107 Mich. 312 | Mich. | 1895
This is an action of ejectment for the recovery of 18 acres of land in Greenfield township, Wayne county. Plaintiff and defendant George Kennedy both
The plaintiff claims that the defendants are not bona fide purchasers for the reasons:
1. That an examination of the records showed fraud, as any person inspecting them would have ascertained that, while the- land purported to have been sold to
2. That the defendants knew, and had known all their lives, the people affected, and were advised of the fact that George F. Pillard, through whom they derived title, was the executor of the estate of George E. Pillard, deceased; that defendant’s grantor, William Kennedy, was his brother, and a partner in the business, and was a commissioner on claims and appraiser of the Pillard estate; that the evidence shows a conspiracy between William and George Kennedy and George F. Pillard to defraud the plaintiff out of the land, or that at least there was sufficient evidence to go to the jury for their consideration of that question.
8. That the sale by the executor to Leonard was not tona fide, but was an indirect sale to Pillard himself, as Leonard paid no money to Pillard; and that $3,0.00 of the money paid by William Kennedy was paid in to the estate, and accounted for by the executor, to pay the debts of the estate; and that the executor fraudulently manipulated the estate, and appropriated it to his own use.
We shall dispose of the last two questions first. The evidence shows that William Kennedy was one of the commissioners on claims on the estate, but it fails to show that he had any knowledge, or that George Kennedy had any actual knowledge, that the sale from Leonard back to the executor was not a tona fide transaction. The record discloses that the sale of the lands was necessary to meet the debts preferred against the estate, which appear to have been in an amount almost equal to its value. But, whatever may be said of the knowledge of William Kennedy, or notice to him by reason of his having been one of the commissioners on claims, there is nothing to show that George Kennedy had knowledge or notice of the situation of the estate, or that he had knowledge or notice that the sale to Leonard was not made in good faith and for a valuable consideration, except such notice as the recording of the
2 How. Stat. § 6042, provides:
“The executor or administrator making the sale, and the guardian of any minor heir of the deceased, shall not, directly or indirectly, purchase or be interested in the purchase of any part of the real estate so sold, and all sales made contrary to the provisions of this section shall be void,” etc.
Counsel for plaintiff contends that under this statute the transfer from Leonard to the executor was absolutely void, and therefore defendant took no title.
At the common law, a purchase by an executor or other person acting in a trust capacity was forbidden, as it is by the above statute. This statute was before this court in Hoffan v. Harrington, 28 Mich. 90. That was an action of trespass, and plaintiff claimed title under administrator’s sale. Hamilton, as administrator of the estate, sold the land to one Minnie, and Minnie’s heirs conveyed back to Hamilton, and he conveyed to plaintiff. Chief Justice Christianot held that under this statute all sales made contrary to its provisions were null and void. He said: “There is no exception or qualification, and no saving of rights in favor of purchasers of any kind, with or without notice, nor in favor of any person whatever.” That opinion was concurred in by Mr. Justice Cooley. Mr. Justice Graves dissented „ from those views, and said that the provision was a mere enactment of the rule which the courts had laid down prior to its passage, and, like many others, was simply intended as a legislative recognition of a doctrine developed by the tribunals, and considered worthy of being made stable by adoption into the statute book. Speaking of the methods and principles guiding the courts in the application of the rule before it was crystallized into a statute, he says:
*317 “These principles were not set aside or impugned. They remained as vital as ever. And since the only change effected was in carrying this rule, which was already law, from the unwritten to the written code, T cannot see why it should be administered in a new spirit, and contrary to the principles natural to it. They accompanied the rule into the statute book, as I think, and should be recognized in applying it. If we reject these principles, and take the provision as one to be applied in a sense as universal as the terms will literally allow, then every sale by an executor, administrator, or guardian in which the trustee has an interest, however secret, is ipso facto void in the sense of being a nullity. It has no force whatever. It is bad as to everybody and all transactions. No one is bound by it, and no one can be benefited by or through it. Whether the deed given on the public sale is recorded or unrecorded, whether a full price was or was not paid and applied for the estate, whether the sale was or was not confirmed in regular form by the court, whether or not the party claiming title under it through a subsequent purchase bought in good faith for a full price and without notice, can make no difference. It never had effect, because the law forbade it. We are compelled to go to this length, or confess that such a sale is not made positively illegal and so completely nugatory, if not void as a sale, it must have some of the legal possibilities of a valid sale. There is no practical middle ground. We cannot stop short of the extreme view without confessing that the law was not intended to make such sales wholly ineffectual and inoperative as to all persons and circumstances, nor without admitting that they may- avail to some purposes, and for and against particular parties, and hence that they are to be regarded simply as voidable, and not as nullities; and, if we accept this conclusion, we tacitly admit that in applying the act we are not only authorized, but required, to mitigate its scope. Now, I understand it to be conceded that we ought to qualify its operation. If we may. do this, if we may say that such a sale is not a nullity, but may have some force, by what.principle are we to be governed? Where shall we pause? What reason can be given for halting short of the view which was settled when the rule was worked into the statute?”
We think the true principles of construction of this statute were stated by Justice Graves, and under the circumstances stated in the present case Mr. Justice ChristiaNCy might have reached a different conclusion. There was a link missing in the chain of title in that case in the claim under the administrator’s sale. The deed from the administrator to the purchaser at such sale had been lost, and was never recorded. Justice Ohristiancy, commenting upon this, said:
“As the administrator’s deed to Minnie [the purchaser at the administrator’s sale] was not recorded, the plaintiff did not purchase on the faith of its record. Had it been recorded, and had the plaintiff purchased on the faith of its record, without notice that the purchase was made for the administrator, the case would probably have come within the registry laws, upon the same principle that the deed from Thorn [the deceased] himself would have come within them, so far, at least, as regards questions of the kind here presented.”
We think that the views expressed by Justice Graves upon this question have been followed by the later decisions of this court. In Taylor v. Brown, 55 Mich. 482, at the sale of land by executors under license of the probate
“The plaintiff’s case is devoid of all equity, and both the letter'and spirit of the law require that these defendants should be protected in the enjoyment of the property they have in good faith and for a full and valuable consideration purchased and paid for. The statute (2 How. Stat. § 5683) does not require a person, in order to keep within its provisions in a case like this, to examine beyond the registry of deeds for outstanding claims when he makes his purchase. It is very clear from the record that both the guardian and executors acted in perfect good faith, and, so far as we can discover, for the best interests of the wards as well as that of the estate.”
The statute referred to in that case provides:
“Every conveyance of real estate within this State hereafter made, which shall not be recorded as provided in this chapter, shall be void as against any subsequent purchaser in good faith and for a valuable consideration of the same real estate, or any portion thereof, whose conveyance shall be first duly recorded.”
“I am not prepared to hold, under such circumstances, that third parties, acting in good faith, could not acquire rights under such a conveyance, even although it might afterwards be shown by evidence éeliors the record that the administratrix was indirectly and secretly interested.”
In McKay v. Williams, 67 Mich. 547, Mr. Justice Champlin, referring to section 6042, 2 How. Stat., said, “This statute was merely an affirmance of the common law.”
We are therefore compelled to hold, both upon reason and authority, that sales of the kind in question are voidable only. The statute must be read in connection with the registry laws. 2 How. Stat. § 5683.
Upon the question of whether there was evidence upon the face of the record to create in the minds of the defendants such a suspicion of bad faith in the executor as to put them upon inquiry, it appears that Pillard did not purchase until one month after the sale to Leonard. It is true that the deed to Leonard was not recorded until the date of the execution of the deed back to Pillard; but it frequently occurs that deeds are not put upon record on the date of their execution. We think this fact could not be construed as notice to a subsequent purchaser that anything was wrong about the purchase by Pillard, especially in view of the fact that the consideration in the deed to Pillard was greater than the purchase price recited in the Leonard deed, and also in view of the settled rule that the subsequent purchase by an executor of land which he has previously and in good faith sold under license of the probate court is
As to the proximity of the date of record of Pillard’s deed to Leonard and the date of the deed from Leonard to him being notice of bad faith, this case is distinguishable from Winter v. Truax, 87 Mich. 324, and McKay v. Williams, 67 Mich. 547. In both of those cases the conveyances by the trustee to the purchaser and back to the trustee were made upon the same day, and for the same consideration, and the decisions are justly based upon the principle that the notice upon the face of the records was that both conveyances were a part of one and the same transaction; but such notice does not appear in this case.
The fact that the deed from Leonard to Pillard was a special warranty was not evidence of bad faith. While it is held in Peters v. Cartier, 80 Mich. 129, that a grantee in a quitclaim deed cannot be a bona fide purchaser under our recording laws, yet the rule is otherwise where a grantee obtains title through a warranty deed, as in this case. William Kennedy had a deed of warranty from Pillard, and conveyed to George Kennedy by warranty. See Culbertson v. Witbeck Co., 92 Mich. 469. But the deed from Leonard to Pillard was something more than a deed of quitclaim. It was in fact an assertion that the executor’s sale to him was bona fide.
In addition to these facts, the defendant George Ken
‘‘The extent, to which the cases have gone is that, where the fact of a prior conveyance or incumbrance is brought to the knowledge of the subsequent purchaser or incumbrancer, he must be held to take subject to such prior conveyance or, incumbrance; or, when such circumstances are shown to exist as would put an ordinarily prudent business man upon inquiry as to such prior conveyance or incumbrance, then he is charged with notice of such facts as, upon inquiry, he could have ascertained; but, where circumstances alone are relied upon, with no proof of actual knowledge, they must be of such character that failure to make the inquiry amounts to bad faith.”
No such facts were shown by the record.
.The learned circuit judge before whom the case w7as tried held in accordance with the views here expressed, and directed a verdict in favor of defendants. The judgment must be affirmed.