Dobson v. Snider

NELSON, District Judge. The main issue is the bona ñdes in the execution and recording of the deeds, so that the right of complainants to the relief sought in their bill must depend upon whether they have proved the fraud set forth therein. While there is little or no conflict in the testimony, there is a sharp contention between counsel as to the credit to be given to the same. Snider, and Neiler the president, of the bank, with whom the negotiations were had, testify that there was no agreement or understanding not to record the deeds, and that the failure so to do was due entirely to an oversight on the part of Mr. Neiler. Counsel for complainants insist that the surrounding- facts and circumstances negative this testimony, and that the failure to record was due to a desire and intent, on the part of the bank not to injure the credit of Hnider, and to give him an opportunity to continue borrowing money elsewhere, which he could not luwe done liad the deeds been placed on record. The facts are as follows: Snider had been for some years a large borrower of money from the bank on Ms individual paper. In December, 1889, March and June, 1890, this indebtedness amounted to $99,000, and in October and November, 1890, it increased to §44,000. On November 21, 1890, Snider and wife executed two deeds absolute on their face, of these pine lands in Gass and Hubbard counties to one Kelley, a director of the bank, to whom, however, they were never delivered, with á stated consideration of §85,000. These deeds were not filed for record until more than a year after their execution, but were recorded a short time before Snider was compelled to resign Ms position as a director of the bank on account of financial embarrassments, and after these notes of complainants had been protested. It is admitted that these deeds were in reality only mortgages given as security for the debt due the bank; but they state nowhere that they were given to Kelley as trustee, or that he was connected with the bank, and, when recorded, gave no notice save of an absolute sale for an ample consideration. The question now is, will a court, of equity declare this to be an honest and proper transaction, adopt it, and stamp it with its approval? It is true that the mere nonrecording of these deeds until some time after their execution is not necessarily a badge of fraud, and that forgetfulness may be accepted as an excuse for failure to record; but the giving of the deeds with a consideration larger than the actual one, and the failure to place them on record for more than a year by the bank for whose use and benefit they were given, are matters to he taken into consideration, in the light of the surrounding facts and circumstances, in determining whether or not this was a valid and bona [12] fide transaction. If a grantee fails to record an instrument, he does so at his peril, and accepting the testimony of Mr. Neiler that the failure to record the deeds, the consideration for which exceeded one-tenth of the capital stock of the bank, evidenced by. notes frequently renewed, was due to an oversight on his part, no complaint can be made if such negligence results in loss. While there may have been no agreement that the deeds should not be recorded, it is impossible to resist the conclusion that there was a desire and intent on the part of the bank and Snider to shield or benefit the latter at the expense of some one else. Had the intent of the bank been merely to protect or secure itself, as it had a perfect right to do, a mortgage or a deed for the amount of the indebtedness would have sufficed. In my opinion, the action of Mr. Neiler, the president of the bank, enabled Snider to keep up a credit to which he was not entitled, and, on the strength thereof, to obtain money from complainants, whereby a fraud in law was perpetrated upon them. A decree will be entered declaring the deeds of conveyance from Samuel P. Snider to Austin F. Kelley null and void as against the rights of complainants herein.