70 N.W. 271 | N.D. | 1897
The plaintiffs in this case are the Daisy Roller Mills, a corporation; the McCormick Harvester Machine Company,, a corporation; J. W. Griggs and E. W. Dyke, co-partners under the firm name of J. W. Griggs & Co.; Helen E. Thompson, as executrix of the estate of Milton H. Thompson, deceased; Cornelia M. Arnold, as administratrix of the estate of Reuben Cole, deceased; Lizzie J. Anderson; and Mabel H. Frances and Harry M. Frances, by Lizzie J. Anderson, their guardian. The defendants are George A. Ward and Jessie S. Ward, husband and wife; H. H. Hall, a son of Jessie S. Ward by a former marriage; Daniel Patterson; and Benjamin Cameron. On December 20, 1888, George A. Ward and Jessie S. Ward, by warranty deed, conveyed to Daniel Patterson about 1,000 acres of land in Traill County. On the same day H. H. Hall conveyed to Patterson, by warranty deed, 320 acres of land in said county. The plaintiffs are, each and all, judgment creditors of the Wards and Hall. The debts upon which their respective judgments are based existed prior to the date of such conveyances, but the judgments have been obtained since that date. The plaintiffs claim that executions were regularly issued upon their respective judgments, and levied upon the real estate described in said conveyances, as the property of the Wards and Hall, and that further proceedings under such executions are held in abeyance
In 1894, in some litigation between the Wards and Hall, on the one part, and Patterson,'on the other, a receiver was appointed for the rents and profits of the lands described in the conveyances-here in controversy. Defendant Patterson, in his answer herein, and in- open court, asked that such receiver be brought in as a party defendant in this case. This the trial court refused, and the point is urged' here. But we are unable to see in what manner such receiver is a necessary or even proper party to this litigation. No accounting for rents and profits is asked as against Patterson for any time since such conveyances were made. The sole question here is the validity or invalidity of those conveyances of December 20, 1888, made nearly six years before the receiver wg.s appointed, and with which he was in no manner connected. He is clearly not a necessary party at this stage of the litigation.
The answer of defendant Patterson attempted to raise an issue as to the representative capacity of the plaintiffs, Helen E. Thompson, as executrix, Cornelia M. Arnold, as administratrix,
Another preliminary question is raised as against the claims represented by Helen E. Thomson, executrix, and Cornelia M. Arnold, admistratrix. The judgments in these cases were procured in the lifetime of the decedents, and in their names, and the executions in aid of which this action was brought, and which were issued after the decease of the original judgment creditors, were issued in their names, no proceedings having been had, by scire facias or otherwise, to revive the judgments in favor-of the representatives.
It is urged that an execution issued in favor of a judgment plaintiff then deceased is void; that the death of a judgment creditor suspends the right to issue execution until, by proper proceedings, the judgment is revived in favor of his representatives. No doubt that such was the case at common law. See Freem. Ex’ns, § § 35, 36, where the matter is fully discussed, and authorities cited. But § 5110, Comp. Laws, in force when this action was begun, reads as follows: “The party in whose favor judgment has heretofore been, or shall hereafter be given, and, in case of his death, his personal representatives, duly appointed, may, at any time within five years after the entry of judgment, proceed-to enforce the same by writ of execution, as provided in this chapter.” No provisions- are contained in the chapter for reviving the judgment or substituting parties. Under
We need not in this case discuss the detail testimony upon which fraud is predicated. All the testimony introduced in the case of Paulson v. Ward, supra, was introduced in this case.' In the former case we discussed the testimony at length, and announced what facts we deemed proven. We need not recapitulate them. From the proven facts in that case, we concluded that the transfers attacked were made by the grantors with intent to hinder, delay, an,d defraud the plaintiff, and that Patterson, knowing of such intent upon the part of the grantor, actively and purposely aided in its consummation. We need only notice here the points wherein it is claimed the evidence in this case differs from the evidence in the Paulson case. In that case it appeared, as it does in this, that the conveyances were in fact intended as mortgages, and were accompanied by a defeasance, which was not recorded. We commented upon the fact that deeds absolute on their face were taken as security, and no explanation given why the transaction assumed that form. We stated that such fact was a circumstance which might be considered, with the other evidence in the case, as tending to establish fraud. It is claimed that the transaction is explained in this case. The defendant Patterson swears that he took deeds absolute, because he supposed that in case of default it would save foreclosure, and avoid the year given for redemption. This explanation is not very
It is urged, also, that in the former case the evidence showed that Patterson or his agent, Hanson, had actual knowledge of the existence of the Paulson claims at the time the deeds were taken,while in this case it appears that neither Patterson or his agent, Hanson, had at that time-any knowledge of the claims of any of the plaintiffs in this case. We cannot concede the latter proposition under the evidence, but, granting it, we are unable to see how it aids appellants. Section 5052, Rev. Codes ( §4656, Comp. Laws), declares that “every transfer of property or charge thereon made * * * with intent to delay or defraud any creditor or other person of his demands is void as' against all creditors of the debtor,” etc. Without attempting a full construction of this section, we think this much is clear: If a creditor seeking to set aside a conveyance as fraudulent as against himself shows that the conveyance was made and received for the express purpose of defrauding another creditor, he thei'eby establishes its fraudulent character as against himself. As we have said, all the evidence in the Paulson Case was introduced as a part of the evidence in" this case. If that evidence shows a fraudulent conveyance as to Paulson, the law then declares it fraudulent as to these plaintiffs.
There are, however, certain interesting legal propositions presented in this case that were not in the Paulson Case. At the time of the transfer of the lands to Patterson, and as a part of the transaction, Patterson assumed, by parol, and promised to pay, pre-existing liens and encumbrances against the land, amounting to about $15,000. Upon these claims, Patterson has paid, in principal and interest, large sums of money, and he also paid the taxes for one year. Since all these claims so paid were prior and superior to the claims of any and all of these plaintiffs, and since, if not paid by Patterson, plaintiffs would have beet) forced to
It must be borne in mind that this is a case of actual fraud, a case where the grantee Patterson actively aided the grantors, the Wards and Hall, in their design to hinder and delay their creditors. Hence the rules that, apply in cases of constructive fraud are not applicable to this case. Where the fraud is constructive only, the grantee comes into court with comparatively clean hands, and the courts treat him with leniency. In such cases the fraudulent conveyance has been allowed to stand as security for the purchase price, or for the amount of prior liens or debts of the grantor paid by the grantee, or for taxes paid. Coiron v. Millaudon, 19 How. 115; Clements v. Moore, 6 Wall. 312; Bean v. Smith, 2 Mason, 252, Fed. Cas. No. 1174, also reported 18 Myers’ Fed. Dec. bottom page 406; Tompkins v. Sporut, 55 Cal. 31; Robinson v. Stewart, 10 N. Y. 189; Lobstein v. Lehn, 120 Ill.
It is not the true province of a court of equity to punish a party for fraud. That is left to the courts of law. Neither will it despoil him of his property. But when it becomes necessary for a party to invoke the equity powers of the court to obtain relief from a position in which he has voluntarily placed himself, —when it-becomes necessary for.him to assume the position of actor, and appeal to equity for affirmative relief, — then he must come with clean hands. This principle is as old as equity jurisdiction, and knows no exceptions. The very term “equity” bars whatever savors of fraud or wrong. He who appeals to equity for relief from a position in which his own fraud has placed him must ever fail. Equity will leave him where it finds him, irrespective of the financial results to himself. “He that committeth iniquity shall not have equity.” In the early and instructive case of Sands v. Codwise, 4 Johns., at page 598, Chief Justice Kent, in speaking of a claim made by fraudulent grantees that the conveyance be allowed to. stand as'security for their advances, said: “The denial of this prayer appears to me to result necessarily from a decision against the validity of the deeds. On the ground of absolute fraud, the deeds were void to all intents and purposes. It is the same thing as if no deeds had ever been executed. A fraudulent conveyance is no conveyance, as.against
We think these principles must be applied in this case in their full vigor. When the deeds from the Wards and Hall to Patterson were execúted, there existed valid liens and incumbrances upon the property conveyed. It was not possible to defraud these secured creditors. Their rights in -the property were clearly fixed. But the successful consummation of the scheme to defraud the unsecured creditors, and at the same time secure to the grantors the continual use of the land, and the benefit of the crops raised thereon, required that provision be made whereby the securities would not in the meantime be enforced against the land. Therefore Patterson assumed these incumbrances, and, in addition to-deeds absolute of the land, took from the grantors a chattel mortgage for more than $49,000, covering all the personal property then owned by them, and all the crops to be raised by them during a long series of years. The taking of this chattel mortgage and its bearing upon the real estate transaction are fully discussed in Paulson v. Ward, supra. In pursuance of this agreement, Patterson has paid á portion of these secured claims, but all the payments so made by him were in aid of the original corrupt purpose of defrauding these plain
There is yet another claim made by appellant Patterson, wherein we think he must prevail. As has been stated, since the final determination in the case of Paulson v. Ward, supra, Patter: son has purchased and caused to be assigned to him, or to appellant Cameron in trust for him, the judgments involved in that case. Such purchase was not made in pursuance of the original agreement. In one sense it was not voluntary. It was forced upon Patterson by the decree in the Paulson case. It was not connected with the original fraud. By the purchase, Patterson succeeds to the rights of Paulson also, and no rule of equity prevents the enforcement of these rights. We need not decide in this case whether, in cases of conveyance of real property in fraud of the creditors of the grantor, judgments subsequently obtained against the grantor become liens upon the property conveyed in the .order of their rendition, or in the order in which the judgment creditors attack the conveyance. In either case the liens o,f the Paulson judgments are senior to the liens of any of the plaintiffs in this case. The decree below, so far as it set aside the deeds as fraudulent and void as against these plaintiffs,’ and allowed appellant Patterson no relief or indemnity, as against plaintiffs, for the payment of the claims which he assumed to pay under his' oral contract made at the time of the conveyance to him, and for the payment of the taxes, was in all respects right and proper. But the.decree should have declared the lien of the Paulson judgment in the hands of Cameron, as trustee for Patterson, upon
Modified and affirmed.