Quirk v. Thomas

6 Mich. 76, 1858 Mich. LEXIS 74

• Court: Michigan Supreme Court
• Decided: December 9, 1858
• Status: Published

Opinions

Manning J.:

I agree with the learned judge who decided the cases in the court below, that the deed from Aaron Thomas to his son Alanson, which complainants ask to have re-formed, was made to defraud the creditors of Aaron. The evidence is conclusive on that point; and admitting complainants are purchasers in good faith, for a valuable consideration,' and ’without notice of the fraud, or of the mistake in the deed from Aaron to Alanson, their grantor,- they still have failed to make a case entitling them to relief in a court of equity. On the ground of purchasers for a valuable consideration, without notice, they asked and obtained relief in the court below, where it seems to have been taken for granted that that, of itself, is an equity on which a bill may be sustained for relief. It can be used as a defense only. It is a shield to protect a party, but can not be made a basis of attack. It was so held in Beekman v. Frost, 18 Johns. 544, on appeal from Chancellor Kent — the Court of Errors reversing the decree of the Chancellor. In that case, as in the cases before us, the question was not raised in the court below. Spencer Ch. J. in delivering the opinion of the court, ®ays^ “In Patterson v. Slaughter, Amb. 293, Lord Hardwicke laid clown the rule to be, that the title of a purchaser for a valuable consideration is not ground for relief, though it is a good defense.” The Chief Justice then says: “No book of precedents,, no treatise on equity, furnishes a case of a bill filed on the ground that there has been purchase without notice, and for valuable consideration.” The principle i also recognized in Jackson v. Cadwell, 1 Cow. 622. Hare & Wallace, in their notes on Beading Cases in Equity, vol. 2, pt. 1, p. 55, say: “There can be no doubt that a defense resting on the ground of a purchase for valuable consideration, as technically made by plea, which does not allege the existence of a good title in the vendor, and which, as remarked by Lord Eldon, implies a want of title in the vendee, can not, in itself, furnish a ground for a suit or action, either in a court of equity or of law. Such a defense shows matter sufficient to exonerate the conscience of the purchaser and entitle him to retain what he has purchased, but does not, necessarily or usually, show enough to bind the conscience of others, and become the foundation of equitable proceedings against them.”

The reason of the rule has been said to be, that the party to be affected by it is entitled to the oath of the party seeking to avail himself of it; I do not think this the true reason; for a defendant may obtain the oath of complainant on a bill e£ discovery. The rule rests on a more solid foundation; which is, that the effect the law gives to a purchase without notice, is not a perfect right in itself, and, therefore, will not sustain an action at law or bill in equity, but may, in certain circumstances, be used by a defendant to stay the interposition of the court, on the ground that he is equally entitled with the plaintiff to its protection. If the right was in itself a perfect right — one that'would sustain an action at law or bill in equity — no man’s property would be safe. B having a horse belonging to A in his possession, sells it to C, who purchases in good faith, believing it to be the property of B, and pays him what the horse is worth. A sues C in trover for the horse. C is a bona fide purchaser for a valuable consideration, without notice, and has all the rights of such a purchaser ; and yet it is no defense. But if A, instead of having •a legal right to the horse, had an equitable right only that Was good against B’s legal right, and to enforce it was under the necessity of going into a court of equity, the court would give him relief against B, and also against C, if he purchased of B with a knowledge of A’s equitable title; but it would not give him relief against C if he had purchased of B without notice of A’s equity. Why would the court give relief against C in the one case and not in the other ? Because, in the first case, C would have the legal title without any equity — he would have B’s title, and nothing more — and A’s equity would prevail against his legal title. In the other case, C would have the equity of a bona fide purchaser in conjunction with the legal title, and for that reason the court would refuse to divest him of his legal title in favor of A’s equity. Or, in other words, it would leave’ complainant his legal remedy. This is what I understand by the equity of a bona fide purchaser without notice.

When defendant has the legal title, and plaintiff is seeking to divest him of it by reason of some equity that was a good ground for relief against his grantor, he may 'turn on his adversary, and say: “I purchased the estate you claim of me in good faith; I paid a valuable consideration for it, and I had no notice of your claim when I parted with my money.”

In the cases before us, complainants admit Alanson Thomas, their grantor, had no legal title when he conveyed to them, and they file their several bills to re-form the deed from Aaron to Alanson, so as to vest the legal title in him, and, through him, in themselves respectively, to the part of the premises severally purchased by them of Alanson. They stand in the precise position mentioned by Hare & Wallace in the note to which I have referred, of “ purchasers for valuable consideration as technically made by plea, which does not allege the existence of a good title in the vendor" (Alanson Thomas, their grantor), “and which, as remarked by Lord Eldon, implies a want of title in the vendee.” In the present cases, the want of title in complainants is admitted, not implied; and they come into a court of equity to get a title.

Asno relief can be given solely on the. ground that complainants purchased in good faith without notice, is there any other ground on which the relief asked may be granted? As purchasers from Alanson Thomas, they have all of his right at law and in equity, and nothing more. But this comt would not correct the mistake in favor of Alanson, on a bill filed by him, for he was a party to the intended fraud of the father. Neither can it in favor of complainants,, his grantees, without conceding to them greater rights than Alanson had, and making itself a party to .the intended fraud. It matters not there are no creditors, even if such be the case, now to be injured. It is the corrupt intention, the illegal object the Thomases had in view — -the wrong in' tended, and not the wrong done — that stays the hands of the court. If the court would not have corrected the mistake-the instant it occurred, it will not now; for, by correcting it now, it would give effect to the deed from its execution. To give effect to it on any day subsequent to the time the parties intended it should take effect, would not be enforcing the original contract, but making a new contract for the parties..

A court of equity will not decree a specific performance of an illegal contract. On what principle, then, can it correct a mistake in such a contract?

There is another ground, it seems to me, aside from the intended fraud, why the relief asked • should not be. granted. It is the want of a consideration for the deed from Aaron to Alanson. The deed was intended to be the execution of a voluntary contract. And as a court of equity will not decree the performance of such a contract (Colman v. Sarrell, 1 Ves. 50; Antrobus v. Smith, 12 Ves. 39 ; Edwards v. Jones, 1 Myl. & Cr. 226; Ellison v. Ellison, 6 Ves, 656; 2 Spence Eq. Juris. 285, notes b ande), I can not well conceive of a case, where there is no intervening equity, in which it would correct a mistake in a defective execution of it. The most complainants can claim, even in a court, of equity, under their deeds from Alanson, is, that they are in equity the assignees of such contract. And, a¡Si assignees, they would take it subject to all' its vices, and to all equities existing between the parties to it.

Complainants are not bona fide purchasers without no-, tice. In law, they could not be said to be ignorant of the mistake when they purchased. The deed from Aaron to Alanson was recorded, and they are chargeable with notice of every thing that appears on the face of the record. If they purchased without examining the record, or seeing whether it described the land they were about to purchase, it is then- misfortune, and, unhappily for them, one that this court can not correct. If it be said the registry is notice only to subsequent purchasers from the same grantor, there is still another principle of law which charges them with notice. It is, that a vendee is deemed to have notice of what appears on the face of a conveyance through which he claims title, whether it be in a conveyance to his grantor, or other prior conveyance in the chain of his title.

Aaron Thomas, in his lifetime, frequently said he had conveyed the farm to his son, and made the same statement under- oath in a court of justice. Such declarations were evidence to prove the mistake in the deed from,him to Alanson, but not to disprove the fraud with which the deed was tainted. They were consistent with the fraud, and were doubtless made with intent to conceal it. Nor can it be said they liken complainant’s case to a purchase of a third person, in the presence of the real owner, under an impression such person was the owner, and the cotemporaneous declaration of the owner to the same effect. For it does not appear the declarations of Aaron Thomas, referred to, were ever made to, or in the presence of, complainants, or either of them. Aaron Thomas was not present, nor could such declarations have been made by him, when complainants purchased. He died in 1847; and it was on the 14th of February, 1848, Alanson deeded to Quirk, and on the 9th of September, 1850, he deeded to Greusel. I am therefore unable to see any equity in favor of complainants growing out of the declarations of Aaron Thomas. If there be any, in what does it consist, and where is it to be found? Certainly not in what Aaron Thomas said or did in the presence of complainants, but in what they may have understood from others he had said and done. This is public rumor — nothing more; and if public rumor can create an equity on one side, I know no reason why it may not on the other. Complainants forget, while calling in public rumor to assist them, that her testimony, like a two - edged sword, cuts both ways — that while she testifies in favor of a conveyance, she at the same time states it was made to defraud creditors. On what principle can one part of her story be received, and the other rejected? The truth is, there is no equity growing out of the declarations of Aaron Thomas, one way or the other, and I can not see that they have any thing to do with the case, except for the purpose I have already stated.

The Statute of Frauds, it is said, declares the deed void as against creditors only, leaving it good between the parties to it. The statute, in this particular, is declaratory of the common law only, by which all contracts made in violation of law, or contrary to public policy, are illegal, and consequently void; and when executory, will not be enforced, or relieved against when executed — the law treating the whole transaction as void and of no effect, in the former case, and giving full force and effect to it between the parties in the latter — when it has been executed in part, giving it effect so far as it has been executed, and holding it void so far as it remains executory. —Nellis v. Clark, 20 Wend. 24, and 4 Hill, 424. In that case the Statute of Frauds, the common law, and the validity and effect of such contracts, were fully considered, and all the cases bearing on them referred to and commented on by Cowen J., in the Supreme Court, and by Chancellor Walworth, in the Court of Errors. CoAven, J., in delivering the opinion of the Supreme Court, says: “It” (the statute) “declares all contracts, both executory and executed, to defraud creditors, void only as against the latter. It was wanted for nothing else. It was but declaratory; and Avere it not for the fourth section) giAÚng additional- sanctions, the common law would have reached every pin-pose. Now, had the statute stopped Avith declaring the contract simply void, it Avould have changed the common law, avoiding one class, viz., executed contracts, which that law would not interfere with. Therefore, the statute withdraws itself entirely from any interference between the parties, with the intent to let' the common -law take its own course.” Chancellor Wahvorth, in his opinion, says: “A sale or assignment for the purpose of delaying, hindering, or defrauding a creditor in the collection of his debt, was illegal at the common law, and is, in itself, immoral, and against public policy. And the statutes declaring such transactions void as against creditors, are only in affirmance of the common law on that subject. The word only, as used in the statute of Elizabeth, and in our reAdsed statute of l^V, on this subject, was not intended to render executory contracts of that character legal and valid between the parties thereto. But it Avas inserted to prevent the general provisions of the statute from changing the common law rule, as between the parties themselves, in relation to executed contracts.”

The decrees of the court below, I think, should be reversed, and the bills be dismissed.