Case ID: iowa_93/html/0038-01.html
Source: Caselaw Access Project
Author: {"author": "Bothrock, J. Kobinson, J. Granger, C. J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Jacob Sims, Administrator of the Estate of J. H. Russell, Deceased, et al., Appellants, v. David Gray, et. al.
    
    Fraudulent Conveyance: statute of limitations. A fraud in a 1 conveyance is discovered, within Code 2591, when the deed is recorded, and action to set aside must be brought within five years from such recording — Granger, Ch. J., and Robinson, J., dissenting.
    
    Same — trusts. Such a conveyance does not create a trust in such 2 sense as to interfere with applying the statute of limitation.
    Practice in Supreme Court: remand. Facts stated under which a 3 decree in equity will not be reversed for trifling error caused by imperfect presentation below, and under which, instead, a partial remand will be ordered.
    
      Appeal from Pottawattamie District Court. — Hon. "Walter1 I. Smith, Judge.
    Monday, December 17, 1894.
    This is a suit in equity by which the plaintiffs seek to subject certain real estate to the payment, of two judgments rendered in favor of J. H. Russell, deceased, against the defendant, David Gray. It is claimed in behalf of plaintiffs that said real estate was conveyed to the defendants U. H. White and Jane White in fraud of the rights of the said Russell and other creditors of Gray. A claim is also made that said Gray has an equitable interest in certain other real estate, the title to which is in said White, which is held by White in fraud of the creditors of said Gray. The substance of the prayer of the petition is that all of said real estate, or of the said Gray’s interest therein, be subjected to the payment of said judgments. There was a full hearing on the merits, and the petition of the plaintiffs was dismissed. Plaintiffs appeal.
    
    Affirmed.
    
      Sims & Bainbridge for appellants.
    
      Sari & McCabe for appellees.
   Bothrock, J.

II. It is insisted, however, that the statute of limitations cannot be invoked as a defense, because the contract by which the conveyance was made constituted a trust. It is true that there is evidence in the case to the effect that White was to hold the title and collect rents, and pay debts, and eventually reconvey to Gray. But this fact is not at all conclusive, especially when considered in connection with the title conveyed to Jane White. An ingenious argument is made, based upon the claim that there was a resulting trust in the property in favor of Gray. It is true that the title of a fraudulent grantee in such a case is in a certain sense held in trust for the creditors of the fraudulent grantor. But whether such a trust is capable of enforcement in equity after the bar of the statute is altogether another question. An ordinary creditors’ bill is not founded upon the idea of a resulting trust. It is based upon the ground.that the conveyance is void. The general doctrine of trusts has no application to such a case. It is a well-understood equitable principle that a conveyance made by a fraudulent grantor cannot be impeached by the parties thereto, either in law or equity, no matter whether the fraudulent contract was an absolute conveyance or a mere transfer of the property as a protection against creditors. In all such cases equity leaves the parties in the position where they, placed themselves. In our judgment, this is a plain case of fraudulent conveyance, void as to creditors, and there is no foundation in either reason or authority for the claim that the transaction involves a trust which may be enforced, notwithstanding the statute of limitations. “The trust is in reality one' in name alone. The creditors’ right to reach the debtor’s property is in no true sense an interest in the property. It is at most an equitable lien on that property.” Pom. Eq. Jur., section 1857, note 1. That the statute- of limitations cannot be avoided upon the contention under consideration, see Stone v. Brown (Ind. Sup.), 18 N. E. Rep. 392. See, also, Musselman v. Kent, 33 Ind. 452; Wait, Fraud, Conv., section 292.

III. The claim made that Gray is the owner of an equitable interest in certain other real estate is not' sustained by the evidence, and that part of the controversy demands no further attention. It appears from the petition and an exhibit attached thereto that, before this action was commenced, a suit was pending in which Gray was plaintiff and U. H. White wras defendant, in which a large amount of money was claimed on account. The plaintiffs, in their petition, incorporated a claim in this action for a lien on whatever was recovered by Gray against White in the other action. The- defendant, U. H. White, in his answer, averred that said claim was wholly fictitious, except as to a few.items procured at Gray’s harness shop, and consented that the court might decree that such sum, if any shall be found owing Gray, might be subjeeted to- the judgments of the plaintiffs. It appears that no attention was given to this claim when the final decree was pronounced by the court, and it is now claimed that the decree of the court below should be reversed on this ground. The printed records and arguments on this appeal contain about two hundred and seventy-five pages. The whole costs of the appeal will aggregate nearly, if not quite, three hundred dollars. Not more than six or eight pages of abstract and arguments are devoted to this insignificant account It is not stated in the argument of appellants what amount is claimed on the account. Under these peculiar circumstances', we are of the opinion that the claim on the account should be remanded to the court below, to ascertain the amount for vvhich judgment should be rendered, and enter a judgment therefor. The whole controversy in the court below was as to the real estate, and from the record made it is quite probable that this account was not called to the attention of the court when the decision was made. This modification, or rather remanding, of this claim, is not intended as a reversal of the decree, but merely to correct what appears to us to have been overlooked. The decree as to the real estate will be affirmed, at plaintiff’s costs.- — Affirmed.

Kobinson, J.

(Dissenting.)—I cannot agree with ‘so much of the foregoing opinion as approves the rule announced in the case of Laird v. Kilbourne, — that the law holds that a person affected by a fraudulent deed discovers the fraud at the time the deed is recorded. It may be true that in most cases the recording of the deed,' taken in connection with other relevant facts, will-be .sufficient to charge interested parties with knowledge of the true character of the deed; but I do not think that should be held true in all cases. It was said in Hawley v. Page that the language of the opinion in the Laird case, considered abstractly, announces a broader rule than was intended, and, in ray opinion, that should continue to be true. As the facts disclosed by the record in this case, including the recording of the deed, show that the plaintiffs should be charged with knowledge of the fraud in question for more than five years before this action was commenced, I agree to the result announced by the majority.

Granger, C. J.

I concur in the views expressed by Justice Robinson.