Court Opinion

ID: 5151669
Source: CourtListenerOpinion
Date Created: 2022-01-02 01:58:28.800631+00
Date Added: 2024-06-11T08:25:05.379352
License: Public Domain

*1248OPINION
Before RABINOWITZ, C. J., and CONNOR, BOOCHEVER and FITZGERALD, JJ.
FITZGERALD, Justice.
We decide in this case the nature of the title to real property acquired by a purchaser at execution sale.
Briefly the facts are as follows. In early 1967 John Withers owned two lots which had been appraised at $8,000 in 1966. He owed approximately $1,500 to Central Alaska Utilities, Inc. and in excess of $3,000 to Kenneth Muller for back rent. When Muller insisted upon payment, Withers mentioned his two lots.1 There was talk that Muller would take one lot for the past-due rent and pay Withers $4,400 for the other. Before the negotiations were completed, Muller left Anchorage on a business trip. On his return he learned Withers had moved leaving no forwarding address. On February 27, 1967, Muller filed suit to collect the rent and attached the two lots. However, on February 21 Marvin Briggs recorded bills of sale purportedly conveying the lots from Withers to Briggs.
Russell Arnett, who in 1967 was Muller’s attorney, testified at trial from notes of conversations with Briggs that:
Withers told [Briggs] he wanted to go to Viet Nam or someplace and needed $500.00 which Briggs gave him for the 2 [bills of sale]. Withers discouraged him from seeing an attorney. Withers was to give Briggs a warranty deed, later in turn for a trust deed from Briggs. Briggs got people holding the assessment for approximately $2,000.00 to hold off suit.
The “assessment” apparently related to Withers’ debt on a utilities account.
Sometime before May 10, 1967, Arnett was notified by Briggs of these sales, and tentative negotiations between Muller and Briggs regarding the property took place between that date and July, 1967, after which there was no further communication from Briggs.
On May 25, 1967, United obtained a default judgment against Briggs for $8,116.39 but did not attach the two lots until August 25, 1970. In the interim, Muller had acquired a quitclaim deed to the two lots at an execution sale on June 30, 1969. On July 7, 1970, Muller executed a quitclaim deed to Gransbury. On October 2, 1972, United obtained a quitclaim deed for the lots at its execution sale against Briggs.
The superior court found that:
The transaction between Withers and Briggs was a fraudulent conveyance meeting the test set forth under A.S. 34.-40.010.2
Blumenstein v. Phillips Insurance Center, Inc., 490 P.2d 1213 (Alaska 1971).
The trial court also found that United Building had notice of the conveyances from Withers to Briggs but that United was without knowledge of any of the facts of the transaction or of any claim that the conveyance was fraudulent, void or claimed to have been void. The court concluded as a matter of law that:
The fraud which vitiates title under AS 34.40.010 must be asserted directly against the defendant. United Building who is a successor in title to such a defendant, Briggs, and who took without any knowledge of the fraudulent nature of the prior conveyance, is a bona fide *1249purchaser and its title is not voidable under AS 34.40.010.
On this basis, the court found United to be the owner in fee simple of the lots. Costs and attorney fees were accordingly awarded to United. It is from this judgment that the parties have appealed.
At this time Gransbury argues that the superior court correctly found that the conveyance to Briggs was fraudulent but incorrectly ruled that United could take the property free of encumbrances. The purchaser by quitclaim deed at his own execution sale, Gransbury asserts, can take no better title than his predecessor. In addition, Gransbury argues that the superior court mechanically awarded attorney fees to the prevailing party and that such an award is an abuse of discretion3 in the context of a quiet title action.
United, on the other hand, argues that the finding of a fraudulent conveyance was clearly erroneous, that in any event a purchaser without notice at an execution sale obtains an unclouded title, and that the award of attorney fees was proper.
At the outset we conclude that the superior court’s finding that the Withers-to-Briggs conveyance was fraudulent was not clearly erroneous. It would be reasonable to infer from Withers’ hasty and unexplained departure that the conveyance was “made with the intent to hinder, delay or defraud creditors.” AS 34.40.010. We have also held that when a conveyance is alleged to have been made fraudulently, the court may consider:
whether the disparity between the true value . . . and the price paid is so great as to shock the conscience and strike the understanding at once with the conviction that such transfer never could have been made in good faith.4
Since Briggs informed Arnett that he had paid $500 for the lots which were worth $8,000 and against which there was an assessment of $1,500, we conclude that the superior court’s finding was amply supported by the evidence.
The determination of the validity of United’s quitclaim deed is controlled by AS 34.25.040(c) which defines the legal effect of a deed resulting from a judicial sale. The statute provides, in relevant part:
The deed, when executed and delivered, is sufficient to convey all the title of the judgment debtor or other person affected by the order or decree in the premises sold to the purchaser at the sale.
Under the statute, the purchaser at an execution sale acquires no better title than the judgment debtor had.
The statute is in accord with substantial precedent. See Harvey v. Whyte, 158 Cal.App.2d 685, 323 P.2d 162, 164 (1958), which stated:
A purchaser at an execution sale is chargeable with notice that he acquires no better title than the judgment debtor has; the rule of caveat emptor applies with all its force to such sales.5
The title which Briggs, the judgment debtor, had at the time of the execution sale was defective due to the fraudulent conveyance. United, the purchaser at the execution sale, therefore acquired a defective title, no better than that of the judgment debtor.
*1250Gransbury should not be estopped from asserting the fraudulent title of United’s predecessor. It is proper for Gransbu-ry to assert the fraud despite Muller’s failure to include Briggs as a defendant for, from the standpoint of the defrauded creditor (Muller), title to the lots remained in Withers.6 Nor does Gransbury’s failure to inform United of his claim of fraud give rise to an estoppel. Gransbury, a non-lawyer, informed United of his interest; he put United on actual notice of a competing claim.7
We must conclude, therefore, that United was improperly awarded title to the lots in question. The decision of the superior court with respect to title in the two lots, as well as to costs and attorney fees,8 is reversed. The case is remanded for proceedings in accordance with this opinion.
ERWIN, J., not participating.

. Lots 23A and 33B of the Campbell Lakes Subdivision, Anchorage Recording Precinct.

. AS 34.40.010 provides :
Invalidity generally. A conveyance or assignment, in writing or otherwise, of an estate or interest in lands, or in goods, or things in action, or of rents or profits issuing from them or a charge upon lands, goods, or things in action, or upon the rents or profits from them, made with the intent to hinder, delay, or defraud creditors or other persons of their lawful suits, damages, forfeitures, debts, or demands, or a bond or other evidence of debt given, action commenced, decree or judgment suffered, with the like intent, as against the persons so hindered, delayed, or defrauded is void.

. Reference is made to Malvo v. J. C. Penney Company, Inc., 512 P.2d 575 (Alaska 1973), in which we rejected:
. the proposition that the prevailing party in each case should automatically be awarded the full amount of the attorney fees incurred. 512 P.2d at 586.

. Blumenstein v. Phillips Insurance Center, Inc., 490 P.2d 1213, 1220 n. 8, (Alaska 1971), quoting White v. Nollmeyer, 151 Mont. 387, 443 P.2d 873, 883 (1968).

. See also Nussbaumer v. Superior Court in and for the County of Yuma, 107 Ariz. 504, 489 P.2d 843, 847 (1971) ; Lebrecht v. Beckett, 96 Ariz. 389, 396 P.2d 13, 16 (1964) ; Sarkeys v. Russell, 309 P.2d 723, 726 (Okl.1957) ; Dahl v. Prince, 119 Utah 556, 230 P.2d 328, 331 (1951) ; Anderson Buick Co. v. Cook, 7 Wash.2d 632, 110 P.2d 857, 860 (1941) ; MacGinniss Realty Co. v. Hinderager, 63 Mont. 172, 206 P. 436, 439 (1922) ; Hexter v. Schneider, 14 Or. 184, 12 P. 668, 670 (1886).

. See In re Luftman, 245 F.Supp. 723, 725 (S.D.N.Y.1965) ; Strangman v. Duke, 140 Cal.App.2d 185, 295 P.2d 12, 17 (1956).

. See James v. Nelson, 90 F.2d 910, 912, 918, 9 Alaska 117, 135 (9th Cir. 1937) ; Kierulff v. Metropolitan Stevedore Company, 315 F.2d 839, 842-844 (9th Cir. 1963).

. We are inclined to agree with appellant Gransbury that the trial court should not mechanically award attorney fees to the prevailing party in a quiet title action; but that question is, in the light of our decision, moot.