Reynolds v. Vilas

— 478 — By the Court, Cole, J. On the trial of this cause in the circuit court, the plaintiff in error, who was the plaintiff below, requested the court, among other things, to instruct the jury as follows: “ That if they believed that the sheriffs sale to Shackelford was without consideration, and for Doty’s benefit, and the deed from Doty to Goodell was a good and valid deed, made in good faith and for a valuable consideration, and was duly recorded prior to any conveyance of the same lots by Shackelford to Covall, through whom the defendant claims title, then the sheriff’s deed was void as to Goodell and his grantees.” This instruction was refused and exception duly taken. And the main question which we propose now to consider, is, was the instruction right in point of law, and proper under the evidence in the case to be given to the jury? We are of the opinion that it was. In order to perceive the application of the instruction more clearly, it will be necessary to bear in mind some of the facts of the case as they appeared in the evidence or were offered to be proven on the trial. The defendant to defeat the action, with other testimony, had offered in evidence, transcripts of certain judgments from the counties of Brown and Milwaukee, in favor of Alanson Sweet, and against James D. Doty, and the execution and vend. exp. issued thereon, by virtue of which the premises in controversy had been sold by the sheriff of Dane county, on the 16th day of August, 1842, to Barlow Shackelford, and had also offered in evidence the certificates of sale, made and filed by the sheriff; and the sheriff’s deed to the purchaser, Shackelford, which bore date, August 17th, 1844. From the plaintiff’s case it appeared that Doty had conveyed the premises on the 25th day of February, 1843, to Goodell, through whom the plaintiff, Reynolds, claimed title. Further, it appears that on the trial the plaintiff — 479 — insisted and had offered to prove for the purpose of impeaching and avoiding the sheriff’s deed that the judgments in favor of Sweet had been paid and satisfied prior to the sale on the execution issued thereon ; that the purchaser, Shack-elford, had full notice of such payment and satisfaction; that the sale Avas made for the benefit of Doty, and by collusion between him and Shackelford to defraud the creditors and subsequent purchasers of Doty; and that no consideration passed at the sheriff’s sale from Shackelford. All this testimony being objected to was ruled out by the court. The real question fairly piesented by the instruction and the ruling of the courUn rejecting this evidence may be stated to be this: It being made to appear that the sheriff’s sale to Shackelford was without consideration and for Doty’s benefit, and intended by the parties to it to defraud prior or subsequent purchasers of the same premises; and that the deed from Doty to Goodell was a good and valid deed made in good faith and for a valuable consideration, and placed upon record prior to any conveyance from Shackelford, whether these facts existing or being satisfactorily established, the title derived from Goodell would prevail against a title claimed through Shackelford? The determination of this question will depend upon the operation of the statute in force at the time of the execution of these several conveyances. The first section of title one of the act to prevent fraudulent conveyances, and contracts relative to real and personal property found in the R. S. of Ter: of Wis., page 161, reads as follows: “ That every conveyance of any estate or interest in lands and every charge upon lands or upon the rents and profits thereof made or created with the intent to defraud prior or subsequent purchasers for a valuable consideration of the same lands, rents or profits, as against such purchasers shall be void.” It will be noticed that this provision is a substantial transcript of the statute of 27, Eliz. c. 4, (Bac. Ab., — 480 — Title "Fraud” C.,) which would probably have controlled the case in the absence of any special enactment, and which has received frequent construction as well in the courts in England as in the various State and federal courts in this country. It may be well to premise here that we do not suppose in view of the statute just cited, and under the circumstances of this case, there can be really any material distinction in principle between a sheriff’s sale made as this was alleged to have been made for the purpose of fraud and a private sale. For it would seem if the sale and conveyance were actually made with the intent to defraud prior or subsequent purchasers for a valuable consideration of the same lands, the parties could not avoid the expressed consequences of the statute by resorting to the idle ceremony of a sheriff’s sale under an execution. Assuming therefore that the condition of the case is not otherwise than it would have been, had Doty directly made the deed to Shackelford, voluntarily and with the intent to defraud subsequent purchasers for valuable consideration, how does the matter stand ? Doty and Shackelford, according to the assumption, collude together to have a judicial sale, made under executions issued upon judgments paid and satisfied, with the intent thereby to defraud subsequent purchasers. Now if we had not the light which numerous cases, decided by the most eminent judges, have thrown upon this statute, or one in pari materia, still, by giving the language of the statute, its fair, ordinary meaning, is there room for a reasonable doubt that a conveyance, admitted to be fraudulent in its very inception, fictitious, without consideration, and for the benefit of the real grantor, and which was designed by the parties to it to defraud subsequent purchasers, must be, as against a subsequent purchaser, void? We think not. Courts in England have gone so far in their construction of the statute of 27, Eliz., as to hold that a voluntary conveyance in law was fraudulent and void against a subsequent purchaser — 481 — for valuable consideration even with notice. Evelyn vs. Templar, 2 Brown, Ch. R., Eden’s edition, 148; Doe ex dem. Otley vs. Manning, 9 East., 59. Lord Ellenborough in Perry vs. James, 16 East., 212, says notice of a prior voluntary settlement cannot vary the question, for it amounts to only a notice of a settlement which was void against a subsequent purchaser for a valuable consideration. The Master of the Rolls, in the case of Buckle vs. Mitchell, 18 Ves. Jr., 110, also stated, that the statute of 27 Elizabeth, had received the construction that a voluntary settlement however free from actual fraud, is by the operation of that statute deemed fraudulent and void against a subsequent purchaser for valuable consideration, even where the purchase has been made with notice of the prior voluntary settlement, “ and it is settled in England,” says Chancellor Kent, 4 Gom., p. 514, of eighth edition, “ that a voluntary conveyance, though for a meritorious purpose, will be deemed to have been made with fraudulent views, and be set aside in favor of a subsequent purchaser, for a valuable consideration, even though he had notice of the prior deed.” See also Pulvertoft vs. Pulvertoft, 18 Ves., 84. But the authorities do not extend the doctrine so far in this country. The American doctrine is that a bona fide purchaser for valuable consideration is protected under the statutes of 13 and 27 Elizabeth, as adopted in this country, whether he purchases from a fraudulent grantor or a fraudulent grantee; and there is no difference in this respect between a deed to defraud subsequent creditors, and one to defraud subsequent purchasers. They are voidable only and not absolutely void. 4 Kent. Com., 8th edition, p. 516; Anderson vs. Roberts, 3 J. C. R., 371; same case in 18 J. R., 515; Bean vs. Smith, 2 Mason, 251; and in the following cases, a conveyance actually fraudulent has been held to be void against a subsequent purchaser for valuable consideration, even with notice. Ricker vs. Ham, — 482 — 14 Mass., R. 137; Clapp vs. Leatherbee, 18 Pick., 131; Clapp vs. Tirrell, 20, id., 247; Verplank vs. Sterry, 12 J. R., 536; 7, B. Mon., 11; 10 Ala. R., 348; 4 McCord, 295. C. J. Marshall in Cathcart et al. vs. Robinson, 5 Peters, 264, states that a subsequent sale to a bona fide purchaser without notice is evidence that a prior voluntary conveyance was fraudulent. From these authorities, and others to the same effect, which might be cited if necessary, it would seem to be clear and incontestible, that if the judgments in favor of Sweet were paid prior to the sheriff's sale, and Shackelford had full knowledge of the fact of such payment, and the sale was made by collusion between Doty and Shackelford for the purpose of defrauding the creditors and subsequent purchasers oí Doty, that while a court would not aid Doty in setting aside this sale, and the sheriff’s deed founded upon it, still it must interfere to protect a subsequent purchaser for a valuable consideration, seeking to avoid a title claimed through the sheriff’s deed. What the consideration in the deed from Doty to Goodell was, does not very clearly appear from the printed case, Doty’s recollection upon the point is not distinct, and he is rather inclined to the belief that the only consideration was that Goodell should build upon the lots. The deed is not in the record of the case, and we cannot therefore refer to it to satisfy ourselves upon this matter. But the counsel for the plaintiff in error on the argument stated that the deed was for a valuable and not a nominal or good consideration, and probably the consideration expressed in the deed must be taken as prima facia evidence of the real consideration until the contrary appears. The acknowledgment of consideration in the deed in the case of Clapp vs. Terrell, 20 Pick., 247, was considered as mere prima facia evidence which might be controlled and rebutted by parol proof; and we are disposed to adopt this rule, although other cases hold the contrary doctrine, Rogers vs. Hall, 4 Watts R., 359; Kimball vs. Turner, 12 N.H., 248. — 483 — But the instruction asked for went upon the assumption that the deed from Doty to Goodell was a good and valid deed, made in good faith and for a valuable consideration, and we must therefore presume that Goodell paid a real and valuable consideration for the lots. If these views are correct it must follow that the first instruction asked for by the plaintiff in error was right in point of law, and ought to have been given to the jury. It also follows that the circuit court erred in its general charge by holding that the defendant’s right in the premises was not affected by any fraud, if fraud there was between Doty and Shackelford; but for the purposes of the case the sale by the sheriff to Shackelford must be treated as a valid sale, and as a conveyance destroyed Doty’s right and power to convey title by his deed to Goodell. It was insisted on t.he argument by the counsel for the defendant that since the sheriff’s deed related back to the time of sale under the execution, we must hold that the defendant was a purchaser in good faith without any notice of the collusion or fraud between Doty and Shackelford, and was in possession claiming under the oldest title. Without dwelling at any length upon this proposition we remark this difficulty. Before the giving of the sheriff’s deed to Shackel-ford, and before any attempt on the part of Shackelford to convey away the premises, Doty, the frudulent grantor, had conveyed the lots to Goodell for a valuable consideration. As between Doty and Shackelford the sheriffs’s deed might be deemed a valid conveyance; certainly a court would not interfere to enable Doty to avoid the deed and relieve himself from the consequences of his own misconduct. Had Shack-elford conveyed the estate to an innocent purchaser for a valuable consideration before Doty had done so, the case would be materially different; the benefit of the statute would extend to any bona fide purchaser for a valuable con — 484 — sideration whether he purchased from the fraudulent grantor or.the fraudulent grantee. The fraudulent grantee would take the estate of the fraudulent grantor, and the deed would be voidable at the instance of a subsequent purchaser, but not legally and strictly void. Had Covall therefore obtained his deed from Shackelford in good faith, and for a valuable consideration, before the conveyance from Doty to Goodell, he or the defendant claiming under him would have taken the title free from any defect arising from the conduct of Doty or Shackelford. But this he did not do, and he cannot for this obvious reason claim the benefit of the statute. In the former opinion given in this case we expressed a doubt as to whether the sheriff’s deed to Shackelford could be impeached in a court of law for fraud. The case did not probably call for the expression of any opinion upon that point, and we might not in this respect be sustained by the authorities. Under the old practice the usual way to set aside deeds for fraud was by filing a bill in chancery for that purpose. Whether it was or was not competent for a court of law to set aside a deed impeached for fraud we shall not stop to inquire, for it is immaterial in this case. Under the ¿ode of proceedure all distinction between equitable and legal actions is abolished and the provisions of the code must apply to the trial and subsequent proceedings in this case. Code, §, 356, sub. 2. We therefore think it very obvious that the sheriff’s deed in this case might have been impeached on the trial. The judgment of the circuit court must be reversed and a new trial ordered.