Blackman v. Wright

65 N.W. 843, 96 Iowa 541

• Court: Supreme Court of Iowa
• Decided: January 21, 1896
• Status: Published

Opinion

Kinne, J.

I. The pleadings in this case are elabórate, and the facte are many, and somewhat complicated. A thorough understanding of the case, and of the grounds upon which our conclusions rest, demands a quite full statement touching the matters in controversy. In 1887 plaintiff, a resident of the state of Nebraska, became acquainted with some of the heirs of one John Hopper, who died in the state of New York in 1706. These Hopper heirs (some two hundred in number) claimed an interest in certain land fronting on Broadway, in the city of New York. This claim seems to have been based upon the fact that in 1708 the Bloomingdale road, in said city, had been laid out upon land belonging to said Hopper, which road was in 1847 so widened and straightened as to leave a strip of ground lying between the lots fronting upon the old road and the east line of the new road (called “Broadway”), which, in accordance with an act of the legislature of New York, reverted to the owners of the abutting lots. Plaintiff undertook, for a half interest therein, to recover this property for some of the Hopper heirs. In 1888 plaintiff interested E. B. Duffie, an attorney residing in Omaha, Neb., in his venture, and Duffie went to New York City, and spent some time in investigating the records, titles, etc. For his services in this behalf, Duffie afterwards demanded over five thousand dollars. Thereafter plaintiff made an arrangement with Charles Haldane, then of Council Bluffs, Iowa, and a member of the firm of Wright, Baldwin & Haldane, whereby Haldane was to share equally with plaintiff in the enterprise, and was to, and did, go to New York City to investigate the matter, to procure deeds from the Hopper heirs, and to prosecute suits in furtherance of their joint venture. Haldane, for some time after his removal to New York City, continued his firm relations with Wright and Baldwin, who were also interested in the contract with plaintiff. Plaintiff and Haldane, in the course of their investigations, found that Daniel Dull, a defendant herein, was in possession of a portion of the strip of land on Broadway heretofore mentioned, which plaintiff claimed was the property of these Hopper heirs. Dull was a tenant of one Lyon, who held title to the land. Twenty-four feet of the Broadway front of his premises were embraced in this disputed tract. Dull had erected a building upon this land, and by the terms of his lease his landlord had an option, at a certain time, to take the building and pay Dull twenty-two thousand dollars for it. The lease required Dull to erect a building to cost not less than twenty-five thousand dollars, but in fact the building had cost forty-five thousand dollars. In 1889 plaintiff and Haldane met Dull, and proposed to sell him the strip of ground belonging to the Hopper heirs. Dull informed them that he was only a tenant. Dull knew Wright. The time when Lyon, the landlord, might exercise his option, was near at hand, and Dull was anxious to unload the building on to his landlord for thirty-five thousand dollars. He apparently saw in the proposition of Haldane and plaintiff the opportunity to further his designs in that direction, and entered into negotiations with them- for the purchase of the interest which they represented in this disputed strip1 of ground which he was occupying. His object, no doubt, was to acquire the control of the Hopper title, and thus force his landlord to Ms terms. The result of the negotiation was that on June 28, 1889, Dull conveyed to plaintiff, by warranty deed, five hundred and fifty-one acres of land in Pottawattamie county, Iowa, and was to remove therefrom a mortgage for ten thousand dollars which covered the tract of land conveyed and other lands. He never did remove this incumbrance. As a part of the deal, Blackman executed to Dull a quitclaim deed to this disputed strip of ground which the latter was occupying as a tenant, which was placed in escrow with one King, who was a solicitor for Dull in New York City. As a part of the same transaction, Blackman gave Dull a mortgage on said disputed strip for ten thousand dollars, which was delivered to Dull. It is not clear as to how long this deed was to be held in escrow; probably, however, until Dull secured a settlement with his landlord, or until it was determined in the litigation which was expected to follow, that Blackman had title to the land. Dull, Blackman, and Haldane then set about getting the landlord to purchase the brick building which Dull had erected upon the lot, and also were going to convey to the landlord the title which Black-man had discovered to be in, and had acquired from, the Hopper heirs. There can be no doubt that so far, in these negotiations, Blackman and Haldane were acting as agents for Dull. Lyon, the landlord, however,did not accede to their demands. Dull, all of this time, had kept from his landlord the knowledge that he (Dull) already had a mortgage on the disputed ground. Finally, either Blackman or Haldane, or perhaps both, without Dull’s knowledge, sold to the landlord, for ten thousand dollars, the same strip of land which they had heretofore mortgaged to- Dull. It is proper to say that, when Dull entered into negotiations with .Blackyman and Haldane, he claims that Blackman represented to him that he (Blackman) was a man of means, that he had then eighty-six per cent, of the Hopper title, and that he would prosecute the matter with due diligence against the occupants and. owners of the strip-. This claim is not acceded to by Blackman. Prior, however, to deeding this strip to- Lyon, the landlord, and on August 8, 1889, Blackman- had conveyed the Iowa land received from Dull, by warranty deed, to G-eorge F. Wright, of the firm of Wright, Baldwin & Haldane, which deed was duly recorded. Blackman claims that this deed was made under an arrangement whereby Wright was to advance not exceeding ten thousand dollars to. further the enterprise. Wright and Baldwin claim this deed was to secure about five thousand dollars already advanced to Haldane, as well as money afterwards to be advanced. It is reasonably clear from the evidence that little if any money was advanced by them to' Blackman after this deed was executed. Wright mortgaged the land to Askwith, a clerk in his office, for five thousand five hundred dollars. The latter however, never advanced any money, the mortgage being made to enable Wright to- raise money from other parties. October 1, 1889, Blackman conveyed the same land, by warranty deed, for a consideration of fifteen thousand dollars- to one Savage, of Omaha, and January 1, 1891, Savage reconveyed it to Blackman. January BO, 1892, Black-nan conveyed the same land to one Phelan, of Omaha, by warranty deed, which conveyance seems to have been originally made to secure a small loan of seventy-five dollars. August 27, 1892, Phelan mortgaged the land to Duffie for five thousand fine hundred dollars, to secure payment of his fees as attorney for services which he had rendered Blackman. On September 15, 1892, it was agreed between Blackman and Phelan that this deed to the latter should convey absolute title, and that Phelan should pay Wright his claim for money advanced Haldane, Duffie’s claim, and a claim for some one thousand dollars or more held by Savage, of Omaha, against Blackman, and to pay Blackman five hundred dollars, and to do> certain other acts in the premises. September 22, 1892, Dull deeded this Iowa land to his wife, Nellie M. Dull. In February, 1892, Blackman began this action against Wright alone to cancel the deed he had made to Wright. Blackman then went to Chicago and wrote Dull to meet him there, with a view of settling their troubles. Dull met him, and Duffie was also present. From 1889 to 1892, Dull seems to have been advancing money to Blackman and Haldane to meet their necessities, and to aid them in prosecuting their claims. There is dispute in the testimony as to1 whether a settlement was in fact reached in Chicago between Dull and Blackman. That some sort of an ágreement was made between them, or was consummated after they both returned to New York, seems manifest from the fact that Dull kept on advancing money to them; no doubt on the faith, also, that he would have an interest in the Hopper title generally, as the evidence strongly tends to show. Dull admits that he was to stand by Blackman in the prosecution of his suit against Wright for the recovery of the land, and claims Blackman agreed to' reconvey it to' him. Blackman and Haldane fell out, and Dull undertook to reconcile their differences. Finally he determined that they were simply using him for the purpose of extorting money, and that Blackman’s representations were untrue, and ascertained that he had, in the Iowa case, amended his petition; asking to have his title quieted as against Dull, as well as against Wright. Thereupon he appeared in this ease, and filed an answer and cross, petition. On November 3, 1892, Dull began suit in Westchester county, N. Y., to. set aside his deed which he made to the Iowa land, and in said suit an injunction was issued. In this suit Blackman and his wife, Wright, Askwith, Phelan, and Duffle were all made parties defendant. Blackman, only, was served in the state of New York, Wright and- Askwith were served in Council Bluffs, and Duffle and Phelan in Omaha. None of the defendants, save Blackman and wife, ever resided in the state of New York. Black-man appeared in the New York suit, and made defense. The other defendants never appeared. In this suit a final decree was entered setting aside the conveyance from Dull to Blackman, and ordering a reconveyance of the property and enjoining each of the defendants from prosecuting this, action, or conveying or incumbering said land. The decree is pleaded in. this action by Dull as. an adjudication against all of the defendants.

Such pleadings were filed by the various parties that the following issues were presented for the determination of the trial court in the cause at bar. First. Alleged fraud of Blackman, practiced on Dull, in representing that he (Blackman) had eighty-six per cent, of the title of the Hopper heirs; it being claimed, in fact, that he held only fifty-four per cent. Second. That Blackman reported that he was a man of means, and able to prosecute the litigation in New York. It is said that this is untrue, and that Blackman was insolvent. Third. That there was a failure of consideration for the deed from Dull to Blackman, and hence it should be set aside. Fourth. The effect of the decree pleaded. The district court entered a decree that if the mortgagee, Holcomb, elected to foreclose, he should first exhaust the lands embraced in his mortgage, which are not in controversy in this action; that the deeds, from Blackman to Wright and from Dull to his wife be set aside and canceled; that the mortgage made by-Wright to Askwith be canceled; that the title to. the lands be quieted in the intervener Phelan, as against the plaintiff and all defendants and other interveners; and that Phelan be decreed to be the absolute owner of the land, subject only to the right of Holcomb to satisfy his mortgage out of said land, after first exhausting the other lands covered thereby, and also subject to the mortgage, held by Duffle, and the claim for one thousand dollars held by Savage. The defend-, ants Dull alone excepted and appeal.

1 2 II. As Dull and wife only appeal, we are concerned only with the question as to whether such fraud was practiced upon Dull by Blackman as to warrant the setting aside of the conveyance of the Iowa lands by the former to Blackman, and, if so, whether the other claimants to this land took their title with notice of the fraud, or with knowledge of such facts as should be held to put them upon inquiry touching it. Passing for the present the consideration of the effect of the New York judgment, what evidence is there of fraud ? The first item of fraud charged by Dull is that Blackman represented to. him that he owned eighty-six per cent, of the Hopper title,, when in fact he only had fifty-four per cent. Blackman denies making any such representations. Haldane testifies that Blackman only had fifty-four per cent, of the title. Dull’s claim in this, respect cannot be said to be established, unless we may consider Haldane’s evidence. Now, Haldane’s knowledge as to Blackman’s title was derived only from Blackman himself, or from papers which Blackman had placed in Haldane’s possession. At this time Haldane was Blackman’s attorney. The information which Haldane had touching this matter was obtained confidentially, and in his professional capacity, to enable him to properly perform his professional duties on behalf of his client. Haldane’s evidence cannot, therefore, be considered. Code, section 3643. Dull also testifies that Blackman represented that he was a man of means, and had land in Nebraska. So far as we can discover from the record, there is no evidence whatever that Blackman did not have the Nebraska land, nor is there any evidence that he was not a man of means, unless it be implied from the fact that he was often borrowing. money. The mere fact that Blackman borrowed money shortly after this deal with Dull is no evidence of insolvency. Were it otherwise, it would not be a difficult matter tO' establish the fact that one-half of the men in every community were insolvent because they were borrowers of money. We conclude, then, that the alleged fraud has not been established by a preponderance of the evidence, unless the decree of the New York court is conclusive upon that question.

3 III. The decree of the supreme court of New York is pleaded as a complete adjudication of the rights of the parties in this controversy, and as a bar to the prosecution of this suit. Now, if it in fact be such, then it is clear that the decree in the court below in this case should have been in favor of the Dulls. Before entering into a discussion as to the legal effect of this New York decree, it will be well to ascertain just what the court undertook to do by it: First. It ordered Blackman to execute a deed to Dull conveying the Iowa lands; and second, it enjoined all of the defendants in that proceeding from prosecuting this action in Pottawattamie county, Iowa, affecting the title of said lands; and third, it enjoined said -defend'ants from conveying or incumbering said lands. It would appear that this decree is one in personam, and not in rent. It does not purport to act upon the subject-matter of this suit, — the land. True, it directs a conveyance of the land by Blackman to Dull, but it nowhere provides for the making of any such conveyance in the event Blackman shall refuse to do so; and we think it cannot be held to settle the title to said land, as between the parties now contesting the same. Another thing of interest about this decree is the fact that by it relief is undertaken to be granted to Dull long after the pleadings and evidence in the case show that he had parted with all his interest in the land. Nor was his grantee, the real party in interest, substituted in said suit. The New York suit was instituted by Dull on November 3, 1892. The decree therein was entered in May, 1893. Now, Dull had conveyed the land to his wife many months before this suit was instituted. He did not have the legal title when he began the suit, or when, the decree was entered. How a decr ee entered undersuch circumstances in favorof Dull could confirm the title in him to land, the title to- which was, by his voluntary and unimpeached act, placed- in another person, is difficult to understand. It is contended, however, that Dull, having executed to his wife a deed with covenants of warranty, might properly prosecute an action to reinvest himself with the title to the land. We do.not find it necessary to determine that question.

IY. Now, it will be remembered that neither Phelan, Wright, Askwith, Savage, nor Duffle resided within the state of New York, neither of them was served in that state, and neither of them appeared in that action. Before Dull began that action, Blackman, his grantee, had deeded this Iowa land first to Wright, and afterwards to Phelan. So that when the New York suit was instituted, as well as when the decree therein was entered, the legal title to the land was either in Dull’s wife, or in Phelan or Wright The grantees of Blackman, as we have seen, were at no time within the jurisdiction of the New York court. The land was not within its jurisdiction. The only defendant within its jurisdiction had deeded the land to parties in Iowa, thereby divesting himself of all interest in it. Dull then by his New York decree1, got nothing, — obtained no rights, — at least as against any one save Blackman. The latter’s grantees, having acquired title long before the New York suit was instituted, could not be affected by the decree thus rendered therein. Under our law, in such a case, to affect the title to. this land, even if suit had been instituted in this state, it would have been necessary to have made Blackman’s grantees parties defendant. They were made parties, defendant, but were not within the jurisdiction of the New York court, and are therefore wholly unaffected by its decree. Swan v. Clark, 36 Iowa, 560. Now, counsel for appellant argue with great zeal that the New York decree was binding as between Dull and Blackman, and place stress upon the cases of Massie v. Watts, 6 Cranch, 148; Burnley v. Stevenson, 24 Ohio St. 474; Mills v. Duryee, 7 Cranch, 481; Hampton v. McConnel, 3 Wheat. 234; Gilliland v. Inabnit, 92 Iowa, 46 (60 N. W. Rep. 211). Now, a consideration of some of these cases will serve to show that they are not applicable to the case at bar. The leading case, which all others follow, is the Massie Case. That was an action to compel Massie to convey to Watts lands located in the former’s name, but within a location made under a land warrant owned by ,O’Neal and assigned to Watts, and which was placed in Massie’s hands, as a common locator of lands. These lands lay in Ohio, and the action was brought in the state of Kentucky, where the parties resided, dearly, here was a case of trust created, and the court decreed that Massie, in whom the title vested, should convey to. Watts. The decree, of itself, did not act upon the land. It simply provided for the doing an act by the party, which, when done, would operate to transfer the title. If Massie refused to obey the decree, he might be punished for contempt, but the title would remain as before. In the Kentucky case it was held that the action was not in rem, but in personam, for the purpose of enforcing a personal obligation of contract or trust. And so. it is said in Hart v. Sansom, 110 U. S. 155 (3 Sup. Ct. 586), “It is clearly not a judgment in rem, establishing a title in the land, but operates in. personam only;” and in the same case, in speaking of the equity power of the court,, it is said, “It has no inherent power, by the mere force of its decree, to- annul a deed or to establish a title.” See MacGregor v. MacGregor, 9 Iowa, 65. Without further discussing this phase of the question, we conclude that this New York judgment is not binding upon these parties who were not within its jurisdiction, so as to affect the title to land in this state, and we need not determine as to whether that judgment was effective as against Blackman. Much more might be said in this connection, and a multitude of authorities cited, but it is not necessary so to do.

4 Y. We have said that fraud on the part of Black-man has not been so established as to warrant a court in setting aside the conveyance made by Dull to Black-man. That conclusion is decisive of the case, and we might rest our judgment upon it alone. There are, however, reasons which .show that, even if fraud had been established, still Dull is not in a situation to take advantage of it. It may be profitable to briefly consider some of them. It is elementary doctrine that one who would rescind a contract on the ground of fraud should act promptly. Now. what did Dull do? He confesses that in October, 1889, or shortly thereafter, he knew that Blackman had quitclaimed to Dull’s landlord the very tract of land on Broadway which he had previously sold to- Dull. Did he then- take such steps as a man ordinarily would who -had discovered that a gross fraud had been practiced upon him? He proceeded to advance money to Blackman- and Haldane to aid them in prosecuting their claims. He goes to Haldane to get the deed which was deposited in escrow, and which King had turned over to Haldane, and which the latter had destroyed. He procures Haldane to make an affidavit as to its loss. At the interview in Chicago- he asks Duffle touching his situation with reference- to- his claim against this New York property, and is told that, as his landlord holds by a quitclaim deed, he (Duffle) thinks his mortgage and his claim is a better claim than that of his landlord. Dull appears to have acted upon this advice to the extent of putting himself in a position to prove the execution of the deed. He evidently then had no- thought of setting aside his deed to Blackman for the Iowa land. He admits that, about two weeks after he left Chicago, he and Blackman “came to some sort of an understanding” touching Blackman’s proposition to give Dull an interest in the New York enterprise. And, though- he claims no settlement was made between him and Blackman, he admits he advanced the latter about three thousand dollars thereafter. Dull’s whole course of conduct after his discovery of the alleged fraud, and which is evidenced by many acts of his, was only consistent with the theory that he expected to have an interest with Blackman in'the New York enterprise, and to prosecute his claim against his landlord for his interest in the title to the Broadway property which he (Dull) occupied as a tenant. If such was not his intent, then he was speculating as to whether he could thus realize the most for himself, or whether he might in the end, if it seemed more desirable, resort for relief to his action to set aside his deed to Blackman. Such a course is not consistent with the duty of one who claims to have been defrauded, — to promptly act in the premises. He cannot be thus permitted to play fast and loose. His own conduct is inconsistent with his present claim. After sleeping upon his rights, if he had any, for over three years, he is in no situation to complain if relief is not granted to him.

YI. Yery many other matters are discussed by counsel, such as the effect upon Dull of his failing to record his mortgage on the New York property; whether Phelan was a good-faith purchaser of the Iowa land; whether Savage and Duffle are in a situation to be protected as was done by the court below. Now, the length of this opinion precludes the separate discussion of these and many other questions raised by the counsel. We have examined all of them, and we are fully satisfied, in every particular, with the decree rendered by the district court. The conclusion we reach is that, whatever may be the real merits of Dull’s claim, he has failed to establish it by the evidence; that his conduct, even if he had established his claim, has been one of acquiescence in the alleged fraud, and utterly inconsistent with the thought that he expected to exercise a right to rescind his contract of conveyance; and that Phelan, Savage, and Duffle have acquired interests in the Iowa land which, under the circumstances, should be protected. Appellees’ motion to strike the denial of their abstract is overruled. The decree, therefore, of the district court, is-in all respects affirmed.

Deemer, J., having tried this case below, takes no-part in its consideration in this court.