Court Opinion

ID: 3618133
Source: CourtListenerOpinion
Date Created: 2016-07-06 00:00:44.535319+00
Date Added: 2024-06-11T14:07:35.251089
License: Public Domain

In this case it is found not only that Joseph A. Bliss, the judgment debtor, purchased and paid for the lands whereof the conveyance was made to his wife, so that a resulting trust arose in favor of his then existing creditors, upon the presumed fraudulent intent, which was not disproved (1 R.S. 728, §§ 51, 52), but he has found further, that Bliss procured such conveyance to be made to his wife with the actual purpose and intent of hindering, delaying and defrauding his creditors, being himself at the time insolvent.
Under these circumstances, it is not claimed that the title of Mary A. Bliss was of any validity as against the respondent, or that the judgment appealed from was not in all respects proper, if her grantee, the defendant Pinner, stands in no better position than herself. *Page 78 
The rights of Pinner are to be tested by two inquiries:
1. Had he notice of the trust?
2. Had he notice that the conveyance to his grantor was procured to be made with actual purpose and intent to hinder, delay and defraud the creditors of her husband?
These two questions need not be confounded. A bona fide
purchaser for value from the grantee, in a fraudulent conveyance, without notice of the fraud, obtains good title. And by the express terms of our statute, above referred to, where the consideration is paid by one, and the conveyance is made to another (§ 54), no implied or resulting trust shall be alleged or established to defeat or prejudice the title of a purchaser for a valuable consideration, and without notice of such trust. Pinner undoubtedly paid a valuable consideration. So the referee finds.
The referee also finds that he had no actual notice of the intent to defraud, or of the legal presumption of fraud, or that there was a resulting trust in favor of the creditors of Bliss; "nor had he actual knowledge or notice of the facts which rendered said deed fraudulent and void as against creditors, or created a resulting trust in their favor."
But the referee does find facts which he concludes, as matter of law, were equivalent to notice or constructive notice of the fraudulent intent and purpose and of such resulting trust, and sufficient to put him on inquiry, and which, therefore, do in law amount to constructive notice thereof.
These facts and this conclusion are the subject of review by the appellants on this appeal.
As to the facts found, which the referee holds amount to constructive notice of the resulting trust, because sufficient to put the defendant to inquiry.
On that subject, he knew, before he bought from Mrs. Bliss, that the premises had been purchased from Hill and wife, and that S.G. Johnson, residing in the same village with himself, acted as the attorney of Hill and wife in the sale.
He had heard conflicting reports in regard to the question who was the purchaser, i.e., he had heard that Joseph A. *Page 79 
Bliss purchased them of Hill and wife, and he had heard that Mrs. Bliss (the wife) had purchased them.
He had made inquiry for the purpose of seeing whether a debt then due from Bliss to himself could be collected out of the property, but believing that it was generally understood that Mrs. Bliss owned or had title to the property, he took no proceedings.
He had heard that it was claimed and supposed that Joseph A. Bliss had paid part of the consideration money on the purchase from Hill and wife.
He knew that Bliss owed debts. He was himself a creditor. He had heard that the firm of which Bliss was or had been a member had failed. And, finally, he made no inquiries of S.G. Johnson in respect to the payment of the consideration money.
Here was plainly enough to put him on inquiry into the facts attending the purchase. He had heard that it was claimed and supposed that Bliss, the debtor, had paid a part of the consideration of the purchase, and he knew that the conveyance was made to the wife, for he took his deed from her.
This was of itself enough to put him to inquire whether the fact was as he had heard it was claimed and supposed to be; for if the fact was as he knew it was claimed and supposed to be, then there was a trust for the creditors of Bliss, and he knew there were such creditors.
On this subject Pinner made no inquiries. Going to Buffalo and examining the records would throw no light on this point. His counsel there were not advised of any doubt growing out of the information that Bliss paid the consideration for the conveyance to his wife. A word of inquiry made at home of the agent of the vendor would have informed him fully.
Upon this ground alone I think it was very properly held that he had constructive notice, and was affected by the resulting trust. On the other point also I think the conclusion of the referee was correct.
This is perhaps not very material, unless, perhaps, it could be claimed that although he was chargeable with notice that, *Page 80 
by force of the statute, Mrs. Bliss held in trust for creditors, he, being a creditor, had a right, by purchasing from her, to obtain payment of his own debt.
If the conveyance to the wife was fraudulent as against creditors upon either ground, then I apprehend, that, although it might be competent for any creditor to secure himself by claiming and obtaining the application thereof, the payment or security of his debt, and might do so, if he could, without first obtaining judgment and execution, he could not, by taking an absolute deed from the fraudulent grantee or trustee, and paying her the balance due, obtain a valid title.
So that, without enlarging on the facts, which I deem sufficient to amount to actual fraud, it must suffice to say, that, in addition to those already enumerated, he knew that one judgment creditor had already filed a bill, and obtained an injunction to prevent Mrs. Bliss from selling or conveying the property. He knew that Bliss was embarrassed — owed debts not paid — had failed — and that he himself had failed in his endeavors to procure payment of what was due to himself.
I have no hesitation in saying, moreover, that notice of the pendency of an action to restrain Mrs. Bliss from selling the property, in which an injunction imposing such restraint had issued, was, of itself, sufficient to induce a man of ordinary prudence, to inquire into the grounds of such action.
Such inquiry would have fully disclosed to him, that it was charged that the said Bliss was largely in debt, and unable to pay his debts when the deed to his wife was made; that Bliss paid the whole consideration for the land purchased; and that Bliss procured the deed to be made to his wife in order to defraud his creditors.
With knowledge of these charges, he could not buy in good faith or otherwise, except at the hazard of the truth as it might appear in future, and as it did in fact appear on the trial of this action, and subject to all the legal consequences of the facts when proved.
The judgment must be affirmed.
Judgment affirmed. *Page 81