Case ID: ohio-st_60/html/0540-01.html
Source: Caselaw Access Project
Author: {"author": "Minshall, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Stevens v. McCoy, Assignee, et al.
    
      Rescission of exchange of land — Decreed by court of equitable jurisdiction — Decree of court transferring mortgage from land returned to land received by plaintiff — Rights of judgment creditor of mortgagor.
    
    1. It is competent to a court of equitable jurisdiction, in decreeing a rescission of an exchange of land, to transfer a mortgage, with the consent of the mortgagee, that had been placed on the land received by the plaintiff in exchange, to the land restored to him, where the rescission could not otherwise be had.
    2. In such a case the decree proprio vigore makes the mortgage a lien on the land from its date.
    3. Also, in such case, the interest of theparty in the lands restored is simply an equity of redemption ; and an execution on a judgment, levied on the land's restored, immediately after the decree of rescission, is inferior in lien to that of the mortgage so transferred.
    (Decided June 20, 1899.)
    Error to the Circuit Court of Perry'County.
    
      J. T. Grew, for plaintiff in error.
    The lien of judgments in Ohio is purely statutory, and can only be a lien on the lands of the judgment debtor within the county of which the defendant is legally seized at the time the judgment is rendered, or, as in this case, the transcript is filed. Baird v. Kirtland et al., 8 Ohio, 21; Haynes v. Baker, 5 Ohio St., 253; Harrington v. Sharp, 48 D., 365; Walton v. Hargrave, 97 D., 429.
    We submit that Price did not hold either the legal or equitable title to the McLuney real estate at that time, but on the contrary Beck was the owner of .both as well as in possession; Price was then the legal and equitable owner and in possession of the Ashtabula farm, and the circuit court in the case of Price v. Beck must haye so held in order to recognize the mortgage lien of Stevens on said farm, which Price gave him in October, 1890; and it was by reason of the written consent of said Stevens which Price attached to, and made a part of, his amended petition, that it became possible for said court to entertain said action and make the decree it did in said case, and thereby re-invest said Price with said title subject to the burthens therein imposed, which burthens said court had, and did by said decree, take off the Ashtabiila farm by consent of said Stevens, which consent was given on condition said burthens should by said decree be imposed upon said MeLuney real estate, etc., and a burthen thereon good as against said Price is good as against said Kent.
    The court will observe that the petition of Price against Beck charged fraud on the part of Beck in the transfer, there was no fraud claimed or charged by any one against Price; had Price never brought suit against Beck where would the legal title now be (as between them and any claiming under them) to the real estate in question? There is only one answer we take it, to wit; in Beck, his heirs or assigns; if that be so, it follows that the title could only have been re-vested in Price by force of the decree in the circuit court, or by deed executed in conformity therewith by Beck to Price.
    But, for argument sake, suppose we admit that the suit had been brought by Beck against Price for rescission on the charge of fraud on the part of Price in procuring said exchange, and the question should thereafter be presented to a court involving the right of Stevens as an innocent mortgage lien holder for value under Price. We ask upon what principle could the lien of Stevens be prejudiced? It is well settled in this state by many adjudicated cases that such innocent purchaser or mortgage for value cannot be prejudiced by a court subsequently setting aside the deed of the purchasers for fraud; and the courts of this state uniformly so hold notwithstanding our statute declares all conveyances made by a debtor for the purpose of hindering, delaying or defrauding creditors, shall be void; that principle is so well established we do not care to cite any authorities in support of it.
    
      L. A. Tussmg, for defendant in error.
    Under a deed of general assignment for the benefit of creditors, the assignee takes the real estate subject to all valid liens existing thereon against the assignor at the time of the assignment, 38 Ohio St., 610; 33 Ohio St., 63; 26 Ohio St., 63; 40 Ohio St., 109.
    Under the decree of the circuit court, (to which this court must give full effect) the title to the property described in the petition was in Price all the time; and therefore he had the legal title when the transcript of Kent’s judgment was filed in the Clerk’s office. The judgment then became a lien; and the Price-Beck case having ended as it did, it follows that this judgment has all the time been a lien on the Perry county property, and Kent never having been a party to the Price-Beck ease, and the judgment never having become dormant, it remains a prior lien to Stevens.
    The court’s transfer of it can not affect Kent’s priority, as he was not a party to the suit (see authorities hereinafter cited); so we see no escape from the conclusion that Kent’s lien is ahead, in any view of the case. Revised statutes, sections 5374, 5375, 5377, 5378 and 5415; McComb v. Thompson, 42 Ohio St., 139.
    One not a party to a suit is not in any way affected by anything done in the case; and therefore Kent’s rights as against the Perry county property are the same as if the circuit court had not attempted to transfer the mortgage from the Ashtabula to the Perry county property. 14 Ohio, 323; 17 Ohio, 239; 19 Ohio St., 472; 30 Ohio St., 24; Holliger v. Bates, 43 Ohio St., 437; Arnold v. Donaldson, 46 Ohio St., 73.
    Kent never in any way recognized the contract between Price and Beck, and never acted upon it, nor sought any relief on account of it. He was not a party to the suit, and the decree was. to correct only what these other parties had wrongfully done under the fraudulent contract.
    The court will bear in mind that Mr. Stevens the innocent (?) mortgagee, had a mortgage, not on the land in question, but on the Ashtabula land. What a judgment debtor may do, especially after date of levy, as in case at bar, after Kent’s transcript was filed, cannot prejudice the rights of the levying- judgment creditor. Therefore, in view of the facts that Kent was not a party to the decree, nor to the Price-Stevens agreement about the transfer of mortgage, and in view of the court’s finding- about the title as above, how can it be otherwise than that the circuit court was bound to make the parties to the suit whole out of the judgment against Beck?
    It is not true that the decree as to the title could have been entered only by consent of Stevens. How could Stevens have upheld' — -kept vitality in — the Price-Beck contract? But having released his mortgage and taken Price’s word for his money, how can he be protected to the prejudice of prior liens attaching before he released his mortgage?
    The Price-Beck contract was declared void, not merely as against creditors of Price, but in fact as being vitiated by actual fraud, leaving Price and his creditors each in the same position, as to their legal rights and as to the effect of the legal process employed by them, as if the Price-Beck contract had never been made. Price had no interest in the Ashtabula land and Beck none in the Perry county land. Price then could give no valid mortgage on the Ashtabula land. 2 Parsons on Con. (7 ed.) page 927 bottom; Frost v. Lowry, 15 Ohio, 215; 2 Pomeroy’s Eq., sec. 899, page 1267.
    Stevens, perhaps, has an equitable lien on the Perry county land as against Price; but he has no prior equitable lien thereon as against Kent, whose transcript was filed (Revised Statutes, section 5377, 5378) long before the agreement between Stevens and Price to impose the mortgage on the Perry county land.
    We contend that Stevens’ alleged lien on the Perry county land gets its vitality only from said last mentioned agreement, which does not bind Kent. 1 Jones on Liens (2d ed.), sections 77, 96, page 67; 2 Pomeroy’s Eq. (2d ed.), sections 721,722 and cases cited and notes on page 1009. White v. Denman et al., 1 Ohio St., 112; 26 Ohio St., 471; 30 Ohio St., 347; 40 Ohio St., 445; 1 Jones on Mortgages, 162; 47 Ohio St., 306; 11 Ohio St., 283; id. 232.
    Stevens must submit to the findings of the court, that the title to the Perry county land “did not pass from Charles W. Price,” * * * and is “in said Charles W. Price as though no conveyanee had been made to Beck;” by reason of which Kent’s lien attached at the time his transcript was filed. Those finding’s can not be attacked collaterally. This is not even an error proceeding- to reverse the original decree. Ohio Revised Statutes, sections 5377 and 5378; Carpenter v. Warner, 38 Ohio St., 416; Buffalo v. Farthing, 101 N. Y., 344; 1 Ohio St., 111; Davis v. Lennen, 24 N. E. R., 8851; 125 Ind., 185.
    There is no doctrine of lis pendens applicable to this case. Neither Price nor Stevens claim under Beck. Revised Statutes, section- 5055, 4987.— Lessee v. Boothby, 14 Ohio, 116; 2 Pomeroy’s Eq., section 633, for definition of lis pendens. Beck is not complaining here. Neither is Price, the plaintiff. Kent’s lien attaches by operation of law— not by g-rant of a party to the suit.
   Minshall, J.

The litigation below arose in a proceeding in the probate court commenced by McCoy, assignee of C. W. Price, to sell lands. Stevens and Russell Kent were made parties. Each claimed a lien on the land prior to the-other; Kent under an execution on a judgment and Stevens under a mortgage that had been transferred to the land by a decree of rescission in a suit between Price and one Beck and others. The matter in dispute between these parties was appealed to the common pleas. That court on the hearing made a finding stating its conclusions of law and fact separately, and rendered a judgment in favor of Kent, giving him priority over Stevens. The latter prosecuted error to the circuit court where the judgment was affirmed, and error is prosecuted by him in this court, to reverse both the lower courts on the finding made in the common pleas.

From the finding it appears that in January, 1890, Price and Beck exchanged lands by the execution of reciprocal deeds, the lands of the former deeded in exchange being situated in Perry county, and those of the latter in Ashtabula county; each at once taking possession of the lands received in exchange. In the month of October, 1890, Price made and delivered to Stevens on the lands in Ashtabula county a mortgage to secure $3,800, which was duly recorded. On November 1, 1890, Kent obtained a judgment before a justice of the peace in Perry county against Price for $287.20, and filed a transcript thereof in the clerk’s office of the county and caused an execution to be issued and levied on certain other lands of Price, that had not been conveyed to Beck.

On January 30, 1891, Price commenced a suit in Perry county common pleas to obtain a rescission of the exchange that had been made between him and Beck, on the ground of fraud, claimed to have been practiced by Beck and his associates. But as the mortgage he had executed precluded a rescission, unless it could in some way be removed, he entered into an agreement with Stevens whereby the latter stipulated, that if a rescission could be had by the removal of his mortgage, he agreed that it might be cancelled on the Ashtabula lands, on condition, however, that it should, by the decree of the court, be removed to and made a lien upon the Perry county lands, that should thus be restored to Price. By amendment this agreement was introduced and made a part of his petition by Price. On the hearing of the case, fraud was found and a decree of rescission made; and, in accordance with the agreement between Price and Stevens, and as a part of the decree, the mortgage on the Ashtabula lands was ordered cancelled, and transferred to the Perry county lands. The case was appealed to the circuit court where on September 22, 1894, that court made a similar decree. As soon as the judgment of rescission was made in the common pleas, Kent caused an execution to be issued and levied on the lands under his judgment. And likewise, as soon as the rescission was ordered in the circuit court, made another levy on the same lands. And hence the question arises, which of these two parties has the prior lien on the lands; whether it be Stevens by virtue of the provisions of the decree of rescission, or whether it be Kent by virtue of the levies made under the executions issued upon his judgment. To prevent misapprehension, it should be stated that Kent was no party to the suit for rescission, nor to the agreement in regard to the transfer of the Stevens mortgage. The mortgage was not recorded in Perry county; and whatever validity it has as a lien on the lands in that county depends upon the effect of the decree of rescission.

It is claimed for Kent, that Price by reason of the fraud practised on him, remained the owner of the land; and that, as a consequence, his judgment became a lien on the land at the time his transcript was filed in the clerk’s office, or else at the date of the first levy, and if not then, at the date of the second, levy after the judgment had been rendered in the circuit court decreeing a rescission; and that the lien of Stevens is at most an equitable one. And particular importance is attached to the fact, that the circuit court, in the suit for rescission, found that, by reason of the fraud practiced, there was no consideration for the conveyance from Price to Beck, and that the title did not pass from Price to Beck, .and was adjudged to be in Price as if no conveyance had been made.

It must, however, readily occur to one familiar with legal distinctions, that the finding of the court, that the title did not pass, but remained in Price as if no conveyance had been made, is not' a finding of fact, but a legal conclusion from facts about which there is no dispute, and, as we think, an erroneous conclusion. It is not disputed that Price in making the exchange, executed and delivered a deed to Beck for his lands in Perry county, given in exchange; and that it was in consideration of a deed made and delivered to him at the same time by Beck for his lands in Ashtabula. It needs no citation of authorities to show that the deed executed by Price passed the title to the lands so conveyed, and that the lands received by him in exchange constituted a consideration, and that nothing but the decree of a court could divest that title. They were subject to the equitable right of Price for a rescission; but they were no longer his lands in the sense that they could be levied on by any of his creditors, nor in the sense that a judgment rendered against him would become a lien thereon. Haynes v. Baker, 5 Ohio St., 253. We may go further and say, that the right that was in Price for a rescission was a right personal to himself, and could not be availed of by creditors, for’ it is not an equity in the land, but a mere right of action personal to the grantor, over which no one else has control. He alone can maintain it, for he alone can comply with the requirement of placing the opposite party in his former position, by executing a reconveyance of the lands obtained by him, and returning whatever else he may have received in exchange. And to still further show the unsound ness of the claim made for Kent, and its want of any principle of equitjq it must be observed, that, in this case, the grantor was in no position, at the commencement of his suit, to have a rescission of the exchange, and could not have obtained such relief, but for the assistance afforded him by Stevens, in his agreement, that if, upon the facts, he was entitled to a decree, he would consent that his mortgage might be cancelled by the decree of the court, and transferred to the Perry county lands. Now, a creditor, should he have endeavored to subject the lands to the payment of his claim, could have done no more than stand in the shoes of the debtor. He would have been required to place the opposite party in statu quo; in other words Kent would have been compelled to make the same agreement with Stevens, that Price did, so that if the rescission had been made at his suit, it would have been subject to the mortgage of Stevens.

The case may be presented in another view. All that was restored to Price by the decree was the land he had exchanged subject to the mortgage. This was all that in equity he had a right to; for by executing the mortgage on the Ashtabula lands he had affected the value of his ownership therein to that extent. Hence the thing restored to him was simply an equity of redemption in the lands, and this was all that the levy of Kent’s execution could attach to. True, Price had the legal title when the levy was made, but it was subject to the lien imposed on the land by the very decree by which the land was restored. There can be no doubt of the power of a court, in the exercise of its equity jurisdiction, to make such a decree, when so clearly required by the interests of justice; and no third person is affected in any of his vested rights. When Kent recovered his judgment, Beck owned the lands, and they would have remained in the ownership of Beck, but for the decree; and and this decree could not have been obtained on any other condition than it was obtained. Hence if Kent could avail himself of this decree, he must do so subject to its provisions. The decree is an entirety; and he cannot therefore avail himself of part of it and reject the other part. The provision as to the mortgage is a material part of the decree; and without that provision no rescission could or would have been made, and he would have had no claim of any valid character whatever against the land. It signifies nothing that Kent was not a party to it. He loses nothing by it to which he had any right. He merely seeks to gain by the loss of another, on the asumption that the rigidity of the law is such that the injustice cannot be avoided. But the law of remedial justice is not so infirm. Looked at from any standpoint of right and justice, the lien of Stevens on the land should be preferred to that of Kent.

In considering the case, it must be constantly kept in mind that Kent, prior to the rescission, had no right, legal or equitable, against the land; and hence the advantage he claims, if it were allowed him, would be in the nature of a wind-fall. He desires to reap where others have sown, without a particle of merit in his favor. He cannot then question the power of the court in administering equity, to make the decree it did; and by which Steven’s mortgage was cancelled on the Ashtabula land and transferred to the land restored to Price; the rescission, the cancellation and the transfer, was in law one act, and must take effect as such.

Judgment reversed and judgment for the plainpiff 4n error.