Court Opinion

ID: 3494576
Source: CourtListenerOpinion
Date Created: 2016-07-05 22:02:32.945904+00
Date Added: 2024-06-11T14:05:11.473980
License: Public Domain

This is an appeal by the defendants from a decree awarding damages to the plaintiffs against defendant Charles Jirasek for $60,623.09 and setting aside as fraudulent a quitclaim deed from him to Joseph Jirasek and Julia, his wife.
The controversy grew out of an alleged conspiracy between Charles Jirasek, Gustav Peeters, and two bank tellers of the Detroit Savings Bank which resulted in a loss to the bank of $59,777.67. The plaintiffs had furnished the bank with indemnity bonds. They paid the loss and took an assignment of the bank's claims against Peeters and Jirasek and the two tellers. Jirasek is the only one of the parties concerned in this suit. The plaintiffs began attachment proceedings against him in the Wayne circuit court and attached certain land in Oakland county known as the Sylvan Shores property. They subsequently learned that Sylvan Shores had been deeded by Charles Jirasek to his brother Joseph Jirasek and wife. Alleging that this transfer was fraudulent as to creditors, this bill was filed to have the deed set aside and for a money decree against Charles Jirasek. The attachment suit in *Page 133 
the Wayne circuit court has been brought to an issue and is now pending awaiting trial by jury.
The vital proposition in the case is whether this deed is fraudulent as to creditors, and, in discussing that question, it will be necessary to make a further statement of the facts.
The defendant Charles Jirasek was engaged in the real estate business, associated with John C. Hoskins of Pontiac, Michigan. They organized and operated real estate corporations, bought and sold property, and were generally successful. Jirasek had relatives in the city of Detroit who became interested in the business to the extent that they advanced money in various sums which Charles was to invest for them. It was taken and used by him for the firm in the purchase of real estate with the understanding that when a sale was made of any property, to the purchase of which they had contributed, the amount of their contributions together with their share of the profits should be paid to them. In some transactions there were large profits, but Mr. Hoskins wanted to retain all of the money in the business. He recognized their interest but deferred payment. Finally Jirasek secured a power of attorney from each of the relatives and began suit against Hoskins for an accounting. A settlement agreement was reached by which the Sylvan Shores property, valued at $200,000 but subject to liens amounting to $42,000, was deeded to Jirasek in full for his interest and that of his relatives. They received no money. Charles Jirasek testified that while negotiations for settlement were pending,
"I discussed with my relatives the proposed settlement as agreed upon and it was agreed between us that Sylvan Shores property was to be security for the amount owing to them. *Page 134 
"Q. And in that discussion between you and your relatives, state what was agreed upon between you with reference to the giving of the quitclaim deed * * * by you to Joseph Jirasek and his wife. * * *
"A. We have discussed that and I was to give them the deed as security and then handle the property and sell it until they will be paid, to pay their claims and whatever will be over that, why, will be mine."
Joseph Jirasek is attorney for the Studebaker Corporation in Detroit. He also had invested in the business. He testified as to how it came that he received the deed.
"Ever since the time when Charlie received a settlement in the case against Hoskins, the settlement consisted of the Sylvan Shores subdivision, there was talk between me and my relatives, who had an interest in this Sylvan Shores subdivision, as to the necessity for some sort of security to be given by Charlie, inasmuch as this money was in his hands for a long period of time. * * *
"Q. State if that was the talk. * * *
"A. The talk was some security should be given by Charlie for us all to protect ourselves in case something should happen to him * * *. In talking with Charles I spoke that it would be the thing to give a quitclaim deed solely as security for the obligation he owed my relatives and myself.
"Q. State whether or not you were looking after the matter for your relatives.
"A. Yes, sir.
"Q. State whether or not they left that matter in your hands.
"A. They did.
"Q. Now, * * * state the amount you claim is owed to you and your relatives for the payment of which that deed was given. * * *
"A. $120,000, * * * consisting of the investments, *Page 135 
original investments, plus the profits ever since the moneys have been handled by Charles."
The settlement with Hoskins was made in December, 1928. The deed was made to Joseph January 22, 1929, and delivered to him at his office in Detroit on the same day. On January 30, 1929, the plaintiffs attached an automobile belonging to Charles and served process on him. On the following morning, he told Joseph he was going to Pontiac and offered to take the deed and have it recorded. It was recorded at 8:40 a. m., and at 2:30 p. m. the plaintiffs attached the land conveyed. On these facts, the trial court found that the conveyance to Joseph was not made in good faith to secure an indebtedness to the relatives, that it was fraudulent as to creditors and should be set aside. We are unable to agree with his finding.
The indebtedness to the relatives of Charles Jirasek was not something framed up for a defense in this case. It had existed for several years. At the insistence of Hoskins, it had been carried along by the firm until the suit for an accounting. At the time of the settlement, Charles Jirasek receipted for the relatives and they surrendered to Hoskins certain shares of stock which they held in one of the firm's corporations. They received no money, but all understood that they were to be paid out of the Sylvan Shores property which was deeded to Charles by Hoskins. It is true that the deed to Joseph was not given until about the time when plaintiffs levied their attachment, but, under the circumstances, that fact is not inconsistent with good faith in giving the conveyance. It is quite probable that Joseph, who represented himself and the other relatives, was willing to leave matters as they were so long as Charles was successful in his real estate business. But, when financial difficulties arose, he *Page 136 
concluded that, with the title in Charles, their interests in the Sylvan Shores property might be in danger. He discussed the matter with the relatives and it was decided to ask for a quitclaim deed as security. There is no doubt that at this time Charles Jirasek owed Joseph and the other relatives a large sum of money, a considerable portion of which had gone into the purchase of the Sylvan Shores property. It was not only proper that he should ask for security but it was good business. If Joseph Jirasek's testimony is true, there can be no question as to the good faith of the transaction. We see no reason to doubt it. He and the other relatives were bona fide creditors. Their claim was pre-existing. Charles Jirasek had a right to secure them by this conveyance though his act in doing so was to prefer them to other creditors. Shelton v. Mann, 85 Mich. 265;Fassbender v. Donohue, 184 Mich. 52; Jordan v.White, 38 Mich. 253; Iosco County Savings Bank v. Barnes,100 Mich. 1; McMorran v. Moore, 113 Mich. 101.
While the deed in question is absolute on its face, the testimony shows that it was given as security for a debt and is therefore held to be a mortgage. On this ground it is sustained. It was not fraudulent as to creditors.
In view of this disposition of the case, it will not be necessary to discuss any of the other questions presented by the record. No relief can be granted.
In the opinion filed by my Brother NORTH he has reached a wrong conclusion in holding that this quitclaim deed given to secure a debt is fraudulent as to other creditors. That there was no fraud even in his view of the facts is apparent from the following statement which I quote from his opinion:
"We think it conclusively appears that the quitclaim deed (mortgage) was given in good faith to *Page 137 
secure payment of an antecedent debt due from Charles to his relatives, and it cannot be said from this record that the amount of the debt was disproportionately small as compared with the value of the property mortgaged. Charles had the right to give preference to certain of his creditors if he so desired."
If this is a correct statement of the facts, and there is no doubt of it, how can it be said that the deed is fraudulent? My brother's conclusion is inconsistent with his findings on the facts. Though he says that the quitclaim deed was given in good faith to secure a debt; that it was for a fair consideration; and that Charles had a right to thus secure this debt in preference to the debts of other creditors, he holds that it was fraudulent as to these other creditors. How he reaches this conclusion appears in the following statement quoted from his opinion:
"There was absolutely no consideration for Charles' conveyance of his equity over and above the amount he owed to his relatives."
The obvious answer to this statement is, that the instrument is a mortgage and there was no conveyance of an equity. Charles still owns an interest in the property and that interest is covered by the attachment filed before the commencement of this suit. All he did by executing the quitclaim deed was to give his relatives a lien to secure their debt. It is difficult to follow my brother in his attempt to find fraud in an instrument which he says is a legally perfect mortgage.
In my judgment, the quitclaim deed is not fraudulent as to creditors and therefore the plaintiffs cannot ask to have their claims determined on the equity side of the court. All the relief which under my brother's theory they could obtain in equity can be obtained in the pending attachment suit. Their relief *Page 138 
is for a money judgment. In the absence of fraud, equity cannot retain jurisdiction to grant that relief. Koontz v. Bay CircuitJudge, 224 Mich. 463; Wisper v. Dix-Ferndale Land Co.,241 Mich. 91.
A decree should be entered dismissing the bill, with costs to defendants.
CLARK, J., concurred with McDONALD, J.