text:
    Mason v. Hull, Assignee, et al.

      Lien from foreign execution waived, when — Rule as to priority of creditor's liens — Effect of exclusive fund being property of surety for debt.

    1. A lien obtained by the levy of a foreign execution on the lands of the judgment debtor is not waived nor abandoned by suing out another execution on the judgment and causing it to be levied on the same lands.
    2. The rule that a creditor who has a Jien on one fund only may compel another creditor having a prior lien thereon and'also a lien upon another fund to exhaust the latter before resorting to the former,is applicable only where both funds are the property of the common debtor; ithas no application where theexclusive fund is the property of surety for the debt for which that fund is bound.
    (Decided November 17, 1896.)
    Error to the Circuit Court of Crawford county.
    This case was argued and submitted with the preceding one, Coal Comrpany v. Bank, ante, page 233. The report of that case disposes of some of the questions involved in this one. A statement of the facts that are material in the consideration of other questions here presented, will be found' in the opinion.

      Cahill Bros, and J. C. Tobias, for plaintiff in error.
    The question arises upon the distribution of the proceeds of the sale of 160 acres of land described in the original petition as to which has the priority of lien, Mason or Sturgeon. Here_ are the respective dates:
    Mason’s judgment, November 17, 1886.
    Mason’s first levy, November 30, 1886.
    Mason’s second levy, November 11, 1891.

      Sturgeon’s first mortgage, August 22, 1887.
    Sturgeon’s second mortgage, April 7, 1888.
    Sturgeon alleges that Mason’s executions of date November 17, 1886, and November 7, 1891, were at the same time levied upon the lands of A. B. Charlton and that if the court finds said levies valid and subsisting liens upon the lands of Michael Charlton superior to Sturgeon’s lien, then Mason, having other security, may be required to exhaust his other security first.
    If Mason’s lien had been on several tracts of land belonging to said Michael Charlton, assignor, and Sturgeon’s lien on but one of said tracts, then the equity he seeks to enforce would be applicable*
    In other words the several creditors must have a common debtor, or debtors; that -is, all the parties seeking aid must be creditors of the same common debtor. 1. Story’s Equity (10th ed.) sections 633, 634, 642, 643, 644 and 645. Cary v. Folsom et al., 14 Ohio, 365; Green v. Ramage et al., 18 Ohio, 428; Farmers’ Loan and Trust Co., v. Walworth, 1 N. Y., 434-451; Inqalls & Stockman v. Morgan, 10 N. Y. 178-186.
    Has Mason’s judgment lien been kept alive, and is it a valid and subsisting lien on said 160-aere tract in Crawford county, superior in priorty to said Sturgeon’s said mortgage liens?
    For want of goods or chattels, each writ was levied on said premises, and properly entered of record in the sheriff’s Foreign Execution Docket, and said executions duly returned. Does this keep the said judgment and lien alive? The sheriff’s return on each of said executions stands unimpeached, and neither have been set aside. It is a legal maxim that a judgment is ahoays to be taken for truth, and we take it that the official records touching the same are of equal verity, until set aside by due course of law.
    Sturgeon denies that said pretended levy of November 30, 1886, ever became or was notice to him. It is not denied but what the sheriff entered the levy of record as aforesaid.
    It is claimed that the second writ issued November 7, 1891, should have been a venditioni exponas instead of an alias execution. A venditioni exponas is a judicial writ addressed to the sheriff commanding him to expose to sale goods which he has already taken into his hands to satisfy a judgment creditor (Wharton’s Law Dictionary).
    These lands were not taken into his hands, but levied upon.
    Liens upon land are given by statute, and cannot be extended in equity. The existence, validity, and extent of a judgment lien are matters purely legal, dependent upon statutory provisions. Corwin v. Benham, 2 Ohio St., 37; Douglas v. Huston et al., 6 Ohio, 156; Gorrell v. Kelsey, 40 Ohio St., 117, 120.
    It is claimed that the suing out an alias fi. fa. instead of an venditioni exponas was a waiver of the former levy.
    It was well settled in Ohio that such is not the law. Bouton v. Lord & Hathaway et al., 10 Ohio St., 453, Liebman v. Ashbacker, 36 Ohio St., 94; Lessee of Paine v. Mooreland, 15 Ohio, 436.
    If the sheriff who made the levy be no longer in office a court of equity will hold that as done which should have been done for the purpose of upholding the levy. In such case, if the sheriff receiving the writ and making the levy, make the proper entry upon his Foreign Execution Docket in every respect as required by section 1212 said entry will be notice to subsequent purchasers and creditors of the matters contained therein, and such levy will be good as against them. Cook et al. v. Densmore et al., 5 C. C., 385-391.
    Section 5405. See also sections 5415 and 5375. Patton v. Sheriff of Pickaway County, 2 Ohio 396-399.
    Under our statute why is a judgment lien not made perpetual, if the judgment creditor continue to issue an execution before the expiration of five years from the issuing of the last execution and so on act infinitum. Reynolds v. Calb, 15 Neb. 378, citing section 5380 R. S. O. and Freeman on Judgments, section 3919. The character, operation and extent of the lien must be ascertained by the terms of the statute creating and defining the same. Beall v. White, 94 U. S., 173.
    The lien arises from or is incident to the judgment, and can be preserved only by keeping the judgment alive. Wuest & Loe v. James et al., 51 Ohio St., 230.
    At the time the first levy was made (November 30, 1886), Mr. Sturgeon had no interest in or claim whatever against said judgment debtor, Michael Charlton. How can he be heard now to proclaim the laches of the sheriff or dictate what the sheriff should have done in order to complete his levy November 30, 1886? Freeman on Execution, sections 108, 279 and 282; Toot v. Wagner, 30 N. Y., 9.
    The sheriff is not responsible for his failure to levy upon property unless he is guilty of fraud in the premises. Mueller et al. v. Bates et al., 2 Disney, 318.
    No entry by the sheriff upon real estate is necessary to constitute a valid levy thereon.. The levy of an execution from another county, when indorsed on the execution, and before entry thereof as required * * * * is complete. The officer may remain in his own office and not even go within view of the land and make a valid levy. Freeman on Execution, section 280 a. Morgan v. Kinney, 38 Ohio St., 610; Kelley v. Vincent, 8 Ohio St., 415.
    Mortgages are a class of securities used for the purposes of investment and unavoidably requiring from, those who would take them with prudence and safety an inquiry into the value, condition and' title of the property upon which they rest. Baily v. Smith, 14 Ohio St., 396.
    The lien of a mortgage arises from the acts of the parties, while the lien of a levy arises by operation of law. A levy will not be lost except by some positive act showing an intention or willingness to part with the control of the property levied on or for a neglect to enforce it' for so long a time as to indicate that it has been purposely abandoned. Houk v. Condon, 40 Ohio St., 569. A statute giving a lien is a remedial statute and is to be liberally construed so as to give full effect to the remedy. Jones on Liens, section 105.
    The lien of a judgment on the lands of a debtor created by statutes and limited to a certain period of time is unaffected by the circumstance of the plaintiff not proceeding upon it (during that period) until a subsequent lien has been obtained and carried into execution, unless the lien be intrinsically defective or is displaced by some act of the party holding it, which shall postpone him at law or in equity. Mere delay in proceeding to execution is not such an act. Rankin et al. v. Scott, 12 Wheat, 177, and notes; Lawrence v. Belger, 31 Ohio St., 175. The statute (section 5383) requiring the officer to immediately levy the same upon the goods and chattels of the debtor is merely directory. And a judgment lien upon land is not discharged against a subsequent purchaser by the fact that chattels were once levied upon and the levy released by the mutual consent of the parties to the execution. Ford v. Shinner et al., 4 Ohio, 378.
    And we hold that as an execution is a proceeding emanating from a judgment, for the purpose of enforcing the judgment, that like a judgment neither the execution or return thereon can be collaterally impeached.except in cases of fraud or mistake. Newnam's Lessee v. The City of Cincinnati, 18 Ohio, 323; Callen et al. v. Ellison, 13 Ohio St., 446; Faran, Administrators. Robinson et al., 17 Ohio St., 243.
    A sheriff’s return is parcel of the record and in an action of debt upon it nil debet is no plea. 2 Saund. 344, n. 2. The sheriff cannot be permitted either in pleading or by evidence to falsify his return. 6 Mass. 325; 7 Mass. 388. A scire facias lies to a sheriff’s return; it is, therefore, a part of the record. Crake Jas. 514. When the sheriff returns that he has recovered a certain sum of money made by execution, this shall charge him although none was actually recovered. 8 Johns. 16. These authorities show that as between parties and privies and the officer, except where the latter is charged upon its falsity, the return is matter of record and therefore- conclusive. Hill v. King, 4 Ohio, 135; Bank of Gallipolis v. Dornigan, 12 Ohio. 221; Hammer v. Nevill et al., W. 169.
    The fact which is not disputed that the levies were made by sheriffs Faeth and Birk respectively, recorded in the Foreign Execution Docket of Crawford county wherein the land is situate, was sufficient of itself to have put said Sturgeon upon inquiry had he but looked; having failed to look he must abide the consequence. Williamson v. Brown, 15 N. Y. 354; Cunningham v. Buckingham 1 Ohio, 264; Ranney v. Hardy, 43 Ohio St., 157.
    If there was sufficient record contained in said Foreign Execution Docket to have put said Sturgeon up on his guard or induced an inquiry in the mind of an intelligent person, or a person of ordinary prudence, he is chargeable with knowledge or notice of the facts therein contained. Cambridge Valley Bank v. Delano et at., 48 N. Y. 326.
    Aside from mere notice of prior liens or equities, the courts draw a distinction between mortgages and other contracts affecting the interest in lands, holding that a mortgagee is not to be treated as a purchaser; that mortgages are bare securities to protect either equitable or legal rights; that thejr are neither the legal right nor the equity; that the right or interest to which a mortgage may attach is absolute; that it is secondary and ■ dependent; that it dies when the debt or right to which it is attached is destroyed, and could never exist without some right to which it can attach. It is in its nature an incident. White v. Dennian et al., 1 Ohio St., 111.
    Judgments and decrees for the payment of money generally, are the only ones which give liens under the statute. Myers el al v. Hewitt et al., 16 Ohio, 449.
    Has Mason done anything that would constitute an actual or implied waiver? A waiver to be effectual, must not only be made intentionally, but with knowledge of the circumstances. Bennecke v. Conn. Mat. L. Ins. Co., 105 U. S. 355.
    It is for the party himself to elect when and under what circumstances he will yield up a security for the payment of his debt which he lawfully possesses and the courts will not interfere. ' Boos v. Ewing et al., 17 Ohio, 500.
    In this ease the premises have been sold by the assigmee by order of said probate court, and the distribution of the proceeds awaits the order of this court. Under section 9 (same as section 6351 R. S. ) of the act regulating the mode of administering assignments, the priority of liens is to be determined as the liens existed at the time the assignment took effect. Scott v. Dunn, 26 Ohio St., 63; Kingman v. Boyer, 40 Ohio St. 109;
    Judgment becoming dormant does not lose its priority. Dempsey v. Bush et al., 18 Ohio St., 376.
    The statutory lien of a judgment on the lands of the debtor, limited to a eertan period of time is unaffected by the plaintiff’s delay within that period in proceeding upon it until a subsequent lien has been obtained and carried into execution. It does not lose its priority. Rankin v. Scott, 12 Wheat. 177. Purchaser at execution sale acquires title superior to prior unrecorded mortgage. Stevens v. Texas & Pacific Railway Co., 105 U. S. 703.
    We conclude that priority of lien gives priority of legal right. It must be conceded that Mason’s judgment lien and levy is prior in time and legal effect. Howard v. Milwaukee & St. Paul Railroad Co., 104 U. S. 837.
    The issuing of a fi. fa. instead of a vend. exp. is not a waiver of the previous levy. Bouton v. Lord & Hathway, 10 Ohio St. 453.
    Issuing a general execution instead of an order of sale of attached property, and a sale of said property thereon, is not a toaiver or abandonment of the priority acquired by the attachment. Liebman v. Ashbacker, 36 Ohio St. 94.

      Mason having caused an alias execution to be issued within the life of his judgment proves conclusively that he did not intend to either waive or abandon his said lien and former levy.

      Harris <& Sears and Finley c& Bennett, for defendants in error,,
    We contend that the following are the propositions of law which govern this case.

      First Proposition. — Where a foreign execution is placed in- the hands of a sheriff, directing him to make the amount of it out of -the personal property of the judgment debtor, and in default of personal property, to levy upon and sell the real estate of the judgment debtor, that a levy made by such writ operates as a lien from- the time of the levy, and only continues as such a lien against subsequent mortgage or other bona fide liens, so long as the sheriff pursues the directions of the writ, and follows the provisions of the statute regarding his duties under such writ; and that whenever the judgment creditor interferes with the duties of the sheriff and stops further, proceedings under the levy, by directing the sheriff to proceed no further, and to return the writ without further proceedings or sale, that, that moment said execution levy becomes dormant and fraudulent, in contemplation of law as against a subsequent bona fide mortgage or junior lien of any kind; and such latter named lien takes precedence over the execution levy in a contention between the two conflicting liens; in other words, Mason could not, on the 30th day of November, 1886, direct the sheriff not to make his judgment out of the personal property of the debtor, but to levy the same upon the real estate, and return it without further proceedings, and thereby create an execution lien that would hold good for the next five years, as against all subsequent mortgage or other liennolders in good faith; or as the books put it, an execution levy cannot be converted into a mortgage on the debtors lands. Sections 5375, 5381, and 5383, Revised Statutes.
    It is questionable whether a levy made on real estate under such circumstances, without the return showing “no goods” is valid, so as to make a lien as against contending- lien-holders, but be that as it may, we being neither parties or privies to the judgment and levy,, are not bound by the sheriff’s return, and it is not conclusive as against us; and we claim that the return not being in conformity to law, binds nobody. Root v. R. R. Co., 45 Ohio St., 222; Philips v. Elwell, 14 Ohio St., 240; Hill v. King, 4 Ohio St., 135.
    The sheriff having seized the land with writ, the statute provides what shall be done by him. Section 5388. And to bring about that sale for cash he is to follow section 5389. And the next section, 5390. And when the foregoing is all done, section 5418, is to be observed.
    If the judgment creditor steps in and prevents the officer from obeying the writ, the penalty for his act in doing so is two-fold; (1), he loses his remedy by amercement against the sheriff; and (2), his act makes his lien dormant and postpones it to that of the subsequent judgment or mortgage liens.
    (1) . A judgment lien becomes dormant and lost in five years, because the judgment on which it is based becomes dormant in that time.
    (2) . An execution lien becomes dormant and loses its priority in sixty days, which is the life of the writ upon which it is founded, unless the levy of the writ is followed up by proceedings to sell and realize upon the levy in the mode pointed out by law.
    Section 5386 — It will thus be seen that this alias execution is simply an execution directing the sale of the property levied upon, and held by the first execution; and conforms precisely to the old writ of vendi exponeos, which was a writ for the sale of property seized by writ of fieri facias.

    It will also be observed that the law with regard to a levy upon real estate, does not differ from that of personal property, as will be seen from section 5405.
    It will be observed that upon the seizure of lands upon an execution where the land is not sold under that execution, the statute makes no provision for eogain seizing the land with a second or subsequent execution, but all subsequent executions amount to no more than writsof vendi exponas to sell the same.

    The land was seized upon the first execution and held for sale. When the alias execution was issued, which the law defines to be an execution to sell the property seized and held by the first execution, what benefit was to be derived from again seizing that property with the alias writ, and returning it back again without further proceedings to sleep like a mortgage lien until some future time ? The only effect that such second seizure or levy could have, we mean the only legal construction that could be given to it, would be that the second levy was an abandonment of the first, and a waiver of it; in which event, if a lien could be acquired at all by a seizure upon an alias execution, which is simply an execution to sell, it certainly would only date from the time of the seizure. Section 5388, Revised Statutes.

      It is clear from the forgoing section that the law does not contemplate that the officer may levy this alias writ upon the" property “previously taken in execution1'1 but that the property mentioned, means other property, and the officer making such levy upon other property, is clothed with authority first to determine whether the property already in hands, whether that be real or personal property, is or is not, sufficient to satisfy the writ; and only in the event that in his opinion, it is sufficient, can this alias execution — this vendi exponas — be legally levied upon other property, but in no event can it be levied upon the property of the judgment-debtor already in the hands of the officer. Arnold v. Fullers’ Heirs, 1 Ohio, 458; Gwynne on Sheriffs, page 440.
    Did the act of Mason in interfering with the sheriff postpone his lien to Sturgeon ?
    We think the Supreme Court of Ohio, as well as every other court, where thd question has arisen, have decided in the affirmative; our Supreme Court, putting it upon the ground that it is not only dormant, but fraudulent as to other lien-holders. Acton v. Woodnutt, 14 Ohio St., 18; 11 Wend., 552; 4 Wend., 332; 5 Hill, 377; 6 Hill, 232; 4 Dall., 358; Gwynne on Sheriffs, 212, and cases, cited
    After the sheriff seized the property under Mason’s execution, he could not return nulla bona ; he was bound then to sell. 6 Ohio, 649; 12 Ohio, 237.
    He was thus bound to sell, unless prevented or directed not to do so by the judgment-creditor ; and, if the judgment-creditor so prevented or directed him not to sell, such act of his, as we have shown, makes his lien dormant and fraudulent, as to subsequent lien-holders, and consequently postpones it to theirs.
    We are not without-abundance of authority' on this question, both as to real and. personal property. Black on Judgments vol. Sec. 1, 457; Gold Ins. Co. v. McCrary, 65 Ala., 127; Freeman on Ex. Vol. 1, 587 ; Beeman v. Martin, 54 Ala., 189; 17 Johns., 274; 11 Cowens, 310; 2 Hill, 277; 2 Swan’s Prac. 1028-1038; Loverich v. Louder, Eng. Com. Law, 165; U. S. v. Conyngham, et al., 4 Dall., 358; 59 Miss., 613 Lovick v. Crowder, 8 B. & C. 132; Vol. 7 Ency. of Law, 144; Hickman v. Caldwell, 4 Rawle, (Pa.) 376; Owen v. Patterson, 6 B. Mon., 489; 44 Am. Decs., 780; Freeman on Ex. Sec. 206.

      Second Proposition. — The first levy, was made Nov. 30, 1886. The second levy upon the alias writ was made Nov. 7, 1891. Between these two dates, our client Sturgeon obtained his mortgage.
    The decisions in ail of the states, wherever this question has arisen, are all one way. Swetser v. Matson, 153 Ill., 568; Baldwin v. Fredendall, 10 Ill., 106; Earls’ App., 13 Pa., 483; Dunderdale v. Saubestre, 13, Abb. Pr., 116; Stoudsburg Bank's App., 126 Pa., 523; Matthews v. Warne, 11 N. J. L., 350; Kellogg v. Griffin, 17 Johns, 274; Benjamin v. Smith, 12 Wend., 404; Ball v. Shell, 21 Wend., 222; Kimball v. Monger, 2 Hill, 364; Price v. Ships, 16 Barb., 586; Corlies v. Stanbridge, 5 Rawle, 286; Lantz v. Worthington, 4 Pa., 153; U. S. v. Conyngham, 1801, Wall. C. C. 178; State Bank v. Etter, 15 Ark., 258; Alabama Gold L. Ins. Co. v. McCreary, 65 Ala. 127; Bank v. Broughton, 15 Ala., 127; S. C. 27 Am. Dec., 274; Kauffelts App., 9 Watts, 334; Mentz v. Haman, 5 Whart., 150; Loiory v. Coulter, 9 Pa. 349; FreeburgeSs App.,
      40 Pa., 244; Koren v. Roemheld, 6 Ill., App., 275.
    The plaintiff in execution may desire to allow the defendant time in which to make payment, and yet may wish to save himself from all hazards arising from his delay to enforce the collection of his judgment. He is likely therefore, to take out an execution, with a view of binding defendant’s property, but with no intent to make any immediate levy or sale. In other words, he seeks to convert his execution into a mere mortgage. This the law does not tolerate. Whenever it can be shown that the object of the writ was merely to obtain better security for the debt, it is fraudulent as against subsequent purchasers or encumbrancers, and .outranked by subsequent executions. Freeman on Judgments. 31 Ill., 121. 5 Rawle, 286. 40 Pa. St., 244. 3 Watts & S., 285. 2 Pa. St., 231. 16 Barb., 585.

      Third Proposition. — We claim that if the levy of Nov. 30, 1886, (proceedings under it having been stopped' by the judgment-creditor Mason), would nevertheless hold good as a lien, that the issue of the alias writ, and the levy of it upon the lands of Michael Charlton, (where no sale was made under it), did not have the effect to prolong and keep alive the prior lien acquired under the levy of Nov. 30, 1886 ; but, that if it could be used to acquire a lien on the lands by levying it upon them, then such lien would date only from the date of the levy under it towit: Nov. 7th, 1891. In other words, you cannot tack the levies together and thereby create a lien, and prolong a lien dating back to the time of the first levy. The last levy either constituted a lien, or it did not; if it constituted a lien, that lien would date from the day of the levy, Nov. -7th, 1891, and would be younger than our mortgage. If it did not constitute a lien, then it did not in any way perpetuate and prolong the life of the first lien, and the property not having been sold under the first levy and lien, and more than five years having elapsed, and the judgment having become dormant, leaving no sale and nothing done under the first levy, other than a mere levy upon the land, it likewise became and was dormant, and ceased to be a lien, especially as against our mortgage.

      Fourth Proposition. — Mason caused his first levy to be made Nov. 30, 1886, and ordered the writ to be returned without further proceedings. He allowed that to stand until Nov. 7th, 1891, when he caused a second execution upon the same judgment to be levied upon the same lands, and in like manner required the sheriff to simply make a land levy and return the writ of Nov. 7, 1891, without a sale. Between the time of those two levies, Sturgeon’s mortgage lien attached. We contend that the levy of the second writ upon the property and its return by direction of Mason without a sale, was an abandonment and a waiver by him of the- so-called lien acquired by the first levy, and would therefore operate only as a lien from the date of such last-named levy, towit: Nov. 7, 1891. That the last named writ, having been returned without a sale, and two years having’ elapsed, and no sale ever having been made under it, the second execution, like the first, became dormant. Freeman on Execution, Sec. 202, page 579; Kregelo v. Adams, 9 Biss., 343; 3 Fed. Rep., 628; Sturgis’s Appeal, 86 Pa. St., 413; Brown v. The Sheriff, Mo., 154; Garner v. Willis, Breese, 368; Watrous v. Latrop, 4 Sand., 700; Union Bank v. McClung, 9 Humph., 91; Maul v. Scott, 2 Cranch C. C., 367; Ross v. Alexander, 65 N. C., 577.
   Williams, C. J.

The controversy here relates to the distribution of a fund in the hands of Hull as assignee for the benefit of the creditors of Michael Charlton. The fund is the proceeds of the sale of lands on which, at the time of the assignment, the plaintiff in error, and Sturgeon, the defendant in error, each claim to have had a lien, and not being sufficient to satisfy both, the priority, as between them, is the matter in dispute here. The plaintiff in error recovered a money judgment against the assignor, Michael Charlton, and A. B. Charlton, in the court of common pleas of Wyandot county, on the 17th day of November, 1886, and caused an execution to issue thereon to the sheriff of Crawford county, who, on the 30th day of that month, levied the writ on the lands in question, thqn owned. by Michael Charlton, and made all the necessary entries concerning the writ and levy in his foreign execution docket. The writ was returned by order of plaintiff’s attorney, without further proceedings under it. An execution was also issued on 'the judgment to the sheriff of Columbiana county, and was levied by him on lands there situate, belonging to A. B. Charlton, on the 18th day of November, 1886, and a return thereof made similar to that on the Crawford county execution. A. B. Charlton was surety of Michael Charlton for the debt on which the judgment was rendered.

After the executions were so levied and returned, Michael Charlton executed two mortgages on the Crawford county lands on which the levy had been made, to Sturgeon, as security for a bona fide indebtedness; one of the mortgages was filed for record August 22, 1887, and the other April 7, 1888.

On the 7th day of November, 1891, the plaintiff in error caused another execution to be issued on his judgment recovered in Wyandot county, directed to the sheriff of Crawford county, which was on that day levied on the same lands that were seized on the first writ and returned without sale; and a like proceeding was had with respect to the lands of A. B. Charlton, in Columbiana county.

On this state of facts the court of common pleas gave the judgment lien priority over the mortgages, and directed the distribution of the fund accordingly. The circuit court reversed the judgment.

Under the decision in the case of The Coal Co. v. Bank, ante, 233, the lien of the judgment on the Crawford county lands was a valid and subsisting one when the mortgages were executed and filed for record, and the lien of the latter was subordinate to that of the judgment unless the issuing and levy of the subsequent execution constituted an abandonment of the lien resulting from the levy of the former one; and whether it did or not is one of the questions peculiar to this case.

The object in suing out the last execution was to prevent the judgment from becoming dormant, and to continue its lien on the lands taken on the first writ. There was no other way in which that could be done, except, perhaps, by suit to marshal the liens, and bring the lands to sale. It is suggested that a writ could have been issued directing the sale under the former levy. But the requirement of such a writ to sell is not more imperative than that of the execution which was issued. The course pursued would have been unobjectionable as a method of preserving the lien of the judgment on lands situated in the county where it was recovered. Boughton v. Lord, 10 Ohio St. 453; Liebman v. Ashback, 36 Ohio St., 94. And the statute does not require a different mode where the lands lie in another county. The mortgagee is in no worse position by the continuation of the lien by the method adopted, than he was when his mortgages were made. They were subordinate to the judgment lien when taken, and the security thereby obtained has not been diminished. The judgment was then unsatisfied and is still so; and instead of the issuing and levying of the last execution indicating an intention to waive or abandon the lien created by the levy of the first one, or justifying any inference by the mortgagee to that effect, it afforded unequivocal evidence of the contrary intention. There was, therefore, no waiver or abandonment of the judgment lien; and, as it remained in force when the proceeding was commenced by the assignee to sell the lands, it was entitled to priority over the mortgages.

Another claim made in this case, but apparently not so much relied on, is that, as the judgment was alien on the lands of A. B. Charlton, in Columbiana county, as well as on those of Michael, in Crawford county, while the mortgages were liens only on the latter, the plaintiff in error should be required first to exhaust the Columbiana county land, before resorting to that encumbered by the mortgages. But it is clear the facts do not make a case for the application of the principle that a creditor who has a lien on one fund only, may compel another creditor having a prior lien thereon, and also a lien upon another fund, to. exhaust the latter before resorting to the former fund. That rule applies only where both funds are the property of the common debtor, or person .who ought in equity to pay both creditors ; it has no application where the exclusive fund is the property of a surety for the debt for which that fund is bound. Here, A. B. Charlton was surety for Michael on the debt, the collection of which was sought by the levy of the execution on the lands of theformer. It is his equitable right to have the principal’s property applied to the satisfaction of the debt, to the exoneration of his own ; or, if he should be compelled to pay it , he would be entitled to be subrogated to the rights of the creditor, and enforce the judgment lien against the property of the principal, and to all the benefits of that lien, Which, being superior to Sturgeon’s mortgages, would at last appropriate the fund in question in preference to the mortgages.

The judgment of the cvrcuit cornd must be reversed, and that of the common pleas affirmed.


source: Caselaw Access Project

author: Minshall, J.

license: Public Domain

text:
    Schurtz, Administrator, v. Colvin et al.

      Vendor's lien— When waived — Escrow—Deed held as— Wrongful de- . livery — Innocent purchaser — Estoppel— When to be pleaded.

    1. A vendor who takes a mortgage on the premises, including other lands of the vendee, thereby waives his lien for the purchase money.
    2. Where an owner of land, under a verbal agreement for the . sale of it, places the purchaser in possession, and executes a deed and places it in the hands of a third person, with direction to deliver it on the purchase-money being paid or secui’ed by mortgage; and the grantee induces the holder of the deed to deliver it to him that he may exhibit it as evidence of title, and the grantee does so to one ignorant of the facts, and who in good faith makes him a loan secured by mortgage on the property, the grantor in such case is estopped from setting up his claim to the land or a lien on it for purchase money, against such innocent mortgagee. Ogden v. Ogden, 4 Ohio St. 182, distinguished.

      3. The rule that one who would avail himself of an estoppel must plead it, is fairly complied with, where, upon the whole case made by the pleadings, it appears that the party intends to rely on it, if certain facts averred by the other party, and denied by him for want of knowledge, are made to appear. And in any case the rule only applies where the party has had an opportunity to plead it.
    (Decided December 1, 1896.)
    Error to the Circuit Court of Muskingum county.
    The original suit was commenced by Oliver. C. Schurtz as administrator of Lewis Schurtz, deceased, against James Colvin, for the foreclosure of a mortgage given by the latter to the decedent to secure a loan of $6,500.00. James E. Colvin, who had a subsequent mortgage on the same land, was made a party. James Colvin made no defense. James E.. Colvin filed an answer and cross petition. He claimed priority over the mortgage of the plaintiff on two grounds. (1.) That at the time the Schurtz mortgage was made he was the legal owner of an undivided one-third interest in the fourth, fifth and sixth tracts included' in the Schurtz mortgage; that he with his co-tenant, Silas H. Colvin, had by a verbal agreement sold the land to James Colvin; but the purchase money had not been paid, and on April 8, 1887, they made a deed and placed it in the hands of one Howard Coivin to be delivered when the money had been paid or secured to be paid. That contrary to instructions, Howard delivered it on August 3, 1887, the money not having been paid ; the Schurtz mortgage having been made prior thereto on July 23, 1887. (2.) That the decedent, when he took his mortgage, had knowledge of the facts, and that the purchase money had not been paid, and that he has therefore a vendor’s lien on the land. These facts are all denied bv the plaintiff; and he further says that the defendant subsequently took a mortgage on the land and other lands of the vendee to secure the purchase money and thereby waived any vendor’s lien he might have had.
    The defendant likewise set up this mortgage and asked that it should be held to be a lien on the fourth, fifth and sixth tracts prior to that of the plaintiff.
    The case was appealed to the circuit court, and ■there tried on the issues; and the court on request, made a separate finding of its conclusions of fact and of law.
    The finding of facts and conclusions of law are as follows:
    “Silas H. and James E. Colvin owned the fourth, fifth and sixth parcels of real estate described in the petition in the following proportions: Silas H. two-thirds and James E. one-third. That in 1884 they sold the land by verbal contract to James Colvin and put him in possession, which possession he retained until the land was sold in this case under plaintiff’s mortgage in 1892; Schurtz and Johnson knew James was in possession of the land at the time plaintiff’s mortgage was given, and had been for some time. The deed to him was executed by James E. Colvin for himself and by him as attorney in fact for Silas H. James E. was duly and legalty authorized by power of attorney duly recorded in the records of Muskingum county from Silas H. to execute and convey by deed Silas’ share. This was all done prior to the plaintiff’s loan of the money. This deed was put in Howard Colvin’s hands by James E. Colvin, to be delivered by him to James Colvin upon payment of the purchase money or upon the same being secured by mortgage. James Colvin intended to borrow money and got this deed from Howard and delivered it to N. S. Chandler the attorney of the person that was to make the loan, so that a description might be obtained and to exhibit the same as a part of his title papers, but without authority from Howard to deliver the same. Chandler preferred a deed should be executed by Silas H. and James E. Colvin personally, and another deed was prepared by him, but the loan was not made. Subsequently a loan was negotiated through W. H. Johnson, an attorney; the plaintiff and his intestate were to furnish the money. The first deed was handed to Mr. Johnson without authority from Howard, with other deeds, either by Mr. Chandler or James Colvin, as a part of the title papers of James Colvin. Before the title was examined, Johnson examined the title for Schurtz, including the power of attorney and this deed as to its sufficiency, and was satisfied there was a perfect title in James Colvin. After the examination of the title, the notes and mortgage to Schurtz were executed, and the money, $6,500.00, paid by Schurtz to James Colvin on July 23, 1887. Johnson instructed James Colvin to record the deed, but was told by James, the grantee, that Chandler had objected to it because it was executed by an attorney in fact, and that he, James Colvin, had had another deed prepared, andit would be back from Missouri, where James E. lived, in a few days, and he would record that one, and thus save the expense of recording two deeds. James E. and Silas H. lived in the west. Subsequently, on August 2, James Colvin got the second deed, which was dated April 7, 1887, from Howard: James informed Howard he had procured a loan. Howard was busy at harvest and did not want to go to Zanesville, and told James he was instructed not to deliver the deed until the money due James E. was paid or secured, and these were the instructions of James E.'to Howard; James told him he could transact the business; Howard delivered the second deed to James, knowing James was going to have it recorded, after the money due James E. was paid or secured to be paid, and it was put on record by James on August 3,- 1887, without the payment as directed by Howard. The Schurtz mortgage was recorded on July 23, 1887. The purchase money for Silas H. Colvin’s share of the property was paid, but James E. Colvin’s purchase money was not paid, except that, from the proceeds of the Schurtz loan, James paid James E. $100. Neither of the Schurtzs nor Johnson knew of any unpaid purchase money and none of them knew either deed was or ever had been in Howard Colvin’s hand, and the Schurtzs took their notes and mortgage and loaned their money in good faith, without any infornation or knowledge that James E. had or claimed any interest in or lien on the land. On September 17, 1888, James E. Colvin was in Muskingum county, Ohio, and learned of the delivery of the deed by Howard to James Colvin, and that Schurtz had loaned this money and taken a mortgage on the land conveyed by that deed as well as upon the other land described in the petition. With this knowledge, on September 17, 1888, James E. took a mortgage on the land described in his and Silas’ deed, and upon other lands of James Colvin for his claim, the lands being the same as those covered by the Schurtz mortgage. The plaintiff and his intestate were the mortgagees in the mortgage of July 23, 1887 Before the maturity of the notes and before James E. took his mortgage, Oliver C. Schurtz transferred his interest in the note and mortgage to Lewis Schurtz, who afterwards died intestate and the owner of the same, and the amount found due his administrator was and is due him. The plaintiff is the duly and legally appointed and qualified administrator of Lewis Schurtz. That the proceeds of the sale of the real estate is not sufficient to pay both plaintiff and James E. in full. From the facts stated, the court found as matters of law:

      First — That James E. Colvin had waived his vendor’s lien for purchase money.

      Second — That James E. Colvin’s mortgage was superior in equity to the Schurtz mortgage and that one-third of the proceeds arising from the sale of the fourth, fifth and sixth parcels of land should be paid to James E. Colvin, subject to proper proportion of the costs of sale.
    Judgment accordingly. The plaintiff at the time excepted to the court’s second conclusion of law and the judgment of the court thereon; and this proceeding is prosecuted to obtain a reversal of the same.

      Frank A. Durban and W. II. Johnson, for plaintiff in error.
    No exception was taken to the finding of law that James E. Colvin had waived his vendor’s lien. There can be no doubt that under the well settled' law of Ohio when James E. Colvin took a mortgage upon other real' estate, he waived his vendor’s lien. Follett v. Reece, 20 Ohio, 546; Mayhem v. Coombs, 14 Ohio, 428; Williams v. Roberts, 5 Ohio, 36; Brown v. Gillman, 4 Wheaton, 255; Jones on Mortgages, Vol. 1, section 207.

      Under these facts we claim the circuit court erred in finding that the mortgage to James E. Colvin was superior in equity to the mortgage asserted by the plaintiff, because :

      First — James Colvin having been put in possession of the land by James E. Colvin and having in his possession a deed for it which James E.’s agent had given him to be exhibited as a part of his title papers, one who loaned money on the faith of the deed and the known possession of the land by the grantee named therein, and without any knowledge or information that the deed had ever been in escrow or that James E. Colvin the grant- or had any interest in or claim upon the land has a superior equity to any that James E. Colvin can under these facts assert.

      Second — The facts show such acts on the part of his agent and on his own part, as would estop James E. Colvin from asserting a claim against that of the innocent mortgagees.

      Thwd — When James E. Colvin took his mortgage with knowledge of all the facts, he ratified the delivery of the first deed as of its original date and delivery, and he also ratified the delivery of the second deed, and the ratification by relation dates as of the time the deed' was put in Howard’s hands. Resor v. Railroad, 17 Ohio St., 139; Quick v. Milligan, 58 Am. Rep., 49; Buthrick v. Tilton, 6 N. E. Rep., 563; Fetterman v. Murphy, 28 Am. Dec. 729; Price v. Junkins, 7 Watts, 90; Blight v. Sconck, 51 Am. Dec. 478.
    Whether the innocent party is a vendee or mortgagee makes no difference in Ohio. It has been repeatedly held by our Supreme Court that an innocent mortgagee of real estate is purchaser of the same for value, Harkrader v. Grane et al.,
      4 Ohio St., 603; The Farmers’ National Bank of Salem, v. Richard W. Teeters, 31 Ohio St., 37; Holmes v. Gardener, 50 Ohio St.. 167. Jones on Mortgages, section 710.
    The second deed was made simply to remove any captious objections that might be urged against a deed executed by an attorney in fact, and in order to save the expense of recoi ding two deeds the second deed alone was recorded, so that the plaintiff is not limited in his claims in this case to any technical effect that may be claimed to follow the delivery of the second. Looking for a moment, however, to the second deed alone, we claim that when it was delivered to James Colvin and that delivery subsequently ratified by James E. Colvin by the taking of his mortgage, the deed took effect from the month of April, 1887, the date of its first delivery to Howard Colvin. Shirly v. Ayers, 14 Ohio, 307; Crooks v. Crooks, 34 Ohio, St., 610; Ball v. Foreman, 37 Ohio St., 132; Rosseau v. Blean, 27 Am. St. Rep. 578.
    While we claim that the title to the land in this case passed and that James E. Colvin is estopped from setting up any claim against the plaintiff’s mortgage, we also claim that the deed in this case to James Colvin was not void in any event, and that the most that could be claimed for James E. Colvin is that the deed was voidable; and the great difficulty with James E. Colvin’s position is that he does not seek to avoid the deed, but is here claiming under it.

      Fred. A. Gates, for defendants in error.
    The questions presented for determination by this finding of fact as to the first deed are:

      I. Was this so-called deed delivered?
    Delivery is as essential as any other part of a deed, as much so as the attestation or acknowledgement; in fact, without delivery a deed is of no more value than so much blank paper. The. so-called deed under consideration was an escrow held by Howard Colvin, to be delivered upon the performance by James Colvin of either of two things:
    (1) Payment in full of purchase money, or
    (2) The execution and delivery of a mortgage upon the land to secure the payment of said purchase money.
    We claim that until either one or the other of these conditions precedent was performed by James Colvin, that James E. did not become divested, nor did James Colvin become vested of the legal title to this land.
    American ■ and English Cyclopedia of Law p. 868; Devlin on Deeds, sec. 323; Ogden v. Ogden, 4 Ohio St., 194; Harkreader v. Clayton, 31 A. R. 369; 20 A. R., 1; 13 Ohio St., 254; 65 A. D., 314; Smith v. Royalton Bank, 76 A. D., 179; People v. Bostwick, 32 N. Y., 445; Washburn on Real Property, Vol. 3, p. 303 and 304; Jones on Mortgages, 4 Ed. section 87.
    We claim that this so-called deed was a nullity, for it wanted that which is essential to any deed as essential as the signing, viz: delivery. Fairbanks v. Metcalf, 8 Mass., 230; Railroad Co. v. Iliff, 13 Ohio St., 253; Harkreader v. Clayton, 56 Mass., 383; Chipman v. Tucker, 38 Wis., 43; 20 Am. Rep., 1; Evarts v. Agness, 4 Wis., 343; Smith v. Bank, 76 Am. Dec. 179.
    Applying the law as established by these decisions to the case at bar, we claim the proposition is established that there was no delivery of this so-called first deed.
    If we are correct in this proposition, there may arise for determination the second question:
    II. Is James E. Colvin either by his own conduct or the conduct of Howard, as against this plaintiff, estopped?
    We say this question may arise. The question of estoppel was not raised in any way in the common pleas court, and was raised only in argument in the circuit court.
    There are no allegations in any of the pleadings of the deféndants, nor are there any allegations in any of the pleadings of the plaintiff, which would raise this question, and we claim that it comes too late, when raised for the first time, by argu. ment of counsel in the circuit court.
    To be available a defense must be pleaded and if this is true generally it must be true particularly of estoppel, which is a defense not well favored. Anderson v. Hubble, 47 Am. Rep. 400; Notes to the case of Tyler v. Hall; 27 Am. S. Rep. 344; 22 Am. S. Rep. 426; Fanning v. Insurance Co., 37 Ohio St., 344; Meiss v. Gill, 44 Ohio St., 253; Pomeroy on Remedies and Remedial Rights, 2 Ed., section 712; Wright’s Rep., 548, Revised Statutes, section 5070. Notes to Tyler v. Hall, 27 Am. S. Rep., 346; Davis v. Davis, 85 Am. Dec., 157; Kilheffer v. Herr, 17 Am. Dec., 658; Thompson v. Stewart, 8 Am. Dec., 173; A. and E. Cyclopedia of Law, Vol. 7, p. 23.
    Neither James E. Colvin nor Howard knew of or sanctioned the handing of this deed by Chandler to Johnson, hence one of the essential elements of estoppel, viz ; knowledge, is absent. Penn. Co.
      v. Platt, 47 Ohio St., 366; Smith v. Bank, 76 Am. Dec., 183.
    The execution and delivery of the deed, and the execution and delivery of the mortgage back to James E. Colvin for the purchase money, were one contract and parts of one continuous transaction. Turk v. Funk, 30 Am. Rep., 771; Stewart v. Smith, 1 Am. S. Rep., 651; Grandin’s Executors v. Anderson, 15 Ohio St., 286.
    And when the Schurtzs took their mortgage, they took it upon an equitable interest. Jones on Mortgages, sections 153 and 158; 30 Am. Rep., 771; 48 Ohio St., 335; 7 U. S., 249; 10 U, S., 174. Under our view of this case there is no room for the application of the rule as to a bona fide purchaser for the reason that, that rule is applicable only to those who have acquired the legal title. Anketel v. Converse, 17 Ohio St., 21; Elstner v. Fife, 32 Ohio St., 373.
   Minshall, J.

There can be no question but that James E. Colvin waived his lien as a vendor by taking a mortgage on the granted premises and other lands of the grantee, to secure the purchase money. Such is the settled law of this state. The court’s conclusion of law as to this is correct, and not now questioned by the defendant in error. So that the only question here presented, is as to whether it erred in its second conclusion, that, upon the facts found, the mortgage of James E. Colvin, being subsequent in point of time, is superior m equity to the Schurtz mortgage. 'Priority is claimed on the ground that at the time the Schurtz mortgage was taken, James E. Colvin held the legal title to his interest in the premises, subject, however, to a legal obligation to convey to James Colvin as purchaser, on his paying the purchase money or securing it to he paid. If the facts found will bear this simple construction, then there can be no question as to the correctness of the court’s conclusion of law thereon. In such case the legal title of James E. Colvin would have been notice to the world of his rights in the property; and no one could have acquired an interest in it superior to his by mortgage or otherwise. The question, however, is whether the facts as found will bear'this construction as between James E. Colvin and the Schurtzs. James E. Colvin had by a verbal agreement made in 1884, sold his interest in the premises to James Colvin, who went into possession under the agreement and was in possession at the time the Schurtz loan was made. Some time before the making of the Schurtz mortgage, James E. Colvin with his co-tenant, Silas H. Colvin, executed a deed for the land to James Colvin, the purchaser, and placed it in the hands of a third person, Howard Colvin, to be delivered when the purchase money was paid or secured by mortgage. Afterward, for the purpose of enabling James Colvin to obtain a loan of money on the land, Howard delivered the deed to him that he might obtain a description of the premises and exhibit it as evidence of his title. The facts found bear this construction and none other. It is true that from the facts found it was not to be regarded as delivered. But the law has always attached much importance to an overt act. It contravenes its spirit to allow that an act may be done with an intention contrary to the act itself. And whilst, as between parties, the intention may be shown, it seldom permits this to be done, wheré to do so would work a fraud on innocent third persons. Here, whilst James Colvin was in possession of the land and of a deed to it by James E. Colvin, of whom he had purchased, the Schurtzs,' on the faith of these appearances, loaned him $6,500, and took a mortgage on the land to secure, its payment; and, as the court expressly finds, without any knowledge that the deed had ever been held as an escrow by any one, and that it was taken in good faith without any knowledge that James E. Colvin had or claimed any interest in or lien on the land.

It would seem on the plainest principles of justice, that under these circumstances James E. Colvin, as against the owner of the Schurtz mortgage, should not be heard to say that the deed had not in fact been delivered at the time the. mortgage was made, and that his equity is superior to it. He trusted Howard with the deed to be delivered when the conditions had been performed. Howard violated his trust.' He delivered it to the grantee that the latter might obtain a loan on the land by exhibiting it as evidence of his title. The loan was so obtained of persons who had no knowledge of the facts and were entirely innocent of any fraud in the matter. Who then should suffer the loss? It may be regarded as one of the settled maxims of the law, that where one of two innocent persons must suffer from the wrongful act of another, he must bear the loss who placed it in the power of the person as his agent to commit the wrong.' Or, more tersely, he who trusts most ought to suffer most. And it would seem, that the rights of the- parties in this, case should be governed by this principle, unless there is some rigid exception established by the decessions, which forbids its application where a deed is delivered in escroto.

Before considering this question, it may be well to note that no importance can be attached to the fact that the deed, on the faith of which the loan was made, had not yet been recorded. A deed on delivery passes title to the land whether recorded or not. It takes effect on delivery. The object of recording a deed is to give notice to third persons, not to perfect it as a muniment of title. Where not recorded it will be treated as a fraud against third persons dealing with the land without notice of its existence; Hence, the first deed, if delivered, having been duly executed, passed the title to James Colvin. Recording it would have added nothing to its effect as a deed; and the failure to record it in no way influenced the conduct of any of the parties to the suit.

There are some cases which seem to hold that, where a deed is delivered as an escrow to a third person to be delivered on the performance of- certain conditions, no title passes if delivered without the conditions being performed; and that this is so as against an innocent purchaser from the vendee. Everts v. Agnes, 6 Wis., 463, is such a case. The argument there is that no title passes by deed without delivery; that where a deed is delivered by one who holds it as an escroio, contrary to the vendor’s instructions, there is no delivery, and consequently an innocent purchaser acquires no title. To the objection that if this be true there is no safety for purchasers, the court said that if it be not true, there is none for vendors. This seems to be a misconception of the real situation of the parties. A vendor may protect himself.' He may either retain the deed until the'vendee pays the money or select á faithful person to hold and deliver it according to his instructions. If he selects an unfaithful person, he should suffer the loss from a wrongful delivery, rather than an innocent purchaser without knowledge of the facts. In purchasing land, no one, in the absence of anything that might awaken suspicion, is required, by any rule of diligence to inquire of a person with whom he deals, whether his deed had been duly delivered. Where a deed is found in the grantee’s hands, a delivery and acceptance is always presumed. Wash. Real Property, 5th Ed., 312, pl. 31. The fact that under any other rule “no purchaser is safe,” had a controlling influence with the court in Blight v. Schenck, 10 Penna. St., 285, 292. In this case the question was whether a deed had been delivered, the defendant being an innocent purchaser from the vendee of the plaintiff. In discussing the case the court used this language: “Here Curtis, who, it is alleged, delivered the deed contrary to his instructions, was the agent of the grantor. If a man employs an incompetent or unfaithful agent, he is the cause of the loss so far as an innocent purchaser is concerned, and he ought to bear it, except as against the party who may be equally negligent in omitting to inform himself of the extent of the authority or may commit a wrong by acting knowingly contrary thereto.” And the case was disposed of on this principle. /

The case on which most reliance is placed by the defendant in error, is that of Ogden v. Ogden, 4 Ohio St. 182. The facts are somewhat complicated. It seems to have grown out of an agreement for an exchange of lots between two of the parties, each being the equitable owner of his lot. The deed for the lot of one of them, David Ogden, was to be delivered by the legal owner to the other on his performing certain conditions, and was delivered to a third person to be delivered on the performance of the conditions. It was delivered without the conditions being performed; and was then mortgaged by the grantee to the defendants, Watson and Stroh, who claimed to be innocent purchasers for value. But it was charged in the bill that they took their mortgages with notice and to cheat and defraud the complainant; and it does not distinctly appear whether this was true or not. From the reasoning of the court it would seem that the deed had been obtained from the party holding it in some surreptitious manner. It is first conceded ‘ ‘that if David reposed confidence in Gilbert, and he violated that confidence and delivered the deed, and loss is to fall on either David or the mortgagees, that David should sustain that loss, and not the innocent mortgagees. ” Instances are then given in which the rule would be otherwise — an innocent purchaser from the bailee of a horse, or of stolen property, or from one who had either stolen or surreptitiously obtained his deed. There is no room for doubt in either of these eases. But the court then observes that, ‘ ‘If the owner of land makes a deed purporting to convey his land to any one, and such person by fraud or otherwise procures the owner to deliver the deed to him, a bona fide purchaser from such fraudulent grantee without notice of the fraud, might acquire title to the land.” This, we think, is equally clear; but, unless the deed in the case had been stolen or surreptitiously obtained, or the mortgagees were guilty of the fraud charged, then, on the reasoning of the court, the decree should have been in their favor. If the case' is to be understood as holding differently, then it is not in accord with the later decision in Resor v. Rcdlroacl Company, 17 Ohio St. 139. • Here the owner of a tract of land contracted to sell it to the company, but refused to deliver the deed until paid. An agreement was then made by which the deed was placed in the hands of the president, but it was not to be considered delivered until payment had been complied with, and the company went into possession. The president wrongfully placed the deed on record, and the company then mortgaged its entire property to secure an issue of bonds. The court held the bond-owners to be innocent purchasers, and that the plaintiff was estopped from setting up his claim as against them. It might be claimed that the delivery by Resor was to the purchaser, the company; and that a deed cannot be delivered as an escrow to the vendee. The latter statement is true. But as a matter of fact it was delivered to the president of the company and not to the company itself. There is ho reason why the president could not have held it as an escrow, and under the agreement, must be regarded as having so held it. Railroad Co. v. Iliff, 13 Ohio St., 235. Watkins v. Nash, L. R., 20 Eq., 262. Ins-Co. v. Cole, 4 Fla., 359. The plaintiff trusted the president to hold the deed, and it was his wrongful.act that disappointed him.

The supreme court of Indiana in a well-considered case, Quick v. Milligan, 108 Ind., 419, the facts of which are very similar to the ease before us, held that where a deed is delivered to a third person to be delivered the grantee, who is already in possession of the land, on payment of the purchase money, and is delivered without the condition being performed that the vendor is estopped as ag’ainst an innocent purchaser to set up his title. See also, and to the same effect, the following cases: Bailey v. Crim, 9 Biss. 95; Haven v. Kramer, 41 Iowa, 382; Blight v. Schenck, 10 Penna. St., 285.

It is the general, if not universal, rule of the courts, to protect the innocent purchaser of property for value, against such vices in the title of their vendors, as result from fraud practiced by them in acquiring the property. For in all such eases the party complaining is found to have been guilty of some negligence in his dealings, or to have trusted some agent who has disappointed his confidence and is more to blame for the consequences than the innocent purchaser, so that his equity is inferior to that of such purchaser. Hence, it is, that the innocent purchaser for value from a fraudulent grantee, is always protected in his title as against the equity of the wronged grantor. In Hoffman v. Strohecker, 7 Wats., 86, where a sale has been made under execution upon a satisfied judgment, the satisfaction not appearing of record, an innocent purchaser of the person who purchased at the sale was protected in his title, although the purchaser at the sale had knowledge of the facts, and acquired no title. A similar holding had been made by the same court in Price v. Junkins, 4 Wats., 85, and in Fetterman v. Murphy, Id., 424. In the case of Price v. Junkins it is said “An innocent purchaser of the legal title, without notice of trust or fraud is peculiarly protected in equity, and chancery never lends its aid to enforce a claim for the land against him.”

Most of the cases cited and relied on by the defendant are not in point. Where the grantee wrongfully procures the holder of a deed as an escrow to deliver it to him, he acquires no title, or at least a voidable one; but this is a very different case from where a third person without notice, afterward and while the grantee is in possession, deals with him in good faith as owner. Again, it may be conceded that the delivery of a deed by one who simply holds it as a depositary, transfers no title; but if he holds it as an escroto, with power to deliver it on certain conditions, a delivery, though wrongful, is not in excess of his authority for, in such case, the act is within his authority and binds the principal as against an innocent party; And so a deed held in escrow, delivered after the death of the principal, passes no title. It will readily appear, from reasons already given, that such cases are without application to the case under review. Here it will be conceded that as between the grantor and the grantee the latter took no title, because delivered by Howard contrary to his instruction. But the plaintiff relies on the fact that, as found, he had no knowledge that the deed had ever been held as an escroto and, in good faith, loaned his money and took a mortgage on the land to secure it; and that the defendant is therefore estopped from setting up his legal title as against him.

But it is claimed that, as the plaintiff relies on an estoppel, he should have pleaded it. This rule, however, only applies where the party has had an opportunity to do so. In this case he had none until the evidence had been introduced. The defendant, in his answer and cross-petition, set up that the deed from him had been placed in escrow and wrongfully delivered to the grantee and that the plaintiff had knowledge of the facts. The plaintiff then averred his. want of any knowledge or belief as to the facts stated by the defendant and denied them. The court, however, found that the deed had been delivered to Howard Colvin to be held as an escroto and was by him wrongfully delivered to the grantee; but also found that the plaintiff was ignorant of the facts, and an innocent purchaser for value without notice. ,. The object of pleading is to inform the opposite ■ party of the facts upon which the pleader relies as the ground of his claim or defense. And here, when the plaintiff denied knowledge of the facts as pleaded by the defendant, he fairly advised the defendant that he relied on an estoppel, on the ground of want of notice, should the facts as pleaded be made to appear in the evidence; for, that he was a purchaser for value appeared from his petition, which was taken as true as it was not controverted. Hence the claim of the plaintiff could in no way surprise the defendant unless he was ignorant of the law. The first opportunity the plaintiff had to plead an estoppel as against James E. Colvin, was when the facts were fully made to appear in evidence; and he is not therefore precluded from doing so on the facts as found by the court.

Judgment reversed and judgment on the facts fot• plaintiff in error.


author: Shauck, J.

text:
    Doney v. Clark, Admr.

      Insolvent estate — Lands conveyed by decedent in fraud of creditors —Rights ofpur chaser in good faith — Section 6139, Revised Statutes — Rights of administrator. — Sections 5240-2, Revised Statutes.

    1. By the provisions of section 6139, Revised Statutes, the administrator of an insolvent estate is a trustee for the creditors of his decedent with respect to lands conveyed by said decedent in fraud of his creditors, and he may maintain a suit to subject them to the payment of the demands of such creditors, unless the rights of a purchaser in good faith from the fraudulent grantee have intervened.
    2. Such administrator may maintain an action against the fraudulent grantee to recover the value Of the lands, if the latter has conveyed them to an innocent purchaser.
    3. The time within which such action may be brought is not fixed by the general statute for the limitation of actions, but by the special provision of said section, which permits it to be brought within four years from the death of the fraudulent grantor.
    4. On the trial of issues of fact joined in an action so brought to recover the value of the lands, either party is entitled to demand a jury.
    5. The action to recover the value of the lands so conveyed “involves the validity of a deed,” and the grantee is competent to testify generally under the provisions of sections 5240-2 of the Revised- Statutes.
    (Decided December 1, 1896.)
    ERROR to the Circuit Court of Franklin county.
    Clark, as administrator of William A. Dunnick, tiled his petition in the court of common pleas to recover from Doney the value of real estate described in the petition. He alleged in substance that Dunnick died insolvent, August 11, 1890, that prior to the death of Dunnick while he was so insolvent, Dunnick and' Doney, for the purpose of hindering, delaying and defrauding the creditors of the former, entered into an agreement whereby Doney should, through the forms of legal proceedings, enforce a judgment rendered against Dunnick in foreclosure in favor of one Jaeger, that pursuant to said agreement Doney, with moneys furnished him by Dunnick, procured an assign- “ ment of said judgment, caused the lands to be sold and himself became the purchaser, agreeing to hold the title thereto for the use and benefit of Dunnick who furnished all the money which Doney paid in the transaction. Prior to the death of Dunnick, in May, 1889, Doney, in violation of said agreement and of the rights of Dunnick’s creditors, sold and conveyed said lands to one Lena G. Miles, under circumstances which gave validity to ' the title acquired by her.
    A general demurrer to this petition was overruled.
    In his answer Doney denied the alleged agreement by which he was to hold the title in trust for Dunnick and that the latter furnished any portion of the funds used by him in the transactions mentioned in the petition, and alleged that he purchased the premises in good faith with his own funds and for his own use.
    There was a judgment for the plaintiff for $2,240 and costs. This judgment was af&rméd by the circuit court.
    The record in the court of common pleas shows that the case was set for trial in one of the civil jury rooms, and that when it was called for trial the defendant moved that it be tried to the court. This motion was allowed, the court holding that neither party was entitled to a jury.
    On the trial of these issues the defendant, Doney, was called as a witness in his own behalf. He was permitted to testify in contradiction of a witness who had testified to admissions made by him. Questions were then put to him concerning his transactions with Dunnick, and to elicit his denials of the alleged contract, and to show that Dunnick had not furnished any of the moneys used in making the purchase. On objection by counsel for the administrator, he was not permitted to testify generally or in answer to such questions.

      J. V. Lee and George L. Converse-, for plaintiff in error.
    The petition claims in substance, that the real estate belonged- to Dunnick, and that Doney held it in secret trust for Dunnick’s benefit.
    The petition undertakes to impeach the deed to Doney as fraudulent and void as to Dunnick’s creditors. The validity of the deed to Doney is impeached by the petition and the question of its validity was the issue made in the case.
    The decree finds that Doney had no interest in the real estate, notwithstanding the deed to him, and the effect of that finding was that his deed was invalid and void.
    We contend that Doney was a competent witness under the statute as to the transaction between him and Dunnick, which involved the validity of Doney’s deed. Plaintiff offered testimony tending to show that Dunnick furnished the money to purchase the Jaeger judgment, and that judgment was the foundation of Doney’s title, and that was the gist of the whole case.
    If the case did involve the validity of the deed to Doney and the validity of his title, it is clear that the trial court erred in ruling out the questions before referred to, and that the circuit court erred in holding that Doney was not a competent witness upon that point.
    When the objection is that the witness- is incompetent to testify, and the objection is sustained, it is not necessary for the party to set out in his bill of exceptions the matters he. expected to prove by the witness. Hollister v. Reznos, 9 Ohio St., 1-7; Wolf v. Powner, 30 Ohio St., 472.
    We contend that the petition is insufficient, and that the trial court erred in overruling the demurrer to it.
    1. The action was brought by Dun nick’s administrator to recover the' value of lands claimed to have been fraudulently conveyed by Dunnick, or through his procurement, to Doney and for the purpose of paying the' debts of the decedent. The transaction between Dunnick and Doney, if fraudulent, cannot be impeached by Dunnick’s administrator, unless the property so transferred by Dunnick is actually required for the payment of his debts. (McCall, Administrator, v. Pixley, 48 Ohio St., 379.)
    This action, if it can be maintained at all, is analogous to. an action brought by the administrator to sell real estate of his decedent for the purpose of paying debts of the estate.
    In this case the action is to recover the value of the real estate, the defendant having sold and transferred it to a third party.
    We suppose that it logically results from this view of the court, that the administrator cannot recover the value of the real estate from a fraudulent grantee unless authorized by statute so to do, because in order to a recovery it is necessary to impeach the fraudulent ■ conveyance of his intestate.

      2. The petition is defective because it does not state when the debts existing at the death of Dunnick accrued. For anything that the petition shows to the contrary, all of the existing debts may have accrued long after the fraudulent transfer. If the transfer was not with intent to defraud future creditors, there could be no recovery by the administrator, for the purpose of paying debts that accrued after the transfer. Creed v. Lancaster Bank, 1 Ohio St., 1; Evans v. Lewis, 30 Ohio St., 11.
    Subsequent creditors must, generally speaking, elicit facts showing contemplation of future indebtedness. * * A specific intent to defraud subsequent creditors will, of course, avoid the transfer as to them. In the absence of proof of such an intent the transaction will stand.
    (Waite on Fraudulent Conveyance, etc., section 96, 1st Ed.). A voluntary conveyance made to defraud creditors is void only as to prior and existing creditors, and to those designed to be defrauded by the conveyance. Voorhis v. Michaelis, 45 Kan., 255; Edgerly v. First Nat. Bank, 30 Ill.; App., 425.
    Can the administrator maintain this action ? Section 6139. There is no provision for recovering the value of the land, where it has passed out of the the hands of fraudulent grantee. It is not alleged in the petition that Lena G. Miles, Doney’s grantee, purchased the property for a valuable consideration, in good faith, and without knowledge of fraud. We think that such averments should have been made. There are averments in the petition from which the fair inference is that Lena G. Miles was not an innocent purchaser. If such was the case, the administrator should have pursued the property, and the court has no authority to render a personal judgment against Doney, for its value.
    We contend that the petition does not, for the reasons above stated, make out a case of a personal judgment against Doney.
    A fraudulent transfer is good against the grantor, his heirs, executors, administrators, etc. Bump Fraudulent Conveyances, p. 444; Crawford v. Lehr, 20 Kansas, 509.

      M. B. Patterson, for defendant in error.
    The right of a creditor of a fraudulent grantor to recover the value of real estate from a fraudulent grantee who has sold the same to an innocent purchaser is now too firmly established to admit of doubt. Waite’on Fraudulent Conveyances, section 177; Beach Mod. Eq. Jur. 922; Solinsky v. Lincoln Sav. Bank, 85 Tenn., 372; Murtha v. Curley, 90 N. Y., 372; Decker v. Decker, 108 N. Y., 128; Feary v. Cummings, 41 Mich., 376; Coale v. Moline Plow Co., 134 Ill., 35; Chamberlain v. Jones, 114 Ind., 458; Phelps v. Smith, 116 Ind., 378; Ringold v. Suitar, 35 W. Va., 186; Ferguson v. Hillman, 55 Wis., 190; Mason, Adrn'r., v. Pierson, 69 Wis., 585; Post v. Stiger, 29 N. J. Eq., 554; Heath v. Page, 63 Pa. St., 125; Logan s. Wallace, 76 N. C., 416; Fullerton v. Viall, 42 How. Pr., 294; Heuston v. Plato, 3 Cols., 402; Hulley v. Chedict, (Nev.) 36, p. 738. And in Ohio, it seems, it is not indispensible to the pursuit of value, that the fraudulent vendee should have disposed.of the property. Bradford v. Byer, 17 Ohio St., 394; Railroad Co. v. O'Donnell, 49 Ohio St., 489.
    The proposition that an administrator may maintain an action for a personal recovery in behalf of creditors of the estate, based on the frauds of the administrator’s intestate, was at one time denied in Ohio. Benjamin v. Baron, 15 Ohio, 518.
    In those jurisdictions in which the proposition that the administrator represents the creditors has been denied, the remedy has been withheld. In those jurisdictions in which the proposition is affirmed the remedy has been granted.
    The Supreme Court of Ohio, while not having expressly decided the question stated by Judge Boynton in Lockwood v. Krum, 34 Ohio St., 10, and presented by the record in this case, has affirmed the proposition that an administrator in this state is trustee for creditors. Lewis v. Eustler, 4 Ohio St., (Opin.), 361; Gill v. Pinney, Adm’r., 12 Ohio St. (Opin.), 47; Davis v. Corwine, 25 Ohio St., 668; Kilbourne v. Fay, 29 Ohio St., (Opin.), 279; McDonald v. Aten, 1 Ohio St., 293.
    The petition seeks a personal recovery, but if the remedy will depend upon the administrator’s power over real estate fraudulently conveyed, the power to subject it to the payment of debts is expressly conferred. Sections 6139 and 6140 R. S. Ohio. These sections were not necessary to confer the remedy. The remedy exists by virtue of section 4196,- by virtue of the statutes which makes a decedent’s real estate stand for payment of his debts, and by virtue of the administrator’s representative capacity. Woerner, sec. 296; Schouler, sec. 297; Williams, p. 305, editor’s notes. Ford v. Ins. Co., 50 Cal., 299; Freeman v. Burnham, 36 Conn., 469; Bassett v. McKenna, 52 Conn., 437; Welsh v. Welsh, 105 Mass., 229; Cross v. Broton, 51 N. H., 488; Pringle v. Pringle, 59 Pa. St., 281; Bonslaugh v. Bonslaugh, 68 Pa. St., 495; Sullice v. Graderigo, 15 La., 582; Coaly v. Whitmore, 71 Me., 65; Clark v. Claugh, 65 N. H., 43.

      The petition substantially conforms to the requirements of section 6141' for the sale of real estate. This action is not one for the sale of real estate, and it is only essential that the petition should show that the estate is insolvent.
    The petition shows an active fraud participated in by both the decedent and defendant. Acts done pursuant to such a fraudulent scheme as is set forth in the petition are absolutely void, both as to. existing and subsequent creditors. Section 4196, R. S. Ohio; Evans v. Lewis, 30 Ohio St., 11; Webb v. Roff, 9 Ohio St., 430; Greed v. Bank, 1 Ohio St., 1.
    It is therefore not important when the indebtedness accrued. ,
    The plaintiff below being an administrator, the defendant below was, by section 5242, R. S. Ohio., rendered incompetent to testify as to the matters-about which he was inquired, unless the action fell within the operation of the last exception of the section in question. The exception referred to provides that the section in question shall not apply to “actions or proceedings involving the validity of the deed.”
    Whether this exception saves to the fraudulent grantee, whose title is attacked by an administrator of the fraudulent grantor in behalf of creditors, the right to testify, in any case, we. think very doubtful. Abbott’s Select Cases, Evidence p. 137. Roberts v. Briscoe, 44 Ohio St., p. 602.

      First — This action is not one directly involving the validity of a deed; and

      Second — The deed in question is not the deed of the deceased grantor, but a master commissioner’s deed.

      The exception in question relates to cases where the “title to the thing granted is directly attacked, ’ ’ and applies only to a case for setting aside a deed of a deceased person. Section 5242, R. S., 1st paragraph; Mosher v. Butler, 31 Ohio St., 188; Sternberger v. Hanna, 42 Ohio St., 305; McNichol v. Johnson, 29 Ohio St., 85.
   Shauck, J.

It is conceded by counsel for the plaintiff in error that if the legal title to the lands, which, according to the allegations of the petition, were the subject of the conveyance, had remained in the fraudulent grantee, the administrator of the grantor might have maintained an action to set aside the conveyance and subject the lands to sale for the payment of the grantor’s debts under the provisions of section 6139 of the Rev. Stats. That section relates to the duties and powers of executors and administrators with respect to the sale of lands of decedents for the payment of their debts, and provides: “The real estate liable to be sold as aforesaid, shall include all that the deceased may have conveyed with intent to defraud his creditors, and all other rights and interests in lands, tenements and hereditaments; provided, that lands so fraudulently conveyed, shall not be taken from anyone who purchased them for a valuable consideration, in good faith, and without knowledge of the fraud; and no claim to lands so fraudulently conveyed shall be made unless within four years next after the decease of the grantor. ”

Nor can it be doubted that the powers of executors and adminstrators are such only as may be conferred upon them by statute. This, however, does not forbid the application to remedial statutes conferring such power of the familiar rule that, to the extent which their language will permit, statutes of that character are to receive such construction as will accomplish the apparent object of the legislature.

The course of decisions in this state shows a rigid adherence to the rule" that a grantor who creates a trust for his own benefit to hinder or delay his creditors cannot maintain any form of action to enforce the trust. The rule results from the turpitude of the transaction. The same rule logically should, and under our authorities does, apply to the administrator of a solvent decedent who, in his lifetime, executed a deed for such fraudulent purpose. The estate being solvent, such suit would, in its substantial aspect, inure to the benefit of the heirs at law of the fraudulent grantor whose rights are not superior to his. McCall, Admr., v. Pixley et al., 48 Ohio St., 379.

But no logical or ethical consideration would justify the extension of that rule to the defrauded creditors of the grantor or to any one standing in their rights. .They are in no sense participes oriminis. Accordingly we have express provisions of statutes authorizing suits to subject property so conveyed to the payment of the grantor’s debts. Such suit may be brought by the creditor, or by the assignee of the grantor for the benefit of . creditors, or by the administrator under the section quoted. In none of these statutes is there express authority for an action against the fraudulent grantee for the value of the lands when the rights of a bona ficle purchaser intervene. But that such action may be maintained by the proper party seems clear on both reason and authority. Although the trust which the parties attempt to establish by their contract is void, the property in the hands of the fraudulent grantee is, by the terms of the statute, impressed with a valid trust in favor of the grantor’s creditors. It may be that the fraudulent grantee is required only to surrender the land so held, but when by his own act he has made that impossible there attaches the usual incident of a personal liability for the value of the subject of the trust. Wait on Fraudulent Conveyances, section 177; Solinsky v. The Bank, 85 Tenn., 368; Chamberlin v. Jones et al., 114 Ind., 458; Mason, Admr., v. Pierron, 69 Wis., 585; Post v. Stiger, 29 N. J. Eq., 554.

. It is true that upon the subject of the right of the administrator to maintain anaction for the recovery of property fraudulently transferred by his decedent the decisions in other states are not uniform. The decisions have been much influenced by statutory provi sions. Where the administrator is regarded as succeeding only to the rights of his decedent a recovery has, of course, been denied. Where he is regarded as standing in the rights of creditors also, it has been allowed. Here in veiw of the insolvency of the estate, and the provisions of the statute, the administrator asserts the rights of creditors. This sufficiently distinguishes the case under consideration from Benjamin v. Le Baron's admr, 15 Ohio, 518, which related to personal property and was not influenced by such statutory provisions.

In answer to the observations of counsel as to the statute of limitations, it is sufficient to say that the special limitation prescribed in the section under consideration is exclusive. It limits the action to four years after the decease of grantor. The present action was brought within less than two years.

The common pleas court did not err in overruling the demurrer to the petition.

This was an action for the recovery of money only. In view of the fact that the fraudulent grantee had conveyed a valid title to the subject of the trust no decree in equity was needed or sought. Although the principles upon which a recovery was sought may be of equitable cognizance, either party is entitled, in an action for the recovery of money only, to have the issues determined by a jury. The erroneous ruling of the trial court to the contrary is, however, not aground of reversal since it was made at the instance of the party who complains of the final judgment there rendered.

The question yet to be considered relates to the ruling of the trial court that the defendant is not, in a case of this character, competent to testify generally. The general rule prescribed by section 5242 of the Rev. Stat., would sustain that ruling because the plaintiff is an administrator. But the last paragraph of the section contains the following: ‘‘Nothing in this section contained shall apply to * * actions or proceedings involving the validity of a deed. ”

The foundation of this action is the invalidity of the deed to Doney. If the apparent title had remained in him the appropriate remedy would have been a decree to subject the lands conveyed. In a suit for that purpose, it is conceded, the grantee would have been competent to testify generally. The difference in the form of the action and the remedy results from the voluntary act of the fraudulent grantee in divesting himself of such title. No reason is suggested why the defendant should be competent in one form of action and not in the other, nor do the terms of the ex-eeption restrict it to suits to set aside deeds or to subject lands fraudulently conveyed by the testator. Neither action could be sustained if the deed were valid to convey an absolute title according' to its purport. The action, therefore, involves the validity of a deed, and it is within both the letter and the reason of the exception. It follows that in actions of this character the defendant is within the general rule of competency prescribed by section 5240 of the Rev. Stat.

For error in excluding the testimony of the plaintiff in error the judgments of the circuit court and the court of common pleas are reversed.