Roberts & Boyd v. Anderson

The Chancellor.

The deposition of Sarah Johnson, before a Master, under the act of the 4th of April, 1807, to perpetuate testimony, is inadmissible, because she was intefested in supporting the title she had conveyed to the defendants. It is, indeed, stated by the Master, that her interest had been released, but no such release is produced, to enable me to judge of it; nor is any account given of its loss. It is also true that the defendants state in their answer, that she had executed to them a quit-claim i deed, for which they paid her 167 dollars; but they say that they had not then heard of the claim of the plaintiffs, and deny all notice of fraud. If, however, Sarah Johnson possessed herself of a title to the land in question from Griffith, by a fraudulent agreement between them, to cover the property from creditors, as is charged, then ’she had not, and knew she had not, any valid title, when she conveyed to the defendants; for a valuable consideration. She took the land in fraud, and fraudulently released to the defendants, and if the charges in the bill were established, the defendants would be entitled to an action on the case, in the nature of an action of deceit, against Sarah Johnson, notwithstanding she conveyed to them without covenants. This is a clear and settled rule of law and equity. (Com. Dig. tit. Action on the case for a deceit, A. 8. 1 Salk. 211. Risney v. Selby, Butler’s note to Co. Litt. No. 332. Edwards v. M'Leay, Cooper’s Eq. Rep. 308.) (a) . She was, therefore, directly interested when *376 she made the deposition, in repelling the charges in the bill, and, consequently, her deposition cannot be received.

A deposition jectment suit at the’ defendants third person^ as verUteland,The" sui?here °is not admissible cvidence against the plaintiff, be- lag res inter all' os acta.

The deposition of Thomas Mien, taken before the clerk of the Supreme Court, in the absence of the Recorder of New York, on the 29th of September, 1812, on the part of the plaintiff, in the cause then depending in the Supreme. Court between “ James Jackson, ex clem. John Jlnderson, an^ Benjamin S. Anderson v. Hector M'Leod,” is inadmissi^e’ because ^ was taken in a cause in which the present plaintiffs were not a party. It was res inter alios acta, r v y and the present plaintiffs had no opportunity or power to . * , ., , . 1 cross examine. It cannot be said, that the present plaintiffs were parties to that ejectment suit, by their tenant, Hector McLeod; for the bill charges that McLeod had taken lease under the present defendants, and that the recovery law was had upon the ground, that J\.TLeod was the tenant of the present defendants; and the answer admits that McLeod was the tenant of the present defendants. It would be a very extraordinary act of inconsistency and injustice, for the defendants to assert, and prevail at law on the assertion, that McLeod was their tenant, and not the tenant of the plaintiffs; and then for them to offer an affidavit taken in the cause at law, and have the same receive in this suit against the plaintiffs, on the ground that it was taken in a cause in which the plaintiffs were essential-the party.

These depositions being rejected, the cause ivas argued, upon the residue of the testimony produced.

S. Jones, jun. for the plaintiffs.

Burr, for the defendants, The Chancellor.

There cannot be a doubt as to the operation and effect of the proof upon the question *377 of fraud. The two deeds from Griffith to Sarah Johnson were palpably and grossly fraudulent. Even if the deposition of Sarah Johnson had been admissible, it would not have been entitled to credit, in opposition to the mass of testimony clearly establishing the fraud in the conveyances to her, and her knowledge and admission of the fact.

Under 27 Elis, for aP'valuable Py mfrauduknt or|5eferredWfoba for Urá valuable considnotice from the ori”maIgrantor'

The only possible question in the case, as it strikes me, is, whether Sarah Johnson, being a fraudulent grantee, can be the source of legal title in the defendants, assuming them to be bona fide purchasers, for a valuable consideration, without notice of the fraud.

It is a rule which we find in the books, (Prodgers v. Langham, 1 Sid. 133. Andrew Newport’s case, Skinner, 423. Smartle v. Williams, 3 Lev. 387. Comb. 247. Doe v. Martyr, 4 B. & Puller, 332.) that a purchaser for a valuable consideration, without notice, from a voluntary or fraudulent grantee, shall be preferred to a subsequent purchaser for a valuable consideration, without notice, from the original grantor. But these are cases arising under the statute of 27 Elis, which was intended to protect bona fide purchasers against purchasers without consideration, or voluntary grantees; this intention is equally fulfilled whether the conveyance for a valuable consideration comes from the voluntary grantor or grantee. there be no creditors, the title of the voluntary grantee is good until there comes a bona fide purchaser from the grantor, for a valuable consideration. Until then, no person’s rights are affected; but when that happens, the deed, as to such puchaser, is to be set aside. If, however, the voluntary grantee shall have sold, in the mean time, to a bona fide purchaser, he is justly to be considered standing in the grantor’s place; and that what is done by him is done by the grantor, and such purchase will stand *378 good. Under this statute, the first purchaser for a valuable consideration, whether he takes the conveyance from the. voluntary grantor or grantee, will have the preference, for the sole objeet of the statute'was to protect such purchasers against voluntary conveyances, which, as to them, are fraua i . QUieni.

ünder the third section of the statute for the preventon of frauds, (sess. EÍiz°c tfj the first purchaser for a valuable consideration, the conveyance tormor ^grantee, win be sectíon^rf ^t’he (sess16 °iomck 44—13 Eliz. c. 5.) a fraudulent conyeyance by tertyvoid^’as to inga^homz fide vSu^iicoMidt without notice of*!1® But a bona fide attrfraudeuientm l^titkby&e conveyance =agamstthe creaitors oi the duient grantor.

The case before me falls under the 13 Eliz. which was ma^e to protect creditors from fraudulent conveyances; and here a different rule of cdnstrüction prevails. The 1 , original deed from the debtor to a fraudulent grantee is “ utterly void” as to creditors, and as against them, the grantee can make no conveyance, for he has no title, as tbem. The statute, in its enacting clause, operates on the deed from the fraudulent debtor, and the proviso in th® a°t applies to that original conveyance from the debtor, and saves it, when madei to a bona fide purchaser . i . ~ , ‘ 1 for a valuable consideration. Such a conveyance is supported by the proviso, however fraudulent the intention of thé grantor might be; and the contrary impression which I had once received on this point from some of the English cases, without, at the time, adverting to this pro- and which led me to the dictum, in Hildrith v. Sands, (2 Johns. Ch. Rep.) was properly corrected by Mr. J. Spencer, when that cause was, afterwards, before the Court of Errors. (14 Johns. Rep. 498.)

But though the debtor himself may fraudulently, on his Parb convey to a bona fide purchaser, for a valuable con^deration, yet his fraudulent grantee cannot; for it is" un-' derstood that the proviso in .the 13 Eliz. does not extend 1 to such subsequent conveyance. The policy of that act would defeated by such extension. Its object was to secure creditors from being defrauded by.the debtor; and the danger was, not that he would honestly Sell for a fair price, but that he would fraudulently convey, upon a secret trust between him and the grantee, at the expense of the creditors. If the debtor sells, himself, in a case where the creditor has no lien, and sells for a valuable *379 consideration, he acquires means to discharge his debts, and it may be presumed he will so apply them. If his fraudulent grantee be enabled to sell, the grantor cannot call those proceeds out of his hands, and the grantee can either appropriate them to his own use, or to the secret trusts upon which the fraudulent conveyance was made. There is more danger of abuse, and that the object of the statute would be defeated, in the one case than in the other.

The fraudulent grantee has no title as against the creditors. The deed as to them, is “ utterly voidand the subsequent conveyance from him would, as against the creditors, have no foundation. There is, therefore, no analogy between the conveyance of the grantee under the 27th, and under the 13ith of Eliz.for in the former case he has'a good title until a conveyance from him, or from the grantor to a bona fide purchaser takes place; whereas, in the latter case, his title, as against the' creditor, was absolutely void from the beginning. It would seem to be a very inadmissible proposition, that the conveyance of a fraudulent grantee can be held valid against creditors, when the statute declares the original conveyance utterly void as against them.

This subject was considered by the Supreme Court of Errors of Connecticut, in Preston v. Crofut, (1 Day’s Rep. N. S. 527. note.) I have availed myself freely of the argument in that case, in which it was decided, by the opinion of six judges to two, upon their statute of frauds, which is substantially the same as the statutes of Elisabeth, that a bona fide purchaser, without notice, and for a valuable consideration, from a fraudulent grantee, had no title against the creditors of the fraudulent grantor. This maybe considered as a decision under the 13 Eliz.; and it is eminently distinguished for accuracy of research, and closeness of reasoning. The case was discussed at the bar and upon the bench, in an elaborate manner, and with *380 very' great ability; and though I entirely subscribe to the opinions of the majority of the court, it is not without the highest respect for the talent with which thé opposite opinion was supported.

In the revision of our statute law, the statutes of the 13th and 27th of EUzí are connected together in- one act, and the provisoes in these statutes are consolidated in the 6th section of the act; but I have taken it for granted, as being a settled rule, (and one which was established by the Court of Errors,) in respect to our revised laws, that the construction of those different provisions in connection with the general proviso, remains the same since, as before the revision. And if the proviso, as applicable to the 13 Eliz. does not reach the case of a sale by a fraudulent grantee, (and all the judges in the case of Preston v. Crofut concurred in this,) then that decision is a direct and strong authority in this case, notwithstanding the statute of frauds in Connecticut may be destitute of such a proviso.

The case before me shows the necessity and wisdom of the rule, which will not allow the fraudulent grantee to convey, so as to bind the creditor s of the grantor; for here the title set up is under the judgment of a creditor of the grantee, and if it was to prevail, the creditors of the grantor would be effectually defrauded. The' conveyance would enure to the exclusion of their debts, and to the sole benefit of the fraudulent grantee.

Independent of the general doctrine, there are special reasons in this case why I think the present defendants cannot protect themselves, as bona fide purchasers, under a sale on execution against Sarah Johnson, the fraudulent grantee.

The plaintiff Roberts was a creditor of Griffith, when the judgment was entered, and the execution issued against Johnson; and the execution authorized and directed the sheriff to sell lands, whereof she was seized, on' such a day. The statute alludes to a legal seisin, whereas by *381 the statute of frauds, she had no seisin, as against the creditors of Griffith. The conveyance to her was, as to them, utterly void; and judicial sales were not intended to defeat the operation of the statute of frauds. They operate only upon the fair legal title, and not wherejher&is a want of title. The statute provides for the case of an eviction of a purchaser, on execution, on account of want of title in the defendant, and purchasers are presumed and understood to be on their guard. In this case the defendants only'gave a nominal consideration of one dollar and fifty cents. It was truly a purchase upon speculation, and which could not have been made at sucha price, at a honafide private sale.

But what appears to me to be decisive, is the fact, that Sarah Johnson never was in possession, as owner, under the fraudulent deed. There were no false lights held out to deceive the world; and the case is not within the reason and policy of any rule calculated to protect a bona fide purchaser. Immediately, or very shortly after the execution of the fraudulent deeds of December, 1807, Win. Griffith leased the premises to Demisión, for five years, and he was in possession under that lease when the defendants made their purchase at the sheriif’s sale. They are to be presumed to have had notice of this fact existing before their eyes; and it was sufficient to put them upon inquiry, as to the pretended title of Sarah Johnson. They are not entitled to be considered as bmafide purchasers for a valuable consideration, without notice. They had notice, that here was no possession accompanying the deeds, and they paid only a nominal consideration.

It is, accordingly, declared, that the two deeds to Sarah Johnson are fraudulent and void; and that the plaintiffs ought to be quieted against any claim on the part of the defendants under those deeds, by a perpetual injunction.

Decree accordingly.

Vide Wardell v. Fosdick, 13 Johns. Rep. 325. Monell v. Colden, lb. 395. 2 Caines, 193 . 1 Fonbl. 366. note.