Court Opinion

ID: 5586011
Source: CourtListenerOpinion
Date Created: 2022-01-11 01:53:43.695959+00
Date Added: 2024-06-11T08:36:14.941629
License: Public Domain

Beck, P. J.
(After stating the foregoing facts.) The decree to which the plaintiff in error, Bank of Louisville, excepts is based upon the special verdict of the jury in answer to questions propounded. These questions .and answers were as follows: First: *638“Was the deed which was executed to 0. W. Kitchens by J. M. Gay made for the purpose of hindering or delaying or defrauding the creditors of J.,M. Gay?” The jury answered, “Yes.” Second: “If you find that the deed was made for the purpose of delaying, hindering, or defrauding the creditors of J. M. Gay, did C. W. Kitchens have notice of such intention, or ground for reasonable suspicion that such was his intention?” Answer, “Yes.” Third: “Was the sale on first Tuesday in December, 1922, to S. P. Wheeler a fraudulent sale?” Answer, “Yes.” Fourth: “Did S. P. Wheeler have notice of the fraud, or notice sufficient to excite his attention and put him upon inquiry?” Answer, “No.” Fifth: “What amount of money do you find as rents and profits for use of said land since first Tuesday in December, 1922?” Not answered. Sixth: “What is the value of improvements, if any, made by S. P. Wheeler since he purchased it on first Tuesday in December, 1922?” Not answered.
The court directed verdicts in favor of the First National Bank of Waynesboro and the Central Bank & Trust Corporation against J. M. Gay as maker and C. W. Kitchens as indorser on the notes held by them respectively. Upon the verdict answering the questions as presented to them the court rendered the following decree: “1st. The security deed executed by J. M. Gay to C. W. Kitchens was made for the purpose of delaying or defrauding creditors of J. M. Gay, and is therefore void. 2nd. That said fraudulent purpose on the part of J. M. Gay was known, to C. W. Kitchens, who participated in such fraud. It is further ordered and decreed that the sale made by C. W. Kitchens, attorney in fact for J. M. Gay, under power in the security deed above referred to, held on the first Tuesday in December, 1922, was fraudulent and void in so far as said C. W. Kitchens was concerned. It is further considered, ordered, and decreed that S. P. Wheeler, purchaser at the sale on the first Tuesday in December, 1922, was Hot a party to any fraudulent intent or purpose, and that he was not chargeable with any notice of any such fraud, and was therefore an innocent purchaser at such sale, and as such obtained a good title to the property purchased by him at such sale. It appearing from the answers made by the administrators of I. J. Gay’s estate to the garnishment proceedings brought by the Bank of Louisville and the American Bank & Trust Company as executor of J. E. Cheney, *639that there remains in their hands as administrators funds and property of J. M. Gay, one of the distributees of the estate of I. J. Gay, subject to distribution under the decree of this court, it is therefore ordered and decreed that out of said funds the claim of Mrs. Gamble and C. B. Cale be paid; that the First National Bank of Waynesboro and Central Bank & Trust Corporation shall have equal dignity and be first paid out of any funds now in the hands of said administrators, or that may come into their hands as administrators for the benefit of J. M. Gay after the claim of Mrs. Gamble, administrator of’E. L. Gamble, and 0. B. Cale have been paid.” The plaintiff in error excepted to that portion of the decree of the court which holds that the title of S. P. Wheeler, the defendant in error, to the land purchased by him under the sale made by C. W. Kitchens as attorney in fact for J. M. Gay was a good title and not subject to the lien of the execution of plaintiff in error, on the ground that “it does not conform to the verdict rendered by the jury, and is contrary to law; the only right under said verdict and under the law to which S. P. Wheeler was entitled was to have the purchase-price refunded to him, with interest on it from day of said fraudulent sale.”
We are of the opinion that the exception taken is without merit. There is no attack on the verdict in the case. The brief of evidence is not brought up in the record. The criticism above quoted is upon the ground that the decree does not conform to the verdict rendered by the jury. If the verdict had been attacked upon the ground that it did not sufficiently cover the issues in the case, and that certain questions were left unanswered, a different question for solution by this court might have been presented from that which is actually presented by this record. But the verdict being left to stand, the decree must also stand, unless it is true, as it is contended, that'it does not conform to the verdict. The plain meaning of the verdict, in short, is this: That J. M. Gay executed a deed to Kitchens for the fraudulent purpose of hindering and delaying his creditors; that Kitchens, the grantee, was aware of this intention. This deed contained a power of sale, which was regularly executed by Kitchens, and Wheeler at the sale under the power bought it without knowledge of the fraud that infected the deed. The property was duly advertised, and Wheeler, the -purchaser, having no notice of the fraud with which the deed *640was infected, was an innocent purchaser. He had no knowledge of any fact which would put him upon inquiry of the fraud existing in the deed. In section 4535 of the Civil Code it is declared that “If one with notice sell to one without notice, the latter is protected.” And in section 4120 it is declared that “A title obtained by fraud, though voidable in the vendee, will be protected in a bona fide purchaser without notice.” These two sections may not be entirely applicable to the facts of this case, because Kitchens was not a vendee in the sense in which the word is used in the section last quoted, but the principle is not entirely foreign to this case; for, whether Wheeler be regarded as the purchaser from Kitchens, or from Gay through Kitchens as his attorney in fact, that is, as the grantee of the power of sale, he bought, as the jury found, without knowledge of any fraud in the deed or knowledge of any fact ox circumstance that would have put him upon inquiry. And that being true, he acquired title to the property sold. It is not inequitable to thus hold against the plaintiff in error here; for if there was fraud in the deed from Gay to Kitchens, and this property was to be sold under the power contained in that instrument, the plaintiff in error should have taken steps before the sale to have the deed and the power in it set aside and canceled, if that could have been done in the face of the rights of other parties to this case. A conveyance of real or personal property; executed with intention to delay or defraud creditors, is not void where the grantee in the deed, if a purchaser for value, takes without knowledge of the fraudulent intention of the grantor and without knowledge of any fact or circumstance that would put him upon inquiry. Consequently we are of the opinion, and so hold, that the court did not err in sustaining Wheeler’s claim of title and decreeing accordingly.
The plaintiff in error excepted also “to that portion of the decree which holds that the money in the hands of the administrator of I. J. Gay’s estate belonging to J. M. Gay should be paid to First National Bank of Waynesboro and Central Bank & Trust Corporation.” We construe this as excepting to the decree on the ground that it did not follow the verdict rendered by the jury in answer to the questions propounded. But there was a verdict in the case directed by the court, in addition to the special verdict of the jury in answer to the questions propounded. That verdict *641was in favor of the' Central Bank & Trust Corporation and the First National Bank of Waynesboro against J. M. Gay as maker and 0. W. Kitchens as indorser. Those notes were secured by the deed which we have had under consideration. And while, as w.e have said above, there was a finding that the deed had been executed with intention on the part of the maker to hinder and delay his creditors, and that Kitchens was a party to this fraud, there is nothing to show that the banks to which had been transferred the notes secured by this deed knew of the fraud and that they were not innocent purchasers for value of the notes. None of the evidence is brought up in the record, and under the pleadings the decree of the court was authorized by the finding of the jury.

Judgment affb'med.

All the Justices concur.