Macomber v. Peck

Day, J. l. fraud : witk ayreservation. I. The evidence shows that the land in question, at the time of the conveyance from Alfred A. Sawyer to Horace Sawyer, was worth $6.00 per acre, amounting for the whole tract to $2,640.00, and that Alfred then owéd the debt upon which Peck afterward recovez’ed judgment. The considez’ation expressed in the deed is $500.00, but the proof shows that the real consideration was $570.00, and that the conveyance was subject to the mortgage to Fz’aneis Sawyer for $883.00. The pz’oof shows also that as part of the consideration for the conveyance it was agz’eed between Horace and Alfred, that Alfred should have the use of the farm, without rent, for three or four years. Under this arrangement Alfred A. lived upon the premises about a year and a half after the sale. He told his creditors that the conveyance to his bz-other was in fact merely a mortgage to secure an. indebtedness. This secret reservation between the vendor and vendee rendered the conveyance fraudulent in laWj irrespective of the intention with which it was executed. The posséssion of the property for the time named constituted a part, and a very cozisiderable part, of the consideration for the conveyance, for the debts satisfied by the conveyance amounted to considerably less than two-thirds the actual value of the land. If such a conveyance shoizld be upheld, deeds might be made for grossly inadequate real consideration, the possession to be retained for a long period by the grantor, and the prizzcipal value of the pz’operty be placed beyond the reach of creditors. The case of Lukins v. Aird, 6 Wallace, 78, is directly in point. In that case Aird, being indebted, conveyed certain town lots at Fort Smith, Arkansas, which he owned, and which had cost him $1,900.00, to one Spring. Spring paid [355] $1,200.00 in money, and agreed that Aird should have the use of ten of the lots one year free of rent, with the privilege, so long as Spring did not desire to sell or make use of them, of renting them at $100.00 a year, the money paid being made less on account of the right to use the lots rent free a year. A creditor of Aird filed a bill against Aird and Spring to set the conveyance aside, alleging that it was fraudulent in fact and in law. The court below, finding that the proofs established no fraud in fact, dismissed the bill. The Supreme Court of the United States, reversing the judgment of the court below, said: “The law will not permit a debtor, in failing circumstances, to sell his land, convey it by deed, without reservations, and yet secretly reserve to himself the right to possess and occupy it for a limited time for his own benefit. Such a transfer may be upon a valuable consideration, but it lacks the element of good faith, for while it professes to be an absolute conveyance on its face, there is a concealed agreement between the parties to it, inconsistent with its terms, securing a benefit to the grantor, at the expense of those he owes. A trust, thus secretly created, whether so intended or not, is a fraud on creditors, because it places beyond their reach a valuable right, the right of possession, and gives to the debtor the beneficial enjoyment of what rightfully belongs to his creditors.” The opinion cites the following authorities: Wooten v. Clark, 23 Mississippi, (1 Cushman,) 75 ; Arthur v. Com. & Railroad Bank, 9 Smedes & Marshall, 394; Towle v.Hoit, 14 New Hampshire, 61; Paul v. Croker, 8 Id., 288; Smith v. Lowell, 6 Id., 67. 2. judgment: void without notice to a pui'ty * pearance. II. The conveyance from Alfred to Horace Sawyer being fraudulent in law, the land was subject to the attachment levied thereon at the suit of the defendant, Peck. It in . becomes necessary, therefore, to determine the v * i effect of the decree rendered at the April term, 1867, of the Cass District Court, correcting the mistake in the conveyance from Alfred A. to Horace Sawyer, and declaring that the attachment and judgment of Henry K. Peck created no lien upon the lands in controversy. It is conceded that no notice of the commencement of the action, in which that [356] decree was rendered, was ever served upon Peck, and it is' abundantly proved that the attorneys who appeared in the> case, had no authority to appear for him. The decree as to him was therefore without jurisdiction and void. Harshey v. Blackmar, 20 Iowa, 161, and cases cited; Bryant v. Williams, 21 Iowa, 329. 3__._. estoppei. III. The decree in question was rendered in April, 1867. The plaintiff pirrchased the lands in November, 1869. It does not appear affirmatively that he knew anything of the circumstances attending the conveyance between Alfred and Horace Sawyer. At the time of his purchase there was upon the records of the District Court of Cass county a decree, in all respects regular upon its face, quieting the title in this land in Horace Sawyer, and declaring that the Peck jxidgment was no lien thereon.. He took counsel of attorneys, and was advised that the decree was probably binding. This decree might have afforded no pi’otection to plaintiff if Peck had promptly taken measures to set it aside) when he leaimed of its rendition. But we are satisfied from the evidence that Peck was advised of the decree, and of the circumstances under which it was rendei*ed, a short time after its rendition. He was a party to the suit in which the decree was entered, in another capacity, and as the rep2’esentative of another intex’est, viz: as a member of the firm of Keyes & Peck. This firm was duly served with notice, and made defense. He was in frequent correspondence with Keyes, who was his uncle. Peck will not undertake to say when he learned that the decree against him was entered, and that attorneys appeared for him. He merely states that he did not know of their appearance until after the decree. From the whole evidence it is fair to assume that Peck was not long ignox’ant that the decree was entered against him. Yet he leaves the title of record to the land in Horace Sawyer, and that title confirmed by the decree of a competent court, and he makes no move until July, 1870, when execution is oi'dered out. . In the meantime, more than two years after the rendition of the decree, without any knowledge of the defect in the decree, ■ and with the opinion of counsel that it is binding, [357] plaintiff purchases. Under such circumstances he had a right to suppose that the rights of the parties were finally settled by the decree. The defendant, by his laches, has lost his right to insist upon an invalidity which otherwise might have availed him, and the plaintiff must be protected in his purchase. Bryant v. Williams, 21 Iowa, 329. The fact that he has paid only part of the purchase price, does not render him liable in a manner different from the liability which lie assumed to his grantor, nor make the property liable to an execution upon the judgment. If part of the purchase money is unpaid, he may, upon being indemnified against any liability to an indorsee of the notes, be in.equity required to pay the consideration to the defendant, to the extent of satisfying defendant’s judgment, and the amount mdy be made an equitable lien upon the land in controversy. • , The defendant prepared an abstract which was reasonably .full, at least the omissions might have been corrected with small labor and expense. The plaintiff prepared an abstract of one hundred and, six pages, printing all the evidence with question and answer, exhibits in full with certificates and acknowledgements. An unnecessary expense has thus been incurred, and the;-labor has been imposed upon the court of reading many pages of matter which might have been omitted without detriment to the case. ■ Under the circumstances no costs can be taxed for the appellee’s abstract. The decree of the court restraining the enforcement of the •execution must be affirmed, but without prejudice to the right of defendant to proceed in any way he may be advised to subject the unpaid purchase money in the hands of plaintiff to •the satisfaction of his judgment. Affirmed.