Morley Bros. v. Stringer

133 Mich. 690 | Mich. | 1903

Grant, J.

(after stating the facts). Counsel for the defendant raise objections to the validity of the judgment rendered in the suit at law. They make no argument upon them, and the pleadings upon which they are based are not found in the record. Therefore they cannot be considered. Enough, however, does appear to indicate that they constitute a collateral attack upon the judgment, which cannot be maintained, under Griffin v. McGavin, 117 Mich. 372 (75 N. W. 1061, 72 Am. St. Rep. 564), and Peninsular Savings Bank v. Ward, 118 Mich. 87 (76 N. W. 161, 79 N. W. 911), and authorities there cited.

The meritorious question in the case is whether the •defendant appellant is entitled to protection for the mortgage of $700, the amount he paid for Mr. Parker’s half of the mortgage existing upon the premises at the time of the fraudulent transfers, and whether the foreclosure of the mortgage given by Zaobariah Stringer and Edgar J. Osband to him, of $813.25 (being said $700 and interest thereon), is valid. The conclusion is irresistible that this entire transaction was fraudulent ab initio, and that Parker, defendant, and his brother entered into it with the sole view to not only hinder and delay, but to defraud, the creditors of Parker. In such cases the courts will leave parties to lie ‘in the beds they have voluntarily made. “ He that committeth iniquity shall not have equity.”

While conveyances made in fraud of creditors are valid as between the parties themselves, they are absolutely void as to creditors, and as to them it is immaterial whether the grantee paid any consideration or not. If the purpose of both the grantor and the grantee is to defraud the grantor’s creditors, the title to the land, as to creditors, is regarded in equity the same as though no conveyance had been made, and the title still stood in the grantor. The wise theory of the law is that a creditor, trusting the debtor upon the faith of his owning the land, is entitled to the first lien upon it, where the grantee has participated in the fraud of the grantor, the debtor. This is the long and well-established rule. Sands v. Codwise, 4 Johns. 536 (4 Am. Dec. 305); Shand v. Hanley, 71 N. Y. 319; Davis v. Leopold, 87 N. Y. 620; Wiley, Banks & Co. v. Knight, 27 Ala. 336; Daisy Roller Mills v. Ward, 6 N. Dak. 317 (70 N. W. 271). In this last case will be found a valuable discussion of the subject, and a citation of authorities.

But we are not without authority in this court. The question arose in the early case of How v. Camp, Walk. Ch. 427. In that case the grantee was allowed the benefit of taxes paid and improvements made by him after the conveyance, but he was held not entitled to the consideration paid for the deed. The reason of the rule undoubtedly is that taxes and improvements in good faith are for the benefit of the creditors, while the consideration paid with the intent to defraud is not. The distinction is drawn in that case between constructive and positive fraud, where the grantee is particeps criminis. See the language of the court on page 436. See, also, Robinson v. Boyd, 17 Mich. 128.

Prior liens paid in pursuance of such fraudulent agreements stand upon the same basis as actual payments for the purchase price. They are in fact a part of the purchase price. Authorities above cited; also Bump, Fraud. Conv. § 628.

This mortgage was voluntarily paid and discharged, and the mortgage to defendant Marshall given as a part of the fraudulent scheme.

We have examined the authorities cited by counsel for the defendant in support of their contention, and find that they have no application.

The decree is affirmed, with costs.

The other Justices concurred.