2 Minn. 264 | Minn. | 1858
By the Oourt.
It appears from the complaint in this case, that Charles W. Pairo and wife conveyed to the De
Section one, of Chapter forty-six Revised Statutes provides that conveyances of lands, or of any estate or interest therein may be made by deed, signed and sealed by the person from whom the estate or interest is intended to pass, being of lawful age; or by his lawful agent or attorney, and acknowledged or proved, and recorded as directed in this Chapter, without any other act or ceremony whatever.” By the common law, conveyances of real estate are not required to be recorded, in order to render them valid even as to other than parties and privies. To what extent has the Statute changed this rule? By reading the first section above cited alone, without reference to other provisions, it would seem that a conveyance of real estate could not be valid even as between parties and privies without record. But from a comparison of this section with other Statutes upon the same subject, we are satisfied, that it was not the intention of the legislature to go to this extent, but that conveyances of real estate duly executed and delivered, pass the title without record, as against all except bona fide purchasers for a valuable consideration. Sec. 24 of Chapter 46, Revised Statutes, provides that “ every conveyance of real estate within this Territory hereafter made which shall not be recorded as provided by law, shall be void as against any subsequent purchasers in good faith, and for a valuable consideration of the same real estate, or any portion thereof, whose conveyance shall be first duly recorded.” This section is wholly meaningless unless the view above taken as to the effect of deeds with
The authorities as to the effect of deeds without record, are numerous and generally uniform, and those based upon Statutes like our own, establish the validity of such deeds beyond question. (4 Kent. 456, and cases cited—also, 10 Johns, 466; 3 At R. 646; 4 Dana, 258; 10 Pick. 413.)
The grantor Pairo, had parted with all his interest in the real estate upon which the attachment was levied, and there was nothing to support the writ, unless the attaching creditor is helped by the recording act. And he can derive no benefit from that unless he shall come within the protection of the Statute as a bona fide purchaser for a valuable consideration.
That an attaching or judgment creditor is not such purchaser within the meaning of the Statute, we are well satisfied. The weight of authorities on this subject settles the question beyond reasonable doubt. In Story's Eg. Jur. Sec. 410, (note) it is said that “ the rule adopted in Equity in favor of bona fide purchasers without notice, not to grant any relief against them, is founded upon a general principle of public policy. It is not however absolutely universal; for it has been broken in upon in two classes of cases. In the first place it is not allowed in favor of a judgment creditor who has no notice of the Plaintiff ’s equity. This appears to proceed upon the principle, that such judgment creditors shall be deemed entitled merely to the same rights, as the debtor had, as he come in under him, and not through him, and upon no new consideration, like a purchaser.” See also, Seavings vs. Brinkerhoff, 5 John, Ch. 329, Coddington vs. Bay, 20 John, 637; Stuart vs. Kissam, 2 Barb. 493; 4 Paige, Ch. R. 215; Jackson vs. Campbell, 19 John, 281; Jackson vs. Dubois, 4 John, 216; 4 Cow. 599.
That such creditor was not considered a bona fide purchaser for a valuable consideration in the view of the Statute which was in force at the time the attachment of the Plaintiff in error was levied, we think also evident from Ohap. 52, Sec. 1, of General Laws of 1858. That Statute requires all conveyances
This brings us to the second important question which is presented by the demurrer in the Court below. The deed from Pairo to Edes is a trust deed, purporting to be for the benefit of creditors, and contains a clause authorizing the trustee to sell, “ either at public or private sale, forthwithfor cash, or on reasonable credit, as the trustee may think most advisable.” It is claimed that the provision allowing the trustee to sell on credit, renders the deed void as to the creditors of Pairo, under Sec. 1 of Chap. 61 of Revised Statutes, on the ground that such conveyance was made with the intent to hinder, delay or defraud creditors. Such provisions have been the subject of much discussion in the different States, and the authorities as to their effect in a deed of trust are to some extent conflicting. But without going into a particular examination of the
It may be true that the property would realize a larger sum at the expiration of such time, than for a cash sale, sufficient perchance to pay the debts and leave a surplus for the benefit of the assignor. And it is probably usually with the intent to benefit the assignor that the clause permitting sales on credit, are inserted in conveyances of this kind.
But voluntary assignments by insolvents, at best, are not regarded with favor by the law, especially those giving preferences, and are not sustained for the benefit of the debtor, nor are his interests to be protected at the expense of those ofthe creditor. Nor, where there may be doubts as to the true construction of the Statute relative to such conveyances, will Courts be anxious to give a liberal construction of the law, in order to sustain them where they seem to have been framed with the view
And if it is illegal and inequitable that the debtor should himself have and exercise such power, it is manifestly equally so, that he should be permitted to exercise it through an agent, or trustee of his own appointment. But it is unnecessary to state all the reasons which suggest themselves in support of this view of the case, as the subject has been ably and elaborately discussed in the cases before the Court of Appeals of the State of New York; and aside from the weight of authority which must be conceded to the decisions of that Court, the reasoning on principle is conclusive to our minds, even were the question to be considered an open one. Nicholson vs. Leavitt, 2 Sel. 510; Brigham vs. Tillinghast 3 Kernan, 215; Kellog vs. Slawson, 1 Kernan, 302; Bernard vs. Griffin, 2 Cow. 365.
The provision of statute under which only a trust of this kind — that is, one for the benefit of creditors — can be created, is contained in subdivision 1, Section 11, of Chapter XLIY. page 203 Kevised Statutes, which allows a trust to sell lands for the benefit of creditors. The provision with which this deed, as actually framed, conflicts, is found in Section 1, Chapter LXIY. page 269 Kevised Statutes. By comparing these Statutes with those of New York, under which the decisions above referred to were made, it will be found that they are identically the same; our statutes, undoubtedly, having been copied, as to those sections, from the statutes of New York. Hence, the reasoning of the Court of Appeals of that State upon the point under consideration applies with equal force here as there. And, indeed, in view of the fact that our Code is mostly a transcript from that of New York, and of the advantage to be derived to the profession, as well as to the community at large, from the decisions of the eminent Court of Last Resort of that State, we should long hesitate to differ from a unanimous opinion of that Court given upon a point involving the construction of the same statute as our own. In
But, it is claimed by the counsel for Defendant in Error that, although the provision or clause in the trust deed permitting the trustee to sell on credit be illegal and void, it does not necessarily vitiate the whole deed, and that the trust as to the other parts should be sustained upon the rule “ Ut res magis vdleat guam ppereat;” but we find no authority which goes to the extent of applying that rule to a case like the one at bar, save that of Darling et al. vs. Rogers, 22 Wendell, 483. But that decision — in effect, at least, if not directly — seems to have been overruled by subsequent decisions of the Courts of that State above referred to. And, indeed, it is difficult to see how that decision can be sustained on reason or principle. If the provision in this trust deed which is objected to be illegal, it is so on the ground that it was inserted with the intent to hinder, delay or defraud creditors.
The statute provides that every corweycvnce made with such intent shall be void, as against the creditor so hindered, delayed or defrauded. The whole conveyance is tainted with the fraud — or, at least, mala fides of the grantor — and not simply the clause conferring or attempting to confer the illegal authority. The deed is the instrument by which the conveyance is made, and the statute, in effect, therefore declares the deed void. It is a familiar principle of law,' that fraud vitiates every contract into which it enters, as to all affected by it save parties and privies to the fraud. The cases to which the maxim above quoted is applicable are those unaffected by any consideration of fraud or bad faith by the parties to the instrument to which it is sought to be applied.
The rule is undoubtedly a sound one in all cases where it can properly apply; but it cannot prevail over an express provision of statute which declares every conveyance of this kind absolutely void. In the cases cited above from the Court of Appeals in New York, the conveyances containing a clause permitting the trustees to sell upon credit were declared void, as against creditors; and, though it does not appear that the
But the intent of the debtor to hinder or delay his creditors must always be implied, when such is the necessary effect of any provision in the instrument of assignment, or of the exercise of any authority or power which the instrument confers. But the Superior Court in that case held that it was not true that every assignment by an insolvent must be held to be void, if the necessary effect of its provisions, or of any of them, is to hinder and delay the creditors; and the Court say that, if such be the true construction, every assignment for the benefit of creditors must be necessarily void, inasmuch as its necessary effect is more or less to hinder or delay creditors; — and the same reasoning was urged before this Court in the case at bar. The remark is true; and for the reason that such assignments would hinder and delay creditors, they would be void unless expressly authorized by statute: and, for the same reason, they cannot be extended beyond the very letter of the statute, which only authorizes a trust to sell lands for the benefit of creditors — not to mortgage, nor to hold them indefinitely in the hands of the trustee or any other person, nor to disj)Ose of them in any other way than for money. In our view, the provision authorizing the assignee to sell upon credit is in direct contravention of the statute, and must, therefore, render the deed entirely void. It will be observed that the. case in 2d 8md.
Entertaining this view of the case upon the provision in the assignment authorizing the trustee to sell upon credit, it is un. necessary to consider the other points raised by the Plaintiff in Error on tbe argument.
• The judgment of the District Court must be reversed, and judgment rendered for the Plaintiff in Error on demurrer in the Court below.