22 F.2d 116 | 8th Cir. | 1927
This suit was brought by appellee to quiet her claimed title to 159 acres of land in McKinley county, New Mexico. In the first count of her bill she alleged that she is the owner in fee simple and in possession of the land and that the appellants make some claim thereto. She alleged that they had no interest and asked that they be required to set forth the nature of their claims. In the second count she alleged that she is the assignee for value of a judgment recovered April 19, 1919, by Alfred Ruiz and Prank W. Clancy against Stephen Canavan (her husband), in the sum of $2,214.05; that a transcript of said judgment was filed for record with the county clerk of McKinley county on April 24,1919, and became a lien on all of the property of Stephen Canavan in that county; that thereafter on January 19, 1920, the land was conveyed to her and her husband by warranty deed of Christopher and Elizabeth Canavan, and said judgment thereupon became a lien on the undivided one-half interest of her husband in said property; that defendants, or one of them, have acquired the title of her husband to said undivided half-interest subject to said judgment; that she' became assignee of said judgment on April 15, 1921, and she prayed in the second count that her title to an undivided half-interest in the property be quieted and that the judgment lien be foreclosed upon the undivided half previously belonging to her husband and that said lien be adjudged superior to any lien, title or interest held by the defendants or either of them. The answer, barring a few formal admissions, is a denial of any interest of appellee in the land. The court entered a decree in her favor as prayed in the second count.
Appellant Kitchen was the owner of the 159 acres in 1910. On July 15th of that year he conveyed it to Rocky Cliff Coal Company, a corporation. That deed was not filed for record until September 20, 1917. Some time in 1910 the Caledonian Coal Company recovered a judgment against the Rocky Cliff Company and Stephen Canavan, from which they took an appeal to the state Supreme Court. Canavan was president of the defendant company, and at his solicitation appellant Kitchen signed the supersedeas bond. The judgment was affirmed and Kitchen was required to pay it because of his obligation on the bond. He brought an action in August, 1918, against the Rocky Cliff Company and Canavan (who was not served) on their liability over to him and recovered judgment against the company for $7,819.73 in February, 1921. Kitchen, in an effort to secure himself after paying the judgment, deeded the land to appellant Dobson in November, 1914, and that deed was filed for record in the recorder’s office of McKinley county on the 19th of that month. The warranty deed which he had given to the Rocky Cliff Company had not then been filed for record. In 1918 Dobson brought a suit in the state district court for McKinley county against the Rocky Cliff Company, Stephen Canavan, Christopher Canavan and Elizabeth Canavan, to quiet the title which Kitchen had conveyed to him in 1914. Kitchen intervened as a party in that cause and after setting up the facts that have been stated in reference to his becoming surety on the supersedeas bond in the action brought by the Caledonian Coal Company, his payment of that judgment in 1912 and his recovery over against the Rocky Cliff Company, he alleged that his judgment against the latter company remained wholly unpaid; that on July 15, 1910, he conveyed the land to the Rocky Cliff Company; that it kept his deed to it from record until September 20, 1917; that shortly before he paid the judgment in favor of the Caledonian Company Stephen Canavan was adjudged to be in contempt of an order of the district court for McKinley county, in failing to discharge a judgment that his then wife, Kate Canavan, had recovered against him and because thereof ho was committed to jail; that Kitchen visited Canavan while he was in jail and requested and demanded that the Rocky Cliff Company either reconvey the land in question to him or turn the unrecorded deed over to some person to be held in trust until the Rocky Cliff Company or Canavan should reimburse him on account of his having paid the judgment in favor of the Caledonian Company; that Canavan promised on two occasions that
On April 6, 1925, the District Court entered a decree in the suit brought by Dob-son, in favor of Kitchen on his petition in intervention against all the defendants therein named. It found that all of the allegations made by Kitchen in his petition were true and that he was entitled to the relief for which he prayed against the Rocky Cliff Company and the other defendants, and it decreed that the amount of Kitchen’s judgment, less a named sum which he owed the Rocky Cliff Company (leaving a large balance in his favor), was a first lien upon the 159 acres, describing it; it further decreed that the deed of date August 4, 1919, purporting to convey the land to Christopher and Elizabeth Canavan and an alleged correction deed made September 22, 1919, by' said Rocky Cliff Company to said Christopher and Elizabeth Canavan be set aside, canceled and, held for-naught as against the rights of Peter Kitchen to levy upon and subject said land to- the payment of his judgment, that the execution of said two deeds was .a fraud against the rights o-f
One year and five months after Dobson instituted the suit in which Kitchen intervened Christopher and Elizabeth Canavan executed a wárranty deed which purported to convey the 159 acres to Stephen Canavan and Bertha Canavan, his wife, and this is the only muniment of title on which appellee ean rely in support of the allegations of her bill .that she is the owner of the 159 acres, or an undivided half-interest therein.
The record does not disclose the reason which led the court to the conclusion that appellee was entitled to have the decree which was entered. Its effect is to take from Kitchen an undivided half-interest in the land, and subject the other half to the Ren of the judgment recovered by Ruiz and Clancy, which was acquired by appellee in April, 1921. This ean be done in no other way than by holding that appellee and her husband acquired' good title to the whole tract as against Kitchen, under the deed to them made by Christopher and Elizabeth Canavan, • of date January 19,1920, which was recorded April 25, 1922. On the plainest principles we think this is am erroneous conception of .the rights of the parties to. this suit. . In oqr opinion there ean he no doubt on the facts that the deeds executed on August 4 and September 22,1919, by Stephen Canavan and Bertha Canavan, as officers of the Rocky Cliff Company, purporting to convey in the name of and on behalf of that company good title to Christopher and Elizabeth Canavan, was, a fraudulent conveyance as to appellant Kitchen, and that Bertha Canavan, as well as her husband, had actual knowledge of the fraudulent purpose of that conveyance. - Nor ean we rid onr minds of the unavoidable inference that the subsequent deed from Christopher'and Elizabeth Canavan to Stephen and Bertha Canavan was a part and continuation of the fraudulent purpose to defeat Kitchen in the collection of his claim. This record, and the facts in the case, constitute a distinct challenge of the good faith of appellee and her husband in taking the deed from Christopher and Elizabeth Canavan. That transaction was between members of the same family and called for explanation when the, title of the grantees was denied. Besides, ever since Boone v. Chiles, 10 Pet. 177, 9 L. Ed. 388, it has been the uniform rule that a claim of good-faith purchaser without notice and for value is an affirmative defense to he plead and established by the claimant; but appellee is silent in plea and in testimony on the point. See U. S. v. Krueger (C. C. A.) 228 F. 97; Wright-Blodgett Co. v. United States, 236 U. S. 397, 35 S. Ct. 339, 59 L. Ed. 637; Great Northern Railway v. Hower, 236 U. S. 702, 35 S. Ct. 465, 59 L. Ed. 798. The corporation was insolvent when the deed of the eompány to Christopher and Elizabeth Canavan and the deed from them to Stephen and Bertha Canavan were made. The Rocky Cliff Company had no other assets than this land. Nothing was left with which it might pay Kitchen’s claim. In that condition of its affairs the appellee and her husband, as officers of the company, occupied a fiduciary relation toward Kitchen which prevented them from appropriating the company’s assets to themselves 'or otherwise diverting them from its creditqrs. Stuart v. Larson (C. C. A.) 298 P. 223; Fletcher’s Cye. Corp. vol. 8, sec. 5145. Kitchen had an equitable right to have the land applied in payment of his claim, and he may not now be' despoiled of his title thus acquired by one -of the perpetrators of the fraud against him, nor may his title be extinguished by sale of any part or interest in the land under a prior lien which appellee now holds, hut which she acquired after knowledge on her part of the fraud
The decree is reversed, with directions to set it aside and to dismiss appellee’s bill on its merits at her cost-.