Court Opinion

ID: 3871018
Source: CourtListenerOpinion
Date Created: 2016-07-06 09:05:25.489601+00
Date Added: 2024-06-11T13:32:00.041339
License: Public Domain

We think the first and second assignments of error, upon which the petition for a hearing is based, are not well taken. The answer does not set out that Virginia J. Boyd bought the land sought to be reached by this bill as an innocent purchaser for value, but avers that her husband, Jonathan Boyd, was to make the advance of ten thousand dollars stipulated to be paid to Alfred Anthony in the agreement made about the Chicago land; and that the mortgage held by said Anthony was to be transferred to Jonathan, and the mortgage held by the Jackson Bank foreclosed under his direction. The testimony, put in the most favorable light for the defendants, supports the averment of the answer, and shows that if Virginia's money went *Page 503 
into the transaction it went in as a loan to her husband. It does not show that she received the conveyance of the land in payment of that loan, but inferentially the loan was paid in cash, and the parties treated the land as William's and not hers. If Jonathan's money was advanced it was repaid to him; if it was Virginia's money it was repaid to her husband, who acted as her agent in the matter, the same person from whom it had been received. It was not money put out for the purchase of this land, for it was not part of the arrangement that it should go to her. The court is of opinion that the finding that she was not an innocent purchaser for value was correct.
The third ground for the petition assumes that the court held, in its opinion in this case, that renewed statements of a fraud constitute a new fraud, which will avoid a compromise of that same fraud. Such is not the fact. The opinion distinctly stated that the fraud which entitles the complainant to relief was perpetrated at the time of the agreement. It arose in this way. The Chicago property had been transferred by William to Jonathan Boyd, on account of a pretended indebtedness. Two creditors did not believe this was an honest transfer, and attached the property as William's. Then came the negotiations which led to the agreement, in which the Boyds insisted upon and renewed previous statements about the large debt due from William to Jonathan, and also stated that Jonathan was to increase that debt by a further advance of $10,000, for all of which his only security was to be the mortgages on the land in Providence and Chicago. The idea that was carried was that William had nothing, and that Jonathan was doing all this. It now appears that the Chicago property and its proceeds belonged to William, and that Jonathan did nothing more than to loan his brother $10,000 for a short time, which sum was repaid in February, 1881; and that William held, and in part disposed of, the property in Providence as his own. The misrepresentation upon which the court thinks relief should be granted relates to the property in Providence, which is the subject of this bill, not that in Chicago. The defendants seem to mistake in this respect not only the opinion of the court, but the purpose of the bill. The bill does not seek to set aside the transaction about the Chicago property, but only that about *Page 504 
the mortgages upon statements then and there made. Anthony, for instance, gave up his mortgage, believing the property it covered was to go to Jonathan in payment of the debt which his brother owed him and the money he was advancing. It appears there was no such debt as was claimed, and that the temporary loan was repaid out of the proceeds of the very property which was claimed to belong to Jonathan, and that the Providence property was held as William's and not as Jonathan's property. The statement about the debt was one element of the misrepresentations, but there were other misstatements sufficient to open the transaction on the ground of fraud, even assuming it to be a compromise. The court treated the arrangement as a compromise, because it was so put by the defendants, and it was not necessary to decide whether it was so or not, for even as a compromise it could not stand. It was, in fact, the releasing of an attachment and security for a consideration, and upon certain statements with reference to the indebtedness, the proceeds of the pending sale, the advance of a further sum, and the future ownership of the property in Providence. Whether this amounts to a compromise, the creditor retaining the entire balance of his debt, it is not necessary to say. Whatever it may be termed, when it appears that the release of the mortgage security was brought about by false statements about the indebtedness to Jonathan, theretofore made and then repeated; by further deceptive statements as to a payment by Jonathan, which was but a pretended or nominal payment by him, or a temporary advance soon returned from the proceeds of the mortgage, which was represented as going to Jonathan for the relinquishment of his claim on the property attached; and by the statement that Jonathan was on this account also to have the Providence property for such debt and payment when in fact William was to have it, and did have it, except in name, all along, — the court thinks such a transaction should be opened.
As to the fourth ground. The complainants' representative in this transaction testifies that he was misled, and the court thinks this is true. Even though he and his testator doubted whether William could owe Jonathan what they said he did, had he known that William was to have the $14,000 mortgage on the Chicago property, out of which he was to pay Jonathan for the loan of *Page 505 
$10,000, and then to have the Providence property besides, it is difficult to believe that he would have released his attachment, or, at any rate, have given up his mortgage security without full payment.
The fifth ground of the petition is covered by what has been said above. The original fraud was the conveyance of the Chicago property by William to Jonathan. That has been settled. But in doing so the complainants' testator was induced, not only by old statements repeated, but by new misrepresentations, to part with valuable security for his debt. This fraud has never been compromised. Although it grows out of the former transaction, it is distinct and independent. To hold what the defendants claim, the court would have to say to the complainants: "Notwithstanding in settling a fraud you were induced to part with security by deceit and imposition, you are now estopped from setting up this new fraud in order to regain what was wrongfully obtained from you."
As to the sixth point. Undoubtedly "it is a general rule that a party who seeks to rescind a contract into which he has been induced to enter by fraud must restore to the other party whatever he has obtained by virtue of the contract." The rule, however, has no application to this case. Whatever was paid in this matter was, in reality, paid by William. As the respondents have paid nothing on account of this transaction which they have not already received back, there is now nothing to restore to them. They held the property as William's, and for his benefit, and they have no claim upon it as against his creditors.
The petition for rehearsing upon all the grounds alleged must be denied.
Order and decree accordingly.