13 Colo. 245 | Colo. | 1889
delivered the opinion of the court.
The Stock-Growers’ National Bank of Pueblo was plaintiff below, and brought its action in the district court against George A. Newton, alleging in the com- • plaint that a certain warranty deed, executed February 2, 1883, by S. E. Todd, Jr., to said Newton, and also a certain bill of sale, executed at the same time by said S. E. Todd, Jr., and by Todd & Fairchild, to said Newton, were fraudulent and void as against the plaintiff. Said warranty deed purported to convey to said Newton certain real estate, to wit, lots 15 and 16, in block 39, city and county of Pueblo, Colorado, together with the improvements on lot 14 in said block, and also all the buildings, fences, sheds, machinery and fixtures on the whole of said premises. The bill of sale purported to convey to said Newton all the personal property of every kind and nature belonging to said firm, and now in their possession at Pueblo, or in that vicinity. The complaint contained specific averments constituting the alleged fraud, and also pertinent allegations showing that plaintiff, as a creditor of Todd & Fairchild, had acquired all their title and interest in and to said property by virtue of a sheriff’s deed based upon a valid judgment, execution, levy and sale thereof, regularly and duly made. The plaintiff prayed for a cancellation of the deed and bill of sale, and for the recovery of the possession of the property therein described. A general demurrer was interposed to the complaint, which being overruled an answer and replication were filed. A referee was thereupon appointed to take all the testimony in the cause and report the same to the court, which being done the
As defendant’s counsel still insists that the- complaint does not state facts sufficient to constitute a case of action it becomes necessary to review the ruling of the court ,upon the demurrer. Counsel contend that this action has a double aspect or purpose: First, to procure the cancellation of the deed under which defendant holds possession of the property in controversy; and second, for the recovery of such possession by the plaintiff. Conceding that there are two causes of action stated in the complaint, and that either might be maintained separately, it does not follow that the two causes are improperly united, since they affect all parties in the same character and capacity, and are directly connected with the subject-matter of the litigation; besides, the improper union of causes of action is not a ground of general demurrer. In some cases the interest of a judgment debtor in lands fraudulently conveyed by him is said to be a legal and not an equitable asset; and that, when such interest is levied upon and sold under execution, ejectment is the appropriate remedy for the purchaser to recover possession. In this case, hovever, the legal title to the real estate in controversy was never in the judgment debtors, but was held in trust for them by S. E. Todd, Jr., individually. Hence the interest of the firm of Todd & Fairchild would remain an equitable one, even if the conveyance by Todd, Jr., to Newton should- be adjudged fraudulent; and so, while an action at law may sometimes be an effective remedy to overcome conveyances made to defraud creditors, a suit in equity is generally a concurrent remedy, and in this case was peculiarly appropriate and necessary to afford adequate and complete relief.
It is further contended by counsel that, under the code, the plaintiff, not being in possession of the premises, cannot maintain this action. The authorities are somewhat
It is scarcely necessary to add that by section 1883, General Statutes, every interest in land, legal and equitable, is subject to levy and sale under execution in this state. The complaint is sufficient, and there was no error in overruling the demurrer.
Whether the parties, or either of them, considering the nature of the action, were entitled to a trial by jury, we need not determine, since the mode of trial adopted without objection was substantially the- same as under the old equity practice. The assignments of error question the sufficiency of the evidence to sustain the judgment; and, as the trial court neither saw nor heard the witnesses testify, this court must examine and weigh the testimony uninfluenced by the finding of the court below upon the facts as well as the law. Fortunately, there is not much conflict in the evidence material to the determination of the equities of the case. Jackson v. Allen, 4 Colo. 263; Miller v. Taylor, 6 Colo. 41; Sieber v. Frink, 7 Colo. 148.
From the evidence it appears that prior to October, 1882, S. E. Todd, Jr., Peter B. Fairchild and the defendant, George A. Newton, were copartners in the business of contracting and building, and operating a planing-mill • at Pueblo, Colorado. The firm name was Todd & Fair-child, the defendant, Newton, being a secret partner. On October 2, 1882, Newton retired from the firm, with the consent of Todd, but, as Fairchild says, without his knowledge or consent. G. J. Piper, however, became a member of the firm by the consent of all parties. Newton received for his interest from the new firm $2,000 in
“This agreement, made and entered into this 2d day of October, A. D. 1882, between George A. Newton, of the county of Pueblo and state of Colorado, and S. E. Todd, Jr., Todd & Fairchild, and G. J. Piper, of said county and state, parties of the second part, witnesseth, that for and in consideration of the said party of the first part having this day loaned the said parties of the second part the sum of $10,000, which loan is secured by a trust-deed upon the realty of the said parties of the second part, but said trust-deed is not to be recorded as provided by law, that it may not affect the financial standing of the said parties of the second part, the said parties of the second part do hereby covenant and agree to and with the said party of the first part that they will not confess any judgment, nor execute any .paper whatsoever, that will in any manner or form incumber said property so conveyed in said trust-deed. And the parties of the second part, in consideration of the $10,000 loan, further bind themselves to see that this amount is paid out of accounts or stock on hand at the time of any embarrassment, so that'no trouble shall come to the party of the first part, whatever, in case of financial disaster overtaking, or other creditors crowding, the parties of the second part. All transactions with the Newton Lumber Company shall be considered same as this loan. S. E. Todd, Jr. Todd & Fairchild, Todd. G. J. Piper. George A. Newton. Witness: Dan. B. Gregg.”
The evidence shows that the bank had no knowledge or information at the time of these representations that Newton was or had been a member of the firm, or that he had any incumbrance upon the firm property, or held
On February 5, 1883, the plaintiff bank brought suit against the insolvent firm, and attached lots 15 and 16, together with the building and fixtures thereon, and machinery therein, so conveyed to Newton. Judgment was rendered in said action in April, 1883, in favor of the plaintiff against Todd and Piper, and afterwards against Fairchild, for the sum of $2,320.94; and by virtue of executions on said judgments the joint and several interests of said defendants in the attached property were sold and conveyed by the sheriff’s deed in due form to the plaintiff; and thereupon this action is brought for the purpose first above stated.
The warranty deed and bill of sale of February 2,1883, having been given in lieu of — a mere substitute for ■— the trust-deed which Newton had received four months before, and in pursuance of the agreement of the same date as above set forth, must be considered as part of the same transaction; all the infirmities of the two earlier instruments, attending their execution or growing out of their subsequent use, were merged in the latter. Hence we have to consider the character and effect of the trust-deed in connection with said contemporaneous agreement
The doctrine is elementary that concealment of matters which the policy of the law requires should be made public, as the withholding of a deed or mortgage from the records for a considerable time, is a badge of fraud. Such concealment is evidence to show a fraudulent intent, and is more or less strong, and may or may not be rebutted, according to circumstances. The withholding of a mortgage from the record is evidence of fraud, for the reason that from such withholding an intention to keep persons dealing with the mortgagor in ignorance of his true financial standing may be implied. When the grantor of a trust-deed and the beneficiary agree together that the trust-deed is not to-be recorded as provided by law, that it may not affect the financial standing of the grantor, thp evidence of fraudulent intent becomes express; and when such agreement and intention are clearly set forth in writing signed by the parties, the fraudulent intention must in general be regarded as certain and indisputable. When, added to such fraudulent agreement, the parties thereto actually carry out their fraudulent purpose, not only by concealing the existence of such trust-deed, but bjr representing the credit of the grantor as good, when they must have known it was at best doubtful, and where the grantor is thereby enabled to obtain large credit from those who, though diligently endeavoring to ascertain his financial standing, were
Newton, having knowingly misled the plaintiff bank to its injury by the concealment of the trust-deed as well as by direct misrepresentation, equity will not permit him to profit by the instrument through which he has wronged others, either by its direct use, or by other instruments secured in exchange therefor, as contemplated by the fraudulent agreement. Bump, Fraud. Conv. 38 et seq.; Blennerhasset v. Sherman, 105 U. S. 100; Hildreth v. Sands, 2 Johns. Ch. 35, 14 Johns. 493; Hildeburn v. Brown, 17 B. Mon. 779; Boyd’s Ex’rs v. Browne, 6 Pa. St. 310; Smith v. Craft, 37 Fed. Rep. 707.
We have not based our conclusions in this case upon the fact that Newton secured a preference from a failing debtor; for, in the absence of legislation to the contrary, the debtor has a right to give, and the creditor to
In view of the conclusion at which we have arrived, it is unnecessary to consider the effect of the several instruments executed by Todd and Piper assuming to convey the interest of their copartner, Fairchild, as well as their own, to the property in controversy; for, whether or not these conveyances were sufficient, under the circumstances, to pass the title to Newton, in whole or in part, as against the firm or either of them, it is certain that as against the plaintiff, a creditor of said firm, the evidence under the pleading shows them to have been fraudulent and void; and they should have been so adjudged by the court to the extent the property therein described had been subjected to judicial process, and conveyed to plaintiff by the sheriff’s deed, as hereinbefore stated. The judgment of the district court is accordingly reversed, and the cause remanded for further proceedings in accordance with this opinion.
Reversed.