Case ID: ohio-np_2/html/0316-01.html
Source: Caselaw Access Project
Author: {"author": "SMITH, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

(Greene County Court of Common Pleas.)
    M. R. STINSON v. JOHN W. RACER et al.
    
      When assignee of a claim cannot have the protection due a bona fide holder. — Where an action is brought to set aside the transfer of a chose in action on the ground that the same was made without consideration and with intent to defraud creditors, the assignee cannot claim the protection due a bona fide holder without notice as to any part of the consideration paid by him after he has been served with a summons in the action, although there is no allegation in the petition that he is indebted to the assignor, and an order restraining payment is not prayed for.
   SMITH, J.

This action was brought to set aside the transfer of an account by John W. Racer to James Racer. Plaintiff alleges that he recovered a judgment against the said John W. Racer, on which said judgment execution has been issued and returned unsatisfied; that John W. Racer has no real or personal property subject to levy on execution sufficient to satisfy said judgment; that he has a claim against the estate of Milton Todhunter, deceased, for services performed for said Todhunter in his lifetime, amounting to $876.00, which claim the said John W. Racer has made a pretended assignment of to defendant, James Racer, his son, without consideration and with intent to hinder and delay his creditors in the collection of claims against him.

Plaintiff prays that defendant, James Racer, be required to set up the interest, if any he has, in said claim against said estate; that said pretended assignment be set aside and held for naught; that said claim, or whatever amount thereof may be allowed as a valid claim against said estate, may be subject to'the payment of plaintiff’s judgment; that defendants, the executors of the last will and'testament of said Milton Tod-hunter, deceased, be enjoined from paying any part of said claim to said James Racer, and that said James Racer be enjoined from disposing of or assigning any part of said claim.

Upon the trial on the issues made upon the petition and the answers of said John W. Racer and James Racer, it was found that James Racer purchased said account in good faith for a valuable consideration paid and to be paid, and without notice of any fraudulent intent on the part of said John W. Racer to defraud plaintiff or other creditors; that said John W. Racer transferred said account for the purpose of defrauding plaintiff and preventing him from subjecting said claim to the payment of his said judgment: that at the time of the service of summons said James Racer had paid the amount agreed upon as the consideration for the transfer of said account except the sum of $179.00; that after the service of summons upon the said James Racer, and before filing his answer herein, he paid a part of the $179.00, so, as aforesaid, remaining unpaid, and the balance thereof after filing his answer herein.

It is claimed that said James Racer is entitled to be protected as to the amount paid after the service of summons, because there is no claim in the petition that said James Racer is indebted to said John W. Racer, or that he has any property in his hands belonging to said John W. Racer except said claim against said estate of which he is the absolute owner. It is further claimed that this is not a proceeding to subject the amount which might be due from James Racer to John W. Racer,but is to subject the claim of John W. Racer against said estate, and no order restraining James Racer from making payments is prayed for in the petition.

At the time of the service of summons said James Racer was chargeable with notice of the claim of the plaintiff set up in the petition. He knew that equitable relief was prayed for in an action against him in which John W. Racer and others were joined as defendants. After that time he can not-make the claim as to the unpaid purchase money, that he is entitled to be-protected as a bona fide purchaser without notice. While he was the absolute-owner of the account,yet he was chargeable with notice of plaintiff’s claim that the transfer was made by said John W. Racer with intent to defraud creditors, and that he was entitled to subject said claim to the payment of his judgment, and therefore any payments thereafter made by him were at his peril. To constitute a bona fide purchaser without notice there-must be want of notice both at the time of purchase and at the time of' payment Blanchard v. Tyler et al., 12 Mich., 338.

M. J Hartley, for plaintiff.

Little & Silencer, for defendants.

In equity a bona fide purchaser is protected to the extent of the payments actually made, and no further. The rule applies even where further-payments are provided for, unless they are secured in such a manner that the purchaser cannot be relieved against them. Dixon v. Hill, 4 Mich., 404; Kerr on Fraud and Mistake, 318, 319; 2 Pomeroy’s Equity .Jurisprudence, sections 691, 750, 751; Keyser v. Angle, 40 N. J. Eq., 481; Bump-on Fraudulent Conveyance, 233, 477; Bush v. Collins; 35 Kansas, 535, Wormley v. Wormly, 8 Wheaton, 421; Jewett v. Palmer, 7 Johns. Chan., 65.

To the extent of the purchase money unpaid at the time of the service-of summons, the said James Racer is not entitled to protection, and the-executors of the estate of said Milton Todhunter, deceased, who are withholding payment of the claim subject to the order of this court, are directed to pay to the clerk of this court said sum of $179.00, to be applied upon plaintiff’s said judgment.