reciting consideration of love and affection for grantee and $5.00, was not upon the deed's face a voluntary conveyance, but was prima facie a deed based on valuable consideration. Pharr v. Pharr, 206 Ga. 354, 57 S.E.2d 177 (1950) (decided under former Code 1933, § 28-201).
Deed to daughters in consideration of love and affection.
- When deed by defendant in fieri facias to defendant's three daughters was without consideration other than natural love and affection, it was a voluntary conveyance, regardless of fact that this property came to him from his wife's father, and that he and his wife had long planned to convey it to his three daughters (claimants); while under appropriate facts, a resulting trust may be declared, no such facts or contention were involved as so far as the evidence showed title to property was vested unconditionally in the defendant without any obligation or agreement to convey it to his daughters. Bussell v. Glenn, 197 Ga. 816, 30 S.E.2d 617 (1944) (decided under former Code 1933, § 28-201).
Marriage is valuable consideration, and sufficient to support deed; and if the woman is guilty of no fraud, and enters into settlement without notice of debt due from man to third person, she will be protected in property conveyed by settlement against that debt. Marshall v. Morris, 16 Ga. 368 (1854) (decided under the Act of 1818).
Voluntary conveyances to family at a time when grantor is solvent.
- When one executed voluntary conveyances of realty to his wife and two daughters and at time of execution he was indebted to creditor in a sum much less than the value of realty and personalty which he still owned, unencumbered so far as the record shows, he was not insolvent, and conveyances to wife and daughters should not be set aside. Mitchell v. Weekes, 179 Ga. 886, 177 S.E. 737 (1934) (decided under former Civil Code 1910, § 3224).
Purchase of land in trust for daughter as voluntary conveyance to latter.
- See Cohen v. Parish, 105 Ga. 339, 31 S.E. 205 (1898) (decided under former Civil Code 1895, § 2695).
Good faith conveyance for purpose of preferring one creditor over another.
- Conveyance made in good faith for purpose of preferring one creditor over another is not a "voluntary deed or conveyance". Johnson v. Sherrer, 185 Ga. 340, 195 S.E. 149 (1938) (decided under former Code 1933, § 28-201).
Promise to provide grantor with necessities of life.
- Conveyance of property for sole consideration of promise by grantee to provide for and furnish to grantor, for remainder of her life, necessities of life such as lodging, food, clothing, and medical expenses, is not voluntary conveyance, but is one for valuable consideration. Ayer v. First Nat'l Bank & Trust Co., 182 Ga. 765, 187 S.E. 27 (1936), overruled on other grounds, Worthen v. State, 2019 Ga. LEXIS 22 (Ga. 2019) (decided under former Code 1933, § 28-201).
Interest payments made to a party by a debtor corporation were in return for the valuable consideration of a bona fide antecedent debt of the corporation incurred as a result of the party's loan to it. Consequently, these payments were not "fraudulent conveyances" under paragraph (3) of former O.C.G.A. § 18-2-22. Estes v. Cranshaw (In re N & D Properties, Inc.), 54 Bankr. 590 (N.D. Ga. 1985), modified on other grounds, 799 F.2d 726 (11th Cir. 1986) (decided under former § 18-2-22).
Actions
Judgment for debt and cancellation of fraudulent conveyance sought in same action.
- Since the Uniform Procedure Act of 1887, a creditor may in one suit proceed for judgment on debt and to set aside fraudulent conveyance made by debtor. Harper v. Atlanta Milling Co., 203 Ga. 608, 48 S.E.2d 89 (1948) (decided under former Code 1933, §§ 28-104 and 28-201).
Creditor may in one action in superior court proceed against a debtor for judgment on the creditor's demand and to set aside a fraudulent conveyance, joining the debtor and grantee. Hyde v. Atlanta Woolen Mills Corp., 204 Ga. 450, 50 S.E.2d 52 (1948) (decided under former law).
Action for both alimony and cancellation of fraudulent conveyance. See McCallie v. McCallie, 192 Ga. 699, 16 S.E.2d 562 (1941) (decided under former Code 1933, § 28-201).
Action against both tortfeasor and grantee of conveyance with fraudulent purpose.
- Parent of minor child killed by negligent tortious acts of another was within protection of former Code 1933, § 28-320 (see now O.C.G.A. § 18-2-59), and may proceed in one action against tortfeasor and grantee named in conveyances executed by tortfeasor to obtain: (1) judgment for damages against tortfeasor for negligent tortious homicide of the parent's child; and (2) decree adjudging null and void as to the conveyances of real and personal property, executed by the defendant tortfeasor subsequent to commission of tort, for purpose of hindering, delaying, or defrauding the plaintiff in collection of the plaintiff's claim for damages. McVeigh v. Harrison, 185 Ga. 121, 194 S.E. 208 (1937) (decided under former Code 1933, § 28-201); Downs v. Powell, 215 Ga. 62, 108 S.E.2d 715 (1959);(decided under former Code 1933, § 28-201).
Action in rem by alimony obligee against fraudulently conveyed property.
- Willful failure to provide for maintenance and support of spouse and children creates lawful demand which, when legally enforced, is called alimony, and is a debtor/creditor relationship. Thus, when spouse was creditor at time of conveyances which are alleged to have been made to defeat her claim for alimony, although no alimony judgment had been rendered at time of conveyances, it would be inequitable and unjust not to allow her to maintain action because she elected to obtain judgment in rem against husband's property when she was unable to obtain personal service because of his willful avoidance of service. Carter v. Bush, 216 Ga. 429, 116 S.E.2d 568 (1960) (decided under former Code 1933, §§ 28-101 - 28-104, and 28-201).
Action by creditor against transferee.
- Creditor can obtain a personal money judgment against a transferee. United States v. Tranakos, 778 F. Supp. 1220 (N.D. Ga. 1991) (decided under former § 18-2-22).
Equitable relief to judgment creditor proving fraudulent conveyance.
- See Peoples Loan Co. v. Allen, 199 Ga. 537, 34 S.E.2d 811 (1945) (decided under former Code 1933, § 28-201).
Showing of actual damage.
- In action to cancel fraudulent conveyance, the plaintiff need not show that actual damage has accrued. Von Kamp v. Gary, 204 Ga. 875, 52 S.E.2d 591 (1949) (decided under former Code 1933, § 28-201).
Judgment for damages may be appropriate.
- When plaintiff alleges that the defendant transferred and conveyed property to parties unknown, and that the property is now beyond the defendant's control, it would not be inappropriate to allow judgment for such damages as creditors may have sustained, not exceeding value of property. Sullivan v. Ginsberg, 180 Ga. 840, 181 S.E. 163 (1935) (decided under former Code 1933, § 28-201).
Jury charge upheld.
- In suit based on paragraphs (2) and (3) of statute, giving statute in its entirety in charge to jury was not grounds for new trial. Thompson v. Shellman Banking Co., 180 Ga. 495, 179 S.E. 75 (1935) (decided under former Civil Code 1910, § 3224).
Parties and Pleadings
Third party to fraudulent conveyance as necessary party.
- Defrauded creditor may, in court of equity, have fraudulent transaction set aside; and, for this purpose, third party to the transaction would be a proper and necessary party. Harper v. Atlanta Milling Co., 203 Ga. 608, 48 S.E.2d 89 (1948) (decided under former Code 1933, §§ 28-104 and 28-201).
Grantor and first taker of stock not indispensable parties.
- In a fraudulent conveyance action against the grantee of stock brought by a divorced wife who was awarded the stock in the divorce proceeding, the grantor, husband, and first taker, a corporation, were not indispensable parties since neither was necessary for a just adjudication of the merits of the action, and neither was required for complete relief. Halta v. Bailey, 219 Ga. App. 178, 464 S.E.2d 614 (1995) (decided under former § 18-2-22).
Special pleadings to show fraud.
- In trial of statutory claim to land, it is not necessary to have special pleadings to show fraud. Mattox v. West, 194 Ga. 310, 21 S.E.2d 428 (1942) (decided under former Code 1933, § 28-201).
Plea failing to allege intent or notice.
- Plea to action of ejectment, to effect that a certain deed, constituting one link in plaintiff's chain of title, was made in fraud of rights of creditors under whom defendants hold, and is fraudulent and void, but which did not allege intent to defraud or notice to grantee should, on motion, be stricken. Baird v. Evans, 58 Ga. 350 (1877) (decided under former law).
Allegation that assignee of insolvent debtor had notice of debtor's insolvency.
- In action to set aside as fraudulent an assignment or transfer of property alleged to have been made by insolvent debtor in trust or for benefit of one of the creditors, when a benefit was reserved to the debtor, the petition need not allege that the assignee or transferee had notice of the debtor's insolvency at the time of transfer. McKenzie v. Thomas, 118 Ga. 728, 45 S.E. 610 (1903) (decided under former Civil Code 1895, § 2695).
Subsequent transferee of the debtor who sought to set aside the original transfer on the grounds of fraud had no argument that the transfer was invalid as to the original transferee because its claim to the property was based on its purchase from the debtor, it was the debtor's privy and stood in the debtor's shoes in challenging the validity of the debtor's contract with the original transferee. Thomas Mote Trucking, Inc. v. PCL Civil Constructors, Inc., 246 Ga. App. 306, 540 S.E.2d 261 (2000) (decided under former § 18-2-22).
Identity of specific conveyance required.
- In a fraudulent conveyances claim asserted under former O.C.G.A. § 18-2-22, the requirement that fraud be pled with particularity mandates that the claimant identify a specific conveyance with sufficient definiteness to advise the adversary of the conveyance which it must explain. Gwinnett Property v. G & H Montage, 215 Ga. App. 889, 453 S.E.2d 52 (1994) (decided under former § 18-2-22).
Petition stating cause of action authorizing injunctive relief.
- See Moncrief Furnace Co. v. Northwest Atlanta Bank, 193 Ga. 440, 19 S.E.2d 155 (1942) (decided under former law).
Setting aside transfer as fraudulent.
- Paragraph (3) of former O.C.G.A. § 18-2-22 was not available to the party seeking to set aside the transfer as fraudulent when the amended answer and pretrial order only tracked the language of paragraph (2) of former O.C.G.A. § 18-2-22. Nelson v. United States, 821 F. Supp. 1496 (M.D. Ga. 1993) (decided under former § 18-2-22).
Evidentiary Issues
Circumstantial evidence may be of high importance.
- When a conveyance, a security deed, or a mortgage is attacked as having been made to hinder, delay, or defraud the creditors of the maker of such instrument, circumstantial evidence is of the highest importance in determining the good faith or bad faith - the real intent - of the grantor in the execution of the instrument; direct testimony as to the real intent of the grantor and grantee whose motives are under attack can only be obtained from these interested persons, and consequently necessarily any circumstance that may throw light on their conduct and motive is admissible for the jury's consideration. Gower v. Cohn, 643 F.2d 1146 (5th Cir. 1981) (decided under former Code 1933, § 28-201).
Failure to produce testimony is badge of fraud, when bona fides of transaction in issue, and witnesses who ought to be able to explain the transaction are in reach. Eberhardt v. Bennett, 163 Ga. 796, 137 S.E. 64 (1927) (decided under former Civil Code 1910, § 3224).
Facts necessary for conclusive presumption of fraud.
- Only facts necessary to render deed from husband to wife fraudulent in law are indebtedness, insolvency of debtor, and voluntariness of deed. When these facts are proved, the law conclusively presumes fraudulent intent and declares instrument void so far as creditors who held demands against the debtor at the time of conveyance are concerned. Chambers v. Citizens & S. Nat'l Bank, 242 Ga. 498, 249 S.E.2d 214 (1978) (decided under former Code 1933, § 28-201); Barclay v. First Nat'l Bank, 265 Ga. 744, 462 S.E.2d 374 (1995);(decided under former § 18-2-22).
Evidence of general character of alleged fraud perpetrator.
- When conveyance between near relatives is attacked upon ground of fraud, the law requires jury to examine every circumstance with care and caution, and one who is charged with defrauding honest creditors should be allowed to introduce evidence concerning one's general character. Wimberly v. Toney, 175 Ga. 416, 165 S.E. 257 (1932) (decided under former law).
Evidence of indebtedness.
- Testamentary trust created by a wife in favor of her husband was not a fraudulent transfer against a judgment creditor since the wife had been released from liability on the judgment by virtue of a settlement agreement executed in bankruptcy court and, thus, creation of the trust was not a debtor's act that could be deemed fraudulent against the creditor under former O.C.G.A. § 18-2-22. Jordan v. Caswell, 264 Ga. 638, 450 S.E.2d 818 (1994) (decided under former § 18-2-22).
Proof of suits against defendant at time of allegedly fraudulent conveyance.
- On trial of issue whether conveyance is fraudulent against creditors, the plaintiff may prove pendency of suits against the debtor at the time of execution of the deed. Barber v. Terrell, 54 Ga. 146 (1875) (decided under former Civil Code 1863, § 1952).
Unexplained agreement that grantor retain possession.
- Agreement between a grantor and grantee that property shall remain in possession of vendor, if not satisfactorily explained, is a badge of fraud; and when such continued possession in vendor is shown, the burden of proof shifts to grantee. State Housecraft, Inc. v. Jones, 96 Ga. App. 182, 99 S.E.2d 701 (1957) (decided under former Code 1933, § 28-201).
Proof required to overcome prima facie case.
- If after conveyance of property grantor was allowed to retain and remain in possession, this was sufficient prima facie evidence to establish fraud under paragraphs (2) and (3) of former Code 1933, § 28-201, and it was then incumbent upon grantee claiming under conveyance to establish that grantor's possession was not by any right of ownership or that grantor was not insolvent at time of such conveyance, and that, even if solvent, any intention of grantor to delay or defraud grantor's creditors was unknown to the grantee at the time of conveyance. Glenn v. Tankersley, 187 Ga. 129, 200 S.E. 709 (1938), later appeal sub nom. Bussell v. Glenn, 197 Ga. 816, 30 S.E.2d 617 (1944) (decided under former Code 1933, § 28-201).
Rebuttal of presumption of fraud arising from seller's continued possession.
- Proof of payment of valuable consideration rebuts presumption of fraud arising from seller's continued possession. Scott v. Winship, 20 Ga. 429 (1856) (decided under former law); Scruggs v. Blackshear Mfg. Co., 45 Ga. App. 855, 166 S.E. 249 (1932);(decided under former Civil Code 1910, § 3224).
Admissibility of writs of fieri facias against defendant.
- See Buttram v. Jackson, 32 Ga. 409 (1861) (decided under former law).
When question of defendant's solvency is involved, fieri facias against defendant with entry of nulla bona thereon is admissible in evidence. Lawson v. Wright, 21 Ga. 242 (1857) (decided under former law).
Proof required by plaintiff in fieri facias to invalidate conveyance.
- See Glenn v. Tankersley, 187 Ga. 129, 200 S.E. 709 (1938), later appeal sub nom. Bussell v. Glenn, 197 Ga. 816, 30 S.E.2d 617 (1944) (decided under former Code 1933, § 28-201).
Without standing to allege fraud.
- When plaintiffs were not creditors of the creator of a trust, plaintiffs could not argue that the plaintiffs were defrauded by the plaintiffs transfer of patents to the trust. Beeson v. Crouch, 227 Ga. App. 578, 490 S.E.2d 118 (1997).
Jury/Court Issues
Whether deed was made with intent to delay or defraud creditors is question of fact for jury to decide from all of the circumstances of the case, and whether the debtor is so solvent or insolvent is a question of fact for the jury. Goodman v. Lewis, 247 Ga. 605, 277 S.E.2d 908 (1981) (decided under former Code 1933, § 28-201).
Questions of fraud and bad faith are ordinarily for jury. Mercantile Nat'l Bank v. Aldridge, 233 Ga. 318, 210 S.E.2d 791 (1974) (decided under former Code 1933, § 28-201).
Issues of good faith and grantee's notice.
- Whether there has been sufficient proof of good faith of transaction or of spouse's lack of knowledge of the other spouse's business affairs or debts is a question for determination by jury. Cotton v. John W. Eshelman & Sons, 137 Ga. App. 360, 223 S.E.2d 757 (1976) (decided under former Code 1933, § 28-201).
Issues of fraudulent intent of grantor and notice of grantee.
- Whether conveyance to spouse was made with intent to delay or defraud creditors, and whether such intent was known to party taking, were all questions for jury, under the evidence and a proper charge. Primrose v. Browning, 59 Ga. 69 (1877) (decided under former Civil Code 1863, § 1952).
Whether deed was executed by grantor with intention to delay or defraud grantor's spouse in collection of alimony and such intention was known to grantee or whether transaction was bona fide and for valuable consideration and without notice or ground for reasonable suspicion is ordinarily question for determination by jury. Lewis v. Lewis, 210 Ga. 330, 80 S.E.2d 312 (1954) (decided under former Code 1933, § 28-201).
Whether grantee chargeable with notice of grantor's fraudulent intention.
- It is a jury question whether grantee is chargeable with notice or ground for reasonable suspicion of grantor's intention to delay or defraud creditors. Mercantile Nat'l Bank v. Aldridge, 233 Ga. 318, 210 S.E.2d 791 (1974) (decided under former Code 1933, § 28-201).
When circumstances, if not satisfactorily explained, indicate fraud.
- When transaction between brothers-in-law is attacked by creditor as fraudulent and there are other circumstances besides relationship which, if not satisfactorily explained, may be regarded as badges of fraud, issues are matters to be determined by jury. Hilburn v. Hightower, 178 Ga. 534, 173 S.E. 389 (1934) (decided under former Civil Code 1910, § 3224).
Allegations of fraudulent intent and notice to grantee.
- Petition of wife against husband which alleges that husband executed deed to his attorney, conveying property occupied by wife and children, for purpose of hindering, delaying, or defrauding her in collection of alimony for support of herself and children, and raises question as to whether defendant attorney knew or had reasonable ground to suspect such intention, was sufficient to raise an issue for determination by jury, and it was error for court to grant nonsuit. Lewis v. Lewis, 210 Ga. 330, 80 S.E.2d 312 (1954) (decided under former Code 1933, § 28-201).
Issues regarding execution of release.
- When the exclusion in a liability policy for injuries or death caused by assault or battery applied to a claim against the insured arising from an assault and battery caused by its employee, there was no coverage under the policy, and a release by the insured of any claims it might have against the insurer did not transfer a valuable asset to the insurer in violation of this statute. Jefferson Ins. Co. v. Dunn, 269 Ga. 213, 496 S.E.2d 696 (1998) (decided under former § 18-2-22).
Whether tortfeasor was solvent at time of voluntary conveyance.
- If tortfeasor was insolvent, or left insolvent, when tortfeasor made voluntary conveyance, it was void as against party damaged; and whether insolvent or not, was question for jury. Westmoreland v. Powell, 59 Ga. 256 (1877) (decided under former Code 1873, §§ 1944 and 1952) Primrose v. Browning, 59 Ga. 69 (1877) See also (decided under former Code 1873, §§ 1944 and 1952).
Evidence that deed was voluntary and intended to defeat claim for alimony.
- Evidence that deed executed by the debtor to the testatrix was fraudulent and void because the deed was without consideration and based on a collusive transaction between them, for the sole purpose of defeating the claim of the debtor's spouse for support and alimony, was sufficient to carry the case upon this question to the jury. Blevins v. Pittman, 189 Ga. 789, 7 S.E.2d 662 (1940) (decided under former law).
Nature and adequacy of consideration for mortgage.
- Whether the consideration for which a mortgage is alleged to have been executed is bona fide, or merely colorable to defraud creditors or so inadequate as to constitute a badge of fraud, is a question of fact for the jury. Williams v. C. & G.H. Kelsey & Halsted, 6 Ga. 365 (1849) (decided under former law).
Inconsistent jury findings.
- When a jury's finding of fraudulent conveyance constituted a finding that the defendant's capital was impaired by a stock redemption, that there was a specific intent to cause harm to the plaintiff, the defendant's vendor, and that punitive damages should be awarded against the directors and shareholders, these findings were wholly inconsistent and irreconcilable with the jury's finding against the defendant on its cross-claim, which required a finding either that no unlawful stock redemption occurred or that the stockholders lacked knowledge of its unlawfulness, and the trial court erred in denying the parties' motions for new trial. Docutronics, Inc. v. Reitman, 235 Ga. App. 268, 509 S.E.2d 348 (1998) (decided under former § 18-2-22).
Effect of Invalidating Conveyance
Title to property fraudulently conveyed.
- Fraudulent conveyances are declared void, and title to property so conveyed remains in judgment debtors subject to judgments subsequently obtained. Coleman v. Law, 170 Ga. 906, 154 S.E. 445 (1930) (decided under former Civil Code 1910, § 3224).
Duty of grantee of fraudulently conveyed property to hold in trust.
- When a debtor makes a fraudulent transfer of property or choses in action, which is voidable as to creditors, property in hands of a fraudulent grantee is held by a debtor in trust for creditors of a fraudulent grantor; and if it has been converted into money, the money is impressed with same trust, and the fraudulent grantee will be compelled in equity to account for the money. Edwards v. United Food Brokers, Inc., 195 Ga. 1, 22 S.E.2d 812 (1942) (decided under former Code 1933, § 28-201).
Judgment of creditor rendered after conveyance.
- If a debtor conveys the debtor's property with intent to delay or defraud the debtor's creditors, and grantee takes with knowledge of such intent, the land can be subjected to judgment of one of such creditors rendered after conveyance. Horton v. Black, 137 Ga. 577, 73 S.E. 833 (1912) (decided under former Civil Code 1910, § 3224).
Effect of setting aside fraudulent transfer.
- Edwards v. United Food Brokers, Inc., 195 Ga. 1, 22 S.E.2d 812 (1942) (decided under former Code 1933, § 28-201).
Effect of fraudulent conveyance on rights of subsequent creditors.
- Roach v. Roach, 212 Ga. 40, 90 S.E.2d 423 (1955) (decided under former law).
RESEARCH REFERENCES
Am. Jur. 2d.
- 37 Am. Jur. 2d, Fraudulent Conveyances and Transfers, § 1 et seq.
C.J.S.- 37 C.J.S., Fraudulent Conveyances, §§ 3, 4, 5. 79 C.J.S., Secured Transactions, § 20 et seq.
ALR.
- Conveyance in consideration of future support as fraudulent against creditors, 2 A.L.R. 1438; 23 A.L.R. 584.
Right of grantee or transferee to be reimbursed for expenditures in payment of taxes or encumbrances on property where conveyance or transfer is in fraud of creditors, 8 A.L.R. 527.
Right of creditors as against directors or officers to whom property of a corporation has been transferred for a consideration other than payment of debts due them, 9 A.L.R. 1447.
Right of insolvent to insure life for benefit of relatives, 31 A.L.R. 51; 34 A.L.R. 838.
Preference in event of debtor's insolvency in respect of funds designated or set apart by him for payment of specified obligations, 32 A.L.R. 950.
Right of parent as against creditor or lienor to make gift to minor child of latter's own services, 44 A.L.R. 876.
Delivery of key as satisfying condition of immediate delivery and actual or continued change of possession to uphold sale of personal property against subsequent purchaser or third persons generally, 56 A.L.R. 518.
What constitutes a "general assignment for the benefit of creditors" within provisions of the Bankruptcy Act which make such an assignment an act of bankruptcy, 57 A.L.R. 859.
Validity, as against creditors of trustee or one deriving his right from trustee, of conveyance or transfer to carry out terms of unenforceable parol trust, 64 A.L.R. 576.
Admissibility of subsequent declarations of vendor on issue of whether sale was in fraud of creditors, 64 A.L.R. 797.
Remedy of general creditor or judgment creditor as affected by Uniform Fraudulent Conveyance Act, 65 A.L.R. 251; 119 A.L.R. 949.
Absolute conveyance or transfer with secret reservation as fraudulent per se as against creditors, 68 A.L.R. 306.
Effect of payment to subcontractors or materialmen by owner or contractor, or by sureties on contractor's bond, within four months of principal contractor's bankruptcy, as a voidable preference, 70 A.L.R. 983.
Right of surety or one secondarily liable to bring an action before payment of obligation to set aside fraudulent conveyances by principal, 71 A.L.R. 354.
When statute of limitations or laches commences to run against action to set aside conveyance or transfer in fraud of creditors, 76 A.L.R. 864; 100 A.L.R. 1094.
Right of grantee, mortgagee, or transferee in instrument fraudulent as to creditors to protection to extent of consideration paid by him, 79 A.L.R. 132.
Transfer of property by debtor to corporation, in consideration of its stock, as a fraud on creditors, 85 A.L.R. 133.
Pledge of accounts as affected by pledgor's reservation of partial dominion or control, 85 A.L.R. 222.
Right and remedy as regards application of debt due from insolvent as between debts owed by creditor to insolvent, 86 A.L.R. 993.
Right of creditor to benefit of redemption from, acquisition or extinction of, outstanding right, title, or interest, by grantee or transferee in fraud of creditors, 87 A.L.R. 830.
Persons asserting claim on theory of agency or trust as within term "creditors" in statutes relating to proof of claims against insolvent bank, 89 A.L.R. 383.
Right of executor or administrator to attack conveyance or transfer by decedent as a fraud upon his creditors, or to the benefit of a successful attack by one or more of the creditors, 91 A.L.R. 133.
Uniform Fraudulent Conveyance Act as applied to conveyance between third persons, upon consideration furnished by debtor, 91 A.L.R. 741.
Reservation to settlor of trust or other grantor of right to revoke or change the same, or to withdraw securities or other property items and substitute others, as affecting its validity as against his creditors, 92 A.L.R. 282.
Debtor's intent to defraud or delay creditors within contemplation of attachment statute as inferable as matter of law from fact that he has removed or is about to remove property from the state without making adequate provision for his creditors, 92 A.L.R. 966.
Validity as against creditors of conveyance in trust for settlor for life with remainder to his appointees, 93 A.L.R. 1211.
Right of creditor of decedent, before perfecting his claim or after loss of recourse against decedent's estate, to pursue remedy against property conveyed by the decedent in fraud of his creditors, 103 A.L.R. 555.
Fraud of judgment debtor in concealing assets or misrepresenting his financial condition as affecting failure to issue execution or revive judgment within statutory period or as ground of action for fraud and deceit causing loss of legal remedy on judgment, 104 A.L.R. 214.
Validity and effect as against creditors of change of beneficiary or assignment of insurance policy from estate to individual, 106 A.L.R. 596.
Succession, estate, or gift tax in respect of or as affected by conveyance or transfer restoring to original owner property transferred by him to defraud or delay creditors, 108 A.L.R. 1508.
Fact that debt to pay or secure which conveyance was made was barred by limitation as affecting attack made upon it as a fraud upon creditors, 109 A.L.R. 1220.
Time when limitation commences to run against action at law or in equity based on fraud inducing execution of contract or conveyance as affected by time when actual damages resulted, 110 A.L.R. 1178.
Conflict of laws as regards validity of fraudulent and preferential transfers and assignments, 111 A.L.R. 787.
Liability of one who assists or encourages the making of conveyance or preference in fraud of creditors, by debtor to a third person, 112 A.L.R. 1250.
Right of creditors, or of trustee in bankruptcy, of grantor in conveyance fraudulent as against creditors, in respect of proceeds of insurance upon property, 114 A.L.R. 1374.
Right to attack and conditions of attack upon conveyance, mortgage, or transfer as fraudulent as against creditors as affected by mortgage or other security for indebtedness to attacking creditor, 116 A.L.R. 1048.
Death of grantee or transferee of property conveyed or transferred in fraud of creditors as affecting rights of creditors of grantor or transferor to attach same, 116 A.L.R. 1196.
Complainant's purpose to defraud creditors as defense to suit to recover property paid for him but conveyed to defendant, 117 A.L.R. 1464.
Right of creditors of one spouse, either before or after death of other spouse, to attack conveyance or encumbrance of estate by entireties by both spouses as in fraud of creditors, 121 A.L.R. 1028.
Right of grantee, or his privies, to maintain suit or proceeding for affirmative relief, where claim is made or anticipated that conveyance was made with intention on part of grantor, but without actual fraud by grantee, to defraud former's creditors, 128 A.L.R. 1504.
Conditions of creditor's bill or suit to avoid conveyance as a fraud on creditors where creditor has recovered foreign judgment, 129 A.L.R. 506.
Remedy of general creditor or judgment creditor as affected by Uniform Fraudulent Conveyance Act, 129 A.L.R. 949.
Jurisdiction, and propriety of its exercise, to require real property in another state or country to be applied in satisfaction of debt (including the setting aside of a fraudulent conveyance thereof), 144 A.L.R. 646.
Right to set aside, for benefit of heirs and distributees, a conveyance or transfer by decedent in fraud of his creditors, 148 A.L.R. 230.
Rights as between creditors of grantor or transferor and those of grantee or transferee in respect of property conveyed or transferred in fraud of creditors, 148 A.L.R. 520.
Assignability of executor's or administrator's right to attack conveyance or transfer by decedent as fraud upon his creditors, 150 A.L.R. 508.
Purchase of homestead as fraud on creditors, 161 A.L.R. 1287.
Right of wife or child by virtue of right to support to maintain actions to set aside conveyance by husband or parent as fraudulent, without reducing claim to judgment, 164 A.L.R. 524.
Use of debtor's individual funds or property for acquisition, improvement of, or discharge of, liens on, property held in estate by entireties as a fraud upon creditors, 7 A.L.R.2d 1104.
Rule denying relief to one who conveyed his property to defraud his creditors as applicable where the claim which motivated the conveyance was never established, 21 A.L.R.2d 589; 6 A.L.R.4th 862.
Necessary parties defendant to action to set aside conveyance in fraud of creditors, 24 A.L.R.2d 395.
Right of creditors to attack as fraudulent a conveyance by third person to debtor's spouse, 35 A.L.R.2d 8.
Admissibility of testimony of transferee as to his knowledge, purpose, intention, or good faith on issue whether conveyance was in fraud of transferor's creditors, 52 A.L.R.2d 418.
Admissibility, in prosecution for criminal burning of property, or for maintaining fire hazard, of evidence of other fires, 87 A.L.R.2d 891.
When statute of limitations or laches commences to run against action to set aside fraudulent conveyance or transfer in fraud of creditors, 100 A.L.R.2d 1094.
Debtor's transfer of assets to representative of creditors as effectuating release of unsecured claims, in absence of express agreement to that effect, 8 A.L.R.3d 903.
Conveyance as fraudulent where made in contemplation of possible liability for future tort, 38 A.L.R.3d 597.
Right of secured creditor to have set aside fraudulent transfer of other property by his debtor, 8 A.L.R.4th 1123.
Right of creditor to recover damages for conspiracy to defraud him of claim, 11 A.L.R.4th 345.