Saling v. First Nat. Bank

BENNETT, J. 1. As to the first affirmative defense offered by the bank, we think the decree must be sustained. It seems to be clearly proven by the evidence that the plaintiff retook possession of the property at least two weeks before defendant’s attachment. This, of itself, would seem to be sufficient notice to put the defendant upon inquiry, and to place upon it the burden of diligence to inquire of the plaintiff as to the nature of his possession. In addition to this, it is admitted that about the time Charles A. Saling turned possession over to his father, he informed the defendant, through its proper officers, that he had given up the deal and turned the property back to his father. It is true he did not specifically say he had deeded the property back, but we do not think that was necessary under the circumstances, or that the defendant could disregard the information it had, and refrain from making any inquiry from the plaintiff as to the circumstances under which the property was turned back, and still claim to be an innocent purchaser without notice. 2. Section 301, L. O. L., provides as follows: “From the date of the attachment, until it be discharged or the writ executed, the plaintiff, as against third persons, shall be deemed a purchaser in good faith and for a valuable consideration of the property * * attached.” — 242 — The language of this section might seem broad enough to put an attaching claimant in the place of a bona fide purchaser without notice, where the record title is in the name of the attached debtor, without regard to actual notice or knowledge of adverse equitable claims. But it seems well settled in this state that such an attaching claimant, notwithstanding the statute, takes subject to any adverse claims of which he has knowledge or sufficient notice to put him upon inquiry: Boehreinger v. Creighton, 10 Or. 42 (23 Pac. 807); Riddle v. Miller, 19 Or. 468 (23 Pac. 807); Dimmick v. Rosenfeld, 34 Or. 101 (55 Pac. 100); Flegel v. Koss, 47 Or. 366 (83 Pac. 847). In Riddle v. Miller, 19 Or. 468 (23 Pac. 807), it is said: “Acts of that character have always been construed as giving to a creditor, under such circumstances, such rights only as he would acquire under a voluntary sale of the property to him by the debtor' for a valuable consideration. They operate to cut off the equities of third persons in the property, where the proceeding under them is taken and perfected without any knowledge of such equities. In the latter case, the equities between the parties being equal, the law prévails; but where a creditor resorts to such a proceeding who is informed of the outstanding equity, or of facts sufficient to put him on an inquiry by which he could ascertain the existence of such equity, the lien he secures thereby will be subject to it.” These authorities seem to be entirely conclusive as to the defendant’s first defense, and entirely justify the findings of the court in relation thereto. We think, however, that the court erred in sustaining the plaintiff’s demurrer to the defendant’s second affirmative defense, which is as follows :- “That at all times herein the plaintiff, William A. Saling, and C. A. Saling were father and son. — 243 — “That on or about the eighth day of March, 1918, said O. A. Saling, son of William Saling, plaintiff herein, came to the bank of defendant and asked for the loan of one thousand dollars; that for the purpose of inducing defendant to make said loan, whieh defendant would otherwise have refused to make, said C. A. Saling represented that he had purchased his father’s dairy farm, the same being the property described in plaintiff’s complaint, and that he needed the thousand dollars to pay to his father, William A. Saling, plaintiff herein, as first payment on the same. Said C. A. Saling further represented to defendant, that with the dairy equipment on said ranch, he could easily pay back to defendant the thousand dollars, together with the interest as it became due, and within the time stated in said note, which was to evidence said loan. That upon said representations, defendant loaned said C. A. Saling the sum of one thousand dollars as stated, and took his note therefor, without any security other than as stated herein, said note being the same referred to in the first separate answer and defense. “Thereafter said C. A. Saling told defendant that he had turned the ranch herein referred to, back to his father William A. Saling,' plaintiff herein, and that therefore he would be unable to pay said note out of hi-s milk checks as he had agreed. That thereupon the defendant requested said C. A. Saling to pay what was due on said note, but that he failed, neglected and refused to pay the same. That thereupon defendant requested plaintiff herein, to pay back said One Thousand Dollars or to secure the payment of the same, but that plaintiff refused and still refuses to pay the same or to secure the same in any manner. That at all times herein plaintiff and his son, the said 0. A. Saling acted in conspirácy with the fraudulent intent and purpose of cheating and defrauding said defendant. That plaintiff and his said son well knew at the time that said C. A. Saling applied for the loan of one thousand dollars from defendant herein, that said 0. A. Saling would not and could not pay said — 244 — note when it came due or at any other time and said plaintiff and said C. A. Saling worked this scheme, solely for the purpose of obtaining from defendant said one thousand dollars, without giving any security, so as to cheat and defraud defendant out of said sum. That except for the property and dairy equipment herein mentioned, the said C. A. Saling was insolvent, at all times material herein, and the plaintiff well knew of his son’s insolvency, and well knew that when said son received said thousand dollars, that said son did not intend to pay the same back, and plaintiff well knew that his son had no property, except what plaintiff placed in his hands as herein set forth, to secure the payment of said note, and plaintiff well knew that said son would do and intended to do the very thing which he afterwards did, to wit: abscond from Tillamook, Oregon, to parts unknown to defendant and other creditors, for the purpose of evading process. “That at the time when defendant filed its attachment as aforesaid, said defendant believed that the title to said property was in said O. A. Saling, and the records of Tillamook County, Oregon, where the property is situated, showed said property to be owned by said C. A. Saling; but that since that date of attachment, it has transpired and come to the attention of the defendant, that on the very day and at the very time, that plaintiff deeded said property to C. A. Saling, his son referred to herein, to wit: on or about March 8,1918, said plaintiff caused his son, C. A. Saling to deed back said property to himself, and at all times herein the said plaintiff, William A. Saling had that deed in his possession and under his control and ready to use at any time that he saw fit. That plaintiff herein well knew that his son C. A. Saling held himself out to the defendant and to the public generally as the owner of said property, and plaintiff placed said property in the name of C. A. Saling in order that he might use the same to get credit with. That plaintiff did not record the deed which he took back as aforesaid at that time or at any other time, but subsequently said plaintiff secretly and fraudu — 245 — lently and for the very purpose of defrauding defendant, and other creditors of C. A. Saling, his son, filed a deed purporting to have been executed by his son, C, A. Saling to himself, conveying said property from Ó. A. Saling to himself, said deed bearing date the sixteenth day of July, 1918, and plaintiff recorded the same on the fifteenth day of August, 1918, in'the Record of Deeds of Tillamook County, Oregon. That said deed was not recorded until long after the date of defendant’s attachment against .said property, and that plaintiff now brings this suit to withdraw said property from defendant’s attachment, and sets out his deed obtained by fraud as aforesaid, and plaintiff seeks equitable relief without in ‘any way making a tender of the thousand dollars, which he secured from defendant by his fraudulent act, and for which he never furnished the least consideration. “That at the time of the execution of the note herein referred to by said C. A. Saling to defendant herein, the representations made by said C. A. Saling to the defendant herein, were false; that said C. A. Saling knew them to be false and that they were made by said C. A. Saling with the intent to deceive the defendant. That the defendant herein acted upon said false statements in good faith and without knowledge of their falsity; that defendant had no means of ascertaining their falsity, by reasonable diligence and that defendant would not have acted upon them if it knew the truth. That at all times herein, plaintiff and C. A. Saling were father and son and were acting in collusion and conspiracy, with the common purpose and design of cheating and defrauding defendant.” 3, 4. These allegations are not very direct and certain as to the collusion and fraud on the part of plaintiff, and as to plaintiff’s participation therein; but it seems the following allegations, when taken together, sufficiently fasten a charge of collusion upon him: “That at all times herein, plaintiff and his son, the said Charles A. Saling, acted in conspiracy with a fraudulent intent and purpose of cheating and de — 246 — frauding the said defendant. * * That plaintiff herein well knew his son, Charles A. Saling held himself out to the defendant, and to the public generally, as the owner of said property, and plaintiff placed said property in the name of C. A. Saling in order that he might use the same to get credit with. * * Subsequently said plaintiff secretly and fraudulently and for the very purpose of defrauding defendant, and other creditors of C. A. Saling, his son, filed a deed purporting to have been executed by his son to himself. * # That at all times herein plaintiff and C. A. Saling were father and son and were acting in collusion and conspiracy, with the common purpose and design of cheating and defrauding defendant.” If these allegations were true, we think plaintiff must fail in this suit without regard to what his technical rights may be in regard to the premises. 5-7. This being a suit in equity the equitable rules and principles have full force. One of these well-established rules is, that the plaintiff in an equity suit must come into court with “clean hands.” Another is, “He who seeks equity must do equity.” If plaintiff had all the time been in collusion with his son for the fraudulent purpose of getting the money in question from the defendant, and turning it over to his father, thereby defrauding the defendant of the same, as alleged in the answer, he certainly is not coming into court with clean hands, and,he would not be doing equity unless he first returned the $1,000 which he had thus fraudulently helped to obtain. In that even his equitable proceeding would fail and he would have to depend upon his remedy in a law action, where he might be able to maintain his technical rights. The whole transaction is at least suggestive of fraud and unfair practices. It may be that upon a trial it will develop that everything was fair and regular, and — 247 — that there was no intentional fraud; hut the defendant should have a right to establish the fraudulent acts of Charles A. Saling and the collusion therein of the plaintiff, if it can do so by competent evidence. The case is therefore remanded in order that-the demurrer may be overruled and the defendant have an opportunity to present any evidence it has as to the defense of fraud and collusion. Remanded With Directions. Rehearing Denied. McBride, C. J., and Bean and Johns, JJ., concur.