Kennedy v. Northup

Caton, J. The first question which properly arises in this case, is that of jurisdiction. The bill is filed for the purpose of setting aside certain deeds held by the defendants which it is alleged were fraudulently obtained, and which remain as a cloud upon the complainants’ title. It is objected that the defendants are in possession, which enables the plaintiffs to bring ejectment, and thus contest the fraudulent deeds in a court of law, and that hence a court of equity will not assume jurisdiction to try the validity of those deeds and set them aside. In support of this position the case of The Insurance Co. v. Buckmaster, 13 Ill. 201, is relied upon. In that case this court held that a bill would not be entertained for the purpose of setting aside a conveyance which was a cloud upon the title of the real owner, where the latter was in a position to bring an action at law to try the sufficiency of the title sought to be set aside. We are still of opinion that the decision in that case was correct, where the question of jurisdiction depends upon the fact alone, of an outstanding title which is. complained of as a cloud upon the complainants’ title. Where the simple question is as to which is the better legal title, the party should go to a court of law, if he is in a position to bring both titles before that tribunal. In the case referred to, the complainants claimed title, first, under a decree foreclosing a mortgage, and second, under certain tax titles, and the defendant claimed under a title acquired at a sheriff’s sale upon an execution at law; and the question sought to be raised was, which was the better legal title, and as the complainants had it in their power to bring an action at law which would compel the defendant in that action to set up Buekmaster’s title, it was held they should be compelled to do so, and should not be allowed, in the first instance, to bring a suit in equity to try its validity. There was no question of fraud in the case, nor other circumstance rendering it proper to resort to chancery in the first instance. Here, however, the case is very different. The very gist Of the complaint is that the title, under which the defendants claim, was obtained by fraud ; and if the fraud cannot be established, the defendants’ title must prevail. While a court of equity will not take jurisdiction of every case of fraud which may be presented, yet there are few questions over which its jurisdiction is more universal, and especially so when it relates to the transfer of real estate. The books are full of cases presented in every conceivable form in which courts of equity have assumed jurisdiction, and set aside conveyances fraudulently obtained. Perhaps in no form has the question more frequently arisen and beqn decided, than upon applications to set aside conveyance fraudulently obtained, and which created a suspicion of the validity of the title of the real owner. Briggs v. French, 1 Sumn. 504, was a case of that kind, and in answer to the objection to the want of jurisdiction, Story, J. said, “ but a court of equity has a clear concurrent jurisdiction with courts of law in cases of fraud.” And in the case of Massie v. Watts, 6 Cranch, 158, where the object of the suit was to prevent the defendant from making a fraudulent conveyance of land lying in another State, Marshall, C. J. said, “ This court is of opinion that in a case of fraud, of trust, or of contract, the jurisdiction of a court of equity is sustainable wherever the person be found, although lands not within the jurisdiction of the court may be affected by the decree.” The power of the court to set aside conveyances or other' documents which, while outstanding, endanger or threaten the rights of others, was extensively examined in the case of Hamilton v. Cummings, 1 John. C. R. 553, by Chancellor Kent, who thus concludes his researches: “ Perhaps the cases may all be recon- ■ ciled on the general principle, that the exercise of this power is to be regulated by sound discretion, as the circumstances of the individual case may dictate.” It may be well here to remark, that the jurisdiction of a court of equity is not bounded by a fixed and arbitrary line, up to which the court must go whenever called upon, and beyond which it can never proceed. Cases are constantly arising in which the court may refuse to act, and yet in deciding which, it would not usurp a power not legally possessed. Cases of fraud even, may frequently arise of which it may, in the exercise of a sound discretion, refuse to take jurisdiction, and yet the cases are very rare indeed, where it may not, if it choose, interpose and set aside the fraudulent act. The soundness of Chancellor Kent’s suggestion oh this subject cannot at this day be well questioned, and it is the undoubted duty as well as right of a court of equity, to determine from the circumstances of the case, as bearing upon the rights of the respective parties, whether it is proper for the court to assume jurisdiction or not. In the case before us, we think the complainant has a right to have the defendants’ title set aside, if, as is alleged, it was acquired with a full knowledge of the complainants’ title, and with the fraudulent purpose of supplanting and defeating it; although it may be true that the fraud, if proved, might defeat that title in a court of law, yet the courts of equity have' ever claimed to possess superior facilities for investigating such questions, to the courts of law, and certainly the relief which they can give is, in many cases, more satisfactory. When the fraud is once established, they can cut up the fraudulent conveyance or contract by the very roots, and leave the party in as secure a position as if it had never existed. This, especially as to conveyances of land, can only be done indirectly, and after repeated trials by the courts of common law. There is another question in this case which requires consideration, and upon which I have not arrived at a conclusion without hesitation and doubt. The complainant claims title under a deed from the patentee to Stewart, which was executed in 1818, but which was not recorded till 1850. After the execution of that' -deed, and before it was recorded, Weiant, the patentee, died, and his heirs executed the conveyance of the premises to Northup, and which was recorded before the deed from the patentee to Stewart" was placed on record. Under this deed from the heirs of the first grantor to Northup, the defendant claims title; and the question is, which of these deeds shall prevail. This depends upon the construction to be given to our recording laws. The statute provides as follows: “ All deeds, mortgages, and other instruments of writing which are required to be recorded, shall take effect and be in force from and after the time of filing the same for record, and not before, as to all creditors and subsequent purchasers without notice; and all such deeds and title papers shall be adjudged void as to all such creditors and subsequent purchasers without notice, until the same shall be filed for record.” Purchasers from whom, and whose creditors, are here meant? The complainant contends that only purchasers or creditors of the grantor of the unrecorded deed are meant; and in support of his position he cites several decisions from Kentucky. The first is that of Rolls v. Graham, 4 Mon. 120, where the court held, under a statute almost precisely like ours, that an unrecorded deed should take precedence of a recorded conveyance from the devisee of the grantor in the unrecorded deed. They put it upon the ground that the statute only makes void unrecorded deeds as to subsequent purchasers from the same grantor, and not from his heirs or devisees. Again, in the case of Hancock v. Beverly, 6 B. Monroe, 531, the same construction was given to the statute, and applied to a deed from the heir of the grantor in the unrecorded deed. In this case the court concede that the question as an original one is doubtful, and place their decision upon the authority in 4 Monroe. A different construction was, however, given to a similar statute in Tennessee, in the case of McCulloch v. Eudaly, 3 Yerger, 346. The reason assigned for that decision, however, cannot certainly be sustained, for they place it upon the ground that the fee remained in the grantor in the first deed, till that should be recorded, which not having been done, the legal title descended to the heir. Now it is everywhere else decided that the legal title does pass by the deed alone, although it may irever be recorded, while, by force of the recording laws, that deed may be postponed in favor of a subsequent one to a bond fide purchaser which is recorded. In the case of Powers v. McFarren, 2 Serg. & Raw. 44, the supreme court of Pennsylvania held, under a statute like ours, that a deed from the heir should prevail over the unrecorded deed from the ancestor, and they place it upon the broad ground that the expression “ subsequent purchasers ” means subsequent purchasers, from the heir, as well as from the original grantor himself, yAfter much reflection, lam satisfied that this is the true and. proper construction of the statute. It meets the objects designed to be accomplished by the law, and is within the reason which gave rise to the enactment. It was the object of the legislature to make potent the titles to real estate, that purchasers might know what title they were acquiring. Where a deed is not recorded, the title is apparently still in the grantor, and the law authorizes purchasers who are ignorant of the conveyance, to deal with him as the real owner. In case of his death, the heir becomes the apparent owner of the legal title; and it is equally important, and equally, as just, that the public may be allowed to deal with him as with the original grantor, if living^/This, it is true, cannot with propriety be always permitida without cutting off devisees, and perhaps creditors. A will may be valid and convey the legal title to the devisee, although it may not be probated and recorded, or even known to exist for a long time, but when discovered the devisee may assert his legal title under it, to the exclusion of the grantee of the heir, who was the apparent legal owner, and so may creditors assert their claims within a certain time, and whoever purchases of the heir must take his conveyance subject to be thus defeated. This is no doubt an evil which, were it practicable and compatible with justice, it would be desirable to remedy. But because the statute could not be framed, or cannot be so construed as to meet every contingency, it is no reason why it may not accomplish the object of its enactment as far as that may be justly done./ There is as much justice in protecting the purchaser from the heir, as from the ancestor; .and because this may not be done in every case, it is no reason why it shall not in any. It is true, that neither the heir nor devisee could hold the title against the unrecorded deed, nor could the grantee in a voluntary deed. And yet the grantee in a subsequent conveyance may hold the title, if he purchases in good faith, and for a valuable consideration, and his deed is first recorded; so that the fact that the apparent legal owner may not hold against the unrecorded deed, does not prove that he may not convey to another who may hold against such deed. A bond fide grantee from a fraudulent purchaser may acquire a good title, as well as a bond fide grantee from a fraudulent purchaser. When the title once vests‘in, or passes through meritorious hands, it becomes purified, and is as valid and effectual as if it had never been exceptionable. Although the hen himself might not prevail against this unrecorded deed, it does not follow that he may not convey to one who may prevail. // This construction, too, is equally within the literal expressions of the statute. The expression is, subsequent purchasers, but it does not say purchasers from whom. That is left to construction. Some word must be supplied by intendment or construction, not for the purpose of extending the language in order to effectuate the objects of the law, but for the purpose of limiting the language so that it shall not go beyond the intent of the statute. The language itself does not limit the application to purchasers from one person more than another; but the manifest object of the law does limit it so as to exclude from its protection those who might purchase from strangers. Without a limitation to at least that extent, the law would become simply absurd. Now the question is, shall we carry this restriction so far as to exclude all except purchasers from the first grantor ? To prescribe the extent of the limitation to be thus introduced into the act by construction, we must look to the object of the act, the mischief to be prevented, and the protection or relief designed to be afforded to those for whose benefit the law was passed. We have already seen that these considerations apply as forcibly to purchasers from heirs or devisees, as to purchasers from the ancestor. During the lifetime of the grantor in an unrecorded deed, the apparent title is in him; and he who purchases in good faith that apparent title, it is conceded on all hands, is protected by the statute. After the death of such original grantor, the apparent legal title is in the heir, and the policy of the law, which is to make potent all legal titles to land so far as practicable, that strangers may safely purchase, equally requires that the bond fide purchaser from the heir should be protected. By the fault of some one the land has been twice sold, from which some one must suffer ; and is it not right, is it not in harmony with every principle of law, that he who is in fault, in not notifying the world by recording his deed, shall suffer the loss which has resulted from such negligence ? If, then, we look at the objects and policy of the law for the purpose of determining how far we shall allow the general words of the law to have effect, and how far we shall restrain them, we cannot find the warrant for saying that they shall be so restrained as to exclude purchasers from the heir, any more than one who purchased from the original grantor. I am of opinion that the conveyance from the heirs, if bond fide, must hold the land. The decree must be reversed, and the suit remanded. Decree reversed. Scates, Justice, dissented.