McIntosh v. Hough

579 So. 2d 179, 1991 Fla. App. LEXIS 3331, 1991 WL 50592
CourtDistrict Court of Appeal of Florida
DecidedApril 11, 1991
DocketNo. 90-1036
StatusPublished
Cited by1 cases

This text of 579 So. 2d 179 (McIntosh v. Hough) is published on Counsel Stack Legal Research, covering District Court of Appeal of Florida primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
McIntosh v. Hough, 579 So. 2d 179, 1991 Fla. App. LEXIS 3331, 1991 WL 50592 (Fla. Ct. App. 1991).

Opinion

HARRIS, Judge.

In July, 1979 Henry Communications recovered a judgment against L. H. Hough in the amount of $45,000. While this judgment is not the subject of this appeal, it spawned the “tangled web” of deception that has enmeshed all the participants in this action and others in various lawsuits and appeals. It was the consequence of that judgment that inspired L. H. Hough and his wife, now Louise T. Bailey, to file for a sham divorce in Baker County (six days after the judgment and obtaining a final judgment on August 16, 1979) and then (on August 17, 1979) to convey all of Hough’s property otherwise subject to execution to Bailey.

The parties had agreed that the property would be held for Hough until he was able to “work out” the Henry judgment. But deception ran in the family. The sham divorce, sweetened by the rewards of conspiracy, transcended into a genuine dissolution when Bailey coveted the property as her own.

Unfortunately for our conspirators, Henry learned of their deception and commenced a fraudulent conveyance action against them. Hough, now fearing Bailey more than Henry, induced Bailey to agree to “place a lien” on the subject property to secure a loan from Hough’s brother for sufficient funds to pay or bond off the Henry judgment and thus avoid the fraudulent conveyance action. Bailey performed her agreement by delivering to attorney Loftin, in escrow, a deed to the property.

Neither the agreement to lien the property nor the Loftin escrow letter indicate any intention to convey the property to Fred Hough (the brother) other than as security for the loan to supercede or pay the Henry judgment. The loan was made and although Hough subsequently repaid his brother and obtained a quitclaim deed to [181]*181the property, this does not appear to strengthen his position. This is because the Bailey deed was withdrawn from escrow before delivery to Hough and because, even if the deed had been delivered, the deed was security only and became ineffective upon the repayment of the debt.

Having learned the art of deception from Hough, Bailey now improved upon it by conveying the property to her wholly owned corporation, T.B.F. Properties, Inc. on October 16, 1980. Hough, totally ineffective at fraud, called upon the courts to do justice and to require Bailey (and her corporation) to honor her lawful and honorable commitment and to reconvey his property to him. This action was filed in Duval County but a lis pendens was properly recorded in St. Johns County covering the property involved herein on July 7, 1981.

Bailey, not yet ready to trust her fate (and fortune) to the judicial process, through her corporation and in spite of (or because of) the lis pendens conveyed the property to Les Miles on December 24, 1981. As part consideration, Miles gave a mortgage to T.B.F. and a mortgage to Gregory Johnson, Bailey’s lawyer. On October 1, 1982 Miles conveyed a one-half interest in the property subject to the mortgages to Ronald Guy McIntosh for $25,000. Neither Miles nor McIntosh had actual knowledge of the pending litigation. Miles subsequently learned of the Duval County litigation and petitioned, as owner of part of the involved property, to intervene. His petition was denied.

During the course of the Duval County litigation, the continuing validity of the lis pendens was challenged. This challenge is more fully described in Hough v. Bailey, 421 So.2d 708 (Fla. 1st DCA 1982), rev. denied, 441 So.2d 614 (Fla.1983) and Hough v. Stewart, 543 So.2d 1279 (Fla. 5th DCA 1989). In Stewart this court held the lis pendens was effective through February 2, 1984. We find that American Legion Com. Club v. Diamond, 561 So.2d 268 (Fla.1990) does not affect this result.

On January 19, 1984 Hough recovered judgment against Bailey in Duval County requiring reconveyance of the property. On February 24, 1984 Johnson assigned his mortgage to Finance America Industrial Plan, Inc.1 On March 1, 1984, still without actual knowledge of the litigation or the result of the litigation and after the expiration of the lis pendens, McIntosh purchased the remaining half of the property from Miles for an additional $20,000. McIntosh then paid off a mortgage to T.B.F. in the amount of $18,000; $9,000 made payable to Bailey; $9,000 to Johnson.

On August 14, 1985 Hough filed this action to quiet title against McIntosh, Johnson and Financial America. Bailey, T.B.F., and Miles were also joined in third party actions.

The trial court found that since the lis pendens was effective through February 2, 1984 — after the conveyance to Miles — that unless Hough was barred by the doctrine of unclean hands he must prevail. The court then determined that Watkins v. Watkins, 123 Fla. 267, 166 So. 577 (1936) and Miller v. Berry, 78 Fla. 98, 82 So. 764 (1919) precludes the application of the unclean hands doctrine under the facts of this case because appellants had no interest in the property at the time of the initial fraud. Summary judgment for Hough was entered.

1984 CONVEYANCE TO McINTOSH

The trial court did not explain why it failed to distinguish between the conveyance to McIntosh during the pendency of the lis pendens and the subsequent conveyance. The record reflects that McIntosh had no actual knowledge of the Hough [182]*182claim. The imputed knowledge given by the lis pendens automatically expired on February 2, 1984 and was ineffective for any purpose when McIntosh took title to the one-half interest on March 1, 1984. The summary judgment is reversed as it affects this interest in the property.

UNCLEAN HANDS DOCTRINE

We find that the unclean hands doctrine should apply under the facts of this case. The cases relied on by the trial court are inapplicable for the proposition stated.

Miller v. Berry, supra, involved the claims of judgment creditors of the fraudulent grantee existing prior to the conveyance. The court denied protection under the unclean hands doctrine because “[c]re-dit was not extended, nor any judgment recovered upon the faith of the record title in Miller.”2 This case has no application. Watkins v. Watkins, supra, dealt with a situation in which parents concerned about a potential judgment, through a strawman, conveyed property to their child. The conveyance to the child was completed but the unrecorded deed was lost. Some years later persons claiming through the strawman claimed the property. Watkins was an action to establish the existing title not one seeking a reconveyance. The court stated:

This is a suit to establish a title already vested in the complainant as distinguished from one in which a reconveyance is sought. In Kahn v. Wilkins [36 Fla. 428, 18 So. 584 (1895)], [citation omitted] this court held that a conveyance between a fraudulent grantor and grantee is good as between the parties and vest title in the grantee, except as to those persons actually defrauded. In the case before us no creditor is involved and none complain.

Watkins, 166 So. at 578.

Watkins does not hold that one claiming through the fraudulent grantee is not entitled to rely on the unclean hands doctrine in an action filed by the fraudulent grantor seeking a reconveyance merely because he took title after the fraud.

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Related

McIntosh v. Hough
601 So. 2d 1170 (Supreme Court of Florida, 1992)

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Bluebook (online)
579 So. 2d 179, 1991 Fla. App. LEXIS 3331, 1991 WL 50592, Counsel Stack Legal Research, https://law.counselstack.com/opinion/mcintosh-v-hough-fladistctapp-1991.