Souder v. Schechterly , 91 Pa. 83 ( 1879 )

Mr. Justice Sterrett

delivered the opinion of the court,

The controversy in this case hinged on the validity of the voluntary conveyance of April 30th 1866, executed by William E. Souder, in favor of his wife, the plaintiff in error. The deed was assailed on the ground of actual as well as constructive fraud ; and there was a verdict in favor of the plaintiff below, who claimed as purchaser at sheriff’s sale under a judgment obtained in December 1873 against the administrators of Souder with notice to his widow and heirs. It may be conceded that if the deed from Souder to his wife was fraudulent, as alleged, the plaintiff below was entitled to recover.

Testimony was introduced for the purpose of proving that Souder was indebted to several persons at the date of the conveyance. It was shown that on an open account, he then owed B. E. Reighart a balance of $277; that the account ran on several years thereafter, during which there were credits and payments on account made by Souder without any specific application thereof by either party, amounting to between four and five hundred dollars. It was claimed by the plaintiff in error that in the absence of any specific appropriation of payments by the parties, the law would apply them in their order to the oldest items of the account, including those prior to April 30th 1866; that in this way the indebtedness existing at the date of the conveyance was fully extinguished, and the claim, consisting of the later items, would rank as a debt contracted subsequent to the conveyance, to which the doctrine of legal or constructive fraud, in the absence of actual fraud, would not apply. A point to this effect was submitted to the court, and in refusing the same the learned judge said: “ The book-account was but one debt. The law, in the absence of any agreement of the parties, would apply the payment to the whole debt. At most, therefore, payments made after 1866, can only be considered as applicable ratably on the whole debt, the old as well as the new, consequently there would be a portion of tha-t debt at least due in 1866. The purpose of giving in evidence the debts of 1866 is to bear upon the question of the intent with which the conveyance was made by Mr. Souder to his wife, and of course received by her; for if he was guilty of fraud, she was equally guilty, ‘because she paid no money for the property, and his intent, therefore, is attributable to her in the whole course of the transaction.” This answer has been assigned for error.

The general rule is that a debtor may appropriate his payments as he sees fit at the time of making them; but if neither he nor his creditor makes any specific application of them the law will do so. In the case of running accounts, composed of various items of debit and credit occurring at, different times, and no special appropriation of the payments is made by either party, the law will apply the successive payments or credits to the discharge of the debit items antecedently due in the order of time in which they stand in the account; in other words, each item of payment or credit is applied in extinguishment of the earliest debit items in the account, until the whole payment or credit is exhausted: 1 Story’s Eq. Jur. 459, a ; Pierce v. Sweet, 9 Casey 151; Hollister v. Davis, 4 P. F. Smith 508. There are some exceptions to this rule, but there is nothing in the circumstances of the present case to bring it within any of them. In answer to defendant’s first point the learned judge had already instructed the jury, that as to any debt due by Souder at the time of the conveyance to his wife, its payment by him afterwards and before her title was controverted, will relieve the case from any imputation of fraud as to such debt. The balance due Reighart was the only debt, existing at the date of the conveyance, that was not disputed, and as the jury were practically instructed that it was not fully discharged by the subsequent payments, the error was likely to be prejudicial to the defendant below and may have carried the verdict against her.

The remaining assignments of error, relating to the admission of testimony as to acts and declarations of Souder subsequently to the conveyance to his wife, are not sustained.

The general rule, applicable more particularly to conveyances for a valuable consideration, undoubtedly is, that the declarations of the grantor, made after he has parted with his title, are not admissible for the purpose of impeaching it; but the rule has been so modified that when the bona tides of the transaction is assailed by creditors on the ground of fraud, and some testimony is introduced tending to show collusion, then such subsequent declarations of the grantor are admissible: Hartman v. Diller, 12 P. F. Smith 37. The same principle is recognised in Scott v. Heilager et al., 2 Harris 238; McElfatrick v. Hicks, 9 Id. 402; Confer v. McNeal, 24 P. F. Smith 112, and Tripner v. Abrahams, 11 Wright 220. It is said in Rodgers v. Hall, 4 Watts 359, that the least degree of concert or collusion between parties to an illegal transaction makes the act of one the act of all. While the evidence of collusion in this case was very slight, there were some facts and circumstances connected with the transaction that were proper for the consideration of the jury, and justified the court in receiving the testimony, and submitting it to the jury, as was done, with carefully guarded instructions.

Judgment reversed and a venire facias de novo awarded.