Merrill v. Meachum

Baldwin, J. The first point presented by this record, is, the admissibility of the declarations of Ensign, the grantor, made at the time he executed the deed. — 345 — Ensign is not a party on tills record, ansi being tire grantor, • >o ⅛ not an admissible witness. That lie executed the deed hi question, is admil ted. The ch.iracier of that u-an-uction, whether done fraudulently, with a view to defeat the claims of creditors, or not, is a question of fact. Such a tact may often be proved from other sources, but seldom more clearly, than by the declarations of the grantor accompanying the transfer. They coi-Hli.ute an essential part of the «acts necessary to understand the transaction. Declarations which are part of the res gesta, and accompanying a transaction, proper to be proved, are always admitted. This is done even in favour of a party. Neither the object of a tender, ¿¡or an escrow, can be proved in any other way. This question is within the rule governing an extensive class of cases, in which the declarations of a person, at the time he does an act, are admitted as part of the facts, necessarily consti-luting the transaction. I am of opinion, that the declarations of Ensign were of this character, and that proof of them was proper From the charge, séveral questions are raised. 1. Whether, from the facts disclosed, the deed in question, was, at any time, fraudulent and void, as to creditors ? And if so, 2. Whether it could be made good by any subsequent act of the parties ? 3. Whether a fraudulent deed is void, as against subsequent creditors ? As the last question was abandoned in the argument, and has been repeatedly decided in favour of such creditor, and lately recognized by this court, in the case of Beach v. Catlin, 4 Day's Rep. 284. it appears to me unnecessary to discuss it. The other questions are presented with more confidence ; but 1 think the decision of the court on them, equally correct. If the facts alleged in this case, are found to be true, it is apparent, that at the time of the execution and delivery of this (iced, there was an intention, on the part of the grantor, thereby to defraud his creditors. This was declared by him, — 346 — anil was manifest from the transaction. Tin: deed was made out anil delivered to the town clerk, without a previous contract, or even the knowledge of the grantee. By that delivery, it. took effect ; for though it is necessary to give a deed validity, that the grantee should assent to take, yet the; law will presume assent, until the contrary appears ; for, as between the parties, the conveyance was good, and it cannot remain the doubtful subject of future contingencies, as to creditors. V/hethor this conveyance was voluntary, and altogether without consideration, or the grantee was a creditor to the amount of what he afterwards agreed to"retain, or a subsequent purchaser of a pari, can make no difference in principle ; since, at (lie lime of ihe conveyance, there was neither an application, nor an adequate price ; nor was the transaction then bona fidt. or on good consideration. The conveyance was, therefore, clearly within the statute, unprotected by the saving clause in the exception. If the land had been attached the next day after the conveyance, or at any time before the subsequent contract, I think no question could have been made. The estate was, then, for a time, still open to the claims of creditors, and the deed as to them, void. Can it be made good by a subsequent act of the partn ⅛ ! A fair, bona fide purchaser, for good consideration, of an estate, conveyed by the grantor, with a fraudulent intent, on his part, to defeat his creditors of a recovery of their debts, is undoubtedly protected in his purchase, by the exception in our statute. But if a conveyance is so made, as to be void by force of the statute, and is unprotected by the saving clause, I am clearly of opinion, it can never be made valid, by any subsequent act, or contract. A contract merely voidable, may be made good, by subsequent acts, if absolutely void, it has no basis for future negotiation. In this case, the defendant, when conscious, that he could not, bona fide, retain the whole, relinquished a part, but has not taken a new conveyance. His title to the remainder reserved, still rests on the baseless foundation of a conveyance, in its inception, utterly void by statute. — 347 — It appears to me, that this question was substantially decided, by this court, in the case of Preston v. Crofut. (a) The principle guiding that decision, was, that a conveyance void by the statute, could never be made good That it could never be the basis of even a subsequent bone fide conveyance ; but must, necessarily, always remain volt!. The reasoi~s were so recently and so fully given, in that case, that I do not think it necessary to enlarge. I am of opinion, that the court was correct on all the points, and that a new trial is not advisable. M1TcIi~aj~, Cli. ~L, SWIFT, TRUMBULL, and BRAINARD, J~ concurred in the opinion exprc~ed by BALDWIN, J, EDMOND, J. gave no opinion~ INGERSOLL, J~ On the best consideration of this case, which I am able to give it, I am of opinion, that there ought to be a new trial: Not indeed, on the ground, that the court received evidence of the declarations of Ensign, the grantor, accompanying the deed, as to his views in giving it, This evidence, in my opinion, was very properly received, But my opinion rests on the ground, thaf the deed, so far as respected the grantee, was not fraudulent~ It is an agreed point, that whatever views a grantor may have, in making a conveyance, yet if it be bonafide, on the part of the grantee; that is, if he be a purchaser, paying a valuable consideration, without any notice of the fraud; auch conveyance, as to him, is not fraudulent. He shall hold the property comprised in the deed, clear of all demands of the creditors of the grantor. This, then, being the principle, it follows of course, that if 1'deachurn had consented to take all the land contained in tho deed, and to pay a valuable consideration for it; or being a creditor to the amount of the value of the whole, had taken the whole in satisfaction of his debt; in either of these cases, the conveyance would — 348 — have been good. He would then have been a bona fide purchaser. Hut if is said, as he consented to take a part of the land only, though he paid a valuable consideration for such pari and also immediately conveyed back to Ensign what of the land, he did not want; yet as he let the original conveyance to him stand, this became, at once, a fraudulent conveyance, 11 is fcutd, further, that the decision of this court, in th« case of I*rasión and CrofuL (b) is dircctiy in point. This decision, it is well known, was, that a fraudulent grantee never can snake good bile to the land comprised in ‘die fraudulent deed, to any bona fide purchaser, against the creditors of his grantor. A fraudulent deed, I agree, by this decision, uc\ er can be purged of the fraud. Taking this decision for law, I apprehend, however, that it does not affect the present ques tion. In other words, I do not consider it, as a case in poinl. To make it directly so, Mcachum must have concurred with the grantor, in the fraud : For so was that case ; both tin. grantor and grantee concurred in the fraud. In the present case, Meachum never can be considered as a fraudulrj.’f grantee, but on the ground, that lie held a part of the lain! comprised in the deed, a certain time, as a trustee to Ensign, To say that such trustee, without any intentional fraud on his part, is a fraudulent grantee, is carrying the principle of fraud a great way indeed. According to this principle, as far as I can see, whenever, by mistake, more lands are conveyed to a grantee, than were purchased by him, the deed will be considered as fraudulent : At any rate, it will be go considered, if the deed be made out before it is accepted by the grantee ; tlsat is to say, if it be made out and brought to him ; and when brought to him, the mistake is discovered by the grantor and grantee, and is not immediately rectified. If, I say, the mistake be not rectified on the spot, from hurry of business, or from any other cause, and any time elapses before a reconveyance of the surplus over and above the purchase money, be made by the grantee, the deed must be considered as fraudulent. — 349 — The deed, according to the principle contended for, roust not only be fraudulent, while any part of the land is held in trust for the grantor, but ever after. There can be no setting it right, however honest the parties may be, but by making entirely new conveyances. The grantee must convey the whole land back to the grantor, and then he must convey to the grantee the exact quantity, that he purchased. But to make the case put, of a deed by mistake, comprising more land than was intended to be sold, to compare with the present case ; the parties, when the mistake is discovered, must immediately rectify it, by the grantee’s reconveying the over-plus land. If, in the case put, the grantee would be considered as a fraudulent grantee, and the conveyance void, as to creditors, the conveyance from Ensign to Meachum, was fraudulent and void : If, however, in the former case, the conveyance would not be fraudulent, neither would it be so, in the latter. They both, as it strikes me, stand on precisely (he same ground. The truth is, in neither case is there any fraud, intentional or legal. It will not be pretended, that there was any intentional fraud, in the case under consideration, on the part of the grantee. Nor, as I apprehend, was there any legal fraud, let the principle be carried ever so far ; because there was no holding for any time whatever, as a trustee to the grantor. The taking the deed by Meachum from Ensign, and recon-veying to him such part, as was not purchased, was all one transaction. The first deed was inchoate, and no title passed by it, until the whole business was completed. There was no instant of time, that a creditor could have stepped in, and seized the property in the hands of Meachum, as a trustee to Ensign. It has been contended, that the land might be attached as the property of Ensign, after he had conveyed to Meackum ; that is, after he had made out the deed, and before it -was accepted by Meachum. Thence, it was inferred, (at least, by the counsel who argued the cause,) that such attaching and holding by the creditor, must be on the ground, that the conveyance was fraudulent. That it might be so attached and — 350 — held, I. agree. But I do not agree, that it could be held by the creditor, on account of any fraud in the transaction. It could be held, for the same reason, that it could be held, if given on the best consideration in the world. It could be held, because the land would remain the property of Ensign, until the deed was accepted by Meachum : For, until such acceptance, there is no transfer of the property; no conveyance, in any sense of the word. In short, there can be no fraudulent conveyance, until there be an acceptance by the grantee. When lands are taken, as being fraudulently conveyed, they most be taken as having been conveyed, and the title transferred, so far as respects the grantor and grantee. Upon the whole, it is my opinion, that Meachum was a bona fide purchaser of the land in question, and never was a fraudulent grantee, in virtue of the conveyance made to Mm, either by holding the land, to cheat the creditors of Ensign,- or in any sense, as a trustee to him ; and therefore, I think that a new trial ought to be advised. Smith, J. It appears from the motion, that the plaintiff claimed, on the trial, that the deed from Ensign to Meachum, was made with a view to defraud his creditors, and with that view, was lodged with the town clerk, without the knowledge or privity of Meachum,: And having introduced proof to this point, tl>e defendant introduced evidence to prove, that after-wards, when the deed came to his knowledge, he made a bona fide contract, for a part of the land contained in the deed, and paid a full consideration for it, without any knowledge of the fraudulent intent of Ensign ; and thatdie immediately reconveyed all the land contained in the deed, which he did not so purchase. Upon this state of the case, the court charged the jury, that if they should find, that at the time when the deed was made, and lodged at the town clerk’s office, it was intended by Ensign, to defraud his creditors, they must find for the plaintiff, although the defendant had no knowledge of the transaction, at the time 5 and that nothing done by tbe#de351 sendaut, afterwards, when the same came to Ms knowledge, could alter or vary his rights. To avoid a conveyance, on the ground, that it was made to defraud creditors, there rnnst be a fraudulent intent, on the pari of the grantee, as well as the grantor. The great question, in the present case, is, then, whether we are authorised to impute the fraudulent intent of the grantor, to the grantee, by way of presumption, so that it can never he removed by opposite testimony ? Although the law will presume the assent of a grantee, to a bona fide deed, I lay it down as an undeniable principle, that such assent cannot be presumed, in case of a corrupt deed. If I am correct in this, the case presents a subject clear of all difficulty. The deed is indeed void, though not on the ground of fraud ; yet, it is so, for want of one essential requisite, viz. the assent of the grantor ;.as much so, as if it had never been delivered or recorded at all; and if creditors take the land under these circumstances, their title is as good, as if nothing had been done : Rut it follows, also, that whenever the contract is assented to, by any agreement which is free from fraud, the contract becomes complete, and the deed valid. In short, I consider this case as standing on the same ground, as though Ensign had made out the deed with a fraudulent intent, and kept it in his pocket till he saw Meachmn, when they made a fair bona fule contract for a part of the land, without any knowledge, on the part of Meachum, of the fraudulent intent of Ensign ; and instead of making out a new deed, Meachmn receives the one already made, and gives back a deed of the land which he did not purchase. I agree, most fully, to the remark, that when once a contract is fraudulent, it must always remain so ; and that nothing done by the parties can make it good. But I can never agree, that because a contract is once incomplete, and void, that the parties can never afterwards complete it; provided no creditor has taken the land in the mean time. But suppose, we admit, that the law will presume the assent of the grantee, for the purpose of preserving the convey352 anee ; and Si ere let me admit fully, that lu; is presumed to assent to all the fraudulent views of the grantor ; still, this is a mere presumption of law, for the purpose of preserving the conveyance, till it came to the knowledge of the grantee ; and when (he deed first comes to his knowledge, the grantee has the same power over it, as though ¡here had been no delivery at the oiiice of the town clerk : And whatever he then does, has relation hack to file dale of the deed. If he dissents to the whole contract, il is v.s though nothing had been done. If he assents to the whole, be takes all the consequences of it, as though he agreed at the time. If he assents to receive the deed, on a hona fide agreement, but dissents to all the fraud originally introduced by the grantor, this is the same thing, as though such had been the agreement originally. In this case, the claim was, that Meachum made a fair bona fide contract for the land, and paid a full consideration for it, without the knowledge, that a fraud was ever intended. Will any one seriously contend, that this presumed assent continues any longer, than the time when the parties come together, and make an actual agreement on the subject 1 Will it be said, that the law will presume an assent, after an actual dissent ? Where there is an express assent, such assent must continue ; and in this point of view, I agrée most fully, that once a fraud, always a fraud. But in respect to an implied assent, it is far otherwise. In this ease, there certainly may be an assent at one time, and a dissent at another ; and if the presumed assent will make a conveyance fraudulent, the actual dissent must surely purge it. Let us see what this grantee has done, which ought to subject him to so heavy a penalty, as the loss of his land. Has he been the means of placing any of the property of the grantor out of the reach of his creditors ? It is not pretended, but that the consideration he paid was as much within their reach, and to as large an amount, as the land he purchased. Did he, at any one time, design to aid the grantor in defrauding his creditors ? This is not pretended. But it is said, that the grantor, at a certain time, did intend to defraud his — 353 — creditors ; and this is the whole amount of the complaint. It cannot escape notice, however, that tiiis fraudulent intention of the grantor, must he entirely impotent, without the concurrence of the grantee : And it gains no strength from any presumed assent, provided the grantee did actually dissent. It can do the creditors no injury, that the law will presume a grantee dishonest; provided he be, in truth and reality, honest. Whatever may be said about presumptions and implications, they cannot make a man a party to a fraudulent conveyance, against his will. I think, therefore, that the court ought to have instructed the jury, that in case they found the facts to be true, as claimed by the defendant, their verdict should be in his favour. In this respect, it appears to me, they erred ; and on this ground, according to my judgment, a new trial ought to be granted. New trial not to be granted. Footnotes [(a)] Vici. I Conn RcJi 527. in nota. [(b)] Vid. 1 Conn. Rep. 527. in nota.