Jordan v. Sharp

Albert, J. On the 26th day of January, 1926, a judgment was entered of record in Crawford County, Iowa, in favor of the plaintiff herein, against Brinten Sharp, defendant, for the sum of $2,484.93, together with interest and costs. This action was to set asid.e and cancel a conveyance made by Sharp to his wife, and to subject a certain quarter section of land in Section 22 in Crawford County, Iowa, to the payment of said judgment. *12 The case turns largely, if not wholly, upon the facts. The record fairly shows the following facts in the case: The defendants were married in Pennsylvania in 1889, and moved to Iowa about 1891. Anna M. Sharp had at that time $300, which she turned over to her husband, Brinten Sharp, which she says he agreed to pay back to her, with interest at 5 per cent. They later went to South Dakota, and took up a homestead, which homestead they traded for a house and lot in Yail, Iowa, which they sold for $1,000. This money was divided between them, and' Anna later let the husband have her share. There is no showing that there was any agreement or understanding that the same was to be repaid, and nothing was said about interest. This $1,000 was used to buy 160 acres of land south of Dow City, onto which they moved, and proceeded to farm the same. They later sold this land, realizing something like $2,000 therefrom, and then purchased 240 acres with the proceeds, which they later sold, realizing, as the net proceeds thereof, the sum of $9,000. This money was again divided equally between them. The wife then bought a house in Dow City, paying $1,200 therefor, and she claims to have loaned the balance, $3,300, to her husband, at 6 per cent interest. At the time the $9,000 was divided between them, the $300 originally loaned by Anna to her husband was settled and disposed of. The $3,300 was used by Brinten Sharp in the purchase of a livery business, which was later traded for land in South Dakota. This was afterwards lost. The house which was bought in Yail was traded in, as a part of the purchase price of the quarter section in controversy, it being taken in at $2,000; and that was all that was paid down on the purchase of this tract of land. At the time they purchased this land, there was a $10,000 loan on the same, which is still unpaid. In March, 1922, Brinten Sharp executed to his wife a quitclaim deed to this quarter section of land, the consideration recited being “one dollar, love, and affection.” The title to this land at all times until this deed was made by Brinten Sharp to his wife was in his name. The land had been sold by him on contract to one Carlson, who was unable to carry out his contract, which by mutual agreement was rescinded. This occurred in 1922. On the 8th of September, 1922, Anna Sharp quitclaimed this land to her husband, reciting, as a consideration, “one dol *13 lar, love, and affection.” She-explains this deed by claiming tbat it was déeded to her busband, to tbe end tbat be would be in position to -forfeit or make settlement witb Carlson on tbe contract tbat be (tbe busband) bad witb Carlson for tbe sale of tbis land: Tbe title stood thus until tbe 30th of June, 1924, when Brinten'Sharp executed a warranty deed to bis wife, Anna Sharp, for tbe same. In 1918, Brinten Sharp went to Texas, where be bought a tract of 31 acres of land at $325 per acre, on which he paid $1,000, — evidently all bis own money. Tbis seems to have been against tbe wife’s wishes; but after he bad made tbe deal, sbe drew her money from the bank and sent it, to complete tbe transaction. There is no claim tbat tbis money was sent under an agreement to repay, nor is there any claim tbat the busband was to pay interest'thereon. The record is silent as to whose name tbe title was taken in, nor does tbe record show tbe final disposition of tbe same. Tbe wife insists in her testimony tbat in all of these transactions sbe was a “copartner,” except possibly in tbe Texas land. By tbis term we assume tbat sbe meant tbat sbe was jointly interested in all of these transactions. She says in her' testimony: “I thought I was in partnership witb my busband all the time. Tbat was tbe agreement, and I was tbe same as a partner, and bad a half interest. My busband thought tbat we were to own tbe property jointly, although it was in my name. Tbat was my understanding all of these years: although tbe title would be in bis name, the property would in fact be owned by us jointly; tbat I should have a full partnership witb him in every piece of property be took in bis name, — but I didn’t have anything to do with tbe Texas land. The other pieces of property, I understood from tbe arrangement witb my busband, were half mine and half bis.” If it be assumed tbat her contention in this respect is true, tbat sbe was tbe owner of a half interest in tbis property prior to 1922, when tbe first deed was made to her by her busband, the question then is whether or not plaintiff’s contention is true, that, when be bought these notes, be was aware of the fact tbat the title to tbis property was in Brinten Sharp’s name, and relied thereon in tbe purchase of the notes. This is one of the *14 disputed questions in the record. Sharp and his wife both testified that, on different occasions before plaintiff bought the notes on which the judgment was rendered, as heretofore recited, they advised him that she was the owner of this property. This knowledge Jordan denies, and says that, if any such statements were made in his presence, he did not hear the same, because he was afflicted with deafness. . This matter, however, raises a wholly false issue. It is to be remembered that, when Jordan bought this note, in 1919, he had no dealings whatever with either of the Sharps. He did not extend credit to them, and since he purchased the note from a third party, the fact (if it be a fact) that the wife owned this property, but allowed the title to remain in her husband, could not operate as an estoppel, because neither of the Sharps was making any representations to him as to the title to said property, and they were not inducing him to part with anything to them or to extend credit to either of them. Under these circumstances, the plaintiff was not entitled to avail himself of these facts, — if they be facts, — as a basis for an estoppel against the wife. That a creditor may take security for debts due him even though he is aware that the purpose of the debtor in giving it is to injure, delay, and defeat and thus defraud other creditors, is well recognized in this state. See Chase, Merritt & Blanchard v. Walters, 28 Iowa 460; Kohn Bros. v. Clement, Morton & Co., 58 Iowa 589; Southern White-Lead Co. v. Haas, 73 Iowa 399; Richards v. Schreiber, Conchar & Westphal Co., 98 Iowa 422. But, if the creditor knows of the fraudulent purpose of the debtor and accepts the mortgage wholly or in part to aid in accomplishing it, he participates in the wrong, and the mortgage is fraudulent against creditors although it was only on a reasonable amount of property to secure a valid debt. Headington v. Langland, 65 Iowa 276; Crawford v. Nolan, 70 Iowa 97; McCreary v. Skinner, 83 Iowa 362; Clark v. Raymond, 86 Iowa 661; Richards v. Schreiber, Conchar & Westphal Co., supra. If the indebtedness existed, as claimed by Mrs. Sharp, she had the same right as any other creditor to secure or receive payment of said indebtedness by this conveyance, provided that she did not participate in the intent on the part of the husband to defraud creditors. This is one of the cases where, although we are not bound by the decision of the lower court, in view of *15 the disputed facts in the case we ¿re disposed to hold that there was a fair consideration for this deed, and that it was not made in fraud of creditors. Viewing the transaction as a whole, we feel that the decision of the district court was right, and the judgment is af firmed. — Affirmed. Evans, C. J., and Stevens, Db Graff, Vermilion, Morling, and Kindig, JJ., concur.