Shaw v. Tracy

Rat, J. It appears from the record in this case that in October, 1864, Charles B. Lewis, being seized in fee of the legal title to certain real estate in Saline county, Missouri, in trust for the use and benefit of his brother, Henry B. Lewis, at the instance of his brother — 227 — conveyed the same to Sally Gr. Lewis, the wife of his said brother, in trust, for the sole and separate use of the wife during her life, with remainder in fee to her children at her death. In March, 1871, Sally Gr. Lewis and her husband, Henry B. Lewis, conveyed the property in fee to the defendant, Edwards, in trust for the defendant, Tracy, to secure $700.00 that day borrowed "by them from said Tracy, and for which they, also, gave their promissory note, both these deeds being duly acknowledged and recorded in the proper office at the time. In51875, Sally Gr. Lewis, the wife, died, leaving the plaintiffs, Alice Shaw and Pauline Stevenson, as her only surviving children, and the defendants, Ella, Joseph and Sally Yaughn, as her only grandchildren by a deceased daughter. In 1877, the plaintiffs brought this suit to declare void, as to them, said deed of trust to Edwards for the benefit of Tracy, on the ground that the same was made in fraud of their rights, and is a ■cloud upon their title to the said real estate, which they claim in fee since the death of their mother, under the provisions of said deed of trust to her from said Charles B. Lewis aforesaid. The evidence in the cause shows that Henry B. Lewis, being insolvent, furnished his brother, Charles, the money with which to purchase said real estate, with the understanding that he. would take the title in his own name, and hold it secretly in trust for the said Henry B. Lewis, which he accordingly did; and afterwards, at the instance of said Henry B. Lewis, he conveyed it to his wife, Sally Gf. Lewis, in trust as aforesaid, for the nominal consideration of $1 and love and affection. The evidence, also, shows that Chas. B. Lewis, in the purchase of said property, advanced $600.00 of his own money, besides the amount furnished by his brother Henry B. Lewis, as aforesaid, and that, at the time of ■executing said conveyance to Sally Gr. Lewis, he refused \to deliver the same, unless he was made secure in the — 228 — amount so advanced. That to 'secure him, Henry B. Lewis gave him the promissory note of Oottingham & Vaughn for $600.00, whereupon the deed was delivered. That when the Oottingham & Vaughn note became due, Henry B. Lewis and Sally Gr. Lewis borrowed the money of Smith to pay it, and when the Smith debt fell due, they borrowed money of Edwards to pay it, ancfi when the Edwards debt matured, for the purpose of discharging it, they then borrowed of Tracy the $700.00-for which they gave their promissory note and deed of trust here sought to be declared void, as aforesaid, and with it paid off the debt to Edwards. It further appears that at the time of executing said note and deed of trust they gave Edwards and Tracy a full history of the debt and the title of Sally Gr. Lewis. The cause was submitted to the court for trial, under the pleadings and evidence, and the court, after hearing and considering the same, found the issues for the defendants and dismissed the plaintiffs’’ bill, and this is assigned for error by the plaintiffs, who bring the cause here by writ of error. The question to be decided upon this state of facts is whether the deed from Chas. B. Lewis to Sally Gr. Lewis under our statute of fraudulent conveyances, sections 2497 and 2498, revision of 1879, and the adjudications thereunder, is to be treated and held as- fraudulent and void as against the trustee and beneficiary in the deed of trust from Sally Gr. Lewis and her husband, Henry B. Lewis. It is conceded, we believe, that our statute is a substantial re-enactment of the English- statutes of 13 Eliz., c. 5, and 27Eliz., c. 4, against fraudulent gifts and conveyances, with some modifications that embody the English construction of these statutes. Our statute, with its modifications, is substantially that of the state of New York, from which it seems to have been taken. According to established rule of construction in such cases, our legislature will be deemed to have enacted the above statute in the sense in which the — 229 — statute had been construed by the courts of the country from which it was taken. Qatheart v. Robinson, 5 Peters 280; Story’s Eq. Juris.; sec. 429; Kent Com., pp. 463, 464. The English statute of 13th Eliz., c. 5, has reference to creditors, while 27th Eliz., c. 4, relates only to purchasers of land. With us, however, they are embodied in the same statute above referred to. The nature, effect and construction of these statutes have been fully considered and discussed by the following (among others) text writers and adjudicated cases, to-wit: 4 Kent Com., p. 463; 1 Smith’s Leading Cases, part 1, page 48; 1 Leading Cases in Equity, part 1, page 415; 2 Greenleaf’s' Cruise on* Real Property, pp. 519, 521, 524, 525; 1 Story’s Eq. Jur., secs. 426, 432 ; 4 Vt. 389; 6 Vt. 411; 16 Vt. 209 ; 3 Bush 343; 4 Cowen 603 ; 14 Mass. 139; 5 Peters 280; 1 Md. Ch. 507; 2 Gray 447; 3 Wash, on Real Prop., p. 337. The result of the foregoing authorities may, we think, be fairly stated thus: In England, it is settled that a voluntary conveyance, though for a meritorious purpose, will be deemed to have been made with fraudulent views, set aside in favor of a subsequent purchaser for a valuable consideration, even though he had notice of the prior deed. In the United States, while a number of the highest authorities adhere to the English rule, the better American doctrine and weight of authority seems now to be that voluntary conveyances of land, bona fide made, and not originally fraudulent, are valid against subsequent purchasers. In both England and America, however, such a conveyance, if originally made with a fraudulent intent, is void, both as to creditors and purchasers, prior and subsequent. The present deed from Chas. B. to Sally G. Lewis' is conceded to have been voluntary and fraudulent when made, and, whether tried by the English or American rule, must be held and treated as fraudulent as against the subsequent deed of trust from Sally G. Lewis and husband to Edwards, as trustee for Tracy, — 230 — whether the beneficiary therein is to be regarded as a creditor or purchaser, since, in some sense, he occupies both relations. He became a creditor by loaning the money, and a purchaser, through his trustee, when he received the deed of trust. According to all the" authorities, mortgagees and beneficiaries in a deed of trust in the nature of a mortgage are purchasers, within the meaning of 27 Eliz. on fraudulent conveyances, as adopted in this country. Prior adjudications of this court, also, are equally adverse to the doctrine contended for by plaintiff in error, and must be accepted as decisive of this case. In the case of Henderson v. Dickey, 50 Mo. 161, it is held that: “If a person who is insolvent or in failing circumstances purchases property with his own money, and has it conveyed by his vendors to a .third party, that conveyance is void as to subsequent purchasers of the property from him. * * * The property continues to be his, and if he conveys it his vendee will acquire a good title.” The case of St. Louis Mutual Life Ins. Co. v. Cravens, 69 Mo. 72, is to the same effect. In Howe v. Waysman, 12 Mo. 169, this court says-that: “If a father in failing circumstances purchases property with his own money and has it conveyed to his minor children, it is void as to subsequent purchasers of the property from him, and as to his subsequent creditors. A bona fide purchaser for a valuable consideration is protected under the statute of 13 and 27 Eliz., as adopted in this country, whether he purchases from a fraudulent grantor or a fraudulent grantee.” In Gamble v. Johnson, 9 Mo. 598, it is held “a voluntary conveyance without consideration, or merely for love and affection, made by one who is insolvent, is void as against creditors, although the grantee were ignorant of the insolvency and innocent of the fraud.” In Lillard v. Shannon, 60 Mo. 522, it is held: “Where a fraudulent purchaser of land, in order to shield himself, puts the title in the third party, having no knowledge of — 231 — the fraud, in an action to set aside the sale the plea that the grantee was an innocent purchaser without notice will not avail.” There is a distinction between a deed merely voluntary and one made upon a valuable consideration, not necessary here to be considered or determined, as there is no pretense that this conveyance was made upon a, valuable consideration. The plaintiff, however, contends that, in this case, there has been no subsequent conveyance by the husband, Henry B. Lewis. That he simply joined in the deed as the husband of Sally Gr. Lewis to enable her to convey as required by statute. That the deed in no sense is his conveyance. That, upon its face, it simply purports to convey her title, which was a life estate only, and is inoperative to pass any interest or estate of the husband, if he had any, and does not purport to do so. That the deed is valid as between the parties thereto and as against the husband, Henry B. Lewis, and all other persons, Tracy and Edwards included, even though void as to the then existing creditors of H. B. Lewis. That they, Tracy and Edwards, were not the creditors of H. B. Lewis at the time, and do not occupy. the position of subsequent creditors or purchasers, within the meaning of the statute concerning fraudulent conveyances. That they took the deed with notice that the title to the land was in Sally Gr. Lewis for life, with remainder to her children, and that H. B. Lewis had no interest therein. That the evidence fails to show that Sally G-. Lewis, or her children, were privy to or had any knowledge of the fraudulent acts and practices of H. B. Lewis, or were parties thereto, and that the existence of such a deed on the records as the trust deed in question was such a cloud on the title of plaintiffs, as a court of equity would and should remove by declaring the same void and of no effect as to them. There might be some force in these statements and argument of plaintiffs, if the deed had simply under — 232 — taken to convey or pass the life estate of the wife; but, instead of that, it purports in express terms by the language used, to convey the fee. This she did not have, and if the doctrine of the above authorities is correct, the fraudulent husband held, and as the granting and operative terms of grant, bargain and sell, used in the deed, were appropriate and competent to pass whatever title he held, the legal title so held by him did pass by the trust deed in question. The face' of the deed, therefore, does not warrant the construction placed on it by plaintiffs. If the deed to Sally Gr. Lewis had originally been made in good faith and not contrived in the beginning, for a fraudulent purpose, as it is admitted to have been, then there might have been no resulting trust, or legal estate remaining in the husband, to pass by the trust deed so executed. According to the authorities, Tracy, for whose benefit the trust deed was made, occupied the position of both creditor and purchaser, subsequent, it is true, but under the authorities as much protected as if he had been a prior creditor. While there may be no direct or positive proof that the wife was an active participant in the fraudulent contrivances and practices of the husband, by which the legal paper title was vested in her, yet we think it quite clear, from the facts and circumstances in proof, that she was privy to, and had knowledge of the object and purposes for which the deed from Chas. 13. Lewis to her was made. Among other things, the agreed abstract of the evidence prepared by plaintiffs’ attorneys, states that at the time H. 33. and Sally Gr. Lewis borrowed the money in question, they gave both Edwards and Tracy “a full history of the debt and the title of Sally Gr. Lewis.” How could she have been a party to such a combination if she was not cognizant of the facts? She being trustee, by the terms of the deed, of the remainder for the children, her knowledge, under the circumstances, was their knowledge. If this were not so, yet, under the authorities, their want of knowledge, or innocence of fraud, does not — 233 — validate a conveyance having its origin in unquestioned, wilful and positive fraud. For these reasons, there was no error in the dismissal of the plaintiffs’ bill by the circuit court, and its judgment is therefore affirmed. All concur, except Hough, C. J., and Henry, J., who dissent; Judge.Norton concurring in the result.