39 N.D. 641 | N.D. | 1918
Lead Opinion
This action comes before us for a trial de novo, and is brought to set aside a fraudulent conveyance. On the 3d day of May the plaintiffs recovered a judgment against the McCormicks for the sum of $1,140.25.
The indebtedness on which the judgment was' founded grew out of 'the sale of an abstract business by the plaintiffs to the defendants, on September 8, 1911, for $4,100, payable in monthly instalments of $50, and the action was brought on the instalments then due and unpáid-.
The transfer which is sought to be set aside was made by the McCormicks to the defendant W. A. Overing, the father of Mrs. McCormick, on the 10th day of April, 1914, and on the day of the commence
After a full argument and a thorough examination of the record, we are constrained to affirm this finding, and nothing would be gained by relating the testimony at length. The matter, indeed, is one largely of probability, and of the credibility of the witnesses, and on the latter point the trial judge had the opportunity of personal observation, which is not presented to us.
There can be no question that there was in the minds of the defendants the desire to prevent the plaintiffs from collecting their claim, and, as far as the consideration for the deeds is concerned, all that is presented is a claim for money alleged to have been advanced by the defendant Overing to the daughter some fourteen years before and before her marriage, but which not only was long since outlawed, if, in fact, it ever existed, but on and for which, according- to her own statements, no interest had ever been paid, no note given, and no payment even demanded, and the only evidence of which was a memorandum contained in a note book owned by the defendant Luina McCormick. It is true that the defendant Overing paid the past-due taxes and the interest on a prior mortgage just prior to the transfer, but the evidence clearly shows that he did this because he was led to believe that the deeds could not be recorded without these payments. The case, indeed, in our minds, is not one where a debtor has honestly preferred a creditor, but one which clearly comes within the general condemnation of the authorities, which seem to hold that the law will treat “as null and void all fraudulent contrivances to screen . . . [the property of a debtor] from the pursuit of his creditors. It is fraudulent to defeat them by reservations of benefits to himself; it is equally fraudulent to
The case also clearly comes within the provisions of § 7220 of the Compiled Laws of 1913, which provides that “every transfer of property or charge thereon made, every obligation incurred, and every judicial proceeding taken with intent to delay or defraud any creditor or other person of his demands is void against all creditors of the debtor and their successors in interest and against any persons upon whom the estate of the debtor devolves in trust for the benefit of others than the debtor.”
There is, too, no doubt of the knowledge of the grantee Overing, of the fraudulent intent, nor of the applicability Of the rule of law announced by us in the case of Fluegel v. Henschel, 7 N. D. 276, 66 Am. St. Rep. 642, 74 N. W. 996, and wherein we said: “Where a conveyance of real estate is made by a grantor, with intent to hinder, delay, and defraud creditors, and the grantee, not being a creditor of the grantor, has knowledge of such fact, the consummation of the transfer is such a participation in the fraud by the grantee as will invalidate the transfer, even where full consideration is paid.”
There is, of course, no merit in the contention that the abstract business was not worth what the defendants agreed to pay for it, and that therefore, the plaintiffs do not come into a court of equity with clean hands. The matter is precluded by the judgment on which the execution is issued. We must asume that in that case the defendants interposed all of the defenses, both legal and equitable, which they had, or deemed themselves entitled to; and no appeal was taken from that judgment.
Nor do we believe that the defendant Overing is entitled to a lien for the taxes and interest paid by him.
Our conclusion from the record is that he knew of and was a party to
The judgment of the District Court, however, goes too far, as it holds that the conveyance is void as between the McCormicks and .Overing. As far as this action is concerned it is void only as to the lien of the plaintiff’s judgment and attachment. It is'modified to this extent and as so modified it is affirmed.
Dissenting Opinion
(dissenting). The purpose of this suit is to subject the half section of land in Renville county to the lien of the plaintiffs’ judgment, which is $1,140.25. In an action by the plaintiffs against the McCormick defendants on May 18, 1914, the plaintiffs caused a writ of attachment to be issued and,levied on the lands in question. On May IS, 1915, a judgment in said action was obtained and docketed, and an execution was issued against the defendants, and the next day it was returned unsatisfied. Pending said action the McCormicks conveyed to W. A. Overing, father of Mrs. Luina M. McCormick, the southeast quarter of 27-161-84, and the east half of west half of the same section. The deeds were made and recorded April 10, 1914. The first tract was owned by L. J. McCormick and the second by his wife. Both tracts were worth about $10,000 and were subject to mortgages amounting to over $7,000. At and prior to the transfer the past-due interest on the mortgages and the taxes amounted to $840, and the McCormicks were unable to pay the same. The mortgagees
Under such pressure the daughter naturally requested her father, whose note was good at the bank, to loan them money to pay the interest and taxes. Having previously advanced the daughter several sums which, with interest, amounted to about $2,000, and which was then outlawed, the father refused to loan the money, and the land was conveyed to him for the amount due on the same and the money which he had loaned his daughter’. Thus the McCormicks counted on paying their debts and shifting the burden onto the old man. However, it is quite clear the deeds were made not only because of immediate pressure and to prevent a ruinous foreclosure, but also to hinder and delay the plaintiffs, whose attorney was pressing them for a mortgage on the land. Defendant Overing knew, or should have known, of such intent.
However, under the statute the transfer should be held void only in so far as it might prevent the plaintiffs from collecting the judgment by the sale of the land; and though the general rule is that a fraudulent grantee of land cannot hold the same as security for the payment of prior liens and taxes, yet there are reasons why that rule should not govern this case. Defendant Overing may well be considered a ward of the court. He was an old man in poor health, and his mind was sadly impaired, and his payment of the interest and taxes was no damage to any party. The chances are that in buying the land his motive was to prevent a foreclosure and to get something for the money advanced to his daughter.
However it may be, it is quite certain the equity of Overing compares well with those of the plaintiffs. Their judgment was obtained on a deal which was rather sharp and unconscionable. It was given on notes for an abstract outfit sold to the McCormicks for $4,100, and taken back on a chattel mortgage and sold to the plaintiff for $500. The courts might well refuse to aid in the collection of such a judgment or any judgment not based on a fair and honest consideration. Thus in suits for specific performance a court refuses to aid an unconscionable deal when the deeds were made as part of the consideration for the same. Overing paid the taxes and the past-due interest on the
It is clear the judgment in this case must be reversed for the reason it goes too far. It declares the deed to Overing to be null and void,, whereas in any event such deeds may be adjudged void only so far as they hinder the collection of plaintiffs’ judgment. It is only to the extent of the judgment, that the plaintiffs may question the right of the McCormicks to give away their land.
As the record does not clearly show the several amounts paid by Overing for taxes and interest, on return of the remittitur, the district court should forthwith take such additional testimony as may be-necessary to ascertain such payments and the amount of the same, with interest, and then to give judgment to the effect that for such amount Overing’s claim of title to the land is and shall be superior to the plaintiffs’ judgment, and that within thirty days the plaintiffs may repay the amount of such taxes and interest, and for the same that they be subrogated to a lien on the land, and that on such payment by the plaintiffs that the deeds to Overing be adjudged void in so far as they hinder the collection of the plaintiffs’ said judgment.
Dissenting Opinion
(dissenting). I agree with the conclusion reached by Judge Robinson, but not in all that he says in his opinion.
There is little doubt but that the transfer of the land was fraudulent and made for the purpose of hindering, delaying, and defeating, if possible, the collection of the plaintiffs’ judgment. I do not believe, however, that the defendant Overing was such an active participant in the scheme as to say that he should be punished by giving the plaintiffs’ judgment priority over the amount Overing paid in taxes and interest, which were prior liens. Overing was an old man, and I believe he was used by his daughter and son-in-law to further their fraudulent scheme without any particular knowledge on his part of everything that was going on. Under such circumstances I do not believe the rules of law as announced by the majority opinion apply.