Goerz v. Barstow

PARDEE, Circuit Judge (after stating the facts). Our view of the case on this limited appeal renders it unnecessary to pass upon all the matters covered by the assignments of error and argued so fully in the briefs, for we think the decision of the question whether Mrs. Goerz was or is an innocent purchaser of the tract of land claimed by her, and therefore entitled to the rights of an innocent purchaser, will settle this appeal. The bill charges that at the time Barstow gave the security deed to Mrs. Burch on June 12, 1895, Barstow was deranged and incapable -of managing his affairs. The evidence does not show such to he the case. The evidence does show that for some indefinite period before his decease Barstow was non compos mentis, but he was never interdicted, and there is no reliable evidence in the record to show at what time his full incapacity to manage his affairs commenced or to show that at the time he gave the security deed to Mrs. Rurcli he was non compos. In fact, the undisputed evidence shows the contrary. Nor is there reliable evidence in the record to show that at the time of the judicial sale of April 5, 1897, under foreclosure of the Burch security deed was he at all times or at that lime, non compos. The most that can be considered as proved as to his condition of mind about that time is that, when under the influence of liquor and for times succeeding, he. behaved in such besotted and fantastic ways as to justify the conclusion that he was then insane; hut the evidence clearly shows that about tile time of the sheriff’s sale on Mrs. Burch’s judgment he had long lucid intervals, in which lie attended to business and was capable of attending to and managing his own affairs. We do not find any evidence or circumstances in the case to throw doubt upon or otherwise discredit the evidence of Mr. Cronk, a respectable member of the bar, and who up to and after the sale in question was Barstow’s attorney apparently representing Barstow’s interests with ability and fidelity. Mr. Cronk testifies: ‘T was admitted to the bar in December, 3878, and have since practiced law in Savannah. “Q. Do you recollect this paper shown to you? and, if you do, please state all you know about it. “A. Mr. Barstow was a client of the firm of Norwood & Cronk in 3894, and was a client of mine in 1895, 3896, and a part of 3897. I think it was the — 570 — latter part of May, 1895, lie called at ray office and stated lie was badly’in need of money, and had made efforts to secure a loan from numbers of money lenders in Savannah. I asked him if he had made application to Mr. Isaac Beckett, who I knew was then lending money for some clients of his. He answered ‘No.’ I told him, if he did not wish to .call Mr. Beckett, I would, as an act of friendship for him, do so. He assented. I immediately called on Mr. Isaac Beckett, and Mr. Beckett stated to me that before he made the loan he would ascertain from Mr. Charles II. Dorsett whether the particular land included in this deed to secure debt was ample security for a loan of $1,500, which was the amount that Mr. Barstow wanted. Later Mr. Beckett informed me that Mr. Dorsett considered the land ample security, and he would make the loan. A few days before this paper was executed Mr. Beckett was in my office, and stated that he did not have as much as $1,500 then in hand, but thought he would have the full amount one or two months Inter, and that, if I wished the paper to be drawn as this paper is drawn, he would draft it and be ready to have it executed on the 12th of June, the date of this paper. I stated to Mr. Beckett that I could give him no instructions as to how to draw the paper or for the amount, because I was not acting as attorney in the matter for Mr. Barstow, but simply as a friend; that he might draw the paper, if he saw lit, this way and leave it exclusively to Mr. Barstow to say whether he would accept this amount and execute the paper. When Mr. Beckett informed me of the date he was readjr to pay this .amount if Mr. Barstow wanted it, I wrote a letter to Mr. Barstow, and he came to my office on the day this paper was executed. He and I called at Mr. Beckett’s office together. Mr. Beckett then handed to me to road this paper for the first time. I read it over first, and then read it aloud to Mr. Barstow. Mr. Beckett showed me a bank book, and also Mr. Barstow, that he did not have the full $1,500 then in bank to the credit of Mrs. Burch, and 1 then stated to Mr. Barstow it was left entirely for him to say whether he was willing to accept the $1,000 cash, and the other small sums later on, as specified in this paper. Mr. Beckett was asked how much longer Mr. Bar-stow would have to wait for the additional money, and I understood Mr. Beckett to say positively in a month or two he would have the additional $500. Mr. Barstow thereupon stated that he would execute the paijer, and the paper was executed in Mr. Beckett’s office, and I witnessed it, and the $1,000 was then handed .to Mr. Barstow. So far as the additional sums are concerned, I do not know when they were paid, and, in fact, do not know personally that they were paid at all. “Q. Xou never heard from Barstow when they were paid? “A. lie never reported to me at the times he received the additional money, but he subsequently informed me that he had received $1,500. * sk * * s;s £ 5¡. “Q. Mr. Cronk, will you state what was the mental condition of Mr. Bar-stow at this time and what your means of information are? “A. As to his mental capacity? “Q. His mental condition. “A. Aside from meeting Mr. Barstow during the years 1894, 1895, 1S9G, and part of 1897 in the capacity of client, he often made calls otherwise to my office during these years. In that way I became pretty well acquainted with him. I never did regard him as an imbecile when not under the influence of liquor; and it was on very rare occasions I ever did see him under the influence of liquor. He was a clear-headed man, and a man of will. When under the influence of liquor, he was inclined to be erratic and quarrelsome. But I never regarded this eccentricity as insanity. He personally attended to all of liis business with me. The southern tier of lots of this tract of land, south of Savannah, called the ‘Norton tract,’ was not covered by any mortgage or deed to secure debt. He arranged to sell off these lots, advertised the property, and made periodical visits to this place with a view of being on hand to meet prospective purchasers. He sold numbers of these lots personally. He got me to draw one or two deeds, and then finally concluded that he would get blank deeds and simply use one of the form deeds written by me and make all further deeds to future purchasers himself, and have them executed before two witnesses, one of them a notary public or justice of the — 571 — peace; thus shoving, as I always believed, that be was fully capable of a.' tending to his own business. If I had ever thought that Air. Barstow was an insane man, nothing conld ever have induced me to have tiled a suit against him'for attorney’s fees. “Q. After the interest became clue did you ever have any conversation jviih him about paying this Burch debt? i say, after he gave this security deed, did you ever have any conversation with him about paying Mrs. Burch? "A. You mean paying this debt? “Q. Yes, sir. “A. 1 do not remember that he did before he was sued for the debt. ITe called at my office in the summer of 1890, with a copy of a petition which had been tiled by Mr. Beckett against him for the foreclosure of this deed to secure debt. Either the time of filing or the time of service on him was not. within the time required by law. I advised him to file no defense to the paper, as Air. Beckett could take no valid judgment against him at the July term of the city court, and in that way I think the petition went over to the November term. I then suggested to Mr. Barstow, as judgment could not bo taken against him before November at least, that that would give him five or six months in which to endeavor to secure another loan to take up this one of Airs. Burch. lie stated that he had made efforts in Savannah heretofore to secure a loan, but that no one would loan him money, and he expected, if possible, to get a loan from a company cither in Alacon or in Atlanta, and with that in view he had gotten Mr. .Tames K. Hines, of Atlanta, to examine the title to the property. Subsequently, and especially not long before the November term of the city court, Mr. Barstow frequently called at my office to consult with me about the suit brohght by Mr. Beckett. He finally decided not to file any defense. It was during these visits that he informed me he could not secure a loan from the loan companies in Macon or Atlanta or from any individual. After his property was advertised for sale under the judgment procured by Air. Isaac; Beckett in favor of Airs. Burch, Air. Barstow called at my office quite often and was anxious to have the sale stayed. In ilie examination I made for Mr. Barstow, I found that the levy on the property proceded.the actual record of the deed made back to him by Mrs. Burch. I therefore^ informed Mr. Barstow that a sale under the then existing levy and advertisement would be void, and that he could either let the sale go on on or stop it by an affidavit of illegality on this as well as other grounds. He said he preferred not to get into expensive litigation with any third person about the property. It was therefore decided to stop the sale by an affidavit of illegality, which was done. Afterwards a second levy was made and the property advertised for sale, I think, in Alarch, 1897. As the affidavit of illegality was pending and the execution had been withdrawn to make the second levy without an order of court, I also stopped this second sale. The only ground of the affidavit of illegality which was then left for a decision of rhe court was on the question of attorney’s fees, which the court decided in favor of Air. Beckett. Haying no authority from Mr. Barstow, I did not carry this question to the Supreme Court. The property was then read-vertised the third time, and subsequently sold by the sheriff of the city court. “Q. Was anything said to you about Ms paying the interest and the debt being allowed to run on? Was anything said to you by Air. Beckett about the interest being paid and the debt running on? “A. He never said anything to me about having paid any interest. “Q. Hid you ever tell Air. Barstow that, if he would pay up the interest, he would ho indulged as to the principal? “A. All that I know is that Mr. Beckett informed me that if Barstow would pay the interest that the principal could run on, but Mr. Beckett did not. state definitely how long the principal could run on. That I communicated to Air. Barstow. “Q. How did you come to sue him, and what for? “A. AIv suit? “Q. Yes. “A. That suit was for fees; the first item being for professional services prior to, I think, the first part of July, 189(5, and for additional services running on to date on Alarch, 1897. After this latter service was near — 572 — ly completed Mr. Barstow asked me to let him take from my possession certain papers which Mr. Rad Saussy, as attorney for the county commissioners, had left with me to get him to nominate a commissioner,. a blank being left in the paper for the commissioner’s name to be filled in, and which paper was.thé original for condemnation of some land of Mr. Barstow under a second proceeding for that purpose. I told Mr. Barstow that I. could not allow him to take the paper from my office. He asked why. I told him simply because it was an office paper that had been intrusted to me by Mr. Saussy for one purpose only, and, if he would name his commissioner, I would fill file-name in and return the paper immediately to Mr. Saussy. He stated ‘No’; that he wanted to carry the paper off for a short while and would bring it back. I declined to let him have that paper. Then he got mad with me and left my office, and I could get no answer from him about paying me up these back fees. I wrote him numbers of letters and tried to conciliate him, but he never after that had anything to say to me, nor did he answer any letters of mine, nor did he ever come to my office again.” As there is no evidence to show that at the time of the sale Bar-stow was under the influence of a drunken spree or suffering from the effects thereof, or suffering any other mental derangement incapacitating him, we consider that, in the light of Cronk’s evidence, there was nothing in Barstow’s mental condition to in anywise affect the validity and conclusiveness of the security deed of June 12, 1895, the judgment rendered thereon in. the city court of Savannah, or of the judicial sale of April 5, 1895, based on the, said judgment. If that sale is impeachable, it must be-for fraud or for matters apparent on the record. The incipient conspiracy and fraud charged in the bill in relation to the security deed and the proceedings to foreclose the same are not established by evidence sufficient to warrant a decree against Beckett and the purchaser at the sale of this tract. It is only in the sales and dealings with other Barstow lands and in subsequent- transactions that these parties may have become involved so as to make them responsible in equity. As to the proceedings in execution apparent of record, it is sufficient to say that the levy was co-extensive with the security deed (see Reeves v. Bolles, 95 Ga. 404, 22 S. E. 626), and, if the property was not sold in lots following the description in the security deed, it was a matter within the control of the court whose judgment was being executed (Rorer on Sales, § 714, p. 290) ; and at the worst was an irregularity not available in any outside attack on the title transferred by the sale. As Barstow was not insane at the time he executed the security deed, nor shown to be insane at the time of the-judicial sale — on the contrary, then having long lucid intervals if ever before insane — the judicial sale of the 50.26 tract was not void, at worst voidable, and is only impeachable, if it is impeachable at all (as to which we do not decide), for fraud, we think it clear that the appellant, Mrs. Goerz, has the right to invoke section 3540 of the Code of 1895 of-Georgia, reading: “A title obtained by fraud, though, voidable in the vendee will be protected in a bona fide purchaser without notice.” The bill charges: “Your orators further show that said Adele M. Goerz bought with notice, and that she was fully cognizant of the character of these transactions and sought to protect herself against the loss by the covenant in her deed against — 573 — lawsuits and taxes. Your orators further show that the covenant in her deed alone was sufficient to put her upon inquiry.” There is no evidence in the record to support this charge, except that her deed contained a covenant of protection against loss from lawsuits and taxes, and as to this covenant it is admitted that it was a part of the printed form of deed used, and the evidence shows that printed forms of deed with such covenant were in use by not only Mr. Beckett, who drafted the deed for Mrs. Goerz, but by other members of the Savannah bar. To an unprofessional person like Mrs. Goerz such a provision would have no significance. Mrs. Goerz’s uncontradicted evidence is that, in 1806 being left a widow with a small capital of SI,800, she soon invested in lots in the southwest section of the city, holding them for a while and then selling with a profit, and has followed that business ever since, dealing with Dorsett and other real estate agents. As to how she bought and paid for the tract in question, she testifies: “Q. Now, Mrs. Goerz, will you please explain how you came to buy this properly?, “A. VI>11, as I slated before that 1 have dealt in and sold real estate, and I. had some cash money on hand which I thought I might invest, I not only went to Mr. Dorsett’s office, but to different other brokers to find what real estate they had on their books and what they jfist had at that time of houses, etc. I could not see anything I wanted, and I went to Mr. Dorsett and asked him if he had lots or anything on hand, and he mentioned several, which I cannot just now state all what it was, and also a tract of land. As I never purchased anything without looking at it, he agreed to take me out. and came to my house' with a hack, and we went out tor me to see the land, and X looked at it and came back to the city and thought títere might be something, a little, in it, and that is how I came to purchase it. “Q. Did you look at it with Mr. Dorsett? •‘A. Yes; with Mr. Dorsett out in the hack, just like he would any other— “Q. Did you agree with .Hr. Dorsett on what you were to pay for it? “A. Not right then. We did not agree on a price. X went back in a day or two because the price was more money than I had on hand, and I wanted to see just how I would get my money together. “Q. .Tust explain — go on in your own way, Mrs. Goerz. Did you or not understand that Mr. Dorsett was one of the owners of the property? “A. X asked him then who I was buying from, and lie says, ‘Well, from a syndicate.’ and 1 said, "Who are they?’ and lie said ‘I am one,’ but that was on the way going out, and he probably would have said the others but there was a buggy coming towards the city and the party in there bowed, and that interfered with the conversation, and wo never renewed it, because generally I am not in the habit of asking who the party is that I buy from, since I have a lawyer afterwards tó see my titles. “Q. You understood Mi*. Dorsett was one? “A. I understood lie was one of the parties. “Q. You been dealing with Mr. Dorsett a good many years? “A. Yes: and when he said he was one that was sufficient for me, because I always found in all my dealings Mr. Dorsett perfectly reliable and all, and I did not inquire any further. “Q. You had enfiro confidence? “A. Entire confidence. “Q. When did you first see these deeds, Mrs. Goerz? “A. Well, I cannot really state the date, but I can explain how it Is. X keep no regular bank account — never have. I have a book at the X’eople’s Saving & Loan Company, and people pay to me pay in there, and it is credited on the book, and, like all my transactions previously, the deeds when they were made out my lawyer sent them there. He sent them to the courthouse, and — 574 — from there they were sent to Mr. Dorsett’s office. They paid for the recording of them and then kept them until I called for them, in the safe. So the deeds were there quite a while before I ever saw them — before I called for them. In fact, I never called for the deeds until I was served with paper in this suit. “Q. Did you see the deeds yourself before you got notice of this suit brought by the Barstows against you and others? “A. To the best of my knowledge I did not. Of course, time has gone off some, and it is hard just to state the exact point. “Q. Are you positive that quite a long'time elapsed before you saw the papers? “A. Quite a long time; yes, sir. “Q. You spoke about keeping money with the People’s Saving & Loan Company and having'your money transactions through that company. Is Mr. Dorsett president of the company — of the People’s Saving & Loan Company? “A. I think he is. “Q. You understand that he is? “A. I know he is one of the officers of the company. “Q. Does that company have its place of business in the same place of business where Mr. Dorsett is? “A. In the same place; that is the same place. “Q. Now, you say the property is paid for? “A. I paid $2,500 in money cash, and then had a note of $1,000 besides taken up, finishing paying the amount due for the property, for I paid $4,000 for it, and, of course, to explain that note of $1,600 the $100 additional I wanted for expenses, because it took all my ready money to pay for that property, to pay Mr. Beckett for papers made out, and such as that. “Q. And other little incidental expenses? “A. Yes, sir. “Q. Did you then borrow $1,600? “A. $1,600. “Q. In order to enable you to pay for this property and some incidental expenses? “A. Yes, sir. “Q. Do you know from whom you borrowed? “A. I borrowed from the.People’s Saving & Loan Company. “Q. So that your money transactions were made through the company and through Mr. Dorsett? “A. Yes, sir.” She testifies, further, that up to the time of hearing- of this suit she did not know and had never heard that the property had ever belonged to Barstow, and had never heard or knew anything of Barstow. As to Mr. Beckett’s connection with her purchase, she testifies that he was the lawyer who drew the deeds for her; that she paid him for the service; that he had previously drawn titles for her; that she did-not know that Beckett had ever had the property sold or had bought it in. She herself bought from a syndicate of which she only knew Dorsett. Throughout a lengthy and rigid cross-examination she answered fairly and fully, and we are impressed with the fact that in purchasing the property she was acting solely in her own interest, in honesty and good faith. It is true that in a small wa))' she was a successful real estate dealer, and she had availed herself of the legal services of Isaac Beckett, who is charged in the bill with conceiving a conspiracy to defraud Barstow of his lands. We are aware of no invidious legal presumptions affecting Mrs. Goerz’s honesty and good faith to be invoked because she was a real estate dealer. Neither under the averments of the bill nor under the evidence can it be presumed that because Isaac Beckett was employed by — 575 — Mrs. Goerz to pass upon the title and draw the deeds she was charged with notice of the frauds theretofore attempted and perhaps committed by .Beckett or within his previous knowledge.. On principle and authority no such presumption can be indulged in. Pursley v. Stahley, 122 Ga. 362, 50 S. E. 339; American Surety Co. v. Pauly, 110 U. S. 105, 18 Sup. Ct. 552, 42 L. Ed. 977; Western Mortgage Co. v. Ganzer, 63 Fed. 650, 651, 11 C. C. A. 371. If Beckett’s knowledge had been, acquired after his employment by Mrs. Goerz, there might he a little more reason in charging her with the knowledge of her agent, but still a presumption that a man volunteers against his own interest a confession of his own rascality is not to be readily indulged in. The price Airs. Goerz paid was not so inadequate as to put her on notice of any defect in the title. She paid $1,000, four-fifths of the value asserted in complainants’ bill, and there is highly respectable authority for holding that complainants are estopped from denying the trnlli of their averments. See 1 Daniel, Chancery, 838. 833n. There is evidence in the record showing that in the opinion of certain real estate men the property was worth in 1897 about $10,000, but considering the history of cities like Savannah, and after the panic of 1893 and 1891 the unexampled prosperity of the country, getting well started in 1890 and 3897, and in view of the continued rise in suburban property near prosperous cities, the opinions of witnesses given now as to the values of vacant suburban property in 1897 are not as reliable in fixing values as would he evidence of actual transactions at the time. In Eyre v. Potter, 15 How. 42-59, 14 L. Ed. 592, it is said: “Again, it is ruled that inadequacy of consideration is not of itself a distinct' principle of equity. Tlie common law knows no such principle. The eon-si deration, he it more or less, supports the contract. Common sense knows no such principle. The value of a thing Is what it will produce, and it admits of no precise standard. One man in the disposal of his property may sell it for less than another would If courts of equity were t.o unravel all these transactions, they would throw everything into confusion, and set afloat the contracts of mankind. Sucli a consequence would of itself he sufficient to show the injustice and impracticability of adopting the doctrine that mere inadequacy of consideration should form a distinct ground for relief. Still there may be such an uneonseionableness or inadequacy in a bargain as to demonstrate some gross imposition or some undue influence; and in such cases court* of equity ought to inter fere upon satisfactory ground of fraud; but then, such uneonseionableness or such inadequacy should he made out as would, to use an expressive phrase, shock tlio conscience, and amount in itself to conclusive and decisive evidence of fraud.” All elements of fraud eliminated, and, so far as Airs. Goerz is concerned, she cannot under the evidence in this case be charged with any, certainly there is nothing iti the price she paid for vacant suburban property, taxable, but producing no revenue, to “shock the conscience.” We have been referred to many adjudged cases to the effect that contracts with an insane person, though not interdicted or judicially declared incapable, are void, and to other cases to the effect that such contracts are voidable only. If absolutely void, the innocent purchaser cannot as such be protected, if voidable, the innocent purchaser may have a standing in equity. If the evidence in this case1 — 576 — established that Barstow was insane at the time the security deed was granted, or perhaps even at the time of the judicial sale of the 50.26 tract, our conclusion on this appeal might have been on other lines. The appellant, Mrs. Goerz, is entitled to a reversal of the decree by the court below, and a remand of the case, with instructions to dismiss the bill so far as she is concerned. This conclusion renders necessary a reversal of the decree, and the dismissal of the bill against the other appellants, so far as they are charged with liability or decreed to pay moneys as the grantors of Mrs. Adele Goerz. Decree accordingly.