Kerr v. Birnie

Bowen, J. A rehearing of this case having been granted heretofore, the same was reargued at the last term of this court. The case was fully stated by Chief'Justice Walker, who delivered the opinion of the court. We will, therefore, make no further statement, but pass at once to the consideration of the questions involved. The 4th section of our statute provides that “ every conveyance or assignment in writing, or otherwise, of any estate or interest in lands, * * * * """ * made or contracted with intent to hinder, delay, or defraud creditors or other persons of their lawful actions, damages, forfeitures, debts, or demands, as against creditors and purchasers, prior and subsequent, shall be void.” “ Section 4. No such conveyance or change shall be deemed void in favor of an innocent subsequent purchaser, if the deed or conveyance shall have been duly acknowledged or proven, and recorded, or the purchaser have actual notice thereof, unless it shall appear that the grantee in such conveyance, or the person to be benefited by such change, was party or privy to the fraud intended.” The first point claiming our attention is the alleged fraud on the part of Charles A. Birnie, sr., as against his creditors, in the matter of the conveyance of the real estate in controversy to his son, Charles A. Birnie, jr., by the deed of date October 30, 1858. As a general rule, when a deed is assailed on the ground of fraud, the onus is upon the party attacking. 'In this case, however, the grantor remained in possession of the property. The witnesses, the nearest neighbors, and one of them a brother of Birnie, sr., knew nothing of Birnie, jr.’s, claim to the property. Birnie, sr,, held it for sale as his own long after the execution of the deed to his son, and actually did, on the 28th day of April, A. I). 1863, again sell and convey the same, by deed, to Mrs. Kerr and Katharine Kerr, her daughter, the appellants. Birnie, jr.’s, wife was present at the sale, and he, though absent at that time, was present when possession was delivered to Mrs. Kerr, and made no objection nor mention of any claim or title at that time, and, indeed, never, until after the death of his parents, which occurred in December, 1863, and July, 1865. At the date of the deed by Birnie, sr., to his son, on the 30th of October, 1858, the former was in embarrassed circumstances. Two suits were pending against him in the circuit court of Sebastian county. The bill in this ease denies the payment of the consideration named in the deed from Birnie, sr., to Birnie, jr. In our opinion, the fact of the continued possession of the property by the former, for the long space of time intervening between the date of his deed to Birnie, jr., and the date of his deed to Mrs. Kerr and daughter, and the fact of his having executed the last mentioned deed, to say nothing of the other circumstances alluded to, -would be sufficient to change the onus, and throw upon the party attempting to sustain the deed the burden of proving the actual payment of the consideration named therein. Having entirely failed to do so, we must, conclude that there was no consideration. This, in connection with ■ the fact of the embarrassed circumstances of Birnie, sr., before alluded to; the fact that Birnie, jr., ivas a young man without property ; the fact of the continued possession of Birnie, sr., of the property after the deed to Birnie, jr., his son; the fact of the subsequent sale by the former of the same property to Mrs. Kerr and daughter, and the fact that Birnie, jr., was present when possession was delivered to Mrs. Kerr, and made no objection nor mention of any claim of his to the property, all taken together, lead us irresistibly to the conclusion that the deed by Birnie, sr., to his son, on the 30th of October, 1858, ivas without consideration, and made with intent to defraud his creditors, who were at that time pressing their claims before the circuit court of Sebastian county, and Birnie, jr., was necessarily, under the circum-' stances, both party and privy to the fraud of his father — his connection therewith relating back to the date of the deed to him, he having attempted to hold the property thereunder. It may be observed, in this connection, that the allegation in the bill that young Birnie was grantee in his father’s fraudulent deed, and that the consideration named ivas not in fact paid, sufficiently charges him with being party to the fraud of his father to admit the evidence upon that point. From the qualifying clause of the statute, found in section 4, “ unless it shall appear,” &c., as already recited at length, it will be seen that Mrs. Kerr’s notice (constructive) of the former conveyance, by Birnie, sr., to his son, is a point of no importance in this case. The fact that the deed to Birnie, jr., ivas recorded before the purchase of the property by Mrs. Kerr and daughter, does not affect the rights of the parties in any manner, because Birnie, jr., was party and privy to the fraud of his father. "Were this fact otherwise, the registry of his deed would have given him priority, and his title could not have been successfully called in question. The seeming conflict of judicial opinion, upon this question of notice, which we find in the authorities cited by counsel, arises, in some instances, from the fact that the statutes in relation to fraudulent conveyances are, although, similar, very different in different States. In other instances, from the fact that the word “notice,” as used, sometimes relates to notice of the fraud; at others, to notice of the former conveyance. Still there is some conflict. Where notice is at all material, the distinction between actual and constructive notice should be observed. Whatever may be the effect of actual notice, we are clearly of opinion that while constructivo notice, such as the registry of a deed, is ample for the purpose of settling questions of priority between bona fide grantees — neither of whom are in any manner connected with the fraud of the grantor — it is not sufficient of itself to charge the last purchaser with being, even constructively, a party to the fraud intended by the grantor and the first purchaser upon the creditors of the grantor. In this case, Mrs. Kerris notice of the former conveyance was only constructive. Had she had actual notice of the former deed to Birnie, jr., and had she purchased the property under such circumstances, she would necessarily'have known why Birnie, sr., had executed the former deed to his son, before she would have purchased. She Avould then have been as much a party to the fraud upon the creditors of Birnie, sr., as that individual himself, or his son, and could not have successfully claimed the benefit of the provisions of the statute, as an innocent subsequent, purchaser. ConstructiA’o notice, as we have already said, does not affect the rights of Mrs. lien-to such an extent. She is, therefore, an innocent purchaser, and entitled to relief. The ansAver herein fails to deny the positi\-e allegation in the bill, that the consideration named -in the deed from Birnie,, sr., to Birnie, jr., a vas mwer, in fact, paid, but simply recites the Avords in the deed to that effect. The ansAver does, IioavOArer, allege that Charles A. Birnie, jr., remained in profound ignorance of the sale by 1ns father to Mrs. Kerr and daughter until after he had left home, AA'hich Avas on the last day of August. A. I). 1803. Tliis statement is flatly contradicted by the testimony of Dr. Main and Thomas Quinn, both of whom conversed with him upon the subject during his sojourn at home in tha¡fc month. From them we learn that he not only knew of the sale to Mrs. Kerr, but acquiesced in it. In the consideration, therefore, of this case, the answer, as a matter of evidence, has had but little, if any, weight upon the mind of the court. Counsel for appellees raise the question of the illegality of the consideration paid by Mrs. Kerr to Birnie, sr. Upon that point we have only to say, that the contract is an executed one, and we have only to concur in the well established rule not to interfere upon the ground urged. Counsel for appellee also urge that the facts set up by this bill are not such as to warrant the interposition of a court of equity. To be brief, among other things, it is alleged that there was no delivery of the deed from Birnie, sr., to Birnie, jr., and that, therefore, Mrs. Kerr should have made her defense to the action of ejectment, the judgment wherein, she now seeks to enjoin. ¥e must consider the bill as a whole; and, in doing so, we conclude that the allegation, “that the deed was never delivered by Birnie, sr., to Birnie, jr.,” was recited as one of a chain of circumstances tending to show the fraud against the creditors of Birnie, sr. Especially, as the statement is followed up by another showing that said deed was caused to be recorded by Birnie, sr., which was of itself such a delivery as would have enabled Birnie, jr., to hold the property as against Birnie, sr., and as shown by these proceedings, to attempt to do so against the whole world. The decree of the Sebastian circuit court is reversed. Complainants’ prayer will be granted, the deed to Birnie, jr., canceled, and the injunction made perpetual here.