6 Mich. 76 | Mich. | 1858
Lead Opinion
I agree with the learned judge who decided the cases in the court below, that the deed from Aaron Thomas to his son Alanson, which complainants ask to have re-formed, was made to defraud the creditors of Aaron. The evidence is conclusive on that point; and admitting complainants are purchasers in good faith, for a valuable consideration,' and ’without notice of the fraud, or of the mistake in the deed from Aaron to Alanson, their grantor,- they still have failed to make a case entitling them to relief in a court of equity. On the ground of purchasers for a valuable consideration, without notice, they asked and obtained relief in the court below, where it seems to have been taken for granted that that, of itself, is an equity on which a bill may be sustained for relief. It can be used as a defense only. It is a shield to protect a party, but can not be made a basis of
The reason of the rule has been said to be, that the party to be affected by it is entitled to the oath of the party seeking to avail himself of it; I do not think this the true reason; for a defendant may obtain the oath of complainant on a bill e£ discovery. The rule rests on a more solid foundation; which is, that the effect the law gives to a purchase without notice, is not a perfect right in itself, and, therefore, will not sustain an action at law or bill in equity, but may, in certain circumstances, be used by a defendant to stay the interposition of the court, on the ground that he is equally entitled with the plain
When defendant has the legal title, and plaintiff is seeking to divest him of it by reason of some equity that was a good ground for relief against his grantor, he may 'turn on his adversary, and say: “I purchased the estate you claim of me in good faith; I paid a valuable consideration for it, and I had no notice of your claim when I parted with my money.”
In the cases before us, complainants admit Alanson Thomas, their grantor, had no legal title when he conveyed to
Asno relief can be given solely on the. ground that complainants purchased in good faith without notice, is there any other ground on which the relief asked may be granted? As purchasers from Alanson Thomas, they have all of his right at law and in equity, and nothing more. But this comt would not correct the mistake in favor of Alanson, on a bill filed by him, for he was a party to the intended fraud of the father. Neither can it in favor of complainants,, his grantees, without conceding to them greater rights than Alanson had, and making itself a party to .the intended fraud. It matters not there are no creditors, even if such be the case, now to be injured. It is the corrupt intention, the illegal object the Thomases had in view — -the wrong in' tended, and not the wrong done — that stays the hands of the court. If the court would not have corrected the mistake-the instant it occurred, it will not now; for, by correcting it now, it would give effect to the deed from its execution. To give effect to it on any day subsequent to the time the parties intended it should take effect, would not be enforcing the original contract, but making a new contract for the parties..
A court of equity will not decree a specific performance of an illegal contract. On what principle, then, can it correct a mistake in such a contract?
Complainants are not bona fide purchasers without no-, tice. In law, they could not be said to be ignorant of the mistake when they purchased. The deed from Aaron to Alanson was recorded, and they are chargeable with notice of every thing that appears on the face of the record. If they purchased without examining the record, or seeing whether it described the land they were about to purchase, it is then- misfortune, and, unhappily for them, one that this court can not correct. If it be said the registry is notice only to subsequent purchasers from the same grantor, there is still another principle of law which charges them with notice. It is, that a vendee is deemed to have notice of what appears on the face of a conveyance through which he claims title, whether it be in a conveyance to his grantor, or other prior conveyance in the chain of his title.
Aaron Thomas, in his lifetime, frequently said he had conveyed the farm to his son, and made the same statement under- oath in a court of justice. Such declarations were evidence to prove the mistake in the deed from,him to Alanson, but not to disprove the fraud with which the
The Statute of Frauds, it is said, declares the deed void as against creditors only, leaving it good between the parties to it. The statute, in this particular, is declaratory of the common law only, by which all contracts made in violation of law, or contrary to public policy, are
The decrees of the court below, I think, should be reversed, and the bills be dismissed.
Concurrence Opinion
As I concur entirely in the views expressed by my brother Manning in these causes, I do not propose to enter into any extended argument on the legal questions involved.
It is very manifest that Alanson Thomas had no title to any land not covered by his deed. If he had any rights outside of the land there described, they arose not from the deed, but from circumstances which entitle him to relief independent of it — or, in other words, from the equity to have a neAV deed conforming to some right which was not perfectly assured by the deed as drawn and executed.
The complainants undertook to purchase from Alanson, and they, in like manner, could only obtain a legal title to what was covered by the deed under which he claimed. They took a conveyance from him of lands not embraced in that deed, and, so far as depends on any right obtained merely from him, that conveyance would be operative to pass no more than he possessed, which would be the legal estate in the lands he owned, and any claim he might have to the lands he did not legally own.
It certainly requires no great amount of reasoning to show that Alanson Thomas had no rights which would be enforced by any court of law or equity. The ground of relief against mistakes is placed upon the same basis with that for specific performance, and the mistake is corrected by establishing the original right to a conveyance, or other instrument, under some agreement which, by reason of the mistake, has not been fully carried out. To make out the mistake, it is necessary to make out the contract, in order that the court may see how far it has failed in the per
The equities upon which the complainants rely, are not Alanson’s equities, but entirely outside matters. They depend really upon acts said to have been done by Aaron Thomas, which, it is claimed, should operate as equitable estoppels upon him and his heirs. And here, I think, a little confusion has arisen in assuming that the case stands as it would have stood had he lived. Whatever rights exist against an ancestor,- will undoubtedly, as a general rule, exist against his heir. But here, Aaron died before either of the complainants acquired any rights. He never made any representations to them whatever. And I have been unable to find any rule of law which authorizes a person to hold another liable for acts or representations not made to himself, or to some one under whom he derives
Christiancy . J. :
After a most careful consideration of these cases, I am unable to agree in the opinion which has been given by my brothers Maiming and Campbell.
I think Ave are all substantially agreed upon the folloAVing facts,— at all events, I think they are sufficiently established by the evidence:
First, That the deed from Aaron Thomas to Alanson Thomas was fraudulent as to creditors:
Second, That there is no sufficient evidence that complainants had any actual notice of the fraud at the time of" them respective purchases:
Third, That complainants are purchasers for a valuable consideration:
Fourth, That there was a mistake in the deed from Aaron to Alanson Thomas — both parties understanding and treating it, during their respective lives, as a deed of the whole farm, including the lands claimed by complainants— and that they both died in ignorance of the mistake; that from the date of the deed in 1838 till the death of Aaron in 1841, both he and Alanson Thomas represented the latter to be the owner of the farm under said deed; that though both remained in possession, Aaron, for the greater portion of the time, had actual possession of but a small part, where he resided, and the business was carried on chiefly, if not entirely, in the name of Alanson, to whom Aaron directed persons wishing to transact business in respect to the farm or farm produce, and persons wishing to lease or purchase any parts of the farm, as well as those who applied to assess or collect taxes thereon, declaring to such persons that the
Fifth, That complainants had no notice of the mistake in the deed at the time of their respective purchases from Alanson, in 1848 and 1850, except such constructive notice as is by law to be implied from what appeared on the face of the deed and record, by reason of their claiming through the deed in question:
Sixth, That Mr. Backus, who was the counsel and professional adviser of both Aaron and Alanson, from 1838 or 1839, till the time of their deaths, frequently had both the patent and the deed in question in his possession, and never discovered or knew of the mistake, — both parties always speaking of the farm as Alanson’s, and never having intimated to him that the deed had been made to defraud, creditors; that both complainants, before purchasing from Alanson Thomas, applied to, and inquired of, him, whether they could-get'a good title; that he informed them a conveyance from Alanson would be good, and that he so believed:
Seventh, That Alanson continued in the open and peaceable possession of the land in question after the death of
Eighth, That the mistake in the description was first discovered by Titus Dort, administrator of Alanson, after the death of the latter, and some time after the respective conveyances to the complainants — -the latter being then in possession, improving and using the land as their own.
If the creditors of Aaron Thomas, or subsequent bona fide purchasers from him, were to be affected by the corree-' tion asked by the bills, and such creditors or purchasers were opposing the relief, a veiy different question would be presented, and, in such case, perhaps no relief could be given. But the relief is asked only against the heirs of Alanson Thomas and the administrator on his estate, and js opposed only by them. Heirs have none of the equitable rights of purchasers who have paid their money for the land, but, upon principle and authority, stand precisely in the condition of their ancestor — having no greater rights— and can avail themselves of no defense which would not have been equally available to him (Jackson v. Garnsey, 16 Johns. 191); and there being no legal evidence in the ease of any debts against the estate — nothing from which debts to any definite amount could be inferred, if any mere inference were permissible, nor any thing to show that the administrator is seeking the property at the instance of creditors' — the administrator stands in no better position than the heirs. — Osborne v. Moss, 7 Johns. 163. Both the above were cases of fraudulent conveyances by deceased, in one of which the heir, and in the other the administrator, sought to set up the fraud in defense;- but in both it was held incompetent.
I shall therefore consider the cases before us as if these bills had been brought against Aaron Thomas himself. And looking at the facts of the case in the light of plain common sense, and applying those principles of honesty and fair dealing universally recognized as governing the ordinary business transac
I propose to examine the objections urged to the relief in these cases, and to show, also, the ground upon which I think it should be granted.
One principal ground upon which my brethren feel bound to deny relief is, that the contract or transaction between Aaron Thomas and his son, Alanson, was fraudulent as to creditors, and therefore illegal between the parties at common law, as opposed to public policy; and that courts will •not enforce an illegal contract.
Whether the contract, as between the immediate parties, was illegal in that' sense which would prevent Alanson Thomas from sustaining an action upon it against Aaron Thomas, is by no means well settled by the cases; for, though we admit that the statute 13th Elizabeth, and our own statute in reference to fraudulent conveyances, are only in affirmance of the common law; it does not follow that the common law went further than the statute, and made such contracts, even when executory, void or illegal as between the parties, so as to enable one of the parties to set up his own fraud in his own defense. It is true it was so held in Smith v. Hubbs, 1 Fairf. 71; in Norris v. Norris’ adm’rs, 9 Dana, 317, and by Cowen and Bronson, judges, against the opinion of Nelson, chief justice, in Clark v. Nellis, 20 Wend. 24; and this decision was sustained in the Court of Errors (4 Sill, 424), by a vote of ten to nine — the Chancellor, who voted for reversal, concurring with the Supreme
It is true those who claim such contracts to be illegal as between the parties, undertake to base these decisions on the ground that the contracts in question were executed, and not executory. But while this distinction is well founded in principle, when applied to cases where the contract has been fully performed, so as to place the party claiming under it, without the aid of the court, in full possession of the thing illegally contracted for, yet, when applied to the class of cases last cited, where, though the contract is com-, pleted, the £>arty has obtained nothing by it, and never can obtain any thing without the aid of the court, the distinc-. tion alluded to becomes merely verbal and technical, without any foundation in principle. The rule which forbids the maintenance of a suit upon an illegal contract while executory, is based upon the ground of public policy; that courts? to discomage fraud, should refuse all aid to parties seeking to derive advantage from their own illegal acts; yet, without the aid of the court, the personal property in Hawes v. Leader, the land in Jackson v. Garnsey, the only substantial benefit, the illegal end and object of the contracts, could
But suppose it be admitted that the contract, as between Aaron and Alanson Thomas, was illegal, so that the latter 'could maintain no action upon it: it can not prejudice the complainants here. It is true that where a statute declares a contract absolutely illegal and void, to all intents and purposes, as has sometimes been done in reference to notes and contracts given for a usurious or gambling consideration, they have been held void in the hands of a bona fide holder. But contracts are treated as void at common law on the ground of public policy only; and the rule, ex twrpi *causa non oritur actio, is subject to all the limitations and
One qualification of the rule is, that the rule itself shall not be made an engine of wrong and injustice, in the hands, of the wrong-doer against innocent parties. It can never be good policy to punish the innocent for the crimes of" the guilty.. Hence, the rule can not be set up to the preju-. dice of any party innocent of all participation in the wrongs or whose rights have been acquired without notice of it. I. am not aware of any case, at law or in equity, where a, contrary doctrine has been held, unless the illegality or fraud occurred directly in the course of judicial administration^ and if there be any such, I can not esteem it as good law or good sense. In some of the cases, general language has been used, which, abstractly considered, might be supposed, to extend the rule to innocent parties; but when considered with reference to the cases before the courts, it will be found to apply only to the parties in fault. The rule is laid down, with its proper limitations, by Lord Brougham, in Armstrong v. Armstrong, 3 Myl. & K. 64; and see Fivaz v. Nicholas, 2 M., G. & S. 512 to 514; and Cowen J. admits this in Clark v. Nellis, 20 Wend.; and the Chancellor in the. same case (4 Mill). The rule in question is the same which declares that a party “must come into court with clean,, hands” — “that no polluted hand| shall touch the pure fountain of justice”. — that the court will not aid a party seeking the reward of his iniquity. And in Holman v. Johnson, Cowp. 343, a leading case on the subject, Lord Mansfield says, 5,n speaking of the ground on which the defense of’ illegality is allowed, “It is. not for the sake of the defend:_
And, as against an innocent party, “no man shall set up his own iniquity as a defense, any more than as a cause of action”; per Lord Mansfield in Montefiori v. Montefiori, 1 W. Bl. 363; see also per Abbott Ch. J. 2 B. & Aid. 368; and see argument 4 Bing. 639; and in Doe v. Boberts, 2 B. & Aid. it was held that a party could not set up his own fraud in defense against his own deed, though the fraud amounted to illegality, and the plaintiff was a party to it. — See Cushwa v. Cushwa’s lessee, 5 Md. 45, 54; Broughton v. Broughton, 4 Rich. 492.
Not only is it incompetent to set up such a defense against an innocent party, but the law will discriminate as to the degrees of guilt, as between the immediate parties; and it is well settled, both at law and in equity, that to enable a party to a transaction merely illegal as against public policy, to show his own fraud in his own defense, the plaintiff must not only be in delicto but in pari delicto. And it is in this class of cases that the rule in pari delicto especially applies; and though the plaintiff may, to some extent, have participated in the illegal transaction, yet, if not equally guilty with the defendant (or at least if there be strong mitigating circumstances in his favor) the latter will not be allowed to avail himself of the defense. — Skaife v. Jackson, 3 B. & C. 421. Smith v. Cuff, 6 M. & S. 160; Alsager v. Spalding, 4 Bing. N. S. 407; Horton v. Riley, 11 M. & W. 492; Turner v. Hoole, Dow. & Ry. N. P. C. 27; Smith v. Bromley, Doug. 696; Osborne v. Williams, 18 Ves. 379; Whaley v. Horton, 1 Vern. 483; Bainham v. Manning, 2 Vern. 242; Anandale v. Harris, 2 P. Wms. 432; James v. Bird’s adm’r 8 Leigh, 510 (referring to case of Austin v. Winston, 1 Hen. & M. 33); Story Eq. Juris. § 300; Adams v. Barrett, 5 Ga. 404.
To apply these well settled rules to the cases before us — are the complainants in pari delicto with Aaron Thomas in this fraud? In what violation of law have they participa
There is nothing arbitrary or technical in the rule in question in a court of law; and I am not willing to close my eyes to the just rights of parties, for the sake of erecting a new, arbitrary barrier to those rights in a court of equity.
The law, I think, need not fear defilement from coming in contact with fraud, for the purpose of suppressing it, or protecting the innocent. I can not resist the conclusion, that it will tend much more to the suppression of fraudulent contracts of this kind, and is therefore more in accordance with sound public policy, to enforce them against the fraudulent party himself, than to allow him, not only to escape the evil consequences, but actually to reap an advantage from his own fraud as against innocent parties. No one, in such case, can suffer any detriment from the enforcement of the contract but the guilty party himself, and he has no right to complain: as he sought the advantage, let him bear the burden of his iniquity.
I think, therefore, this defense is wholly incompetent for these defendants, as against these complainants; that the court have no right to listen to it as against the latter, and
As to the objection of a want of consideration between Aaron Thomas and his son, I am at a loss to perceive how that can be raised by Aaron Thomas, any more than the fraud; or how he can raise it at all. The transaction was single and entire, and for the purpose of defrauding- creditors. It was without' consideration, simply because it was fraudulent ; and Aaron Thomas is not entitled to have this single transaction divided up into two parts, one fraudulent and the other innocent, so as to allow him to claim the protection due to an innocent voluntary vendor: besides, he has said to all the world by his deed,'and to these complainants in particular, who have bought upon the strength of it, that he had received the consideration of “five thousand dollars, good and lawful money of the United States”; and as they had no notice to the contrary, and bought in good faith (beyond all question as to this point), he would be estopped to deny the consideration as against complainants, had there been no fraud, and the conveyance had been merely voluntary. In Frazer v. Western, 1 Barb. Ch. 220, it was decided that even where a purchaser has notice that the deed to his grantor was voluntary and without consideration, this does not make it his duty to inquire, at his peril, whether it was fraudulent as to creditors; and that the legal presumption is that such conveyance is valid where a relationship of blood or marriage exists between the parties; and see Wyche v. Greene, 11 Ga. 159, where a mistake was corrected in a voluntary conveyance.
But it is further objected that, as to so much of the land as is not actually included in the deed of Aaron to Alanson, owing to the mistake, the transaction must be put upon the ground of a contract to convey; that this is a mere chose in action, and complainants, being merely assignees, can stand in no better position than Alanson Thomas himself. No proof
That, as a general rule, an assignee of a chose in action takes it subject to all equities existing between the original parties, cannot be doubted. But if this rule were applicable to such cases as the present, as I think it is not, it may well be doubted whether the fraud of Aaron Thomas can constitute an equity in his own favor, as against complainants, who have not participated in the fraud; especially as such a defense is never allowed to a defendant on his own account. But it is said a purchaser of a chose in action must be presumed to have notice of what the rights of the parties to it really were. This is doubtless true, as a general rule (so far, at least, as respects any defense allowed on the defendant’s own account), and when the vendor understands that he is selling, and the purchaser that he is buying, a chose in action; because, in such case, every purchaser knows he is getting nothing except the right of action existing between the original parties; and hence it becomes his duty to inquire into those rights, and it is his own folly if he does not. But where, as in this case, both the vendor (Alan-son Thomas) and the vendees (complainants), understood that the one was spiling, and the others that they were purchasing, the land itself, instead of a mere contract respecting it; and especially Avhere such Avas the understanding of the original transaction by the parties to it, and by all parties throughout, and the purchasers have paid their money for the land itself, and only failed to obtain the title in consequence of
And the rights of the complainants shordd be governed, as to notice of every thing affecting the rights of prior parties, by the same rules which apply to conveyances of land. As such bona fide purchasers, the rules applicable to a chose in action are no way applicable to them (see Leading Cases in Eq. vol 2, pt. 1, pp. 51 and 52); and they stand upon grounds equally as strong as those which protect the bona fide holder of negotiable paper; and are no more bound to inquire into the consideration or the secret motives of the parties to any of the prior conveyances, especially where their immediate grantor is in open and peaceable possession, and no want of consideration, and no illegality or unfairness, appears on the conveyance.
A bona fide purchaser is a peculiar favorite of courts of equity, and those courts have gone, perhaps, further in protecting such purchase than in protecting any other right cognizable in equity.— See Leading Cases in Eq. ed. above cited, pp. 37 and 48 ; Sugden V. and P. 11th ed. 924 to 1013. And though the statute expressly declare a fraudulent conveyance void as against creditors, and make no exception in . favor of bona fide purchasers, yet such purchasers will hold even against creditors. — Anderson v. Roberts, 18 Johns. 516; Jackson, v. Terry, 13 Johns. 471; Boyce v. Waller, 2 B. Monr. 91; Fraser v. Western, 1 Barb. Ch. R. 220; Lee v. Abbe, 2 Root, 359 (and such is the rule expressly enacted by our own statute, Comp. L. vol,
But it is objected that complainants can not claim to be bona fide purchasers, because the deed was recorded, and they were bound to take notice of any defect of title appearing on the record. I am at a loss to perceive how the record of the deed can have any bearing upon this question. The purpose of the registry law, as I understand it, is not to give notice, as between a grantor and his grantee, immediate or remote, for the protection of the grantor, but as between prior and subsequent purchasers and incumbrancers from the same grantor, and for the protection of purchasers. As between Aaron and Alanson Thomas, or as between the former and the grantees of the latter, the question would be precisely the same if the deed had never been recorded.
I admit the general rule, that a purchaser is bound to notice such defects of title, and such incumbrances, as appear on the face of any deed through which he derives title, whether it appear directly or by reference to some other paper mentioned in it. This was the rule at common law, and does not depend upon the registry. But it will not, I presume, be contended, that under this rule, the deed itself could give the complainants notice of the fraud or illegality, as this does not appear on the deed, expressly or by reference; much less that complainants could thereby be made particeps criminis in the original illegality. Constructive notice, implied by this rule, is purely a fiction of law, adopted for wise purposes, and wholesome in its operation when confined within its proper limits: but in fictions juris, semper equitas existitq and to extend it so far as to make an innocent man particeps criminis in a past transaction of which he is actually ignorant, would make it an engine of oppression.
But it is contended, that under this rule, the deed of Aaron is notice to complainants of the mistake in the dqgd itself;
But there are also other reasons why Aaron Thomas can not insist upon holding these complainants bound by this mistake, and why he should not be at liberty to object to them the want of consideration, or his own intended fraud upon creditors. His own acts tended to lead them into the error, and to disarm them of any suspicion of fraud. I do not allude to any merely verbal statements of Aaron Thomas made to persons not shown to have communicated with complainants, and Avho did not, under the influence and belief of such statements, in any Avay advise or mislead the complainants in respect to the title. Nor are complainants to be affected by rumors and neighborhood reports or surmises.
1st. The description in the deed, as I have shown, was hi its nature calculated to deceive, and did deceive them, as it had deceived him, as well as Alanson and the widow and heirs. And if the error in the deed was intentional on his part, to defraud creditors, and to induce the belief that the whole had been conveyed, when he knew the contrary, the case is still the worse for him and his heirs; as it not only admits that the error was such as he supposed likely to deceive, but that he actually intended it should deceive. He must be presumed to have intended the natural consequences of his acts. The trap, though set for creditors, was so set and baited as to be equally dangerous to purchasers; and when the latter have been caught, shall he come into court and seek to avoid the consequences of his acts, on the ground that he only intended to entrap creditors ? When courts become more solicitous for the protection of the avowed swindler (as this suggestion would make him) than of his innocent victim, it will be time enough to listen to the plea. But this suggestion is wholly inadmissible, as it is against his own oath, twice repeated, and there is nothing in the case to warrant it.
2d. He represents on the face of the deed that he had received five thousand dollars in cash, in payment for the land; and no man can believe that, but for this deed, complainants would ever have purchased the lands from Alanson Thomas.
3d. The fact that he put Alanson in possession, with all the apparent indicia of ownership, recognized him as the owner nine years during his life, and left him in peaceable possession at his death, and that this possession continued, open and visible to all the world, up to the time of the purchase by these complainants.
I can not admit that there is any principle of law which limits the effect of such acts and representations to the period of a man’s own life, or which prevents Ms heirs being bound by them after Ms death, wherever he would be bound by them if living. Nor that there is any principle which confines the rule of equitable estoppel to such representations as are made directly, and in person, to the parties acting upon them. Whether direct or indirect, in the presence or in the absence of the parties, is immaterial, so that they are calculated and intended to produce, and do produce, the end.
But, 4th, it is also in evidence that Mr. Backus, the counsel and adviser of Aaron and Alanson during their lives, and who frequently had both the deed and the patent in his possession; who had ahvay heard both speak ofsthe farm as Alanson’s, and never heard from either any fraudulent purpose connected with the deed, nor ever discovered the mis. take, — was inquired of by these complainants as to the title
It is true that, on the death of Aaron Thomas, the powers of Mr. Backus, as his attorney, ceased. But his death did not obliterate the impression, nor take back the information he had imparted; and Mr. Backus doubtless acted upon that information in perfect good faith, and was entitled to act upon it, when he advised these complainants that the title of Alanson Thomas was good. If Mr. Backus, and, through him, the complainants were misled, the acts and representations of Aaron Thomas tended to mislead them.
I think, therefore, that Aaron Thomas can be no more at liberty to insist upon his fraud, the want of consideration or the mistake in the deed, as against these complainants, than if he had been present at the sale by Alanson to them, advising it, and giving the strongest assurances of Alanson’s title. The case is even stronger against him than any verbal representations could have made it, because no one would be so likely to rely upon any verbal assurances, as upon a solemn deed of conveyance, duly executed, acknowledging full consideration, and followed by many years of peaceable possession under it.
It is well settled at law, that where goods are obtained by fraud, under circumstances which would render the sale void between vendor and vendee, and the vendor has furnished, however innocently, to the vendee any of the evidences of ownership, calculated to mislead a purchaser, and the goods are purchased bona fide from the fraudulent vendee, relying upon such evidences of ownership, such purchaser will hold against the innocent vendor. — Ash v. Putnam, 1 Hill, 307; and see Rowley v. Bigelow, 12 Pick. 307 (which perhaps goes too far); Peabody v. Fenton, 8 Barb. Ch. R. 451, and Lupin v. Marie, 2 Paige, 169.
In the case of Teasdale v. Teasdale, Sel. Ca. Ch. 59, it was decided that, even where a person has been induced to become a purchaser by the misrepresentation of another
But the cases before us are much stronger, and it seems to me, stand upon the ground of that numerous class of cases, where the party, knowing his rights, willfully conceals them, encourages another person to purchase, and, when the purchase has been made on the strength of the representations, seeks to take advantage of his own wrong to the injury of the purchaser; as in Savage v. Foster, 9 Mod. 35, Ibbottson v. Rhodes, 2 Vern. 554. Shall the fraud of a party shield him when his ignorance would not ? When others have been induced to purchase property on the strength of his representations, shall he be allowed to excuse himself on the plea that he only meant to defraud creditors, when the allowance of the excuse would defraud purchasers also?
In every view I have been able to take of this case, I am compelled to look upon these complainants as bona fide purchasers, without notice of the fraud, want of consideration, or mistake; and this is simply giving effect to the purchase according to the actual understanding and intent of the parties.
But here the broad ground is taken (though no such objection was urged on the argument), that a purchase in good faith and for a valuable consideration, is no ground to sustain a bill for relief in a court of equity, though it is a good defense; and for this my brethren have cited Beekman v. Frost, 18 Johns. 544 (in which the Court of Errors reversed the opinion of Chancellor Kent by a vote of 15 to 10); and Jackson v. Cadwell, 1 Cow. 622. The latter case decided nothing of the kind, and could not, as it was an action of ejectment; but it contains a mere dictum, to that effect by Woodworth J. But in the case of Beekman v. Frost, the broad unqualified language used by the court would carry the rule nearly to the extent claimed by my brethren, though the case before the court by no means
But these bills do not claim relief on this ground, as respects the fraud between the Thomases. This is no part of the case made by the bills, nor do they in any manner allude to the fraud. The defendants have undertaken to set up this fraud in their defense. As to this they are the assailing party; and if admissible at all (as I think it is not), they have the affirmative of the issue, and must prove notice to complainants of the fraud, instead of requiring the ■complainants to prove the negative.
The present cases are not, then, within the reason given for the rule in Beekman v. Frost, if that reason be the true one. It is true these bills claim that complainants purchased bona fide, without notice or knowledge of the mistake; but so much would have been necessary had they purchased directly from Aaron Thomas, and the mistake had occurred in his deed to them.
But, relying upon the general language of the court in Beekman v. Frost, my brethren have laid down the rule as one of universal application to all complainants who may happen to be bona fide purchasers, without exception or limitation. But the language of judicial decisions must not be taken abstractly, without reference to the facts of the case to which it is applied; and where general language is used, it can not be taken as authority further than justified by the case; and construing the decision in Beekman v. Frost, secundum subjectam materiam, it only justifies the application of the rule there laid down, to bona fide purchasers who do not show an equity superior to that of the -defendant.
But so strong is the position of a bona fide purchaser in a court of equity, that the court will sometimes protect him as defendant, even where the complainant shows a superior right; as, for instance, where complainant shows an equal equity coupled with the legal estate — Joyce v. De Moleyns, 2 J. & L. and Bowen v. Fvans, 1 Ibid. 264 (cited Lead. Ca. in Eq. note to Basset v. Nosworthy); and even though complainant be in possession under his legal title.— Wallwyn v. Lee, 9 Ves. 24. This would seem to depend mainly, if not entirely, upon considerations connected with discovery — the court refusing to appeal to the conscience of a party to make discovery when he has in good faith parted with Ms money in ignorance of the conflicting right,
In all such cases, and m all others where such purchaser can not show a superior equity (M the sense in which I have used these terms), he could not, certainly, obtain relief as complainant. But that there is any established rule in a court of eqmty which denies relief to a bona fide purchaser who shows equities superior to those of the defendant, I can not admit. I can discover no principle on which such a rule can be justified; and the decisions cited, when considered with reference to the subject-matter, will justify no such conclusion. And after a careful examination, and much reflection, I must declare my conviction that the rule, as broadly stated in Beekman v. Frost, and by my brethren in this case, has no existence — -that it exists, m fact, only as it is based upon, and forms an instance in illustra
I am not sure that I comprehend this reason. It does not convey to my mind any clear or definite idea. If by an “imperfect right” is intended a mere equitable, as distinguished from a legal, right, then it is too broad, and would materially narrow the limits of recognized equity jurisdiction. If it be intended to declare that the right is imperfect only in the sense that, though recognized as a .good defense, it is not recognized as sufficient ground for equitable relief, then it is simply giving in another form ■of words the ride itself as the reason of the rule. There •is no difficulty, it seems to me, in discovering the reason
In the great majority of cases where the rights of a bona fide purchaser have come in question, it is doubtless true that such purchase would only be good as a defense, because the question has generally arisen between two purchasers from the same grantor, immediate or remote, or upon analogous principles; and this is what is generally understood by the terms bona fide purchaser, as mentioned in the books; and few such cases can .arise, where, if the defendant were complainant, the opposite party would not have an equal equity. It is also true that such bona fide purchase is most frequently set up by a defendant, because he is generally the party in possession, and therefore the party attacked. The cases before us are, I think, the first in which the rule in question was ever sought to be applied as between the purchaser and his grantor, mediate or immediate, especially where the equities of the purchaser were superior to those of the grantor. It is easy to see that, in cases between a bona fide purchaser and Ms vendor, such purchaser is quite as likely to have the superior equities as the grantor. The cases before us are an example m which all the equities are on the side of the purchaser, and none are even claimed to exist on the part of the vendor, Aaron Thomas, or his heirs. Mr. Hare, in Ms note (Leading Ga. in Fq. vol. 2, part 1, 54 to 56), condemns
I think the complainants clearly entitled to the relief asked by their bill, and my only apology for so extended a discussion, is my imwillingness to sanction the establishment of rules which will not only result in the consummation of a gross fraud upon innocent parties in the cases before us, but which, I think, will operate as an encouragement of fraud in other
Concurrence Opinion
I fully concur in the views expressed by my brother Christianey, and, under ordinary circumstances, I should content myself with this declaration. But the extraordinary nature of the defense set up, and the fact that the cornt is divided in opinion, impels me to give some of the reasons for such concurrence.
The simple narration of the facts set out in the pleadings, and established by the proofs, suggests the equity of these complainants’ claim to relief. This claim, however, is met by the allegation of fraud on the part of Aaron and Alan-son Thomas in the transaction between them, which resulted in the deed alleged to be defective — not fraud inter sese, but fraud as to creditors; and upon this defense, the heirs and the personal representative of Aaron Thomas rely to defeat such claim. A more unconscionable, and, to my mind, inequitable defense, was never set up in a court of equity That Quirk and Greusel are bona fide purchasers, for valuable consideration, from Alanson Thomas, I can not doubt. As a general proposition, it will be conceded that such purchasers will not only be protected, in equity, in the enjoyment of their purchase, but they will be aided against the claims of those having inferior equities. It seems to be thought, however, that these complainants are not within this rule, but that the fraudulent design of Aaron Thomas inducing the conveyance to Alanson, so far vitiates that conveyance that no equities can arise upon it in behalf of any one. And it was urged at the bar that, as Alanson could not ask the interposition of a court of equity to correct the mistake in the deed to him, so as to perfect his title, his grantees can not, to perfect theirs — in other words, that his grantees stand in no better condition than himself, having acquired
Had the deed from Aaron to Alanson perfectly described the lands intended to be conveyed by it, the latter would have held a perfect title as against all the world, except creditors thereby defrauded. Neither Aaron nor his heirs would be per
Now, as already suggested, were Aaron living, he could not be heard to allege his own fraud in opposition to the relief sought by these complainants. By parting with their money upon the faith of the transaction between him and Alanson, and in the supposition, by all parties, of a good title in Alanson, they acquired the superior equities, and the perfect right to have the mistake corrected, so far as their own purchases are concerned; and Aaron would be compelled to protect their titles thus innocently acquired. If the heirs have no greater rights than the ancestor, then the relief is equally attainable as against them.
It appears to be supposed that the relief sought, if granted, will be the enforcement in fact of the contract between Aaron and Alanson, and it is urged that such a contract, if proven, would be void, and consequently the relief is impossible. I think these grounds to be wholly untenable. In case a bill was filed by Alanson to correct the mistake, it would doubt
But if such contract were proven, would it be void so that no relief could be granted in this case ? So long as the contract was in fieri it could not be enforced by the parties to it, if made with a fraudulent intent; but when executed, it is valid as to all the world, except those creditors it was designed to defraud, and void as to them only upon their taking legal steps to annul it. In the present case, the contract, if any existed, must be held to have been executed, so far as these complainants’ interests are to be affected. In their behalf, the maxim of equity, that “ What is intended to be done, will be presumed to have been done,” will have its full force
The fraud, then, set up in this case being one which is only available to creditors, the heirs of Aaron Thomas can not be permitted to allege it in protection of their claims against the title of these complainants, nor to defeat any relief which may be necessary to perfect the evidences of that title. Nor can 'they avail themselves of it as an instrument of oppression to deprive these complainants of their honestly acquired property. If it can be made available to them for these purposes, it will only be on the ground that courts of equity hold fraud in such abhorrence that, rather than sustain any transaction however remotely tainted with it, they will refuse to interfere respecting it, but, standing by, will suffer a grosser fraud to be perpetrated upon innocent parties who may have the misfortune to acquire rights growing out of such transaction.
The decrees of the court below must be affirmed, with costs.
The court being thus equally divided in opinion, the decrees of the court below were affirmed.