Sims v. Gray, 93 Iowa 38

Sims v. Gray

93 Iowa 38 | Iowa | 1894

Lead Opinion

Bothrock, J.

I. The principal claim of the plaintiffs arises npon the demand that a certain lot in the city of Council Bluffs be subjected to the payment of the Bussell judgments. This lot was originally owned by said David Gray. On the twenty-ninth ,clay of September, 1875, he executed a quitclaim deed of the property to the defendant, U. H. White. At that time there was a two-story brick business building on the lot, the upper story of which was not entirely finished. There was then a mortgage upon the property for two thousand dollars for purchase money. There was also a second mortgage of two thousand dollars, and judgment had been rendered against Gray, which upon the face of the record amounted to over three thousand dollars. In addition to this, there was a considerable amount of delinquent taxes upon the property. At the time of the conveyance by quitclaim to White, Gray was also indebted to said J. H. Bussell; and in the years 1877 and 1878 Bussell recovered judgments against White for the amount due him. Bussell died in the year 1881. The purchase money mortgage was foreclosed, and the property was sold on special execution, and a sheriff’s sale certificate was issued in pursuance of the sale. The property was not redeemed from the sale, and a sheriff’s deed was made and executed to William Garner, who was the owner of the certificate when the time of redemption expired. This deed was executed on the fifth day of March, 1877. Afterward, and in the year 1878, Gamer executed a special warranty deed for the premises to the defend*40ant, Játie White, who is the wife of the defendant, U. H. White; and on the same day a quitclaim deed was executed by IT. H. White to said Jane White. The legal title to the property was thus vested in Jane White. All of these deeds were duly recorded soon after they were executed, and, so far as appears from the record-of the deeds and the proceedings in foreclosure, the absolute title was held by Jane White. The attack made upon these transfers of title is based upon the claims that they were all in fraud of the creditors of David Gray. An examination of the evidence so far as it involves the validity of the conveyance by quitclaim from Gray to White, fully sustains the claims 1 made in the petition that the conveyance was fraudulent. That fact is not really disputed by the defendants, but it is claimed in their behalf that the suit is barred by the statute of limitations, because it was not brought within five years after the fraudulent conveyance was executed and recorded. This action, was commenced in the year 1890, nearly fifteen years after the conveyance of the legal title of the property to White, and twelve or thirteen years after Russell recovered the judgments upon which the suit is founded. Under section 2529 of the Code, “for relief on the ground of fraud in cases heretofore solely cognizable in a court of chancery” may be brought within five years “after their causes accrue;” and it is provided in section 2530 that the cause of action does not accrue in such cases “until the fraud * * * * shall have been discovered by the party aggrieved.” It is claimed in behalf of appellants that the statute of limitations did not commence to run when the deed was recorded, because this is an action for relief on the ground of fraud in a case heretofore solely cognizable in a court of chancery, and the evidence shows that the fraud was mot discovered. until within five years pre*41ceding the commencement of the action. It was held in Laird v. Kilbourne, 70. Iowa, 83, which was a creditor’s bill to set aside a fraudulent conveyance, that the statute of limitations commenced to run when the fraudulent deed was filed for record, and that the law is that “plaintiff discovered the fraud when she had notice of the deed.” This case was followed in Hawley v. Page, 77 Iowa, 239. It is true that in the laist-named case the question-of actual notice is discussed, but it is distinctly stated in the opinion that the rule in Laird v. Kilbourne is correct as applied to the facts in that case. It is useless to further consider this question. It may not be improper to say, however, that there is a very decided preponderance of evidence that Russell, the judgment plaintiff, had- actual notice of such facts as to charge him with knowledge of the fraudulent character of the conveyance long prior to his death.

2 II. It is insisted, however, that the statute of limitations cannot be invoked as a defense, because the contract by which the conveyance was made constituted a trust. It is true that there is evidence in the case to the effect that White was to hold the title and collect rents, and pay debts, and eventually reconvey to Gray. But this fact is not at all conclusive, especially when considered in connection with the title conveyed to Jane White. An ingenious argument is made, based upon the claim that there was a resulting trust in the property in favor of Gray. It is true that the title of a fraudulent grantee in such a case is in a certain sense held in trust for the creditors of the fraudulent grantor. But whether such a trust is capable of enforcement in equity after the bar of the statute is altogether another question. An ordinary creditors’ bill is not founded upon the idea of a resulting trust. It is based upon the ground.that the *42conveyance is void. The general doctrine of trusts has no application to such a case. It is a well-understood equitable principle that a conveyance made by a fraudulent grantor cannot be impeached by the parties thereto, either in law or equity, no matter whether the fraudulent contract was an absolute conveyance or a mere transfer of the property as a protection against creditors. In all such cases equity leaves the parties in the position where they, placed themselves. In our judgment, this is a plain case of fraudulent conveyance, void as to creditors, and there is no foundation in either reason or authority for the claim that the transaction involves a trust which may be enforced, notwithstanding the statute of limitations. “The trust is in reality one' in name alone. The creditors’ right to reach the debtor’s property is in no true sense an interest in the property. It is at most an equitable lien on that property.” Pom. Eq. Jur., section 1857, note 1. That the statute- of limitations cannot be avoided upon the contention under consideration, see Stone v. Brown (Ind. Sup.), 18 N. E. Rep. 392. See, also, Musselman v. Kent, 33 Ind. 452; Wait, Fraud, Conv., section 292.

III. The claim made that Gray is the owner of an equitable interest in certain other real estate is not' sustained by the evidence, and that part of the controversy demands no further attention. It appears from the petition and an exhibit attached thereto that, before this action was commenced, a suit was pending in which Gray was plaintiff and U. H. White wras defendant, in which a large amount of money was claimed on account. The plaintiffs, in their petition, incorporated a claim in this action for a lien on whatever was recovered by Gray against White in the other action. The- defendant, U. H. White, in his answer, averred that said claim was wholly fictitious, except as to a few.items procured at Gray’s harness shop, and *43consented that the court might decree that such sum, 3 if any shall be found owing Gray, might be subjeeted to- the judgments of the plaintiffs. It appears that no attention was given to this claim when the final decree was pronounced by the court, and it is now claimed that the decree of the court below should be reversed on this ground. The printed records and arguments on this appeal contain about two hundred and seventy-five pages. The whole costs of the appeal will aggregate nearly, if not quite, three hundred dollars. Not more than six or eight pages of abstract and arguments are devoted to this insignificant account It is not stated in the argument of appellants what amount is claimed on the account. Under these peculiar circumstances', we are of the opinion that the claim on the account should be remanded to the court below, to ascertain the amount for vvhich judgment should be rendered, and enter a judgment therefor. The whole controversy in the court below was as to the real estate, and from the record made it is quite probable that this account was not called to the attention of the court when the decision was made. This modification, or rather remanding, of this claim, is not intended as a reversal of the decree, but merely to correct what appears to us to have been overlooked. The decree as to the real estate will be affirmed, at plaintiff’s costs.- — Affirmed.

Dissenting Opinion

Kobinson, J.

(Dissenting.)—I cannot agree with ‘so much of the foregoing opinion as approves the rule announced in the case of Laird v. Kilbourne, — that the law holds that a person affected by a fraudulent deed discovers the fraud at the time the deed is recorded. It may be true that in most cases the recording of the deed,' taken in connection with other relevant facts, will-be .sufficient to charge interested parties with *44knowledge of the true character of the deed; but I do not think that should be held true in all cases. It was said in Hawley v. Page that the language of the opinion in the Laird case, considered abstractly, announces a broader rule than was intended, and, in ray opinion, that should continue to be true. As the facts disclosed by the record in this case, including the recording of the deed, show that the plaintiffs should be charged with knowledge of the fraud in question for more than five years before this action was commenced, I agree to the result announced by the majority.

Concurrence Opinion

Granger, C. J.

I concur in the views expressed by Justice Robinson.