Case Name: SEARS v. DAVIS
Court: Oregon Supreme Court
Jurisdiction: Oregon
Decision Date: 1901-12-23
Citations: 40 Or. 236
Docket Number: 
Parties: SEARS v. DAVIS.
Judges: 
Reporter: Oregon Reports
Volume: 40
Pages: 236–239

Head Matter:
Argued 26 November;
decided 23 December, 1901.
SEARS v. DAVIS.
[66 Pac. 913.]
Fraudulent Conveyance — Mistake—Innocent Creditor.
1. A person who has permitted another to obtain and hold the title to his real property for many years, and until after others have extended credit iñ reliance on such apparent ownership, is estopped thereby from asserting his claim as against such creditors. As an example, where a husband purchased land with his wife’s money, and by mistake the conveyance was in his name, but the wife was notified, and allowed the husband to manage the estate as though it were his own for twenty-eight years, a conveyance from the husband to the wife should be held void as to creditors who became such on the faith of the husband’s apparent ownership.
Correspondence of Allegations and Proofs.
2. Parties cannot prosecute or defend legal proceedings except on the grounds stated in their pleadings — thus, in a suit to -declare a deed from a husband to his wife void as in fraud, of judgment creditors, the defense that the land was a homestead and not subject to sale on execution, cannot be urged unless pleaded.
From Polk: Reuben P. Boise, Judge.
Bill by Vau B. Sears, executor of the estate of Isaac Ball, deceased, against J. M. Davis and others. From a decree for defendant, plaintiff appeals.
Reversed.
For appellant there was a brief and an oral argument by Mr. Oscar Say ter.
For respondents there was a brief over the names of J. S. Townsend, and Butler & Goad, with-an oral argument by Mr. N. L. Butler. ■

Opinion:
Mr. Chief Justice Bean
delivered the opinion.
This is a suit to set aside a conveyance from J. M. Davis to his wife, and to subject the property to the lien of plaintiff's judgment. The complaint alleges that the conveyance was made for the purpose of defrauding creditors. ' The answer denies the fraud charged, and for affirmative defense avers that in 1866 the defendant Davis purchased the property in controversy for his wife, with her money, but by mistake the deed was made in his name, and through inadvertence he failed and neglected to convey it to her until December, 1895. The decree was in favor of the defendants, and plaintiff appeals.
There is no substantial conflict in the testimony. In 1866 Davis contracted for the purchase of the Eldridge donation land claim for his wife. A part of the purchase money was paid at the time, and a bond for a deed given by Eldridge, which, by mistake of the scrivener, was made in favor of Davis. When the balance of the consideration was paid, in March, 1867, Eldridge refused to make the deed to Mrs. Davis, although the money was furnished by her, but instead made it in her husband's name, according to his bond. She was immediately advised of that fact, however, but suffered and permitted the deed to, be placed of record, and the apparent title to the property to remain in her husband, until December, 1895, when the conveyance now sought to be set áside was made. In the meantime Davis occupied and cultivated the premises, sold and disposed of the proceeds thereof as his own, a.nd in fact managed and dealt with the property as if it belonged to him, and was generally reputed in the community tó be the owner thereof. .In 1889, while the title thus stood in his name, he borrowed of one Isaac Ball $300, giving his promissory note therefor. ' Ball died in February, 1895, and plaintiff was appointed executor of his estate. In June following Davis applied for'an increase in the loan to $500, when the plaintiff told him that he thought that the estate ought to have security. Davis said he would give' a mortgage upon his land for that purpose, but that there was already a mortgage thereon for $1,500, and, upon his promising to repay the money upon three days' notice, the plaintiff accepted a new note for $500, dated July 6, 1895, without requiring security. In order to verify Davis' statement, however, he examined the records, and found the title to the property to be in Davis as he had represented, although the testimony does not clearly show whether this 'examination was made before or after the note was executed. In December, 1895, the plaintiff endeavored to collect the note, when he ascertained for the first time that Davis had transferred the property to his wife. He thereupon commenced an action upon the note, in due time obtained judgment thereon, and thereafter brought this suit. Upon these facts the only question to be considered is whether Mrs. Davis is estopped from setting up title to the property as against the plaintiff.
Under our statute the property and pecuniary rights of a married woman are not subject to the debts and contracts of her husband: Hill's Ann. Laws, § 2992. But when she voluntarily permits her husband to retain the apparent title to her property and to deal with it as his own for twenty-eight years, as the testimony shows to have been the fact in this case, she is estopped from afterwards asserting her claim as against creditors of the husband who have dealt with him upon the faith of his apparent ownership: 2 Pomeroy, Eq. Jur. (2 ed.), § 814; Galbraith v. Lunsford, 87 Tenn. 89 (9 S. W. 365, 1 L. R. A. 522); Pierce v. Hower, 142 Ind. 626 (42 N. E. 223); Geo. Taylor Com. Co. v. Bell, 62 Ark. 26 (34 S. W. 80); Warner v. Watson, 35 Fla. 402 ( 17 South. 654); Swartz v. McClelland, 31 Neb. 646 (48 N. W. 461); Roy v. McPherson, 11 Neb. 197 (7 N. W. 873); Hopkins v. Joyce, 78 Wis. 443 (47 N. W. 722); Leete v. State Bank of St. Louis, 115 Mo. 184 (21 S. W. 788). This doctrine proceeds upon the principle, as stated by Mr. Justice Elliott in Hirsch v. Norton, 115 Ind. 341 (17 N. E. 612), that: "Where a party, by clothing another with all the leg-al indicia of ownership, enables him to mislead others, he, and not those who are misled by his acts, must be the sufferer. If loss comes, the man who invested the debtor with the evidence of absolute title, and thus misled creditors, must bear it, and not the creditors. The conclusion we assert involves little more than the application of the familiar general principle that, where one of two innocent persons must suffer by the act of a third, he must suffer who put it in the power of the third to do the act. " It is said that there is no evidence of Davis having represented to plaintiff that he owned the property in controversy. The answer to this objection depends upon the construction of the testimony upon a point not made clear. But, however that may be, it does appear that for more than twenty-five years, with the knowledge of Mrs. Davis, the title to the property remained of record in her husband. During all the time he was apparently, to all intents and purposes, the owner thereof, and the conclusion is irresistible that the loan was made by Ball in the first instance, and the renewal note taken by plaintiff thereafter on the faith of his ownership. Whether plaintiff's examination of the record was made before or after the execution of the renewal note, he no doubt acted upon the information he thus obtained, either in making the loan, or in forbearing to enforce its collection prior to the transfer complained of.
A contention is made that the property is a homestead, not subject to sale under execution, and therefore the conveyance could not have been a fraud upon creditors. No such defense is made by the answer, nor does the evidence show the value of the property, so that we are unable to determine at this time whether or not it is exempt under the provisions of the homestead act.
The decree of the court below is reversed, and a decree will be entered here declaring the deed from Davis to his wife void as to the lien of plaintiff's judgment. Beversed.