Bond v. Ellison

Mr. Justice Bean delivered the opinion of .the court. 1. Ellison claims under his mortgage as an innocent purchaser for value without notice. This is an affirmative defense, and is alleged by the defendant, and must be proved: Weber v. Rothchild, 15 Or. 385, 389, 391 (15 Pac. 650, 3 Am. St. Rep. 162); Hyland v. Hyland, 19 Or. 51, 55 (23 Pac. 811); Barnes v. Spencer et al., 79 Or. 205 (153 Pac. 47, 51). 2, 3. The main question presented in this case is one of fact. Bealizing the importance of the suit, the [638] number of people interested, and the amount involved, we have given the record our most careful attention and consideration. The evidence is overwhelmingly in favor of the contentions of the defendant James Ellison, who in good faith loaned $25,000 on the security of the land in question without any notice or knowledg'e of any equities of the claimants. While looking-back it might possibly seem otherwise, yet at the time of the execution of the mortgage there was no real ground for suspicion of bad faith on the part of the defendant. To mention one instance will, perhaps, suffice. Ellison owned some bonds in the Columbia Eiver Orchard Company and by De Larm and his confederates was induced to believe that the Wahluke project would in the end come out all right. He was not warned nor informed to the contrary. He was “roped in” by De Larm and his assistants. On the other hand, showing the astuteness of these men, the several plaintiffs in these cases, who also now own bonds of the Columbia Eiver Orchard Company, were warned by a local bank in the vicinity of the project that the bonds “were not first class,” and yet De Larm and his coconspirators succeeded in convincing them that the bank was unfriendly to the project and its promoters, and that the bonds were all right.- The corporation is defunct, and some of the promoters have been prosecuted and punished. Our statute provides that every conveyance or as-, signment in writing of any estate or interest in lands, and every charge upon lands made with the intent to. hinder, delay- or defraud creditors, or other persons of their lawful suits or damages, with the like intent, as against the persons so hindered, delayed or defrauded, shall be void: Section 7397, L. O. L. The question- of fraudulent intent in all cases arising under [639] the provisions of this chapter shall be deemed a question of fact and not of law: Section 7400, L. O. L. The provisions of this chapter shall not be construed in any manner to affect or impair the title of a purchaser for a valuable consideration, unless it shall appear that such purchaser had previous notice of the fraudulent intent of his immediate grantor, or of the fraud rendering void the title of such grantor: Section 7401, L. O. L. In order to avoid a sale upon the ground of fraud, the vendee must have had notice of the vendor’s fraudulent designs. Notice of the fraudulent intent of the vendor may be inferred from the circumstances; but the mere negligence or want of diligence in not inquiring into the facts known to him and calculated to put him upon inquiry is not sufficient to charge him with notice of fraud. Hence the question is whether or not James Ellison did in fact know or believe that the mortgagors intended to defraud anyone, and not whether or not he was negligent in failing to discover the fraudulent intent: Bowman v. Metzger, 27 Or. 23 (39 Pac. 3, 44 Pac. 1090); Jennings v. Frazier, 46 Or. 470 (80 Pac. 1011); Livesley v. Heise, 48 Or. 147 (85 Pac. 509); Ball v. Danton, 64 Or. 196 (129 Pac. 1034); Coffey v. Scott, 66 Or. 465 (135 Pac. 88); Van Raalte v. Harrington, 101 Mo. 603 (14 S. W. 710, 20 Am. St. Rep. 626,11 L. R. A. 424); Stearns v. Gage, 79 N. Y. 102. We are convinced that the findings and decree of the lower court were correct. The decree is therefore affirmed. Affirmed. Mr. Chief Justice Moore, Mr. Justice McBride and Mr. Justice Burnett concur. Mr. Justice Harris took no part in the consideration of this case.