Hurley v. Osler

Servers, Ch. J. i conveykSuientf1 evidence. I. The declarations of Hurley, Sr., made both before and after the conveyance to the plaintiff, and also the declarations of the plaintiff after such conveyance> tending to show that such convejumce was made without consideration and with intent to defraud the creditors of Hurley, Sr., were admitted in evidence, against the objections of the plaintiff, and as the evidence is now before us the objection is renewed, the ground being that the evidence is immaterial and irrelevant. If the conveyance from Hurley, Sr., to the plaintiff was being attacked by the creditors of Hurley, Sr., upon the ground that it was made to defraud them, we apprehend it would be conceded such testimony was admissible and entitled to consideration. If such testimony is not admissible, then no fraudulent conveyance could be successfully impeached. The materiality or admissibility of the evidence, therefore, depends on the question whether a purchaser in good faith and for value from a fraudulent grantor can avail himself of or rely on the fraud as a defense or protection to his title or possession, in an action brought against him by the fraudulent grantee. As we shall presently see, such a purchaser may so protect him [645] self, and, therefore, the testimony is both material and admissible. From its consideration (and without giving any weight to the declarations of Hurley, Sr., made after the conveyance) we arrive at the conclusion, without doubt or difficulty, that the conveyance from Hurley, Sr., to the plaintiff was without consideration and made with intent to defraud the creditors of Hurley, Sr., and that this object and purpose were known to plaintiff. It also clearly appears that Hurley, Sr., remained in possession for some time thereafter, and after removing therefrom he received the rents and profits up to the time he sold the premises to Osman Osier. 2 _._. • II. The plaintiff also objected to the introduction of the contract in evidence, on the ground that it was immaterial and that no authority was shown from the plaintiff for its execution. In making the contract of .purchase Alexander Osier acted as the agent of Osman Osier, and the materiality of the contract depends on the question whether a purchaser in good faith from a fraudulent grantor can impeach a conveyance made with intent to defraud creditors, or rely on the fact of such fraud as a protection to his title, and for the reasons heretofore and hereafter stated we think the evidence material and admissible. III. The testimony of Alexander Osier satisfies us he had knowledge at the time he purchased the premises that the title of record was in the plaintiff, and that he purchased knowing this fact. It is, however, apparent that he acted in good faith and supposed Hurley, Sr., would make a good title to the premises. The presumption is that Hurley, Sr., was also acting in good faith, and supposed the power of attorney gave him the requisite authority to sell the premises described in the petition, or that plaintiff would give him such authority, for certainly there is nothing showing the contrary. Before the submission of the cause, the plaintiff dismissed so much of the petition as seeks any relief as to the premises described in the power of attorney, and there is no evidence tending to show that the plaintiff ever gave Hurley, Sr., or any one else authority to sell the residue of the premises; on [646] the contrary, the plaintiff testifies he never gave such authority, and that he in no manner has ratified the act. 3. —:-: m°ust'be had.y IY. It is insisted by the plaintiff, as Hurley, Sr., conveyed the premises in dispute as attorney in fact for the plaintiff, and as he was not such attorney and had no authority to make the sale or conveyance, and as the legal title was in the plaintiff, such facts conclusively show that defendants have no title and that plaintiffs must recover. In this view we do not concur, because: First, the plaintiff must recover on the strength of his own title, and not on the weakness of the defendants’; second, as the defend-: ants are in possession, it may be admitted they have no title, and yet the plaintiff not entitled to recover; third, as before stated, it is competent for defendants to impeach the title of the plaintiff. 4. -purfaith: 'nfftic* Y. We are now brought to a consideration of the main point in the case, which may be stated as follows: Where a conveyance of real estate has been made to defraud creditors, can a purchaser with notice from the fraudulent grantor rely on such fraud as a protection to his title or possession when sued in a court of equity by the fraudulent grantee? We have held in Gardner v. Cole, 21 Iowa, 205 (to state the point decided in the language of Dillon, J\), “that where the first conveyance originates in a fraudulent purpose and is without any consideration of value, and the grantor remains in possession, and claiming ownership sells the property as his own to a party who buys without actual notice of the prior deed and pays value, the latter purchaser may avoid the prior voluntary conveyance.” And it is also held that the recording of such conveyance is not constructive notice thereof to such subsequent purchaser. It was.held in Wolf v. Van Metre, 23 Iowa, 397, that a voluntary conveyance made in good faith cannot be avoided by a subsequent purchaser with notice. In 1 American Leading Cases, 51, it is said: “A conveyance actually fraudulent is void against a subsequent purchaser for a valuable consideration even with notice; .and a voluntary conveyance is presumptively fraudulent against a [647] subsequent tona fide purchaser without notice; that is, a subsequent sale to a tona fide purchaser without notice, is evidence that a prior voluntary conveyance was fraudulent; but a voluntary conveyance (at least according to the decisions, in some of the States), is not void against a subsequent purchaser with notice.” In support of these distinctions several adjudicated cases in different states are cited. It will be seen, therefore, that there is a clear and recognized distinction between a fraudulent and voluntary conveyance made in good faith. It follows, therefore, that Wolf v. Van Metre, supra, is not decisive of the question now before us. In Barney v. Little, 15 Iowa, 527, we held, in relation to the notice im7 parted under the statute by recording of conveyances of real estate, that “ the law declares the world has notice and will not allow any individual to show that he in fact did not have notice. In other words, the presumption of notice which the law in such cases raises is conclusive and incontrovertible.” It will be seen there is no difference between actual and the notice implied from the record of the.instrument. In Gardner v. Cole, supra, there was no actual notice, therefore the point decided was properly restrained and. limited by that fact. If there is no difference between actual and constructive notice, and we have seen there is not, then the two cases cited, when considered together, are decisive of’the important question in this case. Gardner v. Cole holds that a purchaser from the fraudulent grantor without actual notice is protected, and that the constructive notice imparted by the record of the fraudulent conveyance does not affect him, and in Barney v. Little it is held that such constructive notice is conclusively presumed, and that proof contradictory of such presumption is inadmissible. That a purchaser, in good faith and for a valuable consideration, from a fraudulent grantor, with notice, is protected when sued by a fraudulent grantee, is supported by the following authorities: Recker v. Ham, 14 Mass., 136; Clapp v. Leatherbee, 18 Pick., 131; Clapp v. Terrill, 20 Pick., 249; Waller v. Cralle, 7 B. Mon., 11; Kimball v. Hutchins, 3 Conn., 450; and our attention has not been called to any reported case holding the contrary doctrine. . [648] 6_.fraU(j_ pel-' VI. Hurley, Sr., sold and agreed to convey the premises as his own, but he conveyed the same as attorney in fact for the plaintiff. He is, therefore, estopped from claiming that he did not sell and agree to convey, and that he in fact did convey in the capacity stated. This we think constitutes the defendants, through their ancestor, purchasers for value, and that they are within the rule just stated. But whether this is true or not, the plaintiff, as we have said, must succeed on the strength of his own title and not by reason of the weakness of the defendants’, who are in possession, not fraudulently, but rightfully under their purchase. The decree of the District Court is Aeeirmed.